PROPOSALS FOR AMENDMENTS TO THE NOVA SCOTIA COMPANIES ACT A DISCUSSION PAPER 2005 Prepared for Service Nova Scotia and Municipal Relations by COX HANSON O'REILLY MATHESON Crown copyright © 2005, Province of Nova Scotia, all rights reserved. TABLE OF CONTENTS 1. INTRODUCTION........................................................................................................- 1 - 2. SUMMARY OF RECOMMENDATIONS..............................................................................- 4 - A. The Role of the Court in Amalgamations and Fundamental Changes of ULCs (Chapter 3) ........................................................................................................ - 4 - B. The Role of the Court in Reductions of Capital (Chapter 4) ................................ - 5 - C. The Role of the Court in the Restoration of Struck-Off Companies (Chapter 5)..... - 7 - D. The Role of the Court in The Alteration of the Memorandum of Association (Chapter 6) - 8 - Recommendation .............................................................................................. - 9 - E. Financing Share Purchases (Chapter 7) ............................................................... - 9 - F. Capital of Continuing Companies (Chapter 8)..................................................... - 9 - G. Authorized Capital Limits (Chapter 9)............................................................... - 10 - H. Special Resolutions and Shareholders' and Directors' Meetings (Chapter 10) .... - 12 - I. Documents to be available at the Registered Office (Chapter 11)...................... - 12 - J. Access to the Share Register (Chapter 12)......................................................... - 13 - 3. THE ROLE OF THE COURT IN AMALGAMATIONS AND FUNDAMENTAL CHANGES OF ULCS ..- 15 - A. Introduction..................................................................................................... - 15 - B. Nova Scotia..................................................................................................... - 15 - C. Other Jurisdictions........................................................................................... - 16 - Federal ............................................................................................................ - 16 - Alberta ............................................................................................................ - 17 - British Columbia.............................................................................................. - 17 - Other Provinces............................................................................................... - 19 - D. Discussion....................................................................................................... - 19 - E. Unlimited Liability Companies......................................................................... - 22 - F. Recommendations ........................................................................................... - 25 - Appendix "A"............................................................................................... - 27 - Appendix "B"............................................................................................... - 31 - Appendix "C"............................................................................................... - 36 - Appendix "D" .............................................................................................. - 37 - Appendix "E" ............................................................................................... - 48 - Appendix "F" ............................................................................................... - 53 - 4. THE ROLE OF THE COURT IN REDUCTIONS OF CAPITAL.................................................- 55 - A. Introduction..................................................................................................... - 55 - B. NSCA .............................................................................................................. - 58 - Sections 57-67................................................................................................. - 58 - Section 49 ....................................................................................................... - 64 - Section 51 ....................................................................................................... - 65 - C. Reductions of Capital by Unlimited Liability Companies .................................. - 65 - D. Other Jurisdictions........................................................................................... - 67 - Canada............................................................................................................ - 67 - Alberta ............................................................................................................ - 68 - - 2 - British Columbia.............................................................................................. - 69 - New Brunswick ............................................................................................... - 70 - Newfoundland & Labrador............................................................................... - 70 - Ontario............................................................................................................ - 71 - Quebec ........................................................................................................... - 71 - E. Recommendation ............................................................................................ - 72 - Appendix "A"............................................................................................... - 75 - Appendix "B"............................................................................................... - 82 - Appendix "C"............................................................................................... - 83 - Appendix "D" .............................................................................................. - 84 - Appendix "E" ............................................................................................... - 85 - Appendix "F" ............................................................................................... - 86 - Appendix "G" .............................................................................................. - 87 - Appendix "H" .............................................................................................. - 90 - 5. THE ROLE OF THE COURT IN RESTORING STRUCK-OFF COMPANIES .................................- 94 - A. Introduction..................................................................................................... - 94 - B. Restoration of Struck-off Companies................................................................. - 94 - Nova Scotia..................................................................................................... - 94 - Other Jurisdictions........................................................................................... - 96 - C. Discussion....................................................................................................... - 96 - D. Recommendation ............................................................................................ - 97 - Appendix "A"............................................................................................... - 98 - 6. THE ROLE OF THE COURT IN THE ALTERATION OF THE MEMORANDUM OF ASSOCIATION OF A COMPANY ...........................................................................................................- 107 - A. Nova Scotia................................................................................................... - 107 - B. Other Jurisdictions......................................................................................... - 107 - C. Jurisdictions Outside Canada ......................................................................... - 107 - D. Discussion..................................................................................................... - 108 - E. Recommendation .......................................................................................... - 109 - Appendix "A"............................................................................................. - 110 - Appendix "B"............................................................................................. - 112 - 7. FINANCING SHARE PURCHASES ...............................................................................- 114 - A. Introduction................................................................................................... - 114 - B. Discussion..................................................................................................... - 114 - Purpose of subsection 110(5) of the NSCA ..................................................... - 115 - Suggested Reasons Why Prohibitions on Financial Assistance for Share Purchases Do Not Work...................................................................................... - 117 - Reform of Similar Provisions in other Jurisdictions.......................................... - 120 - Possibilities for Reform of subsections 110(5) and (6)...................................... - 122 - 1. Repeal Subsections 110(5) and (6)........................................................ - 122 - 2. Replace the Solvency tests with an Authorization for financial assistance where it is in the best interest of the company ...................................... - 123