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

Marginal note:Approval of financial statements

• 158 (1) The directors of a corporation shall approve the financial statements referred to in section 155 and the approval shall be evidenced by the manual signature of one or more directors or a facsimile of the signatures reproduced in the statements.

• Marginal note:Condition precedent

  (2) A corporation shall not issue, publish or circulate copies of the financial statements referred to in section 155 unless the financial statements are

  • (a) approved and signed in accordance with subsection (1); and

  • (b) accompanied by the report of the auditor of the corporation, if any.

Marginal note:Copies to shareholders

• 159 (1) A corporation shall, not less than twenty-one days before each annual meeting of shareholders or before the signing of a resolution under paragraph 142(1)(b) in lieu of the annual meeting, send a copy of the documents referred to in section 155 to each shareholder, except to a shareholder who has informed the corporation in writing that he or she does not want a copy of those documents.

• Marginal note:Offence

  (2) A corporation that, without reasonable cause, fails to comply with subsection (1) is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars.

Marginal note:Copies to Director

• 160 (1) A distributing corporation, any of the issued securities of which remain outstanding and are held by more than one person, shall send a copy of the documents referred to in section 155 to the Director

  • (a) not less than twenty-one days before each annual meeting of shareholders, or without delay after a resolution referred to in paragraph 142(1)(b) is signed; and

  • (b) in any event within fifteen months after the last preceding annual meeting should have been held or a resolution in lieu of the meeting should have been signed, but no later than six months after the end of the corporation’s preceding financial year.

• Marginal note:Subsidiary corporation exemption

  (2) A subsidiary corporation is not required to comply with this section if

  • (a) the financial statements of its holding corporation are in consolidated or combined form and include the accounts of the subsidiary; and

  • (b) the consolidated or combined financial statements of the holding corporation are included in the documents sent to the Director by the holding corporation in compliance with this section.

• Marginal note:Offence

  (3) A corporation that fails to comply with this section is guilty of an offence and is liable on summary conviction to a fine not exceeding five thousand dollars.

Marginal note:Qualification of auditor

• 161 (1) Subject to subsection (5), a person is disqualified from being an auditor of a corporation if the person is not independent of the corporation, any of its affiliates, or the directors or officers of any such corporation or its affiliates.

• Marginal note:Independence

  (2) For the purposes of this section,

  • (a) independence is a question of fact; and

  • (b) a person is deemed not to be independent if they or their business partner

    • (i) is a business partner, a director, an officer or an employee of the corporation or any of its affiliates, or a business partner of any director, officer or employee of any such corporation or any of its affiliates,

    • (ii) beneficially owns or controls, directly or indirectly, a material interest in the securities of the corporation or any of its affiliates, or

    • (iii) has been a receiver, receiver-manager, sequestrator, liquidator or trustee in bankruptcy of the corporation or any of its affiliates within two years of the person’s proposed appointment as auditor of the corporation.

• Marginal note:Business partners

  (2.1) For the purposes of subsection (2), a person’s business partner includes a shareholder of that person.

• Marginal note:Duty to resign

  (3) An auditor who becomes disqualified under this section shall, subject to subsection (5), resign forthwith after becoming aware of the disqualification.

• Marginal note:Disqualification order

  (4) An interested person may apply to a court for an order declaring an auditor to be disqualified under this section and the office of auditor to be vacant.

• Marginal note:Exemption order

  (5) An interested person may apply to a court for an order exempting an auditor from disqualification under this section and the court may, if it is satisfied that an exemption would not unfairly prejudice the shareholders, make an exemption order on such terms as it thinks fit, which order may have retrospective effect.

Marginal note:Appointment of auditor

• 162 (1) Subject to section 163, shareholders of a corporation shall, by ordinary resolution, at the first annual meeting of shareholders and at each succeeding annual meeting, appoint an auditor to hold office until the close of the next annual meeting.

• Marginal note:Eligibility

  (2) An auditor appointed under section 104 is eligible for appointment under subsection (1).

• Marginal note:Incumbent auditor

  (3) Notwithstanding subsection (1), if an auditor is not appointed at a meeting of shareholders, the incumbent auditor continues in office until a successor is appointed.

• Marginal note:Remuneration

  (4) The remuneration of an auditor may be fixed by ordinary resolution of the shareholders or, if not so fixed, may be fixed by the directors.

Marginal note:Dispensing with auditor

• 163 (1) The shareholders of a corporation that is not a distributing corporation may resolve not to appoint an auditor.

• Marginal note:Limitation

  (2) A resolution under subsection (1) is valid only until the next succeeding annual meeting of shareholders.

• Marginal note:Unanimous consent

  (3) A resolution under subsection (1) is not valid unless it is consented to by all the shareholders, including shareholders not otherwise entitled to vote.

• (4) [Repealed, 1994, c. 24, s. 18]

Marginal note:Ceasing to hold office

• 164 (1) An auditor of a corporation ceases to hold office when the auditor

  • (a) dies or resigns; or

  • (b) is removed pursuant to section 165.

• Marginal note:Effective date of resignation

  (2) A resignation of an auditor becomes effective at the time a written resignation is sent to the corporation, or at the time specified in the resignation, whichever is later.

Marginal note:Removal of auditor

• 165 (1) The shareholders of a corporation may by ordinary resolution at a special meeting remove from office the auditor other than an auditor appointed by a court under section 167.

• Marginal note:Vacancy

  (2) A vacancy created by the removal of an auditor may be filled at the meeting at which the auditor is removed or, if not so filled, may be filled under section 166.

Marginal note:Filling vacancy

• 166 (1) Subject to subsection (3), the directors shall forthwith fill a vacancy in the office of auditor.

• Marginal note:Calling meeting

  (2) If there is not a quorum of directors, the directors then in office shall, within twenty-one days after a vacancy in the office of auditor occurs, call a special meeting of shareholders to fill the vacancy and, if they fail to call a meeting or if there are no directors, the meeting may be called by any shareholder.

• Marginal note:Shareholders filling vacancy

  (3) The articles of a corporation may provide that a vacancy in the office of auditor shall only be filled by vote of the shareholders.

• Marginal note:Unexpired term

  (4) An auditor appointed to fill a vacancy holds office for the unexpired term of the auditor’s predecessor.

Marginal note:Court appointed auditor

• 167 (1) If a corporation does not have an auditor, the court may, on the application of a shareholder or the Director, appoint and fix the remuneration of an auditor who holds office until an auditor is appointed by the shareholders.

• Marginal note:Exception

  (2) Subsection (1) does not apply if the shareholders have resolved under section 163 not to appoint an auditor.

Marginal note:Right to attend meeting

• 168 (1) The auditor of a corporation is entitled to receive notice of every meeting of shareholders and, at the expense of the corporation, to attend and be heard on matters relating to the auditor’s duties.

• Marginal note:Duty to attend

  (2) If a director or shareholder of a corporation, whether or not the shareholder is entitled to vote at the meeting, gives written notice not less than ten days before a meeting of shareholders to the auditor or a former auditor of the corporation, the auditor or former auditor shall attend the meeting at the expense of the corporation and answer questions relating to their duties as auditor.

• Marginal note:Notice to corporation

  (3) A director or shareholder who sends a notice referred to in subsection (2) shall send concurrently a copy of the notice to the corporation.

• Marginal note:Offence

  (4) An auditor or former auditor of a corporation who fails without reasonable cause to comply with subsection (2) is guilty of an offence and liable on summary conviction to a fine not exceeding five thousand dollars or to imprisonment for a term not exceeding six months or to both.

• Marginal note:Statement of auditor

  (5) An auditor is entitled to submit to the corporation a written statement giving reasons for resigning or for opposing any proposed action or resolution when the auditor

  • (a) resigns;

  • (b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of removing the auditor from office;

  • (c) receives a notice or otherwise learns of a meeting of directors or shareholders at which another person is to be appointed to fill the office of auditor, whether because of the resignation or removal of the incumbent auditor or because the auditor’s term of office has expired or is about to expire; or

  • (d) receives a notice or otherwise learns of a meeting of shareholders at which a resolution referred to in section 163 is to be proposed.

• Marginal note:Other statements

  (5.1) In the case of a proposed replacement of an auditor, whether through removal or at the end of the auditor’s term, the following rules apply with respect to other statements:

  • (a) the corporation shall make a statement on the reasons for the proposed replacement; and

  • (b) the proposed replacement auditor may make a statement in which he or she comments on the reasons referred to in paragraph (a).

• Marginal note:Circulating statement

  (6) The corporation shall send a copy of the statements referred to in subsections (5) and (5.1) without delay to every shareholder entitled to receive notice of a meeting referred to in subsection (1) and to the Director, unless the statement is included in or attached to a management proxy circular required by section 150.

• Marginal note:Replacing auditor

  (7) No person shall accept appointment or consent to be appointed as auditor of a corporation to replace an auditor who has resigned, been removed or whose term of office has expired or is about to expire until the person has requested and received from that auditor a written statement of the circumstances and the reasons, in that auditor’s opinion, for their replacement.

• Marginal note:Exception

  (8) Notwithstanding subsection (7), a person otherwise qualified may accept appointment or consent to be appointed as auditor of a corporation if, within fifteen days after making the request referred to in that subsection, the person does not receive a reply.

• Marginal note:Effect of non-compliance

  (9) Unless subsection (8) applies, an appointment as auditor of a corporation of a person who has not complied with subsection (7) is void.

Marginal note:Examination

• 169 (1) An auditor of a corporation shall make the examination that is in their opinion necessary to enable them to report in the prescribed manner on the financial statements required by this Act to be placed before the shareholders, except such financial statements or part thereof that relate to the period referred to in subparagraph 155(1)(a)(ii).

• Marginal note:Reliance on other auditor

  (2) Notwithstanding section 170, an auditor of a corporation may reasonably rely on the report of an auditor of a body corporate or an unincorporated business the accounts of which are included in whole or in part in the financial statements of the corporation.

• Marginal note:Reasonableness

  (3) For the purpose of subsection (2), reasonableness is a question of fact.

• Marginal note:Application

  (4) Subsection (2) applies whether or not the financial statements of the holding corporation reported on by the auditor are in consolidated form.

Marginal note:Right to information

• 170 (1) On the demand of an auditor of a corporation, the present or former directors, officers, employees, agents or mandataries of the corporation shall provide any

  • (a) information and explanations, and

  • (b) access to records, documents, books, accounts and vouchers of the corporation or any of its subsidiaries

  that are, in the opinion of the auditor, necessary to enable the auditor to make the examination and report required under section 169 and that the directors, officers, employees, agents or mandataries are reasonably able to provide.

• Marginal note:Idem

  (2) On the demand of the auditor of a corporation, the directors of the corporation shall

  • (a) obtain from the present or former directors, officers, employees and agents or mandataries of any subsidiary of the corporation the information and explanations that the present or former directors, officers, employees and agents or mandataries are reasonably able to provide and that are, in the opinion of the auditor, necessary to enable the auditor to make the examination and report required under section 169; and

  • (b) furnish the auditor with the information and explanations so obtained.

• Marginal note:No civil liability

  (3) A person who in good faith makes an oral or written communication under subsection (1) or (2) is not liable in any civil proceeding arising from having made the communication.