Canada Business Corporations Regulations, 2001 (SOR/2001-512)

• 81 (1) If a constrained share corporation has sent a notice referred to in subsection 80(3) and has not sold, under subsection 46(1) of the Act, any share in respect of which the notice was sent, and if the corporation changes its conclusion referred to in paragraph 80(3)(a) or its directors change their determination referred to in paragraph 80(3)(b) or if there is a change in the reason for the conclusion or determination, the corporation shall immediately send by registered mail to the recipient of that notice a notice of the change to the conclusion, to the determination or to the reason for the conclusion or determination, including the reason for the change.

• (2) When a corporation sends a notice under subsection (1), the corporation shall, at the time the notice is sent, enter or cause to be entered in the securities register of the corporation the particulars of the notice, including the date on which it was sent.

• 82 (1) No share shall be sold by a constrained share corporation under subsection 46(1) of the Act unless

  • (a) the corporation has sent the notices referred to in subsections 80(1) and (3) to the person shown in the securities register of the corporation as the holder of the share;

  • (b) not less than 150 days but not more than 300 days have elapsed from the day on which the notice referred to in subsection 80(1) was sent to the holder of the share;

  • (c) not less than 60 days but not more than 150 days have elapsed from the day on which the notice referred to in subsection 80(3) was sent to the holder of the share;

  • (d) the corporation has concluded that the share is owned, or the directors of the corporation have determined in accordance with subsection 80(2) that the share may be owned, contrary to a constraint referred to in paragraph (c) of the definition constraint in section 73 and, at the time of sale, the corporation has no reasonable grounds on which to change its conclusion or the directors of the corporation have no reasonable grounds on which to change their determination, as the case may be;

  • (e) the sale takes place

    • (i) on a stock exchange where shares of the corporation are listed and posted for trading, or

    • (ii) if shares of the corporation are not listed and posted for trading on a stock exchange, in any other manner that the directors of the corporation determine to be appropriate; and

  • (f) the corporation sells the share with a view to obtaining the best sale price available in the circumstances at the time of sale.

• (2) No share in respect of which a notice is sent in accordance with subsection 80(1) shall be sold by a constrained share corporation under subsection 46(1) of the Act if a transfer of the share is registered in the securities register of the corporation after the notice was sent, unless the corporation again complies with the requirements set out in this Part respecting the sale of the share.

• 83 (1) Immediately after a sale of shares by a constrained share corporation under subsection 46(1) of the Act, the corporation shall

  • (a) register the transfer or a notice of the sale of the shares or cause the transfer or a notice of the sale of the shares to be registered in the securities register of the corporation; and

  • (b) send a notice of the sale to the person shown in the securities register of the corporation as the holder of the shares at the time of the sale.

• (2) The notice referred to in paragraph (1)(b) shall

  • (a) state the number of shares sold;

  • (b) identify the certificate that represents the shares sold, by certificate number or otherwise;

  • (c) state the date and manner of sale;

  • (d) state the manner in which the person entitled to receive the net proceeds of the sale under subsection 46(3) of the Act may obtain them;

  • (e) state that the corporation concluded that the shares were owned, or that the directors determined in accordance with subsection 80(2) that the shares may be owned, contrary to a constraint referred to in paragraph (c) of the definition constraint in section 73 and state the reason why the corporation so concluded or the directors so determined, as the case may be; and

  • (f) contain a statement, if not all of the shares of the holder represented by a certificate were sold, that not all of the shares were sold and that a certificate that represents the shares that were not sold will be issued on surrender for cancellation of the certificate that represents the shares sold.

84 For the purpose of subsection 47(1) of the Act, the proceeds of a sale by a constrained share corporation under subsection 46(1) of the Act shall be deposited in an interest-bearing account with a chartered bank in Canada to which the Bank Act applies or a trust company in Canada to which the Trust and Loan Companies Act applies.

Disclosure of Beneficial Ownership

85 Section 86 applies to a constrained share corporation that has provisions in its articles imposing a constraint referred to in paragraph (a) or (b) of the definition constraint in section 73.

• 86 (1) Subject to section 103 of the Act, the directors of a constrained share corporation may make, amend or repeal any by-laws required to administer the constrained share provisions set out in the articles of the corporation, including by-laws

  • (a) to require any person in whose name shares of the corporation are registered to provide a statutory declaration under the Canada Evidence Act concerning

    • (i) whether the shareholder is the beneficial owner of the shares of the corporation or holds them for a beneficial owner,

    • (ii) whether the shareholder is an associate of any other shareholder,

    • (iii) whether the shareholder or beneficial owner is a Canadian, and

    • (iv) any further relevant facts;

  • (b) to require any person seeking to have a transfer of a voting share registered in their name or to have a voting share issued to them to provide a statutory declaration as described in paragraph (a); and

  • (c) to determine the circumstances in which any declarations are required, their form and the times when they are to be provided.

• (2) If a person is required to provide a declaration under a by-law made under subsection (1), the directors may refuse to register a transfer of a voting share in their name or to issue a voting share to them until that person has provided the declaration.

• (3) In administering the constrained share provisions set out in the articles of a constrained share corporation, the directors of the corporation may rely on

  • (a) a statement made in a declaration referred to in subsection (1) or (2); and

  • (b) the knowledge of a director, officer, employee, agent or mandatary of the corporation.

• (4) If the directors are required to determine the total number of voting shares of a constrained share corporation held by or on behalf of persons other than Canadians, the directors may rely on the sum of the voting shares held by every shareholder whose latest address as shown in the securities register is

  • (a) outside Canada; and

  • (b) in Canada but who, to the knowledge of a director, officer, employee, agent or mandatary of the corporation, is not a Canadian.

• (5) For the purpose of subsection (4), the directors may rely on the securities register of the constrained share corporation as of any date after the day on which the corporation became a constrained share corporation, but that date shall not be more than four months before the day on which the determination is made.

References and Definitions for the Purpose of Certain Provisions of the Act

• 87 (1) For the purpose of paragraph 174(1)(b) of the Act,

  • (a) the following laws are prescribed:

    • (i) the Canadian Aviation Regulations made under the Aeronautics Act,

    • (ii) the Canada Transportation Act and any regulations made under it,

    • (iii) the Canada Oil and Gas Land Regulations and the Canada Oil and Gas Drilling and Production Regulations,

    • (iv) the Broadcasting Act,

    • (v) the Northern Mineral Exploration Assistance Regulations made under Appropriation Act No. 9, 1966,

    • (vi) section 19 of the Income Tax Act,

    • (vii) the Securities Act (Ontario), R.S.O. 1990, c. S.5, and any regulations made under it, as amended from time to time,

    • (viii) the Securities Act (Quebec), CQRL c. V-1.1, and any regulations made under it, as amended from time to time, and

    • (ix) any other law of Canada that has requirements in relation to Canadian ownership, or any other law of a province, as amended from time to time, that has requirements in relation to Canadian ownership; and

  • (b) financial intermediary means a bank, trust company, loan company, insurance company, investment company and body corporate that carries on business as a securities broker, a dealer or an underwriter.

• (2) For the purposes of subsection 32(1) and paragraphs 46(1)(a), 49(10)(a) and 174(1)(c) of the Act, the following laws are prescribed:

  • (a) the Canada Petroleum Resources Act and any regulations made under it; and

  • (b) the Canada Transportation Act and any regulations made under it.

• (3) For the purpose of paragraphs 46(1)(b), 49(10)(b) and 174(1)(d) of the Act, the following laws are prescribed:

  • (a) the Insurance Companies Act and any regulations made under it; and

  • (b) the Trust and Loan Companies Act and any regulations made under it.

PART 10Rules of Procedure for Applications for Exemptions

Application

88 This Part applies to every application for an exemption under subsection 2(6), 10(2), 82(3) or 151(1), section 156 or subsection 171(2) or 187(11) of the Act.

Time of Filing Applications

• 89 (1) An application for an exemption under

  • (a) subsection 2(6) of the Act may be made at any time;

  • (b) subsection 10(2) or 187(11) of the Act shall be made before the date of issue of the certificate of continuance referred to in subsection 187(4) of the Act;

  • (c) subsection 82(3) of the Act shall be made at least 30 days before the corporation is required to comply with Part VIII of the Act;

  • (d) subsection 151(1) of the Act shall be made before the date of the notice referred to in subsection 149(1) of the Act;

  • (e) section 156 of the Act shall be made at least 60 days before the documents in respect of which the exemption is requested are to be sent to the Director; and

  • (f) subsection 171(2) of the Act may be made at any time.

• (2) Despite subsection (1), the Director shall extend the time for making an application for an exemption if the applicant establishes that no prejudice will result from the extension.

Notice by Director of Decision

90 The Director shall, within 30 days after receipt of an application for an exemption, grant the exemption requested or send to the applicant written notice of the Director’s refusal, together with reasons for the refusal.

General

91 The Director may request that an applicant for an exemption provide the Director with further information or that any other person provide the Director with information in writing that is relevant to the application.

92 The Director shall give the applicant for an exemption a copy of any information received from any other person under section 91 and shall allow the applicant a reasonable opportunity to respond in writing.

93 If an applicant for an exemption or a person from whom the Director has requested information under section 91 does not provide the information within the time specified by the Director, the Director may deal with the application without regard to the information.

94 If the Director does not grant an exemption or send written notice of the Director’s refusal within the time specified in section 90, the applicant may exercise their rights under section 246 of the Act as if the Director had refused the exemption.