RTA · Business Corporations Act
Part 9 — Directors and Officers
118 Liability of directors and others
resolution authorizing the issue of a share under section 27 for a
consideration other than money are jointly and severally liable to
the corporation to make good any amount by which the
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consideration received is less than the fair equivalent of the money
that the corporation would have received if the share had been
issued for money on the date of the resolution.
(2) Subsection (1) does not apply if the shares, on allotment, are
held in escrow pursuant to an escrow agreement required by the
Executive Director and are surrendered for cancellation pursuant to
that agreement.
(3) Directors of a corporation who vote for or consent to a
resolution authorizing
(a) a purchase, redemption or other acquisition of shares
contrary to section 34, 35 or 36,
(b) a commission on a sale of shares not provided for in secti on
42,
(c) a payment of a dividend contrary to section 43,
(d) financial assistance contrary to section 45,
(e) a payment of an indemnity contrary to section 124, or
(f) a payment to a shareholder contrary to section 191 or 242,
are jointly and severally liable to restore to the corporation any
amounts so paid and the value of any property so distributed, and
not otherwise recovered by the corporation.
(4) A director who has satisfied a judgment rendered under this
section is entitled to contribution from the other directors who
voted for or consented to the unlawful act on which the judgment
was founded.
(5) If money or property of a corporation was paid or distributed to
a shareholder or other recipient contrary to section 34, 35, 36, 42,
43, 45, 124, 191 or 242, the corporation, any director or
shareholder of the corporation, or any person who was a creditor of
the corporation at the time of the payment or distribution, is
entitled to apply to the Court for an order under subsection (6).
(6) On an application under subsection (5), the Court may, if it is
satisfied that it is equitable to do so, do any or all of the following:
(a) order a shareholder or othe r recipient to restore to the
corporation any money or property that was paid or
distributed to the shareholder or other recipient contrary to
section 34, 35, 36, 42, 43, 45, 124, 191 or 242;
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(b) order the corporation to return or issue shares to a perso n
from whom the corporation has purchased, redeemed or
otherwise acquired shares;
(c) make any further order it thinks fit.
(7) A director is not liable under subsection (1) if the director
proves that the director did not know and could not reasonably
have known that the share was issued for a consideration less than
the fair equivalent of the money that the corporation would have
received if the share had been issued for money.
(8) A director is not liable under subsection (3)(d) if the director
proves that the director did not know and could not reasonably
have known that the financial assistance was given contrary to
section 45.
(9) An action to enforce a liability imposed by this section may not
be commenced after 2 years from the date of the resolution
authorizing the action complained of.
1981 cB-15 s113;1988 c7 s3;1995 c28 s64