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

Marginal note:Solicitor-client privilege or professional secrecy

236 Nothing in this Part shall be construed as affecting solicitor-client privilege or, in Quebec, the professional secrecy of advocates and notaries.

Marginal note:Inquiries

• 237 (1) The Director may make inquiries of any person relating to compliance with this Act and may, as part of any inquiry, require the person to provide any records or other documents or information.

• Marginal note:Response

  (2) A person shall respond to any inquiry made under subsection (1).

PART XIX.1Apportioning Award of Damages

Interpretation and Application

Marginal note:Definitions

237.1 The definitions in this section apply in this Part.

financial interest

financial interest, with respect to a corporation, includes

• (a) a security;

• (b) a title to or an interest in capital, assets, property, profits, earnings or royalties;

• (c) an option or other interest in, or a subscription to, a security;

• (d) an agreement under which the interest of the purchaser is valued for purposes of conversion or surrender by reference to the value of a proportionate interest in a specified portfolio of assets;

• (e) an agreement providing that money received will be repaid or treated as a subscription for shares, units or interests at the option of any person or the corporation;

• (f) a profit-sharing agreement or certificate;

• (g) a lease, claim or royalty in oil, natural gas or mining, or an interest in the lease, claim or royalty;

• (h) an income or annuity contract that is not issued by an insurance company governed by an Act of Parliament or a law of a province;

• (i) an investment contract; and

• (j) anything that is prescribed to be a financial interest. (intérêt financier)

financial loss

financial loss means a financial loss arising out of an error, omission or misstatement in financial information concerning a corporation that is required under this Act or the regulations. (perte financière)

third party

third party includes any subsequent party that is joined in proceedings before a court. (Version anglaise seulement)

Marginal note:Application of Part

• 237.2 (1) This Part applies to the apportionment of damages awarded to a plaintiff for financial loss after a court has found more than one defendant or third party responsible for the financial loss.

• Marginal note:Non-application of Part

  (2) This Part does not apply to an award of damages to any of the following plaintiffs:

  • (a) Her Majesty in right of Canada or of a province;

  • (b) an agent of Her Majesty in right of Canada or of a province or a federal or provincial Crown corporation or government agency, unless a substantial part of its activities involves trading, including making investments in, securities or other financial instruments;

  • (c) a charitable organization, private foundation or public foundation within the meaning of subsection 149.1(1) of the Income Tax Act; or

  • (d) an unsecured creditor in respect of goods or services that the creditor provided to a corporation.

Apportionment of Damages

Marginal note:Degree of responsibility

• 237.3 (1) Subject to this section and sections 237.4 to 237.6, every defendant or third party who has been found responsible for a financial loss is liable to the plaintiff only for the portion of the damages that corresponds to their degree of responsibility for the loss.

• Marginal note:Uncollectable amounts

  (2) If any part of the damages awarded against a responsible defendant or third party is uncollectable, the court may, on the application of the plaintiff, reallocate that amount to the other responsible defendants or third parties, if the application is made within one year after the date that the judgment was made enforceable.

• Marginal note:Reallocation

  (3) The amount that may be reallocated to each of the other responsible defendants or third parties under subsection (2) is calculated by multiplying the uncollectable amount by the percentage that corresponds to the degree of responsibility of that defendant or third party for the total financial loss.

• Marginal note:Maximum amount

  (4) The maximum amount determined under subsection (3), in respect of any responsible defendant or third party, may not be more than fifty per cent of the amount originally awarded against that responsible defendant or third party.

Marginal note:Exception — fraud

• 237.4 (1) The plaintiff may recover the whole amount of the damages awarded by the court from any defendant or third party who has been held responsible for a financial loss if it was established that the defendant or third party acted fraudulently or dishonestly.

• Marginal note:Contribution

  (2) The defendant or third party referred to in subsection (1) is entitled to claim contribution from any other defendant or third party who is held responsible for the loss.

Joint and Several, or Solidary, Liability

Marginal note:Individual or personal body corporate

• 237.5 (1) Defendants and third parties referred to in subsection 237.2(1) are jointly and severally, or solidarily, liable for the damages awarded to a plaintiff who is an individual or a personal body corporate and who

  • (a) had a financial interest in a corporation on the day that an error, omission or misstatement in financial information concerning the corporation occurred, or acquired a financial interest in the period between the day that the error, omission or misstatement occurred and the day, as determined by the court, that it was generally disclosed; and

  • (b) has established that the value of the plaintiff’s total financial interest in the corporation was not more than the prescribed amount at the close of business on the day that the error, omission or misstatement occurred or at the close of business on any day that the plaintiff acquired a financial interest in the period referred to in paragraph (a).

• Marginal note:Exception

  (1.1) Subsection (1) does not apply when the plaintiff brings the action as a member of a partnership or other association or as a trustee in bankruptcy, liquidator, receiver or sequestrator of a body corporate.

• Marginal note:Interpretation

  (2) For the purposes of this section,

  • (a) a personal body corporate is a body corporate that is not actively engaged in any financial, commercial or industrial business and that is controlled by an individual, or by a group of individuals who are connected by marriage, common-law partnership or any legal parent-child relationship or are connected indirectly by a combination of those relationships, whether or not the individuals through whom they are connected are members of the group; and

  • (b) a common-law partnership is a relationship between two persons who are cohabiting with each other in a conjugal relationship and have done so for a period of at least one year.

Marginal note:Equitable grounds

• 237.6 (1) If the value of the plaintiff’s total financial interest referred to in subsection 237.5(1) is greater than the prescribed amount, a court may nevertheless determine that the defendants and third parties are jointly and severally, or solidarily, liable if the court considers that it is just and reasonable to do so.

• Marginal note:Factors

  (2) The Governor in Council may establish factors that the court shall take into account in deciding whether to hold the defendants and third parties jointly and severally, or solidarily, liable.

• Marginal note:Statutory Instruments Act

  (3) The Statutory Instruments Act does not apply to the factors referred to in subsection (2), but the factors shall be published in Part I of the Canada Gazette.

Marginal note:Value of security

• 237.7 (1) When, in order to establish the value of the total financial interest referred to in subsection 237.5(1), it is necessary to determine the value of a security that is traded on an organized market, the value of the security is, on the day specified in subsection (3),

  • (a) the closing price of that class of security;

  • (b) if no closing price is given, the average of the highest and lowest prices of that class of security; or

  • (c) if the security was not traded, the average of the bid and ask prices of that class of security.

• Marginal note:Court may adjust value

  (2) The court may adjust the value of a security that has been determined under subsection (1) when the court considers it reasonable to do so.

• Marginal note:Valuation day

  (3) The value of the security is to be determined as of the day that the error, omission or misstatement occurred. If the security was acquired in the period between that day and the day, as determined by the court, that the error, omission or misstatement was generally disclosed, the value is to be determined as of the day that it was acquired.

• Marginal note:Definition of organized market

  (4) In this section, organized market means a recognized exchange for a class of securities or a market that regularly publishes the price of that class of securities in a publication that is generally available to the public.

Marginal note:Court determines value

• 237.8 (1) The court shall determine the value of all or any part of a financial interest that is subject to resale restrictions or for which there is no organized market.

• Marginal note:Factors

  (2) The Governor in Council may establish factors that the court may take into account in determining value under subsection (1).

• Marginal note:Statutory Instruments Act

  (3) The Statutory Instruments Act does not apply to the factors referred to in subsection (2), but the factors shall be published in Part I of the Canada Gazette.

Marginal note:Application to determine value

237.9 The plaintiff may, by application made at any time before or during the course of the proceedings, request the court to determine the value of the plaintiff’s financial interest for the purpose of subsection 237.5(1).

PART XXRemedies, Offences and Punishment

Marginal note:Definitions

238 In this Part,

action

action means an action under this Act; (action)

complainant

complainant means

• (a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates,

• (b) a director or an officer or a former director or officer of a corporation or any of its affiliates,

• (c) the Director, or

• (d) any other person who, in the discretion of a court, is a proper person to make an application under this Part. (plaignant)

Marginal note:Commencing derivative action

• 239 (1) Subject to subsection (2), a complainant may apply to a court for leave to bring an action in the name and on behalf of a corporation or any of its subsidiaries, or intervene in an action to which any such body corporate is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the body corporate.

• Marginal note:Conditions precedent

  (2) No action may be brought and no intervention in an action may be made under subsection (1) unless the court is satisfied that

  • (a) the complainant has given notice to the directors of the corporation or its subsidiary of the complainant’s intention to apply to the court under subsection (1) not less than fourteen days before bringing the application, or as otherwise ordered by the court, if the directors of the corporation or its subsidiary do not bring, diligently prosecute or defend or discontinue the action;

  • (b) the complainant is acting in good faith; and

  • (c) it appears to be in the interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued.

Marginal note:Powers of court

240 In connection with an action brought or intervened in under section 239, the court may at any time make any order it thinks fit including, without limiting the generality of the foregoing,

• (a) an order authorizing the complainant or any other person to control the conduct of the action;

• (b) an order giving directions for the conduct of the action;

• (c) an order directing that any amount adjudged payable by a defendant in the action shall be paid, in whole or in part, directly to former and present security holders of the corporation or its subsidiary instead of to the corporation or its subsidiary; and

• (d) an order requiring the corporation or its subsidiary to pay reasonable legal fees incurred by the complainant in connection with the action.

Marginal note:Application to court re oppression

• 241 (1) A complainant may apply to a court for an order under this section.

• Marginal note:Grounds

  (2) If, on an application under subsection (1), the court is satisfied that in respect of a corporation or any of its affiliates

  • (a) any act or omission of the corporation or any of its affiliates effects a result,

  • (b) the business or affairs of the corporation or any of its affiliates are or have been carried on or conducted in a manner, or

  • (c) the powers of the directors of the corporation or any of its affiliates are or have been exercised in a manner

  that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer, the court may make an order to rectify the matters complained of.

• Marginal note:Powers of court

  (3) 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 restraining the conduct complained of;

  • (b) an order appointing a receiver or receiver-manager;

  • (c) an order to regulate a corporation’s affairs by amending the articles or by-laws or creating or amending a unanimous shareholder agreement;

  • (d) an order directing an issue or exchange of securities;

  • (e) an order appointing directors in place of or in addition to all or any of the directors then in office;

  • (f) an order directing a corporation, subject to subsection (6), or any other person, to purchase securities of a security holder;

  • (g) an order directing a corporation, subject to subsection (6), or any other person, to pay a security holder any part of the monies that the security holder paid for securities;

  • (h) an order varying or setting aside a transaction or contract to which a corporation is a party and compensating the corporation or any other party to the transaction or contract;

  • (i) an order requiring a corporation, within a time specified by the court, to produce to the court or an interested person financial statements in the form required by section 155 or an accounting in such other form as the court may determine;

  • (j) an order compensating an aggrieved person;

  • (k) an order directing rectification of the registers or other records of a corporation under section 243;

  • (l) an order liquidating and dissolving the corporation;

  • (m) an order directing an investigation under Part XIX to be made; and

  • (n) an order requiring the trial of any issue.

• Marginal note:Duty of directors

  (4) If an order made under this section directs amendment of the articles or by-laws of a corporation,

  • (a) the directors shall forthwith comply with subsection 191(4); and

  • (b) no other amendment to the articles or by-laws shall be made without the consent of the court, until a court otherwise orders.

• Marginal note:Exclusion

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

• Marginal note:Limitation

  (6) A corporation shall not make a payment to a shareholder under paragraph (3)(f) or (g) if there are reasonable grounds for believing that

  • (a) the corporation is or would after that payment be unable to pay its liabilities as they become due; or

  • (b) the realizable value of the corporation’s assets would thereby be less than the aggregate of its liabilities.

• Marginal note:Alternative order

  (7) An applicant under this section may apply in the alternative for an order under section 214.