Canadian corporate law: Difference between revisions

'''Canadian companycorporate law''' concerns the operation of [[corporations]] in [[Canada]], which can be established under either federal or provincial authority.

Federal incorporation of for-profit corporations is governed by [['''Corporations Canada]]''' under the ''[[Canada Business Corporations Act]]''. All of the Canadian provinces and territories also have laws permitting (and governing) the incorporation of corporations within their area of jurisdiction. Often, the choice of whether to incorporate federally or provincially will be based on many business considerations, such as scope of business and the desire for application of particular rules which may be available under one corporate statute but not another.

:* through an [[Act of Parliament (UK)|Act of the [[Parliament of the United Kingdom]], as for the [[Canada Company]]

:* formation as a [[joint stock company]] without limited liability under the laws of the applicable colony (first introduced in [[Lower Canada]] in 1849 for limited purposes,<ref>{{cite book|title = ''An Act to Authorize the Formation of Joint Stock Companies in Lower Canada for the Constructions of Macadamized Roads, and of Bridges and Other Works of Like Nature'', SC 1849, c. 56|year = 1849|url = httphttps://books.google.cacom/books?id=MLxRAAAAYAAJ&lpg=PA610&ots=1LYHpzxwZB&pg=PA349}}</ref> extended to other types of business in the [[Province of Canada]] in 1850<ref>{{cite book|title = ''An Act to provide for the formation of Incorporated Joint Stock Companies, for Manufacturing, Mining, Mechanical or Chemical purposes'', SC 1850, c. 28|url = httphttps://books.google.cacom/books?id=CFQ1AQAAMAAJ&pg=PA1201|author1 = Canada|year = 1850}}</ref>)

Before 1862, [[limited liability]] was the exception, being conferred on specific companies through royal charter or special Act. When it was introduced into UK company law by the ''[[Companies Act 1862]]'' as a matter of general application, the Canadian colonies introduced legislation to enable the same locally.<ref>{{cite book|title = ''An Act to Authorize the Granting of Charters of Incorporation to Manufacturing, Mining and other Companies'', SC 1864, c. 23|url = httphttps://books.google.cacom/books?id=AHCuAAAAMAAJ&lpgpg=PA73&otsPA181|author1 =SH6BgHlUCv&pg Canada|year =PA181 1864}}</ref>

The articles of incorporation can provide for different classes of shares<ref>{{cite web|title = ''CBCA'', s. 49| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-49.html}}</ref> (which may carry the right to elect separate directors).<ref name = "S109">{{cite web|title = ''CBCA'', s. 109| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-109.html}}</ref> Like most of the Commonwealth and Europe, the "one share, one vote" principle prevails in public companies, but [[cumulative voting]] can occur where the articles of incorporation so provide.<ref>{{cite web|title = ''CBCA'', s. 107| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-107.html}}</ref>

Shareholders must elect directors at each annual meeting, and, where the articles are silent, directors remain in office until the annual meeting after their election.<ref name = "S106">{{cite web|title = ''CBCA'', s. 106| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-106.html}}</ref> after incorporation (at which time the initial directors are simply registered).<ref>{{cite web|title = ''CBCA'', s. 6| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-6.html}}</ref> There can be staggered boards, but any director’sdirector's term is limited to three annual meetings.<ref name = "S106"/> Directors elected by a particular class cannot be removed without consent of that class.<ref name = "S109"/> All changes in directors have to be filed with the registrar.<ref>{{cite web|title = ''CBCA'', s. 113| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-113.html}}</ref>

:* disclose annually whether it has adopted a [[majority voting policy]] for uncontested director elections, and if not, explain why, and

:* ''Proxy Voting Principles and Guidelines''<ref>{{cite web|title = Proxy Voting Principles and Guidelines|url = http://www.cppib.com/content/dam/cppib/How%20we%20invest/Responsible%20Investing/Proxy%20Voting/Proxy_Voting_Principles_and_Guidelines.pdf|publisher = [[Canada Pension Plan Investment Board]]|date = 14 February 2013}}{{Dead link|date=November 2018 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

:* ''2013 Best Practices for Proxy Circular Disclosure''<ref>{{cite web|title = 2013 Best Practices for Proxy Circular Disclosure|url = http://www.ccgg.ca/site/ccgg/assets/pdf/2013_best_practices.pdf|publisher = Canadian Coalition for Good Governance|access-date = 2013-12-11|archive-url = https://web.archive.org/web/20140630133136/http://www.ccgg.ca/site/ccgg/assets/pdf/2013_best_practices.pdf|archive-date = 2014-06-30}}</ref>

:* ''Proxy Voting by Canadian Mutual Funds 2006–2009''<ref>{{cite web|author1 = L O’NeillO'Neill|author2 = J Cook|title = Proxy Voting by Canadian Mutual Funds 2006–2009|url = http://www.share.ca/files/SHARE_Mutual_Fund_Voting_Report_2010.pdf|publisher = SHARE|location = Vancouver|date = September 2010}}</ref>

Directors set their own remuneration.<ref>{{cite web|title = CBCA, s. 125| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-125.html}}</ref> They have a fiduciary duty to not put their own interests first when setting it. Some case law exists where decisions about remuneration were not reached fairly, or where directors’directors' fees are unusually high, thus attracting [[oppression remedy]] claims under the various corporate statutes. Otherwise the remuneration committee should be composed of independent directors. There is no [[say on pay]] rule in the CBCA. However, a large number of Canadian companies have been having say on pay votes, as a result of shareholder proposals to change company constitutions in order to introduce them.

:* ''51-102: Continuous Disclosure Obligations''<ref>[http://www.osc.gov.on.ca/documents/en/Securities-Category5/rule_20111031_51-102_unofficial-consolidation-post-ifrs.pdf ''51-102: Continuous Disclosure Obligations'']</ref>

:* ''52-109: Certification of Disclosure in Issuers' Annual and Interim Filings''<ref>[http://www.osc.gov.on.ca/documents/en/Securities-Category5/rule_20101210_52-109_unofficial-consolidated-post-ifrs.pdf ''52-109: Certification of Disclosure in Issuers' Annual and Interim Filings'']</ref>

:* ''52-110: Audit Committees''<ref>[http://www.osc.gov.on.ca/documents/en/Securities-Category5/rule_20101210_52-110_unofficial-consolidated.pdf ''52-110: Audit Committees'']</ref>

:* ''58-101: Disclosure of Corporate Governance Practices'',<ref>[http://www.osc.gov.on.ca/documents/en/Securities-Category5/rule_20050617_58-101_disc-corp-gov-pract.pdf ''58-101: Disclosure of Corporate Governance Practices''],</ref> the Canadian implementation of the practices recommended by the UK [[Cadbury Report]], made mandatory by the [[Toronto Stock Exchange]] for listed companies.<ref>[http://tmx.complinet.com/en/display/display_main.html?rbid=2072&element_id=256 ''TSX Company Manual'', s. 472]</ref>

Under s. 140(1) of the ''CBCA'', all shareholders have the right to vote.<ref>{{cite web|title = ''CBCA'', s. 140| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-140.html}}</ref> Shareholders holding the same class of shares must be treated equally, and so, for instance, no voting ceilings are allowed.<ref>{{cite CanLII|litigants=Jacobsen v. United Canso Oil & Gas Ltd.|link=|year=1980|court=abqb|num=1150|format=canlii|pinpoint=|parallelcite=|date=1980-06-12|courtname=auto|juris=}}</ref>

With 5% of the voting rights, known as a ''requisition'', shareholders may require directors to call a meeting.<ref>{{cite web|title = ''CBCA'', s. 143| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-143.html}}</ref> Uniquely, under s. 137 of the ''CBCA'':<ref>{{cite web|title = ''CBCA'', s. 137| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-137.html}}</ref>

:* any shareholder can make a proposal, a brief statement of which must be included with notices of meetings, but it can be refused if it "does not relate in a significant way to the business or affairs of the corporation," or "the rights conferred by this section are being abused to secure publicity" and under s. 137(8) the only way to challenge this is by application to a court. The proposal also has to not have been submitted within the last 5 years, if the last time it got less than 3%, 6% or 10% of the votes (depending on how often it had previously been submitted).<ref>{{cite web|title = ''Canada Business Corporations Regulations, 2001'' (SOR/2001-512), s. 51| date=15 January 2020 |url = http://laws-lois.justice.gc.ca/eng/regulations/SOR-2001-512/section-51.html}}</ref> Before 2001 there was a prohibition on proposals for economic, political, racial, religious or social causes, but this has since been repealed.

:* otherwise, the directors determine what goes on the meeting and proxy solicitation agenda<ref>{{cite web|title = ''CBCA'', s. 149| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-149.html}}</ref>

While a starting point of Canadian companies is that directors "manage or supervise the management of, the business and affairs of a corporation,",<ref>{{cite web|title = ''CBCA'', s. 102| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-102.html}}</ref> shareholders may unanimously agree to do a corporate act, regardless of what directors think.<ref>{{cite web|title = ''CBCA'', s. 146| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-146.html}}</ref> Shareholders can amend the articles with a three-quarters majority vote.<ref>{{cite web|title = ''CBCA'', s. 173| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-173.html}}</ref>

===Directors’Directors' duties===

{{cquotequote|

:(3) Subject to subsection 146(5), no provision in a contract, the articles, the by-laws or a resolution relieves a director or officer from the duty to act in accordance with this Act or the regulations or relieves them from liability for a breach thereof.}}

:* In ''[[Peoples Department Stores Inc. (Trustee of) v. Wise]]''<ref>{{cite CanLII|litigants=Peoples Department Stores Inc. (Trustee of) v. Wise|link=Peoples Department Stores Inc. (Trustee of) v. Wise|year=2004|court=scc|num=68|format=|pinpoint=|parallelcite=[2004] 3 SCR 461|date=2004-10-29|courtname=|juris=}}</ref> it was held that the duty is not merely owed to the corporation itself, but also to corporate stakeholders, namely "shareholders, employees, suppliers, creditors, consumers, governments and the environment.: This duty is not mandatory. The main directors’directors' duties under Canadian corporate law is the duty of care, and then avoiding conflicts of interest, which include primarily of engaging in undisclosed self-dealing, taking unauthorized corporate opportunities, competing with the company, and being enriched in a takeover bid.

Within the general duty to avoid conflicts of interest there is a duty for directors and officers to disclose self-dealing.<ref>{{cite web|title = ''CBCA'', s. 120| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-120.html}}</ref> A director has to disclose a material interest in any transaction the company enters into. The same strict standard as in the UK applies to this day, so even having a close friendship with someone that benefits from a company contract counts. They must state any conflict of interest that may result from the conclusion of a contract with a third party, and if they do not respect this obligation any shareholder or interested person may ask for the annulment of the decision taken. If a breach of duty has already taken place, the Canadian rules on ''[[ex post]]'' shareholder approval provide that a shareholder resolution does not affect the invalidity of a transaction and the liability of the director, but it may be taken into account when the court decides whether or not to let a derivative action continue by a minority shareholder. The position on taking corporate opportunities begins with the case of ''[[Cook v Deeks]]'', where directors must have authorization by independent directors before they try to make any profit out of their office, when the company itself could possibly have an interest in the same deal.

'''Tripartite Fiduciary Duty and the Principle of Fair Treatment'''

{{cquotequote| A detailed examination of the Court's language [in ''[[BCE Inc. v. 1976 Debentureholders]]''] reveals that the duty of directors in Canada to 'act honestly and in good faith with a view to the best interests of the corporation' is an implied three-part fiduciary duty, which operationalizes the principle of fair treatment.<ref name = "Rojas2014">{{cite journal |last=Rojas |first=Claudio R. |authorlink=|year=2014 |title=An Indeterminate Theory of Canadian Corporate Law |journal=University of British Columbia Law Review |volume=47 |issue=1 |pages=59–128 |ssrn=2391775}}</ref>}}

In addition to being initiated by the corporation, litigation can be exercised through either [[derivative action]]s or the [[oppression remedy]] (the latter available federally and in all provinces other than [[Prince Edward Island]]). The two types of action are not mutually exclusive,<ref>{{cite web|author1 = T. Mark Pontin|author2 = Tracey M. Cohen|author3 = Graeme Cooper|title = Distinguishing Oppression Claims and Derivative Actions|url = http://www.fasken.com/files/Publication/9f6e9808-d5d0-4c18-bf65-0c3b0f128332/Presentation/PublicationAttachment/8cf188a6-678d-4107-993d-1ffa93f80f24/53611_2_CohenPontin.pdf|publisher = [[Fasken Martineau]]|date = June 2011|accessdateaccess-date = {{date2 July 2013|archive-url = https://web.archive.org/web/20131215012512/http://www.fasken.com/files/Publication/9f6e9808-d5d0-4c18-bf65-0c3b0f128332/Presentation/PublicationAttachment/8cf188a6-678d-4107-993d-1ffa93f80f24/53611_2_CohenPontin.pdf|archive-date = 2013-712-2}}15}}</ref> and the differences between them were noted in 1991:

Access to derivative actions and the oppression remedy is available to any complainant, which in the case of the ''CBCA'' includes current and former shareholders, current and former directors and officers, the Director, and "any other person who, in the discretion of a court, is a proper person to make an application under this Part."<ref>{{cite web|title = ''CBCA'', s. 238| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-238.html}}</ref> In that regard, it can include a creditor of the corporation,<ref>{{cite journal |author= J.S. Ziegel|year= 1993|title= Creditors as Corporate Stakeholders: The Quiet Revolution - An Anglo Canadian Perspective|journal= University of Toronto Law Journal|volume= 43|issue= 3|page= 511|publisherpages= 511–531|doi= 10.2307/825717|pmidjstor= |pmc= |url= |accessdate=825717}}</ref><ref>{{cite CanLII|litigants=First Edmonton Place Ltd. v. 315888 Alta. Ltd.|link=|year=1989|court=abca|num=222|format=canlii|pinpoint=|parallelcite=[1990] 2 WWR 670 |date=|courtname=auto|juris=}} (where a landlord was not paid by a company for rent, after the landlord gave it money as an inducement to rent the property. That money was paid out by the directors to the themselves. This counted as ‘oppression’'oppression'.)</ref> but not every creditor will qualify.<ref>{{cite web|author = Frank Roberts|title = Creditor's use of the oppression remedy|url = http://digitool.library.mcgill.ca/webclient/DeliveryManager?pid=30298&custom_att_2=direct|publisher = [[McGill University]]|year = 2000|accessdateaccess-date = {{date|2 July 2013-7-2}}}}</ref> The court has discretion to dismiss an action where it is found to be frivolous, vexatious, or bound to be unsuccessful.<ref>{{cite CanLII|litigants=Re Marc-Jay Investments Inc. and Levy et al.|link=|year=1974|court=onsc|num=786|format=canlii|pinpoint=|parallelcite=5 OR (2d) 235 |date=|courtname=auto|juris=}}</ref>

Shareholders can also bring claims based on breaches for personal rights directly, such as having one’sone's right to vote obstructed.<ref>{{cite web|title = ''CBCA'', s. 145| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-145.html}}</ref>

#it appears to be in the interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued.<ref>{{cite web|title = ''CBCA'', s. 239| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-239.html}}</ref>

Canadian legislation provides for a broad approach to the oppression remedy. In ''[[Peoples Department Stores Inc. (Trustee of) v. Wise]]'', the [[Supreme Court of Canada]] noted:

{{cquotequote|

48.&nbsp;... The oppression remedy of s. 241(2)(c) of the ''CBCA'' and the similar provisions of provincial legislation regarding corporations grant the broadest rights to creditors of any common law jurisdiction.<ref>{{cite journal|author = D. Thomson|title = Directors, Creditors and Insolvency: A Fiduciary Duty or a Duty Not to Oppress?|url = http://utflr.law.utoronto.ca/sites/utflr.law.utoronto.ca/files/media/UTLFR/utflr58/06_58UTorontoFacLRev31%282000%29.pdf|year = 2000|volume = 58|journal = University of Toronto Faculty of Law Review|issue = 1|page = 48}}{{Dead link|date=May 2019 |bot=InternetArchiveBot |fix-attempted=yes }}</ref> One commentator describes the oppression remedy as “the"the broadest, most comprehensive and most open-ended shareholder remedy in the common law world.”"<ref>{{cite book|last = Beck|first = Stanley M.|chapter = Minority Shareholders’Shareholders' Rights in the 1980s|title = Corporate Law in the 80s, Special Lectures of the Law Society of Upper Canada|location = Don Mills|publisher = Richard De Boo|year = 1982|page = 312|isbn = 0-88820110-9}}</ref>

:* Does the evidence establish that the reasonable expectation was violated by conduct falling within the terms “oppression”"oppression", “unfair"unfair prejudice”prejudice" or “unfair"unfair disregard”disregard" of a relevant interest?

Where conflicting interests arise, it falls to the directors of the corporation to resolve them in accordance with their fiduciary duty to act in the best interests of the corporation. There are no absolute rules and no principle that one set of interests should prevail over another.<ref>''BCE Inc.'', par. 81-84</ref> This is defined as a "tripartite fiduciary duty", composed of (1) an overarching duty to the corporation, which contains two component duties — (2) a duty to protect shareholder interests from harm, and (3) a procedural duty of "fair treatment" for relevant stakeholder interests. This tripartite structure encapsulates the duty of directors to act in the "best interests of the corporation, viewed as a good corporate citizen".<ref name = "Rojas2014">{{cite journal |last=Rojas |first=Claudio R. |authorlink=|year=2014 |title=An Indeterminate Theory of Canadian Corporate Law |journal=University of British Columbia Law Review |volume=47 |issue=1 |pages=59–128 |ssrn=2391775}}</ref> Following ''BCE'', the [[Court of Appeal of British Columbia]] noted that "breach of fiduciary duty ... 'may assist in characterizing particular conduct as tending as well to be 'oppressive', 'unfair', or 'prejudicial'".<ref>{{cite CanLII|litigants=Icahn Partners LP v Lions Gate Entertainment Corp.|link=|year=2011|court=bcca|num=228|format=|pinpoint=par. 71|parallelcite=333 DLR(4th) 257|date=2011-05-10}}</ref> More recently, scholarly literature has clarified the connection between the oppression remedy and the fiduciary duty in Canadian law:

{{quotationquote| 84. Upholding the reasonable expectations of corporate constituents is the cornerstone of the oppression remedy. Establishing a breach of the tripartite fiduciary duty has the effect of raising a presumption of conduct contrary to the reasonable expectations of a complainant.<ref name = "Rojas2014"/>}}

:* It can be potentially used by any stakeholder to deal with any type of unfair conduct by a corporation<ref>{{cite web|title = The Oppression Remedy in Canada|url = http://www.mcmillan.ca/94283|publisher = [[McMillan LLP]]|date = July 2009|accessdateaccess-date = {{date|2013-7-2}} July 2013}}</ref>

:* It can cover an affiliate not incorporated under the same Act<ref>{{cite web|author1 = Robert D. Chapman|author2 = Edward P. Kerwin|title = CBCA Oppression Remedy Extends to Non-CBCA Affiliate|url = http://mccarthy.ca/article_detail.aspx?id=4128|publisher = [[McCarthy Tétrault]]|date = {{date|28 August 2008|access-8-28}}date = 2 July 2013|accessdatearchive-url = {{datehttps://web.archive.org/web/20131213031711/http://mccarthy.ca/article_detail.aspx?id=4128|archive-date = 2013-712-2}}13}}</ref><ref>{{cite CanLII|litigants=Manufacturers Life Insurance Company v. AFG Industries Ltd.|link=|year=2008|court=onsc|num=873|format=canlii|pinpoint=|parallelcite=44 BLR (4th) 277 |date=2008-01-17|courtname=auto|juris=}}</ref>

:* It has been used to enforce unpaid judgments against the corporation's directors, where the corporation had been subject to [[asset stripping]]<ref>{{cite web|author = Mark A. Wiffen|title = Getting blood from a stone – enforcing unpaid corporate judgments against directors |url = http://www.mcmillan.ca/getting-blood-from-a-stone--enforcing-unpaid-corporate-judgments-against-directors|publisher = [[McMillan LLP]]|year = 2011|accessdateaccess-date = {{date|2013-7-2}} July 2013}}</ref>

:* It has also been used in conjunction with other remedies {{emdash}} including the threatened winding up of a company by the court {{emdash}} in order to resolve shareholder disputes in closely held companies.<ref>{{cite web|author = Stephen Antle|title = Oppression, just and equitable winding-up and the family company|url = http://www.blg.com/en/newsandpublications/documents/publication348_EN.pdf|publisher = [[Borden Ladner Gervais]]|accessdateaccess-date = {{date3 July 2013|archive-url = https://web.archive.org/web/20131215035746/http://www.blg.com/en/newsandpublications/documents/publication348_EN.pdf|archive-date = 2013-712-3}}15}}</ref><ref>{{cite CanLII|litigants=Safarik v. Ocean Fisheries Ltd.|link=|year=1995|court=bcca|num=6269|format=canlii|pinpoint=|parallelcite=22 BLR (2d) 1; 12 BCLR (3d) 342|date=1995-09-20|courtname=auto|juris=}}</ref>

:* The Crown has employed the oppression remedy in its status as a creditor under the ''Income Tax Act'', in order to set aside dividend payments that rendered a corporation unable to pay its tax liability.<ref name = ""Van Duzer">{{cite journal|author = J. Anthony Van Duzer|title = Who May Claim Relief from Oppression: The Complainant in Canadian Corporate Law|url = http://www.rdo-olr.uottawa.ca/index2.php?option=com_sobi2&sobi2Task=dd_download&fid=273&Itemid=842|journal = Ottawa Law Review|volume = 25|issue = 3|page = 476|year = 1993|accessdateaccess-date = {{date4 July 2013|archive-url = https://web.archive.org/web/20131216171425/http://www.rdo-olr.uottawa.ca/index2.php?option=com_sobi2&sobi2Task=dd_download&fid=273&Itemid=842|archive-date = 2013-712-4}}16}}</ref><ref>''R. v. Sands Motor Hotel Ltd'', (1984) 36 Sask. R. 45 (Q.B.)</ref>

:* Where a company has made excessive salary payments to a controlliingcontrolling shareholder, a judgment creditor has been permitted to be a complainant.<ref name = ""Van Duzer"/><ref>{{cite CanLII|litigants=Prime Computer of Canada Ltd. v. Jeffrey|link=|year=1991|court=onsc|num=7157|format=canlii|pinpoint=|parallelcite=6 OR (3d) 733|date=1991-12-13|courtname=auto|juris=}}</ref>

:* A wrongfully dismissed employee can make a claim in order to thwart a corporation from conducting asset stripping in order to make itself [[judgment proof]].<ref name = ""Van Duzer"/><ref>''Tavares v. Deskin Inc.'', [1993] O.J. No. 195 (Gen. Div.)</ref>

:* Any rectification of a matter complained of can only be made with respect to the person’sperson's interest as a shareholder, creditor, director or officer.

Relatively little litigation has taken place in this matter in the Canadian courts.<ref>{{cite journal|author = Christopher C. Nicholls|title = Lock-Ups, Squeeze-Outs, and Canadian Takeover Bid Law: A Curious Interplay of Public and Private Interests|url = http://lawjournal.mcgill.ca/userfiles/other/4160146-1224868704_Nicholls.pdf|journal = [[McGill Law Journal]]|volume = 51|issue = 2|pages = 407{{endash}}427}}</ref> The current régime (which has been described as being quite lax in comparison to that in the United States)<ref>{{cite webnews|author = Julius Melnitzer|title = Canadian firms easy targets for takeovers|url = http://business.financialpost.com/2012/02/08/canadian-firms-easy-targets-for-takeovers/|publishernewspaper = ''[[Financial Post]]''|date = 8 February 2012}}</ref> came into effect in 2008.<ref>{{cite web|title = Revised Canadian Take-Over Bid and Issuer Bid Regime|url = http://www.dwpv.com/~/media/Files/PDF/Revised_Canadian_Take-Over_Bid_and_Issuer_Bid_Regime.ashx|publisher = [[Davies Ward Phillips & Vineberg]]|date = February 2008}}</ref> The [[Canadian Securities Administrators]] issued proposals in 2013 on tightening early warning requirements in their rules,<ref>{{cite web|title = CSA Proposes Changes to Early Warning Requirements|url = http://www.dwpv.com/en/Resources/Publications/2013/CSA-Proposes-Changes-to-Early-Warning-Requirements|publisher = [[Davies Ward Phillips & Vineberg]]|date = 14 March 2013}}</ref> while in Quebec the ''[[Autorité des marchés financiers (Québec)|Autorité des marchés financiers]]'' issued a proposal favouring an alternative approach concerning all take-over bid defensive tactics.<ref>{{cite web|title = The Competing Visions of the CSA and AMF on Shareholder Rights Plans and Take-over Bid Defensive Tactics|url = http://www.davis.ca/en/publication/csa-and-amf-on-shareholder-rights-plans-and-takeover-bid-defensive-tactics/|publisher = [[Davis LLP]]|date = 22 April 2013|access-date = 17 December 2013|archive-url = https://web.archive.org/web/20131217221433/http://www.davis.ca/en/publication/csa-and-amf-on-shareholder-rights-plans-and-takeover-bid-defensive-tactics/|archive-date = 17 December 2013}}</ref>

===''Companies' Creditors Arrangement Act''===

Under the ''CCAA'', the court has broad discretion in administering any issues that may arise.<ref>{{Cite web | author = John Sandrelli | title = Jurisdiction of the court in CCAA proceedings: Inherent jurisdiction vs statutory discretion | url = http://www.fmc-law.com/upload/en/publications/20052006/2634262_Jursidiction_of_the_Court_in_CCA.pdf | publisher = [[Fraser Milner Casgrain]] | date = September 15–16, 2005 | access-date = 2011-09-1512 | archive-url = https:/16/web.archive.org/web/20120329040843/http://www.fmc-law.com/upload/en/publications/20052006/2634262_Jursidiction_of_the_Court_in_CCA.pdf | accessdatearchive-date = 20112012-0903-1229 }}</ref> As the Act says,

{{cquotequote| ...the court, on the application of any person interested in the matter, may ... make any order that it considers appropriate in the circumstances.<ref>{{Cite web|title = CCAA, S. 11 | date = November 2019| url = http://laws-lois.justice.gc.ca/eng/acts/C-36/page-5.html}}</ref>}}

:* the packaging and orderly resolution of holdings of [[asset-backed commercial paper]] by multiple investors, which can include the release of claims against third parties who are themselves solvent and not creditors of the debtor company<ref>{{cite CanLII|litigants=Metcalfe & Mansfield Alternative Investments II Corp., (Re)|link=|year=2008|source=onca|num=587|pinpoint=|parallelcite=92 OR (3d) 513; 296 DLR (4th) 135|date=2008-08-18|courtname=|juris=}}</ref><ref>{{Cite web| author |author1= Philippe H. Bélanger, |author2=Geoff R. Hall, |author3=Kevin P. McElcheran and |author4=Mason Poplaw |title = Creativity in the Courts: Use of the CCAA to Address Asset-Backed Commercial Paper Crisis | url = http://www.mccarthy.ca/article_detail.aspx?id=4176 | publisher = [[McCarthy Tétrault]] | date = 2008-11-04 | accessdate access-date= 2011-09-12 |archive-url=https://web.archive.org/web/20110703092603/http://mccarthy.ca/article_detail.aspx?id=4176 |archive-date=2011-07-03 }}</ref><ref>{{Cite web| author = Michael Schafler | title = Court Approves Restructuring Plan for Failed Asset-Backed Commercial Paper| url = http://www.fmc-law.com/upload/en/publications/2008/Michael%20Schafler%20.pdf| publisher = [[Fraser Milner Casgrain]] | date = September 2008| accessdateaccess-date = 2012-09-11}}{{dead link|date=July 2017 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

:* dealing with [[limited partnership]]s managed by an insolvent general partner<ref>{{Cite web| author = Geoffrey Thompson |title = Limited Partnerships and the CCAA | url = http://www.blg.com/en/home/publications/Documents/publication1362_EN.pdf | publisher = [[Borden Ladner Gervais]] | date = July 2009 | accessdateaccess-date = 2011-09-12}}</ref>

:* arranging for disposal of the company through a [[stalking horse offer]]<ref>{{Cite web | author author1= Michael Fitch and |author2=Kibben Jackson |title = Face the Music: The A&B Sound CCAA Proceeding - A Stalking Horse of a Different Colour | url = http://www.fasken.com/files/Publication/9861dcb5-1cad-473f-82ce-efe1024322da/Presentation/PublicationAttachment/8031485e-659d-45a0-9934-f0cd643d5f37/Face%20the%20Music.pdf | publisher = [[Fraser Milner Casgrain]] | accessdate access-date= 2011-09-12 |archive-url=https://web.archive.org/web/20120331014800/http://www.fasken.com/files/Publication/9861dcb5-1cad-473f-82ce-efe1024322da/Presentation/PublicationAttachment/8031485e-659d-45a0-9934-f0cd643d5f37/Face%20the%20Music.pdf |archive-date=2012-03-31 }}</ref>

:* providing a more effective way for arranging [[merger and acquisition]] transactions involving distressed companies<ref>{{Cite web| author author1= Sean F. Collins, |author2=James D. Gage, |author3=Warren Milman and |author4=Roger Taplin |title = Mergers & Acquisitions in a More Uncertain World: Using the ''Companies’Companies' Creditors Arrangement Act'' | url = http://www.mccarthy.ca/article_detail.aspx?id=4299 | publisher = [[McCarthy Tétrault]] | date = 2012-07-25 | accessdateaccess-date = 2012-08-13}}</ref>

:* administering the [[liquidation]] of the company<ref>{{Cite web | author author1= Peter B. Farkas, |author2=John Sandrelli and |author3=Jordan Schultz |title = The Role of Liquidating CCAAs | url = http://www.fmc-law.com/upload/en/publications/2010/0410_The_Role_Of_Liqudating_CCAAs.pdf | publisher = [[Fraser Milner Casgrain]] | accessdate access-date= 2011-09-12 |archive-url=https://web.archive.org/web/20120329040851/http://www.fmc-law.com/upload/en/publications/2010/0410_The_Role_Of_Liqudating_CCAAs.pdf |archive-date=2012-03-29 }}</ref>

:* declining to approve [[debt restructuring|restructuring plans]], either because they are poorly conceived<ref>{{Cite web| author1= Michael MacNaughton| author2= Geoffrey Thompson |title = Restructuring without a plan | url = http://www.blg.com/en/home/publications/Documents/publication1093_EN.pdf | publisher = [[Borden Ladner Gervais]] | accessdateaccess-date = 2011-09-12}}</ref><ref>{{Cite web| author = Jassmine Girgis |title = Restructuring under the CCAA: Should A Debtor Always Be Allowed to Proceed? | url = http://ablawg.ca/wp-content/uploads/2010/01/blog_jg_budgetwaste_abqb_jan2010.pdf | publisher = ABlawg.ca | accessdateaccess-date = 2010-01-28}}</ref> or contrary to the best interests of the parties concerned<ref>{{Cite web| author = Roger Jaipargas |title = Court Declines to Approve Sale of Assets as Part of Proposal Proceedings | url = http://www.blg.com/en/home/publications/Documents/publication_1653.pdf | publisher = [[Borden Ladner Gervais]] | date = July 2010 | accessdateaccess-date = 2011-09-12}}</ref>

The various Canadian statutes also allow for plans of arrangement to be devised for companies that are solvent. In that regard, the ''CBCA'' defines arrangements as including:<ref>{{cite web|title = ''CBCA'', s. 192| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-192.html}}</ref>

Plans of arrangement have been employed in cross-border mergers to great success.<ref>{{cite web|author = Ken Pogrin|title = Canadian Plans of Arrangement: An Attractive Structure for the Cross-Border Merger|url = http://www.stikeman.com/newslett/MaOct06_2.htm|publisher = [[Stikeman Elliott]]|year = 2006|access-date = 2013-12-14|archive-url = https://web.archive.org/web/20130116105607/http://www.stikeman.com/newslett/MaOct06_2.htm|archive-date = 2013-01-16}}</ref> They have also been used for [[debt restructuring]] in insolvency situations, which is a recent innovation in Canadian proceedings.<ref>{{cite journal|author1 = Sophie Melchers|author2 = François-David Paré|author3 = David Crandall|title = Debt restructuring under the Canada Business Corporations Act|url = http://www.nortonrosefulbright.com/files/debt-restructuring-under-the-canada-business-corporations-act-pdf-494kb-52242.pdf|journal = Corporate Litigation|volume = XI|issue = 4|year = 2011}}</ref>

:* the arrangement is “fair"fair and reasonable”reasonable".<ref>''BCE Inc.'', par. 137</ref>

Courts should refrain from substituting their views of the “best”"best" arrangement, but should not surrender their duty to scrutinize the arrangement. Only security holders whose legal rights stand to be affected by the proposal are envisioned. It is a fact that the corporation is permitted to alter individual rights that places the matter beyond the power of the directors and creates the need for shareholder and court approval. However, in some circumstances, interests that are not strictly legal could be considered. The fact that a group whose legal rights are left intact faces a reduction in the trading value of its securities generally does not constitute a circumstance where non‑legal interests should be considered on an application for an arrangement.<ref>''BCE Inc.'', par. 149-155</ref>

However, such concern may not apply where a transaction is not being contested, in which case the opinion may considered as evidence that the board had "considered the fairness and reasonableness of the proposed transaction on the basis of objective criteria to the extent possible."<ref>{{cite CanLII|litigants=(Re) Bear Lake Gold Ltd.|link=|year=2014|court=onsc|num=3428|format=|pinpoint=par. 15|parallelcite=|date=2014-06-05|courtname=|juris=}}, discussed in {{cite web|author1 = Paul D. Davis|author2 = Brett G. Harrison|title = ''Bear Lake Gold Ltd.'' decision - Ontario Court Supports Existing Practice Regarding The Use Of Fairness Opinions In Plans Of Arrangement|url = http://www.mcmillan.ca/Files/173833_Bear%20Lake%20Gold%20Ltd.%20decision.pdf|date = June 2014|publisher = [[McMillan LLP]]}}</ref>

:* under the ''[[Winding-Up and Restructuring Act]]'', where it is an insolvent financial institution or an insolvent corporation incorporated under provincial law (although the latter case is only rarely seen in recent times).<ref name="Welling2008">{{cite journal|last=Welling|first=Bruce L.|author2=Thomas G. W. Telfer|date=September 1, 2008|title=The Winding-Up and Restructuring Act: Realigning Insolvency's Orphan to the Modern Law Reform Process|journal=Banking & Finance Law Review|volume=24|page=233|url=http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1309703|accessdate=December 31, 2011}}</ref>

Liquidation under the incorporating statute can occur with or without an accompanying court order that provides for the orderly payment of debts and/or the dissolution of the corporation.<ref>{{cite web|title = ''CBCA'', s. 217| date=January 2020 |url = http://laws-lois.justice.gc.ca/eng/acts/C-44/section-217.html}}</ref> Under the ''BIA'', an insolvent corporation exits bankruptcy after the court approves its discharge<ref>{{cite web|title = ''BIA'', s. 172| date=November 2019 |url = http://laws-lois.justice.gc.ca/eng/acts/B-3/section-172.html}}</ref> (but it may not apply for discharge until its debts are paid in full).<ref>{{cite web|title = ''BIA'', s. 169| date=November 2019 |url = http://laws-lois.justice.gc.ca/eng/acts/B-3/section-169.html}}</ref> Under the ''WURA'' the corporation is required to cease business.<ref>{{cite web|title = ''WURA'', s. 19| date=22 June 2016 |url = http://laws-lois.justice.gc.ca/eng/acts/W-11/section-19.html}}</ref>

! Corporate tax rates<br>(Standard/Small business)<ref>{{cite web|title = Corporation tax rates| date=27 November 2019 |url = http://www.cra-arc.gc.ca/tx/bsnss/tpcs/crprtns/rts-eng.html|publisher = [[Canada Revenue Agency]]}}</ref>

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| [http://www.bclaws.ca/EPLibraries/bclaws_newcivix/document/IDid/complete/freesidestatreg/02057_0015018_01 ''SocietySocieties Act'' (RSBCSBC 19962015, c. 433)18]

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| [http://www.qp.gov.sk.ca/documents/English/Statutes/Statutes/N-4.2.pdf ''Non-profit Corporations Act, 1995'' (SS 1995, c. N-4.2)]{{Dead link|date=November 2018 |bot=InternetArchiveBot |fix-attempted=yes }}

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| [https://archive.today/20130628041019/https://www.appmybizaccount.gov.on.ca/wps/portal/mba_pub/!ut/p/c4/LY6xDsIwDES_pUPXuCNioxUDEgKGIloW5ERWiEjtKElB_D0pIC-nu2f74AplGJ_OYnbC6GGAMaAl7_ixlqRVkJjRqzBr74xiYfXDtSeVJTgDl-WGR7YwEi_6dG73u-7WHQ_9duhhrJtJI7H1Lt3rRpiSzNFQ3Xz3U7ECRcyEek6upMXZsZFYXpdWbN8Fb_8RhGlavTZV9QGQV8tR/ ServiceOntario - Companies and Personal Property Security Branch]

| [https://web.archive.org/web/20130523182600/http://www.revenuquebec.ca/en/entreprise/impot/societes/taux_imposition.aspx 11.9%/3.9%]

| [http://nslegislature.ca/legc/statutes/companiecompanies.htm pdf''Companies Act'' (RSNS 1989, c. 81)]

| [https://web.archive.org/web/20130626203126/http://www.justice.gov.nt.ca/pdfPDF/ACTS/Business%20Corporations.pdf ''Business Corporations Act'' (SWNT 1996, c. 19)]

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| [http://www.justice.gov.nu.ca/apps/fetch/download.aspx?file=Consolidated+Law%2fCurrent%2f635034536796918678-894468018-consSNWT1996c19.pdf ''Business Corporations Act'' (SWNT 1996, c. 19, as modified)]{{Dead link|date=June 2019 |bot=InternetArchiveBot |fix-attempted=yes }}

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