Part 15 Fundamental Changes (clauses 90-96)

A number of consequential amendments required as a result of amendments to other parts of the Act are included in this Part. In addition, several minor technical amendments, amendments to the French version and amendments designed to clarify and facilitate the efficient operation and administration of the statute are included.

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

Bill Clause No. 90
CBCA Section No. 186.1(4)
Topic  Fundamental Changes (Government Administration)

Sources of Proposed Law 

Changes From Present Law 
The Director would be allowed to set the form of the articles.

Purpose of Change 
See explanation: clause 3.

Similar Provincial Laws 

Current Wording 
186.1. (4) For the purposes of section 262, a notice referred to in subsection (3) is deemed to be articles that are in the prescribed form.

Proposed Wording 
186.1. (4) For the purposes of section 262, a notice referred to in subsection (3) is deemed to be articles that are in the form that the Director fixes .

Bill Clause No. 91
CBCA Section No. 187(3) and (11)
Topic : Fundamental Changes (Technical Amendments)

Sources of Proposed Law 

Changes From Present Law
(A) The Director would be allowed to set the form of the articles.

(B) Clarification in the French version of the meaning of "impracticable."

Purpose of Change
(A) Subsection (3): See explanation: clause 3.

(B) Subsection (11): This technical change clarifies the wording and application of the Act.

Similar Provincial Laws

Current Wording 
187. (3) Articles of continuance in prescribed form shall be sent to the Director together with the documents required by sections 19 and 106.

187. (11) Au cas où le directeur, saisi par une personne morale, décide qu'il n'y a pas lieu de supprimer la référence aux actions à valeur nominale ou au pair d'une catégorie ou d'une série qu'elle était autorisée à émettre avant sa prorogation en vertu de la présente loi, il peut, par dérogation au paragraphe 24(1), autoriser la personne morale à maintenir, dans ses statuts, la désignation de ces actions, même non encore émises, comme actions à valeur nominale ou au pair.

Proposed Wording 
187. (3) Articles of continuance in the form that the Director fixes shall be sent to the Director together with the documents required by sections 19 and 106.

187. (11) Au cas où le directeur, saisi par une personne morale, décide qu'il est pratiquement impossible de supprimer la référence aux actions à valeur nominale ou au pair d'une catégorie ou d'une série que celle-ci était autorisée à émettre avant sa prorogation en vertu de la présente loi, il peut, par dérogation au paragraphe 24(1), l' autoriser à maintenir, dans ses statuts, la désignation de ces actions, même non encore émises, comme actions à valeur nominale ou au pair.

Bill Clause No. 92
CBCA Section No. 188(1), (2), (2.1) and (8)
Topic : Fundamental Changes (Technical amendment)

Sources of Proposed Law 

Changes From Present Law
Subs. 188(1) and (2.1) would be replaced with new subsections 188(1) and (2) as a result of the repeal of the Investment Companies Act on July 31, 1996; The word "prescribed" is replaced with "that the Director fixes"in s. 188(8).

Purpose of Change 
This technical change would clarify the wording and application of the Act and remove a reference to a statute that was repealed in 1996. Subsection 2.1 is renumbered as (2).

Subsection 188(8): See explanation at clause 3.

Similar Provincial Laws 

Current Wording 
188. (1) Subject to subsections (2) and (10), a corporation

(a) that is authorized by the shareholders in accordance with this section, and

(b) that establishes to the satisfaction of the Director that its proposed continuance in another jurisdiction will not adversely affect creditors or shareholders of the corporation may apply to the appropriate official or public body of the other jurisdiction requesting that the corporation be continued as if it had been incorporated under the laws of that other jurisdiction.

(2) A corporation to which the Investment Companies Act applies shall not apply for continuance in another jurisdiction without the prior consent of the Minister of Finance.

(2.1) A corporation that is authorized by the shareholders in accordance with this section may apply to the appropriate Minister for its continuance under the Bank Act, the Canada Cooperative Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act.

(8) For the purposes of section 262, a notice referred to in subsection (7) is deemed to be articles that are in the prescribed form.

Proposed Wording 
188. (1) Subject to subsection (10), a corporation may apply to the appropriate official or public body of another jurisdiction requesting that the corporation be continued as if it had been incorporated under the laws of that other jurisdiction if the corporation

( a ) is authorized by the shareholders in accordance with this section to make the application; and

( b ) establishes to the satisfaction of the Director that its proposed continuance in the other jurisdiction will not adversely affect creditors or shareholders of the corporation.

(2) A corporation that is authorized by the shareholders in accordance with this section may apply to the appropriate Minister for its continuance under the Bank Act , the Canada Cooperatives Act , the Insurance Companies Act or the Trust and Loan Companies Act .

(8) For the purposes of section 262, a notice referred to in subsection (7) is deemed to be articles that are in the form that the Director fixes .

Bill Clause No. 93
CBCA Section No. 89(1), (b) and (c)
Topic : Fundamental Changes (Technical Amendments)

Sources of Proposed Law 

Changes From Present Law 
The words "the articles of a corporation are deemed to state" in s. 189(1) are no longer necessary. Reference to "hypothec" is added in s. 189(1)(b) and reference to s. 44 is removed in 189(1)(c).

Purpose of Change 
These technical changes clarify the wording and application of the Act and update the CBCA to match the terminology used in the new Civil Code of Québec regarding debt obligations. Reference to s. 44 is removed because this section is being repealed.

Similar Provincial Laws 

Current Wording 
189. (1) Unless the articles or by-laws of or a unanimous shareholder agreement relating to a corporation otherwise provide, the articles of a corporation are deemed to state that the directors of a corporation may, without authorization of the shareholders,

(b) issue, reissue, sell or pledge debt obligations of the corporation;

(c) subject to section 44, give a guarantee on behalf of the corporation to secure performance of an obligation of any person;

Proposed Wording 
189. (1) Unless the articles or by-laws of or a unanimous shareholder agreement relating to a corporation otherwise provide, the directors of a corporation may, without authorization of the shareholders,

( b ) issue, reissue, sell, pledge or hypothecate debt obligations of the corporation;

( c ) give a guarantee on behalf of the corporation to secure performance of an obligation of any person; and

Bill Clause No. 94
CBCA Section No. 190(1)(b), new (f) and (2.1)
Topic : Fundamental Changes (Going-Private Transactions)

Sources of Proposed Law 

Changes From Present Law 
(A) Amend par. 190(1)(b) by replacing, in the French version, the words "étendre" by "ajouter" and "certaines restrictions" by "toute restriction".

(B) Provide that the right to dissent under s. 190 is also available to shareholders of a corporation that carries out a going-private transaction.

(C) Provide that the right to dissent is also available to shareholders under s. 190(2) even where there is only one class of shares. This amendment applies to all situations where the right to dissent is or should be given.

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

(B) This amendment provides a shareholder who is being forced out of the corporation pursuant to a going-private transaction (in the case of a distributing corporation) or a squeeze-out transaction (in the case of a non-distributing corporation) with the same rights as shareholders undergoing other fundamental changes in the affairs of the corporation. (Going-private transaction and squeeze-out transaction - see clauses 1(5) and 97.)

(C) While the CBCA does not deal expressly with this issue, class votes under s. 176 may not be available to shareholders of a corporation with only one class of shares. Subsection 190(2) provides that a holder of shares of any class or series of shares entitled to vote under section 176 may dissent if the corporation resolves to amend its articles in a manner described in that section. The "manners" of amending the articles described in section 176 are very broad, including share consolidations and the creation of a new class of shares with equal or superior rights. Thus, shareholders entitled to vote under s. 176 have a broad right to dissent. If shareholders of a corporation with one class of shares cannot vote under s. 176, they have a much more limited right to dissent. This amendment addresses this imbalance by providing shareholders with a right to dissent even where there is only one class of shares.

Similar Provincial Laws 
Business Corporations Act (Ontario )

Current Wording 
190. (1) Subject to sections 191 and 241, a holder of shares of any class of a corporation may dissent if the corporation is subject to an order under paragraph 192(4)( d ) that affects the holder or if the corporation resolves to …

( b ) amend its articles under section 173 to add, change or remove any restriction on the business or businesses that the corporation may carry on; …

Proposed Wording 
190. (1) b) de modifier ses statuts, conformément à l'article 173, afin d' ajouter , de modifier ou de supprimer toute restriction à ses activités commerciales;

( f ) carry out a going-private transaction or a squeeze-out transaction.

190. (2.1) The right to dissent described in subsection (2) applies even if there is only one class of shares.

Bill Clause No. 95
CBCA Section No. 191(4)
Topic : Fundamental Changes (Government Administration)

Sources of Proposed Law 

Changes From Present Law 
The Director would be allowed to set the form of the articles.

Purpose of Change 
See explanation: clause 3.

Similar Provincial Laws 

Current Wording 
191. (4) After an order referred to in subsection (1) has been made, articles of reorganization in prescribed form shall be sent to the Director together with the documents required by sections 19 and 113, if applicable.

Proposed Wording 
191. (4) After an order referred to in subsection (1) has been made, articles of reorganization in the form that the Director fixes shall be sent to the Director together with the documents required by sections 19 and 113, if applicable.

Bill Clause No. 96
CBCA Section No. 192(1), new (f.1) and 192(3) and (6)
Topic : Fundamental Changes (Going-Private Transactions)

Sources of Proposed Law 

Changes From Present Law 
(A) Expand the definition of "arrangement" set out in s. 192(1) to include going-private transactions and squeeze-out transactions.

(B) Clarification in the French version of the meaning of "impracticable".

(C) The Director would be allowed to set the form of the articles.

Purpose of Change 
(A) Paragraph 192(1)(f.1): This amendment will allow a corporation to carry out a going-private transaction pursuant to terms and conditions prescribed by the court (see s. 192(4)), where it is not practicable to do so under any other provision of the Act (see clause 97).

(B) Subsection (3): This technical change clarifies the wording and application of the Act.

(C) Subsection (6): See explanation: clause 3.

Similar Provincial Laws  

Current Wording 
192. (1) In this section, "arrangement" includes…

( f ) an exchange of securities of a corporation held by security holders for property, money or other securities of the corporation or property, money or securities of another body corporate that is not a take-over bid as defined in section 194;

(3) Lorsque la société, qui n'est pas insolvable, n'est pas en mesure d'opérer, en vertu d'une autre disposition de la présente loi, une modification de structure équivalente à un arrangement, elle peut demander au tribunal d'approuver, par ordonnance, l'arrangement qu'elle propose.

(6) After an order referred to in paragraph (4)(e) has been made, articles of arrangement in prescribed form shall be sent to the Director together with the documents required by sections 19 and 113, if applicable.

Proposed Wording 
192. (1)( f ) an exchange of securities of a corporation for property, money or other securities of the corporation or property, money or securities of another body corporate;

( f .1) a going-private transaction or a squeeze-out transaction in relation to a corporation ;

(3) Lorsqu'il est pratiquement impossible pour la société qui n'est pas insolvable d'opérer, en vertu d'une autre disposition de la présente loi, une modification de structure équivalente à un arrangement, elle peut demander au tribunal d'approuver, par ordonnance, l'arrangement qu'elle propose.

(6) After an order referred to in paragraph (4)( e ) has been made, articles of arrangement in the form that the Director fixes shall be sent to the Director together with the documents required by sections 19 and 113, if applicable.