Table of Contents — Master

VOLUME 1

Supplementary Table of Cases.................................................................. STC-1Table of Cases.......................................................................................... TC-1

CHAPTER 1 — NON-CORPORATE ORGANIZATIONS

1.1 — Unincorporated Business Organizations............................................ 1-11.1.1 Introduction ...................................................................................... 1-11.1.2 Sole Proprietorship and Division ....................................................... 1-4

1.1.2.1 Sole Proprietorship.................................................................... 1-41.1.2.1(a) Commercial Law Characteristics ................................. 1-41.1.2.1(b) Tax Factors ................................................................ 1-5

1.1.2.2 Corporate Division ................................................................... 1-71.1.2.2(a) Commercial Law Characteristics ................................. 1-71.1.2.2(b) Tax Factors ................................................................ 1-8

1.1.3 Joint Venture and Co-ownership........................................................ 1-81.1.3.1 Commercial Law Characteristics ............................................... 1-8

1.1.3.1(a) Joint Venture .............................................................. 1-81.1.3.1(b) Co-ownership.............................................................. 1-9

1.1.3.2 Tax Factors .............................................................................1-111.1.4 Business Trust (Including Real Estate Investment Trust)...................1-12

1.1.4.1 Commercial Law Characteristics ..............................................1-121.1.4.2 Tax Factors .............................................................................1-16

1.1.5 Limited Liability Company ...............................................................1-191.2 — Unincorporated Non-Profit Organizations .......................................1-221.2.1 Unincorporated Non-Profit Associations ..........................................1-221.2.2 Charitable Trusts ..............................................................................1-24

1.2.2.1 Charitable Trusts Distinguished from Other Trusts ..................1-241.2.2.2 Types of Charitable Trusts .......................................................1-25

1.2.3 Taxation of Non-Profit Organizations...............................................1-281.2.4 Regulation of Charities .....................................................................1-301.3 — General Partnerships and LLPs ......................................................1-351.3.1 Nature of Partnership .......................................................................1-35

1.3.1(a) Meaning of “Partnership”.............................................1-351.3.1(b) Indicia of Partnership ...................................................1-381.3.1(c) Subordination of Certain Loan Agreements and

Sales of Goodwill Providing for Share of Profits ...........1-401.3.2 External Relations and the Liability of Partners to Third

Parties ..............................................................................................1-411.3.2(a) Agency of Partners .......................................................1-41

TABLE OF CONTENTS

CON-1 (OCLP) (2014 – Rel. 2)

1.3.2(b) Partner Liability Regime...............................................1-441.3.3 Relations Among Partners Inter Se....................................................1-48

1.3.3(a) Default Rules ...............................................................1-481.3.3(b) Partnership Property.....................................................1-511.3.3(c) Fidelity .........................................................................1-521.3.3(d) Limited Rights of Assignees..........................................1-53

1.3.4 Ownership of Land ...........................................................................1-541.3.5 Dissolution .......................................................................................1-54

1.3.5(a) Dissolution Triggering Events .......................................1-541.3.5(b) Procedure .....................................................................1-551.3.5(c) Distribution of Partnership Property and

Liability for Deficiency .................................................1-551.3.6 Registration Requirements ................................................................1-591.3.7 Limited Liability Partnership ............................................................1-59

1.3.7.1 Function ..................................................................................1-591.3.7.2 LLP Liability Shield.................................................................1-601.3.7.3 Formation................................................................................1-611.3.7.4 Restrictions of Business Activities ............................................1-611.3.7.5 LLP Firm Name ......................................................................1-621.3.7.6 Extra-Provincial LLP ...............................................................1-621.3.7.7 BNA Registration ....................................................................1-63

1.3.8 Formation and Registration Requirements........................................1-631.3.8.1 General ....................................................................................1-631.3.8.2 Name Registration by a General Partnership or

LLP .........................................................................................1-631.3.8.3 Partnership Record ..................................................................1-651.3.8.4 Business Name Other than Firm Name ....................................1-661.3.8.5 Registration Fees .....................................................................1-671.3.8.6 Cancellation of a Business Name Registration..........................1-671.3.8.7 Renewals..................................................................................1-691.3.8.8 Civil Remedy ...........................................................................1-691.3.8.9 Effect of Noncompliance..........................................................1-691.3.8.10 Offences .................................................................................1-711.3.8.11 Prohibited and Restricted Business Names .............................1-71

1.3.9 Transaction Opinions Involving General Partnershipsor LLPs ............................................................................................1-72

1.3.9.1 General ....................................................................................1-721.3.9.2 Scope of Examination ..............................................................1-731.3.9.3 Formation and Existence of Partnership...................................1-731.3.9.4 Partnership Authorization ........................................................1-741.3.9.5 Execution and Delivery ............................................................1-751.3.9.6 Enforceability...........................................................................1-76

1.3.10 Taxation of Partnerships and Partners ............................................1-771.3.10.1 Fiscal Period ..........................................................................1-77

TABLE OF CONTENTS

CON-2

1.3.10.2 Nature of Partnership Taxation..............................................1-771.3.10.3 Special Rules Applicable to Calculating Partnership

Income ...................................................................................1-781.3.10.4 Flow-Through of Partnership Losses ......................................1-801.3.10.5 Disposition of Partnership Interest .........................................1-81

1.4 — Limited Partnerships.......................................................................1-831.4.1 Overview...........................................................................................1-831.4.2 LP Structure .....................................................................................1-84

1.4.2.1 Basic Requirements ..................................................................1-841.4.2.2 LP Declarations (and Declarations of Change).........................1-861.4.2.3 Consequences of Non-compliance ............................................1-881.4.2.4 LP Name Requirements ...........................................................1-891.4.2.5 LP Documents .........................................................................1-90

1.4.2.5(a) Record of Limited Partners........................................1-901.4.2.5(b) Other LP Documents and Rights of Inspection..........1-91

1.4.3 Rights, Liabilities and Immunities of Partners...................................1-921.4.3.1 General Partners ......................................................................1-921.4.3.2 Limited Partners ......................................................................1-92

1.4.3.2(a) Limitation of Liability................................................1-921.4.3.2(b) Return of Contribution..............................................1-961.4.3.2(c) Assignment of Limited Partner’s Interest ....................1-961.4.3.2(d) Other Rights of Limited Partners...............................1-97

1.4.4 Dissolution of LP .............................................................................1-991.4.4.1 Triggering Dissolution..............................................................1-991.4.4.2 Distributions on Dissolution ....................................................1-99

1.4.5 Extra-Provincial LP ........................................................................ 1-1001.4.5.1 Registration Requirements ..................................................... 1-1001.4.5.2 Consequences of Non-compliance .......................................... 1-1011.4.5.3 Record of Limited Partners .................................................... 1-101

1.4.6 Manitoba LPs................................................................................. 1-1021.4.7 Transaction Opinions Involving LPs ............................................... 1-102

1.4.7.1 Overview................................................................................ 1-1021.4.7.2 Scope of Examination ............................................................ 1-1031.4.7.3 Formation and Existence of LP.............................................. 1-1031.4.7.4 Corporate Status of GP ......................................................... 1-1051.4.7.5 GP’s Corporate Power and Capacity...................................... 1-1051.4.7.6 LP Authorization ................................................................... 1-1061.4.7.7 GP’s Corporate Authorization ............................................... 1-1061.4.7.8 Execution and Delivery .......................................................... 1-106

CHAPTER 2 — CORPORATIONS

2.1 — Business Corporations ...................................................................... 2-12.1.1 Characteristics of a Corporation ........................................................ 2-12.1.2 Jurisdiction Shopping......................................................................... 2-2

TABLE OF CONTENTS

CON-3 (OCLP) (2014 – Rel. 2)

2.1.2.1 OBCA v. CBCA ....................................................................... 2-22.1.2.1(a) Technical Differences .................................................. 2-22.1.2.1(b) Fees ............................................................................ 2-6

2.1.2.2 Incorporation in Other Canadian Jurisdictions .......................... 2-92.1.3 Professional Corporations .................................................................2-102.1.4 Mutual Fund Corporations...............................................................2-16

2.1.4.1 Non-LSIF ................................................................................2-162.1.4.2 LSIF ........................................................................................2-17

2.1.5 Financial Institutions and Cooperatives ............................................2-182.1.6 Corporate Taxation ..........................................................................2-192.2 — Unlimited Liability Companies ........................................................2-262.2.1 Introductions ....................................................................................2-262.2.2 Background to the Current Environment ..........................................2-262.2.3 Significant Tax Changes Due to the New Protocol............................2-312.2.4 Current Determinants in the Choice of ULC Jurisdiction..................2-31

2.2.4.1 NSULC v. BCULC..................................................................2-322.2.4.2 NSULC v. ABULC .................................................................2-322.2.4.3 BCULV v. ABULC .................................................................2-33

2.2.5 Concluding Observations ..................................................................2-332.3 — Non-Share Capital Corporations .....................................................2-422.3.1 Introduction .....................................................................................2-422.3.2 Decision to Incorporate ....................................................................2-43

2.3.2.1 Whether to Incorporate With or Without Share Capital...........2-432.3.2.1(a) Advantage of Non-Share Capital Corporations ..........2-432.3.2.1(b) Disadvantages of Non-Share Corporation..................2-432.3.2.1(c) Tax Status..................................................................2-44

2.3.2.2 Advantages of Incorporation....................................................2-442.3.2.3 Choice of Ontario Federal Incorporation .................................2-46

2.3.3 Structure of the Corporations Act (Ontario) .......................................2-472.3.4 Incorporation....................................................................................2-48

2.3.4.1 Application for Incorporation ..................................................2-482.3.4.2 Name Search Report................................................................2-492.3.4.3 Corporate Name ......................................................................2-492.3.4.4 Head Office..............................................................................2-512.3.4.5 Objects and Powers ..................................................................2-52

2.3.4.5(a) Principal Objects and Powers .....................................2-542.3.4.5(b) Secondary Objects......................................................2-542.3.4.5(c) Restrictions in Other Legislation ................................2-54

2.3.5 Directors...........................................................................................2-552.3.6 By-Laws ...........................................................................................2-592.3.7 Members...........................................................................................2-602.3.8 Non-Profit Characteristics.................................................................2-63

2.3.8.1 Non-Profit to Members and Directors......................................2-632.3.8.2 Distribution Constrains ............................................................2-63

TABLE OF CONTENTS

CON-4

2.3.9 Records and Financial Statements ....................................................2-642.3.10 Supplementary Letters Patent..........................................................2-652.3.11 Continuations and Amalgamation...................................................2-66

2.3.11.1 Continuation ..........................................................................2-662.3.11.2 Amalgamation........................................................................2-66

2.3.12 Cancellation and Winding-up ..........................................................2-672.3.12.1 Cancellation for Cause ...........................................................2-672.3.12.2 Winding-up ............................................................................2-68

2.3.13 Special Non-Share Corporations .....................................................2-682.3.13.1 Clubs .....................................................................................2-682.3.13.2 Charitable Corporations .........................................................2-70

2.3.14 Taxation of Non-Share Capital Organizations.................................2-71

2.4 — Corporate Personality and Liability..................................................2-742.4.1 Juridical Nature of the Corporation..................................................2-742.4.2 The Ends of the Corporation ............................................................2-752.4.3 Corporate Personality .......................................................................2-75

2.4.3.1 Insurable Interest .....................................................................2-762.4.3.2 Equitable Subordination ..........................................................2-772.4.3.3 Veil Piercing.............................................................................2-79

2.4.3.3(a) Statutory Framework.................................................2-792.4.3.3(b) Jurisprudence.............................................................2-80

2.4.4 Corporate Liability ...........................................................................2-862.4.4.1 Civil Liability ...........................................................................2-86

2.4.4.1(a) Contract ....................................................................2-862.4.4.1(b) Corporate Vicarious Liability in Tort.........................2-91

2.4.4.2 Corporate Criminal Liability ....................................................2-932.4.5 Constitutional Jurisdiction ................................................................2-97

2.4.5.1 Provincial Authority.................................................................2-972.4.5.2 Federal Authority ....................................................................2-98

2.5 — Canada Not-for-Profit Corporations Law ....................................... 2-1002.5.1 Introduction ................................................................................... 2-1002.5.2 Types of Federal NFP Corporations ............................................... 2-102

2.5.2.1 Non-Soliciting Corporations................................................... 2-1022.5.2.2 Soliciting Corporations .......................................................... 2-1022.5.2.3 Religious Corporations .......................................................... 2-104

2.5.3 Regulation of Soliciting and Non-Soliciting Corporations ............... 2-1062.5.4 Public Accountants and Audits ....................................................... 2-1092.5.5 Modernized Corporate Law Framework ......................................... 2-111

2.5.5.1 Incorporation......................................................................... 2-1112.5.5.2 Abolition of Ultra Vires Doctrine........................................... 2-1122.5.5.3 Directors and Officers ............................................................ 2-1132.5.5.4 Members and Membership Rights/Remedies .......................... 2-1132.5.5.5 By-laws .................................................................................. 2-114

TABLE OF CONTENTS

CON-5 (OCLP) (2014 – Rel. 7)

2.5.5.6 Borrowing.............................................................................. 2-1152.5.5.7 Fundamental Changes............................................................ 2-115

2.5.6 Problems and Solutions .................................................................. 2-1152.5.6.1 Whether the Ultra Vires Doctrine is Preserved in Part............ 2-1162.5.6.2 Vacillation between Soliciting and Non-Soliciting Status ........ 2-1182.5.6.3 Lack of Knowledge Qualifier in Soliciting Corporation

Status..................................................................................... 2-1202.5.6.4 Accidental or Unintentional Members.................................... 2-1222.5.6.5 Minority Veto Power ............................................................. 2-123

2.5.6.5(a) Possible Issues.......................................................... 2-1242.5.6.5(b) Possible Solutions .................................................... 2-130

2.5.6.6 Does Membership Have Any Privileges?................................. 2-1302.5.6.6(a) Irreducible Class Membership Rights ....................... 2-1322.5.6.6(b) Statutory Membership Remedies.............................. 2-132

2.5.6.7 Hybrid By-Laws and By-Law Amendments............................ 2-1332.5.6.8 Self-Perpetuating Boards ........................................................ 2-1352.5.6.9 Ex Officio Directors ............................................................... 2-1352.5.6.10 Liability of Directors and Officers ........................................ 2-136

2.5.7 Corporate Governance.................................................................... 2-1382.5.7.1 Implicit CBCA Model ............................................................ 2-138

2.5.7.1(a) CBCA Governance Pillars........................................ 2-1392.5.7.1(b) Summary ................................................................. 2-140

2.5.7.2 Implicit CNCA Governance Model ........................................ 2-1412.5.7.2(a) CNCA Governance Pillars ....................................... 2-1412.5.7.2(b) Implications ............................................................. 2-143

2.5.8 Transitioning to the New Act ......................................................... 2-1442.5.9 Conclusion...................................................................................... 2-145Summary of Procedure — Canada Not-For-ProfitCorporations Act .................................................................................. 2-146.1

2.6 — Continuance Under the Canada Not-for-profit CorporationsAct ...................................................................................................... 2-1472.6.1 Outline of the Steps in a Continuance to the CNCA....................... 2-1472.6.2 Continue or Involuntarily Dissolve ................................................. 2-147

2.6.2.1 Administrative Dissolution ..................................................... 2-1482.6.2.2 Revival................................................................................... 2-149

2.6.3 Steps in the Continuance Process .................................................... 2-1492.6.4 Conclusion...................................................................................... 2-177

CHAPTER 3 — FORMATION

3.1 — Incorporation.................................................................................... 3-13.1.1 Pre-Incorporation Decisions............................................................... 3-13.1.2 Methods of Incorporation.................................................................. 3-3

3.1.2.1 Four Methods of Incorporation ................................................ 3-3

TABLE OF CONTENTS

CON-6

3.1.2.1(a) Filing Articles of Incorporation................................... 3-33.1.2.1(b) Registration of Memorandum of Association.............. 3-33.1.2.1(c) Letters Patent.............................................................. 3-33.1.2.1(d) Special Act ................................................................. 3-4

3.1.2.2 Differences in Methods of Incorporation................................... 3-53.1.3 Incorporation under the OBCA ......................................................... 3-7

3.1.3.1 Application of the Act .............................................................. 3-73.1.3.2 Incorporation Procedure ..........................................................3-10

3.1.3.2(a) Documentary Requirements .......................................3-113.1.3.2(b) Incorporation Date ....................................................3-123.1.3.2(c) Corporation Number .................................................3-133.1.3.2(d) Fees ...........................................................................3-13

3.1.3.3 Articles of Incorporation..........................................................3-143.1.3.3(a) Corporate Name ........................................................3-143.1.3.3(b) Registered Office........................................................3-153.1.3.3(c) Share Capital .............................................................3-153.1.3.3(d) Incorporators and First Directors ..............................3-163.1.3.3(e) Optional Provisions....................................................3-18

3.1.4 Pre-Incorporation Contracts .............................................................3-303.1.4.1 Problem at Common Law........................................................3-303.1.4.2 OBCA Solution........................................................................3-313.1.4.3 Case Law on Reformed Pre-Incorporation Contract Regime ....3-32

3.1.4.3(a) Promoter’s Personal Liability .....................................3-323.1.4.3(b) Corporation’s Adoption of Contract ..........................3-333.1.4.3(c) Promoter’s Express Disclaimer ...................................3-353.1.4.3(d) Judicial Apportionment of Liability ...........................3-35

3.1.5 Corporate Capacity and Powers........................................................3-363.1.5.1 Ultra Vires Doctrine.................................................................3-363.1.5.2 Capacity of an OBCA Corporation..........................................3-373.1.5.3 Restricted Businesses or Powers ...............................................3-38

3.1.6 Abolition of Constructive Notice Doctrine........................................3-403.1.7 Indoor Management Rule .................................................................3-40Summary of Major Corporate Events — Incorporation Under theOntario Business Corporations Act.............................................................3-44

3.2 — Organization .............................................................................. 3-44.253.2.1 General........................................................................................ 3-44.253.2.2 Information Required .................................................................. 3-44.253.2.3 Duties and Powers of First Directors ................................................3-453.2.4 Procedure .........................................................................................3-46

3.2.4.1 Meeting of First Directors........................................................3-463.2.4.2 Organizational Meeting of Shareholders ...................................3-473.2.4.3 Appointment of Officers...........................................................3-473.2.4.4 Transfer of Shares to Permanent Shareholders .........................3-48

TABLE OF CONTENTS

CON-7 (OCLP) (2014 – Rel. 7)

3.2.4.5 Forms of Share Certificates ......................................................3-483.2.4.6 Corporate Seal .........................................................................3-483.2.4.7 Minute Book and Corporate Registers .....................................3-49

3.2.5 By-Laws ...........................................................................................3-503.2.5.1 Purpose of By-Laws .................................................................3-503.2.5.2 Making, Amending or Repealing By-Laws ...............................3-513.2.5.3 Optional By-Law Provision in the OBCA.................................3-52

3.2.6 Banking and Signing Officers............................................................3-543.2.7 Corporate Seal..................................................................................3-563.2.8 Officers .............................................................................................3-59

3.3 — Names.............................................................................................3-613.3.1 Introduction .....................................................................................3-613.3.2 Selecting a Corporate Name .............................................................3-63

3.3.2.1 Elements of a Corporate Name ................................................3-633.3.2.2 Unauthorized Use of Legal Elements .......................................3-643.3.2.3 Format of Name ......................................................................3-643.3.2.4 French Form of Name .............................................................3-653.3.2.5 Foreign Language Name..........................................................3-67

3.3.3 Name Restrictions ............................................................................3-673.3.3.1 Absolute Prohibitions...............................................................3-67

3.3.3.1(a) Words........................................................................3-673.3.3.1(b) Identical names..........................................................3-683.3.3.1(c) Punctuation Marks.....................................................3-683.3.3.1(d) Obscene Names .........................................................3-683.3.3.1(e) Misdescriptive Names.................................................3-68

3.3.3.2 Conditional Prohibitions ..........................................................3-693.3.3.2(a) Affiliated Body Corporate..........................................3-693.3.3.2(b) Foreign Parent...........................................................3-693.3.3.2(c) Long Usage................................................................3-693.3.3.2(d) Names Restricted by Statute ......................................3-703.3.3.2(e) Amalgamated Corporation.........................................3-703.3.3.2(f) Words ........................................................................3-703.3.3.2(g) Numerals ...................................................................3-70

3.3.3.3 Political Party ..........................................................................3-713.3.3.4 Prohibitions without Consent or Undertaking ..........................3-71

3.3.3.4(a) Successor Corporation ...............................................3-713.3.3.4(b) Successor Business .....................................................3-723.3.3.4(c) Differentiated Corporate Names.................................3-723.3.3.4(d) Family Names ...........................................................3-723.3.3.4(e) Engineer.....................................................................3-733.3.3.4(f) Architect.....................................................................3-733.3.3.4(g) Names Implying Government, University, Professional

or Financial Intermediary Status ................................3-73

TABLE OF CONTENTS

CON-8

3.3.3.5 Proposed Names ......................................................................3-743.3.3.6 Deceptive and Distinctive Names .............................................3-743.3.3.7 General, Descriptive, Individual and Geographic Names ..........3-81

3.3.4 Searching a Proposed Corporate Name.............................................3-813.3.5 Number Names ................................................................................3-833.3.6 Business Names ................................................................................3-843.3.7 Protecting a Corporate Name ...........................................................3-843.3.8 Change of Corporate Name..............................................................3-85

3.3.8.1 Voluntary Name Change..........................................................3-863.3.8.2 Compulsory Name Change ......................................................3-873.3.8.3 Judicial Review of Director’s Name Decision ...........................3-89

3.3.9 Trade-Marks.....................................................................................3-923.3.10 Domain Names ...............................................................................3-94

3.3.10.1 Registration of Domain Names ..............................................3-943.3.10.2 Cyber-Squatting .....................................................................3-96

3.4 — Corporate Name Disputes ................................................................3-993.4.1 Introduction .....................................................................................3-99

3.4.1.1 Rationale for Minimizing the Incidence of CorporateName Confusion ......................................................................3-99

3.4.1.2 Acquiring a Corporate Name under the OBCA...................... 3-1013.4.1.3 Self-Selected Corporate Names............................................... 3-102

3.4.2 Elements of a Corporate Name....................................................... 3-1033.4.3 Corporate Name Regulation ........................................................... 3-104

3.4.3.1 Director’s Regulatory Roles ................................................... 3-1043.4.3.2 Compulsory Name Change .................................................... 3-1053.4.3.3 Judicial Review of Director’s Name Decision ......................... 3-108

3.4.4 Substantive Analysis of Likelihood of Deception ............................ 3-1103.4.4.1 Statutory Framework ............................................................. 3-110

Table 3.4.4.1 — Legislative Framework on DeceptiveCorporate Names.................................................................................... 3-110

3.4.4.2 Parallel to Trade-mark Confusion Analysis ............................ 3-1133.4.4.3 Likelihood of Deception......................................................... 3-1163.4.4.4 Case Law Summaries ............................................................. 3-119

Table 3.4.4.4(a) — Cases Ordering a Corporation to Changeits Name ................................................................................................. 3-120Table 3.4.4.4(b) — Cases Refusing to Order a Change ofCorporate Name ..................................................................................... 3-139

3.4.4.5 Synthesis of Principles and Factors ........................................ 3-1583.4.4.5(a) Public v. Private Interests......................................... 3-1583.4.4.5(b) Actual Use............................................................... 3-1593.4.4.5(c) Meaning of “Deception” .......................................... 3-1593.4.4.5(d) Degree of Similarity and Inherent

Distinctiveness ......................................................... 3-1623.4.4.5(e) Degree of Similarity ................................................. 3-163

TABLE OF CONTENTS

CON-9 (OCLP) (2015 – Rel. 1)

3.4.4.5(f) Identical Names........................................................ 3-1633.4.4.5(g) Similar Names ......................................................... 3-1643.4.4.5(h) Identical Coined Element, with Similar or No

Descriptive Elements................................................ 3-1643.4.4.5(i) Family Names .......................................................... 3-1663.4.4.5(j) Identical Suggestive Names ....................................... 3-1683.4.4.5(k) Identical Arbitrary Words........................................ 3-1693.4.4.5(l) Identical Geographical Elements ............................... 3-1703.4.4.5(m) Distinctiveness (including Non-identical Coined

Names and Names Without InherentDistinctiveness) ....................................................... 3-172

3.4.4.5(n) Length of Time that the Objector s Name orTrade-Mark Has Been in Use .................................. 3-176

3.4.4.5(o) Class of Persons Dealing With Corporation andObjector................................................................... 3-177

3.4.4.5(p) Other Factors .......................................................... 3-1803.4.4.5(q) Exercise of Discretion .............................................. 3-182

CHAPTER 4 — SHAREHOLDER RIGHTS AND REMEDIES

4.1 — Shareholders and Their Rights .......................................................... 4-14.1.1 Nature of a Shareholder .................................................................... 4-1

4.1.1.1 Shareholders, Beneficial Holders and Entitlement Holders......... 4-14.1.1.2 Ways to Become a Shareholder ................................................. 4-44.1.1.3 Joint Shareholders..................................................................... 4-5

4.1.2 Shareholder Lists ............................................................................... 4-54.1.3 Shareholder Rights ............................................................................ 4-8

4.1.3.1 Overview................................................................................... 4-84.1.3.2 Liability Shield.......................................................................... 4-84.1.3.3 Dividends.................................................................................. 4-94.1.3.4 Return of Capital...................................................................... 4-94.1.3.5 Information Rights ..................................................................4-104.1.3.6 Voting Rights...........................................................................4-114.1.3.7 Decision-Making Rights...........................................................4-164.1.3.8 Minority Rights .......................................................................4-22

4.2 — Shareholder Agreements and Voting Agreements...............................4-244.2.1 Shareholder Agreements ...................................................................4-24

4.2.1.1 Types of Shareholder Agreements ............................................4-244.2.1.2 Common Provisions .................................................................4-24

4.2.1.2(a) Parties........................................................................4-254.2.1.2(b) Liquidity....................................................................4-264.2.1.2(c) Financing ...................................................................4-334.2.1.2(d) Dividends and Bonuses ..............................................4-354.2.1.2(e) Management ..............................................................4-36

TABLE OF CONTENTS

CON-10

4.2.1.2(f) Employment ...............................................................4-374.2.1.2(g) Dispute Resolution ....................................................4-404.2.1.2(h) Other .........................................................................4-42

4.2.1.3 USA ........................................................................................4-424.2.1.3(a) Definition and Nature................................................4-424.2.1.3(b) Section 108 of the OBCA...........................................4-454.2.1.3(c) OBCA Provisions Subject to USA..............................4-50

4.2.2 Voting Agreements ...........................................................................4-554.2.2.1 Pooling Agreement...................................................................4-564.2.2.2 Voting Trust ............................................................................4-57

4.3 — Dissent and Appraisal Rights ...........................................................4-584.3.1 Introduction .....................................................................................4-584.3.2 Standing to Dissent...........................................................................4-604.3.3 Triggering Events..............................................................................4-63

4.3.3.1 Articles of Amendment ............................................................4-634.3.3.2 Amalgamation and Export Continuances .................................4-674.3.3.3 Sale of Substantially All of the Corporation’s Property ............4-684.3.3.4 Statutory Arrangements ...........................................................4-714.3.3.5 Voluntary Extensions ...............................................................4-724.3.3.6 Remedy for Undisclosed USA..................................................4-734.3.3.7 Compulsory Acquisitions, Compelled Acquisitions and

GPTs .......................................................................................4-734.3.3.7(a) Compulsory Acquisitions ...........................................4-734.3.3.7(b) Compelled Acquisitions of Minority Interests ............4-744.3.3.7(c) GPTs .........................................................................4-75

4.3.4 Procedure .........................................................................................4-764.3.4.1 Section 185 ..............................................................................4-764.3.4.2 Section 188 ..............................................................................4-794.3.4.3 Section 189 ..............................................................................4-81

4.3.5 Fair Value Determination .................................................................4-824.3.5.1 Procedural Aspects...................................................................4-824.3.5.2 Partial Summary Judgment ......................................................4-824.3.5.3 Overview..................................................................................4-834.3.5.4 Judicial Approach to Share Valuation ......................................4-84

4.3.5.4(a) Market Value Approach ............................................4-864.3.5.4(b) Asset-Value Approach ...............................................4-884.3.5.4(c) Earnings Approach ....................................................4-894.3.5.4(d) Combination of Approaches ......................................4-89

4.3.5.5 Interest and Costs ....................................................................4-90Summary of Procedure — Appraisal Rights of DissentingShareholders .......................................................................................... 4-90.1

4.4 — Oppression Remedy .........................................................................4-914.4.1 Introduction .....................................................................................4-91

TABLE OF CONTENTS

CON-11 (OCLP) (2015 – Rel. 1)

4.4.1.1 Background .............................................................................4-914.4.1.2 Overview..................................................................................4-92

4.4.1.2(a) Applicants..................................................................4-934.4.1.2(b) Grounds ....................................................................4-934.4.1.2(c) Court-Ordered Relief..................................................4-94

4.4.2 Applicants ........................................................................................4-954.4.2.1 OSC.........................................................................................4-954.4.2.2 Per Se Complainants................................................................4-954.4.2.3 Proper Persons .........................................................................4-96

4.4.3 Direct and Indirect Routes to the Oppression Remedy.................... 4-1014.4.3.1 Test for Oppression under Subsection 248(2).......................... 4-101

4.4.3.1(a) Determining the Complainant’s ReasonableExpectations ............................................................ 4-103

4.4.3.1(b) Oppressive or Unfairly Prejudicial Conduct ............. 4-1054.4.3.2 Alternative to Court-Ordered Liquidation .............................. 4-106

4.4.4 Indicia of Oppression...................................................................... 4-1084.4.4.1 Oppression Found.................................................................. 4-1094.4.4.2 Oppression Not Found .......................................................... 4-114

4.4.5 Remedies ........................................................................................ 4-1164.4.5.1 Buyout ................................................................................... 4-116

4.4.5.1(a) Circumstances Justifying Buyout Remedy ................ 4-1164.4.5.1(b) Elements of Buyout Remedy.................................... 4-117

4.4.5.2 Other Interim and Final Costs ............................................... 4-1294.4.5.2(a) Injunctive Relief....................................................... 4-1294.4.5.2(b) Appointment of Receiver-Manager .......................... 4-1304.4.5.2(c) Amending Articles, By-Laws or USA ....................... 4-1314.4.5.2(d) Issuing Securities...................................................... 4-1324.4.5.2(e) Appointing or Replacing Directors........................... 4-1334.4.5.2(f) Purchasing Securities ................................................ 4-1344.4.5.2(g) Repayment............................................................... 4-1344.4.5.2(h) Rescission ................................................................ 4-1364.4.5.2(i) Production of Financial Statements........................... 4-1374.4.5.2(j) Compensating an Aggrieved Person .......................... 4-1394.4.5.2(k) Rectification ............................................................ 4-1414.4.5.2(l) Liquidation............................................................... 4-1414.4.5.2(m) Investigation ........................................................... 4-1414.4.5.2(n) Requiring a Trial ..................................................... 4-1424.4.5.2(o) Other Relief ............................................................. 4-142

4.4.6 Contracting Out.............................................................................. 4-1444.4.6.1 Trust Indentures..................................................................... 4-1444.4.6.2 Arbitration............................................................................. 4-145

4.5 — Derivative Actions, Investigations and Other ShareholderRemedies ................................................................................................. 4-1474.5.1 Derivative Action............................................................................ 4-147

TABLE OF CONTENTS

CON-12

4.5.1.1 Nature of Statutory Remedy .................................................. 4-1474.5.1.2 Complainants......................................................................... 4-1484.5.1.3 Leave Requirements ............................................................... 4-1504.5.1.4 Specific Powers of the Court .................................................. 4-155

4.5.2 Investigation ................................................................................... 4-1554.5.2.1 Overview................................................................................ 4-1554.5.2.2 Background ........................................................................... 4-1564.5.2.3 Statutory Provisions ............................................................... 4-1564.5.2.4 Usage..................................................................................... 4-159

4.5.3 Compliance and Restraining Orders................................................ 4-1644.5.3.1 Complainant or Creditor Initiated.......................................... 4-1644.5.3.2 OSC Initiated......................................................................... 4-165

4.5.4 Other Juridical Remedies under the OBCA..................................... 4-1664.5.5 Security Holder Remedies under the OSA....................................... 4-169

CHAPTER 5 — CORPORATE GOVERNANCE

5.1 — Board Functions, Composition and Process ........................................ 5-15.1.1 Background ....................................................................................... 5-15.1.2 Governance Models ........................................................................... 5-3

5.1.2.1 Implicit OBCA Governance Model ........................................... 5-35.1.2.1(a) OBCA Governance Pillars........................................... 5-45.1.2.1(b) Summary .................................................................... 5-5

5.1.2.2 Non-offering Corporations........................................................ 5-55.1.2.3 Offering Corporations ..............................................................5-11

5.1.3 General Board Functions ..................................................................5-115.1.4 Board Composition...........................................................................5-12

5.1.4.1 Number ...................................................................................5-125.1.4.2 Qualification and Disqualification ............................................5-145.1.4.3 Election....................................................................................5-155.1.4.4 Termination .............................................................................5-175.1.4.5 Removal ..................................................................................5-185.1.4.6 Quorum ...................................................................................5-22

5.1.5 Board Meetings ................................................................................5-225.1.6 Remuneration ...................................................................................5-275.1.7 Committees.......................................................................................5-285.1.8 Officers .............................................................................................5-33

5.1.8.1 General ....................................................................................5-335.1.8.2 Specific Officers .......................................................................5-36

5.1.8.2(a) Chair .........................................................................5-365.1.8.2(b) Managing Director ....................................................5-375.1.8.2(c) President ....................................................................5-385.1.8.2(d) Vice-President ............................................................5-385.1.8.2(e) Manager ....................................................................5-385.1.8.2(f) Secretary, Treasurer and Controller ............................5-38

TABLE OF CONTENTS

CON-13 (OCLP) (2015 – Rel. 1)

Summary of Major Corporate Events — Meetings of DirectorsUnder the Ontario Business Corporations Act ............................................5-405.2 — Duties of Directors and Officers.................................................. 5-40.205.2.1 Duties Generally .......................................................................... 5-40.205.2.2 Contracts in Which Directors or Officers are Interested ....................5-435.2.3 Business Judgment Rule....................................................................5-47

5.2.3.1 BJR in the Supreme Court of Canada......................................5-475.2.3.1(a) People’s Departments Stores (1992) Inc., Re ..............5-475.2.3.1(b) Kerr v. Danier Leather ...............................................5-515.2.3.1(c) BCE ...........................................................................5-525.2.3.1(d) Lessons from the S.C.C. Trilogy ................................5-54

5.2.3.2 BJR in Lower Courts ...............................................................5-555.2.4 Corporate Opportunity Doctrine.......................................................5-605.2.5 Insider Reporting..............................................................................5-61

5.2.5.1 Insider Reports ........................................................................5-615.2.5.2 Issuer Filings............................................................................5-645.2.5.3 Mutual Funds ..........................................................................5-655.2.5.4 Exemptions ..............................................................................5-665.2.5.5 Penalties...................................................................................5-66

5.3 — Liabilities of Directors and Officers .................................................5-675.3.1 Introduction .....................................................................................5-67

5.3.1.1 Significance of the Incorporation Jurisdiction...........................5-675.3.1.2 Place of Business......................................................................5-675.3.1.3 Definitions of “Director” and “Officer” ...................................5-67

5.3.1.3(a) Definition of “Director”.............................................5-675.3.1.3(b) Officers ......................................................................5-69

5.3.1.4 Board Committees ...................................................................5-705.3.1.5 Overview of the Civil and Criminal Liabilities of Directors

and Officers .............................................................................5-705.3.2 Functions and Duties of Directors ....................................................5-70

5.3.2.1 Duty to Manage or Supervise Management..............................5-705.3.2.2 Acting in the Best Interests of the Corporation ........................5-71

5.3.3 Civil Liability of Directors and Officers ............................................5-725.3.3.1 Who Can Sue? .........................................................................5-725.3.3.2 Liability to the Corporation .....................................................5-73

5.3.3.2(a) Duty of Loyalty .........................................................5-735.3.3.2(b) Duty of Care .............................................................5-795.3.3.2(c) Insider Trading and Tipping.......................................5-835.3.3.2(d) Non-compliance with OBCA or Constating Documents 5-

945.3.3.2(e) Issuing Shares for Inadequate Non-Cash Consideration 5-

945.3.3.2(f) Reacquisition of Shares by an Insolvent Corporation .5-955.3.3.2(g) Unreasonable Commissions........................................5-96

TABLE OF CONTENTS

CON-14

5.3.3.2(h) Payment of Dividends by an Insolvent Corporation...5-965.3.3.2(i) Financial Assistance....................................................5-975.3.3.2(j) Improper Indemnification ...........................................5-975.3.3.2(k) Payments to Dissenting or Oppressed Shareholders

by an Insolvent Corporation ......................................5-975.3.3.2(l) Oppression..................................................................5-98

5.3.3.3 Liability to Shareholders ..........................................................5-985.3.3.3(a) Oppression.................................................................5-985.3.3.3(b) Insider Trading ..........................................................5-995.3.3.3(c) Non-Compliance with Incorporation Statute or

Constating Documents ...............................................5-995.3.3.3(d) Issuing a Misleading Prospectus............................... 5-1005.3.3.3(e) Issuing a Misleading Take-Over Bid Circular ........... 5-1015.3.3.3(f) Assumption of a Special Duty .................................. 5-1015.3.3.3(g) Duty of Care ........................................................... 5-101

5.3.3.4 Liability to the Holders of Debt Obligations .......................... 5-1025.3.3.4(a) Oppression............................................................... 5-1025.3.3.4(b) Insider Trading ........................................................ 5-1035.3.3.4(c) Misleading Prospectus or Take-Over Bid Circular .... 5-1035.3.3.4(d) Duty of Care ........................................................... 5-103

5.3.3.5 Liability to Employees ........................................................... 5-1045.3.3.5(a) OBCA/CBCA .......................................................... 5-1045.3.3.5(b) Employment Standards Legislation .......................... 5-1065.3.3.5(c) Pension Benefits Legislation ..................................... 5-1075.3.3.5(d) Employee Use of Corporate Law Remedies ............. 5-107

5.3.3.6 Liability to Tax and Other Governmental Authorities ............ 5-1105.3.3.6(a) Liability for Direct Corporate Obligations ............... 5-1105.3.3.6(b) Liability for Third-Party Obligations........................ 5-111

5.3.3.7 Liability to Suppliers of Goods and Services .......................... 5-1155.3.3.7(a) Contractual Trust Funds.......................................... 5-1165.3.3.7(b) Construction Trust Claims ....................................... 5-1175.3.3.7(c) Other Statutory Trust Claims ................................... 5-1185.3.3.7(d) Oppression............................................................... 5-118

5.3.3.8 Liability to Customers............................................................ 5-1195.3.3.9 Liability to Franchisees .......................................................... 5-1195.3.3.10 Liability to Involuntary Creditors of the Corporation........... 5-1205.3.3.11 Liability to Trustee in Bankruptcy........................................ 5-124

5.3.3.11(a) BIA........................................................................ 5-1245.3.3.11(b) Oppression Remedy and Derivative Action ............ 5-125

5.3.4 Criminal Liability of Directors and Officers .................................... 5-1255.3.4.1 Types of Offences................................................................... 5-1255.3.4.2 Ontario Statutes ..................................................................... 5-126

5.3.4.2(a) OBCA...................................................................... 5-1265.3.4.2(b) Securities Law Offences ........................................... 5-129

TABLE OF CONTENTS

CON-15 (OCLP) (2015 – Rel. 1)

5.3.4.2(c) Environmental Offences ........................................... 5-1295.3.4.2(d) Provincial Tax Offences ........................................... 5-1325.3.4.2(e) Other Corporate and Business Statutes..................... 5-1325.3.4.2(f) Other Ontario Statutes ............................................. 5-133

5.3.4.3 Federal Statutes ..................................................................... 5-1345.3.4.3(a) Offences under the Criminal Code ............................ 5-1345.3.4.3(b) Offences under Fiscal Legislation............................. 5-1355.3.4.3(c) Offences under Insolvency Legislation ...................... 5-1355.3.4.3(d) Offences under Federal Environmental Laws ........... 5-1365.3.4.3(e) Offences under Other Federal Statutes ..................... 5-136

5.3.5 Enforcement of Civil Liabilities of Directors and Officers ............... 5-1385.3.5.1 Derivative Action................................................................... 5-1385.3.5.2 Oppression Remedy ............................................................... 5-1385.3.5.3 Compliance and Restraining Orders ....................................... 5-1395.3.5.4 Initiatives ............................................................................... 5-1395.3.5.5 Class Actions ......................................................................... 5-1395.3.5.6 Employment Standards Branch Orders................................... 5-1395.3.5.7 CRA Assessments .................................................................. 5-140

5.3.6 Protecting Directors and Officers from Liability.............................. 5-1405.3.6.1 Shareholder Ratification......................................................... 5-1415.3.6.2 Disclosing Conflicting Interests and Obtaining

Disinterested Approval........................................................... 5-1415.3.6.3 Dissenting from Certain Board Resolutions............................ 5-1425.3.6.4 Unanimous Shareholder Agreement ....................................... 5-1435.3.6.5 Corporate Indemnification ..................................................... 5-144

5.3.6.5(a) Mandatory Indemnification...................................... 5-1445.3.6.5(b) Prohibited Indemnification....................................... 5-1475.3.6.5(c) Permissive Indemnification ....................................... 5-1485.3.6.5(d) Advance of Defence Costs ....................................... 5-1485.3.6.5(e) Practical Limitation.................................................. 5-148

5.3.6.6 Shareholder Indemnification................................................... 5-1495.3.6.7 Protective Orders in Insolvency Proceedings ........................... 5-149

5.3.6.7(a) CCAA Orders .......................................................... 5-1495.3.6.7(b) BIA Orders.............................................................. 5-152

5.3.6.8 Resignation ............................................................................ 5-1525.3.7 Directors and Officers Liability Insurance ....................................... 5-153

5.3.7.1 Statutory Authorization ......................................................... 5-1535.3.7.2 Coverage of Limitations and Exclusions................................. 5-1545.3.7.3 Procedural Requirements ....................................................... 5-1555.3.7.4 Disclosure .............................................................................. 5-1555.3.7.5 Income Tax Implications........................................................ 5-156

5.3.7.5(a) Deductibility of Insurance Premium by Corporation 5-1565.3.7.5(b) Deductibility of Insurance Premium by Director ...... 5-156

TABLE OF CONTENTS

CON-16

5.3.7.5(c) Inclusion of Insurance Premiums in Income ofDirector/Officer........................................................ 5-156

5.3.7.5(d) Inclusion of Insurance Proceeds in Income ofDirector/Officer ....................................................... 5-157

5.3.8 Conclusion...................................................................................... 5-1575.4 — The New NFP Corporate Governance Framework .......................... 5-1595.4.1 Introduction ................................................................................... 5-1595.4.2 Overview of the New NFP Legal Governance Framework .............. 5-1605.4.3 Duties of Directors and Officers ..................................................... 5-163

5.4.3.1 Duty of Care.......................................................................... 5-1675.4.3.2 Fiduciary Duty ...................................................................... 5-168

5.4.3.2(a) Appropriating Corporate Property, Informationor Opportunities ...................................................... 5-168

5.4.3.2(b) Duty to Avoid Unfair Competition Withthe Corporation ....................................................... 5-169

5.4.3.2(c) Duty to Not Fetter Discretion.................................. 5-1705.4.4 Conflicts of Interest ........................................................................ 5-170

5.4.4.1 Corporate Law Rules ............................................................. 5-1705.4.4.2 Charity Law Rules ................................................................. 5-172

5.4.5 Lines of Authority .......................................................................... 5-1745.4.6 Constating Documents.................................................................... 5-1745.4.7 Corporate Policies and Protocols .................................................... 5-1765.4.8 Committees..................................................................................... 5-178

5.4.8.1 Audit Committee ................................................................... 5-1785.4.8.2 Compensation Committee ...................................................... 5-1785.4.8.3 Other Committees .................................................................. 5-179

5.4.9 Protection of Directors and Officers................................................ 5-1795.4.9.1 Indemnification ...................................................................... 5-179

5.4.9.1(a) Mandatory Indemnification...................................... 5-1795.4.9.1(b) Prohibited Indemnification....................................... 5-1815.4.9.1(c) Permissive Indemnification ....................................... 5-1815.4.9.1(d) Advance of Defence Costs ....................................... 5-1825.4.9.1(e) Practical Limitation.................................................. 5-182

5.4.9.2 D & O Insurance ................................................................... 5-1825.4.9.2(a) Statutory Authorization ........................................... 5-1825.4.9.2(b) Coverage Limitations and Exclusions....................... 5-1835.4.9.2(c) Procedural Requirements.......................................... 5-184

5.4.9.3 Other Protections ................................................................... 5-1855.4.10 Ethical and Standards Issues for Directors and Counsel ................ 5-1865.4.11 Governance Action Plans .............................................................. 5-188

5.4.11.1 Increasing Governance Quality ............................................. 5-1885.4.11.2 Avoiding Governance Litigation........................................... 5-189

TABLE OF CONTENTS

CON-17 (OCLP) (2015 – Rel. 1)

VOLUME 2

CHAPTER 6 — CORPORATE FINANCE

6.1 — Debt Obligations and Trust Indentures .............................................. 6-16.1.1 Borrowing Powers.............................................................................. 6-1

6.1.1.1 Borrowing................................................................................. 6-16.1.1.2 Giving Security ......................................................................... 6-46.1.1.3 Giving a Guarantee................................................................... 6-4

6.1.2 Exercise of Borrowing Powers............................................................ 6-56.1.3 Banking Resolutions .......................................................................... 6-56.1.4 Types of Debt Obligations ................................................................. 6-6

6.1.4.1 Borrowing from Financial Institutions....................................... 6-66.1.4.2 Bonds, Debentures and Notes ................................................... 6-9

6.1.4.2(a) A Lexicon ................................................................... 6-96.1.4.2(b) Debt Obligation in Registered or Bearer Form ..........6-11

6.1.4.3 Taking Purchase-Money Security on the Sale of Goods ...........6-126.1.4.3(a) Equipment .................................................................6-126.1.4.3(b) Inventory ...................................................................6-15

6.1.5 Perfection .........................................................................................6-166.1.6 Trust Indentures ...............................................................................6-17

6.1.6.1 Introduction.............................................................................6-176.1.6.2 History of Trust Indenture Regulation in Ontario ....................6-206.1.6.3 Application ..............................................................................6-216.1.6.4 Indenture Trustee.....................................................................6-226.1.6.5 List of Bondholders .................................................................6-236.1.6.6 Regulation of Trustees and Trust Indentures............................6-236.1.6.7 Compliance with Trust Indenture .............................................6-24

Summary of Procedure — Borrowing Powers......................................... 6-26.16.2 — Securities Transfers, Pledges and Transmissions ...............................6-276.2.1 Overview...........................................................................................6-27

6.2.1.1 Predecessor Regime..................................................................6-276.2.1.2 What Was Wrong with the Former Legal Regime? ..................6-276.2.1.3 Background to the STA ...........................................................6-296.2.1.4 What Implementation of the STA Means.................................6-30

6.2.2 Direct Holding System......................................................................6-316.2.2.1 Issue of Securities.....................................................................6-31

6.2.2.1(a) Applicable Conflict of Law Rules ..............................6-316.2.2.1(b) Issue of Certificated or Uncertificated Securities ........6-326.2.2.1(c) Enforcement of Securities and Defences of the Issuer .6-326.2.2.1(d) Share Certificates .......................................................6-34

6.2.2.2 Transfer of Securities ...............................................................6-356.2.2.2(a) Applicable Conflict of Law Rules ..............................6-356.2.2.2(b) Protected Purchaser ...................................................6-39

TABLE OF CONTENTS

CON-18

6.2.2.2(c) Notice of an Adverse Claim .......................................6-386.2.2.2(d) Endorsement of a Security Certificate ........................6-406.2.2.2(e) Delivery .....................................................................6-426.2.2.2(f) Warranties on Transfer...............................................6-436.2.2.2(g) Signature Guarantees .................................................6-446.2.2.2(h) Purchaser’s Right to Other Requisites of Transfer......6-456.2.2.2(i) Registration of Transfer..............................................6-466.2.2.2(j) Lost or Stolen Security Certificates .............................6-47

6.2.2.3 Pledge of Securities ..................................................................6-496.2.2.3(a) Pledgee as Purchaser and Protected Purchaser............6-496.2.2.3(b) Scope of “Security”....................................................6-496.2.2.3(c) Attachment ................................................................6-506.2.2.3(d) Perfection ..................................................................6-516.2.2.3(e) Priority ......................................................................6-536.2.2.3(f) Cut-Off Rule for Buyers of Securities .........................6-54

6.2.3 Indirect Holding System ...................................................................6-546.2.3.1 Application of Indirect Holding System ...................................6-546.2.3.2 Nature of “Security Entitlement” .............................................6-556.2.3.3 Applicable Conflict of Law Rules.............................................6-576.2.3.4 Rights of Entitlement Holders..................................................6-58

6.2.3.4(a) In Rem Rights............................................................6-586.2.3.4(b) In Personam Rights....................................................6-586.2.3.4(c) Cut-Off Rules.............................................................6-59

6.2.3.5 Disposition of Security Entitlements.........................................6-606.2.3.6 Pledge of Security Entitlements ................................................6-61

6.2.3.6(a) Overview....................................................................6-616.2.3.6(b) Attachment................................................................6-626.2.3.6(c) Perfection...................................................................6-636.2.3.6(d) Priority ......................................................................6-64

6.2.4 Transmission of Securities.................................................................6-656.2.4.1 Transmissions ..........................................................................6-656.2.4.2 Rights of Successors.................................................................6-66

6.2.5 Execution against Securities ..............................................................6-676.3 — Share Capital and Dividends ............................................................6-696.3.1 Introduction .....................................................................................6-696.3.2 Authorized Capital ...........................................................................6-71

6.3.2.1 Capital Clause in Articles.........................................................6-716.3.2.2 Designation of Classes and Series.............................................6-736.3.2.3 Single Share Class ....................................................................6-746.3.2.4 Common Shares.......................................................................6-76

6.2.3.4(a) Public Offering...........................................................6-766.2.3.4(b) Exempt Offering ........................................................6-77

6.3.2.5 Multiple Share Classes .............................................................6-786.3.2.6 Preferred Shares .......................................................................6-82

TABLE OF CONTENTS

CON-19 (OCLP) (2015 – Rel. 1)

6.3.2.7 Series .......................................................................................6-856.3.2.8 Warrants..................................................................................6-89

6.3.3 Share Provisions ...............................................................................6-906.3.3.1 Dividend Rights .......................................................................6-90

6.3.3.1(a) Preferential Dividends ................................................6-906.3.3.1(b) Cumulative and Non-Cumulative Dividends ..............6-916.3.3.1(c) Partially Cumulative...................................................6-936.3.3.1(d) Participating Dividends..............................................6-936.3.3.1(e) Dividend Sprinkling ...................................................6-94

6.3.3.2 Return of Capital on Liquidation, Dissolutionor Winding-Up.........................................................................6-96

6.3.3.3 Redemption, Retraction and Purchase of Sharesby Corporation ........................................................................6-976.3.3.3(a) Redemption ...............................................................6-97

6.3.3.3(a)(i) Background Law ...............................................6-976.3.3.3(a)(ii) Redemption Triggers ........................................6-996.3.3.3(a)(iii) Redemption Mechanics .................................. 6-1006.3.3.3(a)(iv) Sinking Fund ................................................. 6-1026.3.3.3(a)(v) Retraction....................................................... 6-1026.3.3.3(a)(vi) Purchase by Corporation ............................... 6-103

6.3.3.4 Conversion Rights and Anti-Dilution Protection .................... 6-1066.3.3.4(a) Conversion Rights.................................................... 6-1066.3.3.4(b) Anti-dilution Protection ........................................... 6-108

6.3.3.5 Tracking Shares ..................................................................... 6-1176.3.3.6 Voting.................................................................................... 6-118

6.3.3.6(a) Mandatory Governance Right.................................. 6-1186.3.3.6(b) Application of Equality Principle ............................. 6-1186.3.3.6(c) Multiple and Subordinate Voting Rights .................. 6-1196.3.3.6(d) Class Election of Directors....................................... 6-1196.3.3.6(e) isement and Separate Class Votes............................. 6-122

6.3.3.7 Other Preferential Features — Especially Governance ............ 6-1256.3.4 Typical Sets Of Share Provisons...................................................... 6-128

6.3.4.1 Private Equity Investment ...................................................... 6-1286.3.4.2 Preferred Shares Used on a Section 85 Rollover

or Estate Freeze ..................................................................... 6-1296.3.4.3 Reorganization of an Insolvent Corporation .......................... 6-131

6.3.5 Stated Capital ................................................................................. 6-1326.3.5.1 Concept of Stated Capital ...................................................... 6-1326.3.5.2 Functions of Stated Capital Account...................................... 6-1336.3.5.3 Increase in Stated Capital....................................................... 6-1396.3.5.4 Reduction in Stated Capital ................................................... 6-1406.3.5.5 Share Purchase or Redemption .............................................. 6-142

6.3.5.5(a) Incidental Reduction of Stated Capital Account....... 6-1426.3.5.5(b) Generally Applicable Solvency Tests ........................ 6-143

TABLE OF CONTENTS

CON-20

6.3.5.5(c) Exceptions to the Generally ApplicableSolvency Tests.......................................................... 6-144

6.3.5.5(d) Director Liability if Solvency Tests Not Met............ 6-1476.3.5.5(e) Calculation of Stated Capital Reduction................... 6-148

6.3.6 Dividends ....................................................................................... 6-1516.3.6.1 General .................................................................................. 6-1516.3.6.2 Application of the Double Solvency Tests .............................. 6-1516.3.6.3 Types of Dividends: Cash, In Specie and

Stock Dividends ..................................................................... 6-1546.3.6.3(a) Stock Dividends ....................................................... 6-1546.3.6.3(b) In Specie Dividends ................................................. 6-156

6.3.6.4 Reserves................................................................................. 6-1576.3.6.5 Declaration of Dividends ....................................................... 6-1576.3.6.6 Record Date .......................................................................... 6-1586.3.6.7 Payment................................................................................. 6-1596.3.6.8 Right to Compel Dividend ..................................................... 6-1596.3.6.9 Director Liability for Improper Dividends.............................. 6-161

6.4 — Issue and Ownership of Shares ....................................................... 6-1636.4.1 Issue and Allotment of Shares ........................................................ 6-163

6.4.1.1 Overview................................................................................ 6-1636.4.1.2 Contract Law Elements.......................................................... 6-1636.4.1.3 Corporate Law Elements........................................................ 6-165

6.4.1.3(a) Consideration for Shares.......................................... 6-1656.4.1.3(b) Pre-emptive Rights................................................... 6-1676.4.1.3(c) Application of Business Judgement Rule to

the Issue of Shares ................................................... 6-1686.4.1.3(d) Issue of Stock Dividend ..................................................... 6-1746.4.1.3(e) Commission on Issuance of Shares ..................................... 6-174

6.4.2 Share Certificates ............................................................................ 6-1756.4.2.1 General Requirements ............................................................ 6-1756.4.2.2 Notation of Transfer Restrictions........................................... 6-1766.4.2.3 Share Conditions.................................................................... 6-1776.4.2.4 Fees ....................................................................................... 6-1786.4.2.5 Loss, Theft or Destruction ..................................................... 6-1786.4.2.6 Fractional and Scrip Certificates ............................................ 6-179

6.4.3 Warrants ........................................................................................ 6-1806.4.4 Share Transfer Restrictions ............................................................. 6-182

6.4.4.1 Private Issuer ......................................................................... 6-1826.4.4.2 Freedom of Contract.............................................................. 6-1836.4.4.3 Exercise of Board Discretion to Approve a Transfer

of Shares................................................................................ 6-1836.4.4.4 Effect of Transfer on a USA .................................................. 6-1846.4.4.5 Transfer Fees ......................................................................... 6-184

6.4.5 Restricted or Constrained Share Corporations ................................ 6-185

TABLE OF CONTENTS

CON-21 (OCLP) (2015 – Rel. 1)

6.4.6 Lien on Shares................................................................................ 6-1866.4.7 Intercorporate Shareholdings .......................................................... 6-187

6.4.7.1 Scope of the Prohibition......................................................... 6-1876.4.7.2 Statutory Exceptions .............................................................. 6-1896.4.7.3 Options to Avoid the Prohibition Against Intercorporate

Shareholdings......................................................................... 6-1906.5 — Secured Transactions ..................................................................... 6-1936.5.1 Overview......................................................................................... 6-1936.5.2 Credit Facilities .............................................................................. 6-194

6.5.2.1 Operating Loan...................................................................... 6-1946.5.2.1(a) Overview.................................................................. 6-1946.5.2.1(b) Currency.................................................................. 6-1946.5.2.1(c) Interest..................................................................... 6-1956.5.2.1(d) Financial Covenants ................................................ 6-1966.5.2.1(e) Negative Pledge........................................................ 6-197

6.5.2.2 Term Loan............................................................................. 6-1976.5.2.2(a) Overview.................................................................. 6-1976.5.2.2(b) Collateral................................................................. 6-1976.5.2.2(c) Financial, Positive and Negative Covenants ............. 6-198

6.5.2.3 Capex Facilities...................................................................... 6-1996.5.2.4 Equipment Leasing ................................................................ 6-1996.5.2.5 Other Credit Facilities ............................................................ 6-200

6.5.2.5(a) Letters of Credit and Bank Guarantees .................... 6-2006.5.2.5(b) Bankers’ Acceptances and Other Commercial

Paper ....................................................................... 6-2016.5.2.5(c) Foreign Exchange .................................................... 6-2026.5.2.5(d) Swaps ...................................................................... 6-2026.5.2.5(e) Consignments........................................................... 6-2026.5.2.5(f) Tax-Assisted Debt Obligations and Governmental

Financial Assistance Programs.................................. 6-2036.5.3 Collateral........................................................................................ 6-204

6.5.3.1 Accounts................................................................................ 6-2046.5.3.2 Chattel Paper ......................................................................... 6-2066.5.3.3 Inventory ............................................................................... 6-2066.5.3.4 Equipment ............................................................................. 6-2086.5.3.5 Mobile Goods ........................................................................ 6-209

6.5.3.5(a) Motor Vehicles ........................................................ 6-2096.5.3.5(b) Vessels and Rolling Stock ........................................ 6-210

6.5.3.6 Investment Property ............................................................... 6-2126.5.3.6(a) Securities.................................................................. 6-2126.5.3.6(b) Security Entitlements ............................................... 6-2136.5.3.6(c) Futures Contracts .................................................... 6-213

6.5.3.7 Real Property......................................................................... 6-2146.5.3.7(a) Owned ..................................................................... 6-214

TABLE OF CONTENTS

CON-22

6.5.3.7(b) Leasehold ................................................................ 6-2156.5.3.8 Insurance ............................................................................... 6-216

6.5.3.8(a) Property Damage and Business Risks....................... 6-2166.5.3.8(b) Refunds of Unearned Premiums .............................. 6-216

6.5.3.9 Intellectual Property............................................................... 6-2166.5.4 PPSA System.................................................................................. 6-217

6.5.4.1 Overview................................................................................ 6-2176.5.4.2 Scope ..................................................................................... 6-218

6.5.4.2(a) Application .............................................................. 6-2186.5.4.2(b) Exclusions................................................................ 6-220

6.5.4.3 Attachment ............................................................................ 6-2226.5.4.3(a) Value ....................................................................... 6-2236.5.4.3(b) Debtor’s Rights in Collateral ................................... 6-2236.5.4.3(c) Written Security Agreement or Secured Party in

Possession ................................................................ 6-2236.5.4.3(d) No Postponement of Attachment............................. 6-224

6.5.4.4 Perfection............................................................................... 6-2246.5.4.4(a) Registration ............................................................. 6-2246.5.4.4(b) Maintaining Perfection............................................. 6-228

6.5.4.5 Priorities ................................................................................ 6-2296.5.4.5(a) General Priority Rules ............................................. 6-2296.5.4.5(b) Specific Internal Priority Rules ................................ 6-230

6.5.4.6 Intercreditor Arrangements .................................................... 6-2346.5.4.6(a) Subordinations and Postponements .......................... 6-2346.5.4.6(b) Estoppel Certificates ................................................ 6-235

6.5.5 Security Agreements ....................................................................... 6-2366.5.5.1 Debenture .............................................................................. 6-236

6.5.5.1(a) Nature ..................................................................... 6-2366.5.5.1(b) Perfection ................................................................ 6-237

6.5.5.2 GSA ...................................................................................... 6-2376.5.5.3 Assignment of Accounts......................................................... 6-238

6.5.5.3(a) GABD..................................................................... 6-2386.5.5.3(b) Specific Assignment ................................................. 6-239

6.5.5.4 Equipment Leases and Consignment Agreements ................... 6-2396.5.5.4(a) Equipment Leases .................................................... 6-2396.5.5.4(b) Consignments .......................................................... 6-240

6.5.5.5 Pledge of Securities or Other Investment Property.................. 6-2416.5.5.6 Bank Act Security .................................................................. 6-241

6.5.5.6(a) Scope ....................................................................... 6-2416.5.5.6(b) Attachment and Perfection....................................... 6-2436.5.5.6(c) Priorities .................................................................. 6-244

6.5.5.7 Guarantee .............................................................................. 6-2456.5.5.8 Real Property Security ........................................................... 6-247

6.5.5.8(a) Charge/Mortgage of Land........................................ 6-247

TABLE OF CONTENTS

CON-23 (OCLP) (2015 – Rel. 1)

6.5.5.8(b) Assignment of Rents ................................................ 6-2486.5.5.8(c) Leasehold Mortgage................................................. 6-248

CHAPTER 7 — FUNDAMENTAL CHANGES

7.1 — Amendments, Continuances and Amalgamations ................................ 7-17.1.1 Amendments...................................................................................... 7-1

7.1.1.1 Articles of Amendment Generally ............................................. 7-17.1.1.2 Procedure.................................................................................. 7-27.1.1.3 Date of Certificate of Amendment ............................................ 7-57.1.1.4 Separate Class or Series Vote .................................................... 7-67.1.1.5 Change of Corporate Name ...................................................... 7-87.1.1.6 Changing Restrictions on Business ............................................ 7-97.1.1.7 Amendments Restricting Issue, Transfer or Ownership of

Shares ....................................................................................... 7-97.1.1.8 Other Amendments to the Articles ...........................................7-10

7.1.2 Restated Articles...............................................................................7-107.1.3 Continuances ....................................................................................7-11

7.1.3.1 Import Continuance .................................................................7-117.1.3.2 Export Continuance .................................................................7-137.1.3.3 Continuances as Co-operative Corporation ..............................7-15

7.1.4 Amalgamations.................................................................................7-167.1.4.1 Amalgamations Generally ........................................................7-167.1.4.2 Amalgamation Procedure .........................................................7-18

7.1.4.2(a) Long-Form Amalgamation ........................................7-187.1.4.2(b) Short-Form Amalgamation ........................................7-237.1.4.2(c) Post-Amalgamation Organizations .............................7-25

7.1.4.3 Legal Effect of Amalgamation..................................................7-267.1.4.4 Appraisal Right........................................................................7-28

Summary of Procedure — Amending Articles and RestatingArticles .................................................................................................. 7-28.1Summary of Procedure — Amalgamation ............................................ 7-28.11Summary of Procedure — Import Continuance.................................... 7-28.21Summary of Procedure — Export Continuance .................................... 7-28.257.2 — Arrangements, Reorganizations and Going-Private Transactions ........7-297.2.1 Arrangements ...................................................................................7-29

7.2.1.1 Introduction.............................................................................7-297.2.1.2 Meaning of Arrangement .........................................................7-297.2.1.3 Whose Rights Can Be Arranged? .............................................7-317.2.1.4 Prerequisites.............................................................................7-32

7.2.1.4(a) Inapplicable CBCA Requirements ..............................7-327.2.1.4(b)OBCA Corporate Applicant........................................7-327.2.1.4(c) Complying with Statutory Procedures ........................7-32

7.2.1.5 Rights That May Be Subject to Arrangement...........................7-347.2.1.5(a) Shareholder Rights.....................................................7-34

TABLE OF CONTENTS

CON-24

7.2.1.5(b) Warrants ...................................................................7-357.2.1.5(c) Debt Obligations ........................................................7-35

7.2.1.6 Interim Orders .........................................................................7-357.2.1.7 Voting Class Identification .......................................................7-367.2.1.8 Approval Orders ......................................................................7-40

7.2.1.8(a) SCC Framework for Approval of Plans ofArrangement ..............................................................7-40

7.2.1.8(b) Lower Court Rulings on Approvals ...........................7-417.2.1.9 Obtaining a Certificate of Arrangement....................................7-43

7.2.2 Reorganizations ................................................................................7-447.2.2.1 Introduction.............................................................................7-447.2.2.2 Scope .......................................................................................7-457.2.2.3 No Dissent or Appraisal Rights ...............................................7-467.2.2.4 Gap-Filling Nature ..................................................................7-467.2.2.5 Stakeholder Approval ..............................................................7-477.2.2.6 Obtaining a Certificate of Reorganization ................................7-48

7.2.3 Going-Private Transactions...............................................................7-497.2.3.1 Background .............................................................................7-497.2.3.2 Regulation of GPTs .................................................................7-50

7.2.3.2(a) Judicial ......................................................................7-507.2.3.2(b) Section 190, OBCA....................................................7-51

Summary of Procedure — Arrangements................................................ 7-54.1Summary of Procedure — Reorganization.............................................. 7-54.77.3 — Liquidation, Dissolution and Revival.................................................7-557.3.1 Liquidation.......................................................................................7-55

7.3.1.1 Overview..................................................................................7-557.3.1.2 Voluntary Liquidation..............................................................7-55

7.3.1.2(a) Resolution .................................................................7-567.3.1.2(b) Notice........................................................................7-577.3.1.2(c) Inspectors...................................................................7-577.3.1.2(d) Arrangement with Creditors re Power of Liquidators.7-577.3.1.2(e) Assets.........................................................................7-587.3.1.2(f) Bank Account ............................................................7-587.3.1.2(g) Contributories............................................................7-587.3.1.2(h) Distribution of Assets ................................................7-597.3.1.2(i) Filling Vacancies in Office of Liquidator.....................7-607.3.1.2(j) Arrangements with Creditors ......................................7-607.3.1.2(k) Compromises with Debtors and Contributors ............7-607.3.1.2(l) Sale of Property for Shares, etc...................................7-607.3.1.2(m) Obtaining Directions and Examinations ....................7-617.3.1.2(n) Meetings ....................................................................7-617.3.1.2(o) Final Meeting ............................................................7-627.3.1.2(p) Dissolution ................................................................7-627.3.1.2(q) Unclaimed Assets.......................................................7-62

TABLE OF CONTENTS

CON-25 (OCLP) (2015 – Rel. 3)

7.3.1.2(r) Disposal of Records ...................................................7-637.3.1.2(s) Stay of Proceedings against the Corporation ..............7-63

7.3.1.3 Involuntary Liquidation ...........................................................7-637.3.1.3(a) Justifiable Lack of Confidence in Conduct of

the Corporation’s Affairs ...........................................7-667.3.1.3(b) Misapplication of the Corporation’s Property by

the Majority Shareholder ...........................................7-667.3.1.3(c) Fraudulent Scheme.....................................................7-677.3.1.3(d) Loss of Substratum....................................................7-677.3.1.3(e) Partnership Analogy...................................................7-677.3.1.3(f) Deadlock ....................................................................7-697.3.1.3(g) Corporation Being Operated Solely for the Benefit

of Debenture-holders .................................................7-697.3.1.3(h) Management Being Involved in Suspicious Transactions

Including Transfer of Assets to AnotherCorporation Without Retaining Voting Control.........7-69

7.3.1.3(i) Outvoted in Domestic Policy ......................................7-707.3.1.4 Procedure for Involuntary Liquidation .....................................7-707.3.1.5 Cancellation of Certificate of Incorporation .............................7-73

7.3.2 Dissolution .......................................................................................7-757.3.2.1 Introduction.............................................................................7-757.3.2.2 Voluntary Dissolution ..............................................................7-767.3.2.3 Termination of Existence of Corporations Not Incorporated

by Articles on Letters Patent ....................................................7-807.3.2.4 Liability of Shareholders ..........................................................7-817.3.2.5 Property Undisposed of at Dissolution.....................................7-817.3.2.6 Preservation of Actions against a Corporation .........................7-82

7.3.3 Revival .............................................................................................7-83Summary of Major Corporate Events — Part XVI of theOBCA — Voluntary Winding Up .............................................................7-87Summary of Major Corporate Events — Part XVI of theOBCA — Winding up by Court.............................................................. 7-107Summary of Major Corporate Events — Part XVI of theOBCA — Voluntary and Involuntary Dissolution and Revival................ 7-1257.4 — Arrangements and Reorganizations of InsolventCorporations ............................................................................................ 7-1357.4.1 Introduction ................................................................................... 7-1357.4.2 Why Resort to Sections 186 or 182 of the OBCA in

an Insolvency? ................................................................................ 7-1357.4.2.1 Key Elements ......................................................................... 7-1357.4.2.2 Restated Capital Structure ..................................................... 7-136

7.4.3 Reorganizations Involving Section 186............................................ 7-1397.4.3.1 Scope ..................................................................................... 7-1397.4.3.2 Gap-Filling Nature ................................................................ 7-139

TABLE OF CONTENTS

CON-26

7.4.3.3 Case Law ............................................................................... 7-1437.4.3.3(a) Extinguishing Shares ................................................ 7-1437.4.3.3(b) Other Cases ............................................................. 7-145

7.4.3.4 Is Section 186 Redundant? ..................................................... 7-1467.4.3.4(a) Why s. 182 may be Preferred to s. 186 ..................... 7-1467.4.3.4(b) Use of s. 186 in Involuntary Contexts ...................... 7-147

7.4.4 Section 182 Arrangements............................................................... 7-1487.4.4.1 Adjunct or Stand-Alone ......................................................... 7-148

7.4.4.1(a) Adjunct to CCAA or BIA Reorganization ............... 7-1487.4.4.1(b) Stand-Alone............................................................. 7-150

7.4.4.2 Compromise of Debt Obligations and Other CreditorClaims.................................................................................... 7-150

7.4.4.3 Meaning of “Arrangement”.................................................... 7-1517.4.4.4 Prerequisites........................................................................... 7-1527.4.4.5 Rights Subject to Arrangement .............................................. 7-153

7.4.4.5(a) Shareholder Rights................................................... 7-1537.4.4.5(b) Warrant Holder Rights ............................................ 7-1547.4.4.5(c) Rights of Holders of Debt Obligations ..................... 7-1547.4.4.5(d) Rights of Other Creditors ........................................ 7-156

7.4.4.6 Overview of the Process for Approving a Plan ofArrangement .......................................................................... 7-156

7.4.4.7 Interim Order......................................................................... 7-1577.4.4.7(a) General .................................................................... 7-1577.4.4.7(b) Notice to Stakeholders............................................. 7-1587.4.4.7(c) Appraisal Rights ...................................................... 7-1587.4.4.7(d) Appointment of Counsel for Shareholders ............... 7-1597.4.4.7(e) Stays ........................................................................ 7-1607.4.4.7(f) Releases.................................................................... 7-161

7.4.4.8 Stakeholder Approval ............................................................ 7-1627.4.4.8(a) Stakeholder Rights to Vote on the Plan ................... 7-1627.4.4.8(b) Voting Class Identification....................................... 7-1637.4.4.8(c) Separate Vote Tabulations ....................................... 7-1687.4.4.8(d) Approval Thresholds ............................................... 7-1697.4.4.8(e) Notice of Meeting and the Information

Circular.................................................................... 7-1697.4.4.8(f) Fairness Opinion ...................................................... 7-1737.4.4.8(g) Procedure at the Meeting, including Quorum ........... 7-173

7.4.4.9 Fairness Hearing .................................................................... 7-1747.4.4.9(a) BCE Framework...................................................... 7-1747.4.4.9(b) Burden of Proof....................................................... 7-1747.4.4.9(c) Compliance with Statutory Procedures ..................... 7-1757.4.4.9(d) Good Faith Requirement ......................................... 7-1777.4.4.9(e) Fair and Reasonable Requirement — Valid Business

Purpose Prong.......................................................... 7-177

TABLE OF CONTENTS

CON-27 (OCLP) (2015 – Rel. 4)

7.4.4.9(f) Fair and Reasonable Requirement — FairBalancing of Rights Prong........................................ 7-178

7.4.4.9(g) Intelligent Business Person Test................................ 7-1817.4.4.10 Challenging the Plan’s Fairness ............................................ 7-181

7.4.4.10(a) Standing to Object to Plan ..................................... 7-1817.4.4.10(b) Lack of Favourable Vote ....................................... 7-1827.4.4.10(c) Challenging the Composition of the Majority ......... 7-1837.4.4.10(d) Plans Found to be Unfair ...................................... 7-1837.4.4.10(e) Appeal of Plan Approval........................................ 7-184

7.4.5 Conclusion...................................................................................... 7-184

CHAPTER 8 — CORPORATE SECRETARIAL

8.1 — Registered Office and Corporate Records .......................................... 8-18.1.1 Registered Office................................................................................ 8-1

8.1.1.1 General ..................................................................................... 8-18.1.1.2 Change of Registered Office ...................................................... 8-28.1.1.3 Functions of Registered Office .................................................. 8-3

8.1.2 Corporate Records............................................................................. 8-48.1.2.1 General ..................................................................................... 8-48.1.2.2 Securities Registers and Records ............................................... 8-68.1.2.3 Minute Books ........................................................................... 8-88.1.2.4 Rectifying Records .................................................................... 8-88.1.2.5 Records as Evidence.................................................................. 8-98.1.2.6 Lists of Shareholders................................................................. 8-98.1.2.7 Lists of Holders of Debt Obligations........................................8-118.1.2.8 Inspection of Records ..............................................................8-128.1.2.9 Location of Records.................................................................8-138.1.2.10 Business Records Protection Act ..............................................8-13

8.1.3 Filings ..............................................................................................8-148.1.3.1 Returns Generally ....................................................................8-148.1.3.2 Corporations Information Act....................................................8-148.1.3.3 Business Names........................................................................8-198.1.3.4 Tax ..........................................................................................8-21

8.1.3.4(a) Federal ......................................................................8-218.1.3.4(b) Ontario......................................................................8-21

8.1.3.5 Corporations Returns Act..........................................................8-228.1.3.6 Securities Act ...........................................................................8-238.1.3.7 Other .......................................................................................8-23

8.1.4 OBCA Exemptions ...........................................................................8-248.1.4.1 Administrative .........................................................................8-248.1.4.2 Judicial ....................................................................................8-26

8.2 — Financial Statements and Auditors ...................................................8-318.2.1 Financial Statements .........................................................................8-318.2.2 Audits...............................................................................................8-35

TABLE OF CONTENTS

CON-28

8.2.2.1 Exemption from Audit Requirement ........................................8-358.2.2.2 Auditor ....................................................................................8-36

8.2.2.2(a) Qualification ..............................................................8-368.2.2.2(b) Duties and Liabilities .................................................8-378.2.2.2(c) Appointment, Removal and Remuneration.................8-398.2.2.2(d) Annual Audit Process ................................................8-418.2.2.2(e) Audit Report..............................................................8-43

8.2.3 Audit Enquiries and Responses.........................................................8-438.2.4 Audit Committees.............................................................................8-44Summary of Procedure — Auditors and Financial Statments ................. 8-46.18.3 — Shareholder Meetings and Proxy Solicitation ...................................8-478.3.1 Meetings of Shareholders ..................................................................8-47

8.3.1.1 General ....................................................................................8-478.3.1.2 Annual Meetings......................................................................8-488.3.1.3 Special Meetings ......................................................................8-508.3.1.4 Class or Series Meetings...........................................................8-518.3.1.5 Shareholder Requisitioned Meetings.........................................8-518.3.1.6 Court-ordered Meetings ...........................................................8-538.3.1.7 Location ..................................................................................8-54

8.3.2 Proxy Solicitation .............................................................................8-558.3.2.1 Record Dates ...........................................................................8-558.3.2.2 Notice of Meeting ....................................................................8-568.3.2.3 Annual Information Form and Management Discussion

and Analysis ............................................................................8-598.3.2.4 Shareholder Communications under NI 54-101 ........................8-59

8.3.2.4(a) Record Date ..............................................................8-608.3.2.4(b) Request for Beneficial Ownership Information...........8-608.3.2.4(c) List of Participants.....................................................8-618.3.2.4(d) Response from Intermediaries ....................................8-618.3.2.4(e) Delivery of Proxy-related Material .............................8-618.3.2.4(f) Annual and Financial Statements ...............................8-628.3.2.4(g) Security Holder Instructions to Intermediaries ...........8-628.3.2.4(h) Interim Financial Statements .....................................8-62

8.3.2.5 Voting Shares Registered in Name of Registrant orIntermediary ............................................................................8-64

8.3.3 Proxies and Information Circulars ....................................................8-668.3.3.1 General ....................................................................................8-668.3.3.2 Form of Proxy .........................................................................8-718.3.3.3 Information Circulars...............................................................8-738.3.3.4 Revocation of Proxies ..............................................................8-74

8.3.4 Procedures at Meeting of Shareholders .............................................8-748.3.5 Shareholder Proposals.......................................................................8-80Summary of Major Corporate Events — Meetings of ShareholdersUnder the Ontario Business Corporations Act ............................................8-84

TABLE OF CONTENTS

CON-29 (OCLP) (2015 – Rel. 4)

8.4 — Extra-Provincial Corporate Licenses and Registrations ................ 8-84.588.4.1 General........................................................................................ 8-84.58

8.4.1.1 Jurisdiction ......................................................................... 8-84.588.4.1.2 Provincial and Territorial Legislation .......................................8-868.4.1.3 Returns Generally ....................................................................8-86

8.4.2 Ontario Extra-Provincial Corporation License ..................................8-878.4.2.1 BNA ........................................................................................8-878.4.2.2 CIA .........................................................................................8-898.4.2.3 ECA ........................................................................................8-92

8.4.2.3(a) Overview....................................................................8-928.4.2.3(b) Classes.......................................................................8-928.4.2.3(c) Name Requirements ...................................................8-938.4.2.3(d) License Requirement..................................................8-938.4.2.3(e) Carrying on Business in Ontario.................................8-938.4.2.3(f) Exemptions.................................................................8-958.4.2.3(g) Inability to Maintain Action ......................................8-958.4.2.3(h) Interests in Land........................................................8-978.4.2.3(i) Penalty for Non-Compliance.......................................8-97

8.4.3 Non-Ontario Extra-Provincial Corporation Licenses andRegistrations.....................................................................................8-98

8.4.3.1 Alberta.....................................................................................8-988.4.3.1(a) Introduction...............................................................8-988.4.3.1(b) Carrying on Business in Alberta.................................8-998.4.3.1(c) Consequences of Failure to Register......................... 8-1008.4.3.1(d) Procedure for Registering......................................... 8-1018.4.3.1(e) Corporate Name (and Assumed Name) .................... 8-1018.4.3.1(f) Forms and Registration Requirements...................... 8-1028.4.3.1(g) Charter .................................................................... 8-1038.4.3.1(h) Issue and Effective Date of Registrar’s Certificate.... 8-1038.4.3.1(i) Attorney ................................................................... 8-1038.4.3.1(j) Annual Filings .......................................................... 8-1048.4.3.1(k) Changes to Charter Documents ............................... 8-1048.4.3.1(l) Change to Address of Head Office or Membership

of the Board ............................................................. 8-1058.4.3.1(m) Change of Address of Attorney............................... 8-1058.4.3.1(n) Amalgamation ......................................................... 8-1058.4.3.1(o) Cancellation, Suspension, Revocation and Revival ..8-105-

Extra-Provincial CorporationsExtra-Provincial Corporations — Alberta ............................................... 8-107

8.4.3.2 British Columbia............................................................... 8-108.288.4.3.2(a) Introduction........................................................ 8-108.288.4.3.2(b) Key BCBCA Definitions..................................... 8-108.288.4.3.2(c) Carrying on Business in British Columbia ................ 8-1098.4.3.2(d) Consequences of Failure to Register ........................ 8-111

TABLE OF CONTENTS

CON-30

8.4.3.2(e) Procedure for Registering ......................................... 8-1118.4.3.2(f) Appointment of Attorney ......................................... 8-1128.4.3.2(g) Notification of Changes ........................................... 8-1138.4.3.2(h) Name to be Displayed ............................................. 8-1138.4.3.2(i) Annual Reports ........................................................ 8-1148.4.3.2(j) Amalgamation .......................................................... 8-1158.4.3.2(k) Cancellation of Registration of Extra-provincial

Companies.................................................................8-158.4.3.2(l) Restoration............................................................... 8-115

Extra-Provincial Corporations — British Columbia................................. 8-1168.4.3.3 Manitoba .......................................................................... 8-116.21

8.4.3.3(a) Introduction........................................................ 8-116.218.4.3.3(b) Names ................................................................ 8-116.218.4.3.3(c) Registration Requirements ....................................... 8-1178.4.3.3(d) Registered Procedure ............................................... 8-1198.4.3.3(e) Cancellation and Restoration of Registration ........... 8-1208.4.3.3(f) Service of Process ..................................................... 8-1218.4.3.3(g) Real Property........................................................... 8-1218.4.3.3(h) Annual Returns ....................................................... 8-122

Extra-Provincial Corporations — Manitoba ............................................ 8-1228.4.3.4 Saskatchewan.................................................................... 8-122.12

8.4.3.4(a) Overview............................................................. 8-122.128.4.3.4(b) Registration Procedure............................................. 8-1258.4.3.4(c) Power of Attorney.................................................... 8-1268.4.3.4(d) Notice of Change..................................................... 8-1268.4.3.4(e) Striking Off and Restoration .................................... 8-1278.4.3.4(f) Alternate Name ........................................................ 8-1278.4.3.4(g) Annual Returns ....................................................... 8-128

Extra-Provincial Corporations — Saskatchewan...................................... 8-1288.4.4 Extra-Provincial Summaries Relating to Carrying on a

Business in Ontario................................................................... 8-1298.4.4(a) Starting to Carry on a Business in Ontario ................. 8-1308.4.4(b) Ongoing Reporting Obligations when Carrying on a Business

in Ontario................................................................... 8-145

CHAPTER 9 — MERGERS AND ACQUISITIONS

9.1 — Negotiated Acquisitions and Divestitures ........................................... 9-19.1.1 General.............................................................................................. 9-19.1.2 Capacity and Authorization ............................................................... 9-39.1.3 Tax Considerations ............................................................................ 9-59.1.4 Investment Canada Act ....................................................................... 9-8

9.1.4.1 Reviewable Investments............................................................. 9-89.1.4.2 Exempt Investments .................................................................9-119.1.4.3 Investors from WTO Members.................................................9-12

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CON-30.1 (OCLP) (2015 – Rel. 4)

9.1.4.4 General ....................................................................................9-139.1.6 Other Pre-Contract Matters ..............................................................9-21

9.1.6.1 Employees................................................................................9-219.1.6.2 Merger Control ........................................................................9-229.1.6.3 Specific Regulatory Approvals .................................................9-239.1.6.4 Third-Party Consents ...............................................................9-239.1.6.5 Securities Legislation................................................................9-23

9.1.7 Purchase Agreement .........................................................................9-249.1.7.1 Overview..................................................................................9-249.1.7.2 Purchased Assets......................................................................9-259.1.7.3 Assumption of Liabilities .........................................................9-269.1.7.4 Assignment of Contracts ..........................................................9-269.1.7.5 Purchase Price..........................................................................9-279.1.7.6 Earn-Outs ................................................................................9-289.1.7.7 Price Allocation .......................................................................9-299.1.7.8 Payment...................................................................................9-299.1.7.9 Holdbacks................................................................................9-309.1.7.10 Escrow ...................................................................................9-319.1.7.11 Representations and Warranties .............................................9-32

9.1.7.11(a) Purposes...................................................................9-329.1.7.11(b) Legal Characterization .............................................9-339.1.7.11(c) Typical Representations and Warranties ...................9-339.1.7.11(d) Negotiating Representations and Warranties ............9-349.1.7.11(e) Survival of Representations and Warranties..............9-369.1.7.11(f) Specific Representations and Warranties ...................9-37

9.1.7.12 Indemnities.............................................................................9-389.1.7.13 Covenants ..............................................................................9-409.1.7.14 Conditions and Conditions Precedent .....................................9-409.1.7.15 Restrictive Covenants .............................................................9-419.1.7.16 Employment and Consulting Agreements ...............................9-42

(Continued on page CON-31)

TABLE OF CONTENTS

CON-30.2

Summary of Procedure — Extraordinary Sale of All or SubstantiallyAll Assets............................................................................................... 9-42.19.2 — Vendor Take-Back Financing ...........................................................9-439.2.1 Context.............................................................................................9-43

9.2.1.1 Sources of Finance...................................................................9-439.2.1.2 Issue of Purchaser’s Shares to Vendor ......................................9-439.2.1.3 Disguised VTB Financing.........................................................9-44

9.2.1.3(a) Consulting Fees .........................................................9-459.2.1.3(b) Put-Call Arrangements...............................................9-45

9.2.2 Rationales for VTB Financing ..........................................................9-479.2.3 Dynamics of VTB Financing Negotiations ........................................9-509.2.4 Dovetailing VTB Financing with Conventional Financing.................9-529.2.5 Process of VTB Financing ................................................................9-549.2.6 Securities Exemptions .......................................................................9-54

9.2.6.1 Financing Share Acquisitions ...................................................9-559.2.6.2 Financing Asset Acquisitions....................................................9-56

9.2.7 Promissory Notes, Loan Agreements and Other Debt Instruments....9-579.2.8 Guarantees .......................................................................................9-60

9.2.8.1 Personal Guarantees.................................................................9-609.2.8.2 Corporate Guarantees ..............................................................9-61

9.2.9 Real Property Collateral ...................................................................9-639.2.9.1 Owned Real Property...............................................................9-639.2.9.2 Leased Real Property ...............................................................9-64

9.2.10 Non-Share Personal Property Security Agreements andRegistrations ...................................................................................9-65

9.2.10.1 Omnibus Collateral ................................................................9-659.2.10.2 Inventory and its Proceeds .....................................................9-669.2.10.3 Accounts, Negotiable Instruments and Chattel Paper .............9-679.2.10.4 Equipment and Machinery Other Than Motor Vehicles..........9-699.2.10.5 Motor Vehicles.......................................................................9-709.2.10.6 Intellectual Property ...............................................................9-709.2.10.7 Ships ......................................................................................9-709.2.10.8 Life Insurance ........................................................................9-71

9.2.11 Target Shares as Collateral..............................................................9-719.2.11.1 Registration of Title ...............................................................9-719.2.11.2 Pledge Agreement...................................................................9-739.2.11.3 Escrow Arrangement ..............................................................9-74

9.2.12 Postponement and Intercreditor Arrangements................................9-759.2.12.1 Postponements Agreements ....................................................9-759.2.12.2 Subordination and Priority Agreements..................................9-76

9.2.13 Legal Opinions................................................................................9-799.2.14 Conclusion ......................................................................................9-809.3 — Transaction Opinions .......................................................................9-819.3.1 Introduction .....................................................................................9-81

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CON-31 (OCLP) (2015 – Rel. 1)

9.3.2 Date and Addresses ..........................................................................9-819.3.2.1 Date.........................................................................................9-819.3.2.2 Addresses .................................................................................9-82

9.3.3 Retainer and Nature of Transaction .................................................9-829.3.3.1 Scope of Retainer.....................................................................9-829.3.3.2 Nature of Transaction..............................................................9-839.3.3.3 Defined Terms .........................................................................9-83

9.3.4 Scope of Examination .......................................................................9-839.3.5 Factual Basis for Opinion .................................................................9-84

9.3.5.1 Officers’ Certificates .................................................................9-849.3.5.2 Governmental Certificates ........................................................9-85

9.3.6 Practice Limitation ...........................................................................9-869.3.7 Standard Assumptions ......................................................................9-869.3.8 Standard Opinions ............................................................................9-88

9.3.8.1 Corporate Status ......................................................................9-889.3.8.1(a) Incorporation.............................................................9-899.3.8.1(b) Organization ..............................................................9-909.3.8.1(c) Corporate Existence ...................................................9-909.3.8.1(d) Qualification to Carry on Business.............................9-92

9.3.8.2 Corporate Power and Capacity ................................................9-939.3.8.3 Authorization...........................................................................9-959.3.8.4 Execution.................................................................................9-989.3.8.5 Delivery ...................................................................................9-999.3.8.6 Enforceability......................................................................... 9-1009.3.8.7 Non-Contravention ................................................................ 9-102

9.3.8.7(a) Laws........................................................................ 9-1039.3.8.7(b) Constating Documents............................................. 9-1049.3.8.7(c) Agreements and Orders ............................................ 9-104

9.3.8.8 No Litigation ......................................................................... 9-1059.3.9 Qualifications.................................................................................. 9-106

9.3.9.1 Insolvency .............................................................................. 9-1079.3.9.2 Equitable Principles and Remedies ......................................... 9-1089.3.9.3 Severability ............................................................................ 9-1099.3.9.4 Written Waivers ..................................................................... 9-109

9.3.10 Reliance and Signature.................................................................. 9-1109.3.10.1 Reliance ............................................................................... 9-1109.3.10.2 Signature.............................................................................. 9-110

9.3.11 Conclusion .................................................................................... 9-1109.4 — Take-Over Bids ............................................................................. 9-1119.4.1 General........................................................................................... 9-1119.4.2 Compulsory Squeeze-Out ................................................................ 9-1119.4.3 Compulsory Buy-Out...................................................................... 9-1199.5 — Bulk Sales ..................................................................................... 9-1239.5.1 Overview......................................................................................... 9-123

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CON-32

9.5.2 Purpose .......................................................................................... 9-1239.5.3 Scope.............................................................................................. 9-1249.5.4 Operation ....................................................................................... 9-126

9.5.4.1 Where Seller is Solvent........................................................... 9-1269.5.4.1(a) Inter-Party Waiver and Indemnity............................ 9-1269.5.4.1(b) Structural Avoidance ............................................... 9-1279.5.4.1(c) Judicial Exemption................................................... 9-1289.5.4.1(d) Compliance with the BSA........................................ 9-1299.5.4.1(e) Post-Sale Exemption Order ...................................... 9-132

9.5.4.2 Where Seller’s Solvency is Doubtful ....................................... 9-1339.5.4.2(a) Realization of Collateral, Receivership, Bankruptcy and

Liquidation ............................................................. 9-1339.5.4.2(b) Judicial Exemption, BSA Compliance or Payment to

Trustee ................................................................... 9-1339.5.4.2(c) Rely on National Trust ............................................. 9-135

9.5.4.3 Remedies for Non-Compliance............................................... 9-1369.5.4.3(2) Protection of Creditors Under the BSA.............................. 9-137

9.5.5 Pre-Planned Liquidation of Assets .................................................. 9-138

CHAPTER 10 — RECENT AND PROSPECTIVE LAW REFORM

10.1 — Recent Legislative Developments ....................................................10-110.1.1 Phase I Business Law Reform: STA and Consequential

Amendments ...................................................................................10-110.1.1.1 OBCA Changes ......................................................................10-1

10.1.1.1(a) Part IV — Corporate Securities................................10-110.1.1.1(b) Dematerialization.....................................................10-210.1.1.1(c) Unanimous Shareholder Agreements ........................10-3

10.1.1.2 Changes to Execution Act.......................................................10-410.1.2 Phase II Business Law Reform: Bill 152, Especially Schedule B.......10-6

10.1.2.1 Reduction in Board Residency Requirement...........................10-710.1.2.2 Elimination of the Canadian Residency Requirement at Board

and Committee Meetings........................................................10-710.1.2.3 Repeal of the Financial Assistance Provisions.........................10-810.1.2.4 Corporate Finance .................................................................10-810.1.2.5 Duty of Care Owed by Directors and Officers ........................10-910.1.2.6 Conflict of Interest Rules .......................................................10-910.1.2.7 D&O Indemnification and Insurance .................................... 10-1010.1.2.8 Due Diligence Defence ......................................................... 10-1210.1.2.9 Shareholder Voting Regime .................................................. 10-1210.1.2.10 Exemptions from Proxy Solicitation Rules.......................... 10-1310.1.2.11 Circulation of Financial Statements and Interim

Financial Statements........................................................... 10-1310.1.2.12 Shareholder Proposals ........................................................ 10-1310.1.2.13 Electronic Communications ................................................ 10-14

TABLE OF CONTENTS

CON-33 (OCLP) (2015 – Rel. 1)

10.1.2.14 Preconditions for Bringing a Derivative Action................... 10-1410.1.2.15 Replacement of Partial Shield LLP Liability Regime with

Full Shield Regime ............................................................. 10-1410.1.3 Conclusion .................................................................................... 10-1510.2 — Ontario Not-for-Profit Corporations Act, 2010 ............................. 10-1610.2.1 Introduction.................................................................................. 10-1610.2.2 Types of Ontario NFP Corporations............................................. 10-18

10.2.2.1 Non-PBCs ............................................................................ 10-1810.2.2.2 PBCs.................................................................................... 10-18

10.2.2.2(a) Charitable Corporations......................................... 10-1810.2.2.2(b) Non-charitable PBCs.............................................. 10-19

10.2.3 Regulation of Charitable Corporations, Non-Charitable PBCs and Non-PBCs............................................................................................. 10-21

10.2.4 Audit, Review, Engagement or Compilation Reports .................... 10-2510.2.5 Modernized Corporate Law Framework ....................................... 10-26

10.2.5.1 Incorporation ....................................................................... 10-2610.2.5.2 Abolition of Ultra Vires Doctrine......................................... 10-2710.2.5.3 Directors and Officers .......................................................... 10-2810.2.5.4 Members and Membership Rights/Remedies ........................ 10-2810.2.5.5 By-laws ................................................................................ 10-3010.2.5.6 Borrowing ............................................................................ 10-3010.2.5.7 Fundamental Changes .......................................................... 10-30

10.2.6 Problems and Solutions................................................................. 10-3110.2.6.1 Whether the Ultra Vires Doctrine is Preserved in Part .......... 10-3110.2.6.2 Vacillation between Non-Charitable PBC and Non-PBC

Status ................................................................................... 10-3410.2.6.3 Lack of Knowledge Qualifier in Non-Charitable PBC

Status ................................................................................... 10-3510.2.6.4 Accidental or Unintentional Members .................................. 10-3610.2.6.5 Minority Veto Power............................................................ 10-36

10.2.6.5(a) Possible Issues........................................................ 10-3710.2.6.5(b) Possible Solutions .................................................. 10-42

10.2.6.6 Does Membership Have Any Privileges?............................... 10-4310.2.6.6(a) Irreducible Class Membership Rights ..................... 10-4410.2.6.6(b) Statutory Membership Remedies ............................ 10-45

10.2.6.7 Hybrid By-Laws and By-Law Amendments .......................... 10-4510.2.6.8 Self-Perpetuating Boards ...................................................... 10-4710.2.6.9 Liability of Directors and Officers ........................................ 10-47

10.2.7 Corporate Governance .................................................................. 10-4910.2.7.1 Implicit OBCA Governance Model....................................... 10-49

10.2.7.1(a) OBCA Governance Pillars...................................... 10-5010.2.7.1(b) Summary ............................................................... 10-51

10.2.7.2 Implicit ONCA Governance Model ...................................... 10-5210.2.7.2(a) ONCA Governance Pillars ..................................... 10-52

TABLE OF CONTENTS

CON-34

10.2.7.2(b) Implications ........................................................... 10-5310.2.8 Transitioning to the New Act........................................................ 10-5410.2.9 Federal v. Ontario Corporation..................................................... 10-55

10.2.9.1 Federal Advantages .............................................................. 10-5610.2.9.2 Ontario Advantages ............................................................. 10-56

10.2.10 Conclusion .................................................................................. 10-5710.2.11 Chapter 10.2 — Appendix 1 ........................................................ 10-59

LEGISLATION

Table of Concordance .........................................................................TCON-1Table of Concordance (BCA vs. NCA) .............................................. TCON-89Table of Concordance (Securities Transfer Act, CBCA andAn act respecting the transfer of securities and theestablishment of security entitlements).............................................. TCON-163Table of Concordance (Limited Partnership Acts) ............................ TCON-181Table of Concordance (Partnership Acts) ......................................... TCON-193Business Corporations Act......................................................................BCA-1

VOLUME 3

General Regulation, R.R.O. 1990, Reg. 62 .................................. BCA-177Forms Regulation, O. Reg. 289/00 .............................................. BCA-205OBCA Forms:............................................................................. BCA-208Form 1: Articles of Incorporation ............................................... BCA-208Form 2: Consent to Act as a First Director................................. BCA-214Form 3: Articles of Amendment.................................................. BCA-215Form 4: Articles of Amalgamation.............................................. BCA-217Form 5: Restated Articles of Incorporation................................. BCA-223Form 6: Articles of Continuance ................................................. BCA-228Form 7: Application for Authorization to Continue in Another

Jurisdiction........................................................................ BCA-235Form 7.1 Application for Authorization to Continue under the

Co-operative Corporations Act.......................................... BCA-237Form 8: Articles of Arrangement ................................................ BCA-239Form 9: Articles of Reorganization ............................................. BCA-241Form 10: Articles of Dissolution ................................................. BCA-243Form 11: Articles of Dissolution ................................................. BCA-245Form 15: Articles of Revival ....................................................... BCA-247Health Profession Corporations, O. Reg. 665/05 ......................... BCA-249

Business Names Act .............................................................................. BNA-1General, O. Reg. 121/91 ............................................................... BNA-11Restrictions Respecting Names, O. Reg. 122/91............................ BNA-21Refund Fee For Electronic Application For New Registration,

O. Reg. 18/07 .................................................................. BNA-25

TABLE OF CONTENTS

CON-35 (OCLP) (2015 – Rel. 1)

Business Regulation Reform Act ..........................................................BRRA-1General, O. Reg. 442/95 ............................................................. BRRA-13

Bulk Sales Act....................................................................................... BSA-1Canada Not-for-Profit Corporations Act..............................................CNCA-1Commodity Futures Act .........................................................................CFA-1

General, R.R.O. 1990, Reg. 90 ......................................................CFA-67Co-operative Corporations Act .............................................................. CCA-1

Co-operative Corporations Act General Regulation, R.R.O. 1990,Reg. 178......................................................................................CCA-133

LEGISLATION

Corporations Act .....................................................................................CA-1Corporations Act General Regulation, R.R.O. 1990, Reg. 181 ...... CA-165

Corporations Information Act..................................................................CIA-1Corporations Information Act General Regulation,R.R.O. 1990, Reg. 182 ...................................................................CIA-11

Corporations Returns Act...................................................................... CRA-1Corporations and Labour Unions Returns Act Regulations ...................CRAR-1Credit Unions and Caisses Populaires Act......................................... CUCPA-1

General, O. Reg. 237/09 .........................................................CUCPA-167Cost of Borrowing and Disclosure to Borrowers,O. Reg. 238/09 .......................................................................CUCPA-235

Extra-Provincial Corporations Act ...................................................... EPCA-1Extra-Provincial Corporations Act General Regulation,R.R.O. 1990, Reg. 365 ................................................................EPCA-13

Limited Partnerships Act........................................................................ LPA-1Ont. Reg. 713 — GeneralR.R.O. 1990, Reg. 713 .................................................................. LPA-17

Ministry of Consumer and Business Services Act............................... MCBSA-1

VOLUME 4

Not-for-Profit Corporations Act ......................................................... ONCA-1Partnerships Act ...................................................................................... PA-1Securities Act ...........................................................................................SA-1Small Business Development Corporations Act [Repealed] ..................SBDCA-1

Ont. Reg. 1018 — Additional Material To Be FurnishedWith Grant Applications [Revoked] ......................................... SBDCA-31Ont. Reg. 1019 — Forms [Revoked]......................................... SBDCA-33Ont. Reg. 1020 — General [Repealed] ...................................... SBDCA-35

SELECTED RULES AND POLICIES, INCLUDING NATIONAL INSTRUMENTS

Checklist for Oppression Claim Proceedings Brought Under the OntarioBusiness Corporations Act........................................................................OC-1

TABLE OF CONTENTS

CON-36

Schedule to Checklist — Court of Justice .............................................. OC-29National Instrument 13-101 — System for Electronic DocumentAnalysis and Retrieval (SEDAR) ......................................................... NI13-1National Instrument 41-101 — General ProspectusRequirements ....................................................................................... NI41-1National Instrument 44-101 — Short Form ProspectusDistributions ........................................................................................ NI44-1National Instrument 45-101 — Rights Offerings................................... NI45-1National Instrument 45-102 — Resale of Securities .............................NI45-19National Instrument 45-106 (on or after January 1, 2011) — Prospectusand Registration Exemptions National Instrument 45-102Resale of Securities OSC Rule 45-501 Ontario Prospectus andRegistration Exemptions .....................................................................NI45-55National Instrument 51-101 — Standards of Disclosure for Oil andGas Activities....................................................................................NI51-101National Instrument 54-101 Communication with BeneficialOwners of Securities of a Reporting Issuer ........................................NI54-101National Instrument 81-106 Investment Fund ContinuousDisclosure ............................................................................................ NI81-1

PRECEDENTS

Table of Contents ................................................................................. PRE-1Chapter 1.1 ......................................................................................... 1PRE-1Chapter 1.3 ......................................................................................... 1PRE-7Chapter 1.4 ........................................................................................1PRE-31Chapter 2.3 ......................................................................................... 2PRE-1Chapter 2.5 ......................................................................................2PRE-107Chapter 2.6 ......................................................................................2PRE-109

VOLUME 5

Chapter 3.1 ......................................................................................... 3PRE-1Chapter 3.2 ........................................................................................3PRE-31Chapter 4.1 ......................................................................................... 4PRE-1Chapter 4.2 ........................................................................................4PRE-47Chapter 4.5 ........................................................................................4PRE-77Chapter 5.1 ......................................................................................... 5PRE-1Chapter 5.3 ........................................................................................5PRE-11Chapter 6.1 ......................................................................................... 6PRE-1Chapter 6.2 ........................................................................................6PRE-69Chapter 6.3 ........................................................................................6PRE-83Chapter 6.4 ......................................................................................6PRE-287Chapter 6.5 ......................................................................................6PRE-419

TABLE OF CONTENTS

CON-37 (OCLP) (2015 – Rel. 2)

Chapter 7.1 ......................................................................................... 7PRE-1Chapter 7.2 ........................................................................................7PRE-49Chapter 7.3 ........................................................................................7PRE-57Chapter 8.1 ......................................................................................... 8PRE-1Chapter 8.2 ........................................................................................8PRE-29Chapter 8.3 ........................................................................................8PRE-33Chapter 8.4 ........................................................................................8PRE-85Chapter 9.1 ......................................................................................... 9PRE-1Chapter 9.5 ......................................................................................... 9PRE-9

WORDS & PHRASES ...........................................................................WP-1

INDEX ....................................................................................................... I-1

TABLE OF CONTENTS

CON-38

Table of Contents — Volume 2

[See Vol. 1 for Master Table of Contents]

VOLUME 2

CHAPTER 6 — CORPORATE FINANCE

6.1 — Debt Obligations and Trust Indentures .............................................. 6-16.1.1 Borrowing Powers.............................................................................. 6-1

6.1.1.1 Borrowing................................................................................. 6-16.1.1.2 Giving Security ......................................................................... 6-46.1.1.3 Giving a Guarantee................................................................... 6-4

6.1.2 Exercise of Borrowing Powers............................................................ 6-56.1.3 Banking Resolutions .......................................................................... 6-56.1.4 Types of Debt Obligations ................................................................. 6-6

6.1.4.1 Borrowing from Financial Institutions....................................... 6-66.1.4.2 Bonds, Debentures and Notes ................................................... 6-9

6.1.4.2(a) A Lexicon ................................................................... 6-96.1.4.2(b) Debt Obligation in Registered or Bearer Form ..........6-11

6.1.4.3 Taking Purchase-Money Security on the Sale of Goods ...........6-126.1.4.3(a) Equipment .................................................................6-126.1.4.3(b) Inventory ...................................................................6-15

6.1.5 Perfection .........................................................................................6-166.1.6 Trust Indentures ...............................................................................6-17

6.1.6.1 Introduction.............................................................................6-176.1.6.2 History of Trust Indenture Regulation in Ontario ....................6-206.1.6.3 Application ..............................................................................6-216.1.6.4 Indenture Trustee.....................................................................6-226.1.6.5 List of Bondholders .................................................................6-236.1.6.6 Regulation of Trustees and Trust Indentures............................6-236.1.6.7 Compliance with Trust Indenture .............................................6-24

Summary of Procedure — Borrowing Powers......................................... 6-26.16.2 — Securities Transfers, Pledges and Transmissions ...............................6-276.2.1 Overview...........................................................................................6-27

6.2.1.1 Predecessor Regime..................................................................6-276.2.1.2 What Was Wrong with the Former Legal Regime? ..................6-276.2.1.3 Background to the STA ...........................................................6-296.2.1.4 What Implementation of the STA Means.................................6-30

6.2.2 Direct Holding System......................................................................6-316.2.2.1 Issue of Securities.....................................................................6-31

6.2.2.1(a) Applicable Conflict of Law Rules ..............................6-316.2.2.1(b) Issue of Certificated or Uncertificated Securities ........6-32

CON-1 (OCLP) (2015 – Rel. 1)

6.2.2.1(c) Enforcement of Securities and Defences of the Issuer .6-326.2.2.1(d) Share Certificates .......................................................6-34

6.2.2.2 Transfer of Securities ...............................................................6-356.2.2.2(a) Applicable Conflict of Law Rules ..............................6-356.2.2.2(b) Protected Purchaser ...................................................6-396.2.2.2(c) Notice of an Adverse Claim .......................................6-386.2.2.2(d) Endorsement of a Security Certificate ........................6-406.2.2.2(e) Delivery .....................................................................6-426.2.2.2(f) Warranties on Transfer...............................................6-436.2.2.2(g) Signature Guarantees .................................................6-446.2.2.2(h) Purchaser’s Right to Other Requisites of Transfer......6-456.2.2.2(i) Registration of Transfer..............................................6-466.2.2.2(j) Lost or Stolen Security Certificates .............................6-47

6.2.2.3 Pledge of Securities ..................................................................6-496.2.2.3(a) Pledgee as Purchaser and Protected Purchaser............6-496.2.2.3(b) Scope of “Security”....................................................6-496.2.2.3(c) Attachment ................................................................6-506.2.2.3(d) Perfection ..................................................................6-516.2.2.3(e) Priority ......................................................................6-536.2.2.3(f) Cut-Off Rule for Buyers of Securities .........................6-54

6.2.3 Indirect Holding System ...................................................................6-546.2.3.1 Application of Indirect Holding System ...................................6-546.2.3.2 Nature of “Security Entitlement” .............................................6-556.2.3.3 Applicable Conflict of Law Rules.............................................6-576.2.3.4 Rights of Entitlement Holders..................................................6-58

6.2.3.4(a) In Rem Rights............................................................6-586.2.3.4(b) In Personam Rights....................................................6-586.2.3.4(c) Cut-Off Rules.............................................................6-59

6.2.3.5 Disposition of Security Entitlements.........................................6-606.2.3.6 Pledge of Security Entitlements ................................................6-61

6.2.3.6(a) Overview....................................................................6-616.2.3.6(b) Attachment................................................................6-626.2.3.6(c) Perfection...................................................................6-636.2.3.6(d) Priority ......................................................................6-64

6.2.4 Transmission of Securities.................................................................6-656.2.4.1 Transmissions ..........................................................................6-656.2.4.2 Rights of Successors.................................................................6-66

6.2.5 Execution against Securities ..............................................................6-676.3 — Share Capital and Dividends ............................................................6-696.3.1 Introduction .....................................................................................6-696.3.2 Authorized Capital ...........................................................................6-71

6.3.2.1 Capital Clause in Articles.........................................................6-716.3.2.2 Designation of Classes and Series.............................................6-736.3.2.3 Single Share Class ....................................................................6-74

CON-2

6.3.2.4 Common Shares.......................................................................6-766.2.3.4(a) Public Offering...........................................................6-766.2.3.4(b) Exempt Offering ........................................................6-77

6.3.2.5 Multiple Share Classes .............................................................6-786.3.2.6 Preferred Shares .......................................................................6-826.3.2.7 Series .......................................................................................6-856.3.2.8 Warrants..................................................................................6-89

6.3.3 Share Provisions ...............................................................................6-906.3.3.1 Dividend Rights .......................................................................6-90

6.3.3.1(a) Preferential Dividends ................................................6-906.3.3.1(b) Cumulative and Non-Cumulative Dividends ..............6-916.3.3.1(c) Partially Cumulative...................................................6-936.3.3.1(d) Participating Dividends..............................................6-936.3.3.1(e) Dividend Sprinkling ...................................................6-94

6.3.3.2 Return of Capital on Liquidation, Dissolutionor Winding-Up.........................................................................6-96

6.3.3.3 Redemption, Retraction and Purchase of Sharesby Corporation ........................................................................6-976.3.3.3(a) Redemption ...............................................................6-97

6.3.3.3(a)(i) Background Law ...............................................6-976.3.3.3(a)(ii) Redemption Triggers ........................................6-996.3.3.3(a)(iii) Redemption Mechanics .................................. 6-1006.3.3.3(a)(iv) Sinking Fund ................................................. 6-1026.3.3.3(a)(v) Retraction....................................................... 6-1026.3.3.3(a)(vi) Purchase by Corporation ............................... 6-103

6.3.3.4 Conversion Rights and Anti-Dilution Protection .................... 6-1066.3.3.4(a) Conversion Rights.................................................... 6-1066.3.3.4(b) Anti-dilution Protection ........................................... 6-108

6.3.3.5 Tracking Shares ..................................................................... 6-1176.3.3.6 Voting.................................................................................... 6-118

6.3.3.6(a) Mandatory Governance Right.................................. 6-1186.3.3.6(b) Application of Equality Principle ............................. 6-1186.3.3.6(c) Multiple and Subordinate Voting Rights .................. 6-1196.3.3.6(d) Class Election of Directors....................................... 6-1196.3.3.6(e) isement and Separate Class Votes............................. 6-122

6.3.3.7 Other Preferential Features — Especially Governance ............ 6-1256.3.4 Typical Sets Of Share Provisons...................................................... 6-128

6.3.4.1 Private Equity Investment ...................................................... 6-1286.3.4.2 Preferred Shares Used on a Section 85 Rollover

or Estate Freeze ..................................................................... 6-1296.3.4.3 Reorganization of an Insolvent Corporation .......................... 6-131

6.3.5 Stated Capital ................................................................................. 6-1326.3.5.1 Concept of Stated Capital ...................................................... 6-1326.3.5.2 Functions of Stated Capital Account...................................... 6-133

CON-3 (OCLP) (2015 – Rel. 1)

6.3.5.3 Increase in Stated Capital....................................................... 6-1396.3.5.4 Reduction in Stated Capital ................................................... 6-1406.3.5.5 Share Purchase or Redemption .............................................. 6-142

6.3.5.5(a) Incidental Reduction of Stated Capital Account....... 6-1426.3.5.5(b) Generally Applicable Solvency Tests ........................ 6-1436.3.5.5(c) Exceptions to the Generally Applicable

Solvency Tests.......................................................... 6-1446.3.5.5(d) Director Liability if Solvency Tests Not Met............ 6-1476.3.5.5(e) Calculation of Stated Capital Reduction................... 6-148

6.3.6 Dividends ....................................................................................... 6-1516.3.6.1 General .................................................................................. 6-1516.3.6.2 Application of the Double Solvency Tests .............................. 6-1516.3.6.3 Types of Dividends: Cash, In Specie and

Stock Dividends ..................................................................... 6-1546.3.6.3(a) Stock Dividends ....................................................... 6-1546.3.6.3(b) In Specie Dividends ................................................. 6-156

6.3.6.4 Reserves................................................................................. 6-1576.3.6.5 Declaration of Dividends ....................................................... 6-1576.3.6.6 Record Date .......................................................................... 6-1586.3.6.7 Payment................................................................................. 6-1596.3.6.8 Right to Compel Dividend ..................................................... 6-1596.3.6.9 Director Liability for Improper Dividends.............................. 6-161

6.4 — Issue and Ownership of Shares ....................................................... 6-1636.4.1 Issue and Allotment of Shares ........................................................ 6-163

6.4.1.1 Overview................................................................................ 6-1636.4.1.2 Contract Law Elements.......................................................... 6-1636.4.1.3 Corporate Law Elements........................................................ 6-165

6.4.1.3(a) Consideration for Shares.......................................... 6-1656.4.1.3(b) Pre-emptive Rights................................................... 6-1676.4.1.3(c) Application of Business Judgement Rule to

the Issue of Shares ................................................... 6-1686.4.1.3(d) Issue of Stock Dividend ..................................................... 6-1746.4.1.3(e) Commission on Issuance of Shares ..................................... 6-174

6.4.2 Share Certificates ............................................................................ 6-1756.4.2.1 General Requirements ............................................................ 6-1756.4.2.2 Notation of Transfer Restrictions........................................... 6-1766.4.2.3 Share Conditions.................................................................... 6-1776.4.2.4 Fees ....................................................................................... 6-1786.4.2.5 Loss, Theft or Destruction ..................................................... 6-1786.4.2.6 Fractional and Scrip Certificates ............................................ 6-179

6.4.3 Warrants ........................................................................................ 6-1806.4.4 Share Transfer Restrictions ............................................................. 6-182

6.4.4.1 Private Issuer ......................................................................... 6-1826.4.4.2 Freedom of Contract.............................................................. 6-183

CON-4

6.4.4.3 Exercise of Board Discretion to Approve a Transferof Shares................................................................................ 6-183

6.4.4.4 Effect of Transfer on a USA .................................................. 6-1846.4.4.5 Transfer Fees ......................................................................... 6-184

6.4.5 Restricted or Constrained Share Corporations ................................ 6-1856.4.6 Lien on Shares................................................................................ 6-1866.4.7 Intercorporate Shareholdings .......................................................... 6-187

6.4.7.1 Scope of the Prohibition......................................................... 6-1876.4.7.2 Statutory Exceptions .............................................................. 6-1896.4.7.3 Options to Avoid the Prohibition Against Intercorporate

Shareholdings......................................................................... 6-1906.5 — Secured Transactions ..................................................................... 6-1936.5.1 Overview......................................................................................... 6-1936.5.2 Credit Facilities .............................................................................. 6-194

6.5.2.1 Operating Loan...................................................................... 6-1946.5.2.1(a) Overview.................................................................. 6-1946.5.2.1(b) Currency.................................................................. 6-1946.5.2.1(c) Interest..................................................................... 6-1956.5.2.1(d) Financial Covenants ................................................ 6-1966.5.2.1(e) Negative Pledge........................................................ 6-197

6.5.2.2 Term Loan............................................................................. 6-1976.5.2.2(a) Overview.................................................................. 6-1976.5.2.2(b) Collateral................................................................. 6-1976.5.2.2(c) Financial, Positive and Negative Covenants ............. 6-198

6.5.2.3 Capex Facilities...................................................................... 6-1996.5.2.4 Equipment Leasing ................................................................ 6-1996.5.2.5 Other Credit Facilities ............................................................ 6-200

6.5.2.5(a) Letters of Credit and Bank Guarantees .................... 6-2006.5.2.5(b) Bankers’ Acceptances and Other Commercial

Paper ....................................................................... 6-2016.5.2.5(c) Foreign Exchange .................................................... 6-2026.5.2.5(d) Swaps ...................................................................... 6-2026.5.2.5(e) Consignments........................................................... 6-2026.5.2.5(f) Tax-Assisted Debt Obligations and Governmental

Financial Assistance Programs.................................. 6-2036.5.3 Collateral........................................................................................ 6-204

6.5.3.1 Accounts................................................................................ 6-2046.5.3.2 Chattel Paper ......................................................................... 6-2066.5.3.3 Inventory ............................................................................... 6-2066.5.3.4 Equipment ............................................................................. 6-2086.5.3.5 Mobile Goods ........................................................................ 6-209

6.5.3.5(a) Motor Vehicles ........................................................ 6-2096.5.3.5(b) Vessels and Rolling Stock ........................................ 6-210

6.5.3.6 Investment Property ............................................................... 6-212

CON-5 (OCLP) (2015 – Rel. 1)

6.5.3.6(a) Securities.................................................................. 6-2126.5.3.6(b) Security Entitlements ............................................... 6-2136.5.3.6(c) Futures Contracts .................................................... 6-213

6.5.3.7 Real Property......................................................................... 6-2146.5.3.7(a) Owned ..................................................................... 6-2146.5.3.7(b) Leasehold ................................................................ 6-215

6.5.3.8 Insurance ............................................................................... 6-2166.5.3.8(a) Property Damage and Business Risks....................... 6-2166.5.3.8(b) Refunds of Unearned Premiums .............................. 6-216

6.5.3.9 Intellectual Property............................................................... 6-2166.5.4 PPSA System.................................................................................. 6-217

6.5.4.1 Overview................................................................................ 6-2176.5.4.2 Scope ..................................................................................... 6-218

6.5.4.2(a) Application .............................................................. 6-2186.5.4.2(b) Exclusions................................................................ 6-220

6.5.4.3 Attachment ............................................................................ 6-2226.5.4.3(a) Value ....................................................................... 6-2236.5.4.3(b) Debtor’s Rights in Collateral ................................... 6-2236.5.4.3(c) Written Security Agreement or Secured Party in

Possession ................................................................ 6-2236.5.4.3(d) No Postponement of Attachment............................. 6-224

6.5.4.4 Perfection............................................................................... 6-2246.5.4.4(a) Registration ............................................................. 6-2246.5.4.4(b) Maintaining Perfection............................................. 6-228

6.5.4.5 Priorities ................................................................................ 6-2296.5.4.5(a) General Priority Rules ............................................. 6-2296.5.4.5(b) Specific Internal Priority Rules ................................ 6-230

6.5.4.6 Intercreditor Arrangements .................................................... 6-2346.5.4.6(a) Subordinations and Postponements .......................... 6-2346.5.4.6(b) Estoppel Certificates ................................................ 6-235

6.5.5 Security Agreements ....................................................................... 6-2366.5.5.1 Debenture .............................................................................. 6-236

6.5.5.1(a) Nature ..................................................................... 6-2366.5.5.1(b) Perfection ................................................................ 6-237

6.5.5.2 GSA ...................................................................................... 6-2376.5.5.3 Assignment of Accounts......................................................... 6-238

6.5.5.3(a) GABD..................................................................... 6-2386.5.5.3(b) Specific Assignment ................................................. 6-239

6.5.5.4 Equipment Leases and Consignment Agreements ................... 6-2396.5.5.4(a) Equipment Leases .................................................... 6-2396.5.5.4(b) Consignments .......................................................... 6-240

6.5.5.5 Pledge of Securities or Other Investment Property.................. 6-2416.5.5.6 Bank Act Security .................................................................. 6-241

6.5.5.6(a) Scope ....................................................................... 6-241

CON-6

6.5.5.6(b) Attachment and Perfection....................................... 6-2436.5.5.6(c) Priorities .................................................................. 6-244

6.5.5.7 Guarantee .............................................................................. 6-2456.5.5.8 Real Property Security ........................................................... 6-247

6.5.5.8(a) Charge/Mortgage of Land........................................ 6-2476.5.5.8(b) Assignment of Rents ................................................ 6-2486.5.5.8(c) Leasehold Mortgage................................................. 6-248

CHAPTER 7 — FUNDAMENTAL CHANGES

7.1 — Amendments, Continuances and Amalgamations ................................ 7-17.1.1 Amendments...................................................................................... 7-1

7.1.1.1 Articles of Amendment Generally ............................................. 7-17.1.1.2 Procedure.................................................................................. 7-27.1.1.3 Date of Certificate of Amendment ............................................ 7-57.1.1.4 Separate Class or Series Vote .................................................... 7-67.1.1.5 Change of Corporate Name ...................................................... 7-87.1.1.6 Changing Restrictions on Business ............................................ 7-97.1.1.7 Amendments Restricting Issue, Transfer or Ownership of

Shares ....................................................................................... 7-97.1.1.8 Other Amendments to the Articles ...........................................7-10

7.1.2 Restated Articles...............................................................................7-107.1.3 Continuances ....................................................................................7-11

7.1.3.1 Import Continuance .................................................................7-117.1.3.2 Export Continuance .................................................................7-137.1.3.3 Continuances as Co-operative Corporation ..............................7-15

7.1.4 Amalgamations.................................................................................7-167.1.4.1 Amalgamations Generally ........................................................7-167.1.4.2 Amalgamation Procedure .........................................................7-18

7.1.4.2(a) Long-Form Amalgamation ........................................7-187.1.4.2(b) Short-Form Amalgamation ........................................7-237.1.4.2(c) Post-Amalgamation Organizations .............................7-25

7.1.4.3 Legal Effect of Amalgamation..................................................7-267.1.4.4 Appraisal Right........................................................................7-28

Summary of Procedure — Amending Articles and RestatingArticles .................................................................................................. 7-28.1Summary of Procedure — Amalgamation ............................................ 7-28.11Summary of Procedure — Import Continuance.................................... 7-28.21Summary of Procedure — Export Continuance .................................... 7-28.257.2 — Arrangements, Reorganizations and Going-Private Transactions ........7-297.2.1 Arrangements ...................................................................................7-29

7.2.1.1 Introduction.............................................................................7-297.2.1.2 Meaning of Arrangement .........................................................7-297.2.1.3 Whose Rights Can Be Arranged? .............................................7-317.2.1.4 Prerequisites.............................................................................7-32

CON-7 (OCLP) (2015 – Rel. 1)

7.2.1.4(a) Inapplicable CBCA Requirements ..............................7-327.2.1.4(b)OBCA Corporate Applicant........................................7-327.2.1.4(c) Complying with Statutory Procedures ........................7-32

7.2.1.5 Rights That May Be Subject to Arrangement...........................7-347.2.1.5(a) Shareholder Rights.....................................................7-347.2.1.5(b) Warrants ...................................................................7-357.2.1.5(c) Debt Obligations ........................................................7-35

7.2.1.6 Interim Orders .........................................................................7-357.2.1.7 Voting Class Identification .......................................................7-367.2.1.8 Approval Orders ......................................................................7-40

7.2.1.8(a) SCC Framework for Approval of Plans ofArrangement ..............................................................7-40

7.2.1.8(b) Lower Court Rulings on Approvals ...........................7-417.2.1.9 Obtaining a Certificate of Arrangement....................................7-43

7.2.2 Reorganizations ................................................................................7-447.2.2.1 Introduction.............................................................................7-447.2.2.2 Scope .......................................................................................7-457.2.2.3 No Dissent or Appraisal Rights ...............................................7-467.2.2.4 Gap-Filling Nature ..................................................................7-467.2.2.5 Stakeholder Approval ..............................................................7-477.2.2.6 Obtaining a Certificate of Reorganization ................................7-48

7.2.3 Going-Private Transactions...............................................................7-497.2.3.1 Background .............................................................................7-497.2.3.2 Regulation of GPTs .................................................................7-50

7.2.3.2(a) Judicial ......................................................................7-507.2.3.2(b) Section 190, OBCA....................................................7-51

Summary of Procedure — Arrangements................................................ 7-54.1Summary of Procedure — Reorganization.............................................. 7-54.77.3 — Liquidation, Dissolution and Revival.................................................7-557.3.1 Liquidation.......................................................................................7-55

7.3.1.1 Overview..................................................................................7-557.3.1.2 Voluntary Liquidation..............................................................7-55

7.3.1.2(a) Resolution .................................................................7-567.3.1.2(b) Notice........................................................................7-577.3.1.2(c) Inspectors...................................................................7-577.3.1.2(d) Arrangement with Creditors re Power of Liquidators.7-577.3.1.2(e) Assets.........................................................................7-587.3.1.2(f) Bank Account ............................................................7-587.3.1.2(g) Contributories............................................................7-587.3.1.2(h) Distribution of Assets ................................................7-597.3.1.2(i) Filling Vacancies in Office of Liquidator.....................7-607.3.1.2(j) Arrangements with Creditors ......................................7-607.3.1.2(k) Compromises with Debtors and Contributors ............7-607.3.1.2(l) Sale of Property for Shares, etc...................................7-60

CON-8

7.3.1.2(m) Obtaining Directions and Examinations ....................7-617.3.1.2(n) Meetings ....................................................................7-617.3.1.2(o) Final Meeting ............................................................7-627.3.1.2(p) Dissolution ................................................................7-627.3.1.2(q) Unclaimed Assets.......................................................7-627.3.1.2(r) Disposal of Records ...................................................7-637.3.1.2(s) Stay of Proceedings against the Corporation ..............7-63

7.3.1.3 Involuntary Liquidation ...........................................................7-637.3.1.3(a) Justifiable Lack of Confidence in Conduct of

the Corporation’s Affairs ...........................................7-667.3.1.3(b) Misapplication of the Corporation’s Property by

the Majority Shareholder ...........................................7-667.3.1.3(c) Fraudulent Scheme.....................................................7-677.3.1.3(d) Loss of Substratum....................................................7-677.3.1.3(e) Partnership Analogy...................................................7-677.3.1.3(f) Deadlock ....................................................................7-697.3.1.3(g) Corporation Being Operated Solely for the Benefit

of Debenture-holders .................................................7-697.3.1.3(h) Management Being Involved in Suspicious Transactions

Including Transfer of Assets to AnotherCorporation Without Retaining Voting Control.........7-69

7.3.1.3(i) Outvoted in Domestic Policy ......................................7-707.3.1.4 Procedure for Involuntary Liquidation .....................................7-707.3.1.5 Cancellation of Certificate of Incorporation .............................7-73

7.3.2 Dissolution .......................................................................................7-757.3.2.1 Introduction.............................................................................7-757.3.2.2 Voluntary Dissolution ..............................................................7-767.3.2.3 Termination of Existence of Corporations Not Incorporated

by Articles on Letters Patent ....................................................7-807.3.2.4 Liability of Shareholders ..........................................................7-817.3.2.5 Property Undisposed of at Dissolution.....................................7-817.3.2.6 Preservation of Actions against a Corporation .........................7-82

7.3.3 Revival .............................................................................................7-83Summary of Major Corporate Events — Part XVI of theOBCA — Voluntary Winding Up .............................................................7-87Summary of Major Corporate Events — Part XVI of theOBCA — Winding up by Court.............................................................. 7-107Summary of Major Corporate Events — Part XVI of theOBCA — Voluntary and Involuntary Dissolution and Revival................ 7-125

7.4 — Arrangements and Reorganizations of InsolventCorporations ............................................................................................ 7-1357.4.1 Introduction ................................................................................... 7-1357.4.2 Why Resort to Sections 186 or 182 of the OBCA in

an Insolvency? ................................................................................ 7-135

CON-9 (OCLP) (2015 – Rel. 3)

TABLE OF CONTENTS

7.4.2.1 Key Elements ......................................................................... 7-1357.4.2.2 Restated Capital Structure ..................................................... 7-136

7.4.3 Reorganizations Involving Section 186............................................ 7-1397.4.3.1 Scope ..................................................................................... 7-1397.4.3.2 Gap-Filling Nature ................................................................ 7-1397.4.3.3 Case Law ............................................................................... 7-143

7.4.3.3(a) Extinguishing Shares ................................................ 7-1437.4.3.3(b) Other Cases ............................................................. 7-145

7.4.3.4 Is Section 186 Redundant? ..................................................... 7-1467.4.3.4(a) Why s. 182 may be Preferred to s. 186 ..................... 7-1467.4.3.4(b) Use of s. 186 in Involuntary Contexts ...................... 7-147

7.4.4 Section 182 Arrangements............................................................... 7-1487.4.4.1 Adjunct or Stand-Alone ......................................................... 7-148

7.4.4.1(a) Adjunct to CCAA or BIA Reorganization ............... 7-1487.4.4.1(b) Stand-Alone............................................................. 7-150

7.4.4.2 Compromise of Debt Obligations and Other CreditorClaims.................................................................................... 7-150

7.4.4.3 Meaning of “Arrangement”.................................................... 7-1517.4.4.4 Prerequisites........................................................................... 7-1527.4.4.5 Rights Subject to Arrangement .............................................. 7-153

7.4.4.5(a) Shareholder Rights................................................... 7-1537.4.4.5(b) Warrant Holder Rights ............................................ 7-1547.4.4.5(c) Rights of Holders of Debt Obligations ..................... 7-1547.4.4.5(d) Rights of Other Creditors ........................................ 7-156

7.4.4.6 Overview of the Process for Approving a Plan ofArrangement .......................................................................... 7-156

7.4.4.7 Interim Order......................................................................... 7-1577.4.4.7(a) General .................................................................... 7-1577.4.4.7(b) Notice to Stakeholders............................................. 7-1587.4.4.7(c) Appraisal Rights ...................................................... 7-1587.4.4.7(d) Appointment of Counsel for Shareholders ............... 7-1597.4.4.7(e) Stays ........................................................................ 7-1607.4.4.7(f) Releases.................................................................... 7-161

7.4.4.8 Stakeholder Approval ............................................................ 7-1627.4.4.8(a) Stakeholder Rights to Vote on the Plan ................... 7-1627.4.4.8(b) Voting Class Identification....................................... 7-1637.4.4.8(c) Separate Vote Tabulations ....................................... 7-1687.4.4.8(d) Approval Thresholds ............................................... 7-1697.4.4.8(e) Notice of Meeting and the Information

Circular.................................................................... 7-1697.4.4.8(f) Fairness Opinion ...................................................... 7-1737.4.4.8(g) Procedure at the Meeting, including Quorum ........... 7-173

7.4.4.9 Fairness Hearing .................................................................... 7-1747.4.4.9(a) BCE Framework...................................................... 7-174

CON-10

TABLE OF CONTENTS

7.4.4.9(b) Burden of Proof....................................................... 7-1747.4.4.9(c) Compliance with Statutory Procedures ..................... 7-1757.4.4.9(d) Good Faith Requirement ......................................... 7-1777.4.4.9(e) Fair and Reasonable Requirement — Valid Business

Purpose Prong.......................................................... 7-1777.4.4.9(f) Fair and Reasonable Requirement — Fair

Balancing of Rights Prong........................................ 7-1787.4.4.9(g) Intelligent Business Person Test................................ 7-181

7.4.4.10 Challenging the Plan’s Fairness ............................................ 7-1817.4.4.10(a) Standing to Object to Plan ..................................... 7-1817.4.4.10(b) Lack of Favourable Vote ....................................... 7-1827.4.4.10(c) Challenging the Composition of the Majority ......... 7-1837.4.4.10(d) Plans Found to be Unfair ...................................... 7-1837.4.4.10(e) Appeal of Plan Approval........................................ 7-184

7.4.5 Conclusion...................................................................................... 7-184

CHAPTER 8 — CORPORATE SECRETARIAL

8.1 — Registered Office and Corporate Records .......................................... 8-18.1.1 Registered Office................................................................................ 8-1

8.1.1.1 General ..................................................................................... 8-18.1.1.2 Change of Registered Office ...................................................... 8-28.1.1.3 Functions of Registered Office .................................................. 8-3

8.1.2 Corporate Records............................................................................. 8-48.1.2.1 General ..................................................................................... 8-48.1.2.2 Securities Registers and Records ............................................... 8-68.1.2.3 Minute Books ........................................................................... 8-88.1.2.4 Rectifying Records .................................................................... 8-88.1.2.5 Records as Evidence.................................................................. 8-98.1.2.6 Lists of Shareholders................................................................. 8-98.1.2.7 Lists of Holders of Debt Obligations........................................8-118.1.2.8 Inspection of Records ..............................................................8-128.1.2.9 Location of Records.................................................................8-138.1.2.10 Business Records Protection Act ..............................................8-13

8.1.3 Filings ..............................................................................................8-148.1.3.1 Returns Generally ....................................................................8-148.1.3.2 Corporations Information Act....................................................8-148.1.3.3 Business Names........................................................................8-198.1.3.4 Tax ..........................................................................................8-21

8.1.3.4(a) Federal ......................................................................8-218.1.3.4(b) Ontario......................................................................8-21

8.1.3.5 Corporations Returns Act..........................................................8-228.1.3.6 Securities Act ...........................................................................8-238.1.3.7 Other .......................................................................................8-23

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TABLE OF CONTENTS

8.1.4 OBCA Exemptions ...........................................................................8-248.1.4.1 Administrative .........................................................................8-248.1.4.2 Judicial ....................................................................................8-26

8.2 — Financial Statements and Auditors ...................................................8-318.2.1 Financial Statements .........................................................................8-318.2.2 Audits...............................................................................................8-35

8.2.2.1 Exemption from Audit Requirement ........................................8-358.2.2.2 Auditor ....................................................................................8-36

8.2.2.2(a) Qualification ..............................................................8-368.2.2.2(b) Duties and Liabilities .................................................8-378.2.2.2(c) Appointment, Removal and Remuneration.................8-398.2.2.2(d) Annual Audit Process ................................................8-418.2.2.2(e) Audit Report..............................................................8-43

8.2.3 Audit Enquiries and Responses.........................................................8-438.2.4 Audit Committees.............................................................................8-44Summary of Procedure — Auditors and Financial Statements................ 8-46.18.3 — Shareholder Meetings and Proxy Solicitation ...................................8-478.3.1 Meetings of Shareholders ..................................................................8-47

8.3.1.1 General ....................................................................................8-478.3.1.2 Annual Meetings......................................................................8-488.3.1.3 Special Meetings ......................................................................8-508.3.1.4 Class or Series Meetings...........................................................8-518.3.1.5 Shareholder Requisitioned Meetings.........................................8-518.3.1.6 Court-ordered Meetings ...........................................................8-538.3.1.7 Location ..................................................................................8-54

8.3.2 Proxy Solicitation .............................................................................8-558.3.2.1 Record Dates ...........................................................................8-558.3.2.2 Notice of Meeting ....................................................................8-568.3.2.3 Annual Information Form and Management Discussion

and Analysis ............................................................................8-598.3.2.4 Shareholder Communications under NI 54-101 ........................8-59

8.2.3.4(a) Record Date ..............................................................8-608.2.3.4(b) Request for Beneficial Ownership Information...........8-608.2.3.4(c) List of Participants.....................................................8-618.2.3.4(d) Response from Intermediaries ....................................8-618.2.3.4(e) Delivery of Proxy-related Material .............................8-618.2.3.4(f) Annual and Financial Statements ...............................8-628.2.3.4(g) Security Holder Instructions to Intermediaries ...........8-628.2.3.4(h) Interim Financial Statements .....................................8-62

8.3.2.5 Voting Shares Registered in Name of Registrant orIntermediary ............................................................................8-64

8.3.3 Proxies and Information Circulars ....................................................8-668.3.3.1 General ....................................................................................8-668.3.3.2 Form of Proxy .........................................................................8-71

CON-12

TABLE OF CONTENTS

8.3.3.3 Information Circulars...............................................................8-738.3.3.4 Revocation of Proxies ..............................................................8-74

8.3.4 Procedures at Meeting of Shareholders .............................................8-748.3.5 Shareholder Proposals.......................................................................8-80Summary of Major Corporate Events — Meetings of ShareholdersUnder the Ontario Business Corporations Act ............................................8-848.4 — Extra-Provincial Corporate Licenses and Registrations ................ 8-84.588.4.1 General........................................................................................ 8-84.58

8.4.1.1 Jurisdiction ......................................................................... 8-84.588.4.1.2 Provincial and Territorial Legislation .......................................8-868.4.1.3 Returns Generally ....................................................................8-86

8.4.2 Ontario Extra-Provincial Corporation License ..................................8-878.4.2.1 BNA ........................................................................................8-878.4.2.2 CIA .........................................................................................8-898.4.2.3 ECA ........................................................................................8-92

8.4.2.3(a) Overview....................................................................8-928.4.2.3(b) Classes.......................................................................8-928.4.2.3(c) Name Requirements ...................................................8-938.4.2.3(d) License Requirement..................................................8-938.4.2.3(e) Carrying on Business in Ontario.................................8-938.4.2.3(f) Exemptions.................................................................8-958.4.2.3(g) Inability to Maintain Action ......................................8-958.4.2.3(h) Interests in Land........................................................8-978.4.2.3(i) Penalty for Non-Compliance.......................................8-97

8.4.3 Non-Ontario Extra-Provincial Corporation Licenses andRegistrations.....................................................................................8-98

8.4.3.1 Alberta.....................................................................................8-988.4.3.1(a) Introduction...............................................................8-988.4.3.1(b) Carrying on Business in Alberta.................................8-998.4.3.1(c) Consequences of Failure to Register......................... 8-1008.4.3.1(d) Procedure for Registering......................................... 8-1018.4.3.1(e) Corporate Name (and Assumed Name) .................... 8-1018.4.3.1(f) Forms and Registration Requirements...................... 8-1028.4.3.1(g) Charter .................................................................... 8-1038.4.3.1(h) Issue and Effective Date of Registrar’s Certificate.... 8-1038.4.3.1(i) Attorney ................................................................... 8-1038.4.3.1(j) Annual Filings .......................................................... 8-1048.4.3.1(k) Changes to Charter Documents ............................... 8-1048.4.3.1(l) Change to Address of Head Office or Membership

of the Board ............................................................. 8-1058.4.3.1(m) Change of Address of Attorney............................... 8-1058.4.3.1(n) Amalgamation ......................................................... 8-1058.4.3.1(o) Cancellation, Suspension, Revocation and Revival ... 8-105

Extra-Provincial Corporations — Alberta ............................................... 8-107

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TABLE OF CONTENTS

8.4.3.2 British Columbia............................................................... 8-108.288.4.3.2(a) Introduction........................................................ 8-108.288.4.3.2(b) Key BCBCA Definitions..................................... 8-108.288.4.3.2(c) Carrying on Business in British Columbia ................ 8-1098.4.3.2(d) Consequences of Failure to Register ........................ 8-1118.4.3.2(e) Procedure for Registering ......................................... 8-1118.4.3.2(f) Appointment of Attorney ......................................... 8-1128.4.3.2(g) Notification of Changes ........................................... 8-1138.4.3.2(h) Name to be Displayed ............................................. 8-1138.4.3.2(i) Annual Reports ........................................................ 8-1148.4.3.2(j) Amalgamation .......................................................... 8-1158.4.3.2(k) Cancellation of Registration of Extra-provincial

Companies.................................................................8-158.4.3.2(l) Restoration............................................................... 8-115

Extra-Provincial Corporations — British Columbia................................. 8-1168.4.3.3 Manitoba .......................................................................... 8-116.21

8.4.3.3(a) Introduction........................................................ 8-116.218.4.3.3(b) Names ................................................................ 8-116.218.4.3.3(c) Registration Requirements ....................................... 8-1178.4.3.3(d) Registered Procedure ............................................... 8-1198.4.3.3(e) Cancellation and Restoration of Registration ........... 8-1208.4.3.3(f) Service of Process ..................................................... 8-1218.4.3.3(g) Real Property........................................................... 8-1218.4.3.3(h) Annual Returns ....................................................... 8-122

Extra-Provincial Corporations — Manitoba ............................................ 8-1228.4.3.4 Saskatchewan.................................................................... 8-122.12

8.4.3.4(a) Overview............................................................. 8-122.128.4.3.4(b) Registration Procedure............................................. 8-1258.4.3.4(c) Power of Attorney.................................................... 8-1268.4.3.4(d) Notice of Change..................................................... 8-1268.4.3.4(e) Striking Off and Restoration .................................... 8-1278.4.3.4(f) Alternate Name ........................................................ 8-1278.4.3.4(g) Annual Returns ....................................................... 8-128

Extra-Provincial Corporations — Saskatchewan...................................... 8-1288.4.4 Extra-Provincial Summaries Relating to Carrying on a

Business in Ontario................................................................... 8-1298.4.4(a) Starting to Carry on a Business in Ontario ................. 8-1308.4.4(b) Ongoing Reporting Obligations when Carrying on a

Business in Ontario..................................................... 8-145

CHAPTER 9 — MERGERS AND ACQUISITIONS

9.1 — Negotiated Acquisitions and Divestitures ........................................... 9-19.1.1 General.............................................................................................. 9-19.1.2 Capacity and Authorization ............................................................... 9-3

CON-14

TABLE OF CONTENTS

9.1.3 Tax Considerations ............................................................................ 9-59.1.4 Investment Canada Act ....................................................................... 9-8

9.1.4.1 Reviewable Investments............................................................. 9-89.1.4.2 Exempt Investments .................................................................9-119.1.4.3 Investors from WTO Members.................................................9-129.1.4.4 General ....................................................................................9-13

9.1.6 Other Pre-Contract Matters ..............................................................9-219.1.6.1 Employees................................................................................9-219.1.6.2 Merger Control ........................................................................9-229.1.6.3 Specific Regulatory Approvals .................................................9-239.1.6.4 Third-Party Consents ...............................................................9-239.1.6.5 Securities Legislation................................................................9-23

9.1.7 Purchase Agreement .........................................................................9-249.1.7.1 Overview..................................................................................9-249.1.7.2 Purchased Assets......................................................................9-259.1.7.3 Assumption of Liabilities .........................................................9-269.1.7.4 Assignment of Contracts ..........................................................9-269.1.7.5 Purchase Price..........................................................................9-279.1.7.6 Earn-Outs ................................................................................9-289.1.7.7 Price Allocation .......................................................................9-299.1.7.8 Payment...................................................................................9-299.1.7.9 Holdbacks................................................................................9-309.1.7.10 Escrow ...................................................................................9-319.1.7.11 Representations and Warranties .............................................9-32

9.1.7.11(a) Purposes...................................................................9-329.1.7.11(b) Legal Characterization .............................................9-339.1.7.11(c) Typical Representations and Warranties ...................9-339.1.7.11(d) Negotiating Representations and Warranties ............9-349.1.7.11(e) Survival of Representations and Warranties..............9-369.1.7.11(f) Specific Representations and Warranties ...................9-37

9.1.7.12 Indemnities.............................................................................9-389.1.7.13 Covenants ..............................................................................9-409.1.7.14 Conditions and Conditions Precedent .....................................9-409.1.7.15 Restrictive Covenants .............................................................9-419.1.7.16 Employment and Consulting Agreements ...............................9-42

Summary of Procedure — Extraordinary Sale of All or SubstantiallyAll Assets............................................................................................... 9-42.19.2 — Vendor Take-Back Financing ...........................................................9-439.2.1 Context.............................................................................................9-43

9.2.1.1 Sources of Finance...................................................................9-439.2.1.2 Issue of Purchaser’s Shares to Vendor ......................................9-439.2.1.3 Disguised VTB Financing.........................................................9-44

9.2.1.3(a) Consulting Fees .........................................................9-459.2.1.3(b) Put-Call Arrangements...............................................9-45

CON-14.1 (OCLP) (2015 – Rel. 4)

TABLE OF CONTENTS

9.2.2 Rationales for VTB Financing ..........................................................9-479.2.3 Dynamics of VTB Financing Negotiations ........................................9-509.2.4 Dovetailing VTB Financing with Conventional Financing.................9-529.2.5 Process of VTB Financing ................................................................9-549.2.6 Securities Exemptions .......................................................................9-54

9.2.6.1 Financing Share Acquisitions ...................................................9-559.2.6.2 Financing Asset Acquisitions....................................................9-56

9.2.7 Promissory Notes, Loan Agreements and Other Debt Instruments....9-579.2.8 Guarantees .......................................................................................9-60

9.2.8.1 Personal Guarantees.................................................................9-609.2.8.2 Corporate Guarantees ..............................................................9-61

9.2.9 Real Property Collateral ...................................................................9-639.2.9.1 Owned Real Property...............................................................9-639.2.9.2 Leased Real Property ...............................................................9-64

9.2.10 Non-Share Personal Property Security Agreements andRegistrations ...................................................................................9-65

9.2.10.1 Omnibus Collateral ................................................................9-659.2.10.2 Inventory and its Proceeds .....................................................9-669.2.10.3 Accounts, Negotiable Instruments and Chattel Paper .............9-679.2.10.4 Equipment and Machinery Other Than Motor Vehicles..........9-699.2.10.5 Motor Vehicles.......................................................................9-709.2.10.6 Intellectual Property ...............................................................9-709.2.10.7 Ships ......................................................................................9-709.2.10.8 Life Insurance ........................................................................9-71

9.2.11 Target Shares as Collateral..............................................................9-719.2.11.1 Registration of Title ...............................................................9-719.2.11.2 Pledge Agreement...................................................................9-739.2.11.3 Escrow Arrangement ..............................................................9-74

9.2.12 Postponement and Intercreditor Arrangements................................9-759.2.12.1 Postponement Agreements......................................................9-75

(Continued on page CON-15)

CON-14.2

TABLE OF CONTENTS

9.2.12.2 Subordination and Priority Agreements..................................9-769.2.13 Legal Opinions................................................................................9-799.2.14 Conclusion ......................................................................................9-809.3 — Transaction Opinions .......................................................................9-819.3.1 Introduction .....................................................................................9-819.3.2 Date and Addresses ..........................................................................9-81

9.3.2.1 Date.........................................................................................9-819.3.2.2 Addresses .................................................................................9-82

9.3.3 Retainer and Nature of Transaction .................................................9-829.3.3.1 Scope of Retainer.....................................................................9-829.3.3.2 Nature of Transaction..............................................................9-839.3.3.3 Defined Terms .........................................................................9-83

9.3.4 Scope of Examination .......................................................................9-839.3.5 Factual Basis for Opinion .................................................................9-84

9.3.5.1 Officers’ Certificates .................................................................9-849.3.5.2 Governmental Certificates ........................................................9-85

9.3.6 Practice Limitation ...........................................................................9-869.3.7 Standard Assumptions ......................................................................9-869.3.8 Standard Opinions ............................................................................9-88

9.3.8.1 Corporate Status ......................................................................9-889.3.8.1(a) Incorporation.............................................................9-899.3.8.1(b) Organization ..............................................................9-909.3.8.1(c) Corporate Existence ...................................................9-909.3.8.1(d) Qualification to Carry on Business.............................9-92

9.3.8.2 Corporate Power and Capacity ................................................9-939.3.8.3 Authorization...........................................................................9-959.3.8.4 Execution.................................................................................9-989.3.8.5 Delivery ...................................................................................9-999.3.8.6 Enforceability......................................................................... 9-1009.3.8.7 Non-Contravention ................................................................ 9-102

9.3.8.7(a) Laws........................................................................ 9-1039.3.8.7(b) Constating Documents............................................. 9-1049.3.8.7(c) Agreements and Orders ............................................ 9-104

9.3.8.8 No Litigation ......................................................................... 9-1059.3.9 Qualifications.................................................................................. 9-106

9.3.9.1 Insolvency .............................................................................. 9-1079.3.9.2 Equitable Principles and Remedies ......................................... 9-1089.3.9.3 Severability ............................................................................ 9-1099.3.9.4 Written Waivers ..................................................................... 9-109

9.3.10 Reliance and Signature.................................................................. 9-1109.3.10.1 Reliance ............................................................................... 9-1109.3.10.2 Signature.............................................................................. 9-110

9.3.11 Conclusion .................................................................................... 9-1109.4 — Take-Over Bids ............................................................................. 9-111

TABLE OF CONTENTS

CON-15 (OCLP) (2015 – Rel. 1)

9.4.1 General........................................................................................... 9-1119.4.2 Compulsory Squeeze-Out ................................................................ 9-1119.4.3 Compulsory Buy-Out...................................................................... 9-1199.5 — Bulk Sales ..................................................................................... 9-1239.5.1 Overview......................................................................................... 9-1239.5.2 Purpose .......................................................................................... 9-1239.5.3 Scope.............................................................................................. 9-1249.5.4 Operation ....................................................................................... 9-126

9.5.4.1 Where Seller is Solvent........................................................... 9-1269.5.4.1(a) Inter-Party Waiver and Indemnity............................ 9-1269.5.4.1(b) Structural Avoidance ............................................... 9-1279.5.4.1(c) Judicial Exemption................................................... 9-1289.5.4.1(d) Compliance with the BSA........................................ 9-1299.5.4.1(e) Post-Sale Exemption Order ...................................... 9-132

9.5.4.2 Where Seller’s Solvency is Doubtful ....................................... 9-1339.5.4.2(a) Realization of Collateral, Receivership, Bankruptcy and

Liquidation ............................................................. 9-1339.5.4.2(b) Judicial Exemption, BSA Compliance or Payment to

Trustee ................................................................... 9-1339.5.4.2(c) Rely on National Trust ............................................. 9-135

9.5.4.3 Remedies for Non-Compliance............................................... 9-1369.5.4.3(2) Protection of Creditors Under the BSA.............................. 9-137

9.5.5 Pre-Planned Liquidation of Assets .................................................. 9-138

CHAPTER 10 — RECENT AND PROSPECTIVE LAW REFORM

10.1 — Recent Legislative Developments ....................................................10-110.1.1 Phase I Business Law Reform: STA and Consequential

Amendments ...................................................................................10-110.1.1.1 OBCA Changes ......................................................................10-1

10.1.1.1(a) Part IV — Corporate Securities................................10-110.1.1.1(b) Dematerialization.....................................................10-210.1.1.1(c) Unanimous Shareholder Agreements ........................10-3

10.1.1.2 Changes to Execution Act.......................................................10-410.1.2 Phase II Business Law Reform: Bill 152, Especially Schedule B.......10-6

10.1.2.1 Reduction in Board Residency Requirement...........................10-710.1.2.2 Elimination of the Canadian Residency Requirement at Board

and Committee Meetings........................................................10-710.1.2.3 Repeal of the Financial Assistance Provisions.........................10-810.1.2.4 Corporate Finance .................................................................10-810.1.2.5 Duty of Care Owed by Directors and Officers ........................10-910.1.2.6 Conflict of Interest Rules .......................................................10-910.1.2.7 D&O Indemnification and Insurance .................................... 10-1010.1.2.8 Due Diligence Defence ......................................................... 10-1210.1.2.9 Shareholder Voting Regime .................................................. 10-12

TABLE OF CONTENTS

CON-16

10.1.2.10 Exemptions from Proxy Solicitation Rules.......................... 10-1310.1.2.11 Circulation of Financial Statements and Interim

Financial Statements........................................................... 10-1310.1.2.12 Shareholder Proposals ........................................................ 10-1310.1.2.13 Electronic Communications ................................................ 10-1410.1.2.14 Preconditions for Bringing a Derivative Action................... 10-1410.1.2.15 Replacement of Partial Shield LLP Liability Regime with

Full Shield Regime ............................................................. 10-1410.1.3 Conclusion .................................................................................... 10-1510.2 — Ontario Not-for-Profit Corporations Act, 2010 ............................. 10-1610.2.1 Introduction.................................................................................. 10-1610.2.2 Types of Ontario NFP Corporations............................................. 10-18

10.2.2.1 Non-PBCs ............................................................................ 10-1810.2.2.2 PBCs.................................................................................... 10-18

10.2.2.2(a) Charitable Corporations......................................... 10-1810.2.2.2(b) Non-charitable PBCs.............................................. 10-19

10.2.3 Regulation of Charitable Corporations, Non-Charitable PBCs and Non-PBCs............................................................................................. 10-21

10.2.4 Audit, Review, Engagement or Compilation Reports .................... 10-2510.2.5 Modernized Corporate Law Framework ....................................... 10-26

10.2.5.1 Incorporation ....................................................................... 10-2610.2.5.2 Abolition of Ultra Vires Doctrine......................................... 10-2710.2.5.3 Directors and Officers .......................................................... 10-2810.2.5.4 Members and Membership Rights/Remedies ........................ 10-2810.2.5.5 By-laws ................................................................................ 10-3010.2.5.6 Borrowing ............................................................................ 10-3010.2.5.7 Fundamental Changes .......................................................... 10-30

10.2.6 Problems and Solutions................................................................. 10-3110.2.6.1 Whether the Ultra Vires Doctrine is Preserved in Part .......... 10-3110.2.6.2 Vacillation between Non-Charitable PBC and Non-PBC

Status ................................................................................... 10-3410.2.6.3 Lack of Knowledge Qualifier in Non-Charitable PBC

Status ................................................................................... 10-3510.2.6.4 Accidental or Unintentional Members .................................. 10-3610.2.6.5 Minority Veto Power............................................................ 10-36

10.2.6.5(a) Possible Issues........................................................ 10-3710.2.6.5(b) Possible Solutions .................................................. 10-42

10.2.6.6 Does Membership Have Any Privileges?............................... 10-4310.2.6.6(a) Irreducible Class Membership Rights ..................... 10-4410.2.6.6(b) Statutory Membership Remedies ............................ 10-45

10.2.6.7 Hybrid By-Laws and By-Law Amendments .......................... 10-4510.2.6.8 Self-Perpetuating Boards ...................................................... 10-4710.2.6.9 Liability of Directors and Officers ........................................ 10-47

10.2.7 Corporate Governance .................................................................. 10-49

TABLE OF CONTENTS

CON-17 (OCLP) (2015 – Rel. 1)

10.2.7.1 Implicit OBCA Governance Model....................................... 10-4910.2.7.1(a) OBCA Governance Pillars...................................... 10-5010.2.7.1(b) Summary ............................................................... 10-51

10.2.7.2 Implicit ONCA Governance Model ...................................... 10-5210.2.7.2(a) ONCA Governance Pillars ..................................... 10-5210.2.7.2(b) Implications ........................................................... 10-53

10.2.8 Transitioning to the New Act........................................................ 10-5410.2.9 Federal v. Ontario Corporation..................................................... 10-55

10.2.9.1 Federal Advantages .............................................................. 10-5610.2.9.2 Ontario Advantages ............................................................. 10-56

10.2.10 Conclusion .................................................................................. 10-5710.2.11 Chapter 10.2 — Appendix 1 ........................................................ 10-59

LEGISLATION

Table of Concordance .........................................................................TCON-1Table of Concordance (BCA vs. NCA) .............................................. TCON-89Table of Concordance (Securities Transfer Act, CBCA andAn act respecting the transfer of securities and theestablishment of security entitlements).............................................. TCON-163Table of Concordance (Limited Partnership Acts) ............................ TCON-181Table of Concordance (Partnership Acts) ......................................... TCON-193Business Corporations Act......................................................................BCA-1

TABLE OF CONTENTS

CON-18

Table of Contents — Volumes 3

[See Vol. 1 for Master Table of Contents]

VOLUME 3

LEGISLATION

General Regulation, R.R.O. 1990, Reg. 62 .................................. BCA-177Forms Regulation, O. Reg. 289/00 .............................................. BCA-205OBCA Forms:............................................................................. BCA-208Form 1: Articles of Incorporation ............................................... BCA-208Form 2: Consent to Act as a First Director................................. BCA-214Form 3: Articles of Amendment.................................................. BCA-215Form 4: Articles of Amalgamation.............................................. BCA-217Form 5: Restated Articles of Incorporation................................. BCA-223Form 6: Articles of Continuance ................................................. BCA-228Form 7: Application for Authorization to Continue in Another

Jurisdiction........................................................................ BCA-235Form 7.1 Application for Authorization to Continue under the

Co-operative Corporations Act.......................................... BCA-237Form 8: Articles of Arrangement ................................................ BCA-239Form 9: Articles of Reorganization ............................................. BCA-241Form 10: Articles of Dissolution ................................................. BCA-243Form 11: Articles of Dissolution ................................................. BCA-245Form 15: Articles of Revival ....................................................... BCA-247Health Profession Corporations, O. Reg. 665/05 ......................... BCA-249

Business Names Act .............................................................................. BNA-1General, O. Reg. 121/91 ............................................................... BNA-11Restrictions Respecting Names, O. Reg. 122/91............................ BNA-21Refund Fee For Electronic Application For New Registration,

O. Reg. 18/07 .................................................................. BNA-25Business Records Protection Act.......................................................... BRPA-1Business Regulation Reform Act ..........................................................BRRA-1

General, O. Reg. 442/95 ............................................................. BRRA-13Bulk Sales Act....................................................................................... BSA-1Commodity Futures Act .........................................................................CFA-1

General, R.R.O. 1990, Reg. 90 ......................................................CFA-67Co-operative Corporations Act .............................................................. CCA-1

Co-operative Corporations Act General Regulation, R.R.O. 1990,Reg. 178.................................................................CCA-133

Corporations Act .....................................................................................CA-1Corporations Act General Regulation, R.R.O. 1990, Reg. 181 ...... CA-165

CON-1 (OCLP) (2015 – Rel. 1)

Corporations Information Act..................................................................CIA-1Corporations Information Act General Regulation,

R.R.O. 1990, Reg. 182 ............................................................CIA-11Corporations Returns Act...................................................................... CRA-1Corporations and Labour Unions Returns Act Regulations ...................CRAR-1Credit Unions and Caisses Populaires Act......................................... CUCPA-1

General, O. Reg. 237/09 .........................................................CUCPA-167Cost of Borrowing and Disclosure to Borrowers,

O. Reg. 238/09 ...............................................................CUCPA-235Extra-Provincial Corporations Act ...................................................... EPCA-1

Extra-Provincial Corporations Act General Regulation,R.R.O. 1990, Reg. 365 ................................................................EPCA-13

Limited Partnerships Act........................................................................ LPA-1Ont. Reg. 713 — GeneralR.R.O. 1990, Reg. 713 .................................................................. LPA-17

Ministry of Consumer and Business Services Act............................... MCBSA-1

VOLUME 4

Not-for-Profit Corporations Act ......................................................... ONCA-1Partnerships Act ...................................................................................... PA-1Securities Act ...........................................................................................SA-1Securities Transfer Act........................................................................... STA-1Small Business Development Corporations Act [Repealed] ..................SBDCA-1

Ont. Reg. 1018 — Additional Material To Be FurnishedWith Grant Applications [Revoked] ......................................... SBDCA-31Ont. Reg. 1019 — Forms [Revoked]......................................... SBDCA-33Ont. Reg. 1020 — General [Repealed] ...................................... SBDCA-35

SELECTED RULES AND POLICIES, INCLUDING NATIONAL INSTRUMENTS

Checklist for Oppression Claim Proceedings Brought Under the OntarioBusiness Corporations Act........................................................................OC-1Schedule to Checklist — Court of Justice .............................................. OC-29National Instrument 13-101 — System for Electronic DocumentAnalysis and Retrieval (SEDAR) ......................................................... NI13-1National Instrument 41-101 — General ProspectusRequirements ....................................................................................... NI41-1National Instrument 44-101 — Short Form ProspectusDistributions ........................................................................................ NI44-1National Instrument 45-101 — Rights Offerings................................... NI45-1National Instrument 45-102 — Resale of Securities .............................NI45-19National Instrument 45-106 (on or after January 1, 2011) — Prospectusand Registration Exemptions National Instrument 45-102

TABLE OF CONTENTS

CON-2

Resale of Securities OSC Rule 45-501 Ontario Prospectus andRegistration Exemptions . .......................................................................NI45-55National Instrument 51-101 — Standards of Disclosure for Oil andGas Activities........................................................................................... NI51-1National Instrument 54-101 — Communication with BeneficialOwners of Securities of a Reporting Issuer . ........................................... NI54-1National Instrument 81-106 Investment Fund ContinuousDisclosure . ............................................................................................... NI81-1

PRECEDENTS

Chapter 1.1 ............................................................................................. 1PRE-1Chapter 1.3 ............................................................................................. 1PRE-7Chapter 1.4 ............................................................................................1PRE-31Chapter 2.3 ............................................................................................. 2PRE-1Chapter 2.5 . .........................................................................................2PRE-107Chapter 2.6 . .........................................................................................2PRE-169

VOLUME 5

Chapter 3.1 ............................................................................................. 3PRE-1Chapter 3.2 ............................................................................................3PRE-31Chapter 4.1 ............................................................................................. 4PRE-1Chapter 4.2 ............................................................................................4PRE-47Chapter 4.5 ............................................................................................4PRE-77Chapter 5.1 ............................................................................................. 5PRE-1Chapter 5.3 ............................................................................................5PRE-11Chapter 6.1 ............................................................................................. 6PRE-1Chapter 6.2 ............................................................................................6PRE-69Chapter 6.3 ............................................................................................6PRE-83Chapter 6.4 . .........................................................................................6PRE-287Chapter 6.5 . .........................................................................................6PRE-419Chapter 7.1 ............................................................................................. 7PRE-1Chapter 7.2 ............................................................................................7PRE-49Chapter 7.3 ............................................................................................7PRE-57Chapter 8.1 ............................................................................................. 8PRE-1Chapter 8.2 ............................................................................................8PRE-29Chapter 8.3 ............................................................................................8PRE-33Chapter 8.4 ............................................................................................8PRE-85Chapter 9.1 ............................................................................................. 9PRE-1

WORDS & PHRASES . .............................................................................WP-1

INDEX . ...........................................................................................................I-1

CON-3 (OCLP) (2015 – Rel. 2)