Sculpin,

Just a thought on the concept of walking away from liabilities in a transfer.

"If it can be perceived or interpreted from Section 137 that directors can walk away from liabilities and hand a company over to shareholders, it would not surprise me."

I don't think this clause suggests that directors can wash their hands of legal wrong-doing if that in fact has happened. I believe it only speaks to liabilities incurred by the company during the course of business. If so, this is not really something new as the transfer and sale of companies typically always include it's liabilities unless otherwise negotiated out of the transfer.

The reason this exists and is one of the single most compelling reasons to incorporate in Canada, in that liability rests on the corporate entity and not in personal guarantees of the Executive or Directors. This ensures an environment for businesses to start and grow without facing levels of risk that FAR outweigh the potential of gain of starting a business which would hamstring any free market economy.

Certainly even in a criminal matter the corporation is liable to some extent for the actions of its directors and employees but that doesn't give any employee or director a get out of jail free card for any individual criminal behaviour if so proven. Often the corporation gets sued first as they are the ones with the means to pay and/or settle any judgement, however those individuals who committed the crimes will likely be held accountable by the corporation and/or authorities. if in fact the corporation was complicit in the crime it may be a situation where both corporation and individual are held accountable...regardless, it would be complicated but still no get out of jail free card.

All in all, I think the relevance this has to the issues at hand vary greatly depending on the desire of shareholders and what type of resolution they ultimately would prefer.

S.