Sale of all or substantially all property (CBCA section 189)

An asset buyer meets this rule when the seller is a corporation selling its business rather than its shares. Under s. 189(3) of the Canada Business Corporations Act (CBCA), a sale, lease or exchange of all or substantially all the property of a corporation, other than in the ordinary course of its business, requires shareholder approval in accordance with subsections (4) to (8). Ontario’s Business Corporations Act (OBCA) uses the same words in s. 184(3).

How the approval works

• CBCA s. 189(8): the sale is adopted when the holders of each class or series entitled to vote on it approve it by special resolution.
• CBCA s. 189(7): a class or series votes separately only if the sale affects it in a manner different from the shares of another class or series.
• CBCA s. 189(9) and OBCA s. 184(8): the directors may abandon the sale without further shareholder approval if the shareholders approving it authorized that, subject to the rights of third parties.

What to ask

Ask which statute the seller was incorporated under and to see the shareholder resolution. A shareholder who objects may have dissent rights; see dissent rights and whether shareholders can dissent when a company sells its assets. Whether a particular sale is “substantially all” is a question for a lawyer. This entry covers the CBCA and Ontario’s OBCA; check the statute that governs the corporation.