Bill S-19

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First Reading

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	GOING-PRIVATE TRANSACTIONS AND SQUEEZE-OUT TRANSACTIONS
Going-private transactions	193. (1) Subject to subsections (2) and (3), a distributing corporation that proposes to carry out a going-private transaction, in the prescribed circumstances, must comply with the prescribed requirements.
Exemptions - if no prejudice	(2) On the application of an interested person, the Director may, in relation to a going-private transaction, exempt a distributing corporation from the application of any of the prescribed requirements, if the Director is satisfied that the shareholders of the distributing corporation will not be prejudiced by the exemption.
Exemptions - general	(3) In the prescribed circumstances, the Director may, on any conditions that the Director considers appropriate, exempt any distributing corporation or class of distributing corporations from the application of any of the prescribed requirements.
Squeeze-out transactions	194. (1) A corporation may not carry out a squeeze-out transaction unless, in addition to any approval by holders of shares required by or under this Act or the articles of the corporation, the transaction is approved by ordinary resolution of the holders of each class of shares that are affected by the transaction, voting separately, whether or not the shares otherwise carry the right to vote. However, the following do not have the right to vote on the resolution:
	(a) affiliates of the corporation; and
	(b) holders of shares that would, following the squeeze-out transaction, be entitled to consideration of greater value or to superior rights or privileges than those available to other holders of shares of the same class.
Exception - consent of all shareholders	(2) Despite subsection (1), a corporation may carry out a squeeze-out transaction if all of its shareholders consent in writing to the transaction.
	98. The heading before section 194 and sections 194 to 205 of the Act are replaced by the following:
	COMPULSORY AND COMPELLED ACQUISITIONS
	99. (1) The portion of subsection 206(1) of the Act before the definition ``dissenting offeree'' is replaced by the following:
Definitions	206. (1) The definitions in this subsection apply in this Part .
	(2) The definition ``take-over bid'' in subsection 206(1) of the Act is replaced by the following:
``take-over bid'' « offre d'achat visant à la mainmise »	``take-over bid'' means an offer made by an offeror to shareholders of a distributing corporation at approximately the same time to acquire all of the shares of a class of issued shares, and includes an offer made by a distributing corporation to repurchase all of the shares of a class of its shares.
	(3) Subsection 206(1) of the Act is amended by adding the following in alphabetical order:
``offer'' « pollicita- tion »	``offer'' includes an invitation to make an offer.
``offeree'' « pollicité »	``offeree'' means a person to whom a take-over bid is made.
``offeree corporation'' « société pollicitée »	``offeree corporation'' means a distributing corporation whose shares are the object of a take-over bid.
``offeror'' « pollicitant »	``offeror'' means a person, other than an agent, who makes a take-over bid, and includes two or more persons who, directly or indirectly,
	(a) make take-over bids jointly or in concert; or
	(b) intend to exercise jointly or in concert voting rights attached to shares for which a take-over bid is made.
``share'' « action »	``share'' means a share, with or without voting rights, and includes
	(a) a security currently convertible into such a share; and
	(b) currently exercisable options and rights to acquire such a share or such a convertible security.
	(4) Paragraph 206(3)(a) of the Act is replaced by the following:
	(a) the offerees holding not less than ninety per cent of the shares to which the bid relates accepted the take-over bid;
	(5) Paragraph 206(3)(d) of the Act is replaced by the following:
	(d) a dissenting offeree who does not notify the offeror in accordance with subparagraph (5)(b)(ii) is deemed to have elected to transfer the shares to the offeror on the same terms that the offeror acquired the shares from the offerees who accepted the take-over bid; and
	(6) Subsections 206(5) and (6) of the Act are replaced by the following:
Share certificate	(5) A dissenting offeree to whom an offeror's notice is sent under subsection (3) shall, within twenty days after receiving the notice,
	(a) send the share certificates of the class of shares to which the take-over bid relates to the offeree corporation; and
	(b) elect
	(i) to transfer the shares to the offeror on the terms on which the offeror acquired the shares of the offerees who accepted the take-over bid, or
	(ii) to demand payment of the fair value of the shares in accordance with subsections (9) to (18) by notifying the offeror within those twenty days.
Deemed election	(5.1) A dissenting offeree who does not notify the offeror in accordance with subparagraph (5)(b)(ii) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.
Payment	(6) Within twenty days after the offeror sends an offeror's notice under subsection (3), the offeror shall pay or transfer to the offeree corporation the amount of money or other consideration that the offeror would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to accept the take-over bid under subparagraph (5)(b)(i) .
	(7) Section 206 of the Act is amended by adding the following after subsection (7):
When corporation is offeror	(7.1) A corporation that is an offeror making a take-over bid to repurchase all of the shares of a class of shares of a corporation is deemed to hold in trust for the dissenting shareholders the money and other consideration that it would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to accept the take-over bid under subparagraph (5)(b)(i), and the corporation shall, within twenty days after a notice is sent under subsection (3), deposit the money in a separate account in a bank or other body corporate any of whose deposits are insured by the Canada Deposit Insurance Corporation or guaranteed by the Quebec Deposit Insurance Board, and shall place the other consideration in the custody of a bank or such other body corporate.
	(8) Subsections 206(8) and (9) of the Act are replaced by the following:
Duty of offeree corporation	(8) Within thirty days after the offeror sends a notice under subsection (3), the offeree corporation shall
	(a) if the payment or transfer required by subsection (6) is made , issue to the offeror a share certificate in respect of the shares that were held by dissenting offerees;
	(b) give to each dissenting offeree who elects to accept the take-over bid terms under subparagraph (5) (b)(i) and who sends share certificates as required by paragraph (5) (a) the money or other consideration to which the offeree is entitled, disregarding fractional shares, which may be paid for in money; and
	(c) if the payment or transfer required by subsection (6) is made and the money or other consideration is deposited as required by subsection (7) or (7.1) , send to each dissenting shareholder who has not sent share certificates as required by paragraph (5) (a) a notice stating that
	(i) the dissenting shareholder's shares have been cancelled,
	(ii) the offeree corporation or some designated person holds in trust for the dissenting shareholder the money or other consideration to which that shareholder is entitled as payment for or in exchange for the shares, and
	(iii) the offeree corporation will, subject to subsections (9) to (18), send that money or other consideration to that shareholder without delay after receiving the shares.
Application to court	(9) If a dissenting offeree has elected to demand payment of the fair value of the shares under subparagraph (5)(b)(ii) , the offeror may, within twenty days after it has paid the money or transferred the other consideration under subsection (6), apply to a court to fix the fair value of the shares of that dissenting offeree.
	(9) Subsection 206(13) of the French version of the Act is replaced by the following:
Absence de cautionne- ment pour frais	(13) Dans le cadre d'une demande visée aux paragraphes (9) ou (10), les pollicités dissidents ne sont pas tenus de fournir de cautionnement pour les frais.
	(10) Paragraph 206(14)(a) of the Act is replaced by the following:
	(a) all dissenting offerees referred to in subparagraph (5)(b)(ii) whose shares have not been acquired by the offeror shall be joined as parties and are bound by the decision of the court; and
	(11) Paragraph 206(18)(a) of the Act is replaced by the following:
	(a) fix the amount of money or other consideration that is required to be held in trust under subsection (7) or (7.1) ;
	100. The Act is amended by adding the following after section 206:
Obligation to acquire shares	206.1 (1) If a shareholder holding shares of a distributing corporation does not receive an offeror's notice under subsection 206(3), the shareholder may, within ninety days after the date of termination of the take-over bid or, if the shareholder did not receive an offer pursuant to the take-over bid, within ninety days after learning of the take-over bid, require the offeror to acquire those shares.
Conditions	(2) If a shareholder requires the offeror to acquire shares under subsection (1), the offeror shall acquire the shares on the same terms under which the offeror acquired or will acquire the shares of the offerees who accepted the take-over bid.
1992, c. 27, par. 90(1)(h)	101. (1) Subsection 208(1) of the Act is replaced by the following:
Application of Part	208. (1) This Part, other than sections 209 and 212 , does not apply to a corporation that is an insolvent person or a bankrupt as those terms are defined in subsection 2(1) of the Bankruptcy and Insolvency Act .
1992, c. 27, par. 90(1)(h)	(2) Subsection 208(2) of the English version of the Act is replaced by the following:
Staying proceedings	(2) Any proceedings taken under this Part to dissolve or to liquidate and dissolve a corporation shall be stayed if the corporation is at any time found, in a proceeding under the Bankruptcy and Insolvency Act, to be an insolvent person as defined in subsection 2(1) of that Act.
	102. Subsections 209(2) to (4) of the Act are replaced by the following:
Articles of revival	(2) Articles of revival in the form that the Director fixes shall be sent to the Director.
Certificate of revival	(3) On receipt of articles of revival, the Director shall issue a certificate of revival in accordance with section 262, if
	(a) the body corporate has fulfilled all conditions precedent that the Director considers reasonable; and
	(b) there is no valid reason for refusing to issue the certificate.
Date of revival	(3.1) A body corporate is revived as a corporation under this Act on the date shown on the certificate of revival.
Rights preserved	(4) Subject to any reasonable terms that may be imposed by the Director, to the rights acquired by any person after its dissolution and to any changes to the internal affairs of the corporation after its dissolution, the revived corporation is, in the same manner and to the same extent as if it had not been dissolved ,
	(a) restored to its previous position in law, including the restoration of all its property whether acquired before its dissolution or after its dissolution and before its revival, and any rights and privileges whether arising before its dissolution or after its dissolution and before its revival; and
	(b) liable for the obligations that it would have had if it had not been dissolved whether they arise before its dissolution or after its dissolution and before its revival.
Legal actions	(5) Any legal action respecting the affairs of a revived corporation, other than those with its affiliates, taken between the time of its dissolution and its revival is valid and effective.
Definition of ``interested person''	(6) In this section, ``interested person'' includes
	(a) a shareholder, a director, an officer, an employee and a creditor of the dissolved corporation;
	(b) a person who has a contractual relationship with the dissolved corporation;
	(c) a person who has a cause of action or a claim against the dissolved corporation;
	(d) a person who, although at the time of dissolution of the corporation was not a person described in paragraph (a), would be such a person if a certificate of revival is issued under this section; and
	(e) a trustee in bankruptcy for the dissolved corporation.
	103. (1) Paragraph 210(3)(b) of the French version of the Act is replaced by the following:
	b) d'autre part, la société ait effectué une répartition de biens et un règlement de dettes avant d'envoyer les clauses de dissolution au directeur conformément au paragraphe (4).
	(2) Subsection 210(4) of the Act is replaced by the following:
Articles of dissolution	(4) Articles of dissolution in the form that the Director fixes shall be sent to the Director.
	104. (1) Subsection 211(4) of the Act is replaced by the following:
Statement of intent to dissolve	(4) A statement of intent to dissolve in the form that the Director fixes shall be sent to the Director.
	(2) Paragraph 211(7)(b) of the Act is replaced by the following:
	(b) without delay take reasonable steps to give notice of it in each province in Canada where the corporation was carrying on business at the time it sent the statement of intent to dissolve to the Director;
	(3) Subsection 211(10) of the Act is replaced by the following:
Revocation	(10) At any time after issue of a certificate of intent to dissolve and before issue of a certificate of dissolution, a certificate of intent to dissolve may be revoked by sending to the Director a statement of revocation of intent to dissolve in the form that the Director fixes , if such revocation is approved in the same manner as the resolution under subsection (3).
	(4) Subsection 211(14) of the Act is replaced by the following:
Articles of dissolution	(14) Articles of dissolution in the form that the Director fixes shall be sent to the Director.
1994, c. 24, s. 25	105. (1) Subsection 212(1) of the Act is replaced by the following:
Dissolution by Director	212. (1) Subject to subsections (2) and (3), the Director may

Bill S-19

GOING-PRIVATE TRANSACTIONS AND SQUEEZE-OUT TRANSACTIONS

COMPULSORY AND COMPELLED ACQUISITIONS