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.
Application of Securities Transfer Act, 2006
53. Except as otherwise provided in this Act, the transfer or transmission of a security is governed by the Securities Transfer Act, 2006. 2006, c. 8, s. 110.
Certificated or uncertificated securities
54. (1) A security issued by a corporation may be represented by a security certificate or may be an uncertificated security. 2006, c. 8, s. 111.
(2) Unless otherwise provided by the corporation’s articles, the directors of a corporation may provide by resolution that any or all classes and series of its shares or other securities shall be uncertificated securities, provided that such resolution shall not apply to securities represented by a certificate until such certificate is surrendered to the corporation. 2006, c. 8, s. 111.
Notice to holder of uncertificated security
(3) Within a reasonable time after the issuance or transfer of an uncertificated security, the corporation shall send to the registered owner of the uncertificated security a written notice containing the information required to be stated on a share certificate pursuant to subsections 56 (1) and (2). 2006, c. 8, s. 111.
Parity of rights
(4) Except as otherwise expressly provided or authorized by law, the rights and obligations of the registered owners of uncertificated securities and the rights and obligations of the holders of certificated securities of the same class and series shall be identical. 2006, c. 8, s. 111.
(5) A corporation may charge a fee, not exceeding the prescribed amount, for a security certificate issued in respect of a transfer. 2006, c. 8, s. 111.
(6) A corporation required to issue a security certificate is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery to one of several joint holders is sufficient delivery to all. 2006, c. 8, s. 111.
(7) In this section,
“certificated security” means a certificated security as defined in the Securities Transfer Act, 2006. 2006, c. 8, s. 111.
Signing of security certificates
55. (1) A security certificate shall be signed by at least one of the following persons:
1. A director or officer of the corporation.
2. A registrar, transfer agent or branch transfer agent of the corporation, or an individual on their behalf.
3. A trustee who certifies it in accordance with a trust indenture. 2006, c. 8, s. 112.
(2) A signature required by subsection (1) may be printed or otherwise mechanically reproduced on the security certificate. 2006, c. 8, s. 112.
(3) If a security certificate contains a printed or mechanically reproduced signature of a person, the corporation may issue the security certificate even if the person has ceased to be a director or an officer of the corporation, and the security certificate is as valid as if the person were a director or an officer at the date of its issue. 2006, c. 8, s. 112.
Contents of share certificate
56. (1) There shall be stated on the face of each share certificate issued by a corporation,
(a) the name of the corporation;
(b) the words “Incorporated under the law of the Province of Ontario”, “Subject to the Ontario Business Corporations Act” or words of like effect;
(c) the name of the person to whom it was issued; and
(d) the number and class of shares and the designation of any class or series that the certificate represents. 2006, c. 8, s. 113 (1).
(2) Where a corporation is authorized to issue shares of more than one class or series, the corporation shall legibly state on each share certificate issued by it,
(a) the rights, privileges, restrictions and conditions attached to the shares of each class and series that exists when the share certificate is issued; or
(b) that the class or series of shares that it represents has rights, privileges, restrictions or conditions attached thereto and that the corporation will furnish to a shareholder, on demand and without charge, a full copy of the text of,
(i) the rights, privileges, restrictions and conditions attached to that share and to each class authorized to be issued and to each series in so far as the same have been fixed by the directors, and
(ii) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series, if applicable. R.S.O. 1990, c. B.16, s. 56 (2).
(3)-(5) Repealed: 2006, c. 8, s. 113 (2).
Par value share certificate
(6) A share certificate issued,
(a) prior to the 29th day of July, 1983 by a corporation; or
(b) prior to the date of the certificate of continuance by a body corporate continued under section 180,
does not contravene this Act merely because the certificate refers to the share or shares represented thereby as having a nominal or par value. R.S.O. 1990, c. B.16, s. 56 (6).
Information to be furnished by corporation
(7) Where a share certificate issued by a corporation contains the statement mentioned in clause (2) (b), the corporation shall furnish to a shareholder on demand and without charge a full copy of the text of,
(a) the rights, privileges, restrictions and conditions attached to that class authorized to be issued and to that series in so far as the same have been fixed by the directors; and
(b) the authority of the directors to fix the rights, privileges, restrictions and conditions of subsequent series, if applicable. R.S.O. 1990, c. B.16, s. 56 (7).
Notice of restrictions
(8) Where the articles of a corporation restrict the issue, transfer or ownership of shares of any class or series for a purpose set out in clause 42 (2) (c) or (d), the restriction or a reference to it shall be noted conspicuously on every share certificate of the corporation evidencing a share that is subject to the restriction if the certificate is issued after the day on which the share becomes subject to the restriction under this Act and any reference to the restriction shall include a statement that the corporation will furnish to a shareholder, on demand and without charge, a full copy of the text of the restriction. R.S.O. 1990, c. B.16, s. 56 (8).
Furnishing text of restrictions
(9) Where a share certificate of a corporation contains a reference to a restriction under subsection (8), the corporation shall furnish to a shareholder, on demand and without charge, a full copy of the text of the restriction. R.S.O. 1990, c. B.16, s. 56 (9).
(10) Repealed: 2006, c. 8, s. 113 (2).
Certificate for fractional share or scrip certificates
57. (1) A corporation may issue a certificate for a fractional share or may issue in place thereof scrip certificates in bearer form that entitle the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share. R.S.O. 1990, c. B.16, s. 57 (1).
(1.1) A corporation may issue the fractional share described in subsection (1) as an uncertificated security registered or recorded in records maintained by or on behalf of the corporation or by or on behalf of a registrar, transfer agent, branch transfer agent or issuing or other authenticating agent of the corporation by the making of an appropriate entry in the records of the corporation or its registrar, transfer agent, branch transfer agent or other issuing or authenticating agent. 2006, c. 8, s. 114 (1).
(2) The directors may attach conditions to any scrip certificates issued by a corporation or its registrar, transfer agent, branch transfer agent or other issuing or authenticating agent, including conditions that,
(a) the scrip certificates become void if not exchanged for a certificate, or an uncertificated security, representing a full share before a specified date; and
(b) any shares for which such scrip certificates are exchangeable may, despite any pre-emptive right, be issued by the corporation to any person and the proceeds thereof distributed rateably to the holders of the scrip certificates. 2006, c. 8, s. 114 (2).
Rights of holder of fractional share
(3) A holder of a fractional share issued by a corporation is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share unless,
(a) the fractional share results from a consolidation of shares; or
(b) the articles of the corporation otherwise provide. R.S.O. 1990, c. B.16, s. 57 (3).
Rights of holder of scrip certificate
(4) A holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate. R.S.O. 1990, c. B.16, s. 57 (4).
58. (1) When there has been an overissue within the meaning of the Securities Transfer Act, 2006 and the corporation subsequently amends its articles or trust indenture to increase any maximum number of securities to a number equal to or in excess of the maximum number of securities previously authorized plus the amount of the securities overissued, the securities so overissued, and any act taken by any person in reliance upon the validity of such overissued securities, are valid from the date of their issue. 2006, c. 8, s. 115.
Non-application of ss. 30, 31, 32, 35
(2) A purchase or payment in accordance with subsection 67 (2) or (3) of the Securities Transfer Act, 2006 is not a purchase or payment to which section 30, 31, 32 or 35 of this Act applies. 2006, c. 8, s. 115.
59.-66. Repealed: 2006, c. 8, s. 116.
Effect of registration
67. (1) An issuer or a trustee defined in subsection 46 (1) may, subject to sections 95, 96 and 100, treat the registered holder of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payments in respect of the security, and otherwise to exercise all the rights and powers of a holder of the security. R.S.O. 1990, c. B.16, s. 67 (1).
Representatives, etc., may exercise rights of security holder
(2) A corporation whose articles or unanimous shareholder agreement restrict the right to transfer its securities shall, and any other corporation may, treat a person referred to in clause (a), (b) or (c) as a registered security holder entitled to exercise all the rights of the security holder that the person represents, if that person furnishes evidence as described in section 87 of the Securities Transfer Act, 2006 to the corporation that the person is,
(a) the executor, administrator, estate trustee, heir or legal representative of the heirs, of the estate of a deceased security holder;
(b) a guardian, attorney under a continuing power of attorney with authority, guardian of property, committee, trustee, curator or tutor representing a registered security holder who is a minor, a person who is incapable of managing his or her property or a missing person; or
(c) a liquidator of, or a trustee in bankruptcy for, a registered security holder. R.S.O. 1990, c. B.16, s. 67 (2); 2006, c. 8, s. 117 (1); 2006, c. 34, Sched. B, s. 13.
Rights where ownership devolves by operation of law
(3) If a person upon whom the ownership of a security devolves by operation of law, other than a person referred to in subsection (2), furnishes proof of the person’s authority to exercise rights or privileges in respect of a security of the corporation that is not registered in the person’s name, the corporation shall treat the person as entitled to exercise those rights or privileges. R.S.O. 1990, c. B.16, s. 67 (3); 2006, c. 8, s. 117 (2).
Corporation has no duty to enforce performance
(4) A corporation is not required to inquire into the existence of, or see to the performance or observance of, any duty owed to a third person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this section, as the owner or registered holder thereof. R.S.O. 1990, c. B.16, s. 67 (4); 2006, c. 8, s. 117 (3).
Repudiation by minor
(5) If a minor exercises any rights of ownership in the securities of a corporation, no subsequent repudiation or avoidance is effective against the corporation. 2006, c. 8, s. 117 (4).
(6) Where a security is issued to several persons as joint holders, upon satisfactory proof of the death of one joint holder, the corporation may treat the surviving joint holders as owner of the security. R.S.O. 1990, c. B.16, s. 67 (6); 2006, c. 8, s. 117 (5).
Registration of executor, etc.
(7) Subject to any applicable law of Canada or a province of Canada relating to the collection of taxes, a person referred to in clause (2) (a) is entitled to become a registered holder or to designate a registered holder, if the person deposits with the corporation or its transfer agent,
(a) the original grant of probate or of letters of administration, or a copy thereof certified to be a true copy by,
(i) the court that granted the probate or letters of administration,
(ii) a trust corporation incorporated under the laws of Canada or a province, or
(iii) a lawyer or notary acting on behalf of the person; or
(b) in the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated under the laws of that Province,
(c) an affidavit or declaration of transmission made by the person stating the particulars of the transmission;
(d) the security certificate that was owned by the deceased holder,
(i) in case of a transfer to the person, with or without the endorsement of that person, and
(ii) in case of a transfer to any other person, endorsed in accordance with section 29 of the Securities Transfer Act, 2006; and
(e) any assurance the issuer may require under section 87 of the Securities Transfer Act, 2006. R.S.O. 1990, c. B.16, s. 67 (7); 2006, c. 8, s. 117 (6-8).
(8) Despite subsection (7), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a legal representative of the deceased holder is entitled, subject to any applicable law of Canada or a province of Canada relating to the collection of taxes, to become a registered holder or to designate a registered holder, if the legal representative deposits with the corporation or its transfer agent,
(a) any security certificate that was owned by the deceased holder; and
(b) reasonable proof of the governing laws, the deceased holder’s interest in the security and the right of the legal representative or the person the legal representative designates to become the registered holder. R.S.O. 1990, c. B.16, s. 67 (8); 2006, c. 8, s. 117 (9, 10).
Recording in security register
(9) Deposit of the documents required by subsection (7) or (8) empowers a corporation or its transfer agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in clause (2) (a) or to such person as that person may designate and, thereafter, to treat the person who thus becomes a registered holder as the owner of those securities. R.S.O. 1990, c. B.16, s. 67 (9); 2006, c. 8, s. 117 (11).
68.-91. Repealed: 2006, c. 8, s. 118.
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.