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Summary
Part 14 provides the structure for a liquidation and dissolution of
a corporation incorporated under the Act. It is largely technical in
nature and is, for the most part, in keeping with standard company law
practices. It is largely modelled on the equivalent provisions in the Canada
Business Corporations Act. The methods by which the liquidation
and dissolution of a corporation may be commenced, the process that must
be followed, the duties of a liquidator, the final distribution of assets,
and methods for reviving a corporation are addressed in this Part.
With respect to the distribution of assets on liquidation, the Act requires
the articles of incorporation to state how the assets will be distributed
on dissolution. However, the Act prohibits the distribution of assets
amongst the members of a registered a charity for the purposes of the Income
Tax Act or a soliciting corporation. In that case, the articles
should provide that assets must be distributed to qualified donees as
defined in the Income Tax Act. If the articles do not so provide,
the liquidator must apply to a court for an order to that effect. (Section
233)
Briefing Book
An Act Respecting Not-for-Profit Corporations and
Other Corporations Without Share Capital
Top
Bill Clause No. 215
Section No. 215
Topic: Liquidation and Dissolution
Proposed Wording
215. In this Part, "court", in relation to a corporation, means a
court having jurisdiction in the place where the corporation has its registered
office.
Rationale
This section is self-explanatory.
Present Law
None.
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Bill Clause No. 216
Section No. 216
Topic: Liquidation and Dissolution
Proposed Wording
216. (1) This Part does not apply to a corporation for which there is, under
the Bankruptcy and Insolvency Act, a trustee in bankruptcy, a trustee
under a proposal or an interim receiver – or a receiver under a provincial
law – until the end of the prescribed period after
(a) the trustee or interim receiver has been discharged;
or
(b) the receiver has provided to the Superintendent of Bankruptcy
the final report and statement of accounts required by subsection 246(3) of
the Bankruptcy and Insolvency Act. |
(2) Any proceedings under this Part to dissolve or to liquidate and dissolve
a corporation that are pending when a trustee, interim receiver or receiver
referred to in subsection (1) becomes entitled to act with respect to the corporation
are stayed until the end of the prescribed period after
(a) the trustee or interim receiver has been discharged;
or
(b) the receiver has provided to the Superintendent of Bankruptcy
the final report and statement of accounts required by subsection 246(3) of
the Bankruptcy and Insolvency Act. |
Rationale
This section is designed to prevent a corporation using the liquidation provisions
in the case of bankruptcy when the liquidation should be done under the Bankruptcy
and Insolvency Act (BIA). At the same time, it ensures that the shell of
a corporation that has gone through BIA proceedings can be dissolved once everything
is complete. The prescribed period following discharge (proposed at 3 years)
ensures that all aspects of the BIA proceeding are finished.
Subsection 216(1) will ensure that a proceeding can not be instituted under
this Part of the Act where proceedings have commenced under the BIA. This avoids
any conflicts or confusion arising from multiple proceedings.
Subsection 216(2) establishes the priority of proceedings under the BIA where
a proceeding under this Act is pending.
Present Law
None.
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Bill Clause No. 217
Section No. 217
Topic: Liquidation and Dissolution
Proposed Wording
217. (1) If a corporation or other body corporate is dissolved under this Part,
or if a body corporate created or continued under Part II of the Canada
Corporations Act, chapter C-32 of the Revised Statutes of Canada, 1970 – or
that is subject to Part III of that Act – is dissolved under that Act,
any interested person may apply to the Director to have the dissolved corporation
or other body corporate revived as a corporation under this Act.
(2) Articles of revival in the form that the Director fixes shall be sent
to the Director.
(3) On receipt of articles of revival, the Director shall issue a certificate
of revival in accordance with section 274, if
(a) the dissolved corporation or body corporate has fulfilled
all conditions precedent that the Director considers reasonable; and
(b) there is no valid reason for refusing to issue the certificate. |
(4) A dissolved corporation or other body corporate is revived as a corporation
under this Act on the date shown on the certificate of revival.
(5) On the revival of a body corporate without share capital incorporated
by a special Act of Parliament as a corporation under this Act, the special
Act ceases to apply to the corporation.
(6) Subject to any reasonable terms that may be imposed by the Director, to
the rights acquired by any person after its dissolution and to any changes
to the internal affairs of the corporation or body corporate after its dissolution,
the revived corporation is, in the same manner and to the same extent as if
it had not been dissolved,
(a) restored to its previous position in law, including the
restoration of any rights and privileges whether arising before its dissolution
or after its dissolution but before its revival; and
(b) liable for the obligations that it would have had if it had not
been dissolved, whether they arise before its dissolution or after its dissolution
but before its revival. |
(7) Any legal action respecting the affairs of a revived corporation taken
between the time of its dissolution and its revival is valid and effective.
(8) In this section, "interested person" includes
(a) a member, a director, an officer, an employee and a creditor
of a dissolved corporation or body corporate;
(b) a person who has a contract – other than, in the Province
of Quebec, a contract by gratuitous title – with the dissolved corporation
or body corporate;
(c) a person who, although at the time of dissolution of the corporation
or body corporate was not a person described in paragraph (a), would
be such a person if a certificate of revival were issued under this section;
and
(d) a trustee in bankruptcy for the dissolved corporation or body
corporate. |
Rationale
This section clarifies the circumstances under which a corporation that has been
dissolved can be revived, and, if it is revived, what its status and rights are.
Subsection 217(1) outlines which type of corporations can be revived under
this Act. These include not only corporations incorporated under this Act but
bodies corporate under Part II of the Canada Corporations Act (CCA)
and Special Act bodies corporate that were dissolved under the CCA. Moreover,
bodies corporate under Part II of the CCA that were dissolved under the transition
provisions of this Act may also be revived under this Act. This will ensure
a consistent approach to revivals regardless of the procedure followed for
the dissolution. However, if a Special Act body corporate is revived, it will
lose its status of being a Special Act body corporate and become a corporation
incorporated under this Act.
Subsection (2) states that the articles of revival must be sent to the Director
Appointed Under the Act.
Subsection (3) sets out the procedures to be followed by the Director upon
the receipt of the articles of revival.
Subsection (4) states that a dissolved corporation is revived as of the date
shown on the certificate of revival as issued by the Director.
Subsection 217(5) states that once a corporation without share capital incorporated
by Special Act of Parliament is dissolved and revived, it is no longer subject
to the Special Act responsible for its initial incorporation but is subject
to this Act.
Subsections 217(6) and (7) address the rights pertaining to revived corporations.
In essence, the corporation obtains on revival the same status it had prior
to dissolution. This includes the ability to participate in any lawsuits that
were ongoing prior to revival.
Subsection 217(8) defines the term "interested person" for the purposes
of this section.
Present Law
Canada Corporations Act:
31. (1) Where a company does not go into actual bona fide operation within
three years after incorporation or for three consecutive years does not use
its corporate powers its charter shall be and become forfeited.
(2) In any action or proceeding where such non-user is alleged, proof of user
lies upon the company.
(3) The Minister may upon application of any person interested revive any
charter so forfeited upon compliance with such conditions as he may prescribes.
Top
Bill Clause No. 218
Section No. 218
Topic: Liquidation and Dissolution
Proposed Wording
218. (1) A corporation that has not issued any memberships may be dissolved
at any time by resolution of all the directors.
(2) A corporation that has no property and no liabilities may be dissolved
by special resolution of the members or, if it has more than one class or group
of members, by special resolutions of each class or group whether or not the
members are otherwise entitled to vote.
(3) A corporation that has property or liabilities or both may be dissolved
by special resolution of the members or, if it has more than one class or group
of members, by special resolution of each class or group whether or not the
members are otherwise entitled to vote, if
(a) by the special resolution or resolutions the members
authorize the directors to cause the corporation to distribute any money
or other property in accordance with sections 232 to 234 and discharge
any liabilities; and
(b) the corporation has distributed any money or other property and
discharged any liabilities before it sends articles of dissolution to the Director
under subsection (4). |
(4) Articles of dissolution in the form that the Director fixes shall be sent
to the Director.
(5) On receipt of articles of dissolution, the Director shall issue a certificate
of dissolution in accordance with section 274.
(6) The corporation ceases to exist on the date shown in the certificate of
dissolution.
Rationale
This section establishes the means by which a corporation may be dissolved
of its own accord and the prerequisites for doing so.
Subsection 218(1) states that a corporation with no members can be dissolved
by its directors.
Subsection 218(2) stipulates that, where a corporation has no property or
liabilities, the members may dissolve the corporation through a special resolution
(2/3 majority).
Subsection 218(3) states that, where a corporation has members and has either
property or liabilities, the corporation's dissolution requires the approval
of the members, or each class of members, if any, through a special resolution.
In addition, the resolution must authorize the directors to discharge any liabilities
of the corporation and distribute any property in accordance with sections
232 to 234 (Section 232 deals with property transferred to the corporation
with conditions. Section 233 deals with the distribution of property of registered
charities and soliciting corporations to "qualified donees" as defined
by the Income Tax Act. Section 234 deals with the distribution of
the property of non-soliciting corporations.)
Subsections 218(4) to (6) are technical formalities associated with the dissolution
of a corporation.
Present Law
Canada Corporations Act:
32. (1) The charter of a company may be surrendered if the company proves
to the satisfaction of the Minister
(a) that the company has no assets and that,
if it had any assets immediately prior to the application for leave to
surrender its charter, such assets have been divided rateably among its
shareholders or members, and either, |
| |
(i) that it has no debts, liabilities or other obligations,
or
(ii) that the debts, liabilities or other obligations of the company have been
duly provided for or protected or that the creditors of the company or other
persons having interests in such debts, liabilities or other obligations consent;
and |
(b) that the company has given notice of the
application for leave to surrender by publishing the same once in the
Canada Gazette and once in a newspaper published at or as near as may
be to the place where the company has its head office. |
(2) Where an application to surrender a charter is made by a company that
has not gone into bona fide operation or that has been inoperative for three
or more consecutive years, if the circumstances mentioned in paragraph (1)(a)
are proved to the satisfaction of the Minister, the Minister shall publish
a notice of such application in the Canada Gazette and, unless an objection
to the surrender is received by him within one year after such publication
of the notice, he may accept the application for the surrender of the charter.
(3) Where the Minister has accepted the surrender of a charter upon due compliance
with subsection (1) or subsection (2), as the case may be, the Minister may
direct the cancellation of the charter of the company and fix a date upon and
from which the company shall be dissolved, and the company is thereby and thereupon
dissolved accordingly.
(4) No fee shall be charged in respect of a surrender under this section of
the charter of a company described in subsection (2).
Top
Bill Clause No. 219
Section No. 219
Topic: Liquidation and Dissolution
Proposed Wording
219. (1) The directors may propose the voluntary liquidation and dissolution
of a corporation, or a member who is entitled to vote at an annual meeting
of members may make such a proposal in accordance with section 163.
(2) Notice of any meeting of members at which voluntary liquidation and dissolution
is to be proposed shall set out the terms of the proposal.
(3) A corporation may liquidate and dissolve by special resolution of the
members or, if the corporation has more than one class or group of members,
by special resolution of each class or group whether or not the members are
otherwise entitled to vote.
(4) A statement of intent to dissolve in the form that the Director fixes
shall be sent to the Director.
(5) On receipt of a statement of intent to dissolve, the Director shall issue
a certificate of intent to dissolve in accordance with section 274.
(6) On the issuance of a certificate of intent to dissolve, the corporation
shall cease to carry on its activities except to the extent necessary for the
liquidation, but its corporate existence continues until the Director issues
a certificate of dissolution.
(7) After the issuance of a certificate of intent to dissolve, the corporation
shall
(a) immediately cause notice of the certificate to be sent
to each known creditor of the corporation;
(b) without delay take reasonable steps to give notice of it in each
province in Canada where the corporation was carrying on activities at the
time it sent the statement of intent to dissolve to the Director;
(c) do all acts required to liquidate its property – including
collecting its property, transferring property referred to in section 232 and
converting any property not to be transferred or distributed in kind into money – and
discharge all its obligations; and
(d) after giving the notice required under paragraphs (a)
and (b) and adequately providing for the discharge of all of its obligations,
distribute its remaining property, either in money or inkind, in accordance
with sections 233 and 234. |
(8) On the application of the Director or any interested person made at any
time during the liquidation of a corporation, a court may order that the liquidation
be continued under the supervision of the court as provided in this Part and
make any further order that it thinks fit.
(9) An interested person who makes an application under this section shall
give the Director notice of the application, and the Director is entitled to
appear and be heard in person or by counsel.
(10) At any time after the issue of a certificate of intent to dissolve and
before the issue of a certificate of dissolution, a certificate of intent to
dissolve may be revoked by sending to the Director a statement of revocation
of intent to dissolve in the form that the Director fixes, if the revocation
is approved in the same manner as the resolution under subsection (3).
(11) On receipt of a statement of revocation of intent to dissolve, the Director
shall issue a certificate of revocation of intent to dissolve in accordance
with section 274.
(12) On the date shown in the certificate of revocation of intent to dissolve,
the revocation is effective and the corporation may continue to carry on its
activities.
(13) If a certificate of intent to dissolve has not been revoked and the corporation
has complied with subsection (7), the corporation shall prepare articles of
dissolution.
(14) Articles of dissolution in the form that the Director fixes shall be
sent to the Director.
(15) On receipt of articles of dissolution, the Director shall issue a certificate
of dissolution in accordance with section 274.
(16) The corporation ceases to exist on the date shown in the certificate
of dissolution.
Rationale
This section sets out the steps and procedures that must be followed where the
members or the directors of a corporation determine to dissolve it.
Subsections 219(1) to (4) set out the procedures that must be followed by
a corporation wishing to voluntarily liquidate or dissolve, including who can
make a proposal to dissolve a corporation.
Subsection 219(5) states that the Director Appointed Under the Act will issue
a certificate of intent to dissolve on receipt of the proper materials.
Subsections 219(6) and (7) set out the corporation's duties after the issuance
of a certificate of intent to dissolve, including the cessation of operations,
notification of creditors and other parties, and liquidation of its assets,
among others.
Subsections 219(8) and (9) permit an application to a court to have the liquidation
supervised by a court. The procedure includes notice to the Director Appointed
Under the Act.
Subsections 219(10) to (12) permit a revocation of a certificate of intent
to dissolve and outline the procedures to be followed.
Subsections 219(13) to (16) are technical formalities associated with the
dissolution of a corporation.
Present Law
Canada Corporations Act:
32. (1) The charter of a company may be surrendered if the company proves
to the satisfaction of the Minister
(a) that the company has no assets and that,
if it had any assets immediately prior to the application for leave to
surrender its charter, such assets have been divided rateably among its
shareholders or members, and either, |
| |
(i) that it has no debts, liabilities or other obligations,
or
(ii) that the debts, liabilities or other obligations of the company have been
duly provided for or protected or that the creditors of the company or other
persons having interests in such debts, liabilities or other obligations consent;
and |
(b) that the company has given notice of the
application for leave to surrender by publishing the same once in the
Canada Gazette and once in a newspaper published at or as near as may
be to the place where the company has its head office. |
(2) Where an application to surrender a charter is made by a company that
has not gone into bona fide operation or that has been inoperative for three
or more consecutive years, if the circumstances mentioned in paragraph (1)(a)
are proved to the satisfaction of the Minister, the Minister shall publish
a notice of such application in the Canada Gazette and, unless an objection
to the surrender is received by him within one year after such publication
of the notice, he may accept the application for the surrender of the charter.
(3) Where the Minister has accepted the surrender of a charter upon due compliance
with subsection (1) or subsection (2), as the case may be, the Minister may
direct the cancellation of the charter of the company and fix a date upon and
from which the company shall be dissolved, and the company is thereby and thereupon
dissolved accordingly.
(4) No fee shall be charged in respect of a surrender under this section of
the charter of a company described in subsection (2).
Top
Bill Clause No. 220
Section No. 220
Topic: Liquidation and Dissolution
Proposed Wording
220. (1) Subject to subsections (2) and (3), the Director may
(a) dissolve a corporation by issuing a certificate
of dissolution under this section if the corporation |
| |
(i) has not commenced its activities within the prescribed
period after the date shown in its certificate of incorporation,
(ii) has not carried on its activities for the prescribed period,
(iii) is in default for a prescribed period in sending to the Director any
fee, notice or other document required by this Act, or
(iv) does not have any directors or is in the situation described in subsection
131(4); or |
(b) apply to a court for an order dissolving
the corporation, in which case section 225 applies. |
(2) The Director shall not dissolve a corporation under this section until
the Director has
(a) given notice of the decision to dissolve the corporation
to the corporation and to each director; and
(b) published notice of that decision in a publication generally available
to the public. |
(3) Unless cause to the contrary has been shown or an order has been made
by a court under section 256, the Director may, after the expiry of the prescribed
period, issue a certificate of dissolution in the form that the Director fixes.
(4) Despite anything in this section, the Director may dissolve a corporation
by issuing a certificate of dissolution if the required fee for the issuance
of a certificate of incorporation has not been paid.
(5) The corporation ceases to exist on the date shown in the certificate of
dissolution.
Rationale
This section establishes the instances where the Director Appointed Under the
Act may dissolve a corporation or apply to the court for a dissolution order.
Subsection 220(1) states that the Director can dissolve a corporation where
it has not commenced its activities within a prescribed time period (proposed
at 3 years); has not been operating for a prescribed time period (proposed at 3 consecutive years); has failed to submit
its annual return for the prescribed period (proposed at 1 year), and where
required, has failed to submit its financial statements; or had no directors.
The Director can also apply to the court for a dissolution order.
Subsection 220(2) sets out the procedure the Director must follow when pursuing
a dissolution under subsection 220(1), including the provision of notice to
the corporation and each director, and to the general public.
Subsection 220(3) permits the Director to issue a certificate of dissolution
after a prescribed time period (proposed at 120 days after notice is given
under paragraph 220(2)(a)) provided that there is no court order prohibiting
the issuance of the certificate or there is no cause to the contrary.
Subsection 220(4) permits the Director to immediately issue a certificate
of dissolution if the required incorporation fee has not been paid.
Subsection 220(5) is self-explanatory.
Present Law
Canada Corporations Act:
31. (1) Where a company does not go into actual bona fide operation
within three years after incorporation or for three consecutive years does
not use its corporate powers its charter shall be and become forfeited.
(2) In any action or proceeding where such non-user is alleged, proof of user
lies upon the company.
(3) The Minister may upon application of any person interested revive any
charter so forfeited upon compliance with such conditions as he may prescribes.
133. [...]
(9) Where a company has for two consecutive years failed to file in the Department
the summary required under subsection (1), the Minister may, notwithstanding
paragraph 150(1)(c), give notice to the company that an order dissolving the
company will be issued unless within one year after the publication of the
notice in the Canada Gazette the company files a summary in respect of those
two years.
[...]
Top
Bill Clause No. 221
Section No. 221
Topic: Liquidation and Dissolution
Proposed Wording
221. (1) The Director or any interested person may apply to
a court for an order dissolving a corporation if the corporation has
(a) failed for the prescribed period to comply with the requirements
of this Act with respect to the holding of annual meetings of members;
(b) contravened subsection 17(2) or section 22, 23, 174 or 175; or
(c) procured any certificate under this Act by misrepresentation. |
(2) An interested person who makes an application under this section shall
give the Director notice of the application, and the Director is entitled to
appear and be heard in person or by counsel.
(3) On an application under this section or section 220, the court may order
that the corporation be dissolved or that the corporation be liquidated and
dissolved under the supervision of the court and may make any other order that
it thinks fit.
(4) On receipt of an order under this section or section 220 or 222, the Director
shall
(a) if the order is to dissolve the corporation, issue a
certificate of dissolution in the form that the Director fixes; or
(b) if the order is to liquidate and dissolve the corporation under
the supervision of the court, issue a certificate of intent to dissolve in
the form that the Director fixes and publish notice of the order in a publication
generally available to the public. |
(5) The corporation ceases to exist on the date shown in the certificate of
dissolution.
Rationale
This section addresses other circumstances under which a corporation can be dissolved
by a court order upon application by the Director Appointed Under the Act or
any interested party. It provides increased protection to the members of a corporation
and the public. A court may order a corporation to dissolve if the corporation
is acting in a manner that is either contrary to its articles, contrary to the
requirements of the Act with respect to holding annual meetings, access to corporate
records and financial statements, or if the corporation has procured any certificate
under this Act by misrepresentation.
Section 221(1) permits any interested party, including the Director, to make
an application to a court for an order dissolving a corporation in the circumstances
enumerated.
Subsection 221(2) ensures the Director is informed of, and can intervene in,
a court proceeding to dissolve a corporation initiated by an interested party.
Subsection 221(3) allows a court to order a corporation to be dissolved or
liquidated or can make any other order it thinks fit. The requirement for an
application to a court ensures that the corporation receives the benefit of
due process, thereby safeguarding the interests of the members.
Subsection 221(4) provides for the technical and administrative steps to be
followed by the Director in the event a court makes an order to dissolve or
liquidate a corporation.
Subsection 221(5) is self-explanatory.
Present Law
Canada Corporations Act:
5.6 (1) Where a company
(a) carries on a business that is not within the scope of
the objects set forth in its letters patent or supplementary letters
patent,
(b) exercises or professes to exercise any powers that are not truly
ancillary or reasonably incidental to the objects set forth in its letters
patent or supplementary letters patent,
(c) exercises or professes to exercise any powers expressly excluded
by its letters patent or supplementary letters patent, |
the company is liable to be wound up and dissolved under the Winding-up Act
upon the application of the Attorney General of Canada to a court of competent
jurisdiction for an order that the company be wound up under the Act, which
application may be made upon receipt by the Attorney General of Canada of a
certificate of the Minister setting forth his opinion that any of the circumstances
described in paragraphs (a) to (c) apply to that company.
(2) In any application to the court under subsection (1) the court shall determine
whether the costs of the winding-up shall be borne by the company or personally
by any or all of the directors of the company who participated or acquiesced
in the carrying on of any business or the exercise or the professing of the
exercise of any powers described in subsection (1).
150. (1) Notwithstanding any other provisions in this Act where a company
(a) fails for two or more consecutive years to hold an annual
meeting of its shareholders,
(b) fails to comply with the requirements of section 128, or
(c) defaults in complying for six months or more with any requirement
of section 133, |
the company is liable to be wound up and dissolved under the Winding-up Act
upon the application of the Attorney General of Canada to a court of competent
jurisdiction for an order that the company be wound up under that Act, which
application may be made upon receipt by the Attorney General of Canada of a
certificate of the Minister setting forth his opinion that any of the circumstances
described in paragraphs (a) to (c) apply to that company.
(2) In any application to the court under subsection (1), the court shall
determine whether the costs of the winding-up shall be borne by the company
or personally by any or all of the directors of the company who were knowingly
responsible for the company's failure or default as described in subsection
(1).
Top
Bill Clause No. 222
Section No. 222
Topic: Liquidation and Dissolution
Proposed Wording
222. (1) On the application of a member, a court may order
the liquidation and dissolution of a corporation or any of its affiliated corporations
(a) if the court is satisfied that in respect
of the corporation or any of its affiliates, any of the following is
oppressive or unfairly prejudicial to, or unfairly disregards the interests
of, any shareholder, creditor, director, officer or member, or causes
such a result: |
| |
(i) any act or omission of the corporation or any of its
affiliates,
(ii) the conduct of the activities or affairs of the corporation or any of
its affiliates, or
(iii) the exercise of the powers of the directors of the corporation or any
of its affiliates; or |
(b) if the court is satisfied that |
| |
(i) a unanimous member agreement entitles a complaining member to
demand dissolution of the corporation after the occurrence of a specified
event and that event has occurred, or
(ii) it is just and equitable that the corporation should be liquidated and
dissolved. |
(2) The court may not make an order under paragraph (1)(a) if the
court is satisfied that
(a) the corporation is a religious corporation;
(b) the act or omission, the conduct or the exercise of powers is
based on a tenet of faith held by the members of the corporation; and
(c) it was reasonable to base the act or omission, the conduct or
the exercise of powers on the tenet of faith, having regard to the activities
of the corporation. |
(3) On an application under this section, the court may make any order under
this section or section 251 that it thinks fit.
(4) Section 252 applies to an application under this section.
Rationale
This section sets out additional circumstances under which a court may order
a corporation to dissolve or liquidate upon an application from a member.
Subsection 222(1) provides a member with an opportunity to seek, through the
courts, the dissolution of a corporation if the corporation undertook any of
the specified actions in a manner that a court is satisfied the actions oppress,
unfairly prejudice or unfairly disregard the interests of any shareholder,
creditor, director, officer or member to such a degree that dissolution is
warranted. The portion of this section regarding applications for dissolution
pursuant to a unanimous members agreement is self-explanatory.
Subsection 222(2) outlines the faith-based defence for religious organizations.
It only applies to paragraph 222(1)(a) which is identical to the oppression
remedy in section 251. It provides that if the corporation can satisfy a court
that it is a religious corporation, that the action complained of was based
on a tenet of faith held by the members of the corporation and that it was
reasonable to base such action on religious grounds, the court can not issue
an order for the dissolution of the corporation.
Subsection 222(3) is self-explanatory.
Subsection 222(4) provides that the approval of the members of the corporation
is not sufficient to render the action invalid but shall be taken into account
by the court.
Present Law
None.
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Bill Clause No. 223
Section No. 223
Topic: Liquidation and Dissolution
Proposed Wording
223. (1) An application to a court to supervise a voluntary liquidation and
dissolution under subsection 219(8) shall state the reasons, verified by
an affidavit of the applicant, why the court should supervise the liquidation
and dissolution.
(2) If a court makes an order applied for under subsection 219(8), the liquidation
and dissolution of the corporation shall continue under the supervision of
the court in accordance with this Act.
Rationale
This section sets out the procedure to be followed where the Director Appointed
Under the Act or any interested person makes an application for court supervision
of the liquidation of a corporation.
Present Law
None.
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Bill Clause No. 224
Section No. 224
Topic: Liquidation and Dissolution
Proposed Wording
224. (1) An application to a court under subsection 222(1) shall state the
reasons, verified by an affidavit of the applicant, why the corporation should
be liquidated and dissolved.
(2) On the application, the court may make an order requiring the corporation
and any interested person to show cause, at a time and place specified in the
order, within the prescribed period after the date of the order, why the corporation
should not be liquidated and dissolved.
(3) On the application, the court may order the directors and officers of
the corporation to furnish the court with all material information known to
or reasonably ascertainable by them, including
(a) financial statements of the corporation;
(b) the name and address of each member of the corporation; and
(c) the name and address of each known creditor or claimant, including
any creditor or claimant with unliquidated, future or contingent claims, and
any person with whom the corporation has a contract. |
(4) A copy of an order made under subsection (2) shall be
(a) published as directed in the order, at a prescribed
frequency, before the time appointed for the hearing, in a newspaper
published or distributed in the place where the corporation has its registered
office; and
(b) served on the Director and each person named in the order. |
(5) Publication and service of an order under this section shall be effected
by the corporation or by any other person, and in any manner, that the court
orders.
Rationale
This section sets out procedural and notice requirements regarding court applications
for the dissolution of a corporation. A court may, on the application of a member,
order a corporation to dissolve if the corporation undertook any of the specified
actions in a manner that a court is satisfied the actions oppress, unfairly prejudice
or unfairly disregard the interests of any shareholder, creditor, director, officer
or member to such a degree that dissolution is warranted.
Present Law
None.
Top
Bill Clause No. 225
Section No. 225
Topic: Liquidation and Dissolution
Proposed Wording
225. In connection with the dissolution or the liquidation and dissolution
of a corporation, the court may, if it is satisfied that the corporation
is able to pay or adequately provide for the discharge of all its obligations,
make
(a) an order to liquidate;
(b) an order appointing or replacing a liquidator, with or without
security, and fixing the remuneration of the liquidator or their replacement;
(c) an order appointing or replacing inspectors or referees and specifying
the powers and fixing the remuneration of the inspectors or referees or their
replacements;
(d) an order determining the notice to be given to any interested
person, or dispensing with notice to any person;
(e) an order determining the validity of any claims made against the
corporation;
(f) an order, at any stage of the proceedings, restraining the directors
and officers
|
| |
(i) from exercising any of their powers, or
(ii) from collecting or receiving any debt or other property of the corporation
and from paying out or transferring any property of the corporation, except
as permitted by the court;
|
(g) an order determining and enforcing |
| |
(i) the duty of any present or former director, officer or member
to the corporation, or
(ii) the liability of such a person for an obligation of the corporation; |
(h) an order approving the payment, satisfaction
or settlement of claims against the corporation and the retention of
assets for that purpose, and determining the adequacy of provisions for
the payment or discharge of obligations of the corporation, whether liquidated,
unliquidated, future or contingent;
(i) an order determining the use of documents and records of the corporation
or directing their disposition, including by destruction;
(j) on the application of a creditor, the inspectors or the liquidator,
an order giving directions on any matter arising in the liquidation;
(k) an order specifying to whom the assets of the corporation will
be distributed;
(l) after notice has been given to all interested parties, an order
relieving a liquidator from any omission or default on any terms that the court
thinks fit and confirming any act of the liquidator;
(m) subject to sections 231 to 234, an order approving any proposed
interim or final distribution of money or other property;
(n) an order disposing of any property belonging to creditors or members
who cannot be found;
(o) on the application of any director, officer,
member or creditor or the liquidator, |
| |
(i) an order staying the liquidation on any terms and conditions that
the court thinks fit,
(ii) an order continuing or discontinuing the liquidation proceedings, or
(iii) an order to the liquidator to restore to the corporation all its remaining
property; |
(p) after the liquidator has rendered a final
account to the court, an order dissolving the corporation; and
(q) any other order that it thinks fit. |
Rationale
This section sets out the powers of the court when an order for the liquidation
of a corporation is made. The court can make any order it thinks fit. The list
in paragraphs (a) to (p) are merely examples and are deliberately
broad to ensure that the court has sufficient discretion. The court's powers,
however, are predicated on the fact that the court must be satisfied that the
corporation is capable of adequately discharging all of its obligations.
Present Law
None.
Top
Bill Clause No. 226
Section No. 226
Topic: Liquidation and Dissolution
Proposed Wording
226. The liquidation of a corporation commences when a court makes a liquidation
order.
Rationale
This section is self-explanatory.
Present Law
None.
Top
Bill Clause No. 227
Section No. 227
Topic: Liquidation and Dissolution
Proposed Wording
227. (1) If a court makes an order for the liquidation of a corporation,
(a) the corporation continues in existence but shall cease
to carry on activities, except activities that are, in the opinion of
the liquidator, required for an orderly liquidation; and
(b) the powers of the directors and members cease and vest in the
liquidator, except as specifically authorized by the court. |
(2) The liquidator may delegate any powers vested in the liquidator by paragraph
(1)(b) to the directors or members.
Rationale
This section deals with the effects of a court ordered liquidation of a corporation
and the powers of the liquidator.
Under section 227, where a court has ordered the liquidation of a corporation,
the corporation remains in existence but must cease its operations except where
the liquidator determines it is necessary for the proper liquidation of the
corporation (subsection 227(1)). Moreover, following an order for the liquidation
of a corporation, it is the liquidator who will be in charge, not the directors
or members of that corporation. However, the court may authorize, or the liquidator
may delegate, certain duties to the directors or members, but it is the liquidator
who will have overall control.
Present Law
None.
Top
Bill Clause No. 228
Section No. 228
Topic: Liquidation and Dissolution
Proposed Wording
228. (1) When making an order for the liquidation of a corporation or at any
time after making the order, the court may appoint any person, including
a director, an officer or a member of the corporation or any other body corporate,
as liquidator of the corporation.
(2) If an order for the liquidation of a corporation has been made and the
office of liquidator is or becomes vacant, the property of the corporation
is under the control of the court until the office of liquidator is filled.
Rationale
This section deals with the appointment of a liquidator by a court.
Present Law
None.
Top
Bill Clause No. 229
Section No. 229
Topic: Liquidation and Dissolution
Proposed Wording
229. A liquidator shall
(a) immediately after appointment give notice
of the appointment to the Director and to each claimant and creditor
known to the liquidator;
(b) in each province where the corporation carries on activities,
provide, without delay, notice in accordance with the regulations of the appointment |
| |
(i) requiring any person indebted to the corporation to
render an account and pay to the liquidator at the time and place specified
any amount owing,
(ii) requiring any person possessing property of the corporation to deliver
it to the liquidator at the time and place specified, and
(iii) requiring any person having a claim against the corporation, whether
liquidated, unliquidated, future or contingent, to present particulars of the
claim in writing to the liquidator within the prescribed period;
|
(c) take into custody and control the property
of the corporation;
(d) open and maintain a trust account for the money of the corporation;
(e) keep accounts of the money of the corporation received and paid
out by the liquidator;
(f) maintain separate lists of the members, creditors and other persons
having claims against the corporation;
(g) if at any time the liquidator determines that the corporation
is unable to pay or adequately provide for the discharge of its obligations,
apply to the court for directions;
(h) deliver to the court and to the Director, at least once in the
prescribed period after appointment or more often as the court may require,
financial statements of the corporation in the form required by section 172
or in any other form that the liquidator may think proper or as the court may
require; and |
| |
(i) after the final accounts are approved by the court, distribute
any remaining property of the corporation in accordance with sections
232 to 234. |
Rationale
This section establishes the duties and responsibilities of the liquidator.
These duties include, among others, provisions as to whom the liquidator
must provide notice and what that notice must contain, the means by which
the property of the corporation is to be controlled, the determination of
who has claims against the property of the corporation and what must be provided
to the court and the Director Appointed Under the Act on the conclusion of
the liquidation process.
Present Law
None.
Top
Bill Clause No. 230
Section No. 230
Topic: Liquidation and Dissolution
Proposed Wording
230. (1) A liquidator may
(a) retain legal counsel, accountants, engineers, appraisers
and other professional advisers;
(b) bring, defend or take part in any civil, criminal or administrative
action or proceeding in the name of and on behalf of the corporation;
(c) carry on the activities of the corporation as required for an
orderly liquidation;
(d) sell by public auction or private sale any property of the corporation;
(e) do all acts and execute any documents in the name of and on behalf
of the corporation;
(f) borrow money on the security of the property of the corporation;
(g) settle any claims by or against the corporation; and
(h) do all other things necessary for the liquidation of the corporation
and distribution of its property. |
(2) A liquidator is not liable if the liquidator exercised the care, diligence
and skill that a reasonably prudent person would have exercised in comparable
circumstances, including reliance in good faith on
(a) financial statements of the corporation represented to
the liquidator by an officer of the corporation or in a written report
of the public accountant of the corporation fairly to reflect the financial
condition of the corporation; or
(b) a report of a person whose profession lends credibility to a statement
made by that person.
|
(3) Despite anything in federal or provincial law, a liquidator is not liable,
in that capacity, for any environmental condition or environmental damage,
unless the condition arose or the damage occurred after the liquidator's appointment
as a result of the liquidator's grossnegligence or wilful misconduct or, in
the Province of Quebec, the liquidator's gross or intentional fault.
(4) On the application of a liquidator, the court may – if it is satisfied
that there are reasonable grounds to believe that any person has in their possession
or under their control, or has concealed, withheld or misappropriated, any
property of the corporation – make an order requiring that person to
appear before the court at the time and place designated in the order and to
be examined.
(5) If the court is satisfied, on the examination, that the person has concealed,
withheld or misappropriated property of the corporation, the court may order
that person to restore it or pay compensation to the liquidator.
Rationale
This section deals with the powers and liabilities of liquidators.
Subsection 230(1) provides broad powers to a liquidator so that he/she properly
fulfills their assigned duties.
As the liquidator is essentially in control of the corporation, subsection
230(2) provides a due diligence defence like that provided to directors and
officers. This defence states that the liquidator will not be liable if all
care, diligence and skill that would be exercised by a reasonably prudent person
in similar circumstances is exercised.
Subsection 230(3) relieves a liquidator of liability in the event of environmental
damage unless it was the result of the liquidator's willful misconduct or gross
negligence or, in the Province of Quebec, gross or intentional fault.
Subsection 230(4) permits a liquidator to apply to court for an examination
of a person believed to have property or who is believed to have withheld,
concealed or misappropriated property belonging to the corporation.
Subsection 230(5) allows the court to order the return of such property or
payment of compensation.
Present Law
None.
Top
Bill Clause No. 231
Section No. 231
Topic: Liquidation and Dissolution
Proposed Wording
231. (1) A liquidator shall pay the costs of liquidation out of the property
of the corporation and shall pay, or make adequate provision for, all claims
against the corporation.
(2) Within the prescribed period after appointment, and after paying, or making
adequate provision for, all claims against the corporation, the liquidator
shall apply to the court
(a) for approval of the final accounts and for an order permitting
the liquidator to distribute in money or in kind the remaining property
of the corporation in accordance with sections 232 to 234; or
(b) for an extension of time, setting out the reasons for the extension. |
(3) On the application of a member of the corporation, the court may, if a
liquidator fails to make the application required by subsection (2), order
the liquidator to show cause why a final accounting and distribution should
not be made.
(4) A liquidator shall give notice of their intention to make an application
under subsection (2) to the Director, to each inspector appointed under paragraph
225(c), to each member and to any person who provided security for
the liquidation, and shall publish the notice in a newspaper published or distributed
in the place where the corporation has its registered office, or as otherwise
directed by the court.
(5) If the court approves the final accounts rendered by a liquidator, the
court shall make an order
(a) directing the Director to issue a certificate of dissolution;
(b) giving directions regarding the custody of documents and records
of the corporation or their disposition, including by destruction; and
(c) discharging the liquidator. |
(6) The liquidator discharged under subsection (5) shall immediately send
a certified copy of the order referred to in that subsection to the Director.
(7) On receipt of a certified copy of the order referred to in subsection
(5), the Director shall issue a certificate of dissolution in accordance with
section 274.
(8) The corporation ceases to exist on the date shown in the certificate of
dissolution.
Rationale
This section establishes a liquidator's duties with respect to the finalization
of the liquidation process.
Subsection 231(1) provides that it is the liquidator's responsibility to ensure
all costs of the liquidation are paid and that these costs are to be paid out
of the property of the corporation. It also states that the liquidator is responsible
for paying, or making appropriate arrangements for the payment of, all claims
against the corporation.
Subsection 231(2) provides that the liquidator must, at the end of the prescribed
period (proposed at 1 year), apply to court either for approval of the final
accounts or for an extension of time. If the liquidator fails to do so, a member
may make the application under subsection 231(3).
Subsection (4) requires the liquidator to provide notice to various interested
parties of his/her intention to make an application under subsection 231(2).
Subsection (5) identifies the orders to be made by a court at the conclusion
of the liquidation process.
Subsections (6) to (8) are technical formalities associated with the liquidation
of a corporation.
Present Law
Canada Corporations Act:
150. [...]
(2) In any application to the court under subsection (1), the court shall
determine whether the costs of the winding-up shall be borne by the company
or personally by any or all of the directors of the company who were knowingly
responsible for the company's failure or default as described in subsection
(1).
Top
Bill Clause No. 232
Section No. 232
Topic: Liquidation and Dissolution
Proposed Wording
232. If a person has transferred property to a corporation subject to the condition
that it be returned on the dissolution of the corporation, the liquidator
shall transfer that property to that person.
Rationale
When a person gives property, such as a piece of land, to a not-for-profit corporation
for a specific purpose, it is common for the gift to stipulate that once the
purpose is fulfilled or the corporations ceases to do the purpose, the property
be returned to the person who gave the gift. For example, a person may give a
piece of property on a lake to a church for the purpose of running a summer camp
for underprivileged children. When the church is dissolved or ceases to run the
camp, the land is to be returned to the gifter. This section ensures that sections
233 and 234 are not used to negate that part of the gift.
Present Law
None.
Top
Bill Clause No. 233
Section No. 233
Topic: Liquidation and Dissolution
Proposed Wording
233. (1) This section applies to
(a) a corporation that is a registered charity
within the meaning of subsection 248(1) of the Income Tax Act;
(b) a soliciting corporation; and
(c) a corporation that has, within the prescribed period, |
| |
(i) requested donations or gifts of money or other property
from the public,
(ii) received a grant or similar financial assistance from the federal government
or a provincial or municipal government or an agency of any of those governments,
or
(iii) accepted money or other property from a corporation or other entity that
has made a request referred to in subparagraph (i) or has received assistance
referred to in subparagraph (ii). |
(2) The articles of a corporation shall provide that any property remaining
on dissolution, other than property referred to in section 232, shall be distributed
to one or more qualified donees, within the meaning of subsection 248(1) of
the Income Tax Act.
(3) If the articles of a corporation do not provide for distribution to one
or more qualified donees, the liquidator shall apply for an order under section
225 for the distribution of the remaining property of the corporation, other
than the property referred to in section 232, to one or more qualified donees.
(4) The liquidator shall give notice to the Director of the application, and
the Director may appear and be heard in person or by counsel.
Rationale
This section deals with the distribution of assets upon the dissolution of corporations
which are registered charities and soliciting corporations. It is designed to
ensure that the public interest is protected when corporations that seek funds
from the public or a government are dissolved.
Subsection 233(1) defines which corporations are subject to this section.
Subsections (2) and (3) ensure that, on dissolution, soliciting corporations
and registered charities distribute their remaining property or monies, other
than property transferred to the corporation on the condition that it be returned
to the donor, to "qualified donees" as defined by the Income
Tax Act. This ensures that any remaining money or property of these corporations
goes to corporate bodies which are engaged in similar work.
Subsection 233(4) is designed to allow the Director Appointed Under the Act,
to be notified of, and intervene in, court applications regarding the dissolution
of registered charities and soliciting corporations.
Present Law
None.
Top
Bill Clause No. 234
Section No. 234
Topic: Liquidation and Dissolution
Proposed Wording
234. (1) If the articles of a corporation, other than a corporation referred
to in subsection 233(1), provide for the distribution of the remaining property
of the corporation, other than the property referred to in section 232, the
liquidator shall distribute the remaining property in accordance with the
articles.
(2) If the articles of a corporation, other than a corporation referred to
in subsection 233(1), do not provide for the distribution of the remaining
property of the corporation, other than the property referred to in section
232, the liquidator shall divide the remaining property into as many equal
shares as there are memberships in the corporation and distribute one share
to the holder of each membership.
Rationale
This section deals with the distribution of assets upon the dissolution of a
corporation that is not a soliciting corporation and is not a registered charity.
Subsection 234(1) permits non-soliciting/non-charity corporations to distribute
their assets according to their articles.
Subsection 234(2) provides a default provision in the event that the articles
of a non-soliciting/non-charity corporation do not provide for the distribution
of assets on dissolution.
Present Law
None.
Top
Bill Clause No. 235
Section No. 235
Topic: Liquidation and Dissolution
Proposed Wording
235. (1) If in the course of liquidation of a corporation the members resolve
or the liquidator proposes to do any of the following, a member may apply
to the court for an order requiring the distribution of the property of the
corporation to be in money:
(a) exchange all or substantially all of the property of
the corporation for securities, debt obligations or memberships of another
body corporate that are to be distributed to the members; or
(b) distribute all or part of the property of the corporation to the
members in kind. |
(2) On an application under subsection (1), the court may order all of the
property of the corporation to be converted into and distributed in money.
Rationale
This section permits a member to apply to a court for an order requiring, upon
liquidation, that the distribution of the property of the corporation be
in money.
Present Law
Canada Corporations Act:
33. Notwithstanding the dissolution of a company under section 32, the shareholders
of the company among whom its assets have been divided remain, to the amount
received by them respectively upon such division, jointly and severally liable
to the creditors of the company; and an action may be brought in any court
of competent jurisdiction to enforce such liability, but the action shall be
commenced within and not after one year from the date of such dissolution of
the company.
Top
Bill Clause No. 236
Section No. 236
Topic: Liquidation and Dissolution
Proposed Wording
236. A person who has been granted custody of the documents and records of
a dissolved corporation remains liable to produce those documents and records
until the expiration of the prescribed period after the corporation's dissolution
or of any shorter period fixed by an order made under subsection 231(5).
Rationale
This section ensures that corporate records are kept for an appropriate period
following the dissolution of a corporation. The prescribed period is proposed
at 6 years.
Present Law
None.
Top
Bill Clause No. 237
Section No. 237
Topic: Liquidation and Dissolution
Proposed Wording
237. (1) In this section, "member" includes the heirs and personal
representatives of a member.
(2) Despite the dissolution of a corporation under this Act,
(a) any civil, criminal or administrative action or proceeding
commenced by or against the dissolved corporation before its dissolution
may be continued as if the corporation had not been dissolved;
(b) any civil, criminal or administrative action or proceeding may
be brought against the dissolved corporation within two years after its dissolution
as if the corporation had not been dissolved; and
(c) any property that would have been available to satisfy any judgment
or order if the corporation had not been dissolved remains available for that
purpose. |
(3) Service of a document on a corporation after its dissolution may be effected
by serving the document on a person whose name appears on the last notice that
was sent by the corporation in accordance with section 129 or 135 and received
by the Director.
(4) Service of a document on a company to which the Canada Corporations
Act, chapter C-32 of the Revised Statutes of Canada, 1970, applied and
that has been dissolved under subsection 295(3) may be effected by serving
the document on a person shown as a director in the last annual summary filed
by the company under that Act.
(5) Despite the dissolution of a corporation under this Act, a member to whom
any of its property has been distributed is liable to any person claiming under
subsection (2) to the extent of the amount received by that member on that
distribution, and an action to enforce that liability may be brought within
two years after the date of the dissolution of the corporation.
(6) A court may order an action referred to in subsection (5) to be brought
against the persons who were members as a class or group, subject to any conditions
that the court thinks fit and, if the plaintiff establishes a claim, the court
may refer the proceedings to a referee or other officer of the court, who may
(a) add as a party to the proceedings each person who was
a member found by the plaintiff;
(b) determine, subject to subsection (5), the amount that each person
who was a member shall contribute towards satisfaction of the plaintiff's claim;
and
(c) direct payment of the amounts so determined. |
Rationale
This section states that actions brought against a corporation endure even if
the corporation is dissolved. It is designed to prevent the dissolution of a
corporation being initiated simply to avoid litigation and will ensure that,
even in the event of a legitimate dissolution, parties are not deprived of their
legal rights.
Subsection 237(1) is self-explanatory.
Subsection 237(2) states that legal actions commenced before a corporation
is dissolved can continue and that actions can be brought against the corporation
within 2 years of its dissolution. Moreover, it ensures that any of the corporation's
property prior to its dissolution is available to satisfy any order or judgement
rendered against the corporation.
Subsections 237(3) and (4) provide instructions as to who may be served with
documents in instances where legal action is taken against a dissolved corporation.
Subsection 237(5) outlines the liability of members where legal actions are
brought against a dissolved corporation that distributed money to its members.
The inclusion of a 2-year limitation period ensures that members are not liable
for an unreasonably extended period.
Subsection 237(6) addresses the powers of a court to determine the appropriate
parties to an action pursuant to subsection 237(5) and the appropriate proportion
to be paid by each party in the event of a judgement.
Present Law
Canada Corporations Act:
33. Notwithstanding the dissolution of a company under section 32, the shareholders
of the company among whom its assets have been divided remain, to the amount
received by them respectively upon such division, jointly and severally liable
to the creditors of the company; and an action may be brought in any court
of competent jurisdiction to enforce such liability, but the action shall be
commenced within and not after one year from the date of such dissolution of
the company.
Top
Bill Clause No. 238
Section No. 238
Topic: Liquidation and Dissolution
Proposed Wording
238. (1) On the dissolution of a corporation under this Act, the portion of
the property distributable to a creditor or member who cannot be found shall
be converted into money and paid to the Receiver General.
(2) If payment is made to the Receiver General under subsection (1) with respect
to a creditor or member, the corporation or liquidator shall forward to the
Director with the payment all documents, records and registers in the possession
of the corporation or liquidator that relate to the entitlement of the creditor
or member.
(3) A payment under subsection (1) is deemed to be in satisfaction of a debt
or claim of the creditor or member.
(4) A person who establishes an entitlement to any money paid to the Receiver
General under this Act shall be paid by the Receiver General an equivalent
amount out of the Consolidated Revenue Fund.
Rationale
This section provides a means to discharge corporate obligations and liabilities
on dissolution where a creditor or member can not be located. This will permit
the prompt dissolution of the corporation in question.
Subsection 238(1) states that, where a member or creditor can not be found,
any property owed to these individuals is to be converted to money and paid
to the Receiver General.
Subsection 238(2) requires the corporation or the liquidator to send to the
Director Appointed Under the Act all information related to the member or creditor
who is owed money/property and who can not be found.
Subsection 238(3) provides that once the money has been paid to the Receiver
General the corporation is no longer liable for that claim. The creditor or
member is still able to receive the money he/she is entitled to, but only by
applying to the Receiver General under subsection (4).
Subsection 238(4) provides a means for any member or creditor to recover funds
owed to them in situations where they previously could not be located and money
was paid to the Receiver General.
Present Law
None.
Top
Bill Clause No. 239
Section No. 239
Topic: Liquidation and Dissolution
Proposed Wording
239. (1) Subject to subsection 237(2) and section 238, property of a dissolved
corporation that has not been disposed of at the date of its dissolution
under this Act vests in Her Majesty in right of Canada.
(2) If a dissolved corporation is revived as a corporation under section 217,
any property, other than money, that vested in Her Majesty under subsection
(1) and that has not been disposed of shall be returned to the corporation
and there shall be paid to the corporation out of the Consolidated Revenue
Fund
(a) an amount equal to any money received by
Her Majesty under subsection (1); and
(b) if property other than money vested in Her Majesty under subsection
(1) and that property has been disposed of, an amount equal to the lesser of |
| |
(i) the value of that property at the date it vested in
Her Majesty, and
(ii) the amount realized by Her Majesty from the disposition of that property. |
Rationale
This section provides a means of disposing of unclaimed property held by a corporation
now dissolved.
Subsection 239(1) states that unclaimed property held by a dissolved corporation
becomes the property of the Government of Canada. However, there are two exceptions:
a judgement rendered against the corporation following its dissolution pursuant
to subsection 237(2); and a claim under section 238 by a creditor or member
not located at the time of dissolution.
Subsection 239(2) addresses the treatment of unclaimed property should the
company be revived.
Present Law
None.
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Corporate and Insolvency Law Policy
