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Canada Not-for-profit Corporations Act (S.C. 2009, c. 23)

Act current to 2022-11-16 and last amended on 2022-08-31. Previous Versions

PART 14Liquidation and Dissolution (continued)

Marginal note:Distribution in accordance with articles

  •  (1) If the articles of a corporation, other than a corporation referred to in subsection 235(1), provide for the distribution of property remaining on liquidation after the discharge of any liabilities of the corporation, the liquidator shall distribute the remaining property, other than the property referred to in section 234, in accordance with the articles.

  • Marginal note:Distribution to members

    (2) If the articles do not provide for the distribution of the remaining property, the liquidator shall divide the remaining property, other than the property referred to in section 234, into as many equal shares as there are memberships in the corporation and distribute one share to the holder of each membership.

Marginal note:Right to distribution in money

  •  (1) If in the course of liquidation of a corporation the members resolve or the liquidator proposes to do any of the following, a member may apply to the court for an order requiring the distribution of the property of the corporation to be in money:

    • (a) exchange all or substantially all of the property of the corporation for securities, debt obligations or memberships of another body corporate that are to be distributed to the members; or

    • (b) distribute all or part of the property of the corporation to the members in kind.

  • Marginal note:Powers of court

    (2) On an application under subsection (1), the court may order all of the property of the corporation to be converted into and distributed in money.

Marginal note:Custody of documents

 A person who has been granted custody of the documents and records of a dissolved corporation remains liable to produce those documents and records until the end of the prescribed period or of any shorter period fixed by an order made under subsection 233(5).

Definition of member

  •  (1) In this section, member includes the heirs and personal representatives of a member.

  • Marginal note:Continuation of actions

    (2) Despite the dissolution of a corporation under this Act,

    • (a) any civil, criminal or administrative action or proceeding commenced by or against the dissolved corporation before its dissolution may be continued as if the corporation had not been dissolved;

    • (b) any civil, criminal or administrative action or proceeding may be brought against the dissolved corporation within two years after its dissolution as if the corporation had not been dissolved; and

    • (c) any property that would have been available to satisfy any judgment or order if the corporation had not been dissolved remains available for that purpose.

  • Marginal note:Service on corporation

    (3) Service of a document on a corporation after its dissolution may be effected by serving the document on a person whose name appears on the last notice that was sent by the corporation in accordance with section 128 or 134 and received by the Director.

  • Marginal note:Service on company

    (4) Service of a document on a company to which the Canada Corporations Act, chapter C-32 of the Revised Statutes of Canada, 1970, applied and that has been dissolved under subsection 297(5) may be effected by serving the document on a person shown as a director in the last annual summary filed by the company under that Act.

  • Marginal note:Reimbursement

    (5) Despite the dissolution of a corporation under this Act, a member to whom any of its property has been distributed is liable to any person claiming under subsection (2) to the extent of the amount received by that member on that distribution, and an action to enforce that liability may be brought within two years after the date of the dissolution of the corporation.

  • Marginal note:Representative action

    (6) A court may order an action referred to in subsection (5) to be brought against the persons who were members as a class or group, subject to any conditions that the court thinks fit, and, if the plaintiff establishes a claim, the court may refer the proceedings to a referee or other officer of the court, who may

    • (a) add as a party to the proceedings each person who was a member found by the plaintiff;

    • (b) determine, subject to subsection (5), the amount that each person who was a member shall contribute towards satisfaction of the plaintiff’s claim; and

    • (c) direct payment of the amounts so determined.

Marginal note:Creditors or members not found

  •  (1) On the dissolution of a corporation under this Act, the portion of the property distributable to a creditor or member who cannot be found shall be converted into money and paid to the Receiver General.

  • Marginal note:Payment to be forwarded

    (2) If payment is made to the Receiver General under subsection (1) with respect to a creditor or member, the corporation or liquidator shall forward to the Director with the payment all documents, records and registers in the possession of the corporation or liquidator that relate to the entitlement of the creditor or member.

  • Marginal note:Constructive satisfaction

    (3) A payment under subsection (1) is deemed to be in satisfaction of a debt or claim of the creditor or member.

  • Marginal note:Recovery

    (4) A person who establishes an entitlement to any money paid to the Receiver General under this Act shall be paid by the Receiver General an equivalent amount out of the Consolidated Revenue Fund.

Marginal note:Vesting in Crown

  •  (1) Subject to subsection 239(2) and section 240, property of a dissolved corporation that has not been disposed of at the date of its dissolution under this Act vests in Her Majesty in right of Canada.

  • Marginal note:Return of property on revival

    (2) If a dissolved corporation is revived as a corporation under section 219, any property, other than money, that vested in Her Majesty under subsection (1) and that has not been disposed of shall be returned to the corporation and there shall be paid to the corporation out of the Consolidated Revenue Fund

    • (a) an amount equal to any money received by Her Majesty under subsection (1); and

    • (b) if property other than money vested in Her Majesty under subsection (1) and that property has been disposed of, an amount equal to the lesser of

      • (i) the value of that property at the date it vested in Her Majesty, and

      • (ii) the amount realized by Her Majesty from the disposition of that property.

PART 15Investigation

Marginal note:Investigation

  •  (1) On the application of a member, a debt obligation holder or the Director, ex parte or on any notice that the court requires, a court having jurisdiction in the place where a corporation has its registered office may direct an investigation to be made of the corporation and any of its affiliated corporations and may

    • (a) appoint an inspector to conduct the investigation or replace an inspector and fix the remuneration of the inspector or their replacement;

    • (b) determine the notice to be given to any interested person or, subject to subsection (3), dispense with notice to any person;

    • (c) subject to section 244, authorize an inspector to enter any place if the court is satisfied that there are reasonable grounds to suspect that there is relevant information in that place and to examine any thing and make copies of any document or record found there;

    • (d) require any person to produce documents or records to an inspector;

    • (e) authorize an inspector to conduct a hearing, administer oaths and examine any person on oath, and make rules for the conduct of the hearing;

    • (f) require any person to attend a hearing conducted by an inspector and to give evidence on oath;

    • (g) give directions to an inspector or any interested person on any matter arising in the investigation;

    • (h) require an inspector to make an interim or final report to the court;

    • (i) determine whether a report of an inspector should be published and, if so, order the Director to publish the report in whole or in part or to send copies to any person whom the court designates;

    • (j) require an inspector to discontinue an investigation;

    • (k) require the corporation to pay the costs of the investigation; and

    • (l) make any other order that it thinks fit.

  • Marginal note:Grounds

    (2) The court may make an order on an application under subsection (1) only if it appears to the court that

    • (a) the activities of the corporation or any of its affiliates are or have been carried on with intent to defraud any person;

    • (b) the activities or affairs of the corporation or any of its affiliates are or have been carried on or conducted, or the powers of the directors are or have been exercised, in a manner that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of a member or debt obligation holder;

    • (c) the corporation or any of its affiliates was formed for a fraudulent or unlawful purpose or is to be dissolved for a fraudulent or unlawful purpose; or

    • (d) persons concerned with the formation, activities or affairs of the corporation or any of its affiliates have acted fraudulently or dishonestly.

  • Marginal note:Notice to Director

    (3) A member or debt obligation holder who makes an application under subsection (1) shall give the Director reasonable notice of the application and the Director is entitled to appear and be heard in person or by counsel.

  • Marginal note:No security for costs

    (4) An applicant under this section is not required to give security for costs.

  • Marginal note:Hearings in camera

    (5) An ex parte application under this section shall be heard in camera.

  • Marginal note:Consent to publish proceedings required

    (6) No person shall publish anything relating to ex parte proceedings under this section except with the authorization of the court or the written consent of the corporation being investigated.

Marginal note:Power of inspector

  •  (1) An inspector under this Part has the powers set out in the order appointing the inspector.

  • Marginal note:Court order

    (2) An inspector shall on request produce to an interested person a copy of any order made under subsection 242(1).

Marginal note:Entering dwelling

  •  (1) If the place referred to in paragraph 242(1)(c) is a dwelling, the court shall not make an order under that paragraph unless it is satisfied that

    • (a) entry to the dwelling is necessary to practically obtain the information; and

    • (b) entry to the dwelling has been refused or there are reasonable grounds for believing that entry will be refused.

  • Marginal note:Use of force

    (2) In acting under the authority of an order that authorizes entry to a dwelling, the inspector named in it shall not use force unless the inspector is accompanied by a peace officer and the use of force has been specifically authorized in the order.

Marginal note:Hearing in camera

  •  (1) On the application of an interested person, a court may make an order directing that a hearing conducted by an inspector under this Part be heard in camera or giving directions on any matter arising in the investigation.

  • Marginal note:Right to counsel

    (2) A person whose conduct is being investigated or who is being examined at a hearing conducted by an inspector under this Part has a right to be represented by counsel.

Marginal note:Incriminating statements

 No person is excused from attending and giving evidence and producing documents and records to an inspector under this Part by reason only that the evidence tends to incriminate that person or subject that person to any proceeding or penalty, but no such evidence shall be used or is receivable against that person in any proceeding instituted against that person under an Act of Parliament, other than a prosecution under section 132 of the Criminal Code for perjury in giving the evidence or a prosecution under section 136 of that Act in respect of the evidence.

Marginal note:Exchange of information

  •  (1) In addition to the powers set out in the order appointing the inspector, an inspector appointed to investigate a corporation may furnish information to, or exchange information and otherwise cooperate with, any public official in Canada or elsewhere who is authorized to exercise investigatory powers and who is investigating, in respect of the corporation, any allegation of improper conduct that is the same as or similar to the conduct described in subsection 242(2).

  • Marginal note:Restriction

    (2) An inspector shall not furnish information that was obtained from any person in the course of an investigation under this Part to a public official outside Canada unless the inspector is satisfied that the information will not be used against that person in any proceeding instituted against that person for an offence.

Marginal note:Absolute privilege — defamation

  •  (1) Any oral or written statement or report made by an inspector or any other person in an investigation under this Part has absolute privilege.

  • Marginal note:Copy of report

    (2) An inspector shall send to the Director a copy of every report made by the inspector under this Part.

Marginal note:Solicitor-client privilege or professional secrecy

 Nothing in this Part shall be construed as affecting solicitor-client privilege or, in Quebec, the professional secrecy of advocates and notaries.

PART 16Remedies, Offences and Punishment

Marginal note:Definitions

 The following definitions apply in this Part.

action

action means an action under this Act. (poursuite)

complainant

complainant means

  • (a) a former or present member or debt obligation holder of a corporation or any of its affiliates;

  • (b) a present or former registered holder or beneficial owner of a share of an affiliate of a corporation;

  • (c) a former or present director or officer of a corporation or any of its affiliates;

  • (d) the Director; or

  • (e) any other person who, in the discretion of a court, is a proper person to make an application under this Part. (plaignant)

Marginal note:Derivative action

  •  (1) On the application of a complainant, a court may make an order granting the complainant leave to bring an action in the name of and on behalf of a corporation or any of its subsidiaries, or intervene in an action to which such a body corporate is a party, for the purpose of prosecuting, defending or discontinuing the action on its behalf.

  • Marginal note:Conditions precedent

    (2) The court may not make an order under subsection (1) unless the court is satisfied that

    • (a) the complainant has given notice to the directors of the corporation or its subsidiary of the complainant’s intention to apply to the court under subsection (1) within the prescribed period before bringing the application, or as otherwise ordered by the court, if the directors of the corporation or its subsidiary do not bring the action, prosecute or defend it diligently or discontinue it;

    • (b) the complainant is acting in good faith; and

    • (c) it appears to be in the interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued.

  • Marginal note:Faith-based defence

    (3) The court may not make an order under subsection (1) if the court is satisfied that

    • (a) the corporation is a religious corporation;

    • (b) the decision of the directors referred to in paragraph (2)(a) is based on a tenet of faith held by the members of the corporation; and

    • (c) it was reasonable to base the decision on a tenet of faith, having regard to the activities of the corporation.

 
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