74. In this Part

“offer to the public” means in the case of a company (other than a private company), with relation to securities issued or to be issued by it, every attempt or offer to dispose of, or solicitation of a subscription or application for, or solicitation of an offer to subscribe or apply for any of its securities or any interest in such securities, made by or on behalf of the company, and every such attempt or offer or solicitation made by any underwriter, as hereinafter defined, shall be deemed to have been made by or on behalf of the company, but “offer to the public” does not include

(a) preliminary negotiations or preliminary agreements between the company and an underwriter, or

(b) any offer of securities of the company to a director or directors of such company only;

“prospectus” means any prospectus, notice, circular, advertisement, letter or other graphic communication, offering to the public for subscription or purchase or other acquisition or indicating that there are available for subscription or purchase or other acquisition (and notwithstanding that such communication may state that the securities therein mentioned have been fully subscribed for or sold or that the communication is for the purpose of record only) any securities of a company issued or to be issued by it, but a communication in respect of a security shall not be deemed a prospectus

(a) if it is proved that prior to such communication a prospectus as required by this Act was mailed or delivered by or on behalf of the company to the person to whom the communication was made, or

(b) if the communication contains abona fide statement that a prospectus, a copy of which has been filed under this Act, will be promptly furnished on request, and contains no statement either of fact or opinion relating to the assets of the company owned or to be acquired, its earnings or prospective earnings, or to any business carried on or proposed to be carried on by it, except a statement specifying the nature of such business;

“securities of the company” or “its securities” means securities issued or to be issued by the company;

“subscription” in relation to any securities of a company includes a purchase or other acquisition, except by way of security only, of such securities on any reissue, sale, or other disposal thereof, by or on behalf of the company or an underwriter and the words “subscriber” or “applicant” or other words referring to a person who subscribed or applies for securities of the company include any purchaser or proposed purchaser of such securities from the company or an underwriter;

“underwriter” includes

(a) any person who, to the knowledge of the company, proposes to subscribe for securities of the company with a view to the resale to the public of those securities or a part thereof,

(b) any person to whom a commission is proposed or intended to be paid by the company in consideration of his subscribing or agreeing to subscribe, whether absolutely or conditionally, or in consideration of his procuring or agreeing to procure subscriptions, whether absolute or conditional, for any securities of the company to be offered to the public for subscription.

R.S., 1970, c. C-32, s. 74; R.S., 1970, c. 10(1st Supp.), s. 5.

75. (1) Every prospectus issued by or on behalf of a company shall be dated, and such date shall, unless the contrary is proven, be taken as the date of issue of the prospectus.

(2) A copy of such prospectus, signed at the end by every person who is named therein as a director or proposed director of the company, or his agent authorized in writing, shall be filed with the Minister within seven days from its date, and after such filing every such prospectus shall state on its face that a copy has been filed with the Minister in accordance with this Act.

(3) The Minister shall not accept any such prospectus for filing unless it is dated and the copy thereof signed in the manner required by this section.

(4) Where a prospectus issued by or on behalf of a company is issued (except for the purpose of filing a copy as aforesaid) without a copy thereof being so filed, the company and every person who is knowingly a party to the issue of the prospectus, are liable on summary conviction to a fine not exceeding twenty dollars for every day from the date of the issue of the prospectus until a copy thereof is so filed.

(5) The chief justice or acting chief justice of the court of the province in which the head office of the company is situated, or a judge of the said court designated by either of them, on being satisfied that the omission to file a copy of the prospectus, or that the omission or mis-statement of any particular prescribed to be contained in such prospectus, was accidental, or due to inadvertence, or some other sufficient cause, or is not of a nature to prejudice the position of subscribers to any of the securities referred to in the prospectus, or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any person interested, and on such terms and conditions as may seem to the judge just and expedient, order that the time for filing be extended or dispense with the signature of any director or directors or make such other order as to the judge seems proper, and a copy of the prospectus filed in accordance with the order of the judge, together with a copy of the order, shall be deemed for all purposes a compliance with subsection (2).

R.S., 1952, c. 53, s. 74.

76. (1) The securities of the company shall not be offered to the public for subscription by or on its behalf unless a prospectus in respect of those securities has been filed with the Minister.

(2) The company shall not accept any application in respect of any of its securities offered by or on its behalf to the public for subscription unless a copy of such prospectus has been delivered to the subscriber or applicant at least twenty-four hours prior to the acceptance of his subscription or application or mailed to the applicant at his usual address or other address furnished by him or on his behalf so that it should be received by him in the ordinary course of post at least twenty-four hours prior to the acceptance of his application, but in the case of any application received by the company through an underwriter, this subsection shall conclusively be deemed to have been complied with by the company, if the company prior to the acceptance of such applications obtained from the underwriter a statutory declaration to the effect that copies of the prospectus have been mailed or delivered to all persons making those applications so received, at such times and in such manner as to entitle the company to accept such applications; and any application received by the company for the purposes of this Part shall conclusively be deemed to have been made on the faith of such prospectus.

(3) In the event of non-compliance with subsection (2), the applicant, or if the securities have been issued or allotted on his direction to some other person, then such other person if he is still the owner of such securities is entitled to have the application for such securities or the issuance or allotment thereof rescinded, if written notice of the exercise of such right of rescission was served on the company within thirty days from the date of receipt of notice of allotment or from the date of issuance of the securities, as the case may be, or within thirty days from the date of delivery or mailing to such applicant of a copy of the prospectus filed with the Minister in respect of the securities, whichever is the shorter period.

(4) A company shall not issue any form of application for its securities that are offered by it or on its behalf to the public for subscription unless the form of application is issued with a prospectus filed with the Minister in respect of those securities.

(5) In the event of any contravention of any of the provisions of subsection (1), (2) or (4), the company and any director, officer or other person who knowingly contravenes or permits or authorizes the contravention of those provisions are liable upon summary conviction to a fine not exceeding one thousand dollars.

(6) Any underwriter who offers any securities of a company for public subscription before the provisions of subsection (1) have been complied with by the company or without causing the provisions of subsection (2) to be complied with is guilty of an offence and liable upon summary conviction to a fine not exceeding one thousand dollars or to imprisonment for a term not exceeding six months, or to both.

(7) A director, officer or agent of the company who acts in contravention of the provisions of subsection (4) is liable on summary conviction to a fine not exceeding one thousand dollars.

R.S., 1952, c. 53, s. 75.

77. Sections 75, 76, and 79 to 84 do not apply in respect of an offer by a company of its securities

(a) to existing holders of its securities exclusively, for subscription or in exchange for the securities held by them, where no commission or other remuneration is paid or given directly or indirectly to others in connection with such transaction, or

(b) to existing holders of its securities or to other creditors pursuant to an arrangement or compromise or reorganization of the company or adjustment of the rights of such holders or other creditors.

R.S., 1952, c. 53, s. 76.

78. (1) Where a company makes an offer to the public of its securities in any province or any foreign country wherein it is a general requirement of law that a prospectus or a document of a similar nature be filed with a public authority thereof before an offer of securities may lawfully be made to the public, whether or not the particular offer to the public of the securities of the company in that province or country may by the laws thereof be made without the filing of a prospectus or document of a similar nature, the company need not comply with the provisions of sections 75, 76, 79 and sections 81 to 84 with respect to such offering and, subject to subsection (4), those sections do not apply thereto.

(2) Where a company has filed with a public authority in a province or foreign country, in accordance with the requirements of the law thereof, a prospectus or other document of a similar nature in respect of any offer to the public of its securities in such province or foreign country, the company shall, within ten days after such filing, file with the Department a copy of such prospectus or document certified by such public authority, or by an officer of the company, together with a statement of the date and place of filing, which copy shall be kept available for public inspection in the Department.

(3) Section 80 appliesmutatis mutandis to any prospectus or document of a similar nature issued by or on behalf of the company and filed with a public authority in any province or foreign country for the purpose of making an offer to the public therein.

(4) Notwithstanding subsection (1), the Minister may, in any case where he deems it in the public interest to do so, direct a company to comply with sections 75, 76, 79 and sections 81 to 84.

(5) No company or person shall make any representation, written or oral, that the Minister has in any way passed upon the financial standing, fitness or conduct of a company, or upon the merits of any securities of a company, by reason of the filing with the Department of any prospectus or of any copy of a prospectus or document certified by a public authority in any province or foreign country.

1964-65, c. 52, s. 31.

79. (1) Every prospectus issued by or on behalf of a company shall state

(a) the date of incorporation of the company and the address of the head office;

(b) the names, descriptions and addresses of the directors and proposed directors, if any, and chief executive officers and of the auditors, if any;

(c) the general nature of the business actually transacted or to be transacted by the company;

(d) particulars of the share capital, authorized, issued and paid up, the number and classes of shares and the par value thereof, or if without par value so stating, a description of the respective voting rights, preferences, conversion and exchange rights, rights to dividends, profits or capital of each class, including redemption rights and rights on liquidation or distribution of capital assets;

(e) particulars of the securities, if any, covered by options outstanding or proposed to be given and the price or prices at which and the date or dates by which such options must be exercised;

(f) the number of securities of, each class (which in the case of debentures or other obligations shall bear an appropriate and correct descriptive title) offered by the prospectus and the issue price and the amount payable on the application for and allotment of the securities and in the case of a second or subsequent offer of securities the amount offered for subscription on each previous offer within the two preceding years and the amount actually allotted and the amount paid up thereon;

(g) the specific purposes in detail and the approximate amounts to be devoted to such purposes, so far as determinable, for which the securities offered are to supply funds and if the funds are to be raised in part from other sources the amount thereof and the sources thereof shall be stated;

(h) the aggregate remuneration paid by the company during its last financial year, if completed at least three months prior to the offer, and estimated to be paid or payable during the current financial year (or if such remuneration is not capable of approximate estimation then the basis of determining same) to directors and (separately stated) to officers who individually have received or may be entitled to receive remuneration in excess of ten thousand dollars per annum;

(i) the estimated net proceeds to be derived from the securities offered if they are fully taken up and paid for;

(j) where shares are offered to the public for subscription, the minimum amount, if any, that in the opinion of the directors must be raised by the issue of those shares in order to provide the sums, or, if any part thereof is to be defrayed in any other manner, the balance of the sum required to be provided for the following matters:

(i) the purchase price of any property purchased or to be purchased that is to be defrayed in whole or in part out of the proceeds of the issue;

(ii) any preliminary expenses payable by the company;

(iii) any commission payable by the company to any person in consideration of his agreeing to subscribe for or procuring or agreeing to procure subscriptions for any shares in the company;

(iv) the repayment of any moneys borrowed by the company in respect of the foregoing matters; and

(v) the repayment of bank loans, if any;

(k) the amount, if any, paid within the two preceding years or payable as commission (but not including commission to sub- underwriters) for subscribing or agreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in, or debentures of, the company, or the rate of any such commission;

(l) in the case of a company that has not been carrying on business for more than one year, the amount or estimated amount of preliminary expenses;

(m) particulars of any property purchased or acquired by the company, or proposed to be purchased or acquired, the purchase price of which is to be defrayed in whole or in part out of the proceeds of the issue or has been paid within the last two preceding years or is to be paid in whole or in part in securities of the company, or the purchase or acquisition of which has not been completed at the date of issue of the prospectus and the nature of the title or interest therein acquired or to be acquired by the company;

(n) the names and addresses of the vendors of any property under paragraph (m) and the amount (specifying separately the amount, if any, for goodwill) paid or payable in cash or securities of the company to the vendors for the property and where there is more than one separate vendor or the company is a sub-purchaser, the amount so payable to each vendor; where the vendors or any of them are a firm, the members of the firm shall not be treated as separate vendors, and where the property consists of securities of any other company purchased or acquired or proposed to be purchased or acquired by the company on substantially similar terms from more than twenty-five separate vendors it is sufficient to state the nature and terms of the transaction with particulars of the name and address of each person who is the vendor of securities aggregating more than ten per cent of the total amount of the securities so purchased or acquired or proposed to be purchased or acquired;

(o) the number and amount of securities that, within the two preceding years, have been issued, or agreed to be issued, as fully or partly paid up otherwise than in cash, and in the latter case the extent to which they are so paid up, and in either case the consideration for which those securities have been issued or are proposed or intended to be issued;

(p) where debentures are offered, particulars of the security that has been or will be created for those debentures, specifying the property, if any, comprised or to be comprised in the security and the nature of the title to the property and, if more than twenty-five per cent in value of such property consists or is to consist of shares, debentures or obligations payable in money, particulars of the rights, if any, of the company to substitute other shares, debentures or obligations;

(q) particulars of any services rendered or to be rendered to the company that are to be paid for by the company wholly or partly out of the proceeds of the issue or have been within the last two preceding years or are to be paid for by securities of the company exclusive of commissions to be disclosed under paragraph (k) and amounts included under paragraph (l) and amounts included under paragraph (o);

(r) the amount paid within the two preceding years or intended to be paid to any promoter with his name and address and the consideration for such payment;

(s) the dates of and the parties to and the nature of every material contract entered into within the two preceding years, and a reasonable time and place at which any such material contract or a copy thereof may be inspected; but this requirement does not apply to a contract entered into in the ordinary course of business carried on or intended to be carried on by the company;

(t) any provisions of the by-laws as to the remuneration of the directors;

(u) full particulars of the nature and extent of the interest, if any, of every director in the promotion of, or in any property acquired by the company within the preceding two years or proposed to be acquired by the company, or, where the interest of such director consists in being a partner in a firm, the nature and extent of the interest of the firm, with a statement of all sums paid or agreed to be paid to him or to the firm in cash or securities or otherwise by any person either to induce him to become, or to qualify him as a director, or otherwise for services rendered by him or by the firm in connection with the promotion or formation of the company, but this paragraph does not apply in the case of a prospectus issued more than one year after the date at which the company commenced business, except as to the particulars relating to property proposed to be acquired by the company;

(v) the amount of the consideration received for the issue of shares without nominal or par value and lawfully set aside as distributable surplus prior to the 1st day of July 1965;

(w) in the case of a company that has been carrying on business for less than three years, the length of time during which the business of the company has been carried on, and, if such company has acquired or proposes to acquire (either by direct acquisition or indirectly by ownership of shares or otherwise) a business that has been carried on for less than three years, also the length of time during which such business has been carried on;

(x) where shares are offered, the names and addresses of the persons, if known, who, by reason of beneficial ownership of securities of the company or any agreement in writing, are in a position to, or are entitled to, elect or cause to be elected a majority of the directors of the company.

(2) The information required by subsection (1) to be stated in a prospectus shall be contained in a separate part of the prospectus commencing with the words “Statutory Information” in conspicuous type and the said information shall be set out in type at least as large as that used in the body of the prospectus, except that the information required by paragraphs (1)(b) and (f) may be stated in any part of the prospectus.

(3) Every prospectus issued by or on behalf of a company shall contain

(a) in the case of a company that has been carrying on business for more than one year prior to the issue of the prospectus, a balance sheet of the company, or, if the company has any subsidiaries, a consolidated balance sheet of the company and all its subsidiaries certified by the company’s auditors, as at the end of the last completed financial year of the company or as at a date not more than one hundred and twenty days prior to the issue of the prospectus, whichever is the later;

(b) in the case of a company that has not been carrying on business for more than one year prior to the issue of the prospectus, but, prior to the issue of the prospectus, has acquired (either by direct acquisition or indirectly by ownership of shares or otherwise) a business that has been carried on for more than one year prior to the issue of the prospectus, a balance sheet of the company, or, if the company has any subsidiaries, a consolidated balance sheet of the company and all its subsidiaries as at a date subsequent to the acquisition of such business and not more than one hundred and twenty days prior to the issue of the prospectus, certified by the company’s auditors and a statement certified by accountants, who shall be named in the prospectus, specifying the nature and the value as shown by the books of such business, of any moneys or other assets of such business excluded from such acquisition or distributed or disposed of otherwise than in the ordinary course within six months of such acquisition;

(c) in the case of a company that has been carrying on business for more than one year prior to the issue of the prospectus, a report by the auditors of the company with respect to the profits of the company and the nature and source thereof, or the losses of the company, as the case may be, in respect of the latest completed financial year of the company and of the two preceding financial years, year by year or, if the company has been carrying on business for less than three years, then for such time as the company has been carrying on business and, if the company has any subsidiaries, such report shall be made with respect to the profits or losses of the company and all its subsidiaries;

(d) if the proceeds, or any part of the proceeds of the securities offered are or is to be applied directly or indirectly in the purchase of any business, or, in the case of a company that has not been carrying on business for more than one year prior to the issue of the prospectus, but has acquired or proposes to acquire (either by direct acquisition or indirectly by ownership of shares or otherwise) any business, a report made by accountants, who shall be named in the prospectus, upon the profits or losses of the business and the nature and source thereof in respect of each of the three completed financial years thereof immediately preceding the issue of the prospectus or in respect of such less number of completed financial years as such business has been in operation.

(4) Every balance sheet or certificate of the company’s auditors referred to in subsection (3) shall

(a) state the total amount of arrears, if any, of the cumulative dividends accrued on any shares of the company entitled to cumulative preferential dividends and the date from which such arrears commenced to accrue,

(b) state the manner in which fixed assets have been valued, and, if valued in accordance with an appraisal, the date of the appraisal and the name of the appraiser,

(c) if the reserve, if any, for depreciation in respect of such fixed assets, is, in the opinion of the auditors certifying such balance sheet, inadequate, contain a statement to that effect,

(d) unless, in the opinion of said auditors, the reserve for bad and doubtful accounts is adequate or no such provision is required, contain a statement that in the opinion of the auditors sufficient provision has not been made, and

(e) unless inventories are valued at cost or market value, whichever is the lower, if the value shown, in the opinion of the auditors, exceeds market value, contain a statement to that effect, and, in any event, a statement of the manner in which such value has been determined.

(5) Every report with respect to profits referred to in subsection (3) shall show separately any profits that in the opinion of such auditors or accountants, as the case may be, are of a non-recurring nature, shall exclude unrealized profits, and, if the securities in relation to which the prospectus is issued are shares of the company, such profits shall be shown after income taxes actually paid or payable or estimated if the amount has not been finally determined.

(6) For the purposes of this section every person shall be deemed to be a vendor who has entered into any contract, absolute or conditional, for the sale or purchase, or for any option of purchase, of any property to be acquired by the company, in any case where

(a) the purchase money is not fully paid at the date of issue of the prospectus,

(b) the purchase money is to be paid or satisfied wholly or in part out of the proceeds of the issue offered for subscription by the prospectus, or

(c) the contract depends for its validity or fulfilment on the result of that issue.

(7) Where any of the property to be acquired by the company is to be taken on lease, this section applies as if the expression “vendor” included the lessor, and the expression “purchase money” included the consideration for the lease, and the expression “sub-purchaser” included a sub-lessee.

(8) Any condition requiring or binding any applicant for securities to waive compliance with any requirement of this section, or purporting to affect him with notice of any contract, document, or matter not specifically referred to in the prospectus, is void.

(9) In the event of non-compliance with or contravention of any of the requirements of this section, a director or other person responsible for the prospectus does not incur any liability by reason of the non-compliance or contravention if

(a) as regards any matter not disclosed, he proves that he was not cognizant thereof,

(b) he proves that the non-compliance or contravention arose from an honest mistake of fact on his part, or

(c) the non-compliance or contravention was in respect of matters that, in the opinion of the court dealing with the case, were immaterial, or was otherwise such as might, in the opinion of that court, having regard to all the circumstances of the case, reasonably be excused;

but, in the event of non-compliance with the requirements contained in paragraph (1)(u) no director or other person incurs any liability in respect of the non-compliance unless it is proved that he had knowledge of the matters not disclosed.

(10) Nothing in this section limits or diminishes any liability that any person may incur under the general law or this Act apart from this section.

R.S., 1952, c. 53, s. 77; 1964-65, c. 52, s. 32.

80. (1) Where a prospectus issued by or on behalf of a company invites persons to subscribe for securities of the company,

(a) every person who is a director of the company at the date of the issue of the prospectus,

(b) every person who has authorized himself to be named and is named in the prospectus as a director or as a proposed director or as having agreed to become a director either immediately or after an interval of time,

(c) every person being a promoter of the company, and

(d) every person who has authorized the issue of the prospectus,

is liable to pay compensation to all persons who subscribe for any securities of the company on the faith of the prospectus for the loss or damage they may have sustained by reason of any untrue statement therein, or in any report or memorandum appearing on the face thereof or by reference incorporated therein or issued therewith, unless it is proved

(e) that having consented to become a director of the company he withdrew his consent before the issue of the prospectus, and that it was issued without his authority or consent,

(f) that the prospectus was issued without his knowledge or consent, and that on becoming aware of its issue he forthwith gave reasonable public notice that it was issued without his knowledge or consent,

(g) that, after the issue of the prospectus and before allotment thereunder, he, on becoming aware of any untrue statement therein, withdrew his consent thereto, and gave reasonable public notice of the withdrawal, and of the reason therefor, or

(h) that

(i) as regards every untrue statement not purporting to be made on the authority of an expert or of a public official document or statement, he had reasonable ground to believe and did, up to the time of the allotment of the securities, believe, that the statement was true,

(ii) as regards every untrue statement purporting to be a statement by an expert or contained in what purports to be a copy of or extract from a report or valuation of an expert, it fairly represented the statement, or was a correct and fair copy of or extract from the report or valuation, and

(iii) as regards every untrue statement purporting to be a statement made by an official person or contained in what purports to be a copy of or extract from a public official document, it was a correct and fair representation of the statement or copy of or extract from the document;

but a person is liable to pay compensation as aforesaid if it is proved that he had no reasonable ground to believe that the person making any such statement, report or valuation as is mentioned in subparagraph (h)(ii) was competent to make it.

(2) Where the prospectus contains the name of a person as a director or proposed director of the company, or as having agreed to become a director thereof, and he has not consented to become a director, or has withdrawn his consent before the issue of the prospectus, and has not authorized or consented to the issue thereof, the directors of the company, except any without whose knowledge or consent the prospectus was issued, and any other person who authorized the issue thereof, are liable to indemnify the person named as aforesaid against all damages, costs, and expenses to which he may be made liable by reason of his name having been inserted in the prospectus, or in defending himself against any action or legal proceedings brought against him in respect thereof.

(3) Every person who, by reason of his being a director or named as a director or as having agreed to become a director, or of his having authorized the issue of the prospectus, becomes liable to make any payment under this section may recover contribution, as in cases of contract, from any other person who, if sued separately, would have been liable to make the same payment, unless the person who has become so liable was, and that other person was not, guilty of fraudulent misrepresentation.

(4) For the purposes of this section

“expert” includes engineer, valuer, accountant, and any other person whose profession gives authority to a statement made by him;

“promoter” means a promoter who was a party to the preparation of the prospectus, or of the portion thereof containing the untrue statement, but does not include any person by reason of his acting in a professional capacity for persons engaged in procuring the formation of the company.

R.S., 1952, c. 53, s. 78.

81. (1) No prospectus shall be issued by or on behalf of a company unless an immediate offer to the public is in contemplation by the company, and the Minister shall not accept any prospectus for filing unless it is accompanied by a statutory declaration of the president or a vice-president or the manager of the company stating that such immediate offer is in contemplation and the approximate date when it is proposed that such offer shall be made.

(2) Unless the company makes abona fide offer to the public, within thirty days after the copy of the prospectus has been filed, to subscribe for the securities to which the prospectus relates,

(a) the company shall forthwith file a written notification with the Minister that such offer has not been made within the said thirty days,

(b) no offer to the public to subscribe for such securities on the faith of that prospectus shall be made,

(c) no offer to the public to subscribe for such securities shall be made unless and until a new prospectus in relation to such securities complying in all respects with the provisions of this Act has been filed with the Minister by or on behalf of the company,

(d) such new prospectus shall be deemed to have been substituted for the prospectus originally filed, and

(e) the provisions of subsection (1) apply to such new prospectus.

(3) For any non-compliance with or contravention of this section the company, and every officer or director thereof responsible for such non-compliance or participating in such contravention, as the case may be, are liable on summary conviction to a fine not exceeding one thousand dollars.

R.S., 1952, c. 53, s. 79.

82. (1) From time to time if, during the period during which any securities in relation to which a prospectus has been filed by the company are being offered to the public for subscription, the company enters into any transaction otherwise than in the ordinary course of business and of a nature or effect such that particulars of the transaction would have been required to be stated in the prospectus filed if the transaction had taken place prior to the date of such prospectus, then if the prospectus filed might be fairly regarded as misleading in respect of any particular that is material, if it had been dated as of a date subsequent to such transaction and had not included the particulars aforesaid, the company shall within twenty days from the entering into of such transaction file a new prospectus in relation to the securities or the amount thereof in excess of those for which applications have been received and accepted by the company prior to the date on which such new prospectus ought to be filed.

(2) In the event provided for in subsection (1) the company shall immediately desist from offering any securities in relation to which a prospectus has been filed until a new prospectus complying in all respects with this Act has been filed and any further offer of such securities to the public for subscription shall be made by means of such new prospectus, but for the purposes of paragraph 79(1)(f) the offering of such securities by such new prospectus shall not be deemed to be a second or subsequent offering.

(3) For any non-compliance with or contravention of this section

(a) if such non-compliance is in respect of the requirements of subsection (1) the company and every officer and director having knowledge thereof are liable on summary conviction to a fine not exceeding twenty dollars for every day during which such non-compliance continues;

(b) if such contravention is in respect of the requirements of subsection (2), the company and every officer and director participating in such contravention are liable on summary conviction to a fine not exceeding five hundred dollars, but no director or officer of the company incurs any liability by reason of such non-compliance or contravention if

(i) he proves that the non-compliance or contravention arose from an honest mistake of fact on his part, or

(ii) the non-compliance or contravention was in respect of matters that, in the opinion of the court dealing with the case, were immaterial, or was otherwise such as ought, in the opinion of the court, having regard to all the circumstances of the case, reasonably to be excused.

R.S., 1952, c. 53, s. 80.

83. A person shall not be named as a director or proposed director of a company in any prospectus filed by or on behalf of the company unless before, the filing of the prospectus by or on behalf of the company he has by himself or his agent authorized in writing

(a) signed and filed with the Minister a consent in writing to act as such director, and

(b) either signed the application for incorporation and memorandum of agreement for a number of shares not less than his qualification or signed and filed with the Minister a contract in writing to take from the company and pay for his qualification shares, or made and filed with the Minister a statutory declaration showing that he is qualified for election or appointment as a director in accordance with this Part.

R.S., 1952, c. 53, s. 81.

84. (1) No person acting for or on behalf a company shall call at any residence for the purpose of offering securities of such company to the public or any member of the public for subscription.

(2) A person who acts or incites, causes or procures any person to act, in contravention this section, is liable on summary conviction to a fine not exceeding five hundred dollars and in the case of a second or subsequent offence to imprisonment for a term not exceeding twelve months or to a fine not exceeding one thousand dollars or to both.

(3) Where a person convicted of an offence under this section is a company, whether a company within the meaning of this Act or not, every director and every officer concerned in the management of the company is guilty of the like offence unless he proves that the act constituting the offence took place without his knowledge or consent.

(4) In this section

“call” includes telephonic communications;

“public” does not include close personal friends, business associates or customers with whom the person making the offer has been in the habit of doing regular business in the sale of or obtaining subscriptions for securities in the past;

“residence” means any building or part of a building in which the occupant thereof resides either permanently or temporarily and any premises appurtenant thereto, but does not include an office used for business purposes.

R.S., 1952, c. 53, s. 82.

85. (1) In this section

“dividend” includes bonus or any distribution to shareholders as such;

“mining company” means a company that for the time being carries on as its principal business the business of operating any producing mining-properties owned or controlled by it.

(2) No dividend shall be declared when the company is insolvent or that renders the company insolvent or, subject to subsection (4), that will impair the capital of the company, and in determining the solvency of the company for the purposes of this subsection, no account shall be taken of any increase in the surplus or reserves of the company resulting merely from the writing up of the values of the assets of the company, unless such writing up was made more than five years before the date of the declaration of the dividend.

(3) For the amount of any dividend that the directors may lawfully declare payable in money, they may issue therefor shares of the company as fully paid up, or they may credit the amount of such dividend on the shares of the company already issued but not fully paid up, and the liability of the holders of such shares thereon shall be reduced by the amount of such dividend.

(4) Nothing in this Act prevents a company of which at least seventy-five per cent in value of the assets are of a wasting character, or any mining company, from declaring or paying dividends out of its funds derived from the operations of the company notwithstanding that the paid-up capital of the company may be thereby reduced or impaired, if such payment does not reduce the value of its remaining assets so that they will be insufficient to meet all the liabilities of the company then existing exclusive of its paid-up capital.

(5) Where the directors of the company declare and pay any dividend when the company is insolvent, or any dividend the payment of which renders the company insolvent, or that impairs the capital of the company, they are, until repayment of the dividends so declared and paid, jointly and severally liable to the company and to its creditors for the debts of the company then existing or thereafter contracted, but such liability is limited to the amount of such dividends and interest that have not been repaid to the company.

(6) Where any director present when a dividend mentioned in subsection (5) is declared, forthwith requests the entry on the minutes of the board of his protest against the dividend, or where any director then absent, within one week after he becomes aware of such declaration and is able so to do, delivers to the president, secretary or other officer of the company his protest against the dividend, and within eight days thereafter delivers or mails by registered letter a duplicate copy of his protest to the Minister, such director may thereby, and not otherwise, exonerate himself from such liability.

(7) Nothing in this section shall be deemed to impose upon directors of a company any liability of a character specified in subsection (5), by reason of a declaration or payment of any dividend permitted by subsection (4), or, if such dividend is in excess of the amount so permitted, beyond the amount of such excess.

(8) The directors may deduct from the dividends payable to any shareholder all such sums of money as are due from him to the company on account of calls or otherwise.

R.S., 1952, c. 53, s. 83; 1964-65, c. 52, s. 33.