Marginal note:Proof of ownership

49. An issuer shall treat a person, other than one described in section 48, as being entitled to exercise the rights and privileges attached to a debt obligation if the person provides proof that the person has acquired ownership of the debt obligation by operation of law or has legal authority to exercise the rights and privileges.

Marginal note:Joint holder

50. If satisfactory proof of the death of a joint holder of a debt obligation with a right of survivorship is provided to an issuer, the issuer may treat any surviving joint holder as the owner of the debt obligation.

Marginal note:Duties of issuer

51. An issuer is not required to inquire into the existence of, or see to the performance of, any duty owed to a third person by a registered holder, or a person who may be treated as a registered holder, of a debt obligation.

Marginal note:Minors

52. If a minor exercises a right of ownership in a debt obligation of an issuer, no subsequent repudiation or avoidance or, in Quebec, nullity or reduction of obligations is effective against the issuer.

Marginal note:Deceased owner

• 53. (1) Subject to any applicable law relating to the collection of taxes, a person who is an heir or a fiduciary of an estate or succession of a deceased debt obligation holder is entitled to become the registered holder or to designate a registered holder if the person deposits the following information with the issuer or its transfer agent, together with any reasonable assurances that the issuer may require:

  • (a) the debt obligation certificate or, in default of one, a document proving that the deceased was the debt obligation holder;

  • (b) a document proving the death of the debt obligation holder; and

  • (c) a document proving that the heir or fiduciary has the right under the law of the place in which the deceased was domiciled immediately before their death to deal with the debt obligation.

• Marginal note:Endorsement

  (2) A debt obligation certificate referred to in paragraph (1)(a) shall be endorsed

  • (a) in the case of a transfer to an heir or fiduciary, by that person; and

  • (b) in any other case, in a manner acceptable to the issuer.

• Marginal note:Right of issuer

  (3) Deposit of the documents required by subsection (1) empowers an issuer or its transfer agent to record in a debt obligations register the transmission of a debt obligation from the deceased holder to the heir or fiduciary or to any person that the heir or fiduciary may designate and to treat the person who becomes a registered holder as the owner of the debt obligation.

Marginal note:Overissue

• 54. (1) Subject to this section, the provisions of this Part that validate a debt obligation or compel its issue or reissue do not apply if the validation, issue or reissue of a debt obligation would result in overissue.

• Marginal note:Identical debt obligation

  (2) A person who is entitled to a validation or issue may, if there has been an overissue and if a valid debt obligation that is similar in all respects to the debt obligation involved in the overissue is reasonably available for purchase, compel the issuer to purchase and deliver that debt obligation against the surrender of the debt obligation that the person holds.

• Marginal note:If identical debt obligation not available

  (3) If a valid debt obligation that is similar in all respects to the debt obligation involved in the overissue is not reasonably available for purchase, the person who is entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid debt obligation.

• Marginal note:Increase in capital

  (4) The overissued debt obligations are valid from the date they were issued only if the issuer increases the number of its authorized debt obligations to a number equal to or greater than the number of debt obligations previously authorized plus the number of the debt obligations overissued.

Proceedings

Marginal note:Rules of action

55. The following rules apply in an action on a debt obligation:

• (a) each signature on the debt obligation certificate or in a necessary endorsement is admitted unless specifically denied in the pleadings;

• (b) a signature on the debt obligation is presumed to be genuine and authorized but, if the effectiveness of the signature is in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;

• (c) if a signature is admitted or established, production of a debt obligation certificate entitles the holder to recover on it unless the other party establishes a defence or defect going to the validity of the debt obligation; and

• (d) if the other party establishes the defence or defect, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or some other person under whom the claim is made.

Delivery

Marginal note:Delivery of debt obligations

• 56. (1) A person who is required to deliver debt obligations may deliver any debt obligation of the specified issue

  • (a) in bearer form;

  • (b) in registered form in the name of the transferee; or

  • (c) endorsed to the person or in blank.

• Marginal note:Limitation

  (2) Subsection (1) is subject to any agreement to the contrary, to any applicable Act of Parliament or of the legislature of a province, to any applicable regulation or to any applicable rule of a stock exchange or other regulatory body.

General

Marginal note:Incorporation by reference

• 57. (1) The terms of a debt obligation include those stated on the debt obligation and those incorporated by reference to another document, an Act of Parliament or of the legislature of a province, a regulation, a rule or an order to the extent that the incorporated terms do not conflict with those stated on the debt obligation.

• Marginal note:Purchaser without notice

  (2) Subsection (1) applies to a good faith purchaser but the incorporation by reference is itself not notice of a defect to the purchaser even if the debt obligation expressly states that a person accepting it admits that notice.

Marginal note:Validity of debt obligation

58. A debt obligation is valid in the hands of a good faith purchaser.

Marginal note:Defence

59. Subject to section 62, the fact that a debt obligation is not genuine is a complete defence for the issuer even against a good faith purchaser.

Marginal note:Defences

60. All other defences of an issuer, including non-delivery and conditional delivery of a debt obligation, are ineffective against a good faith purchaser.

Marginal note:Deemed notice

• 61. (1) A purchaser is deemed to have notice of any defect in the issue of a debt obligation or any defence of the issuer if the debt obligation becomes stale within the meaning of subsection (2).

• Marginal note:Stale debt obligation

  (2) A debt obligation becomes stale if

  • (a) the purchaser takes the debt obligation later than the prescribed period that is after

    • (i) the date on which performance of the principal obligation evidenced by the debt obligation was due, or

    • (ii) the date on or after which the debt obligation is to be presented or surrendered for redemption or exchange; or

  • (b) the payment of money or the delivery of debt obligations is required in order to present or surrender the debt obligation, the money or debt obligations are available on the day for the payment or delivery and the purchaser takes the debt obligation later than the prescribed period that is after that day.

Marginal note:Unauthorized signature

• 62. (1) Subject to subsection (2), an unauthorized signature on a debt obligation is ineffective.

• Marginal note:Limited effectiveness

  (2) An unauthorized signature on a debt obligation is effective in favour of a good faith purchaser if the signature was made by

  • (a) an authenticating trustee, transfer agent or other person entrusted by the issuer with the duty to sign the debt obligation, or similar debt obligations, or to prepare them for signing; or

  • (b) an employee of the issuer or a person referred to in paragraph (a) who handles the debt obligation in the ordinary course of their duties.

Marginal note:Completion of debt obligation

63. If a debt obligation contains the signatures necessary for its issue or transfer but is incomplete in another respect, any person may complete it in accordance with their authority.

Marginal note:Enforceability

64. A debt obligation that was completed incorrectly is enforceable by a good faith purchaser.

Marginal note:Fraud

65. A completed debt obligation that was improperly altered, even if fraudulently altered, remains enforceable but only according to its original terms.

Marginal note:Guarantees

• 66. (1) A person signing a debt obligation as an authenticating trustee, transfer agent or other person entrusted by the issuer with the duty to sign the debt obligation guarantees to a good faith purchaser that

  • (a) the debt obligation is genuine;

  • (b) the person’s acts in connection with the debt obligation are within the person’s authority; and

  • (c) the person has reasonable grounds for believing that the debt obligation is in the form and within the amount the issuer is authorized to issue.

• Marginal note:Liability

  (2) Unless agreed otherwise, a person referred to in subsection (1) does not assume any further liability for the validity of the debt obligation.

Marginal note:Acquisition of rights

• 67. (1) On delivery of a debt obligation, the purchaser of the debt obligation acquires the rights in it that the transferor had or had authority to convey.

• Marginal note:Claim free

  (2) A good faith purchaser of a debt obligation acquires it free from any adverse claim.

• Marginal note:No better position

  (3) A purchaser who was a party to a fraud or illegality affecting a debt obligation or who, as a prior holder, had notice of an adverse claim does not have a better position by taking from a later good faith purchaser.

Marginal note:Limitation of the purchase

68. A purchaser acquires rights only to the extent of the interest or right purchased.

Marginal note:Deemed notice

• 69. (1) A purchaser of a debt obligation, or a broker for a seller or purchaser, is deemed to have notice of an adverse claim if

  • (a) the debt obligation has been endorsed “for collection” or “for surrender” or for a purpose other than transfer; or

  • (b) the debt obligation is in bearer form and has a statement on it that it belongs to a person other than the transferor.

• Marginal note:Name

  (2) The mere writing of a name on a debt obligation is not a statement for the purposes of paragraph (1)(b).

Marginal note:No duty to inquire

• 70. (1) A purchaser of a debt obligation, or a broker for a seller or purchaser, has no duty to inquire into the rightfulness of the transfer and, subject to sections 69 and 71, has no notice of an adverse claim.

• Marginal note:Third party holding

  (2) Subsection (1) applies even if the purchaser or broker has notice that the debt obligation is held by a third person or is registered in the name of or endorsed by a fiduciary.

Marginal note:Deemed notice

71. A purchaser or broker who knows that the transaction is for the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty is deemed to have notice of an adverse claim.

Marginal note:Staleness

• 72. (1) The following events do not constitute notice of an adverse claim except if the debt obligation becomes stale within the meaning of subsection (2):

  • (a) an event that creates a right to performance of the principal obligation evidenced by the debt obligation; or

  • (b) an event that sets the date on or after which the debt obligation is to be presented or surrendered for redemption or exchange.

• Marginal note:Staleness of debt obligation

  (2) A debt obligation becomes stale if

  • (a) the purchaser takes the debt obligation later than the prescribed period that is after

    • (i) the date on which performance of the principal obligation evidenced by the debt obligation was due, or

    • (ii) the date on or after which the debt obligation was to be presented or surrendered for redemption or exchange; or

  • (b) the payment of money or the delivery of debt obligations is required in order to present or surrender the debt obligation, the money or debt obligations are available on the day for the payment or delivery and the purchaser takes the debt obligation later than the prescribed period that is after that day.

Marginal note:Guarantee

• 73. (1) A person who presents a debt obligation for registration of transfer or for payment or exchange guarantees to the issuer that the person is entitled to do so.

• Marginal note:Limitation on guarantee

  (2) A good faith purchaser who receives a new, reissued or re-registered debt obligation and who registers a transfer guarantees only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.

Marginal note:Content of guarantee

74. A person who transfers a debt obligation to a purchaser for value guarantees by the transfer only that

• (a) the transfer is effective and rightful;

• (b) the debt obligation is genuine and has not been materially altered; and

• (c) the person knows of nothing that might impair the validity of the debt obligation.

Marginal note:Guarantee of intermediary

75. An intermediary delivering a debt obligation to a purchaser who knows that the intermediary is an intermediary guarantees only its good faith.

Marginal note:Guarantee of broker

76. A broker shall give to a customer, to the issuer and to a purchaser the guarantees provided in sections 73 to 75 and has the rights and privileges of a purchaser under those sections, and those guarantees of and in favour of the broker acting as an agent or mandatary are in addition to guarantees given by the customer and guarantees given in favour of the customer.

Marginal note:Right to compel endorsement

77. If a registered debt obligation is delivered to a purchaser without a necessary endorsement, the purchaser has the right to demand the endorsement. The purchaser becomes a good faith purchaser after the endorsement.

Definition of “appropriate”

• 78. (1) In section 79, subsections 86(1) and 94(1) and section 98, “appropriate”, with respect to a person, means that the person is

  • (a) the person who is specified by the debt obligation or by a special endorsement to be entitled to the debt obligation;

  • (b) if the person described in paragraph (a) is described as a fiduciary but is no longer serving as one, either that person or their successor;

  • (c) if the debt obligation or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons is no longer a fiduciary, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed or qualified;

  • (d) if the person described in paragraph (a) is an individual and is without capacity to act by reason of death, minority or other incapacity, the person’s fiduciary;

  • (e) if the debt obligation or endorsement mentioned in paragraph (a) specifies more than one person with a right of survivorship and by reason of death not all of the persons can sign, the survivor or survivors;

  • (f) a person who has the legal power to sign; or

  • (g) to the extent that a person described in any of paragraphs (a) to (f) may act through an agent or mandatary, the person’s authorized agent or mandatary.

• Marginal note:Time for determination

  (2) The authority of a person signing is determined as of the time of signing.

Marginal note:Endorsement

• 79. (1) An endorsement of a debt obligation in registered form for the purposes of assignment or transfer is made when an appropriate person signs either the debt obligation or a separate document, or when the signature of an appropriate person is written without more on the back of the debt obligation.

• Marginal note:Blank or special

  (2) An endorsement may be in blank or special.

• Marginal note:Blank endorsement

  (3) An endorsement in blank includes an endorsement to bearer.

• Marginal note:Special endorsement

  (4) A special endorsement specifies the person to whom the debt obligation is to be transferred or who has power to transfer it.

• Marginal note:Right of holder

  (5) A holder may convert an endorsement in blank into a special endorsement.