Financial Administration Act (R.S.C., 1985, c. F-11)

By-laws

Marginal note:By-laws

• 114 (1) The board of directors of a parent Crown corporation may, by resolution, make, amend or repeal any by-laws that regulate the business or affairs of the corporation, unless the charter or by-laws of the corporation otherwise provide.

• Marginal note:Copy of by-law to appropriate Minister and President of the Treasury Board

  (2) The board of directors of a parent Crown corporation shall, after making, amending or repealing a by-law, send a copy of that by-law to the appropriate Minister and the President of the Treasury Board.

• Marginal note:Amendment or repeal

  (3) The Governor in Council may direct the board of directors of a parent Crown corporation to make, amend or repeal a by-law within such period as is specified in the direction.

• Marginal note:Regulations

  (4) The Governor in Council may make regulations

  • (a) prescribing the form or the content of by-laws of parent Crown corporations and the time at, before or within which copies of by-laws are to be sent to the appropriate Minister and the President of the Treasury Board; and

  • (b) exempting a specified parent Crown corporation or a parent Crown corporation of a specified class from the application of subsection (2), either generally or in respect of any specified by-law or any by-law of a specified class.

• Marginal note:Restriction

  (5) No direction shall be given pursuant to subsection (3) to the Standards Council of Canada with respect to

  • (a) the manner in which voluntary standardization is promoted; or

  • (b) the provision of financial assistance to or for the benefit of a particular person or group of persons.

• Marginal note:Provision not applicable

  (6) Section 103 of the Canada Business Corporations Act does not apply in respect of any parent Crown corporation established under that Act.

Duties

Marginal note:Duty of care of directors and officers

• 115 (1) Every director and every officer of a Crown corporation in exercising his powers and performing his duties shall

  • (a) act honestly and in good faith with a view to the best interests of the corporation; and

  • (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

• Marginal note:Duty to comply

  (2) Every director and every officer of a parent Crown corporation or of a wholly-owned subsidiary of a parent Crown corporation shall comply with this Part, the regulations, the charter and by-laws of the corporation or subsidiary and any directive given to the corporation.

• Marginal note:Reliance on statements

  (3) A director or officer is not liable for a breach of his duty under subsection (1) or (2) if he relies in good faith on

  • (a) financial statements of the Crown corporation represented to him by an officer of the corporation or in a written report of the auditor of the corporation as fairly reflecting the financial condition of the corporation; or

  • (b) a report of a lawyer, accountant, engineer, appraiser or other person whose position or profession lends credibility to a statement made by him.

Marginal note:Disclosure of interest in contract

• 116 (1) A director or officer of a Crown corporation who

  • (a) is a party to a material contract or proposed material contract with the corporation, or

  • (b) is a director or officer of, or has a material interest in any person who is a party to, a material contract or proposed material contract with the corporation,

  shall disclose in writing to the corporation or request to have entered in the minutes of a meeting of the board of directors thereof the nature and extent of his interest.

• Marginal note:Time for disclosure by director

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

  • (a) at the meeting of the board of directors at which the proposed contract is first considered;

  • (b) if the director was not then interested in the proposed contract, at the first meeting of the board of directors after he becomes so interested;

  • (c) if the director becomes interested after the contract is made, at the first meeting of the board of directors after he becomes so interested; or

  • (d) if the director was interested in the contract before becoming a director, at the first meeting of the board of directors after he becomes a director.

• Marginal note:Time for disclosure by officer

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

  • (a) forthwith after he becomes aware that the contract or proposed contract is to be considered or has been considered at a meeting of the board of directors;

  • (b) if the officer becomes interested after the contract is made, forthwith after he becomes so interested; or

  • (c) if the officer was interested in the contract before becoming an officer, forthwith after he becomes an officer.

• Marginal note:Time for disclosure by director or officer

  (4) If a material contract or proposed material contract is one that, in the ordinary course of the business or activity of the Crown corporation, would not require approval by the board of directors, a director or officer shall disclose in writing to the corporation or request to have entered in the minutes of a meeting of the board of directors the nature and extent of his interest forthwith after the director or officer becomes aware of the contract or proposed contract.

• Marginal note:Voting

  (5) A director referred to in subsection (1) shall not vote on any resolution to approve the contract unless the contract is

  • (a) an arrangement by way of security for money lent to or obligations undertaken by him for the benefit of the Crown corporation or a subsidiary of the Crown corporation;

  • (b) one relating primarily to his remuneration or benefits as a director, officer, employee or agent of the Crown corporation or a subsidiary of the Crown corporation;

  • (c) one for indemnity or insurance under section 119; or

  • (d) one with an affiliate of the Crown corporation.

• Marginal note:Continuing disclosure

  (6) For the purposes of this section, a general notice to the board of directors by a director or officer, declaring that he is a director or officer of or has a material interest in a person and is to be regarded as interested in any contract made with that person, is a sufficient declaration of interest in relation to any contract so made.

• Marginal note:Definition of board of directors

  (7) In this section and section 117, board of directors includes a committee of directors.

Marginal note:Avoidance standards

117 A material contract between a Crown corporation and one or more of its directors or officers, or between a Crown corporation and another person of which a director or an officer of the Crown corporation is a director or an officer or in which he has a material interest, is neither void nor voidable by reason only of that relationship or by reason only that a director with an interest in the contract is present at or is counted to determine the presence of a quorum at a meeting of the board of directors that authorized the contract, if the director or officer disclosed his interest in accordance with subsection 116(2), (3), (4) or (6), as the case may be, and the contract was approved by the board of directors and it was reasonable and fair to the Crown corporation at the time it was approved.

Marginal note:Application to court

• 118 (1) Where a director or an officer of a Crown corporation fails to disclose his interest in a material contract in accordance with section 116, a court may, on application of the corporation or on behalf of the Crown, set aside the contract on such terms as it thinks fit.

• Definition of court

  (2) In this section, court means

  • (a) in the Province of Newfoundland and Labrador, the Trial Division of the Supreme Court of the Province;

  • (a.1) in the Province of Ontario, the Superior Court of Justice;

  • (b) in the Province of Quebec, the Superior Court of the Province;

  • (c) in the Province of New Brunswick, Manitoba, Saskatchewan or Alberta, the Court of Queen’s Bench for the Province;

  • (d) in the Provinces of Nova Scotia, British Columbia and Prince Edward Island, the Supreme Court of the Province; and

  • (e) in Yukon or the Northwest Territories, the Supreme Court, and in Nunavut, the Nunavut Court of Justice.

Indemnification

Marginal note:Obligation to indemnify

• 119 (1) The Treasury Board shall, in accordance with the regulations, if any, indemnify a present or former director or officer of a Crown corporation or a person who acts or acted at the request of a Minister or a Crown corporation as a director or officer of another corporation, and his or her heirs and legal representatives, against the costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, that are reasonably incurred by him or her in respect of any civil, criminal, administrative or investigative action or proceeding to which he or she is a party by reason of being or having been such a director or officer, if he or she

  • (a) acted honestly and in good faith with a view to the best interests of the Crown corporation or other corporation; and

  • (b) in the case of any criminal or administrative action or proceeding that is enforced by a monetary penalty, believed on reasonable grounds that the director’s or officer’s conduct was lawful.

• Marginal note:Advance of costs

  (1.1) The Treasury Board shall, in accordance with the regulations, if any, advance moneys to any individual referred to in subsection (1) for the costs, charges and expenses of an action or proceeding referred to in that subsection unless there are reasonable grounds to believe that the individual does not fulfil the conditions set out in paragraph (1)(a) or (b). The individual shall repay the moneys if he or she does not fulfil those conditions.

• Marginal note:Entitlement to indemnification

  (2) Despite anything in this section, a director or officer referred to in subsection (1) is, and his or her heirs and legal representatives are, entitled to indemnity, in accordance with the regulations, if any, from the Treasury Board in respect of the costs, charges and expenses reasonably incurred by him or her in connection with the defence of any civil, criminal, administrative or investigative action or proceeding to which he or she was made a party by reason of being or having been such a director or officer, if he or she

  • (a) was substantially successful on the merits of the defence of the action or proceeding; and

  • (b) fulfils the conditions set out in paragraphs (1)(a) and (b).

• Marginal note:Regulations

  (3) The Treasury Board may make regulations

  • (a) respecting indemnification and advances under this section, including terms and conditions governing them;

  • (b) defining, for the purposes of this section, the meaning of any word or expression used in it that is not defined in this Act;

  • (c) prescribing circumstances in which a director or officer is presumed not to have fulfilled the condition set out in paragraph (1)(a); and

  • (d) respecting the determination of the amounts to be paid as indemnification or advances under this section.

• Marginal note:Payable out of C.R.F.

  (4) Any amount payable in respect of indemnification under this section may be paid out of the Consolidated Revenue Fund.

DIVISION IIIFinancial Management and Control

Definitions

Marginal note:Definitions

120 In this Division,

annual report

annual report means a report made pursuant to section 150; (rapport annuel)

examiner

examiner means a person designated by or appointed pursuant to section 142 to carry out a special examination; (examinateur)

objectives

objectives, in relation to a parent Crown corporation, means the objectives of the corporation as set out in a corporate plan or an amendment to a corporate plan that has been approved pursuant to section 122; (objectifs)

special examination

special examination means an examination referred to in subsection 138(1). (examen spécial)

Financial Year

Marginal note:Financial year

• 121 (1) The financial year of a parent Crown corporation is the calendar year, unless the Governor in Council otherwise directs.

• Marginal note:Idem

  (2) Notwithstanding subsection (1), the financial year of a parent Crown corporation that was in effect on September 1, 1984 continues in effect, unless the Governor in Council has directed or directs otherwise.

Corporate Plans and Budgets

Marginal note:Corporate plans

• 122 (1) Each parent Crown corporation shall annually submit a corporate plan to the appropriate Minister for the approval of the Governor in Council on the recommendation of the appropriate Minister and, if required by the regulations, on the recommendation of the Minister of Finance.

• Marginal note:Scope of corporate plan

  (2) The corporate plan of a parent Crown corporation shall encompass all the businesses and activities, including investments, of the corporation and its wholly-owned subsidiaries, if any.

• Marginal note:Contents of corporate plan

  (3) The corporate plan of a parent Crown corporation shall include a statement of

  • (a) the objects or purposes for which the corporation is incorporated, or the restrictions on the businesses or activities that it may carry on, as set out in its charter;

  • (b) the corporation’s objectives for the period to which the plan relates and for each year in that period and the strategy the corporation intends to employ to achieve those objectives; and

  • (c) the corporation’s expected performance for the year in which the plan is required by the regulations to be submitted as compared to its objectives for that year as set out in the last corporate plan or any amendment thereto approved pursuant to this section.

• Marginal note:Form of corporate plan

  (4) The corporate plan of a parent Crown corporation shall be prepared in a form that clearly sets out information according to the major businesses or activities of the corporation and its wholly-owned subsidiaries, if any.

• Marginal note:Restriction on business or activity

  (5) No parent Crown corporation or wholly-owned subsidiary of a parent Crown corporation shall carry on any business or activity in any period in a manner that is not consistent with the last corporate plan of the parent Crown corporation or any amendment thereto approved pursuant to this section in respect of that period.

• Marginal note:Amendment to corporate plan

  (6) Where a parent Crown corporation, or a wholly-owned subsidiary of a parent Crown corporation, proposes to carry on any business or activity in any period in a manner that is not consistent with the last corporate plan of the corporation or any amendment thereto approved pursuant to this section in respect of that period, the corporation shall, before that business or activity is so carried on, submit an amendment to the corporate plan to the appropriate Minister for approval as described in subsection (1).

• Marginal note:Terms and conditions

  (6.1) The Governor in Council may specify such terms and conditions as the Governor in Council deems appropriate for the approval of a corporate plan or an amendment to a corporate plan.

• Marginal note:Regulations

  (7) The Governor in Council may make regulations prescribing, for the purposes of this section, the circumstances in which the recommendation of the Minister of Finance is required for the approval of a corporate plan or an amendment thereto.