NEWS ON COMPANY LAW

Bill 47, Securities and Other Financial Assets Transfer Act (the "Bill") was introduced on November 13, 2007. It will of course take a certain amount of time before it comes into force but we believe it is useful to look into the new terminology and the new concepts.

This Bill is founded on the Uniform Securities Transfer Act adopted by the Uniform Law Conference of Canada and which Canadian provinces and territories have accepted. The notions found in this Bill are also found in the Uniform Commercial Code of the United States.

Bill 47 presently has 172 articles and amends the Companies Act, the Civil Code of Québec, the Code of Civil Procedure as well as various municipal statutes. It is divided in 5 chapters.

The first Chapter specifies the object, the application and the extent of the Bill. Section 1 states the objective of the statute, i.e. to establish the legal structure of certain aspects of private law relating to the transfer of securities and other financial assets, in a context of harmonization with the legislation of all Canadian provinces and territories.

Section 2 specifies the suppletive nature of the Bill, while specifying that one cannot withdraw oneself from the obligations to act according to requirements of good faith, with prudence and diligence, in a reasonable way.

The Bill introduces in Québec law concepts such as securities intermediaries, financial assets, protected purchaser, etc. It defines the concept of transfer, of issuer and of securities.

The Bill stipulates a set of rules applying to transfers of securities without an intermediary, i.e. those purchased and held in a legal relationship directly between an investor and an issuer. These rules take into account the dematerialization of securities, which are sometimes not represented by a certificate. The Bill also stipulates rules applying to transfers of securities through an intermediary and to other financial assets.

Bill 47 amends the Civil Code of Québec with respect to movable hypothecs. It introduces specific rules to movable hypothecs with dispossession of securities or titles on financial assets as well as rules governing conflicts of laws. It amends the Code of civil procedure with respect to seizure of company shares in order to include all securities and financial assets.

With respect to the amendments to the Québec Companies Act, the relevant sections of Bill 47 are reproduced hereunder.

152. Section 46 of the Companies Act (R.S.Q., chapter C-38) is amended by replacing "property and are transferable in the manner and on the conditions prescribed by this Part, the constituting act or the by-laws of the company" in the first paragraph by "property; the transfer of company shares is governed by the Securities and Other Financial Assets Transfer Act (2007, chapter (insert the chapter number of this bill)), on the conditions prescribed by this Part and, if the conditions are effective under that Act, by the constituting act or the by-laws of the company".

153. Section 48 of the Act is amended by adding the following sentence at the end of subsection 13: "Likewise, the purchase or redemption of shares by a company that is compelled to do so under the Securities and Other Financial Assets Transfer Act shall not be considered to reduce its capital stock."

154. Section 54 of the Act is amended by striking out ", and the shares may be transferred by delivery of the warrant" in subsection 2.

155. Sections 74 to 76 of the Act are repealed.

156. Section 123.44 of the Act is amended by adding the following sentence at the end of the first paragraph: "It may also hold its own shares if compelled to do so under the Securities and Other Financial Assets Transfer Act."

157. Section 123.93 of the Act is amended by adding the following at the end of the third paragraph: "or, if the shares are uncertificated securities within the meaning of the Securities and Other Financial Assets Transfer Act and the person did not receive notice of such an agreement".

158. Section 144 of the Act is amended by replacing "property and are transferable in the manner and on the conditions prescribed by this Part or by the charter or by-laws of the company" in the first paragraph by "property; the transfer of company shares is governed by the Securities and Other Financial Assets Transfer Act (2007, chapter (insert the chapter number of this bill)), on the conditions prescribed by this Part, by the charter of the company or, if the conditions are effective under that Act, by the by-laws of the company".

159. Section 146 of the Act is amended by adding the following sentence at the end of subsection 13: "Likewise, the purchase or redemption of shares by a company that is compelled to do so under the Securities and Other Financial Assets Transfer Act shall not be considered to reduce its capital stock."

160. Section 152 of the Act is amended by striking out ", and the shares may be transferred by delivery of the warrant" in subsection 2.

161. Sections 166 to 168 of the Act are repealed.