Canada Business Corporations Act

Marginal note:Disclosure of interest

• 120 (1) A director or an officer of a corporation shall disclose to the corporation, in writing or by requesting to have it entered in the minutes of meetings of directors or of meetings of committees of directors, the nature and extent of any interest that he or she has in a material contract or material transaction, whether made or proposed, with the corporation, if the director or officer

  • (a) is a party to the contract or transaction;

  • (b) is a director or an officer, or an individual acting in a similar capacity, of a party to the contract or transaction; or

  • (c) has a material interest in a party to the contract or transaction.

• Marginal note:Time of disclosure for director

  (2) The disclosure required by subsection (1) shall be made, in the case of a director,

  • (a) at the meeting at which a proposed contract or transaction is first considered;

  • (b) if the director was not, at the time of the meeting referred to in paragraph (a), interested in a proposed contract or transaction, at the first meeting after he or she becomes so interested;

  • (c) if the director becomes interested after a contract or transaction is made, at the first meeting after he or she becomes so interested; or

  • (d) if an individual who is interested in a contract or transaction later becomes a director, at the first meeting after he or she becomes a director.

• Marginal note:Time of disclosure for officer

  (3) The disclosure required by subsection (1) shall be made, in the case of an officer who is not a director,

  • (a) immediately after he or she becomes aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting;

  • (b) if the officer becomes interested after a contract or transaction is made, immediately after he or she becomes so interested; or

  • (c) if an individual who is interested in a contract later becomes an officer, immediately after he or she becomes an officer.

• Marginal note:Time of disclosure for director or officer

  (4) If a material contract or material transaction, whether entered into or proposed, is one that, in the ordinary course of the corporation’s business, would not require approval by the directors or shareholders, a director or officer shall disclose, in writing to the corporation or request to have it entered in the minutes of meetings of directors or of meetings of committees of directors, the nature and extent of his or her interest immediately after he or she becomes aware of the contract or transaction.

• Marginal note:Voting

  (5) A director required to make a disclosure under subsection (1) shall not vote on any resolution to approve the contract or transaction unless the contract or transaction

  • (a) relates primarily to his or her remuneration as a director, officer, employee, agent or mandatary of the corporation or an affiliate;

  • (b) is for indemnity or insurance under section 124; or

  • (c) is with an affiliate.

• Marginal note:Continuing disclosure

  (6) For the purposes of this section, a general notice to the directors declaring that a director or an officer is to be regarded as interested, for any of the following reasons, in a contract or transaction made with a party, is a sufficient declaration of interest in relation to the contract or transaction:

  • (a) the director or officer is a director or officer, or acting in a similar capacity, of a party referred to in paragraph (1)(b) or (c);

  • (b) the director or officer has a material interest in the party; or

  • (c) there has been a material change in the nature of the director’s or the officer’s interest in the party.

• Marginal note:Access to disclosures

  (6.1) The shareholders of the corporation may examine the portions of any minutes of meetings of directors or of committees of directors that contain disclosures under this section, and any other documents that contain those disclosures, during the usual business hours of the corporation.

• Marginal note:Avoidance standards

  (7) A contract or transaction for which disclosure is required under subsection (1) is not invalid, and the director or officer is not accountable to the corporation or its shareholders for any profit realized from the contract or transaction, because of the director’s or officer’s interest in the contract or transaction or because the director was present or was counted to determine whether a quorum existed at the meeting of directors or committee of directors that considered the contract or transaction, if

  • (a) disclosure of the interest was made in accordance with subsections (1) to (6);

  • (b) the directors approved the contract or transaction; and

  • (c) the contract or transaction was reasonable and fair to the corporation when it was approved.

• Marginal note:Confirmation by shareholders

  (7.1) Even if the conditions of subsection (7) are not met, a director or officer, acting honestly and in good faith, is not accountable to the corporation or to its shareholders for any profit realized from a contract or transaction for which disclosure is required under subsection (1), and the contract or transaction is not invalid by reason only of the interest of the director or officer in the contract or transaction, if

  • (a) the contract or transaction is approved or confirmed by special resolution at a meeting of the shareholders;

  • (b) disclosure of the interest was made to the shareholders in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; and

  • (c) the contract or transaction was reasonable and fair to the corporation when it was approved or confirmed.

• Marginal note:Application to court

  (8) If a director or an officer of a corporation fails to comply with this section, a court may, on application of the corporation or any of its shareholders, set aside the contract or transaction on any terms that it thinks fit, or require the director or officer to account to the corporation for any profit or gain realized on it, or do both those things.