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Part 14 Financial Disclosure (clauses 73-82)
A number of consequential amendments required as a result of amendments to other parts of the Act are made in this Part. In addition, several minor technical amendments, amendments to the French version and amendments designed to facilitate the efficient operation and administration of the statute are also included.
A provision would be added specifying that in the case of a proposed replacement of an auditor, the corporation must make a statement regarding the reasons for the proposed replacement. Also, the new auditor will be allowed to make a statement on the corporation's statement
(s. 168(5.1)).
Briefing Book
An Act to amend the Canada Business Corporations Act and the Canada Cooperatives Act
Bill Clause No. 73
CBCA Section No. Heading before s. 155
Topic : Financial Disclosure (Technical Amendments)
Sources of Proposed Law
Changes From Present Law
The heading "Présentation de renseignements financiers" before section 155 of the French version of the Act is replaced by "Présentation de renseignements d'ordre financier"
Purpose of Change
This technical change clarifies the wording and application of the Act.
Similar Provincial Laws
Current Wording
Présentation de renseignements financiers
Proposed Wording
Présentation de renseignements d'ordre financier
Bill Clause No. 74
CBCA Section No. 156
Topic : Financial Disclosure (Government Administration)
Sources of Proposed Law
Changes From Present Law
Any exemption made by the Director under the section would not be subject to the Statutory Instruments Act.
Purpose of Change
Under the Statutory Instruments Act, orders are required to be made by the Governor-in-Council. By removing the word "order", the Act is clarifying that the Director's authority to issue an exemption is not caught by the Statutory Instruments Act.
Similar Provincial Laws
Current Wording
156. A corporation may apply to the Director for an order authorizing the corporation to omit from its financial statements any item prescribed, or to dispense with the publication of any particular financial statement prescribed, and the Director may, if he reasonably believes that disclosure of the information therein contained would be detrimental to the corporation, permit such omission on such reasonable conditions as he thinks fit.
Proposed Wording
156. The Director may, on application of a corporation, authorize the corporation to omit from its financial statements any item prescribed, or to dispense with the publication of any particular financial statement prescribed, and the Director may, if the Director reasonably believes that disclosure of the information contained in the statements would be detrimental to the corporation, permit the omission on any reasonable conditions that the Director thinks fit.
Bill Clause No. 75
CBCA Section No. 157(2)
Topic : Financial Disclosure (Consequential Amendment)
Sources of Proposed Law
Changes From Present Law
Replace the phrase "legal representative" with the phrase "personal representative".
Purpose of Change
This amendment is consequential to the addition of the definition of "personal representative" in clause 1(5).
Similar Provincial Laws
Current Wording
157. (2) Shareholders of a corporation and their agents and legal representatives may on request therefor examine the statements referred to in subsection (1) during the usual business hours of the corporation and may make extracts therefrom free of charge.
Proposed Wording
157. (2) Shareholders of a corporation and their personal representatives may on request examine the statements referred to in subsection (1) during the usual business hours of the corporation and may make extracts free of charge.
Bill Clause No. 76
CBCA Section No. 8(1)
Topic : Financial Disclosure (Technical Amendment)
Sources of Proposed Law
Changes From Present Law
Allow facsimiles of directors' signatures to be used as evidence of their approval of the corporation's financial statements.
Purpose of Change
The flexibility of the CBCA would be increased by allowing the use of a facsimile of the director's signature on the financial statements.
Similar Provincial Laws
Current Wording
158. (1) The directors of a corporation shall approve the financial statements referred to in section 155 and the approval shall be evidenced by the signature of one or more directors.
Proposed Wording
158. (1) The directors of a corporation shall approve the financial statements referred to in section 155 and the approval shall be evidenced by the manual signature of one or more directors or a facsimile of the signatures reproduced in the statements.
Bill Clause No. 77
CBCA Section No. 160
Topic : Financial Disclosure (Technical Amendment)
Sources of Proposed Law
Changes From Present Law
(A) Clarify s. 160(1)(b) by replacing the phrase "after the last date when the last preceding annual meeting should have been held" with the wording found in s. 133. (See clause 56).
(B) Repeal subsection (4).
(C) Renumber subsections (5) and (6) as (2) and (3).
Purpose of Change
(A) Subsection 160(1)(b): This amendment is designed to harmonise the CBCA "securities" terminology with the provincial securities legislation.
(B) Subsection (4): This section is repealed to reduce the filing burdens of corporations. Should the Director have occasion to need a corporation's interim financial statements, they are available as public documents through the securities commissions.
(C) Subsections (5) and (6): Renumbering is a consequence of the 1994 repeal of subsections (2) and (3) and the present repeal of subsection (4).
Similar Provincial Laws
Current Wording
160. (1) A corporation any of the securities of which are or were part of a distribution to the public, remain outstanding and are held by more than one person shall send a copy of the documents referred to in section 155 to the Director
(a) not less than twenty-one days before each annual meeting of shareholders or forthwith after the signing of a resolution under paragraph 142(1)(b) in lieu of the annual meeting; and
(b) in any event not later than fifteen months after the last date when the last preceding annual meeting should have been held or a resolution in lieu of the meeting should have been signed.
(2) and (3) [Repealed, 1994, c. 24, s. 17]
(4) If a corporation referred to in subsection (1)
(a) sends to its shareholders, or
(b) is required to file with or send to a public authority or a stock exchange interim financial statements or related documents, the corporation shall forthwith send copies thereof to the Director.
(5) A subsidiary corporation is not required to comply with this section if
(a) the financial statements of its holding corporation are in consolidated or combined form and include the accounts of the subsidiary; and
(b) the consolidated or combined financial statements of the holding corporation are included in the documents sent to the Director by the holding corporation in compliance with this section.
(6) A corporation that fails to comply with this section is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars.
Proposed Wording
160. (1) A distributing corporation, any of the issued securities of which remain outstanding and are held by more than one person, shall send a copy of the documents referred to in section 155 to the Director
(a) not less than twenty-one days before each annual meeting of shareholders, or without delay after a resolution referred to in paragraph 142(1)(b) is signed; and
(b) in any event within fifteen months after the last preceding annual meeting should have been held or a resolution in lieu of the meeting should have been signed, but no later than six months after the end of the corporation's preceding financial year.
(2) A subsidiary corporation is not required to comply with this section if
(a) the financial statements of its holding corporation are in consolidated or combined form and include the accounts of the subsidiary; and
(b) the consolidated or combined financial statements of the holding corporation are included in the documents sent to the Director by the holding corporation in compliance with this section.
(3) A corporation that fails to comply with this section is guilty of an offence and is liable on summary conviction to a fine not exceeding five thousand dollars.
Bill Clause No. 78
CBCA Section No. new 161(2.1) and 161(5)
Topic : Financial Disclosure (Technical Amendments)
Sources of Proposed Law
Changes From Present Law
A) Add a new subsection immediately following 161(2) providing that a person's business partner includes a shareholder of that person.
B) Amend the French version of subsection (5) to replace the words "de ne causer aucun préjudice aux actionnaires" with the words " pas causer un préjudice injustifié aux actionnaires", and the word "pertinentes" with the word "indiquées".
Purpose of Change
A) To reflect the new definition of "auditor" in clause (1) of the Bill, which includes incorporated auditors.
B) subsection (5): This technical change clarifies the wording and application of the Act.
Similar Provincial Laws
Current Wording
161. (2) For the purposes of this section,
(a) independence is a question of fact; and
(b) a person is deemed not to be independent if he or his business partner
(i) is a business partner, a director, an officer or an employee of the corporation or any of its affiliates, or a business partner of any director, officer or employee of any such corporation or any of its affiliates,
(ii) beneficially owns or controls, directly or indirectly, a material interest in the securities of the corporation or any of its affiliates, or
(iii) has been a receiver, receiver-manager, liquidator or trustee in bankruptcy of the corporation or any of its affiliates within two years of his proposed appointment as auditor of the corporation.
161. (5) Le tribunal, s'il est convaincu de ne causer aucun préjudice aux actionnaires, peut, à la demande de tout intéressé, dispenser, même rétroactivement, le vérificateur de l'application du présent article, aux conditions qu'il estime pertinentes.
Proposed Wording
161. (2.1) For the purposes of subsection (2), a person's business partner includes a shareholder of that person.
161. (5) Le tribunal, s'il est convaincu de ne pas causer un préjudice injustifié aux actionnaires, peut, à la demande de tout intéressé, dispenser, même rétroactivement, le vérificateur de l'application du présent article, aux conditions qu'il estime indiquées.
Bill Clause No. 79
CBCA Section No. 163(1)
Topic : Financial Disclosure (Consequential Amendment)
Sources of Proposed Law
Changes From Present Law
Amend subsection 163(1) to refer to "a distributing corporation".
Purpose of Change
This change reflects the new definition of "distributing corporation" added by clause 1(5).
Similar Provincial Laws
Current Wording
163. (1) The shareholders of a corporation that is not required to comply with section 160 may resolve not to appoint an auditor.
Proposed Wording
163. (1) The shareholders of a corporation that is not a distributing corporation may resolve not to appoint an auditor.
Bill Clause No. 80
CBCA Section No. new 168(5.1) and 168(6)
Topic : Financial Disclosure (Shareholder Communications)
Sources of Proposed Law
Changes From Present Law
(A) Add a provision following s. 168(5) to:
(1) require the corporation to prepare a statement setting out the reason for changing auditors, and
(2) provide the new auditor with the right to comment on the reason for changing auditors.
(B) Amend s. 168(6) to give effect to the above changes.
Purpose of Change
The proposed changes are designed to address the concerns of auditors that they should not be summarily dismissed. Auditors play an important role in protecting shareholder interests. In the context of privately-held corporations, shareholders have the right to pass a resolution dispensing with the expense of having an auditor (see s. 163). In a situation where the auditor is not dispensed with, shareholders should be entitled to a formal explanation for the auditor's proposed replacement.
Similar Provincial Laws
Current Wording
168. (6) The corporation shall forthwith send a copy of the statement referred to in subsection (5) to every shareholder entitled to receive notice of any meeting referred to in subsection (1) and to the Director unless the statement is included in or attached to a management proxy circular required by section 150.
Proposed Wording
168. (5.1) In the case of a proposed replacement of an auditor, whether through removal or at the end of the auditor's term, the following rules apply with respect to other statements:
(a) the corporation shall make a statement on the reasons for the proposed replacement; and
(b) the proposed replacement auditor may make a statement in which he or she comments on the reasons referred to in paragraph (a).
(6) The corporation shall send a copy of the statements referred to in subsections (5) and (5.1) without delay to every shareholder entitled to receive notice of a meeting referred to in subsection (1) and to the Director, unless the statement is included in or attached to a management proxy circular required by section 150.
Bill Clause No. 81
CBCA Section No. new 170(3)
Topic : Financial Disclosure (Directors' Liability)
Sources of Proposed Law
Changes From Present Law
Provide in s. 170 that a person who in good faith makes an oral or written communication to the auditor is exonerated from civil liability.
Purpose of Change
This change will help protect individuals who make an oral or written communication to the auditor.
Similar Provincial Laws
Bank Act
Current Wording
N/A
Proposed Wording
170. (3) A person who in good faith makes an oral or written communication under subsection (1) or (2) is not liable in any civil proceeding arising from having made the communication.
Bill Clause No. 82
CBCA Section No. 171(2)
Topic : Financial Disclosure (Government Administration)
Sources of Proposed Law
Changes From Present Law
Any exemption made by the Director under the section would not be subject to the Statutory Instruments Act.
Purpose of Change
Under the Statutory Instruments Act, orders are required to be made by the Governor-in-Council. By removing the word "order", the Act is clarifying that the Director's authority to issue an exemption is not caught by the Statutory Instruments Act.
Similar Provincial Laws
Current Wording
171. (2) A corporation may apply to the Director for an order authorizing the corporation to dispense with an audit committee, and the Director may, if he is satisfied that the shareholders will not be prejudiced by such an order, permit the corporation to dispense with an audit committee on such reasonable conditions as he thinks fit.
171. (2) The Director may, on the application of a corporation, authorize the corporation to dispense with an audit committee, and the Director may, if satisfied that the shareholders will not be prejudiced, permit the corporation to dispense with an audit committee on any reasonable conditions that the Director thinks fit.
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