Canada Business Corporations Act — C-44 174
Constraints on shares 174 (1) Subject to sections 176 and 177, a distributing corporation, any of the issued shares of which remain outstanding and are held by more than one person, may by special resolution amend its articles in accordance with the regulations to constrain (a) the issue or transfer of shares of any class or series to persons who are not resident Canadians; (b) the issue or transfer of shares of any class or series to enable the corporation or any of its affiliates or associates to qualify under any prescribed law of Canada or a province (i) to obtain a licence to carry on any business, (ii) to become a publisher of a Canadian newspaper or periodical, or (iii) to acquire shares of a financial intermediary as defined in the regulations; (c) the issue, transfer or ownership of shares of any class or series in order to assist the corporation or any of its affiliates or associates to qualify under any prescribed law of Canada or a province to receive licences, permits, grants, payments or other benefits by reason of attaining or maintaining a specified level of Canadian ownership or control; (d) the issue, transfer or ownership of shares of any class or series in order to assist the corporation to comply with any prescribed law. (e) the issue, transfer or ownership of shares of any class or series to enable the corporation to be a registered labour-sponsored venture capital corporation under Part X.3 of the Income Tax Act . Exception in respect of paragraph (1)(c) (2) Paragraph (1)(c) does not permit a constraint on the issue, transfer or ownership of shares of any class or series of which any shares are outstanding unless (a) in the case of a constraint in respect of a class, the shares of the class, or (b) in the case of a constraint in respect of a series, the shares of the series are already subject to a constraint permitted under that paragraph. Limitation on ownership of shares (3) A corporation may, pursuant to paragraph (1)(c), limit the number of shares of that corporation that may be owned, or prohibit the ownership of shares, by any person whose ownership would adversely affect the ability of the corporation or any of its affiliates or associates to attain or maintain a level of Canadian ownership or control specified in its articles that equals or exceeds a specified level referred to in paragraph (1)(c). Change or removal of constraint (4) A corporation referred to in subsection (1) may by special resolution amend its articles to change or remove any constraint on the issue, transfer or ownership of its shares. Termination (5) The directors of a corporation may, if authorized by the shareholders in the special resolution effecting an amendment under subsection (1) or (4), revoke the resolution before it is acted on without further approval of the shareholders. Regulations (6) Subject to subsections 261(2) and (3), the Governor in Council may make regulations with respect to a corporation that constrains the issue, transfer or ownership of its shares prescribing (a) the disclosure required of the constraints in documents issued or published by the corporation; (b) the duties and powers of the directors to refuse to issue or register transfers of shares in accordance with the articles of the corporation; (c) the limitations on voting rights of any shares held contrary to the articles of the corporation; (d) the powers of the directors to require disclosure of beneficial ownership of shares of the corporation and the right of the corporation and its directors, employees and agents or mandataries to rely on that disclosure and the effects of that reliance; and (e) the rights of any person owning shares of the corporation at the time of an amendment to its articles constraining share issues or transfers. Validity of acts (7) An issue or a transfer of a share or an act of a corporation is valid notwithstanding any failure to comply with this section or the regulations. R.S., 1985, c. C-44, s. 174; 1991, c.