Bill C-21

1st Session, 38th Parliament,

53 Elizabeth II, 2004

house of commons of canada

BILL C-21

An Act respecting not-for-profit corporations and other corporations without share capital

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

1. This Act may be cited as the Canada Not-for-profit Corporations Act.

PART 1

INTERPRETATION AND APPLICATION

Definitions and Interpretation

2. (1) The following definitions apply in this Act.

“activities” includes any conduct of a corporation to further its mission and any business carried on by a body corporate, but does not include the affairs of a body corporate.

“affairs” means the relationships among a corporation, its affiliates and the directors, officers, shareholders or members of those bodies corporate.

“articles” means original or restated articles of incorporation or articles of amendment, amalgamation, continuance, reorganization, arrangement, dissolution or revival.

“body corporate” includes a company or other organization with legal personality wherever or however incorporated.

“corporation” means a body corporate incorporated or continued under this Act and not discontinued under this Act.

“court” means

(a) in the Provinces of Newfoundland and Labrador and Prince Edward Island, the trial division of the Supreme Court of the Province;

(b) in the Province of Ontario, the Superior Court of Justice;

(c) in the Provinces of Nova Scotia and British Columbia, the Supreme Court of the Province;

(d) in the Provinces of Manitoba, Saskatchewan, Alberta and New Brunswick, the Court of Queen’s Bench for the Province;

(e) in the Province of Quebec, the Superior Court of the Province; and

(f) in Yukon and the Northwest Territories, the Supreme Court of the territory, and in Nunavut, the Nunavut Court of Justice.

“creditor” includes a debt obligation holder.

“debt obligation” means a bond, debenture, note or other evidence of indebtedness or guarantee of a corporation, whether secured or unsecured.

“Director” means an individual appointed under section 279.

“director” means an individual occupying the position of director by whatever name called.

“entity” means a body corporate, a partnership, a trust, a joint venture or an unincorporated association or organization.

“incorporator” means a person who signs articles of incorporation.

“issuer” means a corporation that is required by this Act to maintain a debt obligations register.

“officer” means an individual appointed as an officer under section 143, the chairperson of the board of directors, the president, a vice-president, the secretary, the treasurer, the comptroller, the general counsel, the general manager or a managing director of a corporation, or any other individual who performs functions for a corporation similar to those normally performed by an individual occupying any of those offices.

“ordinary resolution” means a resolution passed by a majority of the votes cast on that resolution.

“person” means an individual or entity.

“personal representative” means a person who stands in place of and represents another person, including a trustee, an executor, an administrator, a receiver, an agent, a mandatary, a liquidator of a succession, a guardian, a tutor, a curator or a legal counsel.

“prescribed” means prescribed by the regulations.

“public accountant”, in respect of a corporation, means the public accountant appointed for the corporation under paragraph 128(1)(e) or subsection 180(1).

“send” includes deliver.

“series” means a division of a class of debt obligations.

“soliciting corporation” means a corporation that has, in the current year or within any preceding period that is prescribed,

(a) requested donations or gifts of money or other property from the public;

(b) received a grant or similar financial assistance from the federal government or a provincial or municipal government, or an agency of such a government; or

(c) accepted money or other property from a corporation or other entity that has made a request referred to in paragraph (a) or has received assistance referred to in paragraph (b).

“special resolution” means a resolution passed by a majority of not less than two thirds of the votes cast on that resolution.

“unanimous member agreement” means an agreement described in subsection 170(1) or a declaration of a member described in subsection 170(2).

(2) For the purposes of this Act,

(a) one body corporate is the affiliate of another body corporate if one of them is the subsidiary of the other or both are subsidiaries of the same body corporate or each of them is controlled by the same person; and

(b) if two bodies corporate are affiliates of the same body corporate at the same time, they are deemed to be affiliates of each other.

(3) For the purposes of this Act, a body corporate is controlled by a person or by two or more bodies corporate if

(a) shares or memberships of the body corporate to which are attached more than fifty per cent of the votes that may be cast to elect directors of the body corporate are held, other than by way of security only, by or for the benefit of that person or by or for the benefit of those bodies corporate; and

(b) the votes attached to those shares or memberships are sufficient, if exercised, to elect a majority of the directors of the body corporate.

(4) A body corporate is the holding body corporate of another if that other body corporate is its subsidiary.

(5) A body corporate is a subsidiary of another body corporate if

(a) it is controlled by

(i) that other body corporate,

(ii) that other body corporate and one or more bodies corporate each of which is controlled by that other body corporate, or

(iii) two or more bodies corporate each of which is controlled by that other body corporate; or

(b) it is a subsidiary of a body corporate that is itself a subsidiary of that other body corporate.

(6) On the application of a corporation, the Director may decide that the corporation is, for the purposes of this Act, to be considered as not being — or not having been — a soliciting corporation if the Director is satisfied that the determination would not be prejudicial to the public interest.

Application

3. (1) This Act applies to every corporation and, to the extent provided for in Part 19, to bodies corporate without share capital incorporated by a special Act of Parliament.

(2) The following do not apply to a corporation:

(a) the Canada Business Corporations Act;

(b) the Canada Corporations Act, chapter C-32 of the Revised Statutes of Canada, 1970; and

(c) the Winding-up and Restructuring Act.

(3) No corporation shall carry on the business of

(a) a bank;

(b) a company or society to which the Insurance Companies Act applies; or

(c) a company to which the Trust and Loan Companies Act applies.

(4) Incorporation or continuance under this Act does not confer any authority on a corporation to carry on activities as a degree-granting educational institution or to regulate any activity, including a profession or trade.

Purpose

4. The purpose of this Act is to allow the incorporation or continuance of bodies corporate as corporations without share capital, including certain bodies corporate incorporated under various Acts of Parliament, for the purposes of carrying on legal activities and to impose certain obligations on bodies corporate without share capital incorporated by a special Act of Parliament.

Designation of Minister

5. The Governor in Council may designate any member of the Queen’s Privy Council for Canada to be the Minister for the purposes of this Act.

PART 2

INCORPORATION

6. (1) One or more individuals or bodies corporate may incorporate a corporation by signing articles of incorporation and complying with section 8.

(2) No individual may incorporate a corporation under subsection (1) if that individual

(a) is less than eighteen years of age;

(b) has been found incapable by a court in Canada or elsewhere; or

(c) has the status of a bankrupt.

7. (1) Articles of incorporation shall follow the form that the Director fixes and shall set out, in respect of the proposed corporation,

(a) the name of the corporation;

(b) the province where the registered office is to be situated;

(c) the classes, or regional or other groups, of members that the corporation is authorized to establish and, if there are two or more classes or groups, any voting rights attaching to each of those classes or groups;

(d) the number of directors or the minimum and maximum number of directors;

(e) any restrictions on the activities that the corporation may carry on;

(f) a statement of the mission of the corporation; and

(g) a statement concerning the distribution of assets on the dissolution of the corporation.

(2) Articles of incorporation shall set out, in respect of the proposed corporation, any provision required by any other Act of Parliament to be set out in the articles.

(3) The articles may set out any provisions that may be set out in the by-laws.

(4) Subject to subsection (5), if the articles or a unanimous member agreement require a greater number of votes of directors or members than that required by this Act to effect any action, the provisions of the articles or of the unanimous member agreement prevail.

(5) The articles may not require a greater number of votes of members to remove a director than the number required by section 131.

8. One of the incorporators shall send to the Director articles of incorporation and the documents required by sections 20 and 129.

9. On receipt of articles of incorporation, the Director shall issue a certificate of incorporation in accordance with section 274.

10. A corporation comes into existence on the date shown in the certificate of incorporation.

11. (1) Subject to subsection 13(1), the name of a corporation may be set out in its articles in an English form, a French form, an English form and a French form, or a combined English and French form, so long as the combined form meets any prescribed criteria. The corporation may use and may be legally designated by any such form.

(2) Subject to subsection 13(1), a corporation may, for use outside Canada, set out its name in its articles in any language form and it may use and may be legally designated by any such form outside Canada.

(3) A corporation shall set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the corporation.

(4) Subject to subsections (3) and 13(1), a corporation may carry on activities under or identify itself by a name other than its corporate name.

12. (1) The Director may, on request, reserve for a prescribed period a name for an intended corporation or for a corporation about to change its name.

(2) If requested to do so by the incorporators or a corporation, the Director shall assign to the corporation as its name a designating number followed by the word “Canada” and a prescribed term.

13. (1) A corporation shall not be incorporated or continued under this Act with, change its name to, or have, carry on activities under or identify itself by, a name

(a) that is, as prescribed, prohibited or deceptively misdescriptive; or

(b) that is reserved for another corporation or intended corporation under subsection 12(1).

(2) The Director may direct a corporation to change its name in accordance with section 195 if, through inadvertence or otherwise, the corporation is granted a name that contravenes subsection (1).

(3) If a corporation has a designating number as its name, the Director may direct the corporation to change its name to a name other than a designating number in accordance with section 195.

(4) If a corporation acquires a name as a result of a person undertaking to dissolve or to change names, and the undertaking is not honoured, the Director may direct the corporation to change its name in accordance with section 195, unless the undertaking is honoured within the period specified in subsection (5).

(5) If a corporation has not followed a directive under subsection (2), (3) or (4) within the prescribed period, the Director may revoke the name of the corporation and assign a name to it and, until changed in accordance with section 195, the name of the corporation is the name assigned by the Director.

14. (1) If the Director assigns a new name to a corporation under subsection 13(5), the Director shall issue a certificate of amendment showing the name and shall publish notice of the change of name as soon as practicable in a publication generally available to the public.

(2) The articles of the corporation are amended accordingly on the date shown in the certificate of amendment.

15. (1) Subject to this section and unless the contract expressly provides otherwise, a person who enters into, or purports to enter into, a written contract in the name of or on behalf of a corporation before it comes into existence is personally bound by the contract and is entitled to its benefits.

(2) The corporation may, within a reasonable time after it comes into existence, adopt the contract by any action or conduct signifying its intention to be bound by the contract, and on such adoption

(a) the corporation is bound by the contract and is entitled to its benefits as if the corporation had been in existence at the date of the contract and had been a party to it; and

(b) the person ceases to be bound by or entitled to the benefits of the contract, except as provided for in subsection (3).

(3) Whether or not a written contract made before the coming into existence of a corporation is adopted by the corporation, a party to the contract may apply to a court for an order respecting the nature and extent of the obligations and liability under the contract of the corporation and the person who is bound by the contract under subsection (1). On the application, the court may make any order that it thinks fit.

PART 3

CAPACITY AND POWERS

16. (1) A corporation has the capacity and, subject to this Act, the rights, powers and privileges of a natural person.

(2) A corporation may carry on activities throughout Canada.

(3) A corporation has the capacity to carry on its activities, conduct its affairs and exercise its powers in a jurisdiction outside Canada to the extent that the laws of that jurisdiction permit.

17. (1) It is not necessary for a by-law to be passed in order to confer any particular power on a corporation or its directors.

(2) A corporation shall not carry on any activities or exercise any power in a manner contrary to its articles.

(3) No act of a corporation, including any transfer of property to or by a corporation, is invalid by reason only that the act or transfer is contrary to its articles or this Act.

18. No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a corporation by reason only that the person can examine it under section 277 or at an office of the corporation.

19. (1) No corporation and no guarantor of an obligation of a corporation may assert against a person dealing with the corporation or against a person who acquired rights from the corporation that

(a) the articles, the by-laws or any unanimous member agreement have not been complied with;

(b) the individuals named in the last notice that was sent by the corporation in accord­ance with section 129 or 135 and received by the Director are not the directors of the corporation;

(c) the place named in the last notice sent to the Director under section 20 is not the registered office of the corporation;

(d) a person held out by a corporation as a director, an officer, an agent or a mandatary of the corporation has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the activities of the corporation or usual for a director, an officer, an agent or a mandatary;

(e) a document issued by any director, officer, agent or mandatary of a corporation with actual or usual authority to issue the document is not valid or not genuine; or

(f) a sale, a lease or an exchange of property referred to in subsection 212(1) was not authorized.

(2) Subsection (1) does not apply in respect of a person who has, or ought to have, knowledge of a situation described in that subsection by virtue of their relationship to the corporation.

PART 4

REGISTERED OFFICE AND RECORDS

20. (1) A corporation shall at all times have a registered office in the province in Canada specified in its articles.

(2) A notice of registered office in the form that the Director fixes shall be sent to the Director together with any articles that designate or change the province where the registered office of the corporation is to be located.

(3) The directors of a corporation may change its registered office to another place within the province specified in the articles, in which case the corporation shall send to the Director a notice of registered office in the form that the Director fixes.

(4) A notice of registered office becomes effective when the Director accepts it.

21. (1) A corporation shall prepare and maintain, at its registered office or at any other place in Canada designated by the directors, records containing

(a) the articles and the by-laws, and amendments to them, and a copy of any unanimous member agreement;

(b) the minutes of meetings of members and any committee of members;

(c) the resolutions of members and any committee of members;

(d) if any debt obligation is issued by the corporation, a debt obligations register that complies with section 45;

(e) a register of directors;

(f) a register of officers; and

(g) a register of members.

(2) The registers referred to in paragraphs (1)(e) to (g) shall contain the prescribed information.

(3) A corporation shall prepare and maintain adequate accounting records and records containing minutes of meetings of the directors and any committee of directors as well as resolutions adopted by the directors or any committee of directors.

(4) Subject to any other Act of Parliament or of the legislature of a province that provides for a longer retention period, a corporation shall retain the accounting records referred to in subsection (3) for the prescribed period.

(5) For the purposes of paragraph (1)(b) and (c) and subsection (3), where a body corporate is continued under this Act, “records” includes similar records required by law to be maintained by the body corporate before it was so continued.

(6) The records described in subsection (3) shall be kept at the registered office of the corporation or at any other place that the directors think fit.

(7) The records described in subsections (1) and (3) shall at all reasonable times be open to inspection by the directors. The corporation shall, at the request of any director, provide them with any extract of the records free of charge.

(8) If accounting records of a corporation are kept outside Canada, accounting records adequate to enable the directors to ascertain the financial position of the corporation with reasonable accuracy on a quarterly basis shall be kept at the registered office or any other place in Canada designated by the directors.

(9) Despite subsections (1) and (8), but subject to the Income Tax Act, the Excise Tax Act, the Customs Act and any other Act administered by the Minister of National Revenue, a corporation may keep all or any of its corporate records and accounting records referred to in subsection (1) or (3) at a place outside Canada, if

(a) the records are available for inspection, by means of any technology, during regular office hours at the registered office or any other place in Canada designated by the directors; and

(b) the corporation provides the technical assistance to facilitate an inspection referred to in paragraph (a).

22. (1) A member, a member’s personal representative and a creditor of a corporation may examine and, on payment of any reasonable fee, take extracts from the records referred to in paragraphs 21(1)(a) to (f) during the usual business hours of the corporation.

(2) Any person described in subsection (1) who wishes to examine the debt obligations register of a corporation shall first make a request to the corporation or its agent or mandatary accompanied by a statutory declaration referred to in subsection (5). On receipt of the statutory declaration, the corporation or its agent or mandatary shall allow the applicant access to the register during the corporation’s usual business hours and, on payment of any reasonable fee, provide the applicant with an extract from the register.

(3) A member of a corporation is entitled on request and free of charge to one copy of the articles and by-laws, any amendments to them, and any unanimous member agreement.

(4) Any person described in subsection (1), on payment of any reasonable fee and on sending to a corporation or its agent or mandatary the statutory declaration referred to in subsection (5), may on application require the corporation or its agent or mandatary to furnish within the prescribed period a list of debt obligation holders setting out the prescribed information. The list shall be updated to a prescribed day.

(5) The statutory declaration required under subsection (2) or (4) shall

(a) state the name and address of the applicant and, if the applicant is a body corporate, its address for service; and

(b) state that the list of debt obligation holders or the information contained in the debt obligations register obtained under subsection (2) will not be used except as permitted under subsection (7).

(6) If the applicant is a body corporate, the statutory declaration shall be made by a director or officer of the body corporate.

(7) A list of debt obligation holders or information from a debt obligations register obtained under this section shall not be used by any person except in connection with

(a) an effort to influence the voting of debt obligation holders of the corporation;

(b) an offer to acquire debt obligations of the corporation; or

(c) any other matter relating to the debt obligations or affairs of the corporation.

23. (1) A member or a member’s personal representative who wishes to examine the register of members of a corporation shall first make a request to the corporation or its agent or mandatary accompanied by a statutory declaration referred to in subsection (5). On receipt of the statutory declaration, the corporation or its agent or mandatary shall allow the applicant access to the register during the corporation’s usual business hours and, on payment of any reasonable fee, provide the applicant with an extract from the register.

(2) Any person described in subsection (1) and debt obligation holders, on payment of any reasonable fee and on sending to a corporation or its agent or mandatary the statutory declaration referred to in subsection (5), may on application require the corporation or its agent or mandatary to furnish within the prescribed period a list of members setting out the prescribed information. The list shall be updated to a prescribed day.

(3) A person described in subsection (1) may only make an application under subsection (2) once in each calendar year. In addition, an application may be made before each special meeting of members of which the person receives notice.

(4) A debt obligation holder may make an application to obtain a list of members only after receiving notice of a meeting of members at which the holder has the right to vote.

(5) The statutory declaration required under subsection (1) or (2) shall

(a) state the name and address of the applicant and, if the applicant is a body corporate, its address for service; and

(b) state that the list of members or the information contained in the register of members obtained under subsection (1) will not be used except as permitted under subsection (7) or (8).

(6) If the applicant is a body corporate, the statutory declaration shall be made by a director or officer of the body corporate.

(7) A member or a member’s personal representative who obtains a list of members or information from a register of members under this section shall not use the list or information except in connection with

(a) an effort to influence the voting of members;

(b) requisitioning a meeting of members; or

(c) any other matter relating to the affairs of the corporation.

(8) A debt obligation holder who obtains a list of members under this section shall not use the list except in connection with an effort to influence the voting of members on any issue that the holder has a right to vote on.

24. (1) The Director may examine the records described in subsection 21(1) during the usual business hours of the corporation and may take extracts from the records free of charge.

(2) The Director may require the corporation or its agent or mandatary to furnish to the Director within the prescribed period a list of members or debt obligation holders setting out the prescribed information. The list shall be updated to a prescribed day.

25. (1) On the application of a corporation, the Director may authorize the corporation, on any terms that the Director thinks fit, to refuse, in whole or in part, to allow access to corporate records or to furnish information that the corporation is otherwise under this Part obligated to allow or furnish, if the Director reasonably believes that allowing the access or furnishing the information would be detrimental to any member or the corporation.

(2) On the application of any member, the Director may direct the corporation, on any terms that the Director thinks fit, not to allow, in whole or in part, access to corporate records or not to furnish, in whole or in part, information that the corporation is otherwise under this Part obligated to allow or furnish, if the Director reasonably believes that allowing the access or furnishing the information would be detrimental to any member or the corporation.

26. (1) All registers and other records required by this Act to be prepared and maintained may be in any form, provided that the records are capable of being reproduced in intelligible written form within a reasonable time.

(2) A corporation and its agents and mandataries shall take reasonable precautions to prevent the loss or destruction of the registers and other records required under this Act, to prevent the falsification of entries in those registers and records and to facilitate the detection and correction of inaccuracies in them.

27. A document executed on behalf of a corporation is not invalid merely because a corporate seal is not affixed to it.

PART 5

CORPORATE FINANCE

28. (1) Unless the articles, the by-laws or a unanimous member agreement otherwise provides, the directors of a corporation may, without authorization of the members,

(a) borrow money on the credit of the corporation;

(b) issue, reissue, sell, pledge or hypothecate debt obligations of the corporation;

(c) give a guarantee on behalf of the corporation to secure performance of an obligation of any person; and

(d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the corporation, owned or subsequently acquired, to secure any obligation of the corporation.

(2) Despite subsection 139(2) and paragraph 143(a), unless the articles, the by-laws or a unanimous member agreement otherwise provides, the directors may, by resolution, delegate the powers referred to in subsection (1) to a director, a committee of directors or an officer.

29. (1) Subject to the articles, the by-laws and any unanimous member agreement, the directors may issue debt obligations for consideration consisting of money or other property or past services.

(2) The monetary value of the property or services shall not be less than the fair equivalent of the money that the corporation would have received if the debt obligation had been issued for money.

(3) In determining whether property or past services are the fair equivalent of a money consideration, the directors may take into account reasonable charges and expenses of organization and reorganization and payments for property and past services reasonably expected to benefit the corporation.

(4) For the purposes of this section, “property” does not include a promissory note, or a promise to pay, that is made by a person to whom a debt obligation is issued, or a person who does not deal at arm’s length, within the meaning of that expression in the Income Tax Act, with a person to whom a debt obligation is issued.

30. (1) Debt obligations issued, pledged, hypothecated or deposited by a corporation are not redeemed by reason only that the indebtedness evidenced by the debt obligations or in respect of which the debt obligations are issued, pledged, hypothecated or deposited is repaid.

(2) Debt obligations issued by a corporation and purchased, redeemed or otherwise acquired by it may be cancelled or, subject to any applicable trust indenture or other agreement, may be reissued, pledged or hypothecated to secure any existing or future obligation of the corporation, and such an acquisition and reissue, pledge or hypothecation is not a cancellation of the debt obligations.

31. Subject to the articles, the by-laws and any unanimous member agreement, the directors may require members to make an annual contribution or pay annual dues and may determine the manner in which the contribution is to be made or the dues are to be paid.

32. A corporation owns any property of any kind that is transferred to or otherwise vested in the corporation and does not hold any property in trust unless that property was transferred to the corporation expressly in trust for a specific purpose or purposes.

33. Directors are not, in that capacity, trustees for any property of the corporation, including property held in trust by the corporation.

34. Subject to the limitations accompanying any gift and the articles or by-laws, a corporation may invest its funds as its directors think fit.

35. (1) Subject to subsection (2), no part of a corporation’s profits or of its property or accretions to the value of the property may be distributed, directly or indirectly, to a member, a director or an officer of the corporation except in furtherance of its activities or as otherwise permitted by this Act.

(2) If a member of a corporation is an entity that is authorized to carry on activities on behalf of the corporation, the corporation may distribute any of its money or other property to the member to carry on those activities.

36. A corporation may accept a membership in the corporation surrendered to it as a gift and may extinguish or reduce a liability respecting an amount unpaid on that membership.

37. (1) The members of a corporation are not, in that capacity, liable for any liability of the corporation, including any arising under paragraph 251(3)(f) or (g), or any act or default of the corporation, except as otherwise provided by this Act.

(2) Subject to subsection 43(2), the articles may provide that the corporation has a lien on a membership registered in the name of a member or the member’s personal representative for a debt of that member to the corporation, including an amount unpaid in respect of a membership issued by a body corporate on the date it was continued as a corporation under this Act.

(3) A corporation may enforce a lien referred to in subsection (2) in accordance with its by-laws.

PART 6

DEBT OBLIGATIONS, CERTIFICATES, REGISTERS AND TRANSFERS

Definitions and Interpretation

38. (1) The following definitions apply in this Part.

“adverse claim”, in respect of a debt obligation, includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in the debt obligation.

“bearer” means the person who is in possession of a debt obligation that is payable to bearer or endorsed in blank.

“broker” means a person who is engaged in whole or in part in the business of buying and selling debt obligations and who, in the transaction concerned, acts for, buys a debt obligation from or sells a debt obligation to a customer.

“delivery” means voluntary transfer of possession.

“fiduciary” means any personal representative of a deceased person, any person who, under common law, acts in a fiduciary capacity and any person who, under civil law, acts as administrator of the property of others or owes a duty to act in good faith and loyalty by reason of being in a relationship of trust and confidence.

“good faith” means honesty in fact in the conduct of the transaction concerned.

“good faith purchaser” means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a debt obligation.

“holder” means a person who is in possession of a debt obligation that is issued or endorsed to the person, to bearer or in blank.

“overissue” means the issue of debt obligations in excess of any maximum number of debt obligations that the issuer is authorized by a trust indenture to issue.

“purchaser” means a person who takes an interest in a debt obligation by sale, mortgage, hypothec, pledge, issue, reissue, gift or any other voluntary transaction.

“transfer” includes transmission by operation of law.

“trust indenture” means a trust indenture as defined in subsection 105(1).

“valid” means issued in accordance with the applicable law and the by-laws of the issuer, or validated under section 55.

(2) Except when a transfer is restricted and noted on a debt obligation in accordance with subsection 43(2), a debt obligation is a negotiable instrument.

(3) A debt obligation is in registered form if

(a) it specifies a person who is entitled to the debt obligation or to the rights it evidences, and its transfer is capable of being recorded in a debt obligations register; or

(b) it bears a statement that it is in registered form.

(4) A debt obligation is in order form if, by its terms, it is payable to the order of a person specified with reasonable certainty in it or to a person to whom it is assigned.

(5) A debt obligation is in bearer form if it is payable to bearer according to its terms and not by reason of an endorsement.

(6) A guarantor for an issuer is deemed to be an issuer to the extent of the guarantee, whether or not the obligation is noted on the debt obligation.

Debt Obligation Certificates

39. An issuer shall provide a debt obligation holder, on request, with

(a) a debt obligation certificate that complies with this Act; or

(b) a non-transferable written acknowledgement of their right to obtain a debt obligation certificate.

40. An issuer may charge a reasonable fee for a debt obligation certificate issued in respect of a transfer.

41. If debt obligations are held by more than one person,

(a) an issuer is not required to issue more than one debt obligation certificate in respect of those debt obligations; and

(b) delivery of a debt obligation certificate to one of the holders is sufficient delivery to them all.

42. (1) A debt obligation certificate shall be signed by at least one of the following persons, or a facsimile of the signature shall be reproduced on the certificate:

(a) a director or officer of the issuer;

(b) a transfer agent or branch transfer agent of the issuer, or an individual acting on their behalf; or

(c) a trustee who certifies it in accordance with a trust indenture.

(2) An issuer may issue debt obligation certificates that contain the signature of a person who is no longer a director or officer and the validity of the certificate is not adversely affected.

43. (1) The following information shall be stated on the face of each debt obligation certificate issued by an issuer:

(a) the name of the issuer;

(b) the words “Incorporated under the Canada Not-for-profit Corporations Act”, “constituée sous l’autorité de la Loi canadienne sur les organisations à but non lucratif”, “Subject to the Canada Not-for-profit Corporations Act” or “assujettie à la Loi canadienne sur les organisations à but non lucratif”;

(c) the name of the person to whom it was issued unless it is in bearer form; and

(d) the value represented by the certificate.

(2) No restriction on transfer, charge in favour of the issuer or unanimous member agreement is effective against a transferee of a debt obligation, issued by an issuer or by a body corporate before it is continued under this Act, who has no actual knowledge of the restriction, charge or agreement unless it or a reference to it is noted conspicuously on the debt obligation certificate.

(3) If the issued debt obligations of an issuer remain outstanding and are held by more than one person, the issuer shall not restrict the transfer or ownership of its debt obligations of any class or series.

44. (1) Every debt obligation certificate, if the articles authorize more than one class or series of debt obligations, shall legibly

(a) state the rights, privileges, restrictions and conditions attached to the debt obligations of each class and series that exist when the debt obligation certificate is issued; or

(b) state that the class or series of debt obligations that it represents has rights, privileges, restrictions or conditions attached to it and that the issuer will provide a debt obligation holder, on demand and without charge, with a full copy of the text of the rights, privileges, restrictions and conditions attached to each class or series authorized to be issued.

(2) If a debt obligation certificate contains a statement referred to in paragraph (1)(b), the issuer shall, on request, provide the debt obligation holder with the copy of the text referred to in that paragraph.

Registers

45. (1) A corporation that issues debt obligations shall maintain a debt obligations register in which it records the debt obligations issued by it in registered form, showing the prescribed information with respect to each class or series.

(2) The debt obligations register shall be maintained at the issuer’s registered office or at any other place in Canada designated by the directors.

(3) An issuer may maintain additional branch debt obligations registers in other places designated by the directors.

(4) A branch debt obligations register shall only contain particulars of debt obligations issued or transferred at the branch. The same information shall also be recorded in the central register.

(5) An issuer, its agent or mandatary, or a trustee as defined in subsection 105(1) is not required to produce a cancelled debt obligation certificate in registered form after the prescribed period.

46. An issuer may appoint an agent or mandatary to maintain debt obligations registers on its behalf.

47. The registration of the issue or transfer of a debt obligation in any debt obligations register is complete and valid registration for all purposes.

48. An issuer or a trustee as defined in subsection 105(1) may treat the person whose name appears on the debt obligations register as the debt obligation’s owner for all purposes.

49. If an issuer restricts the right to transfer its debt obligations, the issuer may, despite section 48, treat a person as the registered holder of a debt obligation if the person provides the issuer with evidence that meets the requirements of the issuer that the person is

(a) the heir of a deceased debt obligation holder or the fiduciary of the estate or succession of a deceased debt obligation holder or of a registered debt obligation holder who is a minor, an incompetent or incapable person or a missing person; or

(b) a liquidator of, or a trustee in bankruptcy for, a registered debt obligation holder.

50. An issuer shall treat a person, other than one described in section 49, as being entitled to exercise the rights and privileges attached to a debt obligation if the person provides proof that the person has acquired ownership of the debt obligation by operation of law or has legal authority to exercise the rights and privileges.

51. If satisfactory proof of the death of a joint holder of a debt obligation with a right of survivorship in common law is provided to an issuer, the issuer may treat any surviving joint holder as the owner of the debt obligation.

52. An issuer is not required to inquire into the existence of, or see to the performance of, any duty owed to a third person by a registered holder, or a person who may be treated as a registered holder, of a debt obligation.

53. If a minor exercises a right of ownership in a debt obligation of an issuer, no subsequent repudiation or avoidance is effective against the issuer.

54. (1) Subject to any applicable law relating to the collection of taxes, a person who is an heir or a fiduciary of an estate or succession of a deceased debt obligation holder is entitled to become the registered holder or to designate a registered holder if the person deposits the following information with the issuer or its transfer agent, together with any reasonable assurances that the issuer may require:

(a) the debt obligation certificate or, in default of one, a document proving that the deceased was the debt obligation holder;

(b) a document proving the death of the debt obligation holder; and

(c) a document proving that the heir or fiduciary has the right under the law of the place in which the deceased was domiciled immediately before their death to deal with the debt obligation.

(2) A debt obligation certificate referred to in paragraph (1)(a) shall be endorsed

(a) in the case of a transfer to an heir or fiduciary, by that person; and

(b) in any other case, in a manner acceptable to the issuer.

(3) Deposit of the documents required by subsection (1) empowers an issuer or its transfer agent to record in a debt obligations register the transmission of a debt obligation from the deceased holder to the heir or fiduciary or to any person that the heir or fiduciary may designate and to treat the person who becomes a registered holder as the owner of the debt obligation.

55. (1) Subject to this section, the provisions of this Part that validate a debt obligation or compel its issue or reissue do not apply if the validation, issue or reissue of a debt obligation would result in overissue.

(2) A person who is entitled to a validation or issue may, if there has been an overissue and if a valid debt obligation that is similar in all respects to the debt obligation involved in the overissue is reasonably available for purchase, compel the issuer to purchase and deliver that debt obligation against the surrender of the debt obligation that the person holds.

(3) If a valid debt obligation that is similar in all respects to the debt obligation involved in the overissue is not reasonably available for purchase, the person who is entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid debt obligation.

(4) The overissued debt obligations are valid from the date they were issued only if the issuer increases the number of its authorized debt obligations to a number equal to or greater than the number of debt obligations previously authorized plus the number of the debt obligations overissued.

Proceedings

56. The following rules apply in an action on a debt obligation:

(a) each signature on the debt obligation certificate or in a necessary endorsement is admitted unless specifically denied in the pleadings;

(b) a signature on the debt obligation is presumed to be genuine and authorized but, if the effectiveness of the signature is in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;

(c) if a signature is admitted or established, production of a debt obligation certificate entitles the holder to recover on it unless the other party establishes a defence or defect going to the validity of the debt obligation; and

(d) if the other party establishes the defence or defect, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or some other person under whom the claim is made.

Delivery

57. (1) A person who is required to deliver debt obligations may deliver any debt obligation of the specified issue

(a) in bearer form;

(b) in registered form in the name of the transferee; or

(c) endorsed to the person or in blank.

(2) Subsection (1) is subject to any agreement to the contrary, to any applicable Act of Parliament or of the legislature of a province, to any applicable regulation or to any applicable rule of a stock exchange or other regulatory body.

General

58. (1) The terms of a debt obligation include those stated on the debt obligation and those incorporated by reference to another document, an Act of Parliament or of the legislature of a province, a regulation, a rule or an order to the extent that the incorporated terms do not conflict with those stated on the debt obligation.

(2) Subsection (1) applies to a good faith purchaser but the incorporation by reference is itself not notice of a defect to the purchaser even if the debt obligation expressly states that a person accepting it admits that notice.

59. A debt obligation is valid in the hands of a good faith purchaser.

60. Subject to section 63, the fact that a debt obligation is not genuine is a complete defence for the issuer even against a good faith purchaser.

61. All other defences of an issuer, including non-delivery and conditional delivery of a debt obligation, are ineffective against a good faith purchaser.

62. (1) A purchaser is deemed to have notice of any defect in the issue of a debt obligation or any defence of the issuer if the debt obligation becomes stale within the meaning of subsection (2).

(2) A debt obligation becomes stale if

(a) the purchaser takes the debt obligation later than the prescribed period that is after

(i) the date on which performance of the principal obligation evidenced by the debt obligation was due, or

(ii) the date on or after which the debt obligation is to be presented or surrendered for redemption or exchange; or

(b) the payment of money or the delivery of debt obligations is required in order to present or surrender the debt obligation, the money or debt obligations are available on the day for the payment or delivery and the purchaser takes the debt obligation later than the prescribed period that is after that day.

63. (1) Subject to subsection (2), an unauthorized signature on a debt obligation is ineffective.

(2) An unauthorized signature on a debt obligation is effective in favour of a good faith purchaser if the signature was made by

(a) an authenticating trustee, transfer agent or other person entrusted by the issuer with the duty to sign the debt obligation, or similar debt obligations, or to prepare them for signing; or

(b) an employee of the issuer or a person referred to in paragraph (a) who handles the debt obligation in the ordinary course of their duties.

64. If a debt obligation contains the signatures necessary for its issue or transfer but is incomplete in another respect, any person may complete it in accordance with their authority.

65. A debt obligation that was completed incorrectly is enforceable by a good faith purchaser.

66. A completed debt obligation that was improperly altered, even if fraudulently altered, remains enforceable but only according to its original terms.

67. (1) A person signing a debt obligation as an authenticating trustee, transfer agent or other person entrusted by the issuer with the duty to sign the debt obligation guarantees to a good faith purchaser that

(a) the debt obligation is genuine;

(b) the person’s acts in connection with the debt obligation are within the person’s authority; and

(c) the person has reasonable grounds for believing that the debt obligation is in the form and within the amount the issuer is authorized to issue.

(2) Unless agreed otherwise, a person referred to in subsection (1) does not assume any further liability for the validity of the debt obligation.

68. (1) On delivery of a debt obligation, the purchaser of the debt obligation acquires the rights in it that the transferor had or had authority to convey.

(2) A good faith purchaser of a debt obligation acquires it free from any adverse claim.

(3) A purchaser who was a party to a fraud or illegality affecting a debt obligation or who, as a prior holder, had notice of an adverse claim does not have a better position by taking from a later good faith purchaser.

69. A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

70. (1) A purchaser of a debt obligation, or a broker for a seller or purchaser, is deemed to have notice of an adverse claim if

(a) the debt obligation has been endorsed “for collection” or “for surrender” or for a purpose other than transfer; or

(b) the debt obligation is in bearer form and has a statement on it that it belongs to a person other than the transferor.

(2) The mere writing of a name on a debt obligation is not a statement for the purposes of paragraph (1)(b).

71. (1) A purchaser of a debt obligation, or a broker for a seller or purchaser, has no duty to inquire into the rightfulness of the transfer and, subject to sections 70 and 72, has no notice of an adverse claim.

(2) Subsection (1) applies even if the purchaser or broker has notice that the debt obligation is held by a third person or is registered in the name of or endorsed by a fiduciary.

72. A purchaser or broker who knows that the transaction is for the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty is deemed to have notice of an adverse claim.

73. (1) The following events do not constitute notice of an adverse claim except if the debt obligation becomes stale within the meaning of subsection (2):

(a) an event that creates a right to perform­ance of the principal obligation evidenced by the debt obligation; or

(b) an event that sets the date on or after which the debt obligation is to be presented or surrendered for redemption or exchange.

(2) A debt obligation becomes stale if

(a) the purchaser takes the debt obligation later than the prescribed period that is after

(i) the date on which performance of the principal obligation evidenced by the debt obligation was due, or

(ii) the date on or after which the debt obligation was to be presented or surrendered for redemption or exchange; or

(b) the payment of money or the delivery of debt obligations is required in order to present or surrender the debt obligation, the money or debt obligations are available on the day for the payment or delivery and the purchaser takes the debt obligation later than the prescribed period that is after that day.

74. (1) A person who presents a debt obligation for registration of transfer or for payment or exchange guarantees to the issuer that the person is entitled to do so.

(2) A good faith purchaser who receives a new, reissued or re-registered debt obligation and who registers a transfer guarantees only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.

75. A person who transfers a debt obligation to a purchaser for value guarantees by the transfer only that

(a) the transfer is effective and rightful;

(b) the debt obligation is genuine and has not been materially altered; and

(c) the person knows of nothing that might impair the validity of the debt obligation.

76. An intermediary delivering a debt obligation to a purchaser who knows that the intermediary is an intermediary guarantees only its good faith.

77. A broker shall give to a customer, to the issuer and to a purchaser the guarantees provided in sections 74 to 76 and has the rights and privileges of a purchaser under those sections, and those guarantees of and in favour of the broker acting as an agent or mandatary are in addition to guarantees given by the customer and guarantees given in favour of the customer.

78. If a registered debt obligation is delivered to a purchaser without a necessary endorsement, the purchaser has the right to demand the endorsement. The purchaser becomes a good faith purchaser after the endorsement.

79. (1) In section 80, subsections 87(1) and 95(1) and section 99, “appropriate”, with respect to a person, means that the person is

(a) the person who is specified by the debt obligation or by a special endorsement to be entitled to the debt obligation;

(b) if the person described in paragraph (a) is described as a fiduciary but is no longer serving as one, either that person or their successor;

(c) if the debt obligation or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons is no longer a fiduciary, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed or qualified;

(d) if the person described in paragraph (a) is an individual and is without capacity to act by reason of death, incompetence, minority or other incapacity, the person’s fiduciary;

(e) if the debt obligation or endorsement mentioned in paragraph (a) specifies more than one person with a right of survivorship in common law and by reason of death not all of the persons can sign, the survivor or survivors;

(f) a person who has the legal power to sign; or

(g) to the extent that a person described in any of paragraphs (a) to (f) may act through an agent or mandatary, the person’s authorized agent or mandatary.

(2) The authority of a person signing is determined as of the time of signing.

80. (1) An endorsement of a debt obligation in registered form for the purposes of assignment or transfer is made when an appropriate person signs either the debt obligation or a separate document, or when the signature of an appropriate person is written without more on the back of the debt obligation.

(2) An endorsement may be in blank or special.

(3) An endorsement in blank includes an endorsement to bearer.

(4) A special endorsement specifies the person to whom the debt obligation is to be transferred or who has power to transfer it.

(5) A holder may convert an endorsement in blank into a special endorsement.

81. Unless agreed otherwise, the endorser does not, by the endorsement, assume any obligation that the debt obligation will be honoured by the issuer.

82. An endorsement purporting to be an endorsement of only part of a debt obligation representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

83. Failure of a fiduciary to comply with the document that is the source of the fiduciary’s power or with the law of the jurisdiction governing the fiduciary relationship does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.

84. An endorsement of a debt obligation does not constitute a transfer until delivery of the debt obligation on which it appears or, if the endorsement is on a separate document, until delivery of both the debt obligation and the document.

85. An endorsement of a debt obligation in bearer form may give notice of an adverse claim under section 70 but does not otherwise affect any of the holder’s rights.

86. (1) The owner of a debt obligation may assert the ineffectiveness of an endorsement against the issuer or a purchaser, other than a purchaser for value without notice of an adverse claim who has in good faith received a new, re-issued or re-registered debt obligation on registration of transfer, unless the owner

(a) has ratified an unauthorized endorsement of the debt obligation; or

(b) is otherwise precluded from impugning the effectiveness of an unauthorized endorsement.

(2) An issuer who registers the transfer of a debt obligation on an unauthorized endorsement is liable for improper registration.

87. (1) A person who guarantees the signature of an endorser of a debt obligation warrants that, at the time of signing, the signer was an appropriate person to endorse and the signature was genuine.

(2) A person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.

(3) A person who guarantees the endorsement of a debt obligation warrants both the signature and the rightfulness, in all respects, of the transfer to which the signature relates, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.

(4) If a guarantee referred to in subsection (1) or (3) is made to any person who, relying on the guarantee, takes or deals with the debt obligation, the guarantor is liable to the person for any loss resulting from breach of warranty.

88. Delivery of a debt obligation to a purchaser occurs when

(a) the purchaser or a person designated by the purchaser acquires possession of it;

(b) the purchaser’s broker acquires possession of a debt obligation specially endorsed to or issued in the name of the purchaser;

(c) the purchaser’s broker sends the purchas­er confirmation of the purchase and the broker in the broker’s records identifies a specific debt obligation as belonging to the purchaser; or

(d) in respect of an identified debt obligation to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.

89. (1) A purchaser is the owner of a debt obligation held for the purchaser by a broker, but a purchaser is not a holder except in the cases described in paragraphs 88(b) and (c).

(2) If a debt obligation is part of a fungible bulk, by nature or usage of trade, a purchaser of the debt obligation is the owner of the proportionate interest in the bulk.

(3) Notice of an adverse claim received by a broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent debt obligation in respect of which no notice of an adverse claim has been received.

90. (1) Unless agreed otherwise, if a sale of a debt obligation is made through brokers, on a stock exchange or otherwise,

(a) the selling customer fulfils their duty to deliver when the customer delivers the debt obligation to the selling broker or to a person designated by the selling broker or when they cause an acknowledgement to be made to the selling broker that the debt obligation is held for the selling broker; and

(b) the selling broker, including a corre­spondence broker, acting for a selling customer fulfils their duty to deliver by delivering the debt obligation or a similar debt obligation to the buying broker or to a person designated by the buying broker or by effecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.

(2) Except as provided otherwise in this section and unless agreed otherwise, a transferor’s duty to deliver a debt obligation under a contract of purchase is not fulfilled until the transferor delivers the debt obligation in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the debt obligation is held for the purchaser.

(3) A sale to a broker purchasing for the broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.

91. (1) A person against whom the transfer of a debt obligation is wrongful may, against anyone except a good faith purchaser,

(a) reclaim possession of the debt obligation or obtain possession of a new debt obligation evidencing all or part of the same rights; or

(b) claim damages.

(2) If the transfer of a debt obligation is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the debt obligation or a new debt obligation even from a good faith purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 86.

92. (1) Unless agreed otherwise, a transferor shall, on demand, supply a purchaser with proof of the transferor’s authority to transfer a debt obligation or with any other requisite that is necessary to obtain registration of the transfer of a debt obligation, but if the transfer is not for value, it is not necessary for the transferor to provide authority to transfer unless the purchas­er pays the reasonable and necessary costs of the proof and transfer.

(2) If a transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject, rescind or resolve the transfer.

93. No seizure of a debt obligation or other interest evidenced by the debt obligation is effective until the person making the seizure obtains possession of the debt obligation.

94. An agent or mandatary, or a bailee or depositary, who in good faith has received debt obligations and sold, pledged or delivered them according to the instructions of the mandator, pledgor, depositor or principal is not in breach of their duties as a fiduciary nor otherwise liable even though they have no right to dispose of the debt obligations.

95. (1) If a debt obligation in registered form is presented for transfer, the issuer shall register the transfer if

(a) the debt obligation is endorsed by an appropriate person;

(b) reasonable assurance is given that the endorsement is genuine and effective;

(c) the issuer has no duty to inquire into adverse claims or has discharged that duty;

(d) all applicable laws relating to the collection of taxes have been complied with;

(e) the transfer is rightful or is to a good faith purchaser; and

(f) any transfer fee referred to in section 40 has been paid.

(2) An issuer who has a duty to register a transfer of a debt obligation is liable to the person presenting it for registration for any loss resulting from an unreasonable delay in registration or from the failure or refusal to register the transfer.

96. (1) An issuer may require an assurance that each necessary endorsement on a debt obligation is genuine and effective by requiring a guarantee of the signature of the person endorsing the debt obligation and by requiring

(a) if the endorsement is by an agent or mandatary, reasonable assurance of authority to sign;

(b) if the endorsement is by a fiduciary, evidence of appointment or incumbency;

(c) if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

(d) in any other case, assurance that corresponds as closely as is feasible to the cases set out in paragraphs (a) to (c).

(2) For the purpose of subsection (1), a guarantee of the signature of a person is sufficient if it is signed by or on behalf of a person whom the issuer believes, on reasonable grounds, to be a responsible person.

(3) An issuer may adopt reasonable stand­ards to determine responsible persons.

(4) For the purpose of paragraph (1)(b), the following constitute sufficient evidence of appointment or incumbency of a fiduciary:

(a) in the case of a fiduciary of a deceased debt obligation holder’s estate or succession, a certified or notarial copy of the document referred to in paragraph 54(1)(c) and dated not earlier than the first day of the prescribed period before a debt obligation is presented for transfer; or

(b) in the case of any other fiduciary, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.

(5) An issuer may adopt reasonable stand-ards with respect to evidence referred to in paragraph (4)(b).

(6) An issuer is deemed not to have notice of the contents of a document referred to in subsection (4) that is obtained by the issuer except to the extent that the contents relate directly to appointment or incumbency.

97. If an issuer, in relation to a transfer, demands assurance other than an assurance specified in subsection 96(1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the issuer is deemed to have notice of all matters contained in the document that affect the transfer.

98. (1) An issuer to whom a debt obligation is presented for registration has a duty to inquire into adverse claims if

(a) the issuer receives written notice of an adverse claim at a time and in a manner that provide the issuer with a reasonable opportunity to act on it before the issue of a new, reissued or re-registered debt obligation and the notice discloses the name and address of the claimant, the registered owner and the issue of which the debt obligation is a part; or

(b) the issuer is deemed to have notice of an adverse claim from a document that it obtained under section 97.

(2) An issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address provided by the adverse claimant or, if no such address has been provided, to the adverse claimant’s residence or regular place of business, that a debt obligation has been presented for registration of transfer by a named person and that the transfer will be registered unless, no later than the prescribed period after the date of sending the notice, the issuer

(a) is served with a restraining order or other order of a court; or

(b) is provided with an indemnity bond sufficient in the issuer’s judgement to protect the issuer and any transfer agent or other agent or mandatary of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.

99. Unless an issuer is deemed to have notice of an adverse claim from a document that is obtained under section 97 or has received notice of an adverse claim under subsection 98(1), if a debt obligation presented for registration is endorsed by an appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,

(a) an issuer registering a debt obligation in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and the issuer may then assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular debt obligation;

(b) an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; and

(c) an issuer is deemed not to have notice of the contents of a court record or a registered document even if the record or document is in the issuer’s possession and the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.

100. A written notice of adverse claim received by an issuer is effective for the prescribed period unless the notice is renewed in writing.

101. (1) Except as provided otherwise in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a debt obligation if

(a) the necessary endorsements were on or with the debt obligation; and

(b) the issuer had no duty to inquire into adverse claims or had discharged that duty.

(2) If an issuer has registered a transfer of a debt obligation to a person not entitled to it, the issuer shall on demand deliver a similar debt obligation to the owner unless

(a) the issuer is not liable by virtue of subsection (1);

(b) the owner is precluded by subsection 102(1) from asserting a claim; or

(c) the delivery would result in an overissue to which section 55 applies.

102. (1) The owner of a debt obligation who fails to notify the issuer of an adverse claim, in writing, within a reasonable time after the owner knows of the loss, apparent destruction or wrongful taking of the debt obligation is precluded from asserting against the issuer a claim to a new debt obligation if the issuer has registered a transfer of the debt obligation.

(2) If the owner of a debt obligation claims that the debt obligation has been lost, destroyed or wrongfully taken, the issuer shall issue a new debt obligation in place of the original one if the owner

(a) so requests before the issuer has notice that the debt obligation has been acquired by a good faith purchaser;

(b) provides the issuer with a sufficient indemnity bond; and

(c) satisfies any other reasonable requirements imposed by the issuer.

(3) If, after the issue of a new debt obligation under subsection (2), a good faith purchaser of the original debt obligation presents the original one for registration of transfer, the issuer shall register the transfer unless registration would result in an overissue to which section 55 applies.

(4) In addition to the rights that an issuer has by reason of an indemnity bond, the issuer may recover the new debt obligation issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a good faith purchaser.

103. An authenticating trustee, transfer agent or other agent or mandatary of an issuer has, in respect of the issue, registration of transfer and cancellation of a debt obligation of the issuer,

(a) a duty to the issuer to exercise good faith and reasonable diligence; and

(b) the same obligations to the holder or owner of the debt obligation and the same rights, privileges and immunities as the issuer.

104. Notice to an authenticating trustee, transfer agent or other agent or mandatary of an issuer is notice to the issuer in respect of the functions performed by the agent or mandatary.

PART 7