Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue 8 - Appendix 

1) Clause 42, CBCA, s. 113 & New Clause 160.1, CCA, s. 91 - A new subsection (s. 113(1.1)) is proposed that would require directors to notify the corporation of their change of address within 15 days of the event. Subsection 113(1) would also be amended to require a corporation to notify the Director of Corporations of any such change of address within 15 days of receipt of the notification from a director. Similar amendments are proposed in respect of section 91 of the CCA, by way of new clause 160.1. In addition, a new subsection 91(3) is proposed to parallel subsection 113(2) of the CBCA, which provides interested parties with the right to apply to a court to require that a corporation comply with subsection 113(1). A compar able provision was inadvertently omitted from the CCA.

2) Clause 55, CBCA, s. 132(4) & Clause 148, CCA, s. 48(3) - The words "Subject to the by-laws" should be replaced with the words "Unless the by-laws otherwise provide" in order to make the language consistent with other sections of the Act. In addition, the provision should be amended to clarify that a shareholder has the right to participate electronically in a meeting of shareholders only if the corporation has the technological means in place to provide for that type of participation.

3) Clause 59, CBCA, s.137(7) & Clause 153, CCA, 60(1) - This section provides that a corporation which refuses to include a shareholder proposal in a management proxy circular shall notify the person submitting the proposal of its intention to omit the proposal from the circular. Industry Canada and stakeholders agree that both statutes should specifically state that the notice of refusal should include a written statement of the reasons for refusal in order to ensure that shareholders are properly informed.

4) Clause 61, CBCA, s. 141(3) & Clause 154, CCA s. 65(3) - Since there may be occasions where a corporation may wish to hold a vote entirely by electronic means, including the votes to be cast by shareholders who are physically present, it was decided that both statutes should clarify that any vote referred to in s. 141(1)/65(1) may be held entirely by electronic means "unless the by-laws otherwise provide" (a more permissive standard). A new CBCA, s. 141(4) and CCA, s. 65(4) would be added to clarify that any person participating electronically in a meeting of shareholders under s. 132(4) or (5) / CCA, s. 48(3) or (3.1) and that is entitled to vote, may exercise their right to vote by electronic means.

5) Clause 68, CBCA, s. 149(2) & New Clause 184.1, CCA s. 165(2) - The words "fewer than fifty" will be replaced in both statutes with the words "fifty or fewer". This minor technical change is being made to ensure consistency with provincial securities legislation.

6) Clause 97, CBCA, s. 193 - The term going-private transaction (GPT) is a generic label which applies to a variety of corporate transactions that result in termination of shareholder interests with compensation but without consent and without a replacement of equivalent value in a participating security. Unlike provincial corporate law, the CBCA does not expressly permit GPTs and concerns have been raised that this vacuum may have caused confusion. Bill S-11 proposes to expressly allow GPTs and to incorporate by reference - in the regulations - standards of fairness for minority shareholders mandated by provincial securities regulators.

The proposed amendment was predicated on Ontario and Quebec harmonizing their GPT requirements. Before the Bill went to print, we were informed by both Ontario and Québec that they had agreed to harmonize their requirements. Bill S-11 was therefore tabled with a GPT regime that incorporated by reference a harmonized set of rules. We have since been informed that, although the Ontario rule and the Quebec policy are harmonized in substance, there are technical differences of application which makes incorporation by reference difficult if not impossible. As a result, under Bill S-11 a corporation would in practice be required to comply with inconsistent provincial requirements, which was not the intent of the provision and would cause great confusion in the marketplace.

Another issue is that the Québec requirements are contained in a policy statement rather than in the legislation, regulations or rules. Policy statements do not have the force of law. It would therefore be inappropriate for federal legislation to mandate compliance with a provincial policy statement since this would have the effect of elevating its legal status beyond that intended by its province of origin. In order to avoid these problems, the relevant motion would remove the incorporation by reference and the CBCA would merely permit GPTs that comply with applicable provincial requirements.

7) Clause 100, CBCA, s. 206.1(1) & New Clause 192.1- CCA, s. 176(1) - This change clarifies the time period within which shareholders, who wish to exercise their right to compel the acquisition of their shares by the offer or following a take-over bid, must require the offeror to acquire those shares.

8) Clause 102, CBCA, s. 209(4)(a), (6)(c) and (e) & Clause 206, CCA, s. 308(6)(a) and new 308(8) - The reference to "property" is being removed from CBCA, s. 209(4)(a) and CCA, s. 308(6)(a) in response to the submission of the Barreau du Québec that such reference together with the reference to "rights and privileges" in the same provision, creates an inference with respect to the amalgamation and continuance sections that the word "property" referred to there does not include rights and privileges. Subsection 209(6)(c) is being deleted to avoid confusion with the use of the word "creditor" in subsection 209(6)(a) and other sections in the CBCA that also refer to the term "creditor". The word "reconstituée" in the French version of s. 209(6)(e) is being replaced by the word "dissoute" as a result of a drafting error.