Canada Business Corporations Act (R.S.C., 1985, c. C-44)

Marginal note:Evidence of compliance

• 86 (1) An issuer or a guarantor of debt obligations issued or to be issued under a trust indenture shall, before doing any act under paragraph (a), (b) or (c), furnish the trustee with evidence of compliance with the conditions in the trust indenture relating to

  • (a) the issue, certification and delivery of debt obligations under the trust indenture;

  • (b) the release or release and substitution of property subject to a security interest constituted by the trust indenture; or

  • (c) the satisfaction and discharge of the trust indenture.

• Marginal note:Duty of issuer or guarantor

  (2) On the demand of a trustee, the issuer or guarantor of debt obligations issued or to be issued under a trust indenture shall furnish the trustee with evidence of compliance with the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.

Marginal note:Contents of declaration, etc.

87 Evidence of compliance as required by section 86 shall consist of

• (a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in that section have been complied with; and

• (b) where the trust indenture requires compliance with conditions that are subject to review

  • (i) by legal counsel, an opinion of legal counsel that such conditions have been complied with, and

  • (ii) by an auditor or accountant, an opinion or report of the auditor of the issuer or guarantor, or such other accountant as the trustee may select, that such conditions have been complied with.

Marginal note:Further evidence of compliance

88 The evidence of compliance referred to in section 87 shall include a statement by the person giving the evidence

• (a) declaring that they have read and understand the conditions of the trust indenture described in section 86;

• (b) describing the nature and scope of the examination or investigation on which the certificate, statement or opinion is based; and

• (c) declaring that they have made the examination or investigation that they believe necessary to enable them to make their statements or give their opinions.

Marginal note:Trustee may require evidence of compliance

• 89 (1) On the demand of a trustee, the issuer or guarantor of debt obligations issued under a trust indenture shall furnish the trustee with evidence in such form as the trustee may require as to compliance with any condition thereto relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.

• Marginal note:Certificate of compliance

  (2) At least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor of debt obligations issued under a trust indenture shall furnish the trustee with a certificate that the issuer or guarantor has complied with all 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, if there has been failure to so comply, giving particulars thereof.

Marginal note:Notice of default

90 The trustee shall give to the holders of debt obligations issued under a trust indenture, within thirty days after the trustee becomes aware of the occurrence thereof, notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee reasonably believes that it is in the best interests of the holders of the debt obligations to withhold such notice and so informs the issuer and guarantor in writing.

Marginal note:Duty of care

91 A trustee in exercising their powers and discharging their duties shall

• (a) act honestly and in good faith with a view to the best interests of the holders of the debt obligations issued under the trust indenture; and

• (b) exercise the care, diligence and skill of a reasonably prudent trustee.

Marginal note:Reliance on statements

92 Notwithstanding section 91, a trustee is not liable if they rely in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.

Marginal note:No exculpation

93 No term of a trust indenture or of any agreement between a trustee and the holders of debt obligations issued thereunder or between the trustee and the issuer or guarantor shall operate so as to relieve a trustee from the duties imposed on the trustee by section 91.

PART IXReceivers, Receiver-managers and Sequestrators

Marginal note:Functions of receiver or sequestrator

94 A receiver or sequestrator of any property of a corporation may, subject to the rights of secured creditors, receive the income from the property, pay the liabilities connected with the property and realize the security interest of those on behalf of whom the receiver or sequestrator is appointed, but, except to the extent permitted by a court, the receiver or sequestrator may not carry on the business of the corporation.

Marginal note:Functions of receiver-manager

95 A receiver-manager of the corporation may carry on any business of the corporation to protect the security interest of those on behalf of whom the receiver-manager is appointed.

Marginal note:Directors’ powers cease

96 If a receiver-manager or sequestrator is appointed by a court or under an instrument or act, the powers of the directors of the corporation that the receiver-manager or sequestrator is authorized to exercise may not be exercised by the directors until the receiver-manager or sequestrator is discharged.

Marginal note:Duty to act

97 A receiver, receiver-manager or sequestrator appointed by a court shall act in accordance with the directions of the court.

Marginal note:Duty under instrument or act

98 A receiver, receiver-manager or sequestrator appointed under an instrument or act shall act in accordance with that instrument or act and any direction of a court made under section 100.

Marginal note:Duty of care

99 A receiver, receiver-manager or sequestrator of a corporation appointed under an instrument or act shall

• (a) act honestly and in good faith; and

• (b) deal with any property of the corporation in their possession or control in a commercially reasonable manner.

Marginal note:Directions given by court

100 On an application by a receiver, receiver-manager or sequestrator, whether appointed by a court or under an instrument or act, or on an application by any interested person, a court may make any order it thinks fit including, without limiting the generality of the foregoing,

• (a) an order appointing, replacing or discharging a receiver, receiver-manager or sequestrator and approving their accounts;

• (b) an order determining the notice to be given to any person or dispensing with notice to any person;

• (c) an order fixing the remuneration of the receiver, receiver-manager or sequestrator;

• (d) an order requiring the receiver, receiver-manager or sequestrator, or a person by or on behalf of whom the receiver, receiver-manager or sequestrator is appointed, to make good any default in connection with the receiver’s, receiver-manager’s or sequestrator’s custody or management of the property and business of the corporation, or to relieve any such person from any default on any terms that the court thinks fit, and to confirm any act of the receiver, receiver-manager or sequestrator; and

• (e) an order giving directions on any matter relating to the duties of the receiver, receiver-manager or sequestrator.

Marginal note:Duties of receiver, receiver-manager or sequestrator

101 A receiver, receiver-manager or sequestrator shall

• (a) immediately notify the Director of their appointment and discharge;

• (b) take into their custody and control the property of the corporation in accordance with the court order or instrument or act under which they are appointed;

• (c) open and maintain a bank account in their name as receiver, receiver-manager or sequestrator of the corporation for the moneys of the corporation coming under their control;

• (d) keep detailed accounts of all transactions carried out as receiver, receiver-manager or sequestrator;

• (e) keep accounts of their administration that shall be available during usual business hours for inspection by the directors of the corporation;

• (f) prepare at least once in every six month period after the date of their appointment financial statements of their administration as far as is practicable in the form required by section 155; and

• (g) on completion of their duties, render a final account of their administration in the form adopted for interim accounts under paragraph (f).

PART XDirectors and Officers

Marginal note:Duty to manage or supervise management

• 102 (1) Subject to any unanimous shareholder agreement, the directors shall manage, or supervise the management of, the business and affairs of a corporation.

• Marginal note:Number of directors

  (2) A corporation shall have one or more directors but a distributing corporation, any of the issued securities of which remain outstanding and are held by more than one person, shall have not fewer than three directors, at least two of whom are not officers or employees of the corporation or its affiliates.

Marginal note:By-laws

• 103 (1) Unless the articles, by-laws or a unanimous shareholder agreement otherwise provide, the directors may, by resolution, make, amend or repeal any by-laws that regulate the business or affairs of the corporation.

• Marginal note:Shareholder approval

  (2) The directors shall submit a by-law, or an amendment or a repeal of a by-law, made under subsection (1) to the shareholders at the next meeting of shareholders, and the shareholders may, by ordinary resolution, confirm, reject or amend the by-law, amendment or repeal.

• Marginal note:Effective date

  (3) A by-law, or an amendment or a repeal of a by-law, is effective from the date of the resolution of the directors under subsection (1) until it is confirmed, confirmed as amended or rejected by the shareholders under subsection (2) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed or confirmed as amended, it continues in effect in the form in which it was so confirmed.

• Marginal note:Idem

  (4) If a by-law, an amendment or a repeal is rejected by the shareholders, or if the directors do not submit a by-law, an amendment or a repeal to the shareholders as required under subsection (2), the by-law, amendment or repeal ceases to be effective and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed or confirmed as amended by the shareholders.

• Marginal note:Shareholder proposal

  (5) A shareholder entitled to vote at an annual meeting of shareholders may, in accordance with section 137, make a proposal to make, amend or repeal a by-law.

Marginal note:Organization meeting

• 104 (1) After issue of the certificate of incorporation, a meeting of the directors of the corporation shall be held at which the directors may

  • (a) make by-laws;

  • (b) adopt forms of security certificates and corporate records;

  • (c) authorize the issue of securities;

  • (d) appoint officers;

  • (e) appoint an auditor to hold office until the first annual meeting of shareholders;

  • (f) make banking arrangements; and

  • (g) transact any other business.

• Marginal note:Exception

  (2) Subsection (1) does not apply to a body corporate to which a certificate of amalgamation has been issued under subsection 185(4) or to which a certificate of continuance has been issued under subsection 187(4).

• Marginal note:Calling meeting

  (3) An incorporator or a director may call the meeting of directors referred to in subsection (1) by giving not less than five days notice thereof by mail to each director, stating the time and place of the meeting.

Marginal note:Qualifications of directors

• 105 (1) The following persons are disqualified from being a director of a corporation:

  • (a) anyone who is less than eighteen years of age;

  • (b) anyone who is incapable;

  • (c) a person who is not an individual; or

  • (d) a person who has the status of bankrupt.

• Marginal note:Further qualifications

  (2) Unless the articles otherwise provide, a director of a corporation is not required to hold shares issued by the corporation.

• Marginal note:Residency

  (3) Subject to subsection (3.1), at least twenty-five per cent of the directors of a corporation must be resident Canadians. However, if a corporation has less than four directors, at least one director must be a resident Canadian.

• Marginal note:Exception — Canadian ownership or control

  (3.1) If a corporation engages in an activity in Canada in a prescribed business sector or if a corporation, by an Act of Parliament or by a regulation made under an Act of Parliament, is required, either individually or in order to engage in an activity in Canada in a particular business sector, to attain or maintain a specified level of Canadian ownership or control, or to restrict, or to comply with a restriction in relation to, the number of voting shares that any one shareholder may hold, own or control, then a majority of the directors of the corporation must be resident Canadians.

• Marginal note:Clarification

  (3.2) Nothing in subsection (3.1) shall be construed as reducing any requirement for a specified number or percentage of resident Canadian directors that otherwise applies to a corporation referred to in that subsection.

• Marginal note:If only one or two directors

  (3.3) If a corporation referred to in subsection (3.1) has only one or two directors, that director or one of the two directors, as the case may be, must be a resident Canadian.

• Marginal note:Exception for holding corporation

  (4) Despite subsection (3.1), not more than one third of the directors of a holding corporation referred to in that subsection need be resident Canadians if the holding corporation earns in Canada directly or through its subsidiaries less than five per cent of the gross revenues of the holding corporation and all of its subsidiary bodies corporate together as shown in

  • (a) the most recent consolidated financial statements of the holding corporation referred to in section 157; or

  • (b) the most recent financial statements of the holding corporation and its subsidiary bodies corporate as at the end of the last completed financial year of the holding corporation.