1997, c. 26

[Assented to April 25, 1997]

An Act to implement certain provisions of the budget tabled in Parliament on February 18, 1997

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

1. This Act may be cited as the Budget Implementation Act, 1997.

2. The definitions in this section apply in this Part.

“auditor” means the auditor for the foundation appointed under section 26.

“board” means the board of directors of the foundation.

“Chairperson” means the Chairperson of the board appointed under subsection 9(2).

“director” means a person who is on the board and includes the Chairperson.

“eligible project” means

(a) a project carried on, or to be carried on, by an eligible recipient for the modernization, acquisition, development, operation or maintenance of research infrastructure by the recipient in Canada; or

(b) the purchasing by an eligible recipient of access to a world-leading research facility located outside Canada or to a major international collaborative research project, including the purchasing of such access by means of a contribution toward a portion of capital costs.

“eligible recipient” means

(a) a hospital, university or post-secondary college or educational institution that is situated in Canada and that carries on, or in the opinion of a majority of the directors is capable of carrying on, meaningful research; or

(b) a non-profit organization or a trust the activities of which are primarily carried on in Canada and that carries on, or in the opinion of a majority of the directors is capable of carrying on, meaningful research.

“employee or agent of Her Majesty in right of a province” does not include an employee or agent of Her Majesty in right of a province whose duties and functions as such an employee or agent are restricted to work in a university, a college or other educational institution or a hospital.

“fiscal year” means the fiscal year of the foundation as determined in accordance with its by-laws.

“foundation” means the Canada Foundation for Innovation established by section 3.

“member” means a person who is a member of the foundation.

“Minister” means the Minister of Industry.

“non-profit organization” means a corporation, society, association, organization or body no part of whose income is payable to or otherwise available for the personal benefit of any of its proprietors, members or shareholders.

“research” means the attempt by careful scientific or technical enquiry, experimentation, study, observation, analysis and recording to discover new facts, knowledge and information, to develop new interpretations of facts, knowledge or information, or to discover new means of applying existing knowledge, relating to

(a) a science;

(b) health;

(c) engineering; or

(d) the environment.

“research infrastructure” means equipment, specimens, scientific collections, computer software, information databases, communications linkages and other intangible property used or to be used primarily for carrying on research, including housing and installations essential for the use and servicing of those things.

“special resolution” of the members means a resolution passed by a majority of not less than two thirds of the votes cast by the members who voted on the resolution at a meeting of the members or signed by all the members entitled to vote on the resolution.

1997, c. 26, s. 2; 2001, c. 11, s. 1.

3. A corporation without share capital is established to be called the Canada Foundation for Innovation consisting of the members of the foundation and the directors.

4. The foundation is not an agent of Her Majesty.

5. The objects and purposes of the foundation are to make grants to eligible recipients for eligible projects to increase Canada’s capability of carrying on high quality research.

1997, c. 26, s. 5; 2001, c. 11, s. 2.

6. For the purposes of carrying out its objects and purposes, the foundation has the capacity and, subject to this Part, the rights, powers and privileges of a natural person.

7. The head office of the foundation shall be in the National Capital Region described in the schedule to the National Capital Act.

8. (1) The Canada Corporations Act, chapter C-32 of the Revised Statutes of Canada, 1970, does not apply to the foundation.

(2) The following provisions of the Canada Business Corporations Act apply, with such modifications as the circumstances require, to the foundation and its directors, members, officers and employees as if the foundation were a corporation incorporated under that Act, this Part were its articles of incorporation and its members were its shareholders:

(a) section 16 (by-law not required to confer powers on foundation, restriction on powers of foundation, and validity of acts of foundation);

(b) subsection 21(1) (access to foundation’s records by members and creditors);

(c) section 23 (corporate seal not needed to validate instrument);

(d) subsections 103(1) to (4) (powers of directors to make and amend by-laws, members' approval of by-laws and effective date of by-laws);

(e) subsection 105(1) (qualifications of directors);

(f) subsection 108(2) (resignation of director);

(g) section 110 (right of director to attend members' meeting and statements by retiring directors);

(h) subsections 114(1) and (2) (place of directors' meetings and quorum);

(i) section 116 (validity of acts of directors and officers);

(j) section 117 (validity of directors' resolutions not passed at meeting);

(k) section 120 (conflict of director’s interests);

(l) subsection 122(1) (duty of care of directors and officers);

(m) section 123 (directors' dissents);

(n) subsections 124(1) to (6) (indemnification of directors and insurance for director’s liability);

(o) section 155 (financial statements);

(p) section 158 (approval of financial statements by directors);

(q) section 159 (sending financial statements to members before annual meeting and penalty for failure);

(r) section 161 (qualifications of auditor);

(s) section 168 (rights and duties of auditor);

(t) section 169 (examinations by auditor);

(u) section 170 (right of auditor to information);

(v) subsections 171(3) to (9) (duty and administration of audit committee and penalty for failure to comply);

(w) section 172 (qualified privilege in defamation for auditor’s statements); and

(x) subsections 257(1) and (2) (certificates of foundation as evidence).

(3) The descriptive words in parentheses that follow the reference to a provision of the Canada Business Corporations Act in subsection (2) form no part of that subsection but are inserted for convenience of reference only.

1997, c. 26, s. 8; 2001, c. 14, s. 235.

9. (1) There shall be a board of directors of the foundation which shall supervise the management of the business and affairs of the foundation and, subject to the by-laws of the foundation, exercise all its powers.

(2) Subject to subsection (3), the board consists of

(a) a Chairperson of the board, who is resident in Canada, appointed by the Governor in Council on the recommendation of the Minister;

(b) six persons, who are resident in Canada, appointed by the Governor in Council on the recommendation of the Minister; and

(c) eight persons, who are resident in Canada and none of whom are employees or agents of Her Majesty in right of Canada or in right of a province or members of the Senate, the House of Commons or the legislature of a province, appointed by the members in accordance with the by-laws of the foundation.

(3) Where the Chairperson is appointed before directors are appointed under paragraph (2)(c), the Chairperson and such other directors, if any, as may have been appointed under paragraph (2)(b) constitute the board until directors are appointed under paragraph (2)(c) and may

(a) undertake the organization of the foundation including the appointment of officers and employees;

(b) make banking arrangements for the foundation;

(c) enact organizational by-laws for the foundation; and

(d) receive on behalf of the foundation any moneys paid to the foundation.

(4) Until directors are appointed under paragraph (2)(c), the board shall not make any grants from or out of the funds of the foundation or enter into any agreements or arrangements, or review any applications, for or in respect of grants to be made from or out of the funds of the foundation.

(5) The operation of the foundation under subsection (3) by the Chairperson and directors, if any, appointed under paragraph (2)(b) shall not, notwithstanding subsection 83(2) of the Financial Administration Act, result in the foundation being considered, for the purposes of Part X of that Act or for any other purpose, to be wholly owned directly by Her Majesty in right of Canada.

10. (1) The Chairperson and the directors appointed under paragraph 9(2)(b) shall be appointed to hold office during pleasure for terms of three years but, except where they cease to be directors under subsection (4), they shall continue to hold office until their successors are appointed.

(2) The directors appointed under paragraph 9(2)(c) by the members shall hold office for terms of three years, but they may be removed from office by a special resolution of the members and, except where they cease to be directors under subsection (4), they shall continue to hold office until their successors are appointed.

(3) A director is eligible to be reappointed for one or more additional terms of office.

(4) A director ceases to be a director when

(a) the director

(i) dies,

(ii) resigns,

(iii) ceases to be resident in Canada, or

(iv) becomes disqualified under subsection 105(1) of the Canada Business Corporations Act;

(b) in the case of a director appointed by the Governor in Council, the appointment is terminated by the Governor in Council before the expiry of the term of the appointment; or

(c) in the case of a director appointed by the members, the director

(i) is removed from office before the expiry of the term of the appointment by a special resolution of the members,

(ii) is appointed to the Senate,

(iii) is elected to the House of Commons or the legislature of a province, or

(iv) becomes an employee or agent of Her Majesty in right of Canada or in right of a province.

11. The appointment of directors shall be made

(a) to ensure, as far as possible, that at all times approximately one half of the directors will be representative of persons engaged in research and one half representative of the business community or non-profit organizations; and

(b) having regard to the desirability of having directors drawn from various regions of Canada.

1997, c. 26, s. 11; 2001, c. 34, s. 7(F).

12. (1) From and out of the funds of the foundation, the directors may be paid remuneration for acting as directors in amounts determined by the board not exceeding maximum amounts prescribed by regulation and they may be reimbursed for any reasonable out-of-pocket expenses incurred by them in performing their duties or attending meetings of the board or of members.

(2) Except as provided in subsection (1), no director shall profit or gain any income or acquire any property from the foundation or its activities.

13. (1) There shall be fifteen members of the foundation.

(2) Upon this Act receiving royal assent, the Governor in Council, on the recommendation of the Minister, shall without delay appoint six persons as members of the foundation.

(3) As soon as possible after the appointment of the six members under subsection (2), the Minister shall make arrangements for a first meeting of those members.

(4) At the first meeting of the six members appointed under subsection (2), or at a meeting held as soon after that meeting as possible, those members shall appoint nine further members of the foundation.

(5) The appointment of a person as a member to succeed a person whose term as a member expires shall be made by the members at a general meeting of members.

(6) The appointment of a person as a member to fill a vacancy in the membership caused by a person ceasing to be a member before the member’s term as a member expires shall be made by the members at a general meeting of members.

(7) A person is not eligible to be appointed a member if the person

(a) is a member of the Senate, the House of Commons or the legislature of a province;

(b) is an employee or agent of Her Majesty in right of Canada or in right of a province;

(c) is a director;

(d) does not reside in Canada; or

(e) does not meet the qualifications set out in subsection 105(1) of the Canada Business Corporations Act.

14. (1) Subject to subsection (2), the members shall be appointed to hold office for terms of five years, but they may be removed from office by a special resolution of the members and, except where they cease to be members under subsection (5), they shall continue to hold office until their successors are appointed.

(2) Of the members appointed under subsections 13(2) and (4), one-third shall be appointed for terms of five years, one-third shall be appointed for four years and one-third shall be appointed for three years but, except where they cease to be members under subsection (5), they shall continue to hold office until their successors are appointed.

(3) A member is eligible to be reappointed for one or more terms of office.

(4) A person appointed to fill a vacancy in the office of a member who has ceased to hold the office before the expiry of the member’s term of office shall be appointed to hold office for the unexpired portion of that term.

(5) A member ceases to be a member when the member

(a) dies;

(b) resigns;

(c) is appointed to the Senate;

(d) is elected to the House of Commons or to the legislature of a province;

(e) is appointed a director;

(f) becomes an employee or agent of Her Majesty in right of Canada or in right of a province;

(g) no longer meets the qualifications set out in subsection 105(1) of the Canada Business Corporations Act; or

(h) is removed from office by a special resolution of the members.

15. The appointment of members shall be made

(a) to ensure, as far as possible, that at all times approximately one half of the members will be representative of persons engaged in research and one half representative of the business community or non-profit organizations; and

(b) having regard to the desirability of having members drawn from various regions of Canada.

16. (1) The members are not entitled to be paid any remuneration for acting as members but they may be reimbursed for any reasonable out-of-pocket expenses incurred by them in performing their duties or attending meetings of the members.

(2) Except as provided in subsection (1), no member shall profit or gain any income or acquire any property from the foundation or its activities.

17. (1) The board may appoint such officers, employees and agents of the foundation as they consider necessary to carry out the objects and purposes of the foundation.

(2) Subject to the by-laws of the foundation, the board may designate the offices of the foundation and specify the duties and functions of each office.

(3) Directors and members are not eligible to be employed as employees or agents of the foundation.

(4) The directors, members, officers, employees and agents of the foundation are not, because of being a director, member, officer, employee or agent of the foundation, part of the federal public administration.

1997, c. 26, s. 17; 2003, c. 22, s. 224(E).

18. From and out of its funds, the foundation may pay salaries and wages of its officers and employees, rent for its accommodation, remuneration for its directors and agents, reimbursement to the directors and members for their reasonable out-of-pocket expenses, and other costs and expenses of carrying on the business of the foundation.

19. (1) From and out of its funds, the foundation may make grants to eligible recipients to be used by them solely for the purposes of eligible projects in accordance with any terms and conditions specified by the foundation in respect of the grants.

(2) In making grants to an eligible recipient in respect of an eligible project, the foundation shall not acquire any interest, whether through the acquisition of share capital, a partnership interest or otherwise, in any research infrastructure acquired by the recipient for the project.

(3) For the purpose of assisting an eligible recipient in completing an eligible project, the foundation may enter into agreements with the recipient respecting, among other things, the manner in which the foundation will make advances in respect of a grant to the recipient, when those advances will be made and any terms or conditions on which the grant will be made.

20. (1) Subject to subsection (3), the foundation may accept donations of money.

(2) All money donated to the foundation, and any income arising from the investment of the money, shall be used by the foundation in carrying out its objects and purposes.

(3) The foundation shall not accept a donation of money that is made on the condition that the foundation use the money or any income arising from the investment of the money for any purpose that is not within the objects and purposes of the foundation.

(4) Subsection (3) does not apply where the conditions of a donation of money merely restrict or direct the manner of investing the money until it can be used to make grants to eligible recipients for eligible projects.

21. The board shall establish investment policies, standards and procedures that a reasonably prudent person would apply in respect of a portfolio of investments to avoid undue risk of loss and obtain a reasonable return, having regard to the foundation’s obligations and anticipated obligations.

22. (1) Subject to any conditions of a donation restricting the investment of the money donated until it can be used to make grants to eligible recipients for eligible projects, the foundation shall invest its funds, and reinvest any income from those funds, in accordance with the investment policies, standards and procedures established by the board.

(2) The foundation shall not invest its funds in, or acquire any right in any property of, an eligible recipient that has received, is about to receive or has applied for a grant from the foundation.

(3) The foundation shall not cause any corporation to be incorporated or participate in the incorporation of a corporation or become a partner in a partnership.

(4) The foundation shall not carry on any business for gain or profit otherwise than in the investment of its funds, and shall not hold or acquire a controlling interest in any corporation or enterprise.

23. (1) The foundation shall not borrow money, issue any debt obligations or securities, give any guarantees to secure a debt or other obligation of another person or mortgage, pledge or otherwise encumber property of the foundation.

(2) The foundation shall not purchase or accept a donation of real property.

24. (1) Subject to subsection (2), the board may delegate to the Chairperson, a committee of directors or an officer of the foundation any of the powers of the board.

(2) The board shall not delegate any power or right of the board

(a) to enact, amend or repeal by-laws;

(b) to authorize the making of grants to eligible recipients;

(c) to appoint directors to, or fill vacancies on, a committee of the board;

(d) to appoint officers of the foundation or fix their remuneration;

(e) to accept donations;

(f) to approve an annual financial statement or a report of the foundation; or

(g) to submit to the members any matter requiring the approval of the members.

25. (1) The board shall cause books of account and other records to be kept and shall establish financial and management controls, information systems and management practices that will ensure that the business and affairs of the foundation are carried on, and the financial, human and physical resources of the foundation are managed, effectively, efficiently and economically.

(2) The books of account and other records of the foundation shall be maintained in such a way that they will show that the assets of the foundation are properly protected and controlled and that its business and affairs are carried on in compliance with this Part and the regulations, and in particular in such a way that they will show

(a) descriptions and book values of all investments of the foundation; and

(b) the eligible recipients who have received, or are about to receive, grants from the foundation in respect of eligible projects, the nature and extent of the projects and the amount of the grants.

26. (1) The members, at their first meeting in each fiscal year, shall appoint an auditor for the foundation for the fiscal year and fix, or authorize the board to fix, the auditor’s remuneration.

(2) The auditor shall be

(a) a natural person who

(i) is a member in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,

(ii) has at least five years experience at a senior level in carrying out audits,

(iii) is ordinarily resident in Canada, and

(iv) is independent of the board, the directors and the officers of the foundation; or

(b) a firm of accountants at least one of the members or employees of which who are jointly designated by the board and the firm to conduct on behalf of the firm the audit of the books and records of the foundation meet the qualifications set out in paragraph (a).

(3) If an auditor is not appointed at the first meeting of the members in a fiscal year, the auditor for the preceding fiscal year continues in office until a successor is appointed.

(4) The members may by a special resolution of the members remove an auditor from office.

(5) An auditor ceases to hold office when the auditor

(a) dies;

(b) resigns; or

(c) is removed from office under subsection (4).

(6) The members, at a meeting of the members, may appoint an auditor to fill any vacancy in the office of the auditor, but if the members fail to fill the vacancy at a meeting, or if no meeting of the members is convened without delay after the vacancy occurs, the board may appoint an auditor.

(7) An auditor appointed to fill a vacancy in the office holds office for the unexpired term of the predecessor in the office.

1997, c. 26, s. 26; 2001, c. 34, s. 8(F).

27. (1) The auditor for a fiscal year shall, as soon as possible after the end of the fiscal year, complete the audit of the books and records of the foundation and submit a report of the audit to the members.

(2) A meeting of the members shall be convened to consider the report of the auditor for a fiscal year and at the meeting the members shall by resolution receive the report.

28. (1) The board shall appoint an audit committee consisting of not fewer than three directors and fix the duties and functions of the committee.

(2) In addition to any other duties and functions it is required to perform, the audit committee shall cause internal audits to be conducted to ensure compliance by the officers and employees of the foundation with management and information systems and controls established by the board.

29. (1) The foundation shall, within three months after the end of each fiscal year, prepare an annual report in both official languages of its activities during the year and include in the report

(a) its financial statement for the year as approved by the board;

(b) its balance sheet as at the end of the year including a detailed statement of its investment portfolio as at the end of the year; and

(c) the report of the auditor for the year in respect of the audit of the books and records of the foundation for the year, the auditor’s certificates respecting the financial statement and balance sheet and any other reports of the auditor respecting the financial circumstances of the foundation in the year.

(2) Before the annual report of the foundation for a fiscal year is distributed to the public, it shall be approved by the board and by the members at a meeting of the members.

(3) After the annual report of the foundation for a fiscal year is approved as required under subsection (2), the report shall be made public in accordance with the by-laws of the foundation and a copy shall be sent to the Minister, who shall cause a copy of the report to be laid before each House of Parliament on any of the first fifteen days on which that House is sitting after the Minister receives it.

30. (1) After it publishes its annual report for a fiscal year, the foundation shall convene a public meeting at a city in Canada selected by the board to consider the report and other matters relating to its activities during the year.

(2) At least thirty days before the date of a meeting convened under subsection (1) to consider the foundation’s annual report for a fiscal year, the foundation shall give notice of the time and place of the meeting in accordance with the by-laws of the foundation.

31. (1) If the foundation is wound up or dissolved, all its property remaining after all its debts and obligations have been satisfied shall be liquidated and the moneys arising from that liquidation shall be distributed among all the eligible recipients that have received grants from the foundation and that are, as of the day the distribution begins, still carrying on research, to be used by them for the purpose of that research, in such a way that each such recipient receives an amount that is the same proportion of those moneys that the total grants received by that recipient from the foundation is of the total of all grants that have been made by the foundation to all such eligible recipients.

(2) Despite subsection (1), the Minister may require the foundation to repay out of the moneys arising from the liquidation to the Receiver General for credit to the Consolidated Revenue Fund any amount that is so repayable under the terms or conditions on which public moneys were provided to the foundation.

1997, c. 26, s. 31; 2003, c. 15, s. 31.

32. The foundation shall offer its services in both official languages.

33. The foundation shall include in its by-laws provisions that

(a) entitle an eligible recipient that has made an application for a grant from the foundation to request the board to make a ruling as to the possible conflict of interest of a director in the consideration or disposal of the application; and

(b) establishing procedures to be followed by the board in responding to the request and giving the ruling.

34. The Governor in Council may make regulations respecting the maximum remuneration payable to the directors.