1998/99 Legislative Session: 3rd Session, 36th Parliament
THIRD READING


The following electronic version is for informational purposes only.
The printed version remains the official version.


BILL 85 -- 1999

COMPANY ACT

... continued ...

 

Part 3 -- Finance

Division 1 -- Authorized Share Structure

Authorized share structure

50 (1) The authorized share structure of a company must consist of one or both of the following kinds of shares:

(a) shares without par value;

(b) shares with par value.

(2) Each class of shares must consist of shares of the same kind and, in the case of a class of shares consisting of shares with par value, shares having the same par value.

Description of authorized share structure

51 (1) A company

(a) may, if the company is authorized, by its notice of articles, to issue only one class of shares, give an identifying name to that class of shares,

(b) must, if the company is authorized, by its notice of articles, to issue more than one class of shares, give an identifying name to each authorized class of shares, and

(c) must, if the company is authorized, by its notice of articles, to issue more than one series of shares, give an identifying name to each authorized series of shares.

(2) A company's notice of articles must

(a) set out any identifying name given to a class or series of its shares under subsection (1),

(b) set out, for each class and series of shares, the maximum number of the shares of that class or series of shares that the company is authorized to issue, or state that there is no maximum number,

(c) if the authorized share structure includes shares with par value, set out the par value of those shares, and

(d) if the authorized share structure includes shares without par value, state that those shares are without par value.

Change in authorized share structure

52 (1) Subject to subsection (2), a company may alter its notice of articles to change its authorized share structure

(a) by creating new classes of shares,

(b) by creating new series of shares in accordance with section 59,

(c) by increasing, reducing or eliminating the maximum number of shares of any class or series of shares that the company, by its notice of articles, is authorized to issue,

(d) by establishing a maximum number of shares that the company is authorized to issue of any class or series of shares for which no maximum is established,

(e) if the company is authorized to issue shares of a class of shares with par value,

(i) subject to section 70, by decreasing the par value of those shares, or

(ii) by increasing the par value of those shares if none of the shares of that class of shares are allotted or issued, and

(f) by eliminating any class or series of shares if none of the shares of that class or series of shares are allotted or issued.

(2) A company must not alter its notice of articles under subsection (1) unless

(a) it has been authorized to do so,

(i) by the type of resolution required or permitted by this Act,

(ii) if this Act does not specify the type of resolution required or permitted, by the type of shareholders' resolution required or permitted by its articles, or

(iii) if neither this Act nor the articles specify the type of resolution required or permitted, by a special resolution, and

(b) the notice of articles is altered in accordance with section 276 to reflect that change.

Subdivision, consolidation and change of shares

53 (1) Subject to this section and sections 50 (2) and 51, a company may

(a) subdivide all or any of its unissued, or fully paid issued, shares with par value into shares of smaller par value,

(b) subdivide all or any of its unissued, or fully paid issued, shares without par value,

(c) consolidate all or any of its unissued, or fully paid issued, shares with par value into shares of larger par value,

(d) consolidate all or any of its unissued, or fully paid issued, shares without par value,

(e) change all or any of its unissued, or fully paid issued, shares with par value into shares without par value,

(f) change all or any of its unissued shares without par value into shares with par value, or

(g) alter the name of all or any of its shares, whether issued or unissued.

(2) A company must not subdivide or consolidate shares with par value under subsection (1) (a) or (c) unless the product obtained by multiplying the number of shares by their par value is the same, disregarding fractions, both before and after the subdivision or consolidation.

(3) Subject to section 275 (2) and subsections (4) and (5) of this section, a company that wishes to effect a change contemplated by subsection (1) must change its authorized share structure to reflect that change.

(4) Section 52 (2) applies to any change to a company's authorized share structure under subsection (3) of this section.

(5) A company need not change its authorized share structure in accordance with subsection (3) to reflect a change contemplated by subsection (1) if that change is

(a) a subdivision or consolidation of shares without par value in respect of which the company has not set limits under section 51 (2) (b),

(b) a subdivision or consolidation of shares without par value that does not impact on any limits set under section 51 (2) (b), or

(c) a change of shares of one kind of shares into shares of the other kind of shares that does not impact on any limits set under section 51 (2) (b).

(6) No subdivision, consolidation, change or alteration under subsection (1) as to any part of the issued shares of any class or series of shares is valid unless

(a) any consent required by section 60 is given, and

(b) the alteration is consented to, by a resolution of shareholders who hold shares of that class or series of shares and whose shares are not to be changed,

(i) passed by 3/4 of the votes cast by those shareholders at a meeting held to consider the resolution if at least 21 days' notice of the meeting and of the intention to propose the resolution has been given to all of those shareholders, or

(ii) passed by being consented to in writing by all of those shareholders.

(7) A company may, in conjunction with the subdivision or consolidation of shares referred to in this section, convert fractional shares within the class or series of shares being subdivided or consolidated, into whole shares in accordance with section 81.

Alterations to authorized share structure, capital or shares

54 (1) If a company proposes alterations to its authorized share structure, capital or shares,

(a) each alteration must be authorized by the kind of resolution required by this Act or the articles, as the case may be, but may be authorized by one or more of that kind of resolution, and

(b) the consents of shareholders holding shares of a class or series of shares affected by any or all of the proposed alterations may be expressed in one or more separate resolutions of those shareholders.

(2) If a company proposes, in a single resolution, to authorize more than one alteration to its authorized share structure, capital or shares, and if different kinds of resolutions are, by this Act or the articles, as the case may be, required to authorize the different alterations proposed, the single authorizing resolution must be passed as whichever of those different kinds of resolutions requires the highest percentage of votes to pass.

Division 2 -- Share Attributes

Shares of the company

55 (1) The par value of shares with par value must be expressed in units of a currency and, if the currency is not Canadian currency, the type of currency must be stated.

(2) A share in a company is personal estate.

Contents of share certificate

56 (1) A company must state on the face of each share certificate issued by it after the coming into force of this Act

(a) the name of the company and the words "A British Columbia Company Act company",

(b) the name of the person to whom the share certificate is issued,

(c) the number, class of shares and, if applicable, series of shares represented by the share certificate and whether those shares are with or without par value and, if with par value, that value,

(d) the date of issue of the share certificate, and

(e) the number or other designation by which the share certificate is identified.

(2) There must be stated on each share certificate issued after the coming into force of this Act for partly paid shares issued before October 1, 1973, the amount paid up on each of the shares represented by the share certificate.

(3) Subject to subsection (4), each share certificate issued on or after October 1, 1973 for shares to which special rights or restrictions are attached must contain or have attached to it a full text of those special rights or restrictions.

(4) Instead of complying with subsection (3), a company may keep at its records office or registered office a copy of the full text of the special rights or restrictions referred to in that subsection, in which event, the company must

(a) provide a free copy of that full text to any shareholder who requests one, and

(b) state on each share certificate representing a share to which those special rights or restrictions are attached that

(i) there are special rights or restrictions attached to the share, and

(ii) a free copy of the full text of those special rights or restrictions may be obtained at the records office or the registered office, as the case may be.

(5) Without limiting subsection (1), each share certificate issued by a company after the coming into force of this Act must be in registered form.

Special rights or restrictions

57 (1) Subject to section 60, a company may

(a) create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued, or

(b) vary or repeal any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued.

(2) The special rights or restrictions attaching to a share are,

(a) for a share of a pre-existing company that has not filed with the registrar a notice of articles and has not altered its articles in accordance with section 367 or 442, the special rights or restrictions set out for that share in the company's memorandum or articles, or

(b) for a share of any other company, the special rights or restrictions set out for that share in the company's articles.

(3) Special rights or restrictions are not created or attached under subsection (1) (a) and special rights or restrictions attached to a share are not varied or repealed under subsection (1) (b) until

(a) the articles are altered to reflect the creation, attachment, variation or repeal, and

(b) the alteration to the articles takes effect in accordance with section 277 (4).

Classes of shares

58 (1) Subject to sections 275 to 277, a company may, in its notice of articles and articles, or, if the company is a pre-existing company that has not filed with the registrar a notice of articles and has not altered its articles in accordance with section 367 or 442, in its memorandum,

(a) provide for a single class of shares, or

(b) provide for different classes of shares.

(2) If a company has provided for different classes of shares under subsection (1) (b), the special rights or restrictions, if any, attached to shares of a class of shares apply, subject to section 59, to each share of that class of shares.

(3) Nothing in this Act prevents a company from attaching the same special rights or restrictions to shares of more than one class or series of shares.

Shares in series

59 (1) Special rights or restrictions may be attached to the shares of a class of shares, at the time of or at any time after the recognition of the company,

(a) to authorize the issue of shares of that class of shares in one or more series of shares, and

(b) if those special rights or restrictions are attached to shares of a class of shares, to provide to the directors the right, by a directors' resolution, to authorize an alteration to the articles and notice of articles of the company to create and name one or more series of shares of that class of shares, and, if there are no outstanding issued shares of that series of shares, to

(i) alter the name of the shares of that series of shares,

(ii) establish or alter the maximum number of shares of that series of shares that the company is authorized to issue, or determine that there is no maximum number, and

(iii) subject to subsections (3) and (4), attach or alter special rights and restrictions to the shares of the series of shares.

(2) Any rights provided to directors under subsection (1) (b) are in addition to the rights available to shareholders under this Act to authorize or effect the alterations referred to in subsection (1) (b) in relation to shares of a class of shares to which are attached the special rights or restrictions referred to in subsection (1) (a).

(3) If there are outstanding issued shares of a series of shares, the alterations contemplated by subsection (1) (b) (i) to (iii) in relation to that series of shares must be effected in accordance with sections 52, 53, 277 and, if applicable, section 60.

(4) Each share in a series of shares must have attached to it the same special rights or restrictions as are attached to every other share in that series of shares, and the special rights or restrictions attached to shares of a series of shares must be consistent with the rights and special rights or restrictions attached to shares of the class of shares of which the series of shares is a part.

(5) If cumulative dividends in respect of a series of shares are not paid in full, the shares of all series of shares of the same class of shares must, in a payment of accumulated dividends, participate rateably in accordance with the amounts that would be payable on those shares if all the accumulated dividends were paid in full.

(6) If amounts payable on a dissolution of the company, or on the occurrence of any other event that entitles the shareholders holding the shares of all series of shares of the same class of shares to a return of capital, are not paid in full, the shares of all series of shares of the same class of shares must, in a return of capital in respect of that class of shares, participate rateably in accordance with the amounts that would be payable on the return of capital if all amounts so payable were paid in full.

(7) No special rights or restrictions attached to a series of shares confer on the series priority over any other series of shares of the same class of shares then outstanding respecting

(a) dividends, or

(b) a return of capital

(i) on the dissolution of the company, or

(ii) on the occurrence of another event that entitles the shareholders holding the shares of all series of shares of the same class of shares to a return of capital.

No interference with class or series rights without consent

60 A right or special right attached to issued shares must not be prejudiced or interfered with under this Act or under the memorandum, notice of articles or articles unless,

(a) if the right or special right is attached to shares of a class of shares, shareholders holding shares of that class of shares, in a separate vote of those shareholders, consent by a special resolution, or

(b) if the right or special right is attached to shares of a series of shares, shareholders holding shares of that series of shares, in a separate vote of those shareholders, consent by a special resolution.

Division 3 -- Issue and Allotment of Shares

Issue and allotment of shares

61 Subject to sections 62, 63 and 65 and to the company's articles and notice of articles or memorandum, as the case may be, shares of the company may be issued at the times, to the persons and for the issue price that the directors may determine.

Consideration for shares

62 (1) In this section, "charter", in relation to a company, means the articles of the company and includes, for a pre-existing company that has not complied with section 367 (2) or 442 (1), the company's memorandum.

(2) The issue price for a share without par value must be set by the persons and in the manner set out in the company's charter or, if the charter does not set out the persons by whom and the manner in which the issue price is to be set,

(a) in the case of a pre-existing company, by a special resolution, or

(b) in any other case, by a directors' resolution.

(3) Subject to section 66, the issue price for a share with par value that is issued or allotted by a company must be equal to or greater than the par value of the share.

(4) Subject to sections 63 (7) and 64 (2), the capital of a company is,

(a) with respect to shares without par value, an amount equal to at least the aggregate of

(i) the price or consideration paid to the company for those shares that are issued, and

(ii) the amounts, if any, that have been added to that capital by a directors' resolution or an ordinary resolution, and

(b) with respect to shares with par value, an amount equal to the aggregate of the par values of those shares that are issued.

Payment of consideration for shares

63 (1) Without limiting the meaning to be attributed to these terms elsewhere in this Act, in this section:

"money" means

(a) a medium of exchange authorized by the government of Canada or by a foreign government as part of its currency,

(b) a cheque, within the meaning of section 165 of the Bills of Exchange Act (Canada),

(c) a money order, bank draft or similar instrument issued by a financial institution and requiring the financial institution to pay to the bearer or to a named payee the sum of money stated on the instrument, or

(d) any other prescribed form of payment;

"property" does not include

(a) a record evidencing indebtedness of a person to whom shares are to be issued, or

(b) a record evidencing indebtedness of any other person who is not dealing at arm's length, within the meaning of the Income Tax Act (Canada), with a person to whom shares are to be issued.

(2) A share must not be issued until it is fully paid.

(3) A share is fully paid when the value of the consideration received by the company equals or exceeds the issue price set for the share under section 62.

(4) For the purposes of subsection (3), the required consideration must be provided to the company by one or more of the following:

(a) past services performed for the company;

(b) property;

(c) money.

(5) The directors must not attribute to past services or property referred to in subsection (4) a value that exceeds the fair market value of those past services or that property.

(6) In determining whether the aggregate value of the past services, property and money referred to in subsection (4) equals or exceeds the issue price set for the share under section 62, the directors may take into account reasonable charges and expenses that

(a) have been incurred by the person providing the past services, property and money, and

(b) are reasonably expected to benefit the company.

(7) Shares issued by way of dividend are deemed to be fully paid and the issue price for those shares, and the capital of the company with respect to those shares, is the amount declared by the directors to be the amount of the dividend.

Deemed receipt of payment

64 (1) Sections 62 and 63 (1) and (3) to (6) do not apply to

(a) a share issued by way of dividend, or

(b) a conversion or exchange of shares under

(i) section 73,

(ii) an amalgamation agreement under Division 3 of Part 9, or

(iii) an arrangement under Division 5 of Part 9.

(2) If shares that are converted or exchanged are fully paid, the shares issued under the conversion or exchange are deemed to be fully paid and the capital of the company with respect to those shares is the amount that was the capital of the company with respect to the shares that were converted into or exchanged for those shares.

Power of pre-existing company to allot and issue shares

65 (1) Unless relieved from the obligation to do so by its articles, the directors of a pre-existing company that was not, immediately before the coming into force of this Act, a reporting company within the meaning of the Companies Act, 1973 must, before allotting shares,

(a) if the company has not provided for different classes of shares, offer to each shareholder the proportion of the shares to be allotted that the number of shares held by that shareholder bears to the total number of outstanding issued shares of the company, or

(b) if the company has provided for different classes of shares,

(i) offer to each shareholder who holds shares of the class of shares to be allotted the proportion of the shares to be allotted that the number of shares of that class of shares held by that shareholder bears to the total number of outstanding issued shares of that class of shares, and

(ii) if any shares remain after the expiry of the offer referred to in subparagraph (i), offer to each shareholder of the company who did not receive an offer under subparagraph (i), at a price per share not less than the price per share contained in the offer made under subparagraph (i) and on other terms that are substantially the same as the terms contained in that offer, the proportion of the remaining shares that the number of shares held by that shareholder bears to the total number of outstanding issued shares of the company that are not of that class of shares.

(2) If a pre-existing company intends to alter its articles to relieve its directors from the obligation imposed on them by subsection (1), a shareholder of the company may give a notice of dissent, under Division 2 of Part 8, to the company in respect of the resolution that is proposed to authorize that alteration.

(3) Subsection (1) does not apply to

(a) an allotment of shares to be issued for a consideration all or substantially all of which is other than money, or

(b) an allotment of shares under

(i) rights of conversion or exchange attached to securities of the company,

(ii) an amalgamation under Division 3 of Part 9,

(iii) an arrangement under Division 5 of Part 9,

(iv) a dividend payable in shares,

(v) an employee share ownership plan registered under Part 1 of the Employee Investment Act, or

(vi) an employee venture capital plan registered under Part 2 of the Employee Investment Act.

(4) An offer under subsection (1) must be made by notice that includes the time period within which the offer may be accepted, which time period must extend for at least 7 days after the offer is received.

(5) Subject to subsection (6), if an offer for shares under subsection (1) (a) or (b) (ii) has expired without having been accepted by, or has been declined in writing by, the shareholder to whom the offer was made, the company may, for a period starting on the earlier of the expiry date for the offer and the date on which it is declined in writing and ending on the date that is 3 months after the expiry date for the offer, offer those shares to the persons and in the manner the company may decide.

(6) The directors may make an offer under subsection (5) if

(a) there are no other shareholders who should first receive an offer for those shares, and

(b) the price per share in the offer made under subsection (5) is not less than the price per share contained in the offer made to the shareholder under subsection (1) and the other terms of the offer made under subsection (5) are substantially the same as the terms contained in the offer made to the shareholder.

(7) A shareholder may not waive generally the right to be offered shares referred to in subsection (1).

(8) Nothing in subsection (7) prevents a shareholder from waiving, in writing, the right to be offered a specified allotment of shares.

(9) A waiver referred to in subsection (8) is effective whether given before or after the allotment or issue of the shares.

(10) Nothing in this section invalidates an allotment or issue of shares to a good faith purchaser as that term is defined in section 106 (1).

Commissions and discounts

66 (1) The directors may authorize the company to pay a reasonable commission or allow a reasonable discount to any person in consideration of that person

(a) purchasing or agreeing to purchase shares of the company from the company or from any other person, or

(b) procuring or agreeing to procure purchasers for any of those shares.

(2) In this Act, reference to the consideration received for a share,

(a) if a commission has been paid with respect to the share, means the gross amount of the consideration received without taking into account any amount paid by way of commission, and

(b) if a discount has been allowed with respect to the share, means the gross amount of the consideration before the discount is subtracted from that amount.

Validation of creation, issue or allotment

67 (1) The creation, issue or allotment of shares by a company, including on the exercise of conversion or exchange rights attached to shares or other securities of the company, may be validated under this section if

(a) the creation, issue or allotment of those shares is invalid,

(b) the terms of the issue or allotment are inconsistent with a provision, applicable to the company, of

(i) this Act, a former Companies Act or any other Act, or

(ii) the memorandum, notice of articles or articles of the company, or

(c) the exercise of any conversion or exchange rights attached to the shares or other securities results in the company having created, issued or allotted on the conversion or exchange, either generally or out of any class or series of shares, a number of shares that exceeds the maximum number of those shares that the company is authorized to issue under its notice of articles or memorandum.

(2) In a case to which subsection (1) applies,

(a) the court, on application by any person whom the court considers to be an appropriate person to bring the application, including the company, a shareholder holding any of those shares or a creditor of the company, and on being satisfied that in all of the circumstances it is just and equitable to do so, may make one or more of the following orders:

(i) an order that validates the creation, issue or allotment of those shares;

(ii) an order that confirms the terms of the issue or allotment of those shares as if the terms of the issue or allotment were consistent with a provision, applicable to the company, of this Act, a former Companies Act or any other Act or with the memorandum, notice of articles or articles of the company, as the case may be;

(iii) an order that validates the conversion or exchange of those shares or other securities and confirms the existence of the shares created, issued or allotted on the conversion or exchange, or

(b) the company may, by a unanimous resolution of all of the shareholders of the company, whether or not their shares otherwise carry the right to vote, passed after the creation, issue or allotment of shares, do one or more of the following:

(i) validate the creation, issue or allotment of those shares;

(ii) confirm the terms of the issue or allotment of those shares as if the terms of the issue or allotment were consistent with the company's articles and notice of articles or memorandum, as the case may be;

(iii) validate the conversion or exchange of those shares or other securities and confirm the existence of the shares created, issued or allotted on the conversion or exchange.

(3) The creation, issue or allotment of shares is confirmed and validated under this section as follows:

(a) for confirmation and validation authorized by a court order under subsection (2) (a),

(i) if the effect of the confirmation or validation is to alter any of the information contained in the company's notice of articles, the company must file a copy of the entered order with the registrar, and the creation, issue or allotment of shares is confirmed and validated in accordance with section 276 (2) (c), and section 276 (2) (d) and (e) applies, or

(ii) if the company has not filed a notice of articles, or if the confirmation or validation does not alter any of the information contained in the company's notice of articles, the creation, issue or allotment of shares is confirmed and validated,

(A) if neither the date nor the time is specified by the order, on the pronouncement of the order,

(B) if a date but no time is specified, at the beginning of the date specified, or

(C) if both a date and time are specified, at the date and time specified, or

(b) for confirmation and validation authorized by a unanimous resolution referred to in subsection (2) (b),

(i) if the effect of the unanimous resolution is to alter the authorized share structure of a company or to alter any of the other information contained in the company's notice of articles, the company must file with the registrar a notice of articles, if one has not already been filed for the company, and a notice of alteration in the prescribed form to alter its notice of articles in accordance with the unanimous resolution, and the creation, issue or allotment of shares is confirmed and validated in accordance with section 276 (5) (a), and section 276 (8) applies, or

(ii) in any other case, the creation, issue or allotment of shares is confirmed and validated when a copy of the resolution, bearing confirmation that it is a unanimous resolution, is deposited in the records office of the company.

(4) When the creation, issue or allotment of shares is confirmed and validated under this section,

(a) if the confirmation and validation is made in respect of the creation, issue or allotment of shares, the applicable shares are deemed to have been validly created, issued or allotted, as the case may be, on the terms of the issue or allotment of them, or

(b) if the confirmation and validation is made in respect of a conversion or exchange of shares or other securities, the conversion or exchange is deemed to have been validly exercised and effected, and the shares created, issued or allotted on the conversion or exchange are deemed to have been validly created, issued or allotted, as the case may be, on the terms of the issue or allotment of them.

Fractional shares

68 (1) A company may issue a fractional share in accordance with this Part.

(2) A person holding a fractional share issued by a company after the coming into force of this Act is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share, unless

(a) the fractional share results from a consolidation of shares, or

(b) the articles of the company provide otherwise.

Dividends

69 (1) Unless its memorandum or articles provide otherwise, a company may pay a dividend

(a) by issuing fully paid shares or fractional shares of the company by way of dividend, and

(b) subject to subsection (2), in property, including in warrants and in money.

(2) A company may declare or pay a dividend unless

(a) there are reasonable grounds for believing that the company is, or the payment of the dividend would render the company, insolvent, or

(b) an enactment or the charter of the company provides otherwise.

(3) On application of a director of a company, the court may declare whether the declaration or payment of a dividend by the company would contravene subsection (2).

(4) A dividend is not invalid merely because it was declared or paid in contravention of subsection (2).

Reduction of capital

70 Subject to section 72, a company may reduce its capital,

(a) by a special resolution, if the capital is reduced to an amount that is not less than the realizable value of the company's assets less its liabilities, or

(b) in any other case, if it is authorized to do so by court order.

Exception to section 70

71 A company may, on the terms, if any, and in the manner, if any, provided in its memorandum or articles, do any of the following without obtaining the special resolution or order referred to in section 70 and without changing its authorized share structure:

(a) redeem or purchase shares under section 74 or 245 (3) (g) or under Division 2 of Part 8;

(b) accept a surrender of shares by way of gift or for cancellation;

(c) convert fractional shares into whole shares in accordance with section 81

(i) under section 53 (7), or

(ii) on a redemption, purchase or surrender referred to in paragraph (a) or (b) of this section.

Effective date of resolution

72 A resolution of a company under section 70 (a) to reduce capital does not take effect,

(a) if the company is a company registered under the Small Business Venture Capital Act, until it has paid the money payable by it to the minister under section 22 of that Act, or

(b) if the company is a company registered under Part 2 of the Employee Investment Act, until it has obtained confirmation from the minister that all of the money payable to the minister under sections 31 and 32 of that Act have been paid.

Division 4 -- Conversion, Exchange or Acquisition of Shares by Company

Conversion or exchange

73 If shares or other securities of a company have rights of conversion or exchange attached to them, the company may, in accordance with those rights,

(a) convert or exchange any of those shares or other securities, other than shares that are not fully paid, into or for unissued shares, and

(b) reissue shares converted or exchanged under this section as if they had never been issued.

Company may redeem or purchase

74 Subject to sections 76 to 79, a company may

(a) redeem, on the terms and in the manner provided in its memorandum or articles, any of its issued shares that has a right of redemption attached to it, and

(b) if it is so authorized by, and subject to any restriction in, its memorandum or articles, purchase any of its shares.

Purchase of fractional shares

75 Subject to section 76, a company may purchase its fractional shares and sections 80 and 81 apply to any fractional shares so purchased.

Purchase or acquisition prohibited when insolvent

76 (1) Without limiting section 265, a company must not make a payment or provide any other consideration to purchase or otherwise acquire any shares issued by it if there are reasonable grounds for believing that the company is, or that making the payment or providing the consideration would render the company, insolvent.

(2) On the application of a director of the company, the court may declare whether a purchase or other acquisition of shares by the company would contravene subsection (1).

(3) A purchase or acquisition of shares is not invalid merely because it is in contravention of subsection (1).

Redemption prohibited when insolvent

77 (1) Without limiting section 265, a company must not redeem any shares issued by it if there are reasonable grounds for believing that the company is, or that the redemption would render the company, insolvent.

(2) On the application of the director of the company, the court may declare whether a redemption of shares by the company would contravene subsection (1).

(3) A redemption of shares is not invalid merely because it is in contravention of subsection (1).

Shares of pre-existing company to be purchased rateably

78 (1) Subject to subsection (2), before a pre-existing company purchases any shares issued by it, it must make an offer, to every shareholder who holds shares of the class or series of shares to be purchased, to purchase rateably from those shareholders the number of shares of that class or series of shares that the company wishes to purchase.

(2) Subsection (1) does not apply if

(a) the purchase is made through a securities exchange,

(b) the shares are being purchased

(i) from an employee or former employee of the company or of an affiliate of the company, or

(ii) in the case of shares beneficially owned by the employee or former employee, from the registered owner of the shares,

(c) in respect of a specific share purchase, the company is, for that purchase, relieved of its obligation to comply with this section by a special resolution or, if the shares to be purchased under this paragraph are of one or more classes or series of shares, by separate special resolutions of the shareholders holding shares of the classes or series of shares from which the shares are to be purchased,

(d) the memorandum or articles of the company provide otherwise,

(e) there are reasonable grounds for believing that the purchase price for the shares being purchased is not more than the fair market value of those shares, or

(f) the purchase is one made under section 75, 245 (3) (g), Division 2 of Part 8 or Division 5 of Part 9.

(3) Nothing in this section prevents a shareholder from waiving, in writing, the right to receive an offer to purchase the shareholder's shares under subsection (1).

(4) A waiver referred to in subsection (3) is effective whether given before or after the purchase by the company of any of its shares.

Shares of pre-existing company to be redeemed rateably

79 Unless the memorandum or articles provide otherwise, a pre-existing company that proposes to redeem some but not all of the shares of a particular class or series of shares, must ensure that the redemption is made rateably among every shareholder who holds shares of the class or series of shares to be redeemed.

Cancellation and retention of shares

80 (1) A company that has redeemed, purchased or otherwise acquired, by surrender or otherwise, any of the shares issued by it

(a) must cancel the shares if required to do so by

(i) the articles,

(ii) the memorandum, or

(iii) a resolution of the directors,

(b) may otherwise cancel the shares, or

(c) must, if the shares are not cancelled under paragraph (a) or (b), retain the shares.

(2) A share is cancelled for the purposes of this Act if

(a) the share certificate, if any, is marked in a manner that indicates that the share is no longer an outstanding issued share, and

(b) the company's records are altered to reflect that the share is no longer an outstanding issued share and that the number of issued shares has been reduced accordingly.

(3) A company that retains a share under subsection (1) (c) must alter its records to reflect that the company is the shareholder of that share.

(4) If shares of a reporting issuer or of a company that was, immediately before the coming into force of this Act, a reporting company within the meaning of the Companies Act, 1973, have been held in escrow under an escrow agreement required by the executive director and are surrendered for cancellation under that agreement, the company must not return any property or other consideration paid to it for those shares unless

(a) the return is first authorized by a special resolution, or

(b) the terms of the escrow agreement

(i) were approved by a special resolution before the allotment of the shares, and

(ii) require the return.

(5) A company may, unless the memorandum or articles provide otherwise,

(a) reissue a share that it has cancelled under subsection (1) (a) or (b), and

(b) sell, gift or otherwise dispose of a share that it has retained under subsection (1) (c).

(6) A company must not vote or pay a dividend or make any other distribution in respect of a share that it has retained under subsection (1) (c).

Elimination of fractional shares

81 (1) If fractional shares are to be converted into whole shares under section 53 (7) or 71 (c), each fractional share that is less than 1/2 of a share must be eliminated and each fractional share that is at least ½ of a share must be changed to a whole share.

(2) A change of a fractional share to a whole share under subsection (2) does not constitute an issue of a share within the meaning of Division 3.

Division 5 -- Purchase of Shares by Subsidiary

Definitions

82 In this Division:

"parent corporation" means the corporation

(a) of which the purchasing subsidiary is a subsidiary, and

(b) the shares of which the purchasing subsidiary wishes to purchase;

"purchasing subsidiary" means a company that wishes to purchase shares of a corporation of which it is a subsidiary.

Subsidiary may purchase shares of parent

83 Subject to section 84 and unless its articles provide otherwise, a subsidiary may purchase or otherwise acquire shares of a corporation of which it is a subsidiary.

Purchase prohibited when insolvent

84 (1) A subsidiary must not purchase any of the shares of its parent corporation if there are reasonable grounds for believing that the subsidiary is, or the purchase would render the subsidiary, insolvent.

(2) On the application of a director of the parent corporation or of the purchasing subsidiary, the court may declare whether a purchase of shares of the parent corporation by the purchasing subsidiary would contravene subsection (1).

(3) A purchase by a subsidiary of shares of its parent corporation is not invalid merely because it was made in contravention of subsection (1).

Division 6 -- Liability of Shareholders

Liability of shareholders

85 (1) No shareholder of a company is personally liable for the debts, obligations or acts of the company.

(2) A shareholder is not, in respect of the shares held by that shareholder, personally liable for more than the amount actually agreed to be paid for those shares.

(3) The liability of a shareholder under subsection (2) is limited to the unpaid amount of the consideration for which that shareholder's shares were issued by the company.

(4) Money payable by a shareholder to the company under the memorandum or articles is a debt due from the shareholder to the company as if it were a debt due or acknowledged to be due by instrument under seal.

Liability of a pre-existing company for partly paid shares

86 Shares of a pre-existing company that were not fully paid on the day on which this Act comes into force, and the shareholders holding those shares, remain subject to those provisions of the Companies Act, R.S.B.C. 1960, c. 67, that relate to the following and to those provisions of the articles of the company that relate to the following:

(a) the payment of calls by and dividends to, and the liability of, the shareholder holding shares that are not fully paid;

(b) the enforcement of the liability referred to in paragraph (a).

Shareholder's liability may be extinguished or reduced

87 (1) Subject to subsection (2), a company may, by a special resolution, extinguish or reduce a shareholder's liability in respect of an amount unpaid on any share that was issued before October 1, 1973.

(2) Unless the court orders otherwise, a company must not extinguish or reduce a shareholder's liability under subsection (1) in respect of an amount unpaid on a share if there are reasonable grounds for believing that the company is, or the extinguishment or reduction would render the company, insolvent.

(3) On the application of a creditor, the court may make an order compelling a shareholder to pay to the company an amount equal to any liability of the shareholder that was extinguished or reduced contrary to subsection (2).

(4) A legal proceeding to enforce a liability imposed by this section may not be commenced more than 2 years after the date of the act complained of.

Liability of former and present shareholders

88 (1) For the purposes of the Bankruptcy and Insolvency Act (Canada) and the Winding-up and Restructuring Act (Canada), the liability of any past or present shareholder who is liable to contribute to the assets of the company is limited to the lesser of

(a) the amount of that shareholder's liability under section 85, and

(b) an amount sufficient for

(i) the payment of the company's debts and liabilities,

(ii) the costs, charges and expenses of the bankruptcy or winding up, as the case may be, and

(iii) the adjustment of the rights of the shareholders among themselves.

(2) Despite subsection (1), a former shareholder is not liable to contribute to the assets of the company

(a) if that shareholder ceased to be a shareholder one year or more before the date of the commencement of the bankruptcy or winding up,

(b) in respect of any debt or liability of the company contracted after that shareholder ceased to be a shareholder, or

(c) in any other case, unless it appears to the court that the existing shareholders are unable to satisfy the contributions required to be made by them.

(3) For the purposes of this section, a sum due to a shareholder, by reason of that person being a shareholder, by way of a dividend, profit or otherwise, may be taken into account for the purpose of the final adjustment of the rights of the shareholders among themselves, but that sum ranks behind a debt owed to a person that is not due to that person by reason of that person being a shareholder.

Division 7 -- Trust Indentures and Debt Obligations

Definitions

89 In this Division:

"event of default" means an event, specified in a trust indenture, on the occurrence of which

(a) a security interest constituted by the trust indenture becomes enforceable, or

(b) the principal, interest or other money payable under the trust indenture becomes, or may be declared to be, payable before the date of maturity,

but an event is not an event of default unless and until the conditions set out by the trust indenture in connection with that event for the giving of notice or the lapse of time or otherwise have been satisfied;

"trustee" means a person appointed as trustee by or under a trust indenture to which a corporation is a party and includes any successor trustee.

Application

90 (1) Subject to subsections (2) and (3), this Division applies to a trust indenture only if a prospectus or a securities exchange issuer circular or a take over bid circular has been filed, under the Securities Act or any predecessor Act, in respect of the debt obligations issued or to be issued under the trust indenture.

(2) Sections 86 to 97 of the Companies Act, 1973 continue to apply to trust indentures under which debt obligations were issued before the coming into force of this Act, other than trust indentures to which this Division applies under subsection (1).

(3) On application by an interested person or on the executive director's own motion, the executive director may make an order, subject to the terms and conditions the executive director considers appropriate, exempting a trust indenture or a class of trust indentures from one or more of the provisions of this Division if the executive director considers that to do so would not be prejudicial to the public interest.

Eligibility of trustee

91 (1) A person must not be appointed as trustee unless that person is, and a group of persons must not be appointed as trustee unless at least one of those persons is,

(a) resident in British Columbia,

(b) authorized to do business in British Columbia, or

(c) authorized to carry on trust business under the Financial Institutions Act.

(2) A person must not be appointed or act as a trustee if there is a material conflict of interest between the person's role as trustee and the person's role in any other capacity.

(3) A trustee must, within 3 months after becoming aware that a material conflict of interest referred to in subsection (2) exists,

(a) eliminate that conflict of interest, or

(b) resign as trustee.

(4) If, despite this section, a trustee has a material conflict of interest, the material conflict of interest does not, in any manner, affect the validity and enforceability of

(a) the trust indenture by or under which the trustee has been appointed,

(b) the security interest constituted by or under the trust indenture, and

(c) the debt obligations issued under the trust indenture.

(5) If a trustee contravenes subsection (2) or (3), an interested party may apply to the court, whether or not the period referred to in subsection (3) has expired, for an order that the trustee be removed and replaced, and the court may make the order it considers appropriate.

Persons holding debt obligations may request information from trustee

92 (1) A person holding debt obligations issued under a trust indenture may, on payment to the trustee of a reasonable fee, require the trustee to furnish, within 25 days after the trustee receives from the person an affidavit referred to in subsection (2), a list of the following information as it appears on the records of the trustee on the date that the affidavit is received by the trustee:

(a) the name and address of every person holding outstanding debt obligations issued under the trust indenture;

(b) the aggregate principal amount of the outstanding debt obligations, issued under the trust indenture, that are held by each person referred to in paragraph (a) of this subsection;

(c) the aggregate principal amount of all outstanding debt obligations issued under the trust indenture.

(2) The affidavit required under subsection (1)

(a) must be made by the person requiring the list or, if that person is a corporation, by a director or officer of the corporation,

(b) must contain

(i) the name, address and occupation of the person requiring the list, or

(ii) if that person is a corporation, its name and the mailing address and, if different, the delivery address of its registered office or equivalent, and

(c) must contain a statement that the requested list will not be used except as permitted under subsection (4).

(3) If, without reasonable excuse, the trustee fails to furnish the list within the time required by subsection (1), the person requiring the list may apply to the court for an order requiring the trustee to furnish the list and the court may make the order.

(4) A person must not use a list obtained under this section except in connection with

(a) an effort to influence the voting of the persons holding debt obligations,

(b) an offer to acquire debt obligations, or

(c) any other matter relating to the debt obligations or the affairs of the issuer or guarantor of the debt obligations.

Information for trustee

93 An issuer of debt obligations must, on demand by a trustee, promptly furnish the trustee with the information required to enable the trustee to comply with section 92 (1).

Evidence of compliance with trust indenture

94 An issuer or a guarantor of debt obligations issued or to be issued under a trust indenture must, before doing any of the following acts, provide to the trustee evidence of compliance with every term of the trust indenture relating to that act:

(a) issuing, certifying and delivering debt obligations under the trust indenture;

(b) releasing, or releasing and substituting, property, rights or interests subject to a security interest constituted by the trust indenture;

(c) satisfying and discharging the trust indenture;

(d) taking any other action to be taken by the trustee at the request of or on the application of the issuer or guarantor.

Contents of evidence of compliance

95 Evidence of compliance as required by section 94 consists of

(a) a certificate or affidavit made by the issuer or guarantor or, if the issuer or guarantor is a corporation, by a director or officer of the issuer or guarantor stating that the conditions referred to in that section have been complied with in accordance with the terms of the trust indenture,

(b) if the trust indenture requires compliance with conditions that are subject to review by a lawyer, an opinion of a lawyer acceptable to the trustee that those terms have been complied with in accordance with the terms of the trust indenture,

(c) if the trust indenture requires compliance with conditions that are subject to review by an auditor or accountant, an opinion or report of the auditor or accountant of the issuer or guarantor, or of any other accountant that the trustee may select, that those terms have been complied with in accordance with the terms of the trust indenture, and

(d) a statement by the person giving the evidence of compliance under paragraph (a), (b) or (c)

(i) declaring that the person has read and understands the terms of the trust indenture concerning which the evidence is given,

(ii) describing the nature and scope of the examination or investigation on which the person based the affidavit, certificate, opinion or report, and

(iii) declaring that the person has made the examination or investigation the person believes necessary to enable the person to make the statements or to give the opinions contained or expressed in it.

Additional evidence of compliance

96 (1) An issuer or a guarantor of debt obligations issued or to be issued under a trust indenture must, on demand by the trustee, furnish the trustee with evidence, in the form the trustee requires, as to compliance with any condition in the trust indenture relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.

(2) An issuer or guarantor of debt obligations issued or to be issued under a trust indenture must, at least once in each period of 12 months that follows the date debt obligations are first issued under the trust indenture, and at any other reasonable time on the demand by the trustee, provide the trustee with a certificate

(a) stating that the issuer or guarantor has complied with all of the requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or

(b) if the issuer or guarantor has not complied with one or more of those requirements, giving particulars of the failure to comply.

Notice of default

97 (1) Unless the trustee in good faith determines that it is in the best interests of the persons holding the debt obligations to withhold notice and so informs the issuer or guarantor of the trust indenture in writing, the trustee must give to the persons holding debt obligations issued under a trust indenture notice of each event of default arising under the trust indenture and continuing at the time the notice is given.

(2) The trustee must provide the notice required under subsection (1) within a reasonable time but not more than 30 days after the trustee becomes aware of the occurrence of the default.

Trustee's duty of care

98 The trustee must exercise the trustee's powers and duties

(a) in good faith and in a commercially reasonable manner,

(b) with the care, diligence and skill of a reasonably prudent trustee, and

(c) with a view to the best interests of the persons holding the debt obligations issued under the trust indenture.

Reliance on statements

99 A trustee is not in contravention of section 98 if the trustee relies and acts in good faith on statements contained in a certificate, affidavit, opinion or report that complies with this Act or the trust indenture.

Trustee not relieved from duties

100 No term of a trust indenture, and no term of an agreement between a trustee and any or all of the persons holding debt obligations issued under the trust indenture or between the trustee and the issuer or guarantor of the trust indenture, relieves a trustee from the duties imposed on that trustee by section 98.

Validity of perpetual debenture

101 Despite any rule of equity to the contrary, no condition contained in a debenture, or in a deed for securing a debenture, is invalid merely because the debenture is made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long.

Enforcement of contract to take debentures

102 Every contract with a company to take up and pay for a debenture of the company may be enforced by a court order for specific performance.

Issue of redeemed debenture

103 (1) If a company redeems a debenture that was previously issued as one of a series, the company has, and is deemed always to have had, power to reissue the debenture, either by reissuing the same debenture or by issuing another debenture in its place, unless

(a) an express or implied provision to the contrary is contained in the debenture, the articles or a contract entered into by the company, or

(b) the company has, by a resolution of the shareholders, manifested its intention that the debenture be cancelled.

(2) On the reissue of a debenture under subsection (1), the person entitled to the debenture has, and is deemed always to have had, the same priority as if the debenture had never been redeemed if

(a) the debenture so states, or

(b) the debenture was first issued before January 1, 1977.

(3) If a company redeems a debenture and has the power to reissue that debenture, particulars of that debenture must be included in the balance sheet of the company.

(4) If a company has issued or deposited a debenture created by the company to secure advances on current account or otherwise, the debenture is not deemed to have been redeemed merely because any of the advances are repaid, or the account of the company ceases to be in debit, while the debenture remains issued or deposited.

(5) The reissue of a debenture or the issue of another debenture in its place under this section is deemed not to be the issue of a new debenture for the purpose of a provision limiting the amount or number of debentures to be issued.

Division 8 -- Receivers and Receiver Managers

Powers of directors and officers

104 If a receiver manager is appointed by the court or under an instrument over some or all of the undertaking of a corporation, the powers of the directors and officers of the corporation cease with respect to that part of the undertaking for which the appointment is made until the receiver manager is discharged.

Duties of receiver and receiver manager

105 A receiver or receiver manager must

(a) within 7 days after being appointed, file with the registrar a notice of the appointment in the prescribed form, and

(b) within 7 days after ceasing to act as receiver or receiver manager, file with the registrar a notice in the prescribed form.


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