5551928 Manitoba – B.C. Supreme Court rectifies the amount of an erroneously calculated capital dividend

A private company made the common mistake of declaring a capital dividend in an amount that assumed an addition to its capital dividend account for a disposition of eligible capital property, even though such addition would not occur until year end. Branch J found in light of the resolution’s wording (which referenced the intention to declare the dividend in the amount of the corporation’s CDA) and statements deposed as to the directors’ intentions that

there was a definite and ascertainable agreement between the directors to effectively “clean out” the petitioner’s capital dividend account.

As the Fairmont test for rectification thus was met, he granted an order to rectify the resolution to reduce the declared dividend by the erroneous amount.

Neal Armstrong. Summary of Re 5551928 Manitoba Ltd., 2018 BCSC 1482 under General Concepts – Rectification.