Canada Business Corporations Act
The Canada Business Corporations Act (CBCA) is the principal statute governing federally incorporated corporations in Canada. The Act provides a modern legal framework for corporate governance, including the incorporation, organization, and dissolution of corporations. Key features include the statutory duty of directors to act honestly and in the best interests of the corporation, the business judgment rule, shareholder rights (including the derivative action and the oppression remedy), and the requirement for public corporations to have a majority of independent directors. The CBCA applies to approximately 270,000 active federal corporations. Provinces have their own business corporation acts governing provincially incorporated companies.
Legal area: Corporate law governs the incorporation, organization, governance, and dissolution of business corporations.
Year enacted: 1985
Full text: https://laws-lois.justice.gc.ca/eng/acts/C-44/
Key Provisions
- Section 3: Incorporation (articles of incorporation, name, share structure)
- Section 102: Board of directors (minimum one, management powers)
- Section 122: Duty of directors and officers (care, diligence, good faith)
- Section 123: Business judgment rule (directors protected if reasonable decisions)
- Section 214: Oppression remedy (remedy for unfairly prejudicial conduct)
- Section 239: Derivative action (shareholder suit on behalf of corporation)
- Section 241: Dissent and appraisal rights
- Part XV: Fundamental changes (amalgamation, amendment, continuance)
Significance
The CBCA is the model for Canadian corporate law, with its provisions often adopted by provincial corporate statutes. The oppression remedy (section 214) is one of the most powerful and flexible remedies in Canadian corporate law, allowing courts to address any conduct that is oppressive, unfairly prejudicial, or unfairly disregards the interests of stakeholders. The CBCA was substantially amended in 2019 to improve diversity (comply or explain for board diversity), transparency, and accountability. The Act is administered by Innovation, Science and Economic Development Canada.