Copyright © 2004: Queen's Printer,
Victoria, British Columbia, Canada
IMPORTANT INFORMATION

BUSINESS CORPORATIONS ACT — Continued
[SBC 2002] CHAPTER 57

Part 3 — Finance

Division 1 — Authorized Share Structure

Kinds, classes and series of shares

52 (1) The authorized share structure of a company

(a) must consist of

(i) one or both of the following kinds of shares:

(A) shares without par value;

(B) shares with par value, and

(ii) one or more classes of shares, and

(b) may, on or after the recognition of the company, include one or more series of shares in any class of shares if the special rights or restrictions attached to the shares of that class provide for that inclusion.

(2) Each class of shares must consist of shares of the same kind and, in the case of a class of shares consisting of shares with par value, shares having the same par value.

(3) The par value of shares with par value must be expressed in reference to a currency and, if the currency is not Canadian currency, the type of currency must be stated.

Description of authorized share structure

53 A company's notice of articles must

(a) set out the identifying name of each class or series of its shares and the kind of shares of which that class or series of shares consists,

(b) set out, for each class and series of shares, the maximum number of the shares of that class or series of shares that the company is authorized to issue, or state that there is no maximum number,

(c) set out the par value of any shares with par value, and

(d) identify any shares without par value as being shares of that kind.

Change in authorized share structure

54 (1) Subject to this Part, a company may

(a) create one or more classes of shares,

(b) create one or more series of shares,

(c) increase, reduce or eliminate the maximum number of shares that the company is authorized to issue out of any class or series of shares,

(d) establish a maximum number of shares that the company is authorized to issue out of any class or series of shares for which no maximum is established,

(e) subdivide all or any of its unissued, or fully paid issued, shares with par value into shares of smaller par value,

(f) subdivide all or any of its unissued, or fully paid issued, shares without par value,

(g) consolidate all or any of its unissued, or fully paid issued, shares with par value into shares of larger par value,

(h) consolidate all or any of its unissued, or fully paid issued, shares without par value,

(i) if the company is authorized to issue shares of a class of shares with par value,

(i) subject to section 74, decrease the par value of those shares, or

(ii) increase the par value of those shares if none of the shares of that class of shares are allotted or issued,

(j) eliminate any class or series of shares if none of the shares of that class or series of shares are allotted or issued,

(k) change all or any of its unissued, or fully paid issued, shares with par value into shares without par value,

(l) change all or any of its unissued shares without par value into shares with par value,

(m) alter the identifying name of any of its shares, or

(n) otherwise alter its authorized share structure when required or permitted to do so by this Act.

(2) A company must not subdivide or consolidate shares with par value under subsection (1) of this section unless the product obtained by multiplying the number of shares by their par value is the same both before and after the subdivision or consolidation.

(3) A company that wishes to effect a change contemplated by subsection (1) must,

(a) if its notice of articles reflects information that would be incorrect or incomplete were the change to occur, effect that change by altering its notice of articles to reflect that change,

(b) if both its notice of articles and articles reflect information that would be incorrect or incomplete were the change to occur, effect that change by altering its notice of articles and articles to reflect that change, or

(c) in any other case, refrain from effecting the change until the company has been authorized to effect that change

(i) by the type of resolution specified by the articles, or

(ii) if the articles do not specify the type of resolution, by a special resolution.

(4) A company may, in conjunction with the subdivision or consolidation of shares referred to in this section, convert fractional shares within the class or series of shares being subdivided or consolidated into whole shares in accordance with section 83.

Alterations may be expressed in a single resolution

55 (1) If a company proposes 2 or more alterations to its authorized share structure or shares,

(a) the shareholders' authorizations required or permitted by this Act or the articles, as the case may be, may be expressed in a single resolution, and

(b) the authorizations or consents of shareholders holding shares of a class or series of shares may be expressed in a single resolution.

(2) In order for a single resolution contemplated by subsection (1) (a) or (b) to authorize or provide consent for 2 or more alterations to a company's authorized share structure or shares, that single resolution must be passed by the majority of votes that is required to authorize or consent to the alteration requiring the highest majority of authorizing or consenting votes.

Division 2 — Share Attributes

Share is personal estate

56 A share in a company is personal estate.

Contents of share certificate

57 (1) A company must set out on the face of each share certificate issued by it after the coming into force of this Act

(a) the name of the company and words indicating that it is a British Columbia company,

(b) the name of the person to whom the share certificate is issued,

(c) the number, class and, if applicable, series of shares represented by the share certificate and whether those shares are with or without par value and, if with par value, that par value,

(d) the date of issue of the share certificate,

(e) if the shares represented by the share certificate are subject to a restriction on transfer, a conspicuous statement that the restriction exists, and

(f) a numerical or other designation by which the share certificate is identified.

(2) There must be stated on each share certificate issued on or after October 1, 1973 for partly paid shares issued before October 1, 1973, the amount paid up on each of the shares represented by the share certificate.

(3) Subject to subsection (4), each share certificate issued on or after October 1, 1973 for shares to which special rights or restrictions are attached must contain or have attached to it the full text of those special rights or restrictions.

(4) Instead of complying with subsection (3), a company may keep at its records office or registered office a copy of the full text of the special rights or restrictions referred to in that subsection and, in that event, the company must

(a) provide, without charge, a copy of that full text to any person who requests one, and

(b) state on each share certificate representing a share to which those special rights or restrictions are attached that

(i) there are special rights or restrictions attached to the share, and

(ii) a copy of the full text of those special rights or restrictions may be obtained, without charge, from the records office or the registered office, as the case may be.

Special rights or restrictions

58 (1) The special rights or restrictions attached to a share are,

(a) for a share of a pre-existing company that has not complied with section 370 (1) (a) and (b) or 436 (1) (a) and (b), the special rights or restrictions set out for that share in the company's memorandum or articles, or

(b) for a share of any other company, the special rights or restrictions set out for that share in the company's articles.

(2) A company may, by the type of shareholders' resolution specified by the articles, or, if the articles do not specify the type of resolution, by a special resolution,

(a) create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued, or

(b) vary or delete any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued.

(3) Special rights or restrictions are not created or attached under subsection (2) (a) of this section and special rights or restrictions attached to a share are not varied or deleted under subsection (2) (b) until,

(a) in the case of a pre-existing company, the company has complied with section 370 (1) (a) and (b) or 436 (1) (a) and (b), and

(b) in the case of any company, including a company referred to in paragraph (a) of this subsection, the articles have been altered to reflect the creation, attachment, variation or deletion.

(4) Nothing in this Act prevents the same special rights or restrictions being attached to shares of more than one class or series of shares.

Classes of shares

59 (1) Subject to section 256, a company may, in its notice of articles and articles, or, if the company is a pre-existing company that has not complied with section 370 (1) (a) or 436 (1) (a), in its memorandum or in its memorandum and articles, provide for one or more classes of shares.

(2) If no express provision for one or more classes of shares is made in a company's charter under subsection (1) of this section, the shares of the company constitute a class of shares for the purposes of this Act.

(3) Every share must be equal to every other share, subject to special rights or restrictions attached to any such share under the memorandum or articles.

(4) Subject to subsection (6), each share of a class of shares must have attached to it the same special rights or restrictions as are attached to every other share of that class of shares.

(5) It is not inconsistent with subsection (3) or (4) for special rights or restrictions to be binding on or accessible to only some of the shareholders holding shares of a class of shares if those special rights or restrictions are attached to each of the shares of that class of shares.

(6) Subsection (4) does not apply to special rights or restrictions that are applicable only to one or more series of shares.

Shares in series

60 (1) The special rights or restrictions attached to the shares of a class of shares

(a) may provide that the class of shares includes or may include one or more series of shares, and

(b) subject to subsections (3) and (4), may authorize the directors, by resolution, to do one or more of the following:

(i) determine the maximum number of shares of any of those series of shares that the company is authorized to issue, determine that there is no maximum number or alter any determination made under this subparagraph, and authorize the alteration of the notice of articles accordingly;

(ii) alter the articles, and authorize the alteration of the notice of articles, to create an identifying name by which the shares of any of those series of shares may be identified or to alter any identifying name created under this subparagraph;

(iii) alter the articles, and authorize the alteration of the notice of articles, to attach special rights or restrictions to the shares of any of those series of shares or to alter any such special rights or restrictions.

(2) Any rights provided to directors under subsection (1) (b) are in addition to any rights available to shareholders under this Act to authorize or make the alterations, determinations and authorizations referred to in that subsection in relation to shares of a class of shares to which are attached the special rights or restrictions referred to in subsection (1) (a).

(3) If alterations, determinations or authorizations contemplated by subsection (1) (b) are to be made in relation to a series of shares of which there are issued shares, those alterations, determinations and authorizations must be made by the type of shareholders' resolution specified by the articles, or, if the articles do not specify the type of resolution, by a special resolution.

(4) Each share of a series of shares must have attached to it the same special rights or restrictions as are attached to every other share of that series of shares, and the special rights or restrictions attached to shares of a series of shares must be consistent with the special rights or restrictions attached to shares of the class of shares of which the series of shares is a part.

(5) It is not inconsistent with subsection (4) for special rights or restrictions to be binding on or accessible to only some of the shareholders holding shares of a series of shares if those special rights or restrictions are attached to each of the shares of that series of shares.

(6) No special rights or restrictions attached to a series of shares confer on the series priority over any other series of shares of the same class of shares respecting

(a) dividends, or

(b) a return of capital

(i) on the dissolution of the company, or

(ii) on the occurrence of any other event that entitles the shareholders holding the shares of all series of shares of the same class of shares to a return of capital.

(7) Without limiting subsection (6),

(a) if cumulative dividends in respect of a series of shares are not paid in full, the shares of all series of shares of the same class of shares must, in a payment of accumulated dividends, participate rateably in accordance with the amounts that would be payable on those shares if all the accumulated dividends were paid in full, and

(b) if amounts payable on a dissolution of the company, or on the occurrence of any other event that entitles the shareholders holding the shares of all series of shares of the same class of shares to a return of capital, are not paid in full, the shares of all series of shares of the same class of shares must, in a return of capital in respect of that class of shares, participate rateably in accordance with the amounts that would be payable on the return of capital if all amounts so payable were paid in full.

No interference with class or series rights without consent

61 A right or special right attached to issued shares must not be prejudiced or interfered with under this Act or under the memorandum, notice of articles or articles unless the shareholders holding shares of the class or series of shares to which the right or special right is attached consent by a special separate resolution of those shareholders.

Division 3 — Allotment and Issue of Shares

Issue of shares

62 Subject to section 64, to the Pre-existing Company Provisions, if applicable, to the memorandum or notice of articles, as the case may be, and to the articles of a company, shares of the company may be issued at the times and to the persons that the directors may determine.

Issue price for shares

63 (1) The issue price for a share without par value must be set

(a) in the manner contemplated by the company's memorandum or articles, or

(b) if the memorandum or articles do not contemplate the manner in which the issue price is to be set,

(i) in the case of a pre-existing company that has not complied with section 370 (1) (a) or 436 (1) (a) or that has a notice of articles that reflects that the Pre-existing Company Provisions apply to the company, by a special resolution, or

(ii) in any other case, by a directors' resolution.

(2) The issue price for a share with par value must be

(a) set by a directors' resolution, and

(b) equal to or greater than the par value of the share.

Payment of consideration for shares

64 (1) In this section, "property" does not include

(a) money, or

(b) a record evidencing indebtedness of the person to whom shares are to be issued.

(2) A share must not be issued until it is fully paid.

(3) A share is fully paid when

(a) consideration is provided to the company for the issue of the share by one or more of the following:

(i) past services performed for the company;

(ii) property;

(iii) money, and

(b) the value of the consideration received by the company equals or exceeds the issue price set for the share under section 63.

(4) The directors must satisfy themselves that the aggregate value of the past services, property and money referred to in subsection (3) (a) of this section equals or exceeds the issue price set for the share under section 63 and in doing so must not attribute to those past services or that property a value that exceeds the fair market value of those past services or that property, as the case may be.

(5) In considering whether the aggregate value of the past services, property and money referred to in subsection (3) (a) of this section equals or exceeds the issue price set for the share under section 63, the directors may take into account reasonable charges and expenses that

(a) have been incurred by the person providing the past services, property and money, and

(b) are reasonably expected to benefit the company.

Deemed receipt of payment

65 (1) Sections 63 and 64 (1) and (3) to (5) do not apply to

(a) a share issued by way of dividend, or

(b) a conversion or exchange of shares under

(i) section 76,

(ii) an amalgamation agreement under Division 3 of Part 9, or

(iii) an arrangement under Division 5 of Part 9.

(2) Shares issued by way of dividend are deemed to be fully paid.

(3) If shares that are converted or exchanged in a manner contemplated by subsection (1) (b) of this section are fully paid, the shares issued under the conversion or exchange are deemed to be fully paid.

Section Repealed

66 [Repealed 2003-71-11.]

Commissions and discounts

67 (1) The directors may authorize the company to pay a reasonable commission or allow a reasonable discount to any person in consideration of that person

(a) procuring or agreeing to procure purchasers for shares of the company, or

(b) purchasing or agreeing to purchase shares of the company from the company or from any other person.

(2) In this Act, reference to the consideration received for a share means,

(a) if a commission has been paid with respect to the share, the gross amount of the consideration received without taking into account any amount paid by way of commission, and

(b) if a discount has been allowed with respect to the share, the gross amount of the consideration before the discount is subtracted from that amount.

Validation of creation, allotment or issue of shares

68 (1) The creation, allotment or issue of shares by a company, including on the exercise of conversion or exchange rights attached to securities, may be validated under this section if

(a) the creation, allotment or issue of those shares, or any of the terms of the allotment or issue of those shares, is inconsistent with

(i) a provision, applicable to the company, of this Act, a former Companies Act or any other Act, or

(ii) the memorandum, notice of articles or articles of the company, or

(b) the creation, allotment or issue of those shares is otherwise invalid.

(2) In a case to which subsection (1) applies,

(a) the court, on the application of any person whom the court considers to be an appropriate person to bring the application, including the company, a shareholder holding any of the shares for which validation under this section is sought or a creditor of the company, and on being satisfied that in all of the circumstances it is just and equitable to do so, may make one or more of the following orders:

(i) an order that validates the creation, allotment or issue of those shares;

(ii) an order that confirms the terms of the allotment or issue of those shares as if the terms of the allotment or issue were consistent with a provision, applicable to the company, of this Act, a former Companies Act or any other Act or with the company's notice of articles or memorandum, as the case may be, and articles, or

(b) the company may, by a unanimous resolution of all of the shareholders, whether or not their shares otherwise carry the right to vote, passed after the creation, allotment or issue of shares for which validation under this section is sought, do one or more of the following:

(i) validate the creation, allotment or issue of those shares;

(ii) confirm the terms of the allotment or issue of those shares as if the terms of the allotment or issue were consistent with the company's notice of articles or memorandum, as the case may be, and articles.

(3) If the court makes an order under subsection (2) (a),

(a) the company must, if the effect of the order is to alter any of the information contained in the company's notice of articles or memorandum,

(i) comply with section 370 or 436, as the case may be, if the company does not have a notice of articles, and

(ii) alter its notice of articles in accordance with the order, and

(b) the creation, allotment or issue of shares is validated, or the terms of the allotment or issue of shares are confirmed, for the purposes of this section,

(i) in a case referred to in paragraph (a) of this subsection, in accordance with section 257 (5), or

(ii) in any other case, on the making of the order.

(4) If a unanimous resolution is passed under subsection (2) (b) of this section,

(a) the company must, if the effect of the resolution is to alter any of the information contained in the company's notice of articles or memorandum,

(i) comply with section 370 or 436, as the case may be, if the company does not have a notice of articles, and

(ii) alter its notice of articles in accordance with the resolution, and

(b) the creation, allotment or issue of shares is validated, or the terms of the allotment or issue of shares are confirmed, for the purposes of this section,

(i) in a case referred to in paragraph (a) of this subsection, in accordance with section 257 (5), or

(ii) in any other case, when a copy of the unanimous resolution is received for deposit at the records office of the company.

(5) When, under this section, the creation, allotment or issue of shares is validated or the terms of the allotment or issue of shares are confirmed, the applicable shares are deemed to have been validly created, allotted or issued, as the case may be, on the terms of the allotment or issue of them or on such other terms as are ordered by the court or are set out in the unanimous resolution, as the case may be.

Fractional shares

69 (1) A company may issue a fractional share, and this Part applies.

(2) Unless the memorandum or articles provide otherwise, a person holding a fractional share has, in relation to the fractional share, the rights of a shareholder in proportion to the fraction of the share held.

Dividends

70 (1) Unless its charter or an enactment provides otherwise, a company may declare a dividend, and may pay that dividend, whether out of profits, capital or otherwise,

(a) by issuing shares or warrants by way of dividend, and

(b) subject to subsection (2), in property, including in money.

(2) A company may declare or pay a dividend under subsection (1) (b) unless there are reasonable grounds for believing that

(a) the company is insolvent, or

(b) the payment of the dividend would render the company insolvent.

(3) On the application of a director of a company, the court may declare whether the declaration or payment of a dividend by the company would contravene subsection (2).

(4) A dividend is not invalid merely because it is declared or paid in contravention of subsection (2).

Discharge for payment

71 The negotiation of a cheque by, or the acknowledgment of receipt by, a shareholder of a company is a valid discharge to the company for a dividend or sum paid or property transferred by the company in respect of a share registered in the name of that person, and the company is not bound to see to the execution of a trust, express, implied or constructive, concerning shares of the company.

Division 4 — Capital

Capital

72 (1) When a company issues shares without par value, there is added to the capital of the company for that class or series of shares,

(a) if the shares are issued for property within the meaning of section 64 (1), an amount not greater than the issue price for those shares,

(b) if the shares are issued by way of dividend, the declared amount, if any, of the dividend, and

(c) in any other case, the issue price for those shares.

(2) In addition to any additions to capital effected under subsection (1), a company may add to its capital in respect of a class or series of shares without par value an amount specified by a directors' resolution or an ordinary resolution.

(3) When a company issues shares with par value, there is added to the capital of the company, for that class or series of shares, an amount equal to the aggregate of the par values of those shares.

Special rule

73 If shares that are converted or exchanged in a manner contemplated by section 65 (1) (b) are fully paid, the capital of the company in relation to the shares that are issued under the conversion or exchange is, at the time of the conversion or exchange, the amount that was the capital of the company, or, in the case of an amalgamation, of the amalgamating corporation, in relation to the shares that were converted or exchanged.

Reduction of capital

74 (1) Subject to section 75 and subsection (2) of this section, a company may reduce its capital if it is authorized to do so

(a) by a court order, or

(b) if the capital is reduced to an amount that is not less than the realizable value of the company's assets less its liabilities, by a special resolution or court order.

(2) A resolution of a company under subsection (1) (b) to reduce capital does not take effect,

(a) if the company is a company registered under the Small Business Venture Capital Act, until the company has paid the money payable by it to the minister under section 22 of that Act, or

(b) if the company is a company registered under Part 2 of the Employee Investment Act, until the company has obtained confirmation from the minister that all of the money payable to the minister under sections 31 and 32 of that Act has been paid.

Exception to section 74

75 A company may, on the terms, if any, and in the manner, if any, provided in its memorandum or articles, do any of the following without obtaining the special resolution or court order referred to in section 74 (1) and without changing its authorized share structure:

(a) redeem or purchase shares under section 77 or 227 (3) (g) or under Division 2 of Part 8;

(b) accept a surrender of shares by way of gift or for cancellation;

(c) convert fractional shares into whole shares in accordance with section 83

(i) on a subdivision or consolidation of shares under section 54 (4), or

(ii) on a redemption, purchase or surrender referred to in paragraph (a) or (b) of this section.

Division 5 — Conversion, Exchange or Acquisition of Shares by Company

Conversion or exchange

76 If securities of a company have rights of conversion or exchange attached to them, the company may, in accordance with those rights and despite section 78,

(a) convert or exchange any of those securities, other than shares that are not fully paid, into or for unissued shares, and

(b) reissue shares converted or exchanged under this section as if they had never been issued.

Company may redeem or purchase

77 Subject to sections 78 and 79 and the Pre-existing Company Provisions, if applicable, a company may

(a) redeem, on the terms and in the manner provided in its memorandum or articles, any of its shares that has a right of redemption attached to it,

(b) if it is so authorized by, and subject to any restriction in, its memorandum or articles, purchase any of its shares, and

(c) subject to any restriction in its memorandum or articles, otherwise acquire any of its shares.

Purchase or acquisition prohibited when insolvent

78 (1) A company must not make a payment or provide any other consideration to purchase or otherwise acquire any of its shares if there are reasonable grounds for believing that

(a) the company is insolvent, or

(b) making the payment or providing the consideration would render the company insolvent.

(2) On the application of a director of a company, the court may declare whether a purchase or other acquisition of shares by the company would contravene subsection (1).

(3) A purchase or acquisition of shares is not invalid merely because it is in contravention of subsection (1).

Redemption prohibited when insolvent

79 (1) A company must not make a payment or provide any other consideration to redeem any of its shares if there are reasonable grounds for believing that

(a) the company is insolvent, or

(b) making the payment or providing the consideration would render the company insolvent.

(2) On the application of a director of a company, the court may declare whether a redemption of shares by the company would contravene subsection (1).

(3) A redemption of shares is not invalid merely because it is in contravention of subsection (1).

Sections Repealed

80 and 81 [Repealed 2003-71-11.]

Cancellation and retention of shares

82 (1) A company that has redeemed, purchased or otherwise acquired, by surrender or otherwise, any of its shares

(a) must cancel the shares if required to do so by its memorandum or articles or by a resolution of the directors,

(b) if not so required, may cancel the shares, or

(c) must, if the shares are not cancelled under paragraph (a) or (b), retain the shares.

(2) A share is cancelled for the purposes of this Act if the company's securities registers are altered to reflect that the share is no longer an issued share.

(3) The company must mark the share certificate, if any, representing a cancelled share in a manner that indicates that the share is no longer an issued share.

(4) A company that retains a share under subsection (1) (c) must alter its securities registers to reflect that the company is the shareholder of that share.

(5) A company may, unless its memorandum or articles provide otherwise,

(a) reissue a share that it has cancelled under subsection (1) (a) or (b), and

(b) sell, gift or otherwise dispose of a share that it has retained under subsection (1) (c).

(6) If a company retains a share under subsection (1) (c), the company

(a) is not entitled to vote the share at a meeting of its shareholders,

(b) must not pay a dividend in respect of the share, and

(c) must not make any other distribution in respect of the share.

Elimination of fractional shares

83 (1) If fractional shares are to be converted into whole shares under section 54 (4) or 75 (c), each fractional share remaining after conversion that is less than 1/2 of a share must be cancelled and each fractional share that is at least 1/2 of a share must be changed to one whole share.

(2) A change of a fractional share to a whole share under subsection (1) of this section does not constitute an issue of a share within the meaning of Division 3.

Division 6 — Purchase of Shares by Subsidiary

Definitions

84 In this Division:

"parent corporation" means the corporation

(a) of which the purchasing subsidiary is a subsidiary, and

(b) shares of which the purchasing subsidiary wishes to purchase;

"purchasing subsidiary" means a company that wishes to purchase shares of a corporation of which it is a subsidiary.

Subsidiary may purchase shares of parent

85 Subject to section 86 and unless its articles provide otherwise, a subsidiary may purchase or otherwise acquire shares of a corporation of which it is a subsidiary.

Purchase prohibited when insolvent

86 (1) A subsidiary must not purchase any of the shares of its parent corporation if there are reasonable grounds for believing that

(a) the subsidiary is insolvent, or

(b) the purchase would render the subsidiary insolvent.

(2) On the application of a director of the parent corporation or of a director of the purchasing subsidiary, the court may declare whether a purchase of shares of the parent corporation by the purchasing subsidiary would contravene subsection (1).

(3) A purchase by a subsidiary of shares of its parent corporation is not invalid merely because it is in contravention of subsection (1).

Division 7 — Liability of Shareholders

Liability of shareholders

87 (1) No shareholder of a company is personally liable for the debts, obligations, defaults or acts of the company.

(2) A shareholder is not, in respect of the shares held by that shareholder, personally liable for more than the lesser of

(a) the unpaid portion of the issue price for which those shares were issued by the company, and

(b) the unpaid portion of the amount actually agreed to be paid for those shares.

(3) Money payable by a shareholder to the company under the memorandum or articles is a debt due from the shareholder to the company as if it were a debt due or acknowledged to be due by instrument under seal.

Shareholder's liability for partly paid shares of a pre-existing company

88 (1) Shares of a pre-existing company that were not fully paid on the day on which this Act comes into force, and the shareholders holding those shares, remain subject to those provisions of the Companies Act, R.S.B.C. 1960, c. 67, and to those provisions of the articles of the company, that relate to the following:

(a) the payment of calls by and dividends to, and the liability of, the shareholder holding shares that are not fully paid;

(b) the enforcement of the liability referred to in paragraph (a).

(2) Subject to subsection (3), a company may, by a special resolution, extinguish or reduce a shareholder's liability in respect of an amount unpaid on any share that was issued before October 1, 1973.

(3) Unless the court orders otherwise, a company must not extinguish or reduce a shareholder's liability under subsection (2) in respect of an amount unpaid on a share if there are reasonable grounds for believing that

(a) the company is insolvent, or

(b) the extinguishment or reduction would render the company insolvent.

(4) On the application of a creditor of a company or any other person the court considers appropriate, the court may order a shareholder of the company to pay to the company an amount equal to any liability of the shareholder that was extinguished or reduced contrary to subsection (3).

(5) An application under subsection (4) must not be brought more than 2 years after the date that the resolution referred to in subsection (2) was passed.

Liability of former and present shareholders on bankruptcy or winding up

89 (1) For the purposes of the Bankruptcy and Insolvency Act (Canada) and the Winding-up and Restructuring Act (Canada), the liability of any former or present shareholder who is liable to contribute to the assets of the company is limited to the lesser of

(a) the amount of that shareholder's liability under section 87 of this Act, and

(b) an amount sufficient for

(i) the payment of the company's debts and liabilities,

(ii) the costs, charges and expenses of the bankruptcy or winding up, as the case may be, and

(iii) the adjustment of the rights of the shareholders among themselves.

(2) Despite subsection (1) of this section, a former shareholder is not liable to contribute to the assets of the company

(a) if that shareholder ceased to be a shareholder one year or more before the date of the commencement of the bankruptcy or winding up,

(b) in respect of any debt or liability of the company contracted after that shareholder ceased to be a shareholder, or

(c) in any other case, unless it appears to the court that the present shareholders are unable to satisfy the contributions required to be made by them.

(3) For the purposes of this section, any dividend, profit or other amount that is due to a shareholder as a result of that person being a shareholder may be taken into account for the purpose of the final adjustment of the rights of the shareholders among themselves, but that sum ranks behind a debt owed to a person that is not due to that person by reason of that person being a shareholder.

Division 8 — Trust Indentures

Definitions

90 In this Division:

"event of default" means an event, specified in a trust indenture, on the occurrence of which

(a) a security interest constituted by or under the trust indenture becomes enforceable, or

(b) the principal, interest or other money payable under the trust indenture becomes, or may be declared to be, payable before the date of maturity,

but an event is not an event of default unless and until the conditions set out in the trust indenture in connection with that event for the sending of notice or the lapse of time or otherwise have been satisfied;

"trustee" means a person appointed as trustee by or under a trust indenture and includes any successor trustee;

"trust indenture" means a deed, indenture or other record, however designated, including every supplement or amendment to it, made by a corporation

(a) under which the corporation issues or guarantees, or provides for the issue or guarantee of, debentures, and

(b) by or under which a person is appointed as trustee for the persons holding the debentures issued or guaranteed under the trust indenture.

Application

91 (1) Subject to subsections (2) and (3), this Division applies to a trust indenture only if a prospectus, securities exchange issuer circular or take over bid circular has been filed, under the Securities Act or any predecessor of that Act, in respect of the debentures issued or guaranteed or to be issued or guaranteed under the trust indenture.

(2) Sections 86 to 97 of the Company Act, 1996 continue to apply to trust indentures to which those sections applied before the coming into force of this Act, other than trust indentures to which this Division applies under subsection (1) of this section.

(3) On the application of an interested person or on the executive director's own motion, the executive director may make an order, subject to the terms and conditions the executive director considers appropriate, exempting a trust indenture or a class of trust indentures or a person or a class of persons from one or more of the provisions of this Division if the executive director considers that to do so would not be prejudicial to the public interest.

(4) A person may appeal to the Securities Commission an order made by the executive director under subsection (3).

Eligibility of trustee

92 (1) A person must not be appointed as a trustee unless that person is, and a group of persons must not be appointed as a trustee unless at least one of those persons is,

(a) resident in British Columbia,

(b) authorized to do business in British Columbia, or

(c) authorized to carry on trust business under the Financial Institutions Act.

(2) A person must not be appointed or act as a trustee if there is a material conflict of interest between the person's role as trustee and the person's role in any other capacity.

(3) A trustee must, within 3 months after becoming aware that a material conflict of interest referred to in subsection (2) exists,

(a) eliminate that conflict of interest, or

(b) resign as trustee.

(4) If, despite this section, a trustee has a material conflict of interest, the material conflict of interest does not, in any manner, affect the validity and enforceability of

(a) the trust indenture by or under which the trustee has been appointed,

(b) the security interest constituted by or under the trust indenture, and

(c) the debentures issued under the trust indenture.

(5) If a trustee has a material conflict of interest referred to in subsection (2), an interested party may apply to the court, whether or not the period referred to in subsection (3) has expired, for an order that the trustee be removed and replaced, and the court may make any order it considers appropriate.

Persons holding debentures may request information from trustee

93 (1) A person holding debentures issued under a trust indenture may, on payment to the trustee of any reasonable fee required by the trustee under this subsection, require the trustee to provide, within 25 days after the trustee receives from the person an affidavit referred to in subsection (2), a list of the following information as it appears on the records of the trustee on the date that the affidavit is received by the trustee:

(a) for each person holding outstanding debentures issued under the trust indenture,

(i) the name and address of that person, and

(ii) the aggregate principal amount of the outstanding debentures held by that person;

(b) the aggregate principal amount of all outstanding debentures under the trust indenture.

(2) The affidavit required under subsection (1)

(a) must be made by the person requiring the list,

(b) must contain

(i) the name and mailing address of the person requiring the list, or

(ii) if that person is a corporation, its name and the mailing address and, if different, the delivery address of its registered office or equivalent, and

(c) must contain a statement that the requested list will not be used except as permitted under subsection (4).

(3) If, without reasonable excuse, the trustee fails to provide the list within the time required by subsection (1), the person requiring the list may apply to the court for an order requiring the trustee to provide the list and the court may make the order.

(4) A person must not use a list obtained under this section except in connection with

(a) an effort to influence the voting of the persons holding the debentures,

(b) an offer to acquire the debentures, or

(c) any other matter relating to the debentures.

Information for trustee

94 An issuer or guarantor of debentures must, on demand by a trustee, promptly provide to the trustee the information required to enable the trustee to comply with section 93 (1).

Evidence of compliance with trust indenture

95 If requested to do so by the trustee, an issuer or a guarantor of debentures issued or to be issued under a trust indenture must, before doing any of the following acts, provide to the trustee evidence of compliance with every term of the trust indenture relating to that act:

(a) issuing, certifying and delivering debentures under the trust indenture;

(b) releasing, or releasing and substituting, property, rights or interests subject to a security interest constituted by the trust indenture;

(c) satisfying and discharging the trust indenture;

(d) taking any other action to be taken by the trustee at the request of or on the application of the issuer or guarantor.

Contents of evidence of compliance

96 Evidence of compliance as required by section 95 consists of

(a) a certificate or affidavit made by the issuer or guarantor stating that the conditions referred to in that section have been complied with in accordance with the terms of the trust indenture,

(b) if the trust indenture requires compliance with conditions that are subject to review by a lawyer, an opinion of a lawyer acceptable to the trustee that those terms have been complied with in accordance with the terms of the trust indenture,

(c) if the trust indenture requires compliance with conditions that are subject to review by an auditor or accountant, an opinion or report of the auditor or accountant of the issuer or guarantor, or of any other accountant that the trustee may select, that those terms have been complied with in accordance with the terms of the trust indenture, and

(d) a statement by each person giving evidence of compliance under paragraph (a), (b) or (c)

(i) declaring that the person has read and understands the terms of the trust indenture concerning which the evidence is given,

(ii) describing the nature and scope of the examination or investigation on which the person based the affidavit, certificate, opinion or report, and

(iii) declaring that the person has made the examination or investigation the person believes necessary to enable the person to make the statements or to give the opinions contained or expressed in it.

Additional evidence of compliance

97 (1) An issuer or guarantor of debentures issued or to be issued under a trust indenture must, on demand by the trustee, provide to the trustee evidence, in the form the trustee requires, as to compliance with any condition in the trust indenture relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.

(2) An issuer or guarantor of debentures issued or to be issued under a trust indenture must, on demand by the trustee, provide to the trustee a certificate

(a) stating that the issuer or guarantor has complied with all of the requirements contained in the trust indenture that, if not complied with, would, with the sending of notice, lapse of time or otherwise, constitute an event of default, or

(b) if the issuer or guarantor has not complied with one or more of those requirements, giving particulars of the failure to comply.

Notice of default

98 (1) Unless the trustee in good faith determines that it is in the best interests of the persons holding the debentures to withhold notice and so informs the issuer or guarantor of the trust indenture in writing, the trustee must send to the persons holding debentures issued under a trust indenture notice of each event of default arising under the trust indenture and continuing at the time the notice is sent.

(2) The trustee must send the notice required under subsection (1) within a reasonable time but not more than one month after the trustee becomes aware of the event of default.

Trustee's duty of care

99 The trustee must exercise the trustee's powers and duties

(a) in good faith and in a commercially reasonable manner,

(b) with the care, diligence and skill of a reasonably prudent trustee, and

(c) with a view to the best interests of the persons holding the debentures issued under the trust indenture.

Reliance on statements

100 A trustee is not in contravention of section 99 if the trustee relies and acts in good faith on statements contained in a certificate, affidavit, opinion or report that complies with this Act or the trust indenture.

Trustee not relieved from duties

101 No term of a trust indenture, and no term of an agreement between a trustee and any or all of the persons holding debentures issued under the trust indenture or between the trustee and the issuer or guarantor of the trust indenture, relieves a trustee from the duties imposed on that trustee by section 99.

Division 9 — Debentures

Validity of perpetual debenture

102 Despite any rule of equity to the contrary, no condition contained in a debenture, or in a deed for securing a debenture, is invalid merely because the debenture is made irredeemable or redeemable only on the happening of a contingency, however remote, or on the expiration of a period, however long.

Enforcement of contract to take debentures

103 Every contract with a company to take up and pay for a debenture of the company may be enforced by a court order for specific performance.

Issue of redeemed debenture

104 (1) If a company redeems a debenture that was previously issued as one of a series, the company has, and is deemed always to have had, power to reissue the debenture, either by reissuing the same debenture or by issuing another debenture in its place, unless

(a) an express or implied provision to the contrary is contained in the debenture, the articles or a contract entered into by the company, or

(b) the company has, by a resolution of the shareholders, manifested its intention that the debenture be cancelled.

(2) On the reissue of a debenture under subsection (1), the person entitled to the debenture has, and is deemed always to have had, the same priority as if the debenture had never been redeemed if

(a) the debenture so states, or

(b) the debenture was first issued before January 1, 1977.

(3) If a company redeems a debenture and has the power to reissue that debenture, particulars of that debenture must be included in the balance sheet of the company.

(4) If a company has issued or deposited a debenture created by the company to secure advances on current account or otherwise, the debenture is not deemed to have been redeemed merely because any of the advances are repaid, or the account of the company ceases to be in debit, while the debenture remains issued or deposited.

(5) The reissue of a debenture or the issue of another debenture in its place under this section is deemed not to be the issue of a new debenture for the purpose of a provision limiting the amount or number of debentures to be issued.

Division 10 — Receivers and Receiver Managers

Powers of directors and officers

105 If a receiver manager is appointed by the court or under an instrument over some or all of the undertaking of a corporation, the powers of the directors and officers of the corporation cease with respect to that part of the undertaking for which the appointment is made until the receiver manager is discharged.

Duties of receiver and receiver manager

106 A receiver or receiver manager must,

(a) within 7 days after being appointed, file with the registrar a notice of appointment of receiver or receiver manager in the form established by the registrar,

(b) within 7 days after any change in any address shown for the receiver or receiver manager in the corporate register, file with the registrar a notice of change of address of receiver or receiver manager in the form established by the registrar, and

(c) within 7 days after ceasing to act as receiver or receiver manager, file with the registrar a notice of ceasing to act as receiver or receiver manager in the form established by the registrar.

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