1. Why do you think section 137(2)(b) of the BCBCA is necessary and worded the way it is?
I believe that section 137(2) of the BCBCA is necessary to prevent any confusion that might arise from overlapping jurisdiction. In the event that powers of the directors were transferred, situations could arise where directors nonetheless claimed jurisdiction. Thus, section 137(2) clarifies that once transferred, powers that accrue to the transferee cannot concurrently be claimed by the transferor.
2. What would be the effect of an agreement to transfer powers of the directors to manage or supervise the management of the business to one or more other persons if that agreement was not included in articles?
Given the discussion in Canadian Jorex Ltd. v. 477749 Alberta Ltd. and Northern Minerals Investment Corp. v. Mundoro Capital Inc., we know that in Canada, residual power to manage the corporation’s affairs rests with the directors. Thus, it seems to me that unless the articles explicitly preclude such a transfer, the transfer would be valid.
Hi Ray, great post. I agree with you in that 137(2)(b) is important to avoid confusion. I also think that it would be important provision that could be use in the event of liability.
Yes, the only reason I can think of for 137(2)(b) is to avoid confusion, two or more parties claiming they had a right to the same certain power.
Yes, I completely agree that section 137(2)(b) is worded the way it is because it is necessary to avoid confusion. But, I would disagree on #2 that an agreement to transfer powers not included in the articles would be valid. I’m not completely sure of why and this is more of a intuitive response, but I just read section 137 as saying that this transfer can only occur if done so through the articles of a company. Maybe a transfer that is not in the interests of the corporation may occur if it is not contemplated in the articles? I agree that directors have residual powers to manage a company’s affairs. However, I think that these residual powers be transferred if the articles give effect to a transfer of directors’ powers, instead of these residual powers being the basis for such transfers to occur at the directors’ will without being included in the articles.
Hi Sania, I just want to respond to your second point about s.137 requiring the transfer to be completed through the articles of the company. I read s.137 as a permissive section vs. a restrictive one. It states only that the articles of the company may transfer the powers, but doesn’t say anything about whether a directorial power transfer must be backed by the articles. So, I would say it exists only to say that articles are permitted to allow transfers, and not to say that any other transfer is invalid.