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Significant
amendments to the Canada Business Corporations Act (“CBCA”) have been
approved by Parliament. These
amendments came into effect on November 24, 2001. DIRECTORS The
Board of Directors of a CBCA corporation will now only need to be composed
of 25% minimum Canadian resident directors. Reliance
by directors on financial statements and professional reports will in a
significant number of situations be sufficient to allow directors who are
acting in good faith to meet their statutory duties and duties of care.
Even these statutory duties may be able to be avoided if the care, skill
and diligence that a reasonably prudent person would apply in similar
circumstances is exercised. A
director will only now be liable for negligence in the preparation of
financial statements to the extent of the director’s proportional
responsibility of losses attributable to the negligence. Directors
must now consent to their appointments and are now obligated to advise the
CBCA Corporation of any changes to their personal information. Significant
amendments have expanded the range of indemnification to directors. MEETINGS Electronic
shareholder and director meetings are now permitted unless prohibited by
the Corporation’s by-laws, subject to the following: Directors must
consent to electronic meetings. The Corporation’s by-laws must
specifically authorize electronic shareholder meetings. Corporations
anticipating holding shareholder meetings outside Canada on a regular
basis may specify one or more places in their articles. If not so
specified, then unanimous shareholder consent is required. ELECTRONIC
DELIVERY Electronic
delivery of documents is now permitted if consented to by the shareholders
unless prohibited by the Corporation’s by-laws and/or securities
legislation. FINANCIAL
ASSISTANCE TO RELATED PARTIES A
wide range of financial assistance options to shareholders, directors,
officers, employees, and subsidiaries is now permitted. SUMMATION Seize
the opportunity to determine the benefits of these legislative changes to
your company. After identifying the options that can benefit your
company, arrange for the review of your by-laws and articles, together
with an assessment of the legal steps required to implement these
benefits. We will be pleased to assist you.
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