Part 1 Interpretation and Application (Clause 1-2)

The following new definitions to s. 2(1) are proposed:

• distributing corporation
• going-private transactions
• entity
• officer
• personal representative
• squeeze-out transaction
• infant

The purpose of these additions is to clarify the language of the CBCA, to reduce ambiguity, to harmonize with provincial securities legislation and to update the CBCA to reflect current business terminology. These changes are required due to amendments to other parts of the Act.

In addition, a number of technical amendments are proposed to update terminology, to clarify wording and to reconcile the English and French versions of the Act.

Briefing Book
An Act to amend the Canada Business Corporations Act and the Canada Cooperatives Act

Bill Clause No. 1(1)
CBCA Section No. 2(1)
Topic: Interpretation and Application (Technical Amendments)

Sources of Proposed Law

Changes From Present Law
Amend the definitions of "auditor", "person" and "unanimous shareholder agreement".

Purpose of Change
The purpose of these additions are to clarify the language of the CBCA, to reduce ambiguity, and to update the CBCA to reflect current business terminology. These changes are required due to amendments to other portions of the Act.

The definition of "auditor" is amended to reflect the fact that auditors are allowed to incorporate in some provinces.

Similar Provincial Laws

Current Wording
2. (1) "auditor" includes a partnership of auditors;

"person" includes an individual, partnership, association, body corporate, trustee, executor, administrator or legal representative;

"unanimous shareholder agreement" means an agreement described in subsection 146(2) or a declaration of a shareholder described in subsection 146(3).

 Proposed Wording
2. (1) "auditor" includes a partnership of auditors or an auditor that is incorporated;

"person" means an individual, partnership, association, body corporate, or personal representative;

"unanimous shareholder agreement" means an agreement described in subsection 146(1) or a declaration of a shareholder described in subsection 146(2).

Bill Clause No. 1(2)
CBCA Section No. 2(1)
Topic: Interpretation and Application (Technical Amendments)

Sources of Proposed Law

Changes From Present Law
Replace the definition of "mandataire" in the French version with "s'entend notamment de l'ayant cause".

Purpose of Change
The definition of "mandataire" is removed (definition found in the French version only). However, reference to "s'entend notamment de l'ayant cause" should be kept because it is not included in the usual concept of "mandataire".

Similar Provincial Laws 

Current Wording 
2. (1) "mandataire" Personne qui agit pour le compte d'autrui, y compris l'ayant cause.

Proposed Wording 
2. (1) "mandataire" S'entend notamment de l'ayant cause.

Bill Clause No.`1(3) and (4)
CBCA Section No. 2(1) def. of "associate"
Topic: Interpretation and Application (Technical Amendments)

Sources of Proposed Law 

Changes From Present Law 
The definition of "associate" in subsection 2(1) of the English version is replaced before paragraph (a) with "associate, in respect of a relationship with a person, means";

And "liquidator of the succession" is added in par. (c) of the definition of "associate".

Purpose of Change 
The purpose of the changes are to clarify and simplify the language of the Act and to reduce ambiguity.

Similar Provincial Laws 

Current Wording 
2. (1) "associate" when used to indicate a relationship with any person, means

(c) a trust or estate in which that person has a substantial beneficial interest or in respect of which he serves as a trustee or in a similar capacity,

Proposed Wording 
2. (1) "associate", in respect of a relationship with a person, means

(c) a trust or estate in which that person has a substantial beneficial interest or in respect of which that person serves as a trustee or liquidator of the succession or in a similar capacity,

Bill Clause No. 1(5)
CBCA Section No. 2(1)
Topic: Interpretation and Application (Securities Terminology)

Sources of Proposed Law 

Changes From Present Law 
This change adds the following new definitions to s. 2(1): distributing corporation, going- private transactions, entity, officer, personal representative and squeeze-out transaction.

Purpose of Change
The purpose of these additions is to clarify the language of the CBCA, to reduce ambiguity, and to update the CBCA to reflect current business terminology. These changes are required due to amendments to other portions of the Act.

The definitions of "distributing corporation" and "going private transactions" will be set in the regulations to allow flexibility. This flexibility is necessary given the complexity of/differences in provincial securities law terminology to which these definitions should be matched as closely as possible and because the terminology changes over time.

A definition "squeeze-out transaction" is required because these will be permitted under the Act. The use of the term "going-private transaction" in the CBCA is adequate for distributing corporations because it refers to the same concept as going-private transactions under provincial securities laws/policies. The transactions do not occur within the same context in the case of non-distributing corporations. Further, parties are not the same and the applicable standards of fairness will be different (see clause 97). Accordingly, different terminology is used. The term "squeeze-out transaction" was chosen because it connotes the concept of a shareholder being forced out of the corporation without the shareholder's consent.

Similar Provincial Laws 

Current Wording 
N/A

Proposed Wording 
2. (1) "distributing corporation" means, subject to subsections (6) and (7), a distributing corporation as defined in the regulations;

"entity" means a body corporate, a partnership, a trust, a joint venture or an unincorporated association or organization;

"going-private transaction" means a going-private transaction as defined in the regulations;

"officer" means an individual appointed as an officer under section 121, the chairperson of the board of directors, the president, a vice-president, the secretary, the treasurer, the comptroller, the general counsel, the general manager, a managing director, of a corporation, or any other individual who performs functions for a corporation similar to those normally performed by an individual occupying any of those offices;

"personal representative" means a person who stands in place of and represents another person including, but not limited to, a trustee, an executor, an administrator, a receiver, an agent, a liquidator of a succession, a guardian, a tutor, a curator, a mandatary or an attorney;

"squeeze-out transaction" means a transaction by a corporation that is not a distributing corporation that would require an amendment to its articles and would, directly or indirectly, result in the interest of a holder of shares of a class of the corporation being terminated without the consent of the holder, and without substituting an interest of equivalent value in shares issued by the corporation, which shares have equal or greater rights and privileges than the shares of the affected class;

Bill Clause No. 1(6)
CBCA Section No. 2(4)
Topic: Interpretation and Application (Technical Amendments)

Sources of Proposed Law 

Changes From Present Law 
Amend the French version to replace the expression "société mère" with the more accurate expression "personne morale mère".

Purpose of Change 
This technical change clarifies the wording and application of the Act.

Similar Provincial Laws

Current Wording 
2. (4) Est la société mère d'une personne morale celle qui la contrôle.

Proposed Wording 
2. (4) Est la personne morale mère d'une personne morale celle qui la contrôle.

Bill Clause No. 1(7)
CBCA Section No. 2(6), (7) and (8)
Topic: Interpretation and Application (Government Administration)

Sources of Proposed Law 
United Nations Convention on the Rights of the Child

Changes From Present Law 
(A) Update and broaden the Director's individual exemption power in the current s. 2(8) to allow case-by-case exemptions from a corporation being a "distributing corporation" and to permit the Director to grant the exemptions where it would not be prejudicial to the public interest.

This change will also add a broad new blanket exemption power to exempt a class or classes of corporations from being "distributing corporations" where it would not be prejudicial to the public interest.

(B) Include a provision to ensure that the CBCA is interpreted consistently with the definition of "child", as a person who is less than 18 years of age, as proposed by the United Nations Convention on the Rights of the Child.

Purpose of Change 
(A) This change adds flexibility to the Act and its application by allowing the Director to exempt corporations from the requirements associated with being "distributing corporations".

(B) This provision was introduced at the suggestion of Mac Harb, M.P.

Similar Provincial Laws 
Securities Act (Ontario)

Current Wording
2. (6) For the purposes of this Act, securities of a corporation

(a) issued on a conversion of other securities, or

(b) issued in exchange for other securities

are deemed to be securities that are part of a distribution to the public if those other securities were part of a distribution to the public.

(7) Subject to subsection (8), for the purposes of this Act a security of a body corporate

(a) is part of a distribution to the public where, in respect of the security, there has been a filing of a prospectus, statement of material facts, registration statement, securities exchange take-over bid circular or similar document under the laws of Canada, a province or a jurisdiction outside Canada; or

(b) is deemed to be part of a distribution to the public, where the security has been issued and a filing referred to in paragraph (a) would be required if the security were being issued currently.

(… )

(8) On the application of a corporation, the Director may determine that a security of the corporation is not or was not part of a distribution to the public if he is satisfied that such determination would not prejudice any security holder of the corporation.

Proposed Wording 
2. (6) On the application of a corporation, the Director may determine that the corporation is not or was not a distributing corporation if the Director is satisfied that the determination would not be prejudicial to the public interest.

(7) The Director may determine that a class of corporations are not or were not distributing corporations if the Director is satisfied that the determination would not be prejudicial to the public interest.

(8) For the purposes of this Act, the word "infant" has the same meaning as in the applicable provincial law and, in the absence of any such law, has the same meaning as the word "child" in the United Nations Convention on the Rights of the Child, adopted in the United Nations General Assembly on November 20, 1989.

Bill Clause No. 2
CBCA Section No. 3(3)
Topic: Interpretation and Application (Technical Amendments)

Sources of Proposed Law

Changes From Present Law
Make the French and English versions of par. 3(3) equivalent.

Purpose of Change 
This technical change clarifies the wording and application of the Act.

Similar Provincial Laws 

Current Wording 
3. (3) Les lois suivantes ne s'appliquent pas à une personne morale :

a) la Loi sur les corporations canadiennes, chapitre C-32 des Statuts revisés du Canada de 1970;

b) la Loi sur les liquidations et les restructurations;

c) les dispositions de la loi spéciale au sens de l'article 87 de la Loi sur les transports au Canada qui sont incompatibles avec la présente loi.

Proposed Wording 
3. (3) Les lois suivantes ne s'appliquent pas à une société :

a) la Loi sur les corporations canadiennes, chapitre C-32 des Statuts revisés du Canada de 1970;

b) la Loi sur les liquidations et les restructurations;

c) les dispositions de toute loi spéciale au sens de l'article 87 de la Loi sur les transports au Canada qui sont incompatibles avec la présente loi.