Cancellation of CBCA Certificates and Related Articles

Policy Statement 2.8
November 19, 2003

Introduction and Statement of General Principles
Cancellation on the Initiative of the Director
Cancellation at the Request of a Corporation or Other Interested Person
Application to Court and Appeal
References

1. Introduction and Statement of General Principles

1.1 Corporations Canada undertakes the cancellation of articles and related certificates from time to time, in response to:

administrative errors;
cases in which the Director lacked the authority to issue a certificate; and
other circumstances such as a cancellation ordered by a court.

1.2 In order to assist corporations and other interested persons, this policy sets forth certain policy and practice guidelines aimed at facilitating cancellations. While the policy and the practice guidelines set out herein do not have the force of law, they do reflect the Director's understanding of the Director's role in cancelling certificates and related articles. The final interpretation of section 265.1 of the Canada Business Corporations Act (the "Act") and related provisions is the function of the courts.

1.3 The Director considers that, by communicating these guidelines to corporations and other interested persons who are considering cancelling a certificate and related articles, the instances of rejected requests and the cost and administrative inconvenience thereby encountered can be reduced.

1.4 Nothing in this policy is intended to constitute a binding statement of what position the Director will take with respect to any particular request for a cancellation. In addition, this policy is not intended to be a substitute for professional legal, accounting or business advice or for the exercise of professional judgment by legal, accounting and business advisors in any particular instance.

1.5 The cancellation of a certificate and related articles may be undertaken on the initiative of the Director. In that case, the Director must be satisfied that the cancellation would not prejudice any of the shareholders or creditors of the corporation.

1.6 The cancellation may also be undertaken upon the request of the corporation or any other interested person. In that case

the cancellation must be approved by the directors of the corporation (or the shareholders acting pursuant to a unanimous shareholder agreement); and
the Director must be satisfied that the cancellation:
1. would not prejudice any of the shareholders or creditors of the corporation; or
2. reflects the original intention of the corporation or the incorporators, as the case may be.

1.7 If the applicable requirements in paragraph 5 or 6 above are satisfied, cancellations may be effected as follows:

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2. Cancellation on the Initiative of the Director

2.1 The Act specifically allows the Director to cancel certificates and related articles that have been incorrectly issued. For example, the Director might cancel a certificate that was issued by Corporations Canada to a dissolved corporation or to a financial corporation that is not allowed to be incorporated under the Act.

2.2 The Director may cancel the certificate and related articles of a corporation if:

the error is obvious on the face of the articles or certificate;
the error was made solely by the Director;
the cancellation is ordered by a court; or
the Director lacked the authority to issue the certificate.

2.3 In these cases, the Director's intention is to cancel the Certificate upon receipt of:

a written acknowledgement of the need for correction from the corporation or any other interested person;
the original Certificate with replacement pages;
a declaration to the effect that the Certificate has not yet been used or relied on,
or
if deemed necessary by the Director, a statutory declaration of a director or officer stating that, to the best of his or her knowledge, after diligent inquiry, the corporation has not executed any security agreements or other documents using the incorrect name, and no filings have been made under any personal property security legislation in Canada, against the incorrect corporate name.
additional documentation, if deemed necessary by the Director, providing assurance that the correction would not prejudice any of the shareholders or creditors of the corporation.

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3. Cancellation at the Request of a Corporation or Other Interested Person

3.1 The cancellation of articles and related certificates may be undertaken at the discretion of the Director upon request of a corporation or any other interested person. The Director expects to receive appropriate documentary evidence including:

a written request for the cancellation from the corporation or other interested person;
a certified copy of a resolution of the directors of the corporation (or the shareholders acting pursuant to a unanimous shareholder agreement, or a statutory declaration of the incorporator(s) where no organizational meeting has been held) approving the cancellation and stating:
1. that there is no dispute among the directors or shareholders of the corporation about this request;
2. if applicable,that the corporation did not authorize the filing of the articles that were filed;
3. that the cancellation reflects the original intention of the corporation or the incorporators, as the case may be;
4. that the articles were filed in error;
5. how the error was made;
6. if applicable, the effects of cancellation on share ownership by shareholders of the corporation;
7. that removal of the error by articles of amendment would cause undue hardship;
8. that no shareholders or creditors would be adversely affected by the correction;
9. if applicable, information regarding who the directors and shareholders were before and after issue of the certificate and the number of shares they held before and after; and
10. that the certificate has not yet been used or relied on, or if it has, documentary consent to the cancellation from anyone dealing with the corporation on the basis of the articles and related certificate;
deemed necessary by the Director, a statutory declaration of a director or officer stating that, to the best of his or her knowledge, after diligent inquiry, the corporation has not executed any security agreements or other documents using its incorrect name, and no filings have been made under any personal property security legislation in Canada, against the incorrect corporate name;
the original certificate, attached articles and any certified copies of the original certificate and articles in the possession of the applicant; and:
in cases where the error was made, not by the corporation itself but by its representative to whom it had given correct instructions, the Director will, at her/his discretion, undertake the requested cancellation upon receipt of all documents noted in paragraph section 3 of this policy, and:
1. a statutory declaration of the representative indicating the instructions received and the reasons why those instructions were not reflected in the articles; or
2. a statutory declaration of an officer of the company explaining why it is not possible to obtain (i) above, the instructions given to the representative, and why instructions were not reflected in the articles.

3.2 Each case will be considered on its merits. The Director has discretion to require additional documentation he/she deems necessary.

3.3 The Director will review the documentation referred to in paragraphs 3.1and 3.2 with a view to determining that neither shareholders nor creditors will be adversely affected by the cancellation and that the cancellation reflects the original intention of the corporation or the incorporators, as the case may be.

3.4 The Director has no discretion to authorize a refund of the filing fee for the certificate that has been cancelled.

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4. Application to Court and Appeal

4.1 If cancellation is found to prejudice any of the shareholders or creditors, the Director, the corporation or any interested person may apply to the court for the cancellation and an order determining the rights of the shareholders or creditors.

4.2 Alternatively, an interested person who feels aggrieved by a decision by the Director to cancel, or to refuse to cancel, the articles and related certificate under section 265.1, may, pursuant to paragraph 246(f.2) of the Act, apply to a court for an order requiring the Director to change the decision. The court has the power to order a change in the Director's decision.

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