Law:CN Commercialization Act

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S.c. 1995, c. 24

Assented to 1995-07-13

An Act to provide for the continuance of the Canadian National Railway Company under the Canada Business Corporations Act and for the issuance and sale of shares of the Company to the public

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 CN Commercialization Act.


Interpretation And Application

Definitions

2. (1) In this Act,

“CN”

« Cn »

“CN” means the Canadian National Railway Company, a company continued by section 3 of the Canadian National Railways Act;

“continuation day”

« date de prorogation »

“continuation day” means the day on which CN becomes a corporation to which the Canada Business Corporations Act applies;

“Minister”

« ministre »

“Minister” means the Minister of Transport.

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. (1) 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 to the extent of the inconsistency.

Operation of Competition Act

(2) 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 CN.

(3)�(Repealed, 1996, c. 10, s. 210.1)

1995, c. 24, s. 3; 1996, c. 10, s. 210.1.


Her Majesty

Binding on Her Majesty

4. This Act is binding on Her Majesty in right of Canada or a province.


Preliminary Transactions

Transfer of CN shares

5. (1) The shares of CN held by the Minister of Finance under subsection 4(2) of the Canadian National Railways Act are hereby transferred to the Minister, who, for the purposes of section 90 of the Financial Administration Act, is hereby authorized to acquire the shares.

Registration and holding of shares

(2) The shares transferred to the Minister by subsection (1) shall be registered in the books of CN in the name of the Minister and shall be held by the Minister in trust for Her Majesty in right of Canada.

Transfer of property

6. The Minister may, at any time while CN is a Crown corporation within the meaning of section 83 of the Financial Administration Act, direct CN to transfer, on such terms and conditions, including consideration, if any, as the Minister considers appropriate, such property, including leases, rights, interests and benefits, of CN as the Minister considers appropriate to the Minister or to any other Minister or Crown corporation designated by the Governor in Council, and CN shall forthwith comply with the direction.


Continuance

Submission of draft application

7. (1) Forthwith on the direction of the Minister, CN shall submit an application for a certificate of continuance of CN under section 187 of the Canada Business Corporations Act to the Minister for approval.

Submission to Director

(2) Forthwith after the Minister approves the application, CN shall submit it to the Director.

Presumption

(3) An application submitted to the Director pursuant to this section is, subject to this Act, deemed for all purposes to have been made under subsection 187(1) of the Canada Business Corporations Act.

Mandatory provisions in articles of continuance

8. (1) The articles of continuance of CN shall contain

(a) provisions imposing constraints on the issue, transfer and ownership, including joint ownership, of voting shares of CN to prevent any one person, together with the associates of that person, from holding, beneficially owning or controlling, directly or indirectly, otherwise than by way of security only, in the aggregate, voting shares to which are attached more than fifteen per cent of the votes that may ordinarily be cast to elect directors of CN;

(b) provisions respecting the enforcement of the constraints imposed pursuant to paragraph (a); and

(c) provisions specifying that the head office of CN is to be situated in the Montreal Urban Community, Quebec.

Enforcement provisions

(2) Without limiting the generality of paragraph (1)(b), the provisions referred to in that paragraph may provide for the filing of declarations, the suspension of voting rights, the forfeiture of dividends, the refusal to issue or register voting shares and the sale of voting shares held contrary to the constraints and payment of the net proceeds of the sale to the person entitled to them.

Exceptions

(3) No provision imposing constraints pursuant to paragraph (1)(a) applies in respect of voting shares of CN that are held

(a) by the Minister in trust for Her Majesty in right of Canada;

(b) by one or more underwriters solely for the purpose of distributing the shares to the public; or

(c) by any person that is acting in relation to the shares solely in its capacity as an intermediary in the payment of funds or the delivery of securities, or both, in connection with trades in securities and that provides centralized facilities for the clearing of trades in securities.

Associates

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

(a) one is a corporation of 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 that relates to voting shares of CN;

(g) both, in the reasonable opinion of the directors of CN, are parties to an agreement or arrangement a purpose of which is to require them to act in concert with respect to their interests, direct or indirect, in CN or are otherwise acting in concert with respect to those interests; or

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

Exceptions

(5) Notwithstanding subsection (4), for the purposes of this section,

(a) where a person who, but for this paragraph, would be an associate of another person submits to CN a statutory declaration stating that

(i) no voting shares of CN held or to be held by the declarant are or will be, to the declarant’s knowledge, held in the right of, for the use or benefit of or under the control of, any other person of which, but for this paragraph, the declarant would be an asociate, and

(ii) the declarant is not acting and will not act in concert with any such other person with respect to their interests, direct or indirect, in CN,

the declarant and that other person are not associates so long as the directors of CN are satisfied that the statements in the declaration are being complied with and that there are no other reasonable grounds for disregarding the declaration;

(b) two corporations are not associates pursuant to paragraph (4)(h) by reason only that under paragraph (4)(a) each is an associate of the same individual; and

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

Control

(6) For the purposes of this section, “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 or arrangement, the ownership of any body corporate or otherwise, and, without limiting the generality of the foregoing,

(a) a body corporate is controlled by a person if

(i) securities of the body corporate to which are attached more than fifty per cent of the votes that may be cast to elect directors of the body corporate are held, otherwise than by way of security only, by or for the benefit of that person, and

(ii) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate; and

(b) a partnership or unincorporated organization is controlled by a person if an ownership interest therein representing more than fifty per cent of the assets of the partnership or organization is held, otherwise than by way of security only, by or for the benefit of that person.

Definitions

(7) In this section,

“corporation”

« société »

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

“person”

« personne »

“person” includes an individual, corporation, government, government agency, trustee, executor, administrator and other legal representative;

“voting share”

« action avec droit de vote »

“voting share” means a share carrying voting rights under all circumstances or under some circumstances that have occurred and are continuing, and includes a security currently convertible into such a share and currently exercisable options and rights to acquire such a share or such a convertible security.

Restriction on amendment

9. CN and its shareholders and directors shall not

(a) apply for continuance of CN in another jurisdiction; or

(b) make any articles or by-laws that are inconsistent with the provisions included in its articles of continuance pursuant to subsection 8(1).


Share Transactions

Issue and disposal of shares by CN

10. For the purposes of complying with section 90 of the Financial Administration Act while CN is a Crown corporation within the meaning of section 83 of that Act, CN is hereby authorized to issue and sell or otherwise dispose of shares of CN on and after the continuation day, with the approval of the Minister.

Dealing with shares, etc., by Minister

11. (1) For the purposes of section 90 of the Financial Administration Act, the Minister is hereby authorized to acquire, hold, dispose of and otherwise deal with shares of CN on and after the continuation day and on such terms and conditions as the Minister, with the approval of the Minister of Finance, considers appropriate.

Registration and holding of shares

(2) Shares acquired by the Minister pursuant to subsection (1) shall be registered in the name of the Minister in the books of CN and shall be held by the Minister in trust for Her Majesty in right of Canada.


Financial Arrangements

Discharge

12. The Minister, with the approval of the Minister of Finance, may

(a) enter into an agreement or other arrangement with CN or any other person respecting the acquisition, holding, service, disposal or discharge of or other dealing with any debt or obligation incurred by, or security interest in, CN;

(b) enter into any agreement or arrangement necessary or incidental to any activity referred to in subsection 11(1); and

(c) pay out of the Consolidated Revenue Fund, or from the proceeds of any sale of shares, debts or obligations of, or security interests in, CN, amounts in respect of any agreement or arrangement referred to in paragraph (a) or (b).

Adjustment of accounts of Canada

13. 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.


General

Names

14. Notwithstanding subsection 10(1) of the Canada Business Corporations Act, CN may continue to use and be legally designated by the names “Canadian National Railway Company” in English and “Compagnie des chemins de fer nationaux du Canada” in French on and after the continuation day.

Application of Official Languages Act

15. The Official Languages Act continues to apply to CN as if it continued to be a federal institution within the meaning of that Act.

Works for the general advantage of Canada

16. (1) The railway and other transportation works in Canada of CN, of every subsidiary of CN and of every corporation formed by any consolidation or amalgamation of any two or more of those corporations are hereby declared to be works for the general advantage of Canada.

Exception

(2) Subsection (1) does not apply to the purchase, sale, lease or operation of motor vehicles of all kinds for the carriage of traffic in conjunction with or substitution for the rail services managed or controlled by CN.


Transitional, Consequential, Repeal And Coming Into Force

Transitional

Continuation in office

17. (1) Subject to subsection (2), the members of the Board of Directors of CN who held office immediately before the continuation day continue to hold office according to the terms of their appointment.

Directors cease to hold office

(2) The members of the Board of Directors of CN cease to hold office at the close of the first annual meeting of shareholders of CN held after the day on which shares of CN are first issued to any person, other than the Minister, which meeting shall be held not later than six months following the end of CN’s financial year in which that day falls.

No compensation

(3) No person has any right to claim or receive any compensation, damages, indemnity or other form of relief from Her Majesty in right of Canada or any servant or agent of Her Majesty for ceasing to hold office by virtue of this Act.


Consequential Amendments

18. (Amendments)


Repeal

19. (1) (Repeal)

Director to give notice

(2) The Director is not required to comply with subsection 187(6) of the Canada Business Corporations Act in respect of CN, but the Director shall, on issuing the certificate of continuance of CN, cause a notice to be published in the Canada Gazette setting out the date on which the certificate was issued and on which the Canadian National Railways Act was repealed.

20. (Repeals)


Coming into Force

Coming into force

Schedules I And Ii

(Amendments)


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