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ONTARIO BUSINESS CORPORATIONS ACT
05/12/2009 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. PART XVII REMEDIES, OFFENCES AND PENALTIES Definitions 245. In this Part, “action” means an action under this Act; (“action”) “complainant” means, (a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a corporation or any of its affiliates, (b) a director or an officer or a former director or officer of a corporation or of any of its affiliates, (c) any other person who, in the discretion of the court, is a proper person to make an application under this Part. (“plaignant”) R.S.O. 1990, c. B.16, s. 245. Derivative actions 246. (1) Subject to subsection (2), a complainant may apply to the court for leave to bring an action in the name and on behalf of a corporation or any of its subsidiaries, or intervene in an action to which any such body corporate is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the body corporate. R.S.O. 1990, c. B.16, s. 246 (1). Idem (2) No action may be brought and no intervention in an action may be made under subsection (1) unless the complainant has given fourteen days’ notice to the directors of the corporation or its subsidiary of the complainant’s intention to apply to the court under subsection (1) and the court is satisfied that, (a) the directors of the corporation or its subsidiary will not bring, diligently prosecute or defend or discontinue the action; (b) the complainant is acting in good faith; and (c) it appears to be in the interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued. R.S.O. 1990, c. B.16, s. 246 (2). Notice not required (2.1) A complainant is not required to give the notice referred to in subsection (2) if all of the directors of the corporation or its subsidiary are defendants in the action. 2006, c. 34, Sched. B, s. 38. Application (3) Where a complainant on an application made without notice can establish to the satisfaction of the court that it is not expedient to give notice as required under subsection (2), the court may make such interim order as it thinks fit pending the complainant giving notice as required. R.S.O. 1990, c. B.16, s. 246 (3). Interim order (4) Where a complainant on an application can establish to the satisfaction of the court that an interim order for relief should be made, the court may make such order as it thinks fit. R.S.O. 1990, c. B.16, s. 246 (4). Court order 247. In connection with an action brought or intervened in under section 246, the court may at any time make any order it thinks fit including, without limiting the generality of the foregoing, (a) an order authorizing the complainant or any other person to control the conduct of the action; (b) an order giving directions for the conduct of the action; (c) an order directing that any amount adjudged payable by a defendant in the action shall be paid, in whole or in part, directly to former and present security holders of the corporation or its subsidiary instead of to the corporation or its subsidiary; and (d) an order requiring the corporation or its subsidiary to pay reasonable legal fees and any other costs reasonably incurred by the complainant in connection with the action. R.S.O. 1990, c. B.16, s. 247. Oppression remedy 248. (1) A complainant and, in the case of an offering corporation, the Commission may apply to the court for an order under this section. 1994, c. 27, s. 71 (33). Idem (2) Where, upon an application under subsection (1), the court is satisfied that in respect of a corporation or any of its affiliates, (a) any act or omission of the corporation or any of its affiliates effects or threatens to effect a result; (b) the business or affairs of the corporation or any of its affiliates are, have been or are threatened to be carried on or conducted in a manner; or (c) the powers of the directors of the corporation or any of its affiliates are, have been or are threatened to be exercised in a manner, that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any security holder, creditor, director or officer of the corporation, the court may make an order to rectify the matters complained of. R.S.O. 1990, c. B.16, s. 248 (2). Court order (3) In connection with an application under this section, the court may make any interim or final order it thinks fit including, without limiting the generality of the foregoing, (a) an order restraining the conduct complained of; (b) an order appointing a receiver or receiver-manager; (c) an order to regulate a corporation’s affairs by amending the articles or by-laws or creating or amending a unanimous shareholder agreement; (d) an order directing an issue or exchange of securities; (e) an order appointing directors in place of or in addition to all or any of the directors then in office; (f) an order directing a corporation, subject to subsection (6), or any other person, to purchase securities of a security holder; (g) an order directing a corporation, subject to subsection (6), or any other person, to pay to a security holder any part of the money paid by the security holder for securities; (h) an order varying or setting aside a transaction or contract to which a corporation is a party and compensating the corporation or any other party to the transaction or contract; (i) an order requiring a corporation, within a time specified by the court, to produce to the court or an interested person financial statements in the form required by section 154 or an accounting in such other form as the court may determine; (j) an order compensating an aggrieved person; (k) an order directing rectification of the registers or other records of a corporation under section 250; (l) an order winding up the corporation under section 207; (m) an order directing an investigation under Part XIII be made; and (n) an order requiring the trial of any issue. R.S.O. 1990, c. B.16, s. 248 (3). Idem (4) Where an order made under this section directs amendment of the articles or by-laws of a corporation, (a) the directors shall forthwith comply with subsection 186 (4); and (b) no other amendment to the articles or by-laws shall be made without the consent of the court, until the court otherwise orders. R.S.O. 1990, c. B.16, s. 248 (4). Shareholder may not dissent (5) A shareholder is not entitled to dissent under section 185 if an amendment to the articles is effected under this section. R.S.O. 1990, c. B.16, s. 248 (5). Where corporation prohibited from paying shareholder (6) A corporation shall not make a payment to a shareholder under clause (3) (f) or (g) if there are reasonable grounds for believing that, (a) the corporation is or, after the payment, would be unable to pay its liabilities as they become due; or (b) the realizable value of the corporation’s assets would thereby be less than the aggregate of its liabilities. R.S.O. 1990, c. B.16, s. 248 (6). Discontinuance and settlement 249. (1) An application made or an action brought or intervened in under this Part shall not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or duty owed to the corporation or its affiliate has been or may be approved by the shareholders of such body corporate, but evidence of approval by the shareholders may be taken into account by the court in making an order under section 207, 247 or 248. R.S.O. 1990, c. B.16, s. 249 (1). Idem (2) An application made or an action brought or intervened in under this Part shall not be stayed, discontinued, settled or dismissed for want of prosecution without the approval of the court given upon such terms as the court thinks fit and, if the court determines that the interests of any complainant may be substantially affected by such stay, discontinuance, settlement or dismissal, the court may order any party to the application or action to give notice to the complainant. R.S.O. 1990, c. B.16, s. 249 (2). Costs (3) A complainant is not required to give security for costs in any application made or action brought or intervened in under this Part. R.S.O. 1990, c. B.16, s. 249 (3). Idem (4) In an application made or an action brought or intervened in under this Part, the court may at any time order the corporation or its affiliate to pay to the complainant interim costs, including reasonable legal fees and disbursements, for which interim costs the complainant may be held accountable to the corporation or its affiliate upon final disposition of the application or action. R.S.O. 1990, c. B.16, s. 249 (4). Rectifying error in entering, etc., name 250. (1) Where the name of a person is alleged to be or have been wrongly entered or retained in, or wrongly deleted or wrongly omitted from, the registers or other records of a corporation, the corporation, a security holder of the corporation or any aggrieved person may apply to the court for an order that the registers or records be rectified. R.S.O. 1990, c. B.16, s. 250 (1). Idem (2) In connection with an application under this section, the court may make any order it thinks fit including, without limiting the generality of the foregoing, (a) an order requiring the registers or other records of the corporation to be rectified; (b) an order restraining the corporation from calling or holding a meeting of shareholders or paying a dividend or making any other distribution or payment to shareholders before the rectification; (c) an order determining the right of a party to the proceedings to have the party’s name entered or retained in, or deleted or omitted from, the registers or records of the corporation, whether the issue arises between two or more security holders, or between the corporation and any security holders or alleged security holders; (d) an order compensating a party who has incurred a loss. R.S.O. 1990, c. B.16, s. 250 (2). Notice of refusal to file 251. (1) Where the Director refuses to endorse a certificate on articles or any other document required by this Act to be endorsed with a certificate by the Director before it becomes effective, the Director shall give written notice to the person who delivered the articles or other document of the Director’s refusal, specifying the reasons therefor. R.S.O. 1990, c. B.16, s. 251 (1). Failure to act deemed refusal (2) Where, within six months after the delivery to the Director of articles or other documents referred to in subsection (1), the Director has not endorsed a certificate on such articles or other document, the Director shall be deemed for the purposes of section 252 to have refused to endorse it. R.S.O. 1990, c. B.16, s. 251 (2). Appeal from Director 252. (1) A person aggrieved by a decision of the Director, (a) to refuse to endorse a certificate on articles or on any other document; (b) to issue or to refuse to issue a certificate of amendment under section 12; (c) to refuse to grant an order under section 144; (d) to grant or refuse to grant exemption under section 148; (e) to refuse to endorse an authorization under section 181; or (f) to issue an order under section 240, may appeal to the Divisional Court. R.S.O. 1990, c. B.16, s. 252 (1). Form of appeal (2) Every appeal shall be by notice of appeal sent by registered mail to the Director within thirty days after the mailing of the notice of the decision. R.S.O. 1990, c. B.16, s. 252 (2). Certificate of Director (3) The Director shall certify to the Divisional Court, (a) the decision of the Director together with a statement of the reasons therefor; (b) the record of any hearing; and (c) all written submissions to the Director or other material that is relevant to the appeal. R.S.O. 1990, c. B.16, s. 252 (3). Representation (4) The Director is entitled to be heard, by counsel or otherwise, upon the argument of an appeal under this section. R.S.O. 1990, c. B.16, s. 252 (4). Court order (5) Where an appeal is taken under this section, the court may by its order direct the Director to make such decision or to do such other act as the Director is authorized and empowered to do under this Act and as the court thinks proper, having regard to the material and submissions before it and to this Act, and the Director shall make such decision or do such act accordingly. R.S.O. 1990, c. B.16, s. 252 (5). Director may make further decision (6) Despite an order of the court under subsection (5), the Director has power to make any further decision upon new material or where there is a material change in the circumstances, and every such decision is subject to this section. R.S.O. 1990, c. B.16, s. 252 (6). Orders for compliance 253. (1) Where a corporation or any shareholder, director, officer, employee, agent, auditor, trustee, receiver and manager, receiver, or liquidator of a corporation does not comply with this Act, the regulations, articles, by-laws, or a unanimous shareholder agreement, a complainant or a creditor of the corporation may, despite the imposition of any penalty in respect of such non-compliance and in addition to any other right the complainant or creditor has, apply to the court for an order directing the corporation or any person to comply with, or restraining the corporation or any person from acting in breach of, any provisions thereof, and upon such application the court may so order and make any further order it thinks fit. R.S.O. 1990, c. B.16, s. 253 (1). Idem (2) Where it appears to the Commission that any person to whom section 111 or subsection 112 (1) applies has failed to comply with or is contravening either or both of such provisions, despite the imposition of any penalty in respect of such non-compliance or contravention, the Commission may apply to the court and the court may, upon such application, make any order it thinks fit including, without limiting the generality of the foregoing, (a) an order restraining a solicitation, the holding of a meeting or any person from implementing or acting upon any resolution passed at a meeting, to which such non-compliance with or contravention of section 111 or subsection 112 (1) relates; (b) an order requiring correction of any form of proxy or information circular and a further solicitation; or (c) an order adjourning the meeting to which such non-compliance with or contravention of section 111 or subsection 112 (1) relates. R.S.O. 1990, c. B.16, s. 253 (2). Application made without notice 254. Where this Act states that a person may apply to the court, that person may apply for injunctive relief without notice as the rules of the court provide. R.S.O. 1990, c. B.16, s. 254. Appeal 255. An appeal lies to the Divisional Court from any order made by the court under this Act. R.S.O. 1990, c. B.16, s. 255. Offences 256. (1) In this section, “misrepresentation” means, (a) an untrue statement of material fact, or (b) an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made. R.S.O. 1990, c. B.16, s. 256 (1). Offence, false statements, etc. (2) Every person who, (a) makes or assists in making a statement in any material, evidence or information submitted or given under this Act or the regulations to the Director, the Director’s delegate or the Commission or any person appointed to make an investigation or audit under this Act that, at the time and in the light of the circumstances under which it is made, is a misrepresentation; (b) makes or assists in making a statement in any application, articles, consent, financial statement, information circular, notice, report or other document required to be filed with, furnished or sent to the Director or the Commission under this Act or the regulations that, at the time and in the light of the circumstances under which it is made, is a misrepresentation; (c) fails to file with the Director or the Commission any document required by this Act to be filed with the Director or the Commission; or (d) fails to observe or to comply with any direction, decision, ruling, order or other requirement made by the Director or the Commission under this Act or the regulations, is guilty of an offence and on conviction is liable to a fine of not more than $2,000 or to imprisonment for a term of not more than one year, or to both, or, if such person is a body corporate, to a fine of not more than $25,000. R.S.O. 1990, c. B.16, s. 256 (2). Idem (3) Where a body corporate is guilty of an offence under subsection (2), every director or officer of such body corporate who, without reasonable cause, authorized, permitted or acquiesced in the offence is also guilty of an offence and on conviction is liable to a fine of not more than $2,000 or to imprisonment for a term of not more than one year, or to both. R.S.O. 1990, c. B.16, s. 256 (3). Defence (4) No person is guilty of an offence under clause (2) (a) or (b) if the person did not know and in the exercise of reasonable diligence could not have known that the statement was a misrepresentation. R.S.O. 1990, c. B.16, s. 256 (4). Consent 257. No proceeding under section 256 shall be commenced except with the consent or under the direction of the Minister. R.S.O. 1990, c. B.16, s. 257. Offence 258. (1) Every person who, (a) fails without reasonable cause to comply with subsection 29 (5); (b) without reasonable cause uses a list of holders of securities in contravention of subsection 52 (5) or subsection 146 (8); (c) fails without reasonable cause to send a prescribed form of proxy to each shareholder of an offering corporation with notice of a meeting of shareholders in contravention of section 111; (d) fails without reasonable cause to send an information circular in connection with a proxy solicitation in contravention of subsection 112 (1); (e) being a proxyholder or alternate proxyholder, fails, without reasonable cause, to comply with the directions of the shareholder who appointed him or her in contravention of subsection 114 (1); (f) without reasonable cause contravenes section 145; (g) being a director of a corporation, fails, without reasonable cause, to appoint an auditor or auditors, as the case may be, under subsection 149 (1); (h) being an auditor or former auditor of a corporation fails without reasonable cause to comply with subsection 151 (2); (i) fails without reasonable cause to comply with subsection 154 (1); or (j) otherwise without reasonable cause commits an act contrary to or fails or neglects to comply with any provision of this Act or the regulations, is guilty of an offence and on conviction is liable to a fine of not more than $2,000 or to imprisonment for a term of not more than one year, or to both, or if such person is a body corporate, to a fine of not more than $25,000. R.S.O. 1990, c. B.16, s. 258 (1). Idem (2) Where a body corporate is guilty of an offence under subsection (1), every director or officer of such body corporate who, without reasonable cause, authorized, permitted or acquiesced in such offence is also guilty of an offence and on conviction is liable to a fine of not more than $2,000 or to imprisonment for a term of not more than one year, or to both. R.S.O. 1990, c. B.16, s. 258 (2). Limitation 259. (1) No proceeding under section 256 or under clause 258 (1) (j) for a contravention of section 144 shall be commenced more than two years after the facts upon which the proceedings are based first came to the knowledge of the Director as certified by him or her. R.S.O. 1990, c. B.16, s. 259 (1). Idem (2) Subject to subsection (1), no proceeding for an offence under this Act or the regulations shall be commenced more than two years after the time when the subject-matter of the offence arose. R.S.O. 1990, c. B.16, s. 259 (2). Information containing more than one offence 260. An information in respect of any contravention of this Act may be for one or more offences and no information, summons, warrant, conviction or other proceeding in any prosecution is objectionable as insufficient by reason of the fact that it relates to two or more offences. R.S.O. 1990, c. B.16, s. 260. Civil remedy not affected 261. No civil remedy for an act or omission is suspended or affected by reason that the act or omission is an offence under this Act. R.S.O. 1990, c. B.16, s. 261. |
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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. |
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