( )

)

liQUIDATION AND DISSOLUTION ..AS A MECHANISM TO RESOLVE ..

SHAREHOLDER DISPUTES

(J:

.,

)

TABLE OF CONTENTS

I. When is Liquidation and Dissolution Available: Sections 203-207and 204 of The Business Corporations Act (Saskatchewan)? 1

II. An Application for Liquidation and Dissolution under Section 207 .4

III. An Application for Liquidation and Dissolution under Section 234 8

IV. Conclusion 10

)

LIQUIDATION AND DISSOLUTION AS AMECHANISM TO RESOLVE SHAREHOLDER DISPUTES

I. WHEN IS LIQUIDATION AND DISSOLUTION AVAILABLE: SECTIONS 203­207 & 234 OF THE BUSINESS CORPORATIONS ACT (SASKATCHEWAN)("SBCA")?

Pursuant to section 203 of the SBCA, dissolution is available in three circumstances. A

corporation that has not issued shares can be dissolved by resolution of the directors: s. 203(1).

A corporation that has no property and no liabilities can be dissolved by special resolution of the

shareholders or, where there is more than one class of shareholders, by special resolution of each

class: s. 203(2). Where a corporation has property or liabilities, the same voting requirements as

set out in s. 203(2) apply. However, the shareholders must also, by special resolution(s),

authorize the directors to distribute the corporation's property and discharge any liabilities.

Pursuant to section 204 the directors may propose voluntary liquidation and dissolution.

Additionally, a shareholder entitled to vote at an annual meeting of shareholders may make a

proposal for voluntary liquidation and dissolution. Subsection (3) states that a corporation may

liquidate and dissolve by special resolution of the shareholders or by special resolution of the

holders of each class. United States case law indicates that the two-thirds majority does not have

an unfettered right to dissolve a corporation. I The court can exercise its inherent jurisdiction to

prevent a dissolution approved by special resolution where the only reason for dissolution is to

freeze out a dissenting shareholder. The two-thirds majority do not have an absolute right to

dissolve a profitable corporation: Theis v. Spokane Falls Gaslight Co.2 The holders of two-thirds

of the shares must exercise their right to dissolve in good faith for the benefit of all shareholders.

Without this caveat, the power to dissolve may be used as a tool for the oppression of the

minority: Doe Run Lead Co., Re.3

Section 205 provides for what is sometimes referred to as administrative dissolution. Pursuant to

this section, the Director may dissolve a corporation or apply to the court for an order dissolving

,a corporation. Section 205 applies in three circumstances: where a corporation has not

.\ See case law in Gray, Annotated Canada Business Corporations Act, looseleaf (Toronto: Carswell, updated toAugust, 2004) at 1-468-468.1 [Annotated CBCA].2 74 Pac. 1004,34 Wash. 104 (S.C. Wash. 1904).3 (1920), 223 S.W. 600 (U.S. Mo. S.C.).

- 2 -

commenced business within three years after incorporation, where a corporation has not carried

on business for three consecutive years or where a corporation has not had its name restored to

the register within two years after it was struck off under section 290.

Pursuant to section 206, the Director or any interested person may apply to a court for an order

dissolving a corporation. Section 206 applies in three circumstances: the corporation has failed

for two or more consecutive years to comply with the requirements of the Act with respect to the

holding of annual meetings of shareholders; the corporation has contravened subsection 16(2) or

sections 21, 151 or 153; or the corporation has procured any certificate under the Act by

misrepresentation. This section encourages compliance with the provisions of the SBCA that

require a corporation to act in accordance with its articles (16(2)) and to maintain, disclose and

provide access to the corporate records referred to in subsection 20(1), shareholder lists (s. 21),

financial statements (s.151) and auditor reports (s. 153).

Sections 207 and 234 are likely the most relevant provisions in the context of liquidation and

dissolution as a remedy for shareholder disputes. Section 207 permits a shareholder to apply for

a liquidation and dissolution order. The court must be satisfied of one of several requirements.

Subsection 207(1)(a) states:

A court may order the liquidation and dissolution of a corporation or any of its affiliatedcorporations upon the application of a shareholder:

(a) if the court is satisfied that in respect of a corporation or any of its affiliates:

(i) any act or omission of the corporation or any of its affiliates effects aresult;

(ii) the business or affairs of the corporation or any of its affiliates are orhave been carried on or conducted in a manner; or

(iii) the powers of the directors of the corporation or any of its affiliates areor have been exercised in a manner;

that is oppressive or unfairly prejudicial to or that unfairly 'disregards the interests of any securityholder, creditor, director or officer

Additionally, the court may order liquidation and dissolution if satisfied that a unanimous

shareholders agreement entitles a shareholder to demand dissolution after the occurrence of a

)

- 3 -

specified event. Furthermore, the court may order liquidation and dissolution if satisfied that it is

just and equitable that the corporation be liquidated and dissolved.

An important aspect of section 207 is found in subsection (2). Upon an application under s. 207,

the court may make a liquidation and dissolution order or it may make an order under section

234. Section 234 contains several less drastic remedies for addressing oppressive conduct.

Section 234(2) repeats the text of section 207(l)(a), set out above. An application under section

234 is brought by a complainant. "Complainant" is defined in section 231(b) as:

(i) a registered holder or beneficial owner, and a former registered holder or beneficialowner, of a security of a corporation or any of its affiliates;

(ii) a director or an officer or a former director or officer of a corporation or of any of itsaffiliates;

(iii) the Director; or

(iv) any other person who, in the discretion of a court, is a proper person to make anapplication under this Division.

Included in the powers of the court is the ability to order the liquidation and dissolution of a

corporation: s. 234(3)(1). Additionally, section 234(7) states, "An applicant under this section.may apply in the <;llternative for an order under section 207."

The interaction between sections 207 and 234 can be explained as follows. The court may

resolve an application for liquidation and dissolution under s. 207 by making a less drastic order

under s. 234. A complainant who makes an application under s. 234 may apply in the alternative

for an order under s. 207 if they want the corporation to be liquidated and dissolved but are

unsure of whether the conduct complained of is oppressive. For the remainder of this paper, I

will concentrate on the interaction of sections 207 and 234 and their relationship to shareholder

disputes.

-4-

II. AN APPLICATION FOR LIQUIDATION AND DISSOLUTION UNDERSECTION 207

A. SECTION 207 AND THE OPPRESSION REMEDY

Referring to the identical sections in the CBCA, Dickerson, Howard and Getz, Federal

Proposals for a New Business Corporations Law for Canada [Dickerson Report] states that the

link established between sections 207 and 234 will facilitate resolution of intra-corporate

disputes.4 The Dickerson Report goes on to state that the oppression section gives the court

broad discretionary powers to make remedial orders falling short of dissolution and that such an

order can me made in the absence of a specific application for it.5 Some of the various orders

available to the courts under s. 234(3) include an order restraining the conduct complained of, an

order appointing directors in place of or in addition to all or any of the directors in office, an

order directing a corporation to purchase securities of a security holder and an order directing an

issue or exchange of securities. The Annotated CBCA notes, "given the less drastic alternative of

ordering the corporation or the majority to buy-out the minority, the courts are generally

reluctant to order the dissolution of the corporation except as a last resort.6• A similar sentiment

is expressed in Shareholder Remedies in Canada.7 The author states that the interaction between

the winding-up order and the oppression remedy "overcomes the drastic nature of the winding-,

up remedy, which left the court to make the difficult election between not granting relief or

terminating the existence of the company."g Additionally, Shareholder Remedies points out that

any order available under the oppression remedy is available on a winding-up application by a

shareholder and that "this selection of orders allows a court to avoid the drastic result of

terminating a corporation where some other less interventionist order will suffice.,,9 As an

example of this approach, Shareholder Remedies cites the following passage from Keho

Holdings Ltd. v. Noble (1987), 52 Alta. LR. (2d) 195 (C.A.):

4 Annotated CBCA, supra note 1. at 1-473.5 Ibid.6 Ibid. at 1-4747Shareholder Remedies in Canada, looseleaf (Markham, Ont.: Butterworths, updated to December, 2002)[Shareholder Remedies].8 Ibid. at 20.32

- 5 -

The court is given authority under [the oppression remedy], ... , to temper the severity ofliquidation with some other appropriate remedy ...

The correct approach in my view is to make an order under s. 234 in every case where equitycould be achieved without invoking the drastic remedy of dissolution. to

Shareholder Remedies reviews some of the case law in this area and concludes that "the cases

take the approach ...of not distinguishing whether the application originated as a winding-up or

oppression application."ll The author goes on to identify the real issue as "the protection of

corporate stakeholders" and expresses the opinion that "rational jurisprudence should not

distinguish between the form of the proceedings.,,12 As examples of this latter proposition,

Shareholder Remedies cites two cases: Triple "L" Construction Ltd. and Lavergne v. Aikens

Lake Lodge Ltd. and Lavergne13 and Mammone v. Doralin Investments Ltd..14 In Triple "L" the

court preferred to provide alternatives to winding-up before ordering the dissolution of a

profitable corporation. The Court would only liquidate and dissolve the corporation if the share­

purchase alternatives they purposed were not exercised. In Mammone one of the shareholders

engaged in self-dealing. Ultimately, the other shareholders experienced a justifiable loss of

confidence. The Court ordered that the company be liquidated and dissolved. Shareholder

Remedies concludes, "these cases suggest that a winding-up order will only be made where the

grounds for such an order exist, and the less drastic oppression remedy orders provide inadequate

relief."15

Furthermore, s. 235 applies to an application for liquidation and dissolution under s. 207: s.

207(3). Pursuant to s. 235(1), an application cannot be stayed or dismissed upon evidence of

shareholder approval of an alleged breach of a right or duty owed to the corporation or its

subsidiary. Consequently, a shareholder can apply for a winding-up order under s. 207 even if

there is a shareholder resolution sanctioning improper conduct. However, the court can take

such approval into account in making an order under s. 207 or s. 234. Additionally, pursuant to

9 Ibid. at 20.11.to Ibid. at 20.28.11 Ibid. at 20.29.3.12 Ibid.13 (1986), 41 Man. R. (2d) 283 (Q.B.) [Triple "L"]14(1985),54 C.B.R. (N.S.) 171 (Ont. H.C.) [Mammome].15 Shareholder Remedies, supra note 7 at 20.29.3.

- 6 -

s. 235(2) an application cannot be stayed, discontinued, settled or dismissed for want of

prosecution without the approval of the court.

B. SUBCLAUSE 207(1)(B)(II): THE JUST AND EQUITABLE RULE

Scozzafava v. Properl6 identifies the circumstances in which it is just and equitable to order a

liquidation:

a) deadlock in management, which means that there are two equal factions ofshareholders who are at odds;

b) business akin to a partnership, which means that there is a relationship formed orcontinued on the basis of a personal relationship, involving mutual confidence;

c) loss of substratum, which means being incapable of carrying out the businessobjectives for which it was formed; and

d) justifiable loss of confidence in management. 17

The just and equitable rule is often used to wind-up a company where there is a "justifiable lack

of confidence in the management" of a corporation. I8 Commonly, this lack of confidence

manifests in the form a voting deadlock or management deadlock. I9 Shareholder Remedies

states, "The 'just and equitable' rule is invoked to wind up companies where such animosity

exists that it is impossible to obtain the consensus necessary to manage the company.,,20 In King

City Holdings Ltd. v. Preston Springs Gardens Inc. 21the court held that the just and equitable rule

is met where deadlock and animosity preclude all hope of reconciliation and co-operation.22 The

person seeking a winding-up under the just and equitable branch of s. 207 must not be

responsible for the deadlock and must cometo the court with clean hands.23

Shareholder Remedies details what it calls "the leading deadlock case:,,24 In re Yenidju Tabacco

Co., Ltd.25 In Yenidju Tabacco the company consisted of two shareholders with equal

16 2003 ABQB 248, 32 B.L.R. (3d) 105.17 See Annotated CBCA, supra note 1 at 1-492.18 Shareholder Remedies, supra note 7 at 20.20.19 Ibid. at 20.25.20 Ibid.21 (2001), 14 B.L.R. (3d) 277 (Ont. S.C.J.).22 See Annotated CBCA, supra note 1 at 1-483.23 Shareholder Remedies, supra note 7 at 20.25.

- 7 -

management and voting right, both of whom were also directors. One shareholder sued the other

for fraudulent misrepresentation and non-disclosure. A dispute over another matter lead to

lengthy arbitration and, ultimately, the ruling was not honoured. Eventually, the shareholders

refused to communicate with each other directly and there were threats to destroy the business.

The Court held that due to the lack of confidence in each other, it was impossible for the

shareholders to run the company. The Court issued a winding-up order.26

A winding-up order should not be made where a corporate dispute or impasse can be resolved

through the corporation's internal mechanisms ie. the election of a new board of directors.27

Shareholder Remedies summarizes the courts' approach to winding-up under the just and

equitable rule as follows:

The locus classicus on the 'Just and equitable" rule stipulates that the availability of othercorporate stakeholder remedies does not preclude a winding-up where the grounds for awinding-up exist, provided that no adequate relief would be available pursuant to theother remedies. Under the CBCA model, this principle may be extended to stipulate thata company will not be dissolved unless adequate relief cannot be obtained pursuant to anorder under the oppression remedy or other corporate stakeholder remedies.28

Additionally, as indicated in Patheon Inc. v. Global Pharm Inc. 29, where it is just and equitable

to wind-up a corporation, the Court may tum to the remedies available under s. 207(2) without

having to find oppression. "Where the shareholders no longer trust each other, lose confidence

in each other's ability to deal fairly, can no longer act compatibly in their business relationship

and deadlock results, the least intrusive and fairest result it to impose a buy-sell shotgun

agreement on the parties.,,3o

24 Ibid. at 20.26.25 [1916] 2 Ch. 426 (C.A.)[Yenidju Tabacco).26 See Shareholder Remedies, supra note 7 at 20.26.27 1bid. at 20.23.28 Ibid. at 20.32; the relevant provisions of the CBCA and the SBCA are identical.29 (2000), 9 B.L.R. (3d) 140 (ant. S.c.J.).30 Annotated CBCA, supra note 1 at 1-495; see also Gold v. Rose, 2001 Carswellant 5 (Ont. S.c.J.).

- 8 -

C. SECTION 217: THE RIGHT TO DISTRIBUTION IN MONEY ANDAPPRAISALS

Section 217(1) permits a shareholder to apply to the court for an order requiring the distribution

of property of the corporation to be in money. Shareholders have access to this section when, in

the course of a liquidation, the shareholders resolve or the liquidator proposes to: (a) exchange

all or substantially all the property of the corporation for securities of another body corporate that

are to be distributed to the shareholders or (b) distribute all or part of the property of the

corporation to the shareholders in kind. Pursuant to s. 217(2), the court has the options of

ordering all property of the corporation to be converted into and distributed in money or the

claims of any shareholder to be satisfied by a distribution in money. In the latter case,

subsections 184(20) to (22) apply. These subsections permit the court to set the fair value of the

shares and appoint appraisers to assist the court in fixing the fair value. The Dickerson Report

makes the following observations regarding the utility of s. 217:

Dissolution has sometimes been used as a way of accomplishing reorganization or other.fundamental change in the constitution of the corporation to prevent shareholders frominvoking their appraisal rights. Section 224 [so 217 SBCA] allows a court to defeat thismanoeuvre eitherby requiring all corporate assets to be converted into cash or by makingapplicable the appraisal provisions of s. 190 [so 184 SBCA] to require payment in cash toshareholders who dissent,31

III. AN APPLICATION FOR LIQUIDATION DISSOLUTION UNDER SECTION 234

As mentioned above, one of the remedies available to courts on an application under the

oppression remedy is liquidation and dissolution: SBCA, s. 234(3)(1). Additionally, 234(7)

allows an applicant under s. 234 to apply in the alternative for an order under s. 207. In respect

of the courts' power to liquidate and dissolve under the oppression section, Shareholder

Remedies echoes the sentiments expressed with respect to the winding-up provisions: "this is

clearly the most severe form of intervention in the management of the company.,,32 With respect

to the application of the liquidation and dissolution order under the oppression remedy,

Shareholder Remedies indicates, "use of this order had been threatened where shareholders

31 Annotated CBCA, supra note 1 at 1-511.32 Shareholder Remedies, supra note 7 at 18.93.6.

)

- 9 -

cannot resolve their differences despite intervention by a court.',33 Shareholder Remedies

maintains that a liquidation and dissolution order "can only be justified in the most severe

instances of oppressive conduct.',34 The rationale for this statement is that there must be balance

between "the protection of corporate stakeholders and the ability of management to conduct the

affairs of the company in an efficient manner.',35 Shareholder Remedies goes on to cite several

cases that illustrate the latter approach.

In Sparling v. Javelin International Ltd. (No. 1/6 the Court refused to order the winding-up of

the company. The company had good prospects for the future, the oppression could be remedied

by other orders and liquidation and dissolution involved adverse tax consequences. The Court

stated:

A corporation belongs to its shareholders. The courts should not expropriate their property by aliquidation of their investments unless there is no other practical solution to the oppression whichgave rise to the Court's intervention. If the shareholders collectively decide that they wish to windup their corporation, the law permits them to do so, but this is a decision they should make, if theyare given an opportunity to express their will freely.37 .

In Millar v. McNalll8 the Court found that to order liquidation and dissolutiop. in the

circumstances would be oppressive and unjust. The majority shareholders relied upon the

business for their livelihood and would be unable to find replacement employment.

Additionally, the majority shareholders assumed the business risk by managing the company and

loaning it money.39

In Wark v. Kozicki4o the applicant was dismissed as general manager and chief operating officer.

He applied for several orders under the oppression remedy, including a ordering liquidating and

dissolving the corporations. The corporations were restrained from terminating the applicant's

employment and he was to be reinstated. The Court held that sufficient cause had not been

33 Ibid.34 Ibid.35 Ibid.36 [1986] R.J.Q. 1073 (Que. S.c.).37 Shareholder Remedies, supra note 7 at 18.93.6-18.95.38 (1991), 3 B.L.R. (2d) 102 (Ont. Gen. Div.).39 Shareholder Remedies, supra note 7 at 18.95.

- 10-

shown that would justify the liquidation and dissolution of the companies. Such an order would

be financially detrimental not only to the companies but to their shareholders.41

Alexander v. Bar SP Ranches Ltd.42 involved a family farming business in which there were

extreme irreconcilable differences and physical violence. The majority sold the companies

major assets without approval. The Court ordered the majority to buy the minority's interest or

the business would be liquidated and dissolved.43

In Goft v. 1206468 Ontario Ltd.44 there was a great deal of mistrust amongst the shareholders.

Although the shareholders had been in the electrical contracting business for years, the business

had been incorporated for a short period of time. The company did not have significant goodwill

of its own and its only value was the specific contracts it had ongoing at the time. The Court

ordered a receiver-manager to fulfill the remaining contracts, after which the corporation would

be liquidated and dissolved.45

IV. CONCLUSION

Liquidation and dissolution is an extreme remedy that the courts' treat as a last resort. This

approach is evident in the case law and in the legislation itself. Sections 207 and 234 of the

SBCA are interchangeable in respect of liquidation and dissolution. Whether an application for

liquidation and dissolution is commenced via s. 207 or s. 234, the court has the power to order

the less drastic remedies found in s. 234(3). Additionally, the courts will not intervene in intra­

corporate disputes where the internal mechanisms of the company contain the means to resolve

impasses. Consequently, shareholders who are thinking of applying for a liquidation and

dissolution order to remedy a corporate dispute should first ensure that there is no internal

40 (1999),171 Sask. R. 208 (Q.B.).41 See also Yannacoulias v. Yannacoulias, unreported, Docket No. QB 81/99 JCPA, Mar. 31, 1999, where the Courtrefused to wind-up family-run businesses to break an impasse because such an order would pre-determine theprimary issues in dispute.42 (1999), 190 Sask. R. 1 (Q.B.).43 Shareholder Remedies, supra note 7 at 18.95.44 (2001), 11 B.L.R. (3d) 131 (Ont. S.C.J.).45 Shareholder Remedies, supra note 7 at 18.95-18.96.

- 11 -

mechanism in place that can resolve the dispute. Additionally, shareholders seeking such an

order should be aware that the court has the power to order not only those remedies outlined in s.

234(3), but also "any interim or final order it thinks fit." Shareholders seeking the liquidation

and dissolution of a corporation may end up with an order they did not anticipate or intend.

APPENDIX "A"

RELEVANT SECTIONS OFTHE BUSINESS CORPORATIONS ACT (SASKATCHEWAN)

Application of Division201(1) This Division does not apply to a corporation that is insolvent within the meaning of theBankruptcy Act (Canada) or that is a bankrupt within the meaning of that Act.

Staying proceedings(2) Any proceedings taken under this Division to dissolve or to liquidate and dissolve a corporationshall be stayed if the corporation is at any time found, in a proceeding under the Bankruptcy Act(Canada), to be insolvent within the meaning of that Act.

Revival202(1) Where a corporation is dissolved under this Division any interested person may apply to theDirector to have the corporation revived.

Articles of revival(2) Articles of revival in prescribed form shall be sent to the Director.

Certificate of revival(3) Upon receipt of articles of revival, the Director shall issue a certificate ofrevival in accordance with section 255.

Rights preserved(4) A corporation is revived on the date shown on the certificate of revival, and thereafter thecorporation, subject to such reasonable terms as may be imposed by the Director and to the rightsacquired by any person after its dissolution, has all the rights and privileges and is liable for theobligations that it would have had if it had not been dissolved.

Dissolution before commencing business203(1) A corporation that has not issued any shares may be dissolved at any time by resolution ofall the directors.

Dissolution· if no property(2) A corporation that has no property and no liabilities may be dissolved by special resolution ofthe shareholders or, where it has issued more than one class of shares, by special resolutions of theholders of each class whether or not they are otherwise entitled to vote.

Dissolution where property disposed of(2.1) A corporation that has property or liabilities, or both, may be dissolved by special resolutionof the shareholders or, where it has issued more than one class of shares, by special resolution of theholders of each class whether or not they are otherwise entitled to vote, if:

(a) by the special resolution or resolutions the shareholders authorize the directors to causethe corporation to distribute any property anddischarge any liabilities; and

(b) the corporation has distributed any property and discharged any liabilities before itsends articles of dissolution to the Director pursuant to subsection (3).

Appendix "A"Page 2

Articles of dissolution(3) Articles of dissolution in prescribed form shall be sent to the Director.

Certificate of dissolution(4) Upon receipt of articles of dissolution, the Director shall issue a certificate of dissolution inaccordance with section 255.

Effect of certificate(5) The corporation ceases to exist on the date shown in the certificate of dissolution.

Proposing liquidation and dissolution204(1) The directors may propose, or a shareholder who is entitled to vote at an annual meeting ofshareholders may, in accordance with section 131, make a proposal for, the voluntary liquidationand dissolution of a corporation.

Notice of meeting(2) Notice of any meeting of shareholders at which voluntary liquidation and dissolution is to beproposed shall set out the terms thereof.

Shareholders' resolution(3) A corporation may liquidate and dissolve by special resolution of the shareholders or, where thecorporation .has issued more than one class of shares, by special resolutions of the holders of eachclass whether or not they are otherwise entitled to vote.

Statement of intent to dissolve(4) A statement of intent to dissolve in prescribed form shall be sent to the Director.

Certificate of intent to dissolve(5) Upon receipt of a statement of intent to dissolve, the Director shall issue a certificate of intent todissolve in accordance with section 255.

Effect of certificate(6) Upon issue of a certificate of intent to dissolve, the corporation shall cease to carryon businessexcept to the extent necessary for the liquidation, but its corporate existence continues until theDirector issues a certificate of dissolution.

Liquidation(7) After issue of a certificate of intent to dissolve, the corporation shall:

(a) immediately cause notice thereof to be sent to each known creditor ofthe corporation;

(b) forthwith publish notice thereof in the Gazette and once in a newspaper published ordistributed in the place where the corporation has its registered office and take reasonablesteps to give notice thereof in every jurisdiction where the corporation was carrying onbusiness at the time it sent the statement of intent to dissolve to the Director;

(c) proceed to collect its property, to dispose of properties that are not tobe distributed inkind to its shareholders, to discharge all its obligations and to do all other acts required toliquidate its business; and

Appendix "A"Page 3

(d) after giving the notice required under clauses (a) and (b) and adequately providing forthe payment or discharge of all its obligations, distribute its remaining property, either inmoney or in kind, among its shareholders according to their respective rights.

Supervision by court(8) The Director or any interested person may, at any time during the liquidation of a corporation,apply to a court for an order that the liquidation be continued under the supervision of the court asprovided in this Division, and upon such application the court may so order and make any furtherorder it thinks fit.

Notice to Director(9) An applicant under this section shall give the Director notice of the application, and the Directoris entitled to appear and be heard in person or by counsel.

Revocation(10) At any time after issue of a certificate of intent to dissolve and' before issue of a certificate ofdissolution, a. certificate of intent. to dissolve may be revoked' by sending to the Director a statementof revocation of intent to dissolve in prescribed form, if such revocation is approved in the samemanner as the resolution under subsection (3).

Certificate of revocation of intent to dissolve(11) Upon receipt of a statement of revocation of intent to dissolve, the Director shall issue acertificate of revocation of intent to dissolve in accordance with section 255.

Effect of certificate(12) On the date shown in the certificate of revocation of intent to dissolve, the revocation iseffective and the corporation may continue to carryon its business or businesses.

Right to dissolve(13) If a certificate of intent to dissolve has not been revoked and the corporation has complied withsubsection (7), the corporation shall prepare articles of dissolution.

Articles of dissolution(14) Articles of dissolution in prescribed form shall be sent to the Director.

Certificate of dissolution(15) Upon receipt of articles of dissolution, the Director shall issue a certificate of dissolution inaccordance with section 255.

Effect of certificate(16) The corporation ceases to exist on the date shown in the certificate of dissolution.

Dissolution by Director205(1) Subject to subsections (2) and (3), where a corporation:

(a) has not commenced business within three years after the date shown in its certificate ofincorporation;

(b) has not carried on its business for three consecutive years; or

Appendix "A"Page 4

(c) has not had its name restored to the register within two years after the date on which itwas struck off under section 290;

the Director may dissolve the corporation by issuing a certificate of dissolution under this section orhe may apply to a court for an order dissolving the corporation, in which case section 210 applies.

Publication(2) The Director shall not dissolve a corporation under this section until he has:

(a) given to the corporation one hundred and twenty days notice of his decision todissolve the corporation; and

(b) published in the Gazette notice of his decision to dissolve the corporation.

Certificate of dissolution(3) Unless cause to the contrary has been shown or an order has been made by a court undersection 239, the Director may, after expiry of the period referred to in subsection (2), issue acertificate of dissolution in prescribed form.

Effect of certificate(4) The corporation ceases to exist on the date shown in the certificate of dissolution.

Grounds for dissolution206(1) The Director or any interested person may apply to a court for an order dissolving acorporation if the corporation has:

(a) failed for two or more consecutive years to comply with the requirements of this Actwith respect to the holding of annual meetings of shareholders;

(b) contravened subsection (2) of section 16 or section 21, 151 or 153; or

(c) procured any certificate under this Act by misrepresentation.

Notice to Director(2) An applicant under this section shall give the Director notice of the application, and the Directoris entitled to appear and be heard in person or by counsel.

Dissolution order(3) Upon an application under this section or section 205, the court may order that the corporationbe dissolved or that the corporation be liquidated and dissolved under the supervision of the court,and the court may make any other order it thinks fit.

Certificate(4) Upon receipt of an order under this section, section 205 or section 207, the Director shall:

(a) if the order is to dissolve the corporation, issue a certificate of dissolution in prescribedform; or

(b) if the order is to liquidate and dissolve the corporation under the supervision of thecourt, issue a certificate of intent to dissolve in prescribed form and publish notice of theorder in the Gazette.

Appendix "A"Page 5

Effect of certificate(5) The corporation ceases to exist on the date shown in the certificate of dissolution.

Further grounds207(1) A court may order the liquidation and dissolution of a corporation or any of its affiliatedcorporations upon the application of a shareholder:

(a) if the court is satisfied that in respect of a corporation or any of its affiliates:(i) any act or omission of the corporation or any of its affiliates effects a result;

(ii) the business or affairs of the corporation or any of its affiliates are or have beencarried on or conducted in a manner; or

(iii) the powers of the directors of the corporation or any of its affiliatesare or have been exercised in a manner;

that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of any securityholder, creditor, director or officer; or

(b) if the court is satisfied that:(i) a unanimous shareholder agreement entitles a complaining shareholder todemand dissolution of the corporation after the occurrence of a specified event andthat event has occurred; or

(ii) it is just and equitable that the corporation should be liquidated and dissolved.

Alternative order(2) Upon an application under this section, a court may make such order under this section orsection 234 as it thinks fit.

Application of section 235(3) Section 235 applies to an application under this section.

Application for supervision208(1) An application to a court to supervise a voluntary liquidation and dissolution undersubsection (8) of section 204 shall state the reasons, verified by an affidavit of the applicant, why thecourt should supervise the liquidation and dissolution.

Court supervision(2) If a court makes an order applied for under subsection (8) of section 204, the liquidation anddissolution of the corporation shall continue under the supervision of the court in accordance withthis Act.

Application to court209(1) An application to a court under subsection (1) of section 207 shall state the reasons, verifiedby an affidavit of the applicant, why the corporation should be liquidated and dissolved.

Show cause order

Appendix "A"Page 6

(2) Upon an application under subsection (1) of section 207, the court may make an order requiringthe corporation and any person having an interest in the corporation or claim against it to showcause, at a time and place therein specified, not less than four weeks after the date of the order, whythe corporation should not be liquidated and dissolved.

Powers of court(3) Upon an application under subsection (1) of section 207, the court may order the directors andofficers of the corporation to furnish to the court all material information known to or reasonablyascertainable by them, including:

(a) financial statements of the corporation;

(b) the name and address of each shareholder of the corporation; and

(c) the name and address of each known creditor or claimant, including any creditor orclaimant with unliquidated, future or contingent claims, and any person with whom thecorporation has a contract.

Publication(4) A copy of an order made under subsection (2) shall be:

(a) published as directed in the order, at least once in each week before the time appointedfor the hearing, in a newspaper published or distributed in the place where the corporationhas its registered office; and

(b)served upon the Director and each person named in the order.

Person responsible(5) Publication and service of an order under this section shall be effected by the corporation or bysuch other person and in such manner as the court may order.

Powers of court210 In connection with the dissolution or the liquidation and dissolution of a corporation, the courtmay, if it is satisfied that the corporation is able to payor adequately provide for the discharge ofall its obligations, make any order it thinks fit including, without limiting the generality of theforegoing:

(a) an order to liquidate;

(b) an order appointing a liquidator, with or without security, fixing his remuneration andreplacing a liquidator;

(c) an order appointing inspectors or referees, specifying their powers, fixing theirremuneration and replacing inspectors or referees;

(d) an order determining the notice to be given to any interested person, or dispensing withnotice to any person;

(e) an order determining the validity of any claims made against the corporation;

(f) an order, at any stage of the proceedings, restraining the directors and officers from:

Appendix "A"Page 7

(i) exercising any of their powers; or(ii) collecting or receiving any debt or other property of the corporation, and frompaying out or transferring any property of the corporation, except as permitted bythe court;

(g) an order determining and enforcing the duty or liability of any present orformer director, officer or shareholder:

(i) to the corporation; or(ii) for an obligation of the corporation;

(h) an order approving the payment, satisfaction or compromise of claims against thecorporation and the retention of assets for such purpose, and determining the adequacy ofprovisions for the payment or discharge of obligations of the corporation, whetherliquidated, unliquidated, future or contingent;

(i) an order disposing of or destroying the documents and records of the corporation;

(j) upon the application of a creditor, the inspectors or the liquidator, an order givingdirections on any matter arising in the liquidation;

(k) after notice has been given to all interested parties, an order relieving a liquidator fromany omission or default on such terms as the court thinks fit and confirming any act of theliquidator;

(I) subject to section 216, an order approving any proposed interim or final distribution toshareholders in money or in property;

(m) an order disposing of any property belonging to creditors or shareholders who cannotbe found;

(n) upon the application of any director, officer, security holder, creditor or the liquidator:(i) an order staying the liquidation on such terms and conditions as the court thinksfit;(ii) an order continuing or discontinuing the liquidation proceedings; or(iii) an order to the liquidator to restore to the corporation all its remainingproperty;

(0) after the liquidator has rendered his final account to the court, an order dissolving thecorporation.

Effect of order211 The liquidation of a corporation commences when a court makes an order therefor.

Cessation of business and powers212(1) If a court makes an order for liquidation of a corporation:

(a) the corporation continues in existence but shall cease to carryon business, except thebusiness that is, in the opinion of the liquidator, required for an orderly liquidation; and

Appendix "A"Page 8

(b) the powers of the directors and shareholders cease and vest in the liquidator, except asspecifically authorized by the court.

Delegation by liquidator(2) The liquidator may delegate any of the powers vested in him by clause (b) of subsection (1) tothe directors or shareholders.

Appointment of liquidator213(1) When making an order for the liquidation of a corporation or at any time thereafter, thecourt may appoint any body corporate or any person, including a director, officer or shareholder ofthe corporation, as liquidator of the corporation.

Vacancy(2) Where an order for the liquidation of a corporation has been made and the office of liquidator isor becomes vacant, the property of the corporation is under the control of the court until the officeof liquidator is filled.

Duties of liquidator214 A liquidator shall:(a) forthwith after his appointment give notice thereof to the Director and to each claimant andcreditor known to the liquidator;

(b) forthwith publish notice in the Gazette and by insertion once a week for two consecutive weeksin a newspaper published or distributed in the place where the corporation has its registered officeand take reasonable steps to give notice thereof in every jurisdiction where the corporation carrieson business, requiring any person:

(i) indebted to the corporation, to render an account and pay to the liquidator at the timeand place specified any amount owing;(ii) possessing property of the corporation, to deliver it to the liquidator at the time andplace specified; and(iii) having a claim against the corporation, whether liquidated, unliquidated, future orcontingent, to present particulars thereof in writing to the liquidator not later than twomonths after the first publication of the notice;

(c) take into his custody and control the property of the corporation;

(d) open and maintain a trust account for the moneys of the corporation;

(e) keep accounts of the moneys of the corporation received and paid out by him;

(f) maintain separate lists of the shareholders, creditors and other persons having claims against thecorporation;

(g) if at any time the liquidator determines that the corporation is unable to payor adequatelyprovide for the discharge of its obligations, apply to the court for directions;

(h) deliver to the court and to the Director, at least once in every twelvemonth period after hisappointment or more often as the court may require, financial statements of the corporation in the )

Appendix "A"Page 9

form required by section 149 or in such other form as the liquidator may think proper or as thecourt may require; and

(i) after his final accounts are approved by the court, distribute any remaining property of thecorporation among the shareholders according to their respective rights.

Powers of liquidator215(1) A liquidator may:

(a) retain lawyers, accountants, engineers, appraisers and other professional advisers;

(b) bring, defend or take part in any civil, criminal or administrative action or proceedingin the name and on behalf of the corporation;

(c) carryon the business of corporation as required for an orderly liquidation;

(d) sell by public auction or private sale any property of the corporation;

(e) do all acts and execute any documents in the name and on behalf of the corporation;

(0 borrow money on the security of the property of the corporation;

(g) settle or compromise any claims by or against the corporation; and

(h) do all other things necessary for the liquidation of the corporation and distribution of itsproperty.

Reliance on statements(2) A liquidator is not liable if he relies in good faith upon:

(a) financial statements of the corporation represented to him by an officer of thecorporation or in a written report of the auditor of the corporation to reflect fairly thefinancial condition of the corporation; or

(b) an opinion, a report or a statement of a lawyer, an accountant, an engineer, an appraiseror other professional adviser retained by the liquidator.

Application for examination(3) If a liquidator has reason to believe that any person has in his possession or under his control, orhas concealed, withheld or misappropriated any property of the corporation, he may apply to thecourt for an order requiring that person to appear before the court at the time and place designatedin the order and to be examined.

Power of court(4) If the examination referred to in subsection (3) discloses that a person has concealed, withheldor misappropriated property of the corporation, the court may order that person to restore it orpay compensation to the liquidator.

Costs.of liquidation

Appendix "A"Page 10

216(1) A liquidator shall pay the costs of liquidation out of the property of the corporation and shallpayor make adequate provision for all claims against the corporation.

Final account(2) Within one year after his appointment, and after paying or making adequate provision for allclaims against the corporation, the liquidator shall apply to the court:

(a) for approval of his final accounts and for an order permitting him to distribute in moneyor in kind the remaining property of the corporation to its shareholders according to theirrespective rights; or

(b) for an extension of time, setting out the reasons therefor.

Shareholder application(3) If a liquidator fails to make the application required by subsection (2), a shareholder of thecorporation may apply to the court for an order for the liquidator to show cause why a finalaccounting and distribution should not be made.

Publication(4) A liquidator shall give notice of his intention to make an application under subsection (2) to theDirector, each inspector appointed under section 210, each shareholder and any person whoprovided a security or fidelity bond for the liquidation, and he shall publish the notice in anewspaper published or distributed in the place where the corporation has its registered office or asotherwise directed by the court.

Final order(5) If the court approves the final accounts rendered by a liquidator, the court shall make an order:

(a) directing the Director to issue a certificate of dissolution;

(b) directing the custody or disposal of the documents and records of the corporation; and

(c) subject to subsection (6), discharging the liquidator.

Delivery of order(6) The liquidator shall forthwith send a certified copy of the order referred to in subsection (5) tothe Director.

Certificate of dissolution(7) Upon receipt of the order referred to in subsection (5), the Director shall issue a certificate ofdissolution in accordance with section 255.

Effect of certificate. (8) The corporation ceases to exist on the date shown in the certificate of dissolution.

Right to distribution in money217(1) If in the course of liquidation of a corporation the shareholders resolve or the liquidatorproposes to:

(a) exchange all or substantially all the property of the corporation for securities of anotherbody corporate that are to be distributed to the shareholders; or

Appendix "A"Page 11

(b) distribute all or part of the property of the corporation to the shareholders in kind;a shareholder may apply to the court for an order requiring the distribution of theproperty of the corporation to be in money.

Powers of court(2) Upon an application under subsection (1), the court may order:

(a) all the property of the corporation to be converted into and distributed in money; or

(b) the claims of any shareholder applying under this section to be satisfied by a distributionin money, in which case subsections (20) to (22) of section 184 apply.

Custody of records218(1) A person who has been granted custody of the documents and ;records of a dissolvedcorporation remains .liable to produce such documents and records for six years following the dateof its dissolution or until the expiry of such other shorter period as may be ordered undersubsection (5) of section 216.

Offence(2) A person who, without reasonable cause, contravenes subsection (1) is guilty of an offence andliable on summary conviction to a fine not exceeding $5,000 or to imprisonment for a term notexceeding six months or to both.

Interpretation219(1) In this section, "shareholder" includes the heirs and legal representatives of a shareholder.

Continuation of actions(2) Notwithstanding the dissolution of a corporation under this Act:

(a) a civil, criminal or administrative action or proceeding commenced by or against thecorporation before its dissolution may be continued as if the corporation had not beendissolved;

(b) a civil, criminal or administrative action or proceeding may be brought against thecorporation within two years after its dissolution as if the corporation had not beendissolved; and

(c) any property that would have been available to satisfy any judgement or order if thecorporation had not been dissolved remains available for such purpose.

Service(3) Service of a document on a corporation after its dissolution may be effected by serving thedocument upon a person shown in the last notice filed under section 101 or 108.

Reimbursement(4) Notwithstanding the dissolution of a corporation, a shareholder to whom any of its property hasbeen distributed is liable to any person claiming under subsection (2) to the extent of the amountreceived by that shareholder upon such distribution, and an action to enforce such liability may bebrought within two years after the date of the dissolution of the corporation.

Appendix "A"Page 12

Representative action(5) A court may order an action referred to in subsection (4) to be brought against the persons whowere shareholders as a class, subject to such conditions as the court thinks fit and, if the plaintiffestablishes his claim, the court may refer the proceedings to a referee or other officer of the courtwho may:

(a) add as a party to the proceedings before him each person who was a shareholder foundby the plaintiff; .

(b) determine, subject to subsection (4), the amount that each person who was a shareholdershall contribute towards satisfaction of the plaintiff's claim; and

(c) direct payment of the amounts so determined.

Unknown claimants220(1) Upon the dissolution of a corporation, the portion of the property distributable to a creditoror shareholder who cannot be found shall be converted into money and paid to the Minister ofFinance.

Constructive satisfaction(2) A payment under subsection (1) is deemed to be in satisfaction of a debt or claim of suchcreditor or shareholder.

Recovery(3) H at any time a person establishes that he is entitled to any moneys paid to the Minister ofFinance under this Act, the Minister of Finance shall pay an equivalent amount to him out of thegeneral revenue fund.

Vesting in Crown221(1) Subject to subsection (2) of section 219 and section 220, property of a corporation that hasnot been disposed of at the date of its dissolution vests in Her Majesty in right ofSaskatchewan.

Return of property on revival(2) H a corporation is revived under section 202, any property other than money that vested in HerMajesty pursuant to subsection (1) and that has not been disposed of shall be returned to thecorporation and there shall be paid to the corporation out of the general revenue fund:

(a) an amount equal to any money received by Her Majesty pursuant to subsection (1); and

(b) where property other than money vested in Her Majesty pursuant to subsection (1) andthat property has been disposed of, an amount equal to the lesser of:

(i) the value of any such property at the date it vested in Her Majesty;and

(ii) the.amount realized by Her Majesty from the disposition of that property.

Application to. court re oppression234(1) A complainant may apply to a court for an order under this section.

Appendix "A"Page 13

Grounds(2) If, upon an application under subsection (1), the court is satisfied that in respect of acorporation or any of its affiliates:

(a) any act or omission of the corporation or any of its affiliates affects a result;

(b) the business or affairs of the corporation or any of its affiliates are or have beencarried on or conducted in a manner; or

(c) the powers of the directors of the corporation or any of its affiliates are or havebeen exercised in a manner;

that is oppressive or unfairly prejudicial to or that unfairly disregards the interests of anysecurity holder, creditor, director or officer, the court may make an order to rectify thematters complained of.

Powers of court(3) In connection with an application under this section, the court may make any interim orfinal order it thinks fit including, without imitating the generality of the foregoing:

(a) an order restraining the conduct complained of;

(b) an order appointing a receiver or receiver-manager;

(c) an order to regulate a corporation's affairs by amending the articles or bylaws orcreating or amending a unanimous shareholder agreement;

(d) an order directing an issue or exchange of securities;

(e) an order appointing directors in place of or in addition to all or any of thedirectors in office;

(f) an order directing a corporation, subject to subsection (6), or any other person,to purchase securities of a security holder;

(g) an order directing a corporation, subject to subsection (6), or any other person,to pay to a security holder any part of the moneys paid by him for securities;

(h) an order varying or setting aside a transaction or contract to which acorporation is a party and compensating the corporation or any other party to thetransaction or contract;

Appendix "A"Page 14

(i) an order requiring a corporation, within a time specified by the court, to produceto the court or an interested person financial statements in the form required bysection 149 or an accounting in such other form as the court may determine;

(j) an order compensating an aggrieved person;

(k) an order directing rectification of the registers or other records of a corporationunder section 236;

(I) an order liquidating and dissolving the corporation;

(m) an order directing an investigation under Division XVII to be made;

(n) an order requiring the trial of any issue.

Duty of directors(4) If an order made under this section directs amendment of the articles or bylaws of acorporation:

(a) the directors shall forthwith comply with subsection (4) of section 185; and

(b) no other amendment to the articles or bylaws shall be made without the consentof the court, until a court otherwise orders.

Exclusion(5) A shareholder is not entitled to dissent under section 184 if an amendment to thearticles is effected under this section.

Limitation(6) A corporation shall not make a payment to a shareholder under clause (f) or (g) ofsubsection (3) if there are reasonable grounds for believing that:

(a) the corporation is or would after that payment be unable to pay its liabilities asthey become due; or

(b) the realizable value of the corporation's assets would thereby be less than theaggregate of its liabilities.

Alternative order(7) An applicant under this section may apply in the alternative for an order under section207.

Evidence of shareholder approval not decisive235(1) An application made or an action brought or intervened in under this Division shallnot be stayed or dismissed by reason only that it is shown that an alleged breach of a right

\

Appendix "A"Page 15

or duty owed to the corporation or its subsidiary has been or may be approved by theshareholders of such body corporate, but evidence or approval by the shareholders may betaken into account by the court in making an order under section 207, 233 or 234.