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

Marginal note:Definition of reorganization

• 191 (1) In this section, reorganization means a court order made under

  • (a) section 241;

  • (b) the Bankruptcy and Insolvency Act approving a proposal; or

  • (c) any other Act of Parliament that affects the rights among the corporation, its shareholders and creditors.

• Marginal note:Powers of court

  (2) If a corporation is subject to an order referred to in subsection (1), its articles may be amended by such order to effect any change that might lawfully be made by an amendment under section 173.

• Marginal note:Further powers

  (3) If a court makes an order referred to in subsection (1), the court may also

  • (a) authorize the issue of debt obligations of the corporation, whether or not convertible into shares of any class or having attached any rights or options to acquire shares of any class, and fix the terms thereof; and

  • (b) appoint directors in place of or in addition to all or any of the directors then in office.

• Marginal note:Articles of reorganization

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

• Marginal note:Certificate of reorganization

  (5) On receipt of articles of reorganization, the Director shall issue a certificate of amendment in accordance with section 262.

• Marginal note:Effect of certificate

  (6) A reorganization becomes effective on the date shown in the certificate of amendment and the articles of incorporation are amended accordingly.

• Marginal note:No dissent

  (7) A shareholder is not entitled to dissent under section 190 if an amendment to the articles of incorporation is effected under this section.

Marginal note:Definition of arrangement

• 192 (1) In this section, arrangement includes

  • (a) an amendment to the articles of a corporation;

  • (b) an amalgamation of two or more corporations;

  • (c) an amalgamation of a body corporate with a corporation that results in an amalgamated corporation subject to this Act;

  • (d) a division of the business carried on by a corporation;

  • (e) a transfer of all or substantially all the property of a corporation to another body corporate in exchange for property, money or securities of the body corporate;

  • (f) an exchange of securities of a corporation for property, money or other securities of the corporation or property, money or securities of another body corporate;

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

  • (g) a liquidation and dissolution of a corporation; and

  • (h) any combination of the foregoing.

• Marginal note:Where corporation insolvent

  (2) For the purposes of this section, a corporation is insolvent

  • (a) where it is unable to pay its liabilities as they become due; or

  • (b) where the realizable value of the assets of the corporation are less than the aggregate of its liabilities and stated capital of all classes.

• Marginal note:Application to court for approval of arrangement

  (3) Where it is not practicable for a corporation that is not insolvent to effect a fundamental change in the nature of an arrangement under any other provision of this Act, the corporation may apply to a court for an order approving an arrangement proposed by the corporation.

• Marginal note:Powers of court

  (4) In connection with an application under this section, the court may make any interim or final order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order determining the notice to be given to any interested person or dispensing with notice to any person other than the Director;

  • (b) an order appointing counsel, at the expense of the corporation, to represent the interests of the shareholders;

  • (c) an order requiring a corporation to call, hold and conduct a meeting of holders of securities or options or rights to acquire securities in such manner as the court directs;

  • (d) an order permitting a shareholder to dissent under section 190; and

  • (e) an order approving an arrangement as proposed by the corporation or as amended in any manner the court may direct.

• Marginal note:Notice to Director

  (5) An applicant for any interim or final order under this section shall give the Director notice of the application and the Director is entitled to appear and be heard in person or by counsel.

• Marginal note:Articles of arrangement

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

• Marginal note:Certificate of arrangement

  (7) On receipt of articles of arrangement, the Director shall issue a certificate of arrangement in accordance with section 262.

• Marginal note:Effect of certificate

  (8) An arrangement becomes effective on the date shown in the certificate of arrangement.

PART XVIGoing-private Transactions and Squeeze-out Transactions

Marginal note:Going-private transactions

193 A corporation may carry out a going-private transaction. However, if there are any applicable provincial securities laws, a corporation may not carry out a going-private transaction unless the corporation complies with those laws.

Marginal note:Squeeze-out transactions

194 A corporation may not carry out a squeeze-out transaction unless, in addition to any approval by holders of shares required by or under this Act or the articles of the corporation, the transaction is approved by ordinary resolution of the holders of each class of shares that are affected by the transaction, voting separately, whether or not the shares otherwise carry the right to vote. However, the following do not have the right to vote on the resolution:

• (a) affiliates of the corporation; and

• (b) holders of shares that would, following the squeeze-out transaction, be entitled to consideration of greater value or to superior rights or privileges than those available to other holders of shares of the same class.

195 to 205 [Repealed, 2001, c. 14, s. 97]

PART XVIICompulsory and Compelled Acquisitions

Marginal note:Definitions

• 206 (1) The definitions in this subsection apply in this Part.

  dissenting offeree

  dissenting offeree means, where a take-over bid is made for all the shares of a class of shares, a holder of a share of that class who does not accept the take-over bid and includes a subsequent holder of that share who acquires it from the first mentioned holder; (pollicité dissident)

  offer

  offer includes an invitation to make an offer. (pollicitation)

  offeree

  offeree means a person to whom a take-over bid is made. (pollicité)

  offeree corporation

  offeree corporation means a distributing corporation whose shares are the object of a take-over bid. (société pollicitée)

  offeror

  offeror means a person, other than an agent or mandatary, who makes a take-over bid, and includes two or more persons who, directly or indirectly,

  • (a) make take-over bids jointly or in concert; or

  • (b) intend to exercise jointly or in concert voting rights attached to shares for which a take-over bid is made. (pollicitant)

  share

  share means a share, with or without voting rights, and includes

  • (a) a security currently convertible into such a share; and

  • (b) currently exercisable options and rights to acquire such a share or such a convertible security. (action)

  take-over bid

  take-over bid means an offer made by an offeror to shareholders of a distributing corporation at approximately the same time to acquire all of the shares of a class of issued shares, and includes an offer made by a distributing corporation to repurchase all of the shares of a class of its shares. (offre d’achat visant à la mainmise)

• Marginal note:Right to acquire

  (2) If within one hundred and twenty days after the date of a take-over bid the bid is accepted by the holders of not less than ninety per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, the offeror is entitled, on complying with this section, to acquire the shares held by the dissenting offerees.

• Marginal note:Notice

  (3) An offeror may acquire shares held by a dissenting offeree by sending by registered mail within sixty days after the date of termination of the take-over bid and in any event within one hundred and eighty days after the date of the take-over bid, an offeror’s notice to each dissenting offeree and to the Director stating that

  • (a) the offerees holding not less than ninety per cent of the shares to which the bid relates accepted the take-over bid;

  • (b) the offeror is bound to take up and pay for or has taken up and paid for the shares of the offerees who accepted the take-over bid;

  • (c) a dissenting offeree is required to elect

    • (i) to transfer their shares to the offeror on the terms on which the offeror acquired the shares of the offerees who accepted the take-over bid, or

    • (ii) to demand payment of the fair value of the shares in accordance with subsections (9) to (18) by notifying the offeror within twenty days after receiving the offeror’s notice;

  • (d) a dissenting offeree who does not notify the offeror in accordance with subparagraph (5)(b)(ii) is deemed to have elected to transfer the shares to the offeror on the same terms that the offeror acquired the shares from the offerees who accepted the take-over bid; and

  • (e) a dissenting offeree must send their shares to which the take-over bid relates to the offeree corporation within twenty days after receiving the offeror’s notice.

• Marginal note:Notice of adverse claim

  (4) Concurrently with sending the offeror’s notice under subsection (3), the offeror shall send to the offeree corporation a notice of adverse claim in accordance with section 78 with respect to each share held by a dissenting offeree.

• Marginal note:Share certificate

  (5) A dissenting offeree to whom an offeror’s notice is sent under subsection (3) shall, within twenty days after receiving the notice,

  • (a) send the share certificates of the class of shares to which the take-over bid relates to the offeree corporation; and

  • (b) elect

    • (i) to transfer the shares to the offeror on the terms on which the offeror acquired the shares of the offerees who accepted the take-over bid, or

    • (ii) to demand payment of the fair value of the shares in accordance with subsections (9) to (18) by notifying the offeror within those twenty days.

• Marginal note:Deemed election

  (5.1) A dissenting offeree who does not notify the offeror in accordance with subparagraph (5)(b)(ii) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.

• Marginal note:Payment

  (6) Within twenty days after the offeror sends an offeror’s notice under subsection (3), the offeror shall pay or transfer to the offeree corporation the amount of money or other consideration that the offeror would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to accept the take-over bid under subparagraph (5)(b)(i).

• Marginal note:Consideration

  (7) The offeree corporation is deemed to hold in trust for the dissenting shareholders the money or other consideration it receives under subsection (6), and the offeree corporation shall deposit the money in a separate account in a bank or other body corporate any of whose deposits are insured by the Canada Deposit Insurance Corporation or guaranteed by the Quebec Deposit Insurance Board, and shall place the other consideration in the custody of a bank or such other body corporate.

• Marginal note:When corporation is offeror

  (7.1) A corporation that is an offeror making a take-over bid to repurchase all of the shares of a class of its shares is deemed to hold in trust for the dissenting shareholders the money and other consideration that it would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to accept the take-over bid under subparagraph (5)(b)(i), and the corporation shall, within twenty days after a notice is sent under subsection (3), deposit the money in a separate account in a bank or other body corporate any of whose deposits are insured by the Canada Deposit Insurance Corporation or guaranteed by the Quebec Deposit Insurance Board, and shall place the other consideration in the custody of a bank or such other body corporate.

• Marginal note:Duty of offeree corporation

  (8) Within thirty days after the offeror sends a notice under subsection (3), the offeree corporation shall

  • (a) if the payment or transfer required by subsection (6) is made, issue to the offeror a share certificate in respect of the shares that were held by dissenting offerees;

  • (b) give to each dissenting offeree who elects to accept the take-over bid terms under subparagraph (5)(b)(i) and who sends share certificates as required by paragraph (5)(a) the money or other consideration to which the offeree is entitled, disregarding fractional shares, which may be paid for in money; and

  • (c) if the payment or transfer required by subsection (6) is made and the money or other consideration is deposited as required by subsection (7) or (7.1), send to each dissenting shareholder who has not sent share certificates as required by paragraph (5)(a) a notice stating that

    • (i) the dissenting shareholder’s shares have been cancelled,

    • (ii) the offeree corporation or some designated person holds in trust for the dissenting shareholder the money or other consideration to which that shareholder is entitled as payment for or in exchange for the shares, and

    • (iii) the offeree corporation will, subject to subsections (9) to (18), send that money or other consideration to that shareholder without delay after receiving the shares.

• Marginal note:Application to court

  (9) If a dissenting offeree has elected to demand payment of the fair value of the shares under subparagraph (5)(b)(ii), the offeror may, within twenty days after it has paid the money or transferred the other consideration under subsection (6), apply to a court to fix the fair value of the shares of that dissenting offeree.

• Marginal note:Idem

  (10) If an offeror fails to apply to a court under subsection (9), a dissenting offeree may apply to a court for the same purpose within a further period of twenty days.

• Marginal note:Status of dissenter if no court application

  (11) Where no application is made to a court under subsection (10) within the period set out in that subsection, a dissenting offeree is deemed to have elected to transfer their shares to the offeror on the same terms that the offeror acquired the shares from the offerees who accepted the take-over bid.

• Marginal note:Venue

  (12) An application under subsection (9) or (10) shall be made to a court having jurisdiction in the place where the corporation has its registered office or in the province where the dissenting offeree resides if the corporation carries on business in that province.

• Marginal note:No security for costs

  (13) A dissenting offeree is not required to give security for costs in an application made under subsection (9) or (10).

• Marginal note:Parties

  (14) On an application under subsection (9) or (10)

  • (a) all dissenting offerees referred to in subparagraph (5)(b)(ii) whose shares have not been acquired by the offeror shall be joined as parties and are bound by the decision of the court; and

  • (b) the offeror shall notify each affected dissenting offeree of the date, place and consequences of the application and of their right to appear and be heard in person or by counsel.

• Marginal note:Powers of court

  (15) On an application to a court under subsection (9) or (10), the court may determine whether any other person is a dissenting offeree who should be joined as a party, and the court shall then fix a fair value for the shares of all dissenting offerees.

• Marginal note:Appraisers

  (16) A court may in its discretion appoint one or more appraisers to assist the court to fix a fair value for the shares of a dissenting offeree.

• Marginal note:Final order

  (17) The final order of the court shall be made against the offeror in favour of each dissenting offeree and for the amount for the shares as fixed by the court.

• Marginal note:Additional powers

  (18) In connection with proceedings under this section, a court may make any order it thinks fit and, without limiting the generality of the foregoing, it may

  • (a) fix the amount of money or other consideration that is required to be held in trust under subsection (7) or (7.1);

  • (b) order that that money or other consideration be held in trust by a person other than the offeree corporation;

  • (c) allow a reasonable rate of interest on the amount payable to each dissenting offeree from the date they send or deliver their share certificates under subsection (5) until the date of payment; and

  • (d) order that any money payable to a shareholder who cannot be found be paid to the Receiver General and subsection 227(3) applies in respect thereof.