Industry Committee on April 21st, 2009

[Robert Vincent, Bloc, Shefford, QC]

What problem do you foresee? I'd like to understand.

Let us suppose that someone creates a company tomorrow morning, in Quebec, and that three, four or five years later, people from other provinces express their interest in doing the same kind of thing in their province. Even if that situation was not foreseen from the outset, it would be simpler that things be done at the pan-Canadian level. Paragraph 3(5)(b) allows that to be done immediately.

[Roger Charland]

Under those conditions, it would be necessary to check the extent to which this legislation would allow a company incorporated under a provincial act from day one to move under the federal program. Some acts include regulations that I think would make that impossible as a procedure. You would have to close down a not-for-profit organization and start another one. If the intention from the outset is to operate at national level, the option is to incorporate federally, as in the bill presently under study. If the intention from day one is for the activities to be much more local, it is always possible to incorporate provincially.

[Robert Vincent, Bloc, Shefford, QC]

I think of all those companies that started in a garage and one day find themselves operating at international level. You can make all kinds of assumptions, but to me, it seems simpler to include this provision.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Vincent.

Mr. Wallace.

[Mike Wallace, Conservative, Burlington, ON]

I want you to call the question.

[The Chair, Conservative, Michael Chong]

Is there any other further discussion on this?

Monsieur Bouchard.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Mr. Charland, your explanations, to the effect that we should allow people freedom of choice, with no regard to existing provincial responsibilities, and that we should allow much more room for the federal government, seem to chip away at the responsibilities or powers of a province like Quebec, or any other.

That is why I would have preferred more openness in this bill. If the aim is to modernize, let us not take over the whole area. Let us not attract organizations by allowing them to incorporate under Bill C-4 and telling them that it is no problem for them to become Canada-wide organizations although they are simply based in a village or a town.

This really seems to me to allow Bill C-4 to siphon organizations away. To my mind, it even seems a bit of an affront to the powers that a province should have, like Quebec.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Bouchard.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Nor do I see why there would not be a provision to address that. Organizations already established locally have had the privilege of being able to incorporate under a federal act while still keeping their local or provincial character. We should allow all the others to check the appropriate box, to go where their true responsibilities lie. That seems logical to me.

So my colleague and I are demanding exactly that consideration for the powers and responsibilities of Quebec and the provinces.

[The Chair, Conservative, Michael Chong]

Merci, Monsieur Bouchard.

(Amendment negatived)

(Clauses 3 to 6 inclusive agreed to)

(On clause 7--Articles of incorporation)

We have another amendment, moved by the Bloc Québécois.

Mr. Bouchard, could you speak to the amendment?

This amendment is going to add the two words “its objects” to clause 7, right after paragraph 7(1)(a).

Monsieur Bouchard, would you like to comment on your proposed amendment to clause 7?

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

In my view, it is related to what we said earlier. The key is the province where the headquarters is located...

The effect is the same, I feel. Provincial responsibilities, Quebec's responsibilities, must always be respected. We must not always be seeing the Canadian government pulling away or siphoning off powers that are reserved for the provinces. The words “its objects“ addresses that.

Given the argument you made earlier, I very much doubt if you are going to support them or make any comments agreeing that they make sense. So there you go!

The text is available.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Bouchard.

Would the Industry Canada officials care to comment as to whether or not they have any problem with including the objects of the corporation within the articles of incorporation?

[Coleen Kirby]

Since we haven't seen the motion, we are assuming it creates a new paragraph (a.1)--

[The Chair, Conservative, Michael Chong]

That's right.

[Coleen Kirby]

--that says “its objects”.

[The Chair, Conservative, Michael Chong]

That's right.

[Coleen Kirby]

Okay, 7.(1)(a.1).

The idea behind paragraph (f) and the statement of purpose is to allow the corporations to spell out what it is they're going to do.

Unfortunately, there are legal problems with the word “object”, which is why we did not make the statement of objects. There is a concept floating around in corporate law of ultra vires, which has been around for well over a hundred years. Using the word “object” has the intention of including that concept, which is present in the Canada Corporations Act. The reason we changed from the word “object” to a statement of purpose was to make sure we clearly got away from that legal concept of ultra vires. But the idea behind the statement of purpose is to spell out what it is the corporation is going to do, which I take as saying its objects or statement of purpose are pretty much the same thing.

[The Chair, Conservative, Michael Chong]

Thank you, Madam Kirby, for that comment.

Are there any other comments or questions from members of the committee concerning this amendment?

Mr. Bouchard.

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Madam, you say that the word “objects“ and the term you use in bill C-4 mean the same. At least, that is what I understood. So why would keeping the word “objects“ be a problem?

[Coleen Kirby]

As I said, the problem has to do with common law and the concept of ultra vires, which is if a corporation operates outside of its stated objects, the activity is considered illegal and the corporation can be dissolved.

One of the things that is done through the Canada Corporations Act is that there is a very strong list of powers. If they do anything that is not in that list, the corporation is ultra vires in its objects and its powers, and therefore the activity is considered illegal.

We have dealt with this differently, which is normal in corporate law. They've gotten rid of this concept, because usually the person who gets hurt is some third party dealing with the corporation that didn't realize that what the contractee has with the corporation is outside of its powers and therefore it's the third party that gets hurt, not the corporation. To make it very clear that we are not bringing in that concept, that we were getting outside of that concept, we have changed the word to “purpose”, and that has been generally accepted for the most part by the legal community and the stakeholders we've consulted on the bill. They understand that both are supposed to be an explanation of what it is the corporation is doing, but one gives that information to the public without bringing in a legal problem.

[The Chair, Conservative, Michael Chong]

Thank you, Madam Kirby.

Do you have another question, Mr. Bouchard?

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Because of the unintended negative consequences and because of the word “objects“, we will vote against when the time comes.

[The Chair, Conservative, Michael Chong]

I will ask the question.

(Amendment negatived)

Mr. Lake, could you move the government amendment?

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

I'll move it and again ask Ms. Kirby to give some background on that.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Lake.

Madam Kirby, could you comment on the government's proposed amendment to clause 7?