AuthorJ. Anthony VanDuzer
Accredited investor: a category of person to whom the sale of securities
by an issuer is exempt from the sec urities law requirement that the
issuer prepare and f‌ile a prospectu s. The accredited investor is def‌ined
in National Instrument 45-106 (Prospectus Exemptions) and includes
a purchaser who (1) either alone or, together with a spouse, benef‌icial ly
owns net f‌inancial assets exceeding $1,000,000 or; (2) in each of the
last two years ha s net individual before-tax income of at least $200,000
or, combined with that of a spouse, has net before-tax income of at least
$300,000 and reasonably expects to exceed that net income in the cur-
rent calendar year. The rationale for the exemption is that accredited
investors are deemed to be suff‌iciently sophist icated to protect their
own interests and do not need the protection of mand atory prospectus
disclosure. They can negotiate for the level of disclosure t hey deter-
mine they need. See “Prospect us,” National Instrument 45-106, s 1.1,
and Chapter 11.
Aff‌iliate d corporations: corporations where one is t he subsidiary of the
other, both are subsidiaries of the same corporation, or both are con-
trolled by the same person. One cor poration is the subsidiary of another
if it is controlled by the other. These are the basic and most common
types of aff‌iliated corporations. If two corporations are aff‌iliated with
the same corporation, they are deemed to be aff‌iliated. “Control” for
the purpose of the def‌inition of “aff‌iliate” is legal control: holding vot-
ing securities of the corporation that carry more than 50 percent of the
votes that may be cast for the election of directors, where such votes
are suff‌icient to elect a majority of the board of directors. See “Parent
corporat ion,” “Subsidi ary, CBCA, ss 2(2)–(5), and Chapters 8, 9, and 10.
Agency costs: in corporate governance theory, costs to shareholders
arising as a re sult of someone other than the shareholders being re-
sponsible for managing the corporation’s business. They include the
direct costs ass ociated with directors and off‌icers acting to fur ther their
personal interest s, in an opportunistic way, at the expense of the cor-
poration, which reduces the value of shareholders’ shares, and the rel at-
ed costs that shareholders incur to monitor their agents, the directors
and off‌icers, for the purpose of guard ing against such opportunistic
behaviour and to hold them accountable. See Chapters 12 and 13.
Amalgamation: a statutory procedure by which two or more corpora-
tions are combined into one. The rights and liabil ities of the amalgamat-
ing corporations continue as right s and obligations of the amalgamated
corporat ion. See “Short-form amalgamation,” and Chapter 8.
Annual meetings: meetings of shareholders that must be held at least
every f‌ifteen months or six month s after the end of the corporation’s
f‌inancial year. Annual meetings are identif‌ied and def‌ined by the hap-
pening of three items of busi ness:
election of directors;
receipt of annual f‌inancial statements and the report of the auditor
on such statements; and
appointment of an auditor (unless dispensed with by unanimous
agreement of shareholders in certain circumstances).
All other meetings are ca lled “special meetings.” To the extent any
business other th an the three items above is carr ied on at an annual
meeting, it is called an “annual and special meeting.” See “Special meet-
in g,” CBCA, s 133, and Chapters 7 and 8.
Articles or articles of incorporation: the document f‌iled wit h the dir-
ector appointed, under the CBCA or similar provincial government of-
f‌icials under corporate statutes modelled after the CBCA, to create a
corporat ion. Under the CBCA, t hey must be f‌iled in the form required
under the Act (Form 1), along with an Initial Reg istered Off‌ice Ad-
dress and First Board of Directors (Form 2). They set out the funda-
mental characteristics of the corporation — for example, its name, the
class and number of share s authorized to be is sued, any restrict ions on
transferring shares, and any restrictions on the business the corpora-
tion may carr y on. Once the director issues a certif‌icate to which the

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