Table of contents
- CBCA exemption policies by subject matter
- CBCA exemptions without policies
- Single filing exemption
- The exemption application
The Canada Business Corporations Act ("CBCA") provides companies or individuals with relief from some of its requirements through a series of specific exemptions. Corporations or individuals must apply to the Director appointed under the CBCA (the “Director”) for these exemptions. To help with this process, policies were developed for some of the exemptions. These policies are intended to meet client needs for information concerning exemption applications. They were conceived as part of a plan to reduce the effort of all parties involved with exemption applications and to explain what the Director and staff consider when deciding whether to grant an exemption.
Policies have not been prepared for exemptions that are rarely sought.
2. CBCA exemption policies by subject matter
Policy on making a determination that a corporation is not a distributing corporation
Section 2(6) of the CBCA
Policy on exempting a trust indenture from Part VIII CBCA
Section 82(3) of the CBCA
Policy on exempting interested persons from the management proxy solicitation requirements
Section 151(1) of the CBCA
Policy on exempting interested persons from the dissident proxy solicitation requirements
Section 151(1) of the CBCA
Policy on exempting a corporation from a financial disclosure requirement
Section 156 of the CBCA
Policy on exempting a distributing corporation from having an audit committee
Section 171(2) of the CBCA
3. CBCA exemptions without policies
Policies have not been prepared for the following two exemptions as they are rarely sought.
i) Name of Corporation (exemption only from inclusion of a legal element)
Subsection 10(2) permits the Director to exempt a corporation continuing under the CBCA from the requirements of subsection 10(1): that the name of the corporation include the word or expression "Limited", "Limitée", "Incorporated", "Incorporée", "Corporation", "Société par actions de régime fédéral" or its corresponding abbreviation. There is no policy for this type of exemption as it has been rarely sought. Most exemptions have been granted to corporations incorporated under Special Acts when they were continuing under the CBCA and whose name was already well-known to the Canadian public, for example "Bell Canada".
ii) Where continued reference to par value shares permissible
Where the Director determines, on the application of an importing body corporate, that it is not practicable to change a reference to the nominal or par value of shares of a class or series that the body corporate was authorized to issue before it was continued under the CBCA, subsection 187(11) states that the Director may permit the corporation to refer in its articles to those shares, whether issued or unissued, as shares having a nominal or par value. No policy is available as this exemption is rarely requested.
4. Single Filing Exemption
Section 258.2 gives the Director authority to make a blanket exemption for notices or documents required to be sent to the Director where the information contained in the notice or document is similar to that required to be made public pursuant to another act of Parliament or of a legislature that the Director specifies.
Pursuant to this authority, the Director has issued the Single Filing Exemption (see Exemption from the filing of certain documents) providing that proxy materials and financial statements required to be filed with the Director pursuant to sections 150 and 160 of the CBCA, need not be filed if documents containing similar information have been filed with any of the participating provincial and territorial securities commissions. Corporations do not need to notify the Director in order to rely on this exemption.
5. The exemption application
- Format: Along with a cover letter indicating the applicant and the name of the corporation (if different from the applicant), the application must provide information under three distinct headings: description and details of the exemption sought; statement of facts, and argument. The policies provide assistance in drafting these applications.
The Director recognizes that in some cases applicants may also be making similar representations under various provincial securities acts. The Director will accept an application made under any provincial securities act provided it contains all relevant information or additional information is attached so as to comply with CBCA requirements. Note, however, that provincial legislation may provide confidentiality protections that do not exist under the CBCA.
- The documents: Detailed below is a brief description of the three major documents that comprise the submission.
- Description and details of the exemption sought: The application must describe the exemption sought and note that it is an application for an exemption under the relevant section of the Canada Business Corporations Act.
- Statement of facts: Information varies depending on the type of exemption sought. The applicant must provide all material facts about the application and describe the circumstances to the degree necessary to allow the Director to make an informed decision on the request.
- Argument: Following the circumstances described, arguments must explain why an exemption is required and, when appropriate, why receiving an exemption would not be prejudicial to the interests of security holders or the public interest. Additional details are provided in the specific policies.
- Effective date of exemption: Exemptions take effect on the date of approval of the application.
- Duration: This varies with the type of exemption sought. Additional details are found in the specific policies.
- Revocation: Exemptions are only revoked if the facts change and the resulting circumstances dictate that the corporation should no longer be exempt from the particular requirement. Appropriate notice will be provided to ensure the applicant can contest the decision to revoke an exemption decision.
- Retrospective or retroactive effect: While the Act may permit exemptions to be granted that have retrospective or retroactive effect, it is the policy to grant these only when there are valid reasons. Retrospective or retroactive exemptions will only be considered in situations where the investing public would not be prejudiced and where the corporation would otherwise be prejudiced. Requests for retrospective or retroactive exemptions will be reviewed on a case-by-case basis.
- Fees: See Services, fees and processing times.
- Number of copies: Only one set of documents is required.
- Processing of application: Section 90 of the Regulations provides the Director 30 days after receipt of an application for an exemption to either grant or refuse the application. If the application contains the necessary information, an exemption is usually issued no later than 15 working days after receipt of the application.
- Urgent cases: An applicant requiring that the Director review the application on an expedited basis should bring the request immediately to the attention of the Director's staff, providing reasons for the urgency.
- Publication: Issued exemptions are published monthly under the heading "Corporations Canada Monthly Transactions" on its website.
- Appeal of Director's decision: A person who feels aggrieved by a decision of the Director to refuse to grant an exemption may apply to a court for an order requiring the Director to change the decision, and on such application, the court may so order and make any further order it thinks fit.
- Access to exemption information filed: Pursuant to section 266 of the CBCA, a person who has paid the required fee is entitled to examine, make copies or extracts of any document required by the Act to be sent to the Director. The information filed with the Director in support of an exemption application is not confidential. Such information is required to be filed in order to obtain an exemption and must therefore be made available to the public.