Law:Eldorado Nuclear Limited Reorganization and Divestiture Act

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S.c. 1988, c. 41

Assented to 1988-07-28

An Act to authorize the reorganization and divestiture of Eldorado Nuclear Limited and to amend certain Acts in consequence thereof

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


Contents

Short Title

Short title

1. This Act may be cited as the Eldorado Nuclear Limited Reorganization and Divestiture Act.


Interpretation

Definitions

2. (1) In this Act,

“agent corporation”

« société mandataire »

“agent corporation” means an agent corporation as defined in Part XII of the Financial Administration Act;

“Eldorado”

« Eldorado »

“Eldorado” means Eldorado Nuclear Limited, a corporation continued under the Canada Business Corporations Act;

“Minister”

« ministre »

“Minister” means such member of the Queen’s Privy Council for Canada as is designated by the Governor in Council as the Minister for the purposes of this Act;

“new corporation”

« nouvelle société »

“new corporation” means the corporation in respect of which the Minister may submit articles pursuant to section 3 or any successor corporation by way of amalgamation or reorganization;

“subsidiary of Eldorado”

« filiale de Eldorado »

“subsidiary of Eldorado” includes a subsidiary of a subsidiary of Eldorado.

Same meaning

(2) Unless a contrary intention appears, words and expressions used in this Act have the same meaning as in the Canada Business Corporations Act.

Operation of Canada Business Corporations Act

(3) In the event of any inconsistency between this Act and the Canada Business Corporations Act, or anything issued, made or established under that Act, this Act prevails.

Operation of Competition Act

(4) Nothing in, or done under the authority of, this Act affects the operation of the Competition Act in respect of the acquisition of any interest in the new corporation.


Reorganization

Articles of new corporation

3. (1) For the purposes of this Act, the Minister may submit to the Governor in Council for approval articles under the Canada Business Corporations Act prepared in accordance with section 5.

Submission to Director

(2) Within ten days after the Governor in Council approves articles submitted pursuant to subsection (1), the Minister shall send to the Director the approved articles and such other documents as are required under the Canada Business Corporations Act in connection with the filing of the approved articles.

Divestiture

4. (1) On such terms and conditions as the Governor in Council may approve, Eldorado or a subsidiary of Eldorado may enter into any transaction providing for the sale, assignment and transfer of its assets, business, works and undertakings, including the shares of a subsidiary of Eldorado, to the new corporation or to a wholly-owned subsidiary of the new corporation for such consideration as the Governor in Council may approve, including securities of the new corporation and the assumption by the new corporation of any liabilities of Eldorado or a subsidiary of Eldorado.

Authorized transactions

(2) For the purposes of any transaction referred to in subsection (1), Eldorado or a subsidiary of Eldorado may

(a) procure the incorporation of a corporation any shares of which, on incorporation, would be held by, on behalf of or in trust for Eldorado or a subsidiary of Eldorado;

(b) acquire shares of a corporation that, on acquisition, would be held by, on behalf of or in trust for Eldorado or a subsidiary of Eldorado;

(c) acquire all or any part of the assets of Eldorado or a subsidiary of Eldorado;

(d) sell or otherwise dispose of any shares of a subsidiary of Eldorado or any assets of Eldorado or a subsidiary of Eldorado;

(e) procure the dissolution or amalgamation of Eldorado or a subsidiary of Eldorado;

(f) reorganize the capital structure of Eldorado or a subsidiary of Eldorado; or

(g) enter into any agreement or arrangement necessary or incidental to any transaction referred to in paragraphs (a) to (f).

Provisions not applicable

(3) Subsections 101(1) to (3) and 108(2) of the Financial Administration Act do not apply in respect of any transaction referred to in subsection (1) or (2).

Vesting of assets and liabilities in Eldorado

(4) For the purpose of effecting any transaction referred to in subsection (1) or (2),

(a) all property, rights and interests of Her Majesty held on the coming into force of this subsection by Eldorado or by a subsidiary of Eldorado that is an agent corporation, and

(b) all obligations and liabilities of Her Majesty incurred by Eldorado, or by a subsidiary of Eldorado that is an agent corporation, and existing on the coming into force of this subsection

are hereby vested in Eldorado or the subsidiary, as the case may be.

Cost of property

(5) For the purposes of the Income Tax Act, the Income Tax Application Rules, 1971 and the Income Tax Regulations,

(a) the property vested in Eldorado, or a subsidiary of Eldorado that is an agent corporation, by subsection (4) is deemed to have been

(i) acquired by Eldorado or the subsidiary, as the case may be, at the same time as it was acquired by Her Majesty and under the same circumstances, and

(ii) owned by Eldorado or the subsidiary, as the case may be, throughout the period during which the property was property of Her Majesty held by Eldorado or the subsidiary;

(b) the cost to Eldorado or the subsidiary of that property, other than any such property that is depreciable property, immediately after the vesting thereof in Eldorado or the subsidiary, is deemed to be the cost amount thereof to Herajesty immediately prior to the vesting;

(c) the capital cost to Eldorado or the subsidiary of any such property that is depreciable property is deemed to be the amount that was the capital cost thereof to Her Majesty;

(d) the amount, if any, by which the capital cost to Her Majesty of any property referred to in paragraph (c) exceeds the cost amount to Her Majesty of the property immediately before its vesting in Eldorado or the subsidiary is, for the purposes of sections 13 and 20 of the Income Tax Act and any regulations made under paragraph 20(1)(a) of that Act, deemed to have been allowed to Eldorado or the subsidiary, as the case may be, in respect of the property under those regulations in computing the income of Eldorado or the subsidiary for taxation years ending before the time of its vesting in Eldorado or the subsidiary;

(e) the income of or loss to Her Majesty from

(i) a business carried on by Eldorado or by a subsidiary of Eldorado that is an agent corporation, and

(ii) a property of Her Majesty administered by Eldorado or by a subsidiary of Eldorado that is an agent corporation

is deemed to be and to always have been the income or loss of Eldorado or the subsidiary, as the case may be; and

(f) Eldorado or a subsidiary of Eldorado that is an agent corporation is deemed to have always incurred on its own behalf all obligations, expenditures, costs and liabilities incurred by it on behalf of Her Majesty prior to the coming into force of subsection (4).

Interpretation

(6) For the purpose of applying subsection (5),

(a) words and expressions used in that subsection have the same meaning as in the Income Tax Act and the Income Tax Regulations; and

(b) in the event of any inconsistency between subsection (5) and the Income Tax Act or the Income Tax Regulations, subsection (5) prevails.

Provisions not applicable

(7) Subsection 108(1) of the Financial Administration Act does not apply in respect of any property, rights or interests vested in Eldorado or a subsidiary of Eldorado by subsection (4) and section 134 of that Act does not apply in respect of any securities issued by Eldorado, by a subsidiary of Eldorado, by the new corporation or by a wholly-owned subsidiary of the new corporation for the purpose of effecting any transaction referred to in subsection (1) or (2).

Exemption order

(8) The Governor in Council may, by order, exempt any property, rights, interests, obligations or liabilities of Her Majesty from the application of subsection (4).

Mandatory provisions in articles

5. (1) The articles of the new corporation shall contain

(a) provisions prohibiting the creation of restricted shares of the new corporation;

(b) provisions imposing constraints on the issue, transfer and ownership, including joint ownership, of voting securities of the new corporation

(i) to prevent any one resident, together with the associates thereof, from holding, beneficially owning or controlling, directly or indirectly, otherwise than by way of security only, voting securities to which are attached more than twenty-five per cent of the votes that may ordinarily be cast to elect directors of the new corporation, and

(ii) to prevent any one non-resident, together with the associates thereof, from holding, beneficially owning or controlling, directly or indirectly, otherwise than by way of security only, voting securities to which are attached more than fifteen per cent of the votes that may ordinarily be cast to elect directors of the new corporation;

(c) provisions respecting the counting or prorating of votes cast at any meeting of shareholders of the new corporation and attached to voting securities of the new corporation that are held, beneficially owned or controlled, directly or indirectly, by non-residents so as to limit the counting of those votes to not more than twenty-five per cent of the total number of votes cast by shareholders at that meeting;

(d) provisions requiring the registered office and the head office operations of the new corporation to be located in Saskatchewan; and

(e) provisions respecting the enforcement of the constraints and requirements imposed pursuant to this section.

Enforcement provisions

(2) Without limiting the generality of paragraph (1)(e), the provisions referred to therein may provide for the filing of declarations, the suspension of voting rights, the forfeiture of dividends or the refusal of the issue or registration of voting securities.

Transactions in limited number of shares

(3) Where it appears to the new corporation that a subscriber for or a transferee of voting securities of the new corporation would, on acquiring the securities, hold, beneficially own or control securities to which are attached not more than the lesser of four one hundredths of one per cent of the votes that may ordinarily be cast to elect directors of the new corporation and ten thousand such votes, the directors are entitled to assume

(a) that the subscriber or transferee is not and will not be an associate of anyone else; and

(b) unless the address to be recorded in the register for the subscriber or transferee is a place outside Canada, that the securities will not be held, beneficially owned or controlled in contravention of the articles of the new corporation.

Application of constraint provisions

(4) No provision imposing constraints that is included in the articles of the new corporation in compliance with paragraph (1)(b) shall be applied to or in respect of any securities of the new corporation issued as part of the consideration for

(a) any transaction authorized by subsection 4(1) or (2), or

(b) any other transaction entered into in conjunction with any transaction authorized by subsection 4(1) or (2) involving the sale, assignment or transfer of assets, works or undertakings of a person other than Eldorado or a subsidiary of Eldorado to the new corporation,

unless the seurities cease to be held by or for the benefit of the original holder thereof or any affiliate of the original holder.

Idem

(5) No provision imposing constraints that is included in the articles of the new corporation in compliance with paragraph (1)(b) or (c) shall be applied to or in respect of any voting securities of the new corporation that are held

(a) by one or more underwriters solely for the purpose of distributing the voting securities to the public; or

(b) by any person who provides centralized facilities for the clearing of trades in securities and is acting in relation to trades in the voting securities solely as an intermediary in the payment of funds or the delivery of the securities, or both.

Special shares

(6) Where the articles of the new corporation provide for a class of shares, the primary purpose of which is to permit the holder of the shares to vote separately as a class in respect of any proposal to transfer the location of the registered office or the head office operations of the new corporation to a different jurisdiction, the holder of the shares shall, except as provided in subsection (7), have no right to vote separately as a class in respect of any other matter in respect of which shareholder approval may be sought.

Voting rights

(7) The holder of the shares of a class referred to in subsection (6) shall have the right to vote separately as a class in respect of

(a) a proposal for amalgamation where the amalgamation agreement contains a provision whereby the registered office or the head office operations of the amalgamated corporation would be located in a different jurisdiction or a provision that would, if contained in a proposal to amend the articles of the new corporation, entitle the holder of the shares to vote separately as a class pursuant to paragraph (b);

(b) a proposal for amending the articles of the new corporation so as to

(i) increase or decrease any maximum number of authorized shares of the class,

(ii) effect an exchange, reclassification or cancellation of all or part of the shares of the class,

(iii) add, change or remove the rights, privileges, restrictions or conditions relating to the shares of the class, or

(iv) effect an exchange or create a right of exchange of all or part of the shares of another class into the shares of the class; and

(c) any other proposal in respect of which shareholder approval is sought where the proposal affects the location of the registered office or head office operations of the new corporation or affects the right of the holder of the class of shares to vote separately as a class in respect of the transfer of the location of the registered office or the head office operations of the new corporation to a different jurisdiction.

Associates

(8) For the purposes of this section, a person is an associate of another person if

(a) one is a corporation which the other is an officer or director;

(b) one is a corporation that is controlled by the other or by a group of persons of which the other is a member;

(c) one is a partnership of which the other is a partner;

(d) one is a trust of which the other is a trustee;

(e) both are corporations controlled by the same person;

(f) both are members of a voting trust or parties to an arrangement that relates to voting securities of the new corporation; or

(g)�both are at the same time associates, within the meaning of any of paragraphs (a) to (f), of the same person.

Exceptions

(9) Notwithstanding subsection (8), for the purposes of this section,

(a) where a resident who, but for this paragraph, would be an associate of a non-resident submits to the new corporation a statutory declaration stating that no voting securities of the new corporation held or to be held by the resident are or will be, to the resident’s knowledge, held in the right of, or for the use or benefit of, the resident or in the right of, for the use or benefit of, or under the control of, any non-resident of which, but for this paragraph, the resident would be an associate, that resident and that non-resident are not associates so long as the voting securities held by the resident are not held contrary to the statements made in the declaration;

(b) two corporations are not associates pursuant to paragraph (8)(g) by reason only that under paragraph (8)(a) each is an associate of the same individual; and

(c) where it appears to the new corporation that any person holds, beneficially owns or controls voting securities to which are attached not more than the lesser of four one hundredths of one per cent of the votes that may ordinarily be cast to elect directors of the new corporation and ten thousand such votes, that person is not an associate of anyone else and no one else is an associate of that person.

Definitions

(10) In this section,

“control”

« contrôle »

“control” means control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, an agreement, the ownership of any body corporate or otherwise;

“corporation”

« société »

“corporation” includes a body corporate, partnership or unincorporated organization;

“non-resident”

« non-résident »

“non-resident” means

(a) an individual, other than a Canadian citizen, who is not ordinarily resident in Canada,

(b) a corporation incorporated, formed or otherwise organized outside Canada,

(c) a foreign government or an agency thereof,

(d) a corporation that is controlled by non-residents as defined in any of paragraphs (a) to (c),

(e) a trust

(i) established by a non-resident as defined in any of paragraphs (b) to (d), other than a trust for the administration of a pension fund for the benefit of individuals a majority of whom are residents, of

(ii) in which non-residents as defined in any of paragraphs (a) to (d) have more than fifty per cent of the beneficial interest, or

(f) a corporation that is controlled by a trust described in paragraph (e);

“person”

« persone »

“person” includes any individual, corporation, government or agency thereof, executor, administrator or other legal representative;

“resident”

« résident »

“resident” means an individual, corporation, government or agency thereof or trust that is not a non-resident;

“restricted share”

« action à restrictions »

“restricted share” means a share of an issuer that carries a residual right to participate to an unlimited degree in the earnings of the issuer and in its assets on liquidation or winding-up and includes any such share

(a) that carries a right to vote subject to a limit or restriction on the number or percentage of shares that may be voted by a person or group of persons, or

(b) that is part of a class or series of shares in respect of which the allocation of voting rights does not reasonably relate to the equity interest in the issuer of the class or series, having regard to the voting rights and equity interests in the issuer pertaining to each class and series of shares of the issuer,

but does not include any such share

(c) to which are attached voting rights exercisable in all circumstances, irrespective of the number of shares owned by the holder of the share, which voting rights are not less, on a per share basis, than the voting rights attached to any other shares of an outstanding class of shares of the issuer, or

(d) by reason only that it is subject to any restriction imposed pursuant to this Act or any constraint imposed pursuant to section 168 of the Canada Business Corporations Act or the regulations made under that section;

“voting security”

« valeur mobilière avec droit de vote »

“voting security” means a share or other security of the new corporation carrying full voting rights under all circumstances or under some circumstances that have occurred and are continuing, and includes

(a) a security currently convertible into such a share or other security, and

(b) currently exercisable options and rights to acquire such a share or other security or such a convertible share or other security.

1988, c. 41, s. 5; 2001, c. 18, s. 1.

Restriction on amendment

6. The new corporation and its shareholders and directors shall not

(a) apply for continuance of the new corporation in another jurisdiction; or

(b) make any articles or by-laws that contain, or amend its articles or by-laws to contain, provisions that are inconsistent with the provisions included in its articles in compliance with section 5.

Canada Labour Code

7. For greater certainty, the transfer of the assets, business, works and undertakings of Eldorado or a subsidiary of Eldorado to the new corporation under section 4 is deemed to be

(a) for the purposes of the Canada Labour Code, a transfer of a particular federal work, undertaking or business within the meaning of section 45 of that Act; and

(b) for the purposes of section 144 of that Act, a sale of a business within the meaning of that section.


Divestiture And Dissolution

Sale or other disposal of securities

8. (1) The Minister may direct Eldorado or a subsidiary of Eldorado to sell or otherwise dispose of any or all securities of the new corporation on such terms and conditions as the Governor in Council may approve.

Compliance with direction

(2) Notwithstanding paragraph 101(3)(b) of the Financial Administration Act, on receiving a direction under subsection (1), Eldorado or a subsidiary of Eldorado is hereby authorized to sell or dispose of the securities of the new corporation in accordance with the direction and shall comply with the direction.

Application of proceeds of disposition

(3) Where Eldorado or a subsidiary of Eldorado receives a direction pursuant to subsection (1), it shall apply the proceeds of disposition of any securities sold or disposed of in accordance with the direction to the discharge of its obligations and liabilities and shall pay any surplus proceeds to the Receiver General.

Funding

9. (1) The Minister may, pursuant to the authority of an appropriation Act and with the approval of the Minister of Finance, pay to Eldorado or to a subsidiary of Eldorado such amounts as may be necessary to enable Eldorado or the subsidiary to pay or discharge any debt or liability, whether incurred before or after the completion of the transactions referred to in subsections 4(1) and (2).

Debt

(2) The Minister of Finance may, on behalf of Her Majesty, in accordance with such terms and conditions as the Governor in Council may approve, enter into agreements or other arrangements with any person in respect of obligations or liabilities of Eldorado or a subsidiary of Eldorado for which Her Majesty in right of Canada is liable and for that purpose may borrow money and issue and sell securities as defined in the Financial Administration Act.

Dissolution of Eldorado

10. (1) After Eldorado and each subsidiary of Eldorado have sold or otherwise disposed of all securities of the new corporation, the Minister may direct the Canada Development Investment Corporation to procure the dissolution of Eldorado.

Compliance with direction

(2) Notwithstanding paragraph 101(1)(e) of the Financial Administration Act, on receiving a direction under subsection (1), the Canada Development Investment Corporation is hereby authorized to procure the dissolution of Eldorado in accordance with the direction and shall comply with the direction.

Adjustment to accounts of Canada

11. The Minister, after consultation with the President of the Treasury Board, shall cause such adjustments to be made in the accounts of Canada as are required as a result of any transaction authorized or required by this Act.


Consequential Amendments

Federal-Provincial Fiscal Arrangements and Federal Post-Secondary Education and Health Contributions Act, 1977

12. and 13. (Amendments)


Municipal Grants Act, 1980

14. (Amendment)

R.S., c. G-7

Government Companies Operation Act

The following provision is not in force.Agency status revoked

15. The Government Companies Operation Act ceases to apply to Eldorado and Eldorado Aviation Limited and they cease to be agents of Her Majesty.


Transitional Provisions

Shares qualified

16. (1) For the purpose of qualifying the shares of the new corporation

(a) as an authorized investment under paragraph 63(1)(m) of the Canadian and British Insurance Companies Act, paragraph 60(1)(e) of the Loan Companies Act or paragraph 68(1)(j) of the Trust Companies Act,

(b) as a permitted investment under paragraph 1(s) of Schedule III to the Pension Benefits Standards Regulations, 1985, and

(c) as assets that may be vested in trust in Canada under paragraph 1(m) of Schedule II to the Canadian and British Insurance Companies Act or paragraph 1(m) of Schedule I to the Foreign Insurance Companies Act,

the new corporation is deemed to have satisfied the requirements of the provisions referred to in paragraphs (a) to (c) with respect to each of the five years immediately preceding the privatization date.

Debt obligations qualified

(2) For the purpose of qualifying the bonds, debentures or other evidences of indebtedness of the new corporation

(a) as an authorized investment under subparagraph 63(1)(j)(i) of the Canadian and British Insurance Companies Act, subparagraph 60(1)(c)(i) of the Loan Companies Act or subparagraph 68(1)(g)(i) of the Trust Companies Act,

(b) as a permitted investment under paragraph 1(m) of Schedule III to the Pension Benefits Standards Regulations, 1985, and

(c) as assets that may be vested in trust in Canada under subparagraph 1(j)(i) of Schedule II to the Canadian and British Insurance Companies Act or subparagraph 1(j)(i) of Schedule I to the Foreign Insurance Companies Act,

the new corporation is deemed

(d) to have satisfied the requirements of the provisions referred to in paragraphs (a) to (c) with respect to each of the five years immediately preceding the privatization date, and

(e) to have had amounts of paid in capital, contributed surplus, retained earnings and total indebtedness at any relevant time prior to the privatization date sufficient to have satisfied the requirements of the provisions referred to in paragraphs (a) to (c) with respect to each of the five years immediately preceding the privatization date.

Idem

(3) For the purpose of qualifying

(a) the bonds, debentures or other evidences of indebtedness of or guaranteed by the new corporation as an authorized investment under subparagraph 63(1)(j)(ii) of the Canadian and British Insurance Companies Act, subparagraph 60(1)(c)(ii) of the Loan Companies Act or subparagraph 68(1)(g)(ii) of the Trust Companies Act,

(b) the bonds, debentures or other evidencesf indebtedness of or guaranteed by the new corporation as a permitted investment under subparagraph 1(n)(i) of Schedule III to the Pension Benefits Standards Regulations, 1985, and

(c) the bonds, debentures or other evidences of indebtedness of the new corporation as assets that may be vested in trust in Canada under subparagraph 1(j)(ii) of Schedule II to the Canadian and British Insurance Companies Act or subparagraph 1(j)(ii) of Schedule I to the Foreign Insurance Companies Act,

the new corporation is deemed to have had earnings and annual interest requirements for any relevant period prior to the privatization date sufficient to have satisfied the requirements of the provisions referred to in paragraphs (a) to (c) with respect to each of the five years immediately preceding the privatization date.

Definition of “privatization date”

(4) In this section, “privatization date” means the date of the first sale or other disposal of securities of the new corporation by the new corporation.


Coming Into Force

Coming into force


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