Canada Not-for-profit Corporations Act (S.C. 2009, c. 23)

Marginal note:Contents of certificate

• 42 (1) The following information shall be stated on the face of each debt obligation certificate issued by an issuer:

  • (a) the name of the issuer;

  • (b) the words “Incorporated under the Canada Not-for-profit Corporations Act”, “constituée sous l’autorité de la Loi canadienne sur les organisations à but non lucratif”, “Subject to the Canada Not-for-profit Corporations Act” or “assujettie à la Loi canadienne sur les organisations à but non lucratif”;

  • (c) the name of the person to whom it was issued unless it is in bearer form; and

  • (d) the value represented by the certificate.

• Marginal note:Restrictions

  (2) No restriction on transfer, lien or hypothec in favour of the issuer or unanimous member agreement is effective against a transferee of a debt obligation, issued by an issuer or by a body corporate before it is continued under this Act, who has no actual knowledge of the restriction, lien, hypothec or agreement unless it or a reference to it is noted conspicuously on the debt obligation certificate.

• Marginal note:Restrictions

  (3) If the issued debt obligations of an issuer remain outstanding and are held by more than one person, the issuer shall not restrict the transfer or ownership of its debt obligations of any class or series.

Marginal note:Contents of certificate

• 43 (1) Every debt obligation certificate, if the articles authorize more than one class or series of debt obligations, shall legibly

  • (a) state the rights, privileges, restrictions and conditions attached to the debt obligations of each class and series that exist when the debt obligation certificate is issued; or

  • (b) state that the class or series of debt obligations that it represents has rights, privileges, restrictions or conditions attached to it and that the issuer will provide a debt obligation holder, on demand and without charge, with a full copy of the text of the rights, privileges, restrictions and conditions attached to each class or series authorized to be issued.

• Marginal note:Copy of text

  (2) If a debt obligation certificate contains a statement referred to in paragraph (1)(b), the issuer shall, on request, provide the debt obligation holder with the copy of the text referred to in that paragraph.

Registers

Marginal note:Registers

• 44 (1) A corporation that issues debt obligations shall maintain a debt obligations register in which it records the debt obligations issued by it in registered form, showing the prescribed information with respect to each class or series.

• Marginal note:Location of register

  (2) The debt obligations register shall be maintained at the issuer’s registered office or at any other place in Canada designated by the directors.

• Marginal note:Branch registers

  (3) An issuer may maintain additional branch debt obligations registers in other places designated by the directors.

• Marginal note:Contents of branch register

  (4) A branch debt obligations register shall only contain particulars of debt obligations issued or transferred at the branch. The same information shall also be recorded in the central register.

• Marginal note:Production of certificates

  (5) An issuer, its agent or mandatary, or a trustee as defined in subsection 104(1) is not required to produce a cancelled debt obligation certificate in registered form after the prescribed period.

Marginal note:Agent or mandatary

45 An issuer may appoint an agent or mandatary to maintain debt obligations registers on its behalf.

Marginal note:Registration

46 The registration of the issue or transfer of a debt obligation in any debt obligations register is complete and valid registration for all purposes.

Marginal note:Trustee

47 An issuer or a trustee as defined in subsection 104(1) may treat the person whose name appears on the debt obligations register as the debt obligation’s owner for all purposes.

Marginal note:Constructive registered holder

48 If an issuer restricts the right to transfer its debt obligations, the issuer may, despite section 47, treat a person as the registered holder of a debt obligation if the person provides the issuer with evidence that meets the requirements of the issuer that the person is

• (a) the heir or legatee of a deceased debt obligation holder or the fiduciary of the estate or succession of a deceased debt obligation holder or of a registered debt obligation holder who is a minor, an incapable person or a missing person; or

• (b) a liquidator of, or a trustee in bankruptcy for, a registered debt obligation holder.

Marginal note:Proof of ownership

49 An issuer shall treat a person, other than one described in section 48, as being entitled to exercise the rights and privileges attached to a debt obligation if the person provides proof that the person has acquired ownership of the debt obligation by operation of law or has legal authority to exercise the rights and privileges.

Marginal note:Joint holder

50 If satisfactory proof of the death of a joint holder of a debt obligation with a right of survivorship is provided to an issuer, the issuer may treat any surviving joint holder as the owner of the debt obligation.

Marginal note:Duties of issuer

51 An issuer is not required to inquire into the existence of, or see to the performance of, any duty owed to a third person by a registered holder, or a person who may be treated as a registered holder, of a debt obligation.

Marginal note:Minors

52 If a minor exercises a right of ownership in a debt obligation of an issuer, no subsequent repudiation or avoidance or, in Quebec, nullity or reduction of obligations is effective against the issuer.

Marginal note:Deceased owner

• 53 (1) Subject to any applicable law relating to the collection of taxes, a person who is an heir or a fiduciary of an estate or succession of a deceased debt obligation holder is entitled to become the registered holder or to designate a registered holder if the person deposits the following information with the issuer or its transfer agent, together with any reasonable assurances that the issuer may require:

  • (a) the debt obligation certificate or, in default of one, a document proving that the deceased was the debt obligation holder;

  • (b) a document proving the death of the debt obligation holder; and

  • (c) a document proving that the heir or fiduciary has the right under the law of the place in which the deceased was domiciled immediately before their death to deal with the debt obligation.

• Marginal note:Endorsement

  (2) A debt obligation certificate referred to in paragraph (1)(a) shall be endorsed

  • (a) in the case of a transfer to an heir or fiduciary, by that person; and

  • (b) in any other case, in a manner acceptable to the issuer.

• Marginal note:Right of issuer

  (3) Deposit of the documents required by subsection (1) empowers an issuer or its transfer agent to record in a debt obligations register the transmission of a debt obligation from the deceased holder to the heir or fiduciary or to any person that the heir or fiduciary may designate and to treat the person who becomes a registered holder as the owner of the debt obligation.

Marginal note:Overissue

• 54 (1) Subject to this section, the provisions of this Part that validate a debt obligation or compel its issue or reissue do not apply if the validation, issue or reissue of a debt obligation would result in overissue.

• Marginal note:Identical debt obligation

  (2) A person who is entitled to a validation or issue may, if there has been an overissue and if a valid debt obligation that is similar in all respects to the debt obligation involved in the overissue is reasonably available for purchase, compel the issuer to purchase and deliver that debt obligation against the surrender of the debt obligation that the person holds.

• Marginal note:If identical debt obligation not available

  (3) If a valid debt obligation that is similar in all respects to the debt obligation involved in the overissue is not reasonably available for purchase, the person who is entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid debt obligation.

• Marginal note:Increase in capital

  (4) The overissued debt obligations are valid from the date they were issued only if the issuer increases the number of its authorized debt obligations to a number equal to or greater than the number of debt obligations previously authorized plus the number of the debt obligations overissued.

Proceedings

Marginal note:Rules of action

55 The following rules apply in an action on a debt obligation:

• (a) each signature on the debt obligation certificate or in a necessary endorsement is admitted unless specifically denied in the pleadings;

• (b) a signature on the debt obligation is presumed to be genuine and authorized but, if the effectiveness of the signature is in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;

• (c) if a signature is admitted or established, production of a debt obligation certificate entitles the holder to recover on it unless the other party establishes a defence or defect going to the validity of the debt obligation; and

• (d) if the other party establishes the defence or defect, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or some other person under whom the claim is made.

Delivery

Marginal note:Delivery of debt obligations

• 56 (1) A person who is required to deliver debt obligations may deliver any debt obligation of the specified issue

  • (a) in bearer form;

  • (b) in registered form in the name of the transferee; or

  • (c) endorsed to the person or in blank.

• Marginal note:Limitation

  (2) Subsection (1) is subject to any agreement to the contrary, to any applicable Act of Parliament or of the legislature of a province, to any applicable regulation or to any applicable rule of a stock exchange or other regulatory body.

General

Marginal note:Incorporation by reference

• 57 (1) The terms of a debt obligation include those stated on the debt obligation and those incorporated by reference to another document, an Act of Parliament or of the legislature of a province, a regulation, a rule or an order to the extent that the incorporated terms do not conflict with those stated on the debt obligation.

• Marginal note:Purchaser without notice

  (2) Subsection (1) applies to a good faith purchaser but the incorporation by reference is itself not notice of a defect to the purchaser even if the debt obligation expressly states that a person accepting it admits that notice.

Marginal note:Validity of debt obligation

58 A debt obligation is valid in the hands of a good faith purchaser.

Marginal note:Defence

59 Subject to section 62, the fact that a debt obligation is not genuine is a complete defence for the issuer even against a good faith purchaser.

Marginal note:Defences

60 All other defences of an issuer, including non-delivery and conditional delivery of a debt obligation, are ineffective against a good faith purchaser.

Marginal note:Deemed notice

• 61 (1) A purchaser is deemed to have notice of any defect in the issue of a debt obligation or any defence of the issuer if the debt obligation becomes stale within the meaning of subsection (2).

• Marginal note:Stale debt obligation

  (2) A debt obligation becomes stale if

  • (a) the purchaser takes the debt obligation later than the prescribed period that is after

    • (i) the date on which performance of the principal obligation evidenced by the debt obligation was due, or

    • (ii) the date on or after which the debt obligation is to be presented or surrendered for redemption or exchange; or

  • (b) the payment of money or the delivery of debt obligations is required in order to present or surrender the debt obligation, the money or debt obligations are available on the day for the payment or delivery and the purchaser takes the debt obligation later than the prescribed period that is after that day.

Marginal note:Unauthorized signature

• 62 (1) Subject to subsection (2), an unauthorized signature on a debt obligation is ineffective.

• Marginal note:Limited effectiveness

  (2) An unauthorized signature on a debt obligation is effective in favour of a good faith purchaser if the signature was made by

  • (a) an authenticating trustee, transfer agent or other person entrusted by the issuer with the duty to sign the debt obligation, or similar debt obligations, or to prepare them for signing; or

  • (b) an employee of the issuer or a person referred to in paragraph (a) who handles the debt obligation in the ordinary course of their duties.

Marginal note:Completion of debt obligation

63 If a debt obligation contains the signatures necessary for its issue or transfer but is incomplete in another respect, any person may complete it in accordance with their authority.

Marginal note:Enforceability

64 A debt obligation that was completed incorrectly is enforceable by a good faith purchaser.

Marginal note:Fraud

65 A completed debt obligation that was improperly altered, even if fraudulently altered, remains enforceable but only according to its original terms.

Marginal note:Guarantees

• 66 (1) A person signing a debt obligation as an authenticating trustee, transfer agent or other person entrusted by the issuer with the duty to sign the debt obligation guarantees to a good faith purchaser that

  • (a) the debt obligation is genuine;

  • (b) the person’s acts in connection with the debt obligation are within the person’s authority; and

  • (c) the person has reasonable grounds for believing that the debt obligation is in the form and within the amount the issuer is authorized to issue.

• Marginal note:Liability

  (2) Unless agreed otherwise, a person referred to in subsection (1) does not assume any further liability for the validity of the debt obligation.

Marginal note:Acquisition of rights

• 67 (1) On delivery of a debt obligation, the purchaser of the debt obligation acquires the rights in it that the transferor had or had authority to convey.

• Marginal note:Claim free

  (2) A good faith purchaser of a debt obligation acquires it free from any adverse claim.

• Marginal note:No better position

  (3) A purchaser who was a party to a fraud or illegality affecting a debt obligation or who, as a prior holder, had notice of an adverse claim does not have a better position by taking from a later good faith purchaser.