Part 7 Security Certificates, Registers and Transfers (clauses 29-33)

This Part includes a number of technical amendments which are designed to clarify the wording and administration of the Act. For example, an amendment would permit signatures on security certificates to be printed or otherwise mechanically reproduced on the certificate (s. 49).

The French version of certain provisions would be amended to reconcile the wording with the English version.

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

Bill Clause No.: 29
CBCA Section No.:48(2)
Topic ;Security Certificates, Registers and Transfers (Technical Amendments)

Sources of Proposed Law
N/A

Changes From Present Law
Amend the definition of "fiduciary" in s. 48 similar to the Bank Act which refers to a personal representative of a deceased person.

Purpose of Change
The purpose of the change is to harmonize the CBCA with other Federal statutes.

Similar Provincial Laws
N/A

Current Wording
48. (2) "fiduciary" means a trustee, guardian, committee, curator, tutor, executor, administrator or representative of a deceased person, or any other person acting in a fiduciary capacity;

Proposed Wording
48. (2)"fiduciary" means any person acting in a fiduciary capacity and includes a personal representative of a deceased person;

Bill Clause No.: 30
CBCA Section No.;49(2), (4), (5),(7)(b), (8), (9) and (10)
Topic :Security Certificates, Registers and Transfers(Corporate Finance)

Sources of Proposed Law
N/A

Changes From Present Law
(A) Provide in subs. 49(2) for the setting by regulation of the maximum fee for the issuance of a security certificate.

(B) Repeal subsections 49(4) and (5) and replace with a new subsection (4) that removes the requirement for a manual signature on security certificates and provides that any signatures required on security certificates may be printed or otherwise mechanically reproduced on the certificate.

(C) Amend par. 49(7)(b) by including the words "or subject to the Canada Business Corporations Act" at the end of the paragraph.

(D) Subsections 49(8) and (9) are reworded.

(E) Remove the specific references to sections of statutes in par. 49(10)(b) and allow the appropriate statutes to be prescribed.

Purpose of Change
(A) Subsection 49(2): The purpose of this change is to allow increased flexibility to deal with changes that are of a frequent and technical nature.

(B) Subsection 49(4): The proposed amendment allows printed or otherwise mechanically reproduced signatures. This would reduce transaction costs through eliminating the need to seek legal advice and the expense and inconvenience of manual signatures.

(C) Paragraph 49(7)(b): Adopting this terminology would harmonize the CBCA with other federal legislation (Bank Act) by making it clear that the designation is linked to the state of the corporation when the statement is made on the share certificate and not at the moment of the corporation's constitution. Some corporations are not incorporated under the CBCA but under the Canada Corporation Act or under laws of other jurisdictions and are continued under the CBCA.

(D) Subsections 49(8) and (9): This technical change will clarify the wording of the Act. The word "agreement" is added to s. 49(8) in order to make the use of this word consistent throughout the provision.

(E) This amendment is consistent with similar amendments made elsewhere in the Act (see s. 46(1)(b)).

Similar Provincial Laws
Business Corporations Act (Alberta)

Business Corporations Act (Saskatchewan)

Current Wording
49. (2) A corporation may charge a fee of not more than three dollars for a security certificate issued in respect of a transfer.

(4) A security certificate shall be signed manually by at least one director or officer of the corporation or by or on behalf of a registrar, transfer agent or branch transfer agent of the corporation, or by a trustee who certifies it in accordance with a trust indenture, and any additional signatures required on a security certificate may be printed or otherwise mechanically reproduced thereon.

(5) Notwithstanding subsection (4), a manual signature is not required on

(a) a security certificate representing

(i) a promissory note that is not issued under a trust indenture,

(ii) a fractional share, or

(iii) an option or a right to acquire a security; or

(b) a scrip certificate.

(7)(b) the words "Incorporated under the Canada Business Corporations Act";

(a) a restriction on its transfer other than a constraint under section 174,

(b) a lien in favor of the corporation,

(c) a unanimous shareholder agreement, or

(d) an endorsement under subsection 190(10), such restriction, lien, agreement or endorsement is ineffective against a transferee of the security who has no actual knowledge of it, unless it or a reference to it is noted conspicuously on the security certificate.

(9) A corporation any of the issued shares of which are or were part of a distribution to the public and remain outstanding and are held by more than one person shall not have a restriction on the issue, transfer or ownership of its shares of any class or series except by way of a constraint permitted under section 174.

(10) Where the articles of a corporation constrain the issue, transfer or ownership of shares of any class or series in order to assist

(a) the corporation or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licenses, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control, or

(b) the corporation to comply with

(i) section 379 of the Trust and Loan Companies Act, or

(ii) section 411 of the Insurance Companies Act, the constraint, or a reference to it, shall be conspicuously noted on every security certificate of the corporation evidencing a share that is subject to the constraint where the security certificate is issued after the day on which the share becomes subject to the constraint under this Act.

Proposed Wording
49. (2) A corporation may charge a fee, not exceeding the prescribed amount, for a security certificate issued in respect of a transfer.

(4) A security certificate shall be signed by at least one of the following persons, or the signature shall be printed or otherwise mechanically reproduced on the certificate:

(a) a director or officer of the corporation;

(b) a registrar, transfer agent or branch transfer agent of the corporation, or an individual on their behalf; and

(c) a trustee who certifies it in accordance with a trust indenture.

(7)(b) the words "Incorporated under the Canada Business Corporations Act" or "subject to the Canada Business Corporations Act";

(8) No restriction, charge, agreement or endorsement described in paragraphs (a) to (d) is effective against a transferee of a security, issued by a corporation or by a body corporate before the body corporate was continued under this Act, who has no actual knowledge of the restriction, charge, agreement or endorsement unless it or a reference to it is noted conspicuously on the security certificate:

(a) a restriction on transfer other than a constraint under section 174;

(b) a charge in favor of the corporation;

(c) a unanimous shareholder agreement; or

(d) an endorsement under subsection 190(10).

(9) A distributing corporation, any of the issued shares of which remain outstanding and are held by more than one person, shall not have a restriction on the transfer or ownership of its shares of any class or series except by way of a constraint permitted under section 174.

(10) Where the articles of a corporation constrain the issue, transfer or ownership of shares of any class or series in order to assist

(a) the corporation or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licenses, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control, or

(b) the corporation to comply with any prescribed law, the constraint, or a reference to it, shall be conspicuously noted on every security certificate of the corporation evidencing a share that is subject to the constraint where the security certificate is issued after the day on which the share becomes subject to the constraint under this Act.

Bill Clause No.:31(1)
CBCA Section No.:51(2)(a) and (b)
Topic :Security Certificates, Registers and Transfers (Technical Amendments)

Sources of Proposed Law
N/A

Changes From Present Law
Replace paragraphs 51(2)(a) and (b) with new paragraphs 51(2)(a) and (b) that use the terminology found in par. 93(2)(a) and (b) of the Bank Act referring to the personal representative definition.

Purpose of Change
The purpose of this change is to harmonize the CBCA with other federal statutes, to clarify the language of the Act and to reduce ambiguity.

Similar Provincial Laws
N/A

Current Wording
51. (2) Notwithstanding subsection (1), a corporation whose articles restrict the right to transfer its securities shall, and any other corporation may, treat a person as a registered security holder entitled to exercise all the rights of the security holder he represents, if that person furnishes the corporation with evidence as described in subsection 77(4) that he is

(a) the executor, administrator, heir or legal representative of the heirs, of the estate of a deceased security holder;

(b) a guardian, committee, trustee, curator or tutor representing a registered security holder who is an infant, an incompetent person or a missing person; or

Proposed Wording
51. (2)(a) the heir of a deceased security holder, or the personal representative of the heirs, or the personal representative of the estate of a deceased security holder;

(b) a personal representative of a registered security holder who is an infant, an incompetent person or a missing person; or

Bill Clause No.:31(2)
CBCA Section No.:51(5)
Topic :Security Certificates, Registers and Transfers (Technical Amendments)

Sources of Proposed Law
Mr. Mac Harb, Private Member Bill C-379

Changes From Present Law
Replace the term "infant" with the phrase "a person who is less than 18 years of age".

Purpose of Change
This change reflects the United Nations Convention on the Rights of the Child and their definition of "child" as "a person who is less than 18 years of age".

Similar Provincial Laws
N/A

Current Wording
51. (5) If an infant exercises any rights of ownership in the securities of a corporation, no subsequent repudiation or avoidance is effective against the corporation.

Proposed Wording
51. (5) If a person who is less than eighteen years of age exercises any rights of ownership in the securities of a corporation, no subsequent repudiation or avoidance is effective against the corporation.

Bill Clause No.31(3)
CBCA Section No.51(8)
Topic  Security Certificates, Registers and Transfers (Technical Amendments)

Sources of Proposed Law

Changes From Present Law
Replace the term "legal representative" with the term "personal representative".

Purpose of Change
The purpose of this change is to harmonize the CBCA with other federal statutes, to clarify the language of the Act and to reduce ambiguity.

Similar Provincial Laws

Current Wording
51. (8) Notwithstanding subsection (7), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a legal representative of the deceased holder is entitled, subject to any applicable law relating to the collection of taxes, to become a registered holder or to designate a registered holder, if he deposits with the corporation or its transfer agent

(a) the security certificate that was owned by the deceased holder; and

(b) reasonable proof of the governing laws, of the deceased holder's interest in the security and of the right of the legal representative or the person he designates to become the registered holder.

Proposed Wording
51. (8) Despite subsection (7), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to any applicable law relating to the collection of taxes, to become a registered holder or to designate a registered holder, if the personal representative deposits with the corporation or its transfer agent

(a) the security certificate that was owned by the deceased holder; and

(b) reasonable proof of the governing laws, of the deceased holder's interest in the security and of the right of the personal representative or the person designated by the personal representative to become the registered holder.

Bill Clause No.32
CBCA Section No.  65(1)(d)
TopicSecurity Certificates, Registers and Transfers (Technical Amendments)

Sources of Proposed Law
Mr. Mac Harb, Private Member Bill C-379

Changes From Present Law Remove the reference to "infancy". Replace the term "otherwise" with the words "other incapacity".

Purpose of Change
The concept of "infancy" is included in the notion of "incapacity". With the proposed change, the English version would be equivalent to the French version.

Similar Provincial Laws

Current Wording
65. (1) In this section, "appropriate person" means

…

(d) if a person described in paragraph (a) is an individual and is without capacity to act by reason of death, incompetence, infancy, minority or otherwise, his fiduciary;

Proposed Wording
65. (1)(d) if a person described in paragraph (a) is an individual and is without capacity to act by reason of death, incompetence, minority, or other incapacity, the person's fiduciary;

Bill Clause No. 33
CBCA Section No.75
Topic Security Certificates, Registers and Transfers (Technical Amendments)

Sources of Proposed Law Changes From Present Law
Amend the French version of s. 75 to replace the word "délivré" with "livré".

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

Similar Provincial Laws

Current Wording
75. Le mandataire ou le dépositaire de bonne foi - ayant respecté les normes commerciales raisonnables si, de par sa profession, il négocie les valeurs mobilières d'une société - qui a reçu, vendu, donné en gage ou délivré ces valeurs mobilières conformément aux instructions de son mandant ne peut être tenu responsable de détournement ni de violation d'une obligation de représentant, même si le mandant n'avait pas le droit d'aliéner ces valeurs mobilières.

Proposed Wording
75. Le mandataire ou le dépositaire de bonne foi .* ayant respecté les normes commerciales raisonnables si, de par sa profession, il négocie les valeurs mobilières d'une société .* qui a reçu, vendu, donné en gage ou livré ces valeurs mobilières conformément aux instructions de son mandant ne peut être tenu responsable de détournement ni de violation d'une obligation de représentant, même si le mandant n'avait pas le droit d'aliéner ces valeurs mobilières.