CN Commercialization Act

Marginal note:Mandatory provisions in articles of continuance

• 8 (1) The articles of continuance of CN shall contain

  • (a) provisions imposing constraints on the issue, transfer and ownership, including joint ownership, of voting shares of CN to prevent any one person, together with the associates of that person, from holding, beneficially owning or controlling, directly or indirectly, otherwise than by way of security only, in the aggregate, voting shares to which are attached more than 25% of the votes that may ordinarily be cast to elect directors of CN;

  • (b) provisions respecting the enforcement of the constraints imposed pursuant to paragraph (a); and

  • (c) provisions specifying that the head office of CN is to be situated in the Montreal Urban Community, Quebec.

• Marginal note:Enforcement provisions

  (2) Without limiting the generality of paragraph (1)(b), the provisions referred to in that paragraph may provide for the filing of declarations, the suspension of voting rights, the forfeiture of dividends, the refusal to issue or register voting shares and the sale of voting shares held contrary to the constraints and payment of the net proceeds of the sale to the person entitled to them.

• Marginal note:Exceptions

  (3) No provision imposing constraints pursuant to paragraph (1)(a) applies in respect of voting shares of CN that are held

  • (a) by the Minister in trust for Her Majesty in right of Canada;

  • (b) by one or more underwriters solely for the purpose of distributing the shares to the public; or

  • (c) by any person that is acting in relation to the shares solely in its capacity as an intermediary in the payment of funds or the delivery of securities, or both, in connection with trades in securities and that provides centralized facilities for the clearing of trades in securities.

• Marginal note:Associates

  (4) For the purposes of this section, a person is an associate of another person if

  • (a) one is a corporation of which the other is an officer or director;

  • (b) one is a corporation that is controlled by the other or by a group of persons of which the other is a member;

  • (c) one is a partnership of which the other is a partner;

  • (d) one is a trust of which the other is a trustee;

  • (e) both are corporations controlled by the same person;

  • (f) both are members of a voting trust that relates to voting shares of CN;

  • (g) both, in the reasonable opinion of the directors of CN, are parties to an agreement or arrangement a purpose of which is to require them to act in concert with respect to their interests, direct or indirect, in CN or are otherwise acting in concert with respect to those interests; or

  • (h) both are at the same time associates, within the meaning of any of paragraphs (a) to (g), of the same person.

• Marginal note:Exceptions

  (5) Notwithstanding subsection (4), for the purposes of this section,

  • (a) where a person who, but for this paragraph, would be an associate of another person submits to CN a statutory declaration stating that

    • (i) no voting shares of CN held or to be held by the declarant are or will be, to the declarant’s knowledge, held in the right of, for the use or benefit of or under the control of, any other person of which, but for this paragraph, the declarant would be an associate, and

    • (ii) the declarant is not acting and will not act in concert with any such other person with respect to their interests, direct or indirect, in CN,

    the declarant and that other person are not associates so long as the directors of CN are satisfied that the statements in the declaration are being complied with and that there are no other reasonable grounds for disregarding the declaration;

  • (b) two corporations are not associates pursuant to paragraph (4)(h) by reason only that under paragraph (4)(a) each is an associate of the same individual; and

  • (c) where it appears from the central securities register of CN that any person holds, beneficially owns or controls voting shares to which are attached not more than the lesser of two one-hundredths of one per cent of the votes that may ordinarily be cast to elect directors of CN and five thousand such votes, that person is not an associate of anyone else and no one else is an associate of that person.

• Marginal note:Control

  (6) For the purposes of this section, control means control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, an agreement or arrangement, the ownership of any body corporate or otherwise, and, without limiting the generality of the foregoing,

  • (a) a body corporate is controlled by a person if

    • (i) securities of the body corporate to which are attached more than fifty per cent of the votes that may be cast to elect directors of the body corporate are held, otherwise than by way of security only, by or for the benefit of that person, and

    • (ii) the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate; and

  • (b) a partnership or unincorporated organization is controlled by a person if an ownership interest therein representing more than fifty per cent of the assets of the partnership or organization is held, otherwise than by way of security only, by or for the benefit of that person.

• Marginal note:Definitions

  (7) In this section,

  corporation

  corporation includes a body corporate, partnership and unincorporated organization; (société)

  person

  person includes an individual, corporation, government, government agency, trustee, executor, administrator and other legal representative; (personne)

  voting share

  voting share means a share carrying voting rights under all circumstances or under some circumstances that have occurred and are continuing, and includes a security currently convertible into such a share and currently exercisable options and rights to acquire such a share or such a convertible security. (action avec droit de vote)