CONSULTATION DRAFT

Table of Provisions ... continued

Third series of proposals to harmonize federal law with the civil law of the Province of Quebec and to amend certain Acts in order to ensure that each language version takes into account the common law and the civil law.

2001, c. 14, s. 31(2)

(2) Subsections 51(5) and (6) of the Act are replaced by the following:

Persons less than 18 years of age

(5) If a person who is less than 18 years of age exercises any rights of ownership in the securities of a corporation, no subsequent repudiation or avoidance or, in the Province of Quebec, nullity or reduction of obligations is effective against the corporation.

Joint holders

(6) A corporation may treat as owner of a security the survivors of persons to whom the security was issued as joint holders with right of survivorship, if it receives proof satisfactory to it of the death of any such joint holder.

Explanatory Notes

(2) Existing text of subsections 51(5) and (6):

(5) If a person who is less than eighteen years of age exercises any rights of ownership in the securities of a corporation, no subsequent repudiation or avoidance is effective against the corporation.

(6) A corporation may treat as owner of a security the survivors of persons to whom the security was issued as joint holders, if it receives proof satisfactory to it of the death of any such joint holder.


(3) The portion of paragraph 51(7)(a) of the Act before subparagraph (i) is replaced by the following:

(a) the original grant of probate, of letters of administration, or of the probate of the will, or a copy certified to be a true copy by

(4) Subparagraph 51(7)(a)(i) of the French version of the Act is replaced by the following:

(i) soit le tribunal qui a prononcé le jugement en vérification ou délivré les lettres d’homologation ou d’administration,

(5) Paragraph 51(7)(b) of the Act is replaced by the following:

(b) in the case of transmission by notarial will in the Province of Quebec, an authentic copy pursuant to the laws of that Province,

Explanatory Notes

(3) to (5) Relevant portion of subsection 51(7):

(7) Subject to any applicable law relating to the collection of taxes, a person referred to in paragraph (2)(a) is entitled to become a registered holder, or to designate a registered holder, if the person deposits with the corporation or its transfer agent

  • (a) the original grant of probate or of letters of administration, or a copy thereof certified to be a true copy by

    • (i) the court that granted the probate or letters of administration,

    • ... 

  • (b) in the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province,

together with 


2001, c. 14, s. 31(3)

(6) The portion of subsection 51(8) of the Act before paragraph (a) is replaced by the following:

Excepted transmissions

(8) Despite subsection (7), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration, or of the probate of the will in respect of the transmission, a personal representative of the deceased holder is entitled, subject to any applicable law relating to the collection of taxes, to become a registered holder or to designate a registered holder, if the personal representative deposits with the corporation or its transfer agent

2001, c. 14, s. 31(3)

(7) Paragraph 51(8)(b) of the Act is replaced by the following:

(b) reasonable proof of the governing laws, of the deceased holder’s interest or right in the security and of the right of the personal representative or the person designated by the personal representative to become the registered holder.

Explanatory Notes

(6) and (7) Relevant portion of subsection 51(8):

(8) Despite subsection (7), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to any applicable law relating to the collection of taxes, to become a registered holder or to designate a registered holder, if the personal representative deposits with the corporation or its transfer agent

  • ... 

  • (b) reasonable proof of the governing laws, of the deceased holder’s interest in the security and of the right of the personal representative or the person designated by the personal representative to become the registered holder.


27. Subsection 55(1) of the English version of the Act is replaced by the following:

Notice of defect

55. (1) Even against a purchaser for value without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated in it by reference to another instrument or act, statute, rule, regulation or order to the extent that the terms so incorporated do not conflict with the stated terms, but such a reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, even though the security expressly states that a person accepting it admits the notice.

Explanatory Notes

Clause 27: Existing text of subsection 55(1):

55. (1) Even against a purchaser for value without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated therein by reference to another instrument, statute, rule, regulation or order to the extent that the terms so incorporated do not conflict with the stated terms, but such a reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, notwithstanding that the security expressly states that a person accepting it admits such notice.


2001, c. 14, s. 135 (Sch., s. 15)(E)

28. (1) Subsection 60(1) of the English version of the Act is replaced by the following:

Title of purchaser

60. (1) On delivery of a security the purchaser acquires the rights in the security that the transferor had or had authority to transfer, except that a purchaser who has been a party to any fraud or illegality affecting the security or who as a prior holder had notice of an adverse claim does not improve their position by taking from a later bona fide purchaser.

Explanatory Notes

Clause 28: (1) Existing text of subsection 60(1):

60. (1) On delivery of a security the purchaser acquires the rights in the security that the transferor had or had authority to convey, except that a purchaser who has been a party to any fraud or illegality affecting the security or who as a prior holder had notice of an adverse claim does not improve their position by taking from a later bona fide purchaser.


(2) Subsection 60(3) of the English version of the Act is replaced by the following:

Limitation of the purchase

(3) A purchaser acquires rights only to the extent of the interest or right purchased.

Explanatory Notes

(2) Existing text of subsection 60(3):

(3) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.


2001, c. 14, s. 135 (Sch., s. 17(4))(E)

29. Subsection 63(5) of the English version of the Act is replaced by the following:

Warranties of broker

(5) A broker gives to a customer, to the issuer or to a purchaser, as the case may be, the warranties provided in this section and has the rights and privileges of a purchaser under this section, and those warranties of and in favour of the broker acting as an agent or mandatary are in addition to warranties given by the customer and warranties given in favour of the customer.

Explanatory Notes

Clause 29: Existing text of subsection 63(5):

(5) A broker gives to a customer, to the issuer and to a purchaser, as the case may be, the warranties provided in this section and has the rights and privileges of a purchaser under this section, and those warranties of and in favour of the broker acting as an agent are in addition to warranties given by the customer and warranties given in favour of the customer.


2001, c. 14, s. 32(E)

30. (1) Paragraph 65(1)(d) of the English version of the Act is replaced by the following:

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

(2) Paragraph 65(1)(e) of the French version of the Act is replaced by the following:

(etout survivant parmi les bénéficiaires avec droit de survie nommés dans la valeur mobilière ou l’endossement mentionné à l’alinéa a);

2001, c. 14, s. 135 (Sch., s. 19(2))(E)

(3) Paragraph 65(1)(g) of the English version of the Act is replaced by the following:

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

Explanatory Notes

Clause 30: (1) to (3) Relevant portion of subsection 65(1):

65. (1) In this section, "appropriate person" means

  • ... 

  • (d) if a 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 security or endorsement mentioned in paragraph (a) specifies more than one person with right of survivorship and by reason of death all cannot sign, the survivor or survivors;

  • ... 

  • (g) to the extent that a person described in paragraphs (a) to (f) may act through an agent, the authorized agent.


2001, c. 14, s. 135 (Sch., s. 19(4))(E)

(4) Subsection 65(10) of the English version of the Act is replaced by the following:

Failure of fiduciary to comply

(10) Failure of a fiduciary to comply with a controlling instrument or act or with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of a transfer, does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.

Explanatory Notes

(4) Existing text of subsection 65(10):

(10) Failure of a fiduciary to comply with a controlling instrument or with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of a transfer, does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.


31. Subsection 70(3) of the English version of the Act is replaced by the following:

Ownership of part of fungible bulk

(3) If a security is part of a fungible bulk, a purchaser of the security is the owner of a proportionate share in the fungible bulk.

Explanatory Notes

Clause 31: Existing text of subsection 70(3):

(3) If a security is part of a fungible bulk, a purchaser of the security is the owner of a proportionate interest in the fungible bulk.


32. Subsection 72(3) of the English version of the Act is replaced by the following:

Remedies

(3) The right to reclaim possession of a security may be specifically enforced, its transfer may be restrained and the security may be impounded or, in the Province of Quebec, sequestrated pending litigation.

Explanatory Notes

Clause 32: Existing text of subsection 72(3):

(3) The right to reclaim possession of a security may be specifically enforced, its transfer may be restrained and the security may be impounded pending litigation.


33. Subsection 73(2) of the Act is replaced by the following:

Rescission or resolution of transfer

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

Explanatory Notes

Clause 33: Existing text of subsection 73(2):

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


2001, c. 14, ss. 33(F), 135 (Sch., s. 24)(E)

34. Sections 74 and 75 of the Act are replaced by the following:

Seizure of security

74. No seizure of a security or other interest or right evidenced by that seizure is effective until the person making the seizure obtains possession of the security.

No conversion if good faith delivery by agent

75. An agent or bailee who in good faith, including observance of reasonable commercial standards if the agent or bailee is in the business of buying, selling or otherwise dealing with securities of a corporation has received securities and sold, pledged or delivered them, in a province other than Quebec, according to the instructions of their principal is not liable for conversion or for participation in breach of fiduciary duty although the principal has no right to dispose of them.

Explanatory Notes

Clause 34: Existing text of sections 74 and 75:

74. No seizure of a security or other interest evidenced thereby is effective until the person making the seizure obtains possession of the security.

75. An agent or bailee who in good faith, including observance of reasonable commercial standards if the agent or bailee is in the business of buying, selling or otherwise dealing with securities of a corporation, has received securities and sold, pledged or delivered them according to the instructions of their principal is not liable for conversion or for participation in breach of fiduciary duty although the principal has no right to dispose of them.


35. Paragraph 77(1)(a) of the English version of the Act is replaced by the following:

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

Explanatory Notes

Clause 35: Relevant portion of subsection 77(1):

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

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


36. (1) Paragraph 78(2)(a) of the English version of the Act is replaced by the following:

(a) the issuer is served with a court order; or

(2) Paragraph 78(2)(b) of the Act is replaced by the following:

(b) the issuer is provided with an indemnity bond or, in the Province of Quebec, a security sufficient in the issuer’s judgment to protect the issuer and any registrar, 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.

Explanatory Notes

Clause 36: (1) and (2) Relevant portion of subsection 78(2):

(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 furnished by the claimant or, if no such address has been furnished, to the claimant’s residence or regular place of business, that a security has been presented for registration of transfer by a named person, and that the transfer will be registered unless within thirty days from the date of mailing the notice either

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

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


37. (1) Paragraph 80(2)(b) of the Act is replaced by the following:

(bprovides the issuer with a sufficient indemnity bond or, in the Province of Quebec, a security; and

Explanatory Notes

Clause 37: (1) Relevant portion of subsection 80(2):

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

  • ... 

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


2001, c. 14, s. 135 (Sch., s. 26(2))(E)

(2) Subsection 80(4) of the Act is replaced by the following:

Right of issuer to recover

(4) In addition to any rights on an indemnity bond or, in the Province of Quebec, a security, the issuer may recover a new security issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a bona fide purchaser.

Explanatory Notes

(2) Existing text of subsection 80(4):

(4) In addition to any rights on an indemnity bond, the issuer may recover a new security issued under subsection (2) from the person to whom it was issued or anyone taking under the person other than a bona fide purchaser.


38. (1) The portion of subsection 81(1) of the Act before paragraph (a) is replaced by the following:

Agent’s or mandatary’s rights and obligations

81. (1) An authenticating trustee, registrar, transfer agent or other agent or mandatary of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,

Explanatory Notes

Clause 38: (1) Relevant portion of subsection 81(1):

81. (1) An authenticating trustee, registrar, transfer agent or other agent of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,

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