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Securities Law

NIN 97/53 - Amendments to the Company Act relating to Compromises and Arrangements [NIN - Rescinded]

Published Date: 1997-12-19
Effective Date: 1997-12-17

The Commission is publishing, on behalf of the Ministry of Finance and Corporate Relations, amendments to section 252 of the British Columbia Company Act. A copy of the amendments and of B.C. Reg. #396/97, which brings them into force, are attached to this notice.

On December 3, 1997, by B.C. Reg. #396/97, the government proclaimed amendments to section 252 of the Company Act, R.S.B.C. 1996, c.62. The amendments were enacted by the Miscellaneous Statutes Amendment Act (No.3), S.B.C. 1997, c. 29, which received royal assent on July 28, 1997. They come into effect on March 3, 1998.

Due to the impact of these amendments on issuers that are incorporated under the British Columbia Company Act, the Commission is publishing this notice to bring them to the attention of issuers and their counsel.

Section 252 of the Company Act governs compromises and arrangements made in the context of a corporate reorganization. Currently a proposed compromise or arrangement must be approved by a majority in number of creditors representing ¾ of the value of those creditors or ¾ of the votes of members in order to be binding on every creditor or member belonging to that class.

The amendments impose an additional requirement on certain compromises or arrangements. In order to be binding on all members of a reporting company (as defined in the Company Act), the compromise or arrangement must be supported by a "majority of the minority", i.e. by a majority of votes cast by members other than affiliates and other related shareholders set out in subsection (8) of section 252.

Any questions about these amendments should be directed to Carol Anne Rolf, Director, Financial and Corporate Sector Policy Branch, Ministry of Finance and Corporate Relations, at (250) 387-1269.

DATED at Vancouver, British Columbia, on December 17, 1997

Douglas M. Hyndman


Section 3, Miscellaneous Statutes Amendment Act (No. 3), 1997

Company Act

Section 252 is amended

(a)in subsection (1) by striking out "subsection (6)," and substituting "subsections (6) and (7),", and

(b) by adding the following subsection:
(7) Nothing in this section or in any order approving a compromise or arrangement made under this section binds a member to exchange shares of a reporting company held by the member for property, money or other securities of the reporting company or for property, money or securities of another corporation unless the compromise or arrangement has been approved in the manner described in subsection (8).
(8) A compromise or arrangement is approved for the purposes of subsection (7) when it is approved by a majority of the votes of members of the reporting company cast at a meeting referred to in subsection (2) other than the votes cast by

(a) affiliates of the reporting company

(b) a member who will, as a consequence of the compromise or arrangement, be entitled to consideration for each share greater than that available to other holders of affected shares of the same class, an
(c) a member who alone or in combination with others effectively controls the reporting company and who, prior to receiving a notice of the meeting referred to in subsection (2), entered into or has agreed to enter into an understanding to support the compromise or arrangement.