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Bill C-17

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RECOMMENDATION

His Excellency the Governor General recommends to the House of Commons the appropriation of public revenue under the circumstances, in the manner and for the purposes set out in a measure entitled ``An Act to amend the Telecommunications Act and the Teleglobe Canada Reorganization and Divestiture Act''.

SUMMARY

This enactment amends the Telecommunications Act and the Teleglobe Canada Reorganization and Divestiture Act in order to implement Canada's obligations to liberalize basic international tele communications services under the Fourth Protocol to the General Agreement on Trade in Services. Consistent with these obligations, the amendments to the Telecommunications Act

    (a) authorize the Canadian Radio-television and Telecommunica tions Commission to establish a licensing regime for telecommu nications service providers and to administer telecommunications numbering resources and other activities related to telecommunica tions; and

    (b) augment the existing regime for the certification and inspection of telecommunications equipment in Canada.

Amendments to the Teleglobe Canada Reorganization and Divesti ture Act repeal provisions that are inconsistent with the termination of Teleglobe Canada Inc.'s monopoly in the provision of facilities for telecommunications services between Canada and overseas.

EXPLANATORY NOTES

Telecommunications Act

Clause 1: New.

Clause 2: New.

Clause 3: New.

Clause 4: Subsection 19(1) reads as follows:

19. (1) The Minister may, on application, issue an international submarine cable licence to a corporation that is eligible under the regulations to hold the licence.

Clause 5: The relevant portion of subsection 22(2) reads as follows:

(2) The Governor in Council may, in relation to international submarine cable licences, make regulations

    . . .

    (c) prescribing classes of international submarine cable licences and determining the corporations eligible to hold licences of any particular class;

Clause 6: New.

Clause 7: New. The relevant portion of subsection 67(1) reads as follows:

67. (1) The Commission may make regulations

Clause 8: New.

Clause 9: (1) The relevant portion of subsection 73(1) reads as follows:

73. (1) Every person who contravenes section 16 or 17 is guilty of an offence punishable on summary conviction and liable

(2) and (3) The relevant portion of subsection 73(2) reads as follows:

(2) Every person who

    (a) contravenes section 25 or subsection 27(1) or (2),

    . . .

    (d) knowingly makes a material misrepresentation of fact or omits to state a material fact to the Minister, the Commission, a person appointed under section 70 or an inspector appointed under section 71

is guilty of an offence punishable on summary conviction and liable, in the case of an individual, to a fine not exceeding ten thousand dollars for a first offence or twenty-five thousand dollars for a subsequent of fence, and in the case of a corporation, to a fine not exceeding one hundred thousand dollars for a first offence or two hundred and fifty thousand dollars for a subsequent offence.

(4) New.

Clause 10: New.

Teleglobe Canada Reorganization and Divestiture Act

Clause 11: The definition ``designated telecommu nications common carrier'' in subsection 2(1) reads as follows:

``designated telecommunications common carrier'' means a telecom munications common carrier named in Schedule I;

Clause 12: Section 5 reads as follows:

5. (1) The articles of incorporation of the new corporation shall contain

    (a) provisions imposing constraints on the issue, transfer and ownership, including joint ownership, of voting shares of the new corporation to prevent designated telecommunications common carriers, together with the associates thereof, from holding, benefi cially owning or controlling, directly or indirectly, otherwise than by way of security only, in the aggregate,

      (i) subject to subparagraph (ii), voting shares to which are attached more than forty per cent of the votes that may ordinarily be cast to elect directors of the new corporation, and

      (ii) on and after sixty days after the day on which voting shares of the new corporation are first distributed to the public, voting shares to which are attached more than thirty-three and one-third per cent of the votes that may ordinarily be cast to elect directors of the new corporation;

    (b) provisions imposing constraints on the issue, transfer and ownership, including joint ownership, of voting shares of the new corporation to prevent non-residents, including any designated common carrier that is a non-resident, from holding, beneficially owning or controlling, directly or indirectly, otherwise than by way of security only, in the aggregate voting shares to which are attached more than twenty per cent of the votes that may ordinarily be cast to elect directors of the new corporation;

    (c) provisions

      (i) permitting designated telecommunications common carriers and their associates, in lieu of casting votes on any resolution electing directors of the new corporation, to appoint that proportion of the total number of directors that the total number of votes that all such carriers and associates may ordinarily cast to elect directors is of the total number of votes that may ordinarily be cast to elect directors, and

      (ii) restricting the total number of directors that may be elected by designated telecommunications common carriers and their associates or appointed under the provisions included in the articles pursuant to subparagraph (i) to prevent control of the new corporation by designated telecommunications common carriers and their associates, such number in any case not to exceed one third of the total number of directors;

    (d) provisions respecting the exercise of voting rights attached to voting shares of the new corporation to prevent control of the new corporation by designated telecommunications common carriers and their associates and by non-residents; and

    (e) provisions respecting the enforcement of the constraints imposed pursuant to this subsection or by subsection (2).

(2) Notwithstanding the provisions included in the articles of incorporation of the new corporation in compliance with subsection (1),

    (a) no non-resident that is a telecommunications common carrier, and

    (b) no associate of such a non-resident,

other than a designated telecommunications common carrier, shall hold, beneficially own or control, solely or jointly, directly or indirectly, any voting share of the new corporation otherwise than by way of secu rity only.

(3) Without limiting the generality of paragraph (1)(e), the provi sions referred to therein may provide for the filing of declarations, the suspension of voting rights, the forfeiture of dividends or the refusal of the issue or registration of voting shares.

(4) Where it appears from the central securities register of the new corporation that a subscriber for or a transferee of voting shares of the new corporation would, on acquiring the shares, hold, beneficially own or control shares to which are attached not more than the lesser of two one-hundredths of one per cent of the votes that may ordinarily be cast to elect directors of the new corporation and two thousand such votes, the directors are entitled to assume that the subscriber or transferee is not and will not be an associate of anyone else and, unless the address to be recorded in the register for the subscriber or transferee is a place outside Canada, that the shares will not be held, beneficially owned or controlled in contravention of the articles of incorporation of the new corporation.

(5) For the purpose of this section, a person is an associate of another person if

    (a) one is a corporation of which the other is an officer or director;

    (b) one is a corporation that is controlled by the other or by a group of persons of which the other is a member;

    (c) one is a partnership of which the other is a trustee;

    (d) one is a trust of which the other is a trustee;

    (e) both are corporations controlled by the same person;

    (f) both are members of a voting trust that relates to voting shares of the new corporation; or

    (g) both are at the same time associates within the meaning of any of paragraphs (a) to (f) of the same person.

(6) Notwithstanding subsection (5), for the purposes of this section,

    (a) where a resident who, but for this paragraph, would be an associate of a designated common carrier or a non-resident submits to the new corporation a statutory declaration stating that no voting shares of the new corporation held or to be held by the resident are or will be, to the resident's knowledge, held in the right of, or for the use or benefit of, the resident or in the right of, for the use or the benefit of, or under control of, any designated telecommunications common carrier or non-resident of which, but for this paragraph, the resident would be an associate, that resident and that designated telecommunications common carrier or non-resident, as the case may be, are not associates so long as the voting shares held by the resident are not held contrary to the statements made in the declaration;

    (b) two corporations are not associates pursuant to paragraph (5)(g) by reason only that under paragraph (5)(a) each is an associate of the same individual; and

    (c) where it appears from the central securities register of the new corporation that any person holds, beneficially owns or controls voting shares to which are attached not more than the lesser of two one-hundredths of one per cent of the votes that may ordinarily be cast to elect directors of the new corporation and two thousand such votes, that person is not an associate of anyone else and no one else is an associate of that person.

(7) In this section,

``corporation'' includes a body corporate, partnership or unincorpo rated organization;

``non-resident'' means

      (a) an individual, other than a Canadian citizen, who is not ordinarily resident in Canada,

      (b) a corporation incorporated, formed or otherwise organized outside Canada,

      (c) a foreign government or an agency thereof,

      (d) a corporation that is controlled by non-residents as defined in any of paragraphs (a) to (c),

      (e) a trust

        (i) established by a non-resident as defined in any of paragraphs (b) to (d), other than a trust for the administration of a pension fund for the benefit of individuals a majority of whom are residents, or

        (ii) in which non-residents as defined in any of paragraphs (a) to (d) have more than fifty per cent of the beneficial interest, or

      (f) a corporation that is controlled by a trust described in paragraph (e);

``resident'' means an individual, corporation, government or agency thereof or trust that is not a non-resident.

Clause 13: Section 6 reads as follows:

6. The new corporation and its shareholders and directors

    (a) shall not, without prior approval of the Governor in Council,

      (i) amend any provisions included in its articles of incorporation in compliance with section 5, or

      (ii) apply for continuance of the new corporation in another jurisdiction; and

    (b) shall not make any articles or by-laws inconsistent with the provisions referred to in subparagraph (a)(i) or with subsection 5(2).

Clause 14: Section 7 reads as follows:

7. (1) The new corporation shall provide public telecommunication services between Canada and places outside Canada and in connection therewith

    (a) shall coordinate telecommunication services between Canada and places outside Canada with the telecommunication services of other countries; and

    (b) shall, so far as practicable and reasonable,

      (i) make use of developments in cable and radio transmission or reception for public telecommunication services between Cana da and places outside Canada, and

      (ii) conduct research and development for the purpose of improving telecommunication services.

(2) Nothing in this section shall be construed as limiting the capacity, rights, powers and privileges of the new corporation or as imposing a restriction on the businesses that it may carry on.

Clause 15: Section 8 reads as follows:

8. (1) The new corporation shall be designated as the new signatory for Canada to the International Maritime Satellite Organization (IN MARSAT) and the International Telecommunications Satelitte Orga nization (INTELSAT) and shall be appointed as the representative of Canada to the Commonwealth Telecommunications Council of the Commonwealth Telecommunications Organisation, but such designa tion and appointment does not prevent the designation or appointment of another person as a new signatory or representative in substitution for the new corporation.

(2) The new corporation shall, on request, apprise the Minister of Communications and the Minister of Foreign Affairs of any of its negotiations with a foreign government or body, or an international organization, respecting telecommunications facilities, operations or services.

Clause 16: Section 10 reads as follows:

10. No act relating to the solvency or winding-up of a corporation applies to the new corporation and in no case shall the new corporation be wound up or amalgamated unless Parliament so provides.

Clause 17: Section 12 reads as follows:

12. No officer of the new corporation may be appointed or continue as director or officer of a designated telecommunications common carrier or an affiliate of a designated telecommunications common carrier, other than an affiliate that is wholly-owned by the new corporation and one or more designated telecommunications common carriers.

Clause 18: Section 13 reads as follows:

13. (1) No person shall acquire control of the new corporation without the prior approval of the Commission.

(2) Except in the ordinary course of the business of the new corporation, the new corporation shall not sell, lease, loan or otherwise dispose of any facilities of the new corporation that are integral and necessary for the carrying on of telecommunications activities without the prior approval of the Commission.

(3) In deciding whether to approve a proposed transaction under this section, the Commission shall decide whether, in its opinion, the transaction is in the public interest.

(4) An approval under this section may be specific or general and may be granted on such terms and conditions as the Commission deems expedient.

(5) This section does not apply in respect of any issue of shares under subsection 4(3) or any sale or other disposal of shares under section 19.

Clause 19: Section 17 reads as follows:

17. Notwithstanding the Telecommunications Act, an agreement or arrangement between the new corporation and any foreign telecommu nications carrier or foreign communications carrier or foreign commu nications administration respecting international telecommunications facilities, operations or services is not subject to the approval of Commission and comes into force in accordance with its terms, but shall be filed with the Commission if the Commission so requires.

Clause 20: Section 18 reads as follows:

18. (1) The Governor in Council may give a directive to the new corporation with respect to any matter relating to the national security, the foreign policy or the international telecommunications policy of Canada.

(2) Before a directive is given to the new corporation, the Minister of Industry may consult the board of directors of the new corporation with respect to the proposed directive.

(3) The directors of the new corporation shall ensure that every directive given to the new corporation is implemented in a prompt and efficient manner and shall forthwith notify the Minister of Industry when the directive is implemented.

(4) The Governor in Council may compensate the new corporation in respect of the implementation of a directive with such moneys as are appropriated by Parliament for the purpose.

(5) Complaince by the new corporation with a directive is deemed to be in the best interests of the new corporation.

(6) The Commission shall allow for regulatory purposes any reasonable costs incurred by the new corporation in implementing a directive to the extent that the costs exceed any compensation paid to the new corporation under this section.

(7) The Minister of Industry shall cause a copy of every directive given to the new corporation to be laid before each House of Parliament on any of the first fifteen days on which that House is sitting after the directive is given, unless the Governor in Council is of the opinion that to do so would be against the interests of national security or foreign relations or the commercial interests of any person.

Clause 21: Section 24 reads as follows:

24. The Governor in Council may, by order,

    (a) delete from Schedule I the name of any telecommunications common carrier that has been changed and substitute the new name therefor;

    (a.1) add to Schedule I the name of any telecommunications common carrier that carries on, in whole or in part, the same business as a carrier whose name appears in that Schedule; and

    (b) delete from Schedule I the name of any former telecommunica tions common carrier that has been dissolved or has otherwise ceased to be a telecommunications common carrier.

Clause 22: Section 33 reads as follows:

33. The Acts set out in column I of Schedule II are amended in the manner and to the extent indicated in column II of that Schedule.

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