ONTARIO BUSINESS CORPORATIONS ACT
Important Notice: The following statute is subject to amendment and legislative changes, so particular attention should be directed to the date of the statute, with reference being made to the official government website for the most current version of a statute at www.e-laws.gov.on.ca.
SALE OF RESTRICTED SHARES
Sale of restricted shares by corporation
45. (1) A corporation that has restrictions on the issue, transfer or ownership of its shares of any class or series may, for any of the purposes set out in clauses (a) to (c), sell, under the conditions and after giving the notice that may be prescribed, as if it were the owner of the shares, any of those restricted shares that are owned, or that the directors determine in the manner that may be prescribed may be owned, contrary to the restrictions in order to,
(a) assist the corporation or any of its affiliates or associates to qualify under the Securities Act or similar legislation of a province or territory to obtain, hold or renew a registration, or to qualify for membership in a stock exchange in Ontario recognized as such by the Commission, by reason of limiting to a specified level the ownership of its shares by any prescribed class of persons;
(b) assist the corporation or any of its affiliates or associates to qualify under any prescribed law of Canada or of a province or territory to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control; or
(c) assist the corporation to comply with a prescribed law. 2006, c. 34, Sched. B, s. 12.
Obligations of directors in sale
(2) Where shares are to be sold by a corporation under subsection (1), the directors of the corporation shall select the shares for sale in good faith and in a manner that is not unfairly prejudicial to, and does not unfairly disregard the interests of, the holders of the shares in the restricted class or series taken as a whole. R.S.O. 1990, c. B.16, s. 45 (2).
Effect of sale
(3) Where shares are sold by a corporation under subsection (1), the owner of the shares immediately prior to the sale shall, by that sale, be divested of the owner’s interest in the shares, and the person who, but for the sale, would be the registered holder of the shares or a person who satisfies the corporation that, but for the sale, such person could properly be treated as the registered holder of the shares under section 67 shall, from the time of the sale, be entitled to receive only the net proceeds of the sale, together with any income earned thereon from the beginning of the month next following the date of the receipt by the corporation of the proceeds of the sale, less any taxes thereon and any costs of administration of a trust fund constituted under subsection (5) in relation thereto. R.S.O. 1990, c. B.16, s. 45 (3).
s. 67 (4-6) apply
(4) Subsections 67 (4), (5) and (6) apply in respect of the person who is entitled under subsection (3) to receive the proceeds of a sale of shares under subsection (1) as if the proceeds were a security and the person were a registered holder of the security. R.S.O. 1990, c. B.16, s. 45 (4).
Proceeds of sale to be trust fund
(5) The proceeds of a sale by a corporation under subsection (1) constitute a trust fund in the hands of the corporation for the benefit of the person entitled under subsection (3) to receive the proceeds of the sale, and any such trust fund may be commingled by the corporation with other such trust funds and shall be invested in such manner as may be prescribed. R.S.O. 1990, c. B.16, s. 45 (5).
Cost of administration
(6) Reasonable costs of administration of a trust fund referred to in subsection (5) may be deducted from the trust fund and any income earned thereon. R.S.O. 1990, c. B.16, s. 45 (6).
Appointment of trust corporation
(7) Subject to this section, a corporation may transfer any trust fund referred to in subsection (5) and the administration thereof, to a trust corporation in Canada registered as such under the laws of Canada, a province or a territory, and the corporation is thereupon discharged of all further liability in respect of the trust fund. R.S.O. 1990, c. B.16, s. 45 (7).
Discharge of corporation and trust corporation
(8) A receipt signed by a person entitled under subsection (3) to receive the proceeds of a sale that constitute a trust fund under subsection (5) shall be a complete discharge of the corporation and of any trust corporation to which a trust fund is transferred under subsection (7), in respect of the trust fund and income earned thereon paid to the person. R.S.O. 1990, c. B.16, s. 45 (8).
Forfeit to Crown
(9) A trust fund described in subsection (5) together with any income earned thereon, less any taxes thereon and costs of administration, that has not been claimed, by a person entitled under subsection (3) to receive the proceeds of a sale that constitute the trust fund for a period of ten years after the date of the sale is forfeited to the Crown. R.S.O. 1990, c. B.16, s. 45 (9).
Burlington Business Lawyer Christopher R. Neufeld is a corporate attorney admitted to practice law in both Ontario (Canada) and New York (U.S.A.). Christopher's legal practice focuses primarily on business law, in particular corporate commercial transactions. The law firm of Neufeld Legal Professional Corporation is headquartered at 719 Catalina Crescent, Burlington, Ontario L7L 5B9, and as such is in immediate proximity to downtown Toronto, Mississauga, Hamilton, Oakville, Brampton, Milton, Guelph and Kitchener Waterloo. COPYRIGHT 2009.