Financial Consumer Agency of Canada Act (S.C. 2001, c. 9)

PART XIVREGULATION OF BANKS — COMMISSIONER

Marginal note:Required information

657. A bank or an authorized foreign bank shall provide the Commissioner with the information at the times and in the form that the Commissioner may require for the purposes of the administration of the Financial Consumer Agency of Canada Act and the consumer provisions.

Marginal note:Confidential information

• 658. (1) Subject to subsection (2), information regarding the business or affairs of a bank or authorized foreign bank or regarding persons dealing with any of them that is obtained by the Commissioner or by any person acting under the direction of the Commissioner, in the course of the exercise or performance of powers, duties and functions referred to in subsection 5(1) of the Financial Consumer Agency of Canada Act, and any information prepared from that information, is confidential and shall be treated accordingly.

• Marginal note:Disclosure permitted

  (2) If the Commissioner is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed, subsection (1) does not prevent the Commissioner from disclosing it

  • (a) to any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;

  • (b) to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;

  • (c) to the Canada Deposit Insurance Corporation, for purposes related to its operation; and

  • (d) to the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions.

Marginal note:Examination of banks

• 659. (1) The Commissioner, from time to time but at least once in each calendar year, shall make or cause to be made any examination and inquiry that the Commissioner considers necessary for the purposes of satisfying the Commissioner that the applicable consumer provisions are being complied with and, after the conclusion of each examination and inquiry, shall report on it to the Minister.

• Marginal note:Access to records of bank

  (2) The Commissioner or a person acting under the Commissioner’s direction in carrying out his or her duties under subsection (1)

  • (a) has a right of access to any records, including electronic records, of a bank or authorized foreign bank; and

  • (b) may require the directors or officers of a bank or authorized foreign bank to provide information and explanations, to the extent that they are reasonably able to do so, in respect of any matter subject to examination or inquiry under subsection (1).

Marginal note:Power of Commissioner on inquiry

660. The Commissioner, in carrying out his or her duties in relation to consumer provisions, has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Commissioner’s direction.

Marginal note:Compliance agreement

661. The Commissioner may enter into an agreement, called a “compliance agreement”, with a bank or an authorized foreign bank for the purposes of implementing any measure designed to further compliance by it with the consumer provisions.

PART XVBANK HOLDING COMPANIES

Purpose

Marginal note:Purpose

662. The purpose of this Part is to provide for the incorporation, formation and regulation of bank holding companies.

Division 1Interpretation

Marginal note:Definitions

• 663. (1) The following definitions apply in this Part.

  “complainant”

  « plaignant »

  “complainant”, in relation to a bank holding company or any matter concerning a bank holding company, means

  • (a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a bank holding company or any of its affiliates;

  • (b) a director or an officer, or a former director or officer, of a bank holding company or any of its affiliates; or

  • (c) any other person who, in the discretion of a court, is a proper person to make an application under section 334, 338 or 989.

  “subordinated indebtedness”

  « titre secondaire »

  “subordinated indebtedness” means an instrument evidencing an indebtedness of a bank holding company that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the bank holding company, be subordinate in right of payment to all liabilities of the bank holding company except those that, by their terms, rank equally with or are subordinate to such indebtedness.

• Marginal note:Provisions in other Parts

  (2) A reference in a provision of this Part to a provision in any other Part is deemed to be a reference to that provision as it has been made applicable by this Part in respect of bank holding companies.

• Marginal note:References in other Parts

  (3) A reference in a provision of another Part to a provision that has been made applicable in respect of bank holding companies by this Part is to be read as including a reference to that provision as it has been made applicable in respect of bank holding companies.

Division 2Status and Powers

Marginal note:Corporate powers

• 664. (1) A bank holding company has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.

• Marginal note:Powers restricted

  (2) A bank holding company shall not carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.

• Marginal note:Business in Canada

  (3) A bank holding company may carry on business throughout Canada.

• Marginal note:Powers outside Canada

  (4) Subject to this Act, a bank holding company has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.

Marginal note:No invalidity

665. No act of a bank holding company, including any transfer of property to or by a bank holding company, is invalid by reason only that the act or transfer is contrary to the bank holding company’s incorporating instrument or this Act.

Marginal note:By-law not necessary

666. It is not necessary for a bank holding company to pass a by-law in order to confer any particular power on the bank holding company or its directors.

Marginal note:No personal liability

667. The shareholders of a bank holding company are not, as shareholders, liable for any liability, act or default of the bank holding company except as otherwise provided by this Act.

Marginal note:No constructive notice

668. No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a bank holding company by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at an office of the bank holding company.

Marginal note:Authority of directors and officers

669. A bank holding company or a guarantor of an obligation of a bank holding company may not assert against a person dealing with the bank holding company or with any person who has acquired rights from the bank holding company that

• (a) the bank holding company’s incorporating instrument or any by-laws of the bank holding company have not been complied with,

• (b) the persons named as directors of the bank holding company in the most recent return sent to the Superintendent under section 951 are not the directors of the bank holding company,

• (c) the place named in the incorporating instrument or the by-laws of the bank holding company is not the head office of the bank holding company,

• (d) a person held out by the bank holding company as a director, an officer or a representative of the bank holding company has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the bank holding company or usual for such director, officer or representative, or

• (e) a document issued by any director, officer or representative of the bank holding company with actual or usual authority to issue the document is not valid or not genuine,

except where the person has or ought to have by virtue of the person’s position with or relationship to the bank holding company knowledge to that effect.

Marginal note:Sunset provision

• 670. (1) Subject to subsection (2), bank holding companies shall not carry on business after the day that is five years after this section comes into force, except that if Parliament dissolves on that day or at any time within the three-month period before that day, bank holding companies may continue to carry on business until the day that is one hundred and eighty days after the first day of the first session of the next Parliament.

• Marginal note:Extension

  (2) The Governor in Council may, by order, extend by up to six months the time during which bank holding companies may continue to carry on business. No more than one order may be made under this subsection.

Division 3Incorporation and Continuance

Formalities of Incorporation

Marginal note:Incorporation of bank holding company

671. On the application of one or more persons made in accordance with this Part, the Minister may, subject to this Division, issue letters patent incorporating a bank holding company.

Marginal note:Restrictions on incorporation

672. Letters patent incorporating a bank holding company may not be issued if the application therefor is made by or on behalf of

• (a) Her Majesty in right of Canada or in right of a province, an agency of Her Majesty in either of those rights, or an entity controlled by Her Majesty in either of those rights;

• (b) the government of a foreign country or any political subdivision thereof;

• (c) an agency of the government of a foreign country or any political subdivision thereof; or

• (d) an entity, other than a foreign institution or any subsidiary of a foreign institution, that is controlled by the government of a foreign country or any political subdivision thereof.

Marginal note:National treatment

673. If a proposed bank holding company would be a subsidiary of a foreign bank, within the meaning of any of paragraphs (a) to (f) of the definition “foreign bank” in section 2, letters patent to incorporate the bank holding company may not be issued unless the Minister is satisfied that, if the application is made by a non-WTO Member foreign bank, treatment as favourable for bank holding companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.

Marginal note:Application for incorporation

674. An application for letters patent to incorporate a bank holding company setting out the names of the first directors of the bank holding company shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.

Marginal note:Matters for consideration

675. Before issuing letters patent to incorporate a bank holding company, the Minister shall take into account all matters that the Minister considers relevant to the application, including

• (a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank that is proposed to be its subsidiary;

• (b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank that is proposed to be its subsidiary;

• (c) the business record and experience of the applicant or applicants;

• (d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

• (e) whether the bank holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

• (f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank holding company and its affiliates on the conduct of those businesses and operations; and

• (g) the best interests of the financial system in Canada.

Marginal note:Contents of letters patent

• 676. (1) There shall be set out in the letters patent incorporating a bank holding company

  • (a) the name of the bank holding company;

  • (b) the place in Canada where the head office of the bank holding company is to be situated; and

  • (c) the date that the bank holding company came, or is to come, into existence.

• Marginal note:Provisions in letters patent

  (2) The Minister may set out in the letters patent incorporating a bank holding company any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed bank holding company.

• Marginal note:Terms and conditions

  (3) The Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating a bank holding company as the Minister considers necessary or appropriate.

Marginal note:Letters patent of incorporation on application of banks

• 677. (1) If, under section 671, the Minister issues letters patent incorporating a bank holding company on the application of a bank, there may, on the request of the bank, and with the approval of the Minister, be included in the letters patent of incorporation of the bank holding company a provision deeming shares of the bank holding company to be issued, on a share for share basis, to all shareholders of the bank in exchange for all the issued and outstanding shares of the bank.

• Marginal note:Effect of provision

  (2) Shares of a bank holding company deemed to be issued under subsection (1) are subject to the same designation, rights, privileges and restrictions or conditions and, subject to any agreement to the contrary, to the same charges, encumbrances and other restrictions as the shares of the bank for which they are exchanged and the shares of the bank, on the issuance of the letters patent, become the property of the bank holding company free and clear of any charge, encumbrance or other restriction.

• Marginal note:Effect of provision

  (3) An exchange of shares of a bank referred to in subsection (1) under a provision included in the letters patent incorporating a bank holding company does not deprive a person who was a holder of shares of the bank immediately before the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect of the shares, but that right or privilege must be exercised in accordance with this Act.

• Marginal note:Transfer and voting of shares

  (4) Despite subsection (3), no share of a bank holding company that is deemed to be issued under a provision included in the letters patent incorporating a bank holding company may subsequently be transferred or voted contrary to this Act.

• Marginal note:Shareholder approval

  (5) No provision described in subsection (1) may be included in letters patent issued under section 671 unless the application for the letters patent is accompanied by evidence that the request for the provision was approved by a special resolution of the shareholders of the bank at a shareholders’ meeting called to consider the application.

• Marginal note:Exchange of share certificates

  (6) If, under a provision included in the letters patent incorporating a bank holding company, a share exchange is deemed to have taken place, the bank holding company shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the bank holding company and for the exchange of those certificates for share certificates representing the shares of the bank that were outstanding on the effective date of the letters patent.

Marginal note:Proposal involving fundamental change

• 678. (1) On application, made in accordance with the regulations, by a bank to give effect to a proposal to incorporate a bank holding company as the holding body corporate of the bank, to continue a body corporate as a bank holding company of the bank or to amalgamate two or more bodies corporate and continue those bodies corporate as a bank holding company of the bank — and to make any other fundamental change to or in respect of the bank, including an exchange of any or all of the shares of the bank for shares of the bank holding company —, the Minister may, to give effect to the proposal,

  • (a) include in the letters patent of the bank holding company issued under section 671, 684 or 809 any provision the Minister considers necessary; or

  • (b) despite any provision of the Act specified in regulations made under paragraph 2(e), give any approval that the Minister considers necessary.

• Marginal note:Regulations

  (2) The Governor in Council may make regulations

  • (a) respecting applications referred to in subsection (1), including their form and the information to be contained in them, and authorizing the Superintendent to require additional information in respect of such applications;

  • (b) respecting proposals to which subsection (1) applies, including the information to be contained in the proposals and the times within which the transactions involved in them must occur;

  • (c) respecting the procedures to be followed by a bank that makes an application under subsection (1);

  • (d) respecting the approval, confirmation or authorization, if any, of all or any portion of proposals to which subsection (1) applies, including the approval of shareholders and including the terms and conditions of those approvals, confirmations or authorizations and their effect; and

  • (e) specifying provisions of the Act for the purpose of paragraph (1)(b).

Marginal note:Notice of issue of letters patent

679. The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent incorporating a bank holding company.

Marginal note:First directors

680. The first directors of a bank holding company are the directors named in the application for letters patent to incorporate the bank holding company.

Marginal note:Effect of letters patent

681. A bank holding company comes into existence on the date provided therefor in its letters patent.

Continuance

Marginal note:Federal corporations

• 682. (1) A body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament, including a bank, may apply to the Minister for letters patent continuing the body corporate as a bank holding company under this Part.

• Marginal note:Other corporations

  (2) A body corporate incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the body corporate as a bank holding company under this Part.

Marginal note:Application for continuance

• 683. (1) Where a body corporate applies for letters patent under subsection 682(1) or (2), sections 672 to 675 apply in respect of the application, with such modifications as the circumstances require.

• Marginal note:Special resolution approval

  (2) Where a body corporate applies for letters patent under subsection 682(1) or (2), the application must be duly authorized by a special resolution.

• Marginal note:Copy of special resolution

  (3) A copy of the special resolution referred to in subsection (2) shall be filed with the application.

Marginal note:Power to issue letters patent

• 684. (1) On the application of a body corporate under subsection 682(1) or (2), the Minister may, subject to this Division, issue letters patent continuing the body corporate as a bank holding company under this Part.

• Marginal note:Issue of letters patent

  (2) Where letters patent are issued to a body corporate under subsection (1), section 676 applies in respect of the issue of letters patent, with such modifications as the circumstances require.

Marginal note:Effect of letters patent

685. On the day set out in the letters patent continuing a body corporate as a bank holding company under subsection 684(1),

• (a) the body corporate becomes a bank holding company as if it had been incorporated under this Part; and

• (b) the letters patent are deemed to be the incorporating instrument of the continued bank holding company.

Marginal note:Copy of letters patent

• 686. (1) Where a body corporate is continued as a bank holding company under this Part, the Superintendent shall without delay send a copy of the letters patent to the appropriate official or public body in the jurisdiction in which the body corporate was authorized to apply to be continued under this Part.

• Marginal note:Notice of issuance of letters patent

  (2) The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as a bank holding company under this Part.

Marginal note:Effects of continuance

687. Where a body corporate is continued as a bank holding company under this Part,

• (a) the property of the body corporate continues to be the property of the bank holding company;

• (b) the bank holding company continues to be liable for the obligations of the body corporate;

• (c) an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;

• (d) a civil, criminal or administrative action or proceeding pending by or against the body corporate may continue to be prosecuted by or against the bank holding company;

• (e) a conviction against, or any ruling, order or judgment in favour of or against the body corporate may be enforced by or against the bank holding company;

• (f) a person who, on the day the body corporate becomes a bank holding company, was the holder of a security issued by the body corporate is not deprived of any right or privilege available to the person at that time in respect of the security or relieved of any liability in respect thereof, but any such right or privilege may be exercised only in accordance with this Act; and

• (g) the by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the bank holding company.

Marginal note:Transitional

• 688. (1) Notwithstanding any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to a bank holding company in respect of which letters patent were issued under subsection 684(1) permission to

  • (a) engage in a business activity specified in the order that a bank holding company is not otherwise permitted by this Act to engage in and that the body corporate continued as the bank holding company was engaging in at the time the application for the letters patent was made;

  • (b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;

  • (c) hold assets that a bank holding company is not otherwise permitted by this Act to hold if the assets were held by the body corporate continued as the bank holding company at the time the application for the letters patent was made;

  • (d) acquire and hold assets that a bank holding company is not otherwise permitted by this Act to acquire or hold if the body corporate continued as the bank holding company was obliged, at the time the application for the letters patent was made, to acquire those assets; and

  • (e) maintain outside Canada any records or registers required by this Act to be maintained in Canada and maintain and process outside Canada information and data relating to the preparation and maintenance of such records or registers.

• Marginal note:Duration

  (2) The permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceeding

  • (a) with respect to any activity described in paragraph (1)(a), thirty days after the effective date of the letters patent or, where the activity is conducted pursuant to an agreement existing on the effective date of the letters patent, the expiration of the agreement;

  • (b) with respect to any matter described in paragraph (1)(b), ten years; and

  • (c) with respect to any matter described in any of paragraphs (1)(c) to (e), two years.

• Marginal note:Renewal

  (3) Subject to subsection (4), the Minister may, on the recommendation of the Superintendent, by order, renew a permission granted by order under subsection (1) with respect to any matter described in paragraphs (1)(b) to (d) for such further period or periods as the Minister considers necessary.

• Marginal note:Limitation

  (4) The Minister shall not grant to a bank holding company any permission

  • (a) with respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the effective date of the letters patent, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank holding company that the bank holding company will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and

  • (b) with respect to matters described in paragraphs (1)(c) and (d), that purports to be effective more than ten years after the effective date of the letters patent.

Discontinuance

Marginal note:Transferring to other Acts

• 689. (1) A bank holding company may, with the approval in writing of the Minister, apply to be continued as a body corporate under any other Act of Parliament or any Act of the legislature of a province.

• Marginal note:Conditions for approval

  (2) No approval referred to in subsection (1) may be given to a bank holding company unless the Minister is satisfied that the application of the bank holding company has been authorized by a special resolution.

Meaning of “bank holding company without a bank subsidiary”

• 690. (1) For the purpose of this section, “bank holding company without a bank subsidiary” means a bank holding company that does not, at any time within one year after it came into existence, have a subsidiary that is a bank or that does not, for a period of one year, have a subsidiary that is a bank.

• Marginal note:Obligation to apply

  (2) A bank holding company without a bank subsidiary must, within 30 days after becoming a bank holding company without a bank subsidiary, apply to be continued under subsection 689(1).

• Marginal note:Cessation of existence

  (3) Except for the sole purpose of winding up its affairs, a bank holding company without a bank subsidiary that has no other subsidiary that fails to make an application under subsection (2) within the time provided for in that subsection ceases to exist on the expiration of that period.

Marginal note:Act ceases to apply

691. On the day specified by the Minister, this Act ceases to apply to the body corporate continued under the other Act of Parliament or under the Act of the legislature of a province.

Marginal note:Withdrawing application

692. Where a special resolution authorizing the application under subsection 689(1) so states, the directors of a bank holding company may, without further approval of the shareholders, withdraw the application before it is acted on.

Corporate Name

Marginal note:Prohibited names

693. A bank holding company may not be incorporated under this Part with a name

• (a) that is prohibited by an Act of Parliament;

• (b) that is, in the opinion of the Superintendent, deceptively misdescriptive;

• (c) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existing

  • (i) trade-mark or trade name, or

  • (ii) corporate name of a body corporate,

  except where the trade-mark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name and consent to the use of the trade-mark, trade name or corporate name is signified to the Superintendent in such manner as the Superintendent may require;

• (d) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any entity carries on business or is identified; or

• (e) that is reserved under section 43 for a bank or an authorized foreign bank or a proposed bank or proposed authorized foreign bank or under section 697 for another bank holding company or a proposed bank holding company.

Marginal note:Affiliated bank holding company

694. Despite section 693 and subject to section 695, a bank holding company that is affiliated with another entity may, with the consent of that entity and the approval of the Superintendent,

• (a) be incorporated with, or change its name to, substantially the same name as that of the affiliated entity; or

• (b) subject to any terms and conditions that may be prescribed, carry on business under or identify itself by a name, other than its corporate name, that is substantially the same as the corporate name of the affiliated entity or that is another name under which or with which the affiliated entity carries on business or otherwise identifies itself.

Marginal note:Restriction

695. A bank holding company may not be incorporated or continued with, change its name to or carry on business or identify itself by, a name that is substantially similar to that of a bank unless the name contains words that, in the opinion of the Superintendent, indicate to the public that the bank holding company is distinct from any bank that is a subsidiary of the bank holding company.

Marginal note:French or English form of name

• 696. (1) The name of a bank holding company may be set out in its letters patent in an English form, a French form, an English form and a French form or in a combined English and French form, and the bank holding company may use and be legally designated by any such form.

• Marginal note:Mandatory abbreviation

  (2) Despite any other provision of this Act and subject to the regulations, every bank holding company shall have as part of its name, the abbreviations “bhc” or “spb”.

• Marginal note:Alternate name

  (3) A bank holding company may identify itself outside Canada by its name in any language and the bank holding company may use and be legally designated by any such form of its name outside Canada.

• Marginal note:Other name

  (4) Subject to subsection (5) and section 832, a bank holding company may carry on business under or identify itself by a name other than its corporate name.

• Marginal note:Directions

  (5) Where a bank holding company is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the bank holding company not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 693(a) to (e).

• Marginal note:Regulations

  (6) The Governor in Council may make regulations respecting the use of the abbreviations “bhc” or “spb” in the name of bank holding companies.

Marginal note:Reserved name

697. The Superintendent may, on request, reserve for ninety days a name for a proposed bank holding company or for a bank holding company that intends to change its name.

Marginal note:Directing change of name

• 698. (1) If through inadvertence or otherwise a bank holding company

  • (a) comes into existence or is continued with a name, or

  • (b) on an application to change its name, is granted a name

  that is prohibited by section 693 or 695, the Superintendent may, by order, direct the bank holding company to change its name and the bank holding company shall comply with that direction.

• Marginal note:Revoking name

  (2) Where a bank holding company has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Part, the Superintendent may revoke the name of the bank holding company and assign to it a name and, until changed in accordance with section 215 or 217, the name of the bank holding company is thereafter the name so assigned.

Publication of Information

Marginal note:Publication of information

699. The Superintendent shall, within sixty days after the end of each year, cause a notice to be published in the Canada Gazette, showing

• (a) the name of every bank holding company; and

• (b) the place in Canada where the head office of the bank holding company is situated.

Division 4Organization and Commencement

Marginal note:First directors’ meeting

• 700. (1) After letters patent incorporating a bank holding company are issued, a meeting of the directors of the bank holding company shall be held at which the directors may, subject to this Division,

  • (a) make by-laws;

  • (b) adopt forms of share certificates and corporate records;

  • (c) authorize the issue of shares of the bank holding company;

  • (d) appoint officers;

  • (e) appoint an auditor to hold office until the first meeting of shareholders;

  • (f) make banking arrangements; and

  • (g) deal with any other matters necessary to organize the bank holding company.

• Marginal note:Calling directors’ meeting

  (2) An incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 770(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the bank holding company.

Marginal note:Calling shareholders’ meeting

• 701. (1) After the meeting referred to in subsection 700(1) is held, the directors of the bank holding company shall without delay call a meeting of the shareholders of the bank holding company.

• Marginal note:Meeting of shareholders

  (2) The shareholders of a bank holding company shall, by resolution at the meeting of shareholders called pursuant to subsection (1),

  • (a) approve, amend or reject any by-law made by the directors of the bank holding company;

  • (b) subject to section 756, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election; and

  • (c) appoint an auditor to hold office until the close of the first annual meeting of shareholders.

Marginal note:Term of first directors

702. A director named in the application for letters patent to incorporate a bank holding company holds office until the election of directors at the meeting of shareholders called pursuant to subsection 701(1).

Division 5Capital Structure

Share Capital

Marginal note:Power to issue shares

• 703. (1) Subject to this Part and the by-laws of the bank holding company, shares of a bank holding company may be issued at such times and to such persons and for such consideration as the directors of the bank holding company may determine.

• Marginal note:Shares

  (2) Shares of a bank holding company shall be in registered form and shall be without nominal or par value.

• Marginal note:Shares of continued bank holding company

  (3) Where a body corporate is continued as a bank holding company under this Part, shares with nominal or par value issued by the body corporate before it was so continued are deemed to be shares without nominal or par value.

• Marginal note:Deemed share conditions

  (4) If a right of a holder of a share with nominal or par value of a body corporate continued as a bank holding company under this Part, other than a voting right, was stated or expressed in terms of the nominal or par value of the share immediately before the body corporate was continued under this Part, that right is deemed, after the continuance, to be the same right stated or expressed without reference to the nominal or par value of the share.

Marginal note:Common shares

• 704. (1) A bank holding company shall have one class of shares, to be designated as “common shares”, which are non-redeemable and in which the rights of the holders thereof are equal in all respects, and those rights include

  • (a) the right to vote at all meetings of shareholders except where only holders of a specified class of shares are entitled to vote;

  • (b) the right to receive dividends declared on those shares; and

  • (c) the right to receive the remaining property of the bank holding company on dissolution.

• Marginal note:Designations of shares

  (2) No bank holding company shall designate more than one class of its shares as “common shares” or any variation of that term.

• Marginal note:Continued bank holding company

  (3) A body corporate continued as a bank holding company under this Part that is not in compliance with subsection (2) on the date letters patent continuing it as a bank holding company are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.

Marginal note:Classes of shares

• 705. (1) The by-laws of a bank holding company may provide for more than one class of shares and, if they so provide, shall set out

  • (a) the rights, privileges, restrictions and conditions attaching to the shares of each class; and

  • (b) the maximum number, if any, of shares of any class that the bank holding company is authorized to issue.

• Marginal note:Shareholder approval

  (2) Where a by-law referred to in subsection (1) is made, the directors of the bank holding company shall submit the by-law to the shareholders at the next meeting of shareholders.

• Marginal note:Effective date

  (3) A by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders at the meeting referred to in subsection (2).

Marginal note:Shares in series

• 706. (1) The by-laws of a bank holding company made pursuant to section 705 may authorize the issue of any class of shares in one or more series and may authorize the directors of the bank holding company to fix the maximum number, if any, of shares in each series and to determine the designation, rights, privileges, restrictions and conditions attaching to the shares of each series, subject to the limitations set out in the by-laws.

• Marginal note:Series participation

  (2) If any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.

• Marginal note:Voting rights

  (3) Where voting rights are attached to any series of a class of shares, the shares of every other series of that class shall have the same voting rights.

• Marginal note:Restriction on series

  (4) No rights, privileges, restrictions or conditions attached to a series of shares authorized under this section confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.

• Marginal note:Material to Superintendent

  (5) Before the issue of shares of a series of shares authorized under this section, the directors shall send to the Superintendent a copy of the by-law authorizing the directors to fix the rights, privileges, restrictions and conditions of those shares and shall provide the Superintendent with particulars of the proposed series of shares.

Marginal note:One share, one vote

707. Where voting rights are attached to a share of a bank holding company, the voting rights may confer only one vote in respect of that share.

Marginal note:Shares non-assessable

708. Shares issued by a bank holding company are non-assessable and the shareholders are not liable to the bank holding company or to its creditors in respect thereof.

Marginal note:Consideration for share

• 709. (1) No share of any class of shares of a bank holding company shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.

• Marginal note:Other currencies

  (2) When issuing shares, a bank holding company may provide that any aspect of the shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.

Marginal note:Stated capital account

• 710. (1) A bank holding company shall maintain a separate stated capital account for each class and series of shares it issues.

• Marginal note:Addition to stated capital account

  (2) A bank holding company shall record in the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.

• Marginal note:Exception

  (3) Notwithstanding subsection (2), a bank holding company may record in the appropriate stated capital account part of the amount of any consideration it receives for shares it issues

  • (a) in exchange for

    • (i) property of a person who immediately before the exchange did not deal with the bank holding company at arm’s length within the meaning of the Income Tax Act, or

    • (ii) shares of a body corporate that immediately before the exchange, or because of the exchange, did not deal with the bank holding company at arm’s length within the meaning of the Income Tax Act; or

  • (b) under an agreement referred to in subsection 804(1) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated bank holding company.

• Marginal note:Limit on addition to a stated capital account

  (4) On the issuance of a share, a bank holding company shall not add to the stated capital account in respect of the share an amount greater than the amount of the consideration it receives for the share.

• Marginal note:Constraint on addition to a stated capital account

  (5) Where a bank holding company that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the bank holding company as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 720(4).

Marginal note:Stated capital of continued bank holding company

• 711. (1) Where a body corporate is continued as a bank holding company under this Part, the bank holding company shall record in the stated capital account maintained for each class and series of shares then outstanding an amount that is equal to the aggregate of

  • (a) the aggregate amount paid up on the shares of each class and series of shares immediately before the body corporate was so continued, and

  • (b) the amount of the contributed surplus of the bank holding company that is attributable to those shares.

• Marginal note:Contributed surplus entry

  (2) The amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (1)(b) shall be deducted from the contributed surplus account of the bank holding company.

• Marginal note:Shares issued before continuance

  (3) Any amount unpaid in respect of a share issued by a body corporate before it was continued as a bank holding company under this Part and paid after it was so continued shall be recorded in the stated capital account maintained by the bank holding company for the shares of that class or series.

Marginal note:Pre-emptive right

• 712. (1) Where the by-laws of a bank holding company so provide, no shares of any class shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.

• Marginal note:Exception

  (2) Notwithstanding the existence of a pre-emptive right, a shareholder of a bank holding company has no pre-emptive right in respect of shares of a class to be issued

  • (a) for a consideration other than money;

  • (b) as a share dividend; or

  • (c) pursuant to the exercise of conversion privileges, options or rights previously granted by the bank holding company.

• Marginal note:Exception

  (3) Notwithstanding the existence of a pre-emptive right, a shareholder of a bank holding company has no pre-emptive right in respect of shares to be issued

  • (a) where the issue of shares to the shareholder is prohibited by this Part; or

  • (b) where, to the knowledge of the directors of the bank holding company, the offer of shares to a shareholder whose recorded address is in a country other than Canada ought not to be made unless the appropriate authority in that country is provided with information in addition to that submitted to the shareholders at the last annual meeting.

Marginal note:Conversion privileges

• 713. (1) A bank holding company may issue conversion privileges, options or rights to acquire securities of the bank holding company, and shall set out the conditions thereof

  • (a) in the documents that evidence the conversion privileges, options or rights; or

  • (b) in the securities to which the conversion privileges, options or rights are attached.

• Marginal note:Transferable rights

  (2) Conversion privileges, options and rights to acquire securities of a bank holding company may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.

• Marginal note:Reserved shares

  (3) Where a bank holding company has granted privileges to convert any securities issued by the bank holding company into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the bank holding company shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.

Marginal note:Holding of own shares

714. Except as provided in sections 715 to 717, or unless permitted by the regulations, a bank holding company shall not

• (a) hold shares of the bank holding company or of any body corporate that controls the bank holding company;

• (b) hold any ownership interests of any unincorporated entity that controls the bank holding company;

• (c) permit any of its subsidiaries to hold any shares of the bank holding company or of any body corporate that controls the bank holding company; or

• (d) permit any of its subsidiaries to hold any ownership interests of any unincorporated entity that controls the bank holding company.

Marginal note:Purchase and redemption of shares

• 715. (1) Subject to subsection (2) and to its by-laws, a bank holding company may, with the consent of the Superintendent, purchase, for the purpose of cancellation, any shares issued by it, or redeem any redeemable shares issued by it at prices not exceeding the redemption price thereof calculated according to a formula stated in its by-laws or the conditions attaching to the shares.

• Marginal note:Restrictions on purchase and redemption

  (2) A bank holding company shall not make any payment to purchase or redeem any shares issued by it if there are reasonable grounds for believing that the bank holding company is, or the payment would cause the bank holding company to be, in contravention of any regulation referred to in subsection 949(1) or (2) or any direction made pursuant to subsection 949(3).

• Marginal note:Donated shares

  (3) A bank holding company may accept from any shareholder a share of the bank holding company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 718.

Marginal note:Holding as personal representative

• 716. (1) A bank holding company may permit its subsidiaries to hold, in the capacity of a personal representative, shares of the bank holding company or of any body corporate that controls the bank holding company or ownership interests in any unincorporated entity that controls the bank holding company, but only if the subsidiary does not have a beneficial interest in the shares or ownership interests.

• Marginal note:Security interest

  (2) A bank holding company may permit its subsidiaries to hold by way of a security interest shares of the bank holding company or of any body corporate that controls the bank holding company, or any ownership interests of any entity that controls the bank holding company, if the security interest is nominal or immaterial when measured by criteria established by the bank holding company that have been approved in writing by the Superintendent.

Marginal note:Cancellation of shares

• 717. (1) Subject to subsection (2), where a bank holding company purchases shares of the bank holding company or fractions thereof or redeems or otherwise acquires shares of the bank holding company, the bank holding company shall cancel those shares.

• Marginal note:Requirement to sell

  (2) If a subsidiary of a bank holding company, through the realization of security, acquires any shares of the bank holding company or of any body corporate that controls the bank holding company or any ownership interests in an unincorporated entity that controls the bank holding company, the bank holding company shall cause its subsidiary to, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.

Marginal note:Reduction of capital

• 718. (1) The stated capital of a bank holding company may be reduced by special resolution.

• Marginal note:Limitation

  (2) A bank holding company shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the bank holding company is, or the reduction would cause the bank holding company to be, in contravention of any regulation referred to in subsection 949(1) or (2) or any direction made pursuant to subsection 949(3).

• Marginal note:Contents of special resolution

  (3) A special resolution to reduce the stated capital of a bank holding company shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.

• Marginal note:Approval by Superintendent

  (4) A special resolution to reduce the stated capital of a bank holding company has no effect until it is approved in writing by the Superintendent.

• Marginal note:Conditions for approval

  (5) No approval to reduce the stated capital of a bank holding company may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.

• Marginal note:Statements to be submitted

  (6) In addition to evidence of the passing of a special resolution to reduce the stated capital of a bank holding company and of the publication thereof, statements showing

  • (a) the number of the bank holding company’s shares issued and outstanding,

  • (b) the results of the voting by class of shares of the bank holding company,

  • (c) the bank holding company’s assets and liabilities, and

  • (d) the reason why the bank holding company seeks the reduction of capital

  shall be submitted to the Superintendent at the time of the application for approval of the special resolution.

Marginal note:Recovery by action

• 719. (1) Where any money or property was paid or distributed to a shareholder or other person as a consequence of a reduction of capital made contrary to section 718, a creditor of the bank holding company may apply to a court for an order compelling the shareholder or other person to pay the money or deliver the property to the bank holding company.

• Marginal note:Shares held by personal representative

  (2) No person holding shares in the capacity of a personal representative and registered on the records of the bank holding company as a shareholder and therein described as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.

• Marginal note:Limitation

  (3) An action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.

• Marginal note:Remedy preserved

  (4) This section does not affect any liability that arises under section 794.

Marginal note:Adjustment of stated capital account

• 720. (1) On a purchase, redemption or other acquisition by a bank holding company of shares or fractions thereof issued by it, the bank holding company shall deduct from the stated capital account maintained for the class or series of shares so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series by the number of shares of that class or series so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.

• Marginal note:Adjustment of stated capital account

  (2) A bank holding company shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 718.

• Marginal note:Shares converted to another class

  (3) On a conversion of outstanding shares of a bank holding company into shares of another class or series, or on a change of outstanding shares of the bank holding company into shares of another class or series, the bank holding company shall

  • (a) deduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; and

  • (b) record the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.

• Marginal note:Stated capital of convertible shares

  (4) For the purposes of subsection (3) and subject to the bank holding company’s by-laws, where a bank holding company issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.

• Marginal note:Conversion or change of shares

  (5) Shares issued by a bank holding company and converted into shares of another class or series, or changed under subsection 217(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.

Marginal note:Addition to stated capital account

721. On a conversion of any debt obligation of a bank holding company into shares of a class or series of shares, the bank holding company shall

• (a) deduct from the liabilities of the bank holding company the nominal value of the debt obligation being converted; and

• (b) record the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the class or series of shares into which the debt obligation has been converted.

Marginal note:Declaration of dividend

• 722. (1) The directors of a bank holding company may declare and a bank holding company may pay a dividend by issuing fully paid shares of the bank holding company or options or rights to acquire fully paid shares of the bank holding company and, subject to subsection (4), the directors of a bank holding company may declare and a bank holding company may pay a dividend in money or property, and where a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.

• Marginal note:Notice to Superintendent

  (2) The directors of a bank holding company shall notify the Superintendent of the declaration of a dividend at least ten days prior to the day fixed for its payment.

• Marginal note:Share dividend

  (3) If shares of a bank holding company are issued in payment of a dividend, the bank holding company shall record in the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend the declared amount of the dividend stated as an amount of money.

• Marginal note:When dividend not to be declared

  (4) The directors of a bank holding company shall not declare and a bank holding company shall not pay a dividend if there are reasonable grounds for believing that the bank holding company is, or the payment would cause the bank holding company to be, in contravention of any regulation referred to in subsection 949(1) or (2) or any direction made pursuant to subsection 949(3).

Subordinated Indebtedness

Marginal note:Restriction on subordinated indebtedness

• 723. (1) A bank holding company shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.

• Marginal note:References to subordinated indebtedness

  (2) A person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by a bank holding company refer to the subordinated indebtedness otherwise than as subordinated indebtedness.

• Marginal note:Other currencies

  (3) When issuing subordinated indebtedness, a bank holding company may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.

Security Certificates and Transfers

Marginal note:Sections 81 to 135 apply

724. Sections 81 to 135 apply in respect of bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”;

• (b) references to “this Act” in those sections are to be read as references to “this Part”;

• (c) references to “Part VII” in those sections are to be read as references to “Division 7 of Part XV”;

• (d) references to “this Part” in those sections are to be read as references to “this Division”;

• (e) the reference to “subsections 137(2) to (5) and sections 138 to 141 and 145” in subsection 93(1) is to be read as a reference to “subsections 726(2) to (5) and sections 727 to 730 and 734”; and

• (f) the reference to “section 71 or 77” in subsection 97(3) is to be read as a reference to “section 715 or 720”.

Division 6Corporate Governance

Shareholders

Marginal note:Place of meetings

725. Meetings of shareholders of a bank holding company shall be held at the place within Canada provided for in the by-laws of the bank holding company or, in the absence of any such provision, at the place within Canada that the directors determine.

Marginal note:Calling meetings

• 726. (1) The directors of a bank holding company

  • (a) shall, after the meeting called pursuant to subsection 701(1), call the first annual meeting of shareholders of the bank holding company, which meeting must be held not later than six months after the end of the first financial year of the bank holding company, and subsequently call an annual meeting of shareholders, which meeting must be held not later than six months after the end of each financial year; and

  • (b) may at any time call a special meeting of shareholders.

• Marginal note:Fixing record date

  (2) For the purpose of determining shareholders

  • (a) entitled to receive payment of a dividend,

  • (b) entitled to participate in a liquidation distribution, or

  • (c) for any other purpose except the right to receive notice of, or to vote at, a meeting,

  the directors may fix in advance a date as the record date for the determination of shareholders, but the record date so fixed shall not precede by more than fifty days the particular action to be taken.

• Marginal note:Record date for meetings

  (3) For the purpose of determining shareholders entitled to receive notice of a meeting of shareholders, the directors may fix in advance a date as the record date for the determination of shareholders, but the record date so fixed shall not precede by more than fifty days or by less than twenty-one days the date on which the meeting is to be held.

• Marginal note:No record date fixed

  (4) If no record date is fixed pursuant to subsection (2) or (3),

  • (a) the record date for the determination of shareholders for any purpose, other than to establish a shareholder’s right to receive notice of a meeting or to vote, is the day on which the directors pass the resolution relating to the particular purpose; and

  • (b) the record date for the determination of shareholders entitled to receive notice of, or to vote at, a meeting of shareholders is

    • (i) the day immediately preceding the day on which the notice is given, or

    • (ii) if no notice is given, the day on which the meeting is held.

• Marginal note:When record date fixed

  (5) When a record date is fixed for a bank holding company, unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the central securities register at the close of business on the date the directors fix the record date, notice thereof shall, not less than seven days before the record date, be given

  • (a) by advertisement in a newspaper in general circulation in the place where the head office of the bank holding company is situated and in each place in Canada where the bank holding company has a transfer agent or where a transfer of the bank holding company’s shares may be recorded; and

  • (b) by written notice to each stock exchange, if any, in Canada on which the shares of the bank holding company are listed for trading.

Marginal note:Notice of meeting

• 727. (1) Notice of the time and place of a meeting of shareholders of a bank holding company shall be sent not less than twenty-one days or more than fifty days before the meeting

  • (a) to each shareholder entitled to vote at the meeting;

  • (b) to each director; and

  • (c) to the auditor of the bank holding company.

• Marginal note:Number of eligible votes

  (2) A bank holding company with equity of five billion dollars or more shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 156.09(1), that may be cast at the meeting as of the record date for determining those shareholders entitled to receive the notice of meeting, or if there are to be separate votes of shareholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.

• Marginal note:Publication in newspaper

  (3) In addition to the notice required under subsection (1), where any class of shares of a bank holding company is publicly traded on a recognized stock exchange in Canada, notice of the time and place of a meeting of shareholders shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in general circulation in the place where the head office of the bank holding company is situated and in each place in Canada where the bank holding company has a transfer agent or where a transfer of the bank holding company’s shares may be recorded.

Marginal note:When notice not required

• 728. (1) A notice of a meeting of shareholders is not required to be sent to shareholders who were not registered on the records of the bank holding company or its transfer agent on the record date fixed or determined under subsection 726(3) or (4).

• Marginal note:Effect of default

  (2) Failure to receive a notice of a meeting of shareholders does not deprive a shareholder of the right to vote at the meeting.

Marginal note:Notice of adjourned meeting

• 729. (1) If a meeting of shareholders is adjourned for less than thirty days, it is not necessary, unless the by-laws otherwise provide, to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned.

• Marginal note:Notice where adjournment is longer

  (2) If a meeting of shareholders is adjourned by one or more adjournments for a total of thirty days or more, notice of the continuation of the meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than ninety days, subsection 156.04(1) does not apply.

Marginal note:Special business

• 730. (1) All matters dealt with at a special meeting of shareholders and all matters dealt with at an annual meeting of shareholders, except consideration of the financial statements, report of the auditor, election of directors, remuneration of directors and reappointment of the incumbent auditor, are deemed to be special business.

• Marginal note:Notice of special business

  (2) Notice of a meeting of shareholders at which special business is to be transacted must

  • (a) state the nature of the special business in sufficient detail to permit a shareholder to form a reasoned judgment thereon; and

  • (b) contain the text of any special resolution to be submitted to the meeting.

Marginal note:Waiver of notice

• 731. (1) A shareholder and any other person entitled to attend a meeting of shareholders may in any manner waive notice of a meeting of shareholders.

• Marginal note:Attendance is waiver

  (2) Attendance at a meeting of shareholders is a waiver of notice of the meeting, except when a person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

Marginal note:Shareholder’s proposal

• 732. (1) A shareholder entitled to vote at an annual meeting of shareholders of a bank holding company may

  • (a) submit to the bank holding company notice of any matter that the shareholder proposes to raise at the meeting; and

  • (b) discuss at the meeting any matter in respect of which the shareholder would have been entitled to submit a proposal.

• Marginal note:Circulation of proposal

  (2) A bank holding company shall attach any proposal of a shareholder submitted for consideration at a meeting of shareholders to the notice of the meeting.

• Marginal note:Shareholder’s statement

  (3) If so requested by a shareholder who submits a proposal to a bank holding company, the bank holding company shall attach to the notice of the meeting a statement by the shareholder of not more than two hundred words in support of the proposal and the name and address of the shareholder.

• Marginal note:Nominations for directors

  (4) A proposal may include nominations for the election of directors if the proposal is signed by one or more holders of shares representing in the aggregate not less than 5 per cent of the shares or 5 per cent of the shares of a class of shares of the bank holding company entitled to vote at the meeting to which the proposal is to be presented.

• Marginal note:Conditions precedent for proposals

  (5) A bank holding company is not required to comply with subsections (2) and (3) if

  • (a) the proposal is not submitted to the bank holding company at least ninety days before the anniversary date of the previous annual meeting of shareholders;

  • (b) it clearly appears that the proposal is submitted by the shareholder primarily for the purpose of enforcing a personal claim or redressing a personal grievance against the bank holding company or its directors, officers or security holders, or primarily for the purpose of promoting general economic, political, racial, religious, social or similar causes;

  • (c) the bank holding company, at the shareholder’s request, attached a proposal to the notice of a meeting of shareholders held within two years preceding the receipt of the request, and the shareholder failed to present the proposal, in person or by proxy, at the meeting;

  • (d) substantially the same proposal was submitted to shareholders in a dissident’s proxy circular relating to, or was attached to the notice of, a meeting of shareholders held within two years preceding the receipt of the shareholder’s request and the proposal was defeated; or

  • (e) the rights conferred by subsections (1) to (4) are being abused to secure publicity.

• Marginal note:Immunity for proposal and statement

  (6) No bank holding company or person acting on behalf of a bank holding company incurs any liability by reason only of circulating a proposal or statement in compliance with subsections (2) and (3).

Marginal note:Refusal of proposal

• 733. (1) If a bank holding company refuses to attach a proposal to a notice of a meeting, the bank holding company shall, within ten days after receiving the proposal, notify the shareholder submitting the proposal of its intention to not attach the proposal to the notice of the meeting and send to the shareholder a statement of the reasons for the refusal.

• Marginal note:Appeal to court

  (2) On the application of a shareholder claiming to be aggrieved by a bank holding company’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order it thinks fit.

• Marginal note:Appeal to court

  (3) A bank holding company or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the bank holding company to not attach the proposal to the notice of a meeting, and the court, if it is satisfied that subsection 732(5) applies, may make such order as it thinks fit.

• Marginal note:Notice to Superintendent

  (4) An applicant under subsection (2) or (3) shall give the Superintendent written notice of the application and the Superintendent may appear and be heard at the hearing of the application in person or by counsel.

Marginal note:Shareholder list

• 734. (1) A bank holding company shall prepare a list, which may be in electronic form, of its shareholders entitled to receive notice of a meeting under paragraph 727(1)(a), arranged in alphabetical order and showing the number of shares held by each shareholder, which list must be prepared

  • (a) if a record date is fixed under subsection 726(3), not later than ten days after that date; or

  • (b) if no record date is fixed,

    • (i) at the close of business on the day immediately preceding the day on which the notice is given, or

    • (ii) where no notice is given, on the day on which the meeting is held.

• Marginal note:Effect of list

  (2) Where a bank holding company fixes a record date under subsection 726(3), a person named in the list prepared under paragraph (1)(a) is, subject to this Part, entitled to vote the shares shown opposite that person’s name at the meeting to which the list relates, except to the extent that

  • (a) the person has transferred the ownership of any of those shares after the record date, and

  • (b) the transferee of those shares

    • (i) produces properly endorsed share certificates, or

    • (ii) otherwise establishes that the transferee owns the shares,

    and demands, not later than ten days before the meeting or such shorter period before the meeting as the by-laws of the bank holding company provide, that the transferee’s name be included in the list before the meeting,

  in which case the transferee may vote those transferred shares at the meeting.

• Marginal note:Effect of list

  (3) Where a bank holding company does not fix a record date under subsection 726(3), a person named in the list prepared under paragraph (1)(b) is, subject to this Part, entitled to vote the shares shown opposite that person’s name at the meeting to which the list relates, except to the extent that

  • (a) the person has transferred the ownership of any of those shares after the date on which a list was prepared under subparagraph (1)(b)(i), and

  • (b) the transferee of those shares

    • (i) produces properly endorsed share certificates, or

    • (ii) otherwise establishes that the transferee owns the shares,

    and demands, not later than ten days before the meeting or such shorter period before the meeting as the by-laws of the bank holding company provide, that the transferee’s name be included in the list before the meeting,

  in which case the transferee may vote those transferred shares at the meeting.

• Marginal note:Examination of list

  (4) A shareholder of a bank holding company may examine the list of shareholders referred to in subsection (1)

  • (a) during usual business hours at the head office of the bank holding company or at the place where its central securities register is maintained; and

  • (b) at the meeting of shareholders for which the list was prepared.

Marginal note:Quorum

• 735. (1) Unless the by-laws otherwise provide, a quorum of shareholders is present at a meeting of shareholders if the holders of a majority of the shares who are entitled to vote at the meeting are present in person or represented by proxyholders.

• Marginal note:Quorum present at opening

  (2) If a quorum is present at the opening of a meeting of shareholders, the shareholders present may, unless the by-laws otherwise provide, proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting.

• Marginal note:Quorum not present at opening

  (3) If a quorum is not present at the opening of a meeting of shareholders, the shareholders present may adjourn the meeting to a fixed time and place but may not transact any other business.

Marginal note:One shareholder meeting

736. If a bank holding company has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or represented by a proxyholder constitutes a meeting of shareholders or a meeting of shareholders of that class or series.

Marginal note:One share — one vote

737. Subject to subsection 156.09, if a share of a bank holding company entitles the holder of the share to vote at a meeting of shareholders, that share entitles the shareholder to one vote at the meeting.

Marginal note:Representative shareholder

• 738. (1) If an entity is a shareholder of a bank holding company, the bank holding company shall recognize any natural person authorized by a resolution of the directors or governing body or similar authority of the entity to represent it at meetings of shareholders of the bank holding company.

• Marginal note:Powers

  (2) A natural person authorized under subsection (1) to represent an entity may exercise on behalf of the entity all the powers the entity could exercise if it were a natural person as well as a shareholder.

Marginal note:Joint shareholders

739. Unless the by-laws otherwise provide, if two or more persons hold shares jointly, one of those holders present at a meeting of shareholders may in the absence of the others vote the shares, but if two or more of those persons who are present in person or represented by proxyholder vote, they shall vote as one on the shares jointly held by them.

Marginal note:Voting by hands or ballot

• 740. (1) Unless the by-laws otherwise provide, voting at a meeting of shareholders shall take place by show of hands except when a ballot is demanded by either a shareholder or proxyholder entitled to vote at the meeting.

• Marginal note:Ballot

  (2) A shareholder or proxyholder may demand a ballot either before or after any vote by show of hands.

Marginal note:Resolution in lieu of meeting

• 741. (1) Except where a written statement is submitted by a director under section 762 or by an auditor under subsection 853(1),

  • (a) a resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders; and

  • (b) a resolution in writing dealing with all matters required by this Part to be dealt with at a meeting of shareholders, and signed by all the shareholders entitled to vote at that meeting, satisfies all the requirements of this Part relating to meetings of shareholders.

• Marginal note:Filing resolution

  (2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings of shareholders.

Marginal note:Requisitioned meeting

• 742. (1) Shareholders who together hold not less than 5 per cent of the issued and outstanding shares of a bank holding company that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition.

• Marginal note:Form

  (2) A requisition referred to in subsection (1)

  • (a) must state the business to be transacted at the meeting and must be sent to each director and to the head office of the bank holding company; and

  • (b) may consist of several documents of like form, each signed by one or more shareholders.

• Marginal note:Directors calling meeting

  (3) On receipt of a requisition referred to in subsection (1), the directors shall call a meeting of shareholders to transact the business stated in the requisition, unless

  • (a) a record date has been fixed under subsection 726(3) and notice thereof has been given under subsection 726(5);

  • (b) the directors have called a meeting of shareholders and have given notice thereof under section 727; or

  • (c) the business of the meeting as stated in the requisition includes matters described in paragraphs 732(5)(b) to (e).

• Marginal note:Shareholders’ power

  (4) If the directors do not call a meeting within twenty-one days after receiving the requisition referred to in subsection (1), any shareholder who signed the requisition may call the meeting.

• Marginal note:Procedure

  (5) A meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called pursuant to the by-laws and this Part.

• Marginal note:Reimbursement

  (6) Unless the shareholders otherwise resolve at a meeting called under subsection (4), the bank holding company shall reimburse the shareholders for any expenses reasonably incurred by them in requisitioning, calling and holding the meeting.

Marginal note:Meeting called by court

• 743. (1) Where it is impracticable

  • (a) to call a meeting of shareholders of a bank holding company in the manner in which meetings of those shareholders are to be called, or

  • (b) to conduct the meeting in the manner required by the by-laws and this Part,

  or where a court thinks fit to do so for any other reason, the court, on the application of a director or a shareholder entitled to vote at the meeting, may order a meeting to be called, held and conducted in such manner as the court directs.

• Marginal note:Varying quorum

  (2) Without restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Part be varied or dispensed with at a meeting called, held and conducted pursuant to this section.

• Marginal note:Valid meeting

  (3) A meeting called, held and conducted pursuant to this section is for all purposes a meeting of shareholders of the bank holding company duly called, held and conducted.

Marginal note:Court review of election

• 744. (1) A bank holding company or a shareholder or director of a bank holding company may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the bank holding company.

• Marginal note:Powers of court

  (2) On an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;

  • (b) an order declaring the result of the disputed election or appointment;

  • (c) an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the bank holding company until a new election is held or the new appointment is made; and

  • (d) an order determining the voting rights of shareholders and of persons claiming to own shares.

Marginal note:Notice to Superintendent

• 745. (1) A person who makes an application under subsection 743(1) or 744(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.

• Marginal note:Superintendent representation

  (2) The Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).

Proxies and Voting Restrictions

Marginal note:Sections 156.01 to 156.09 apply

746. Sections 156.01 to 156.09 apply in respect of bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”;

• (b) references to “this Part” in those sections are to be read as references to “this Division”;

• (c) the English version of subsection 156.05(1) is to be read without reference to “or auditors”;

• (d) the reference to “section 375” in subsection 156.09(4) is to be read as a reference to “section 878”; and

• (e) the reference to “subsection 138(1.1)” in subsection 156.09(11) is to be read as a reference to “subsection 727(2)”.

Directors and Officers

Duties

Marginal note:Duty to manage

• 747. (1) Subject to this Act, the directors of a bank holding company shall manage or supervise the management of the business and affairs of the bank holding company.

• Marginal note:Specific duties

  (2) Without limiting the generality of subsection (1), the directors of a bank holding company shall

  • (a) establish an audit committee to perform the duties referred to in subsections 782(3) and (4);

  • (b) establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;

  • (c) designate a committee of the board of directors to monitor the procedures referred to in paragraph (b); and

  • (d) establish investment and lending policies, standards and procedures in accordance with section 927.

• Marginal note:Exception

  (3) Paragraph (2)(a) does not apply to the directors of a bank holding company if

  • (a) all the voting shares of the bank holding company are beneficially owned by a Canadian financial institution described in any of paragraphs (a) to (d) of the definition “financial institution” in section 2; and

  • (b) the audit committee of the financial institution performs for and on behalf of the bank holding company all the functions that would otherwise be required to be performed by the audit committee of the bank holding company under this Part.

Marginal note:Duty of care

• 748. (1) Every director and officer of a bank holding company in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shall

  • (a) act honestly and in good faith with a view to the best interests of the bank holding company; and

  • (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

• Marginal note:Duty to comply

  (2) Every director, officer and employee of a bank holding company shall comply with this Act, the regulations, the bank holding company’s incorporating instrument and the by-laws of the bank holding company.

• Marginal note:No exculpation

  (3) No provision in any contract, in any resolution or in the by-laws of a bank holding company relieves any director, officer or employee of the bank holding company from the duty to act in accordance with this Act and the regulations or relieves a director, officer or employee from liability for a breach thereof.

Qualification and Number — Directors

Marginal note:Minimum number of directors

• 749. (1) A bank holding company shall have at least seven directors.

• Marginal note:Residency requirement

  (2) At least one half of the directors of a bank holding company that is a subsidiary of a foreign bank and at least two-thirds of the directors of any other bank holding company must be, at the time of each director’s election or appointment, resident Canadians.

Marginal note:Disqualified persons

750. The following persons are disqualified from being directors of a bank holding company:

• (a) a person who is less than eighteen years of age;

• (b) a person who is of unsound mind and has been so found by a court in Canada or elsewhere;

• (c) a person who has the status of a bankrupt;

• (d) a person who is not a natural person;

• (e) a person who is prohibited by subsection 156.09(9) or section 901 or 914 from exercising voting rights attached to shares of the bank holding company;

• (f) a person who is an officer, director or full time employee of an entity that is prohibited by subsection 156.09(9) or section 901 or 914 from exercising voting rights attached to shares of the bank holding company;

• (g) a person who is an agent or employee of Her Majesty in right of Canada or in right of a province;

• (h) a minister of Her Majesty in right of Canada or in right of a province; and

• (i) a person who is an agent or employee of the government of a foreign country or any political subdivision thereof.

Marginal note:No shareholder requirement

751. A director of a bank holding company is not required to hold shares of the bank holding company.

Marginal note:Limit on directors

752. No more than 15 per cent of the directors of a bank holding company may, at each director’s election or appointment, be employees of the bank holding company or a subsidiary of the bank holding company, except that up to four persons who are employees of the bank holding company or a subsidiary of the bank holding company may be directors of the bank holding company if those directors constitute not more than one half of the directors of the bank holding company.

Election and Tenure — Directors

Marginal note:Number of directors

• 753. (1) Subject to section 217, subsection 749(1) and section 756, the directors of a bank holding company shall, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.

• Marginal note:Election at annual meeting

  (2) A by-law made pursuant to subsection (1) that provides for a minimum and maximum number of directors may provide that the number of directors to be elected at any annual meeting of the shareholders be such number as is fixed by the directors prior to the annual meeting.

Marginal note:Term of directors

• 754. (1) Except where this Part or the by-laws of a bank holding company provide for cumulative voting, a bank holding company may, by by-law, provide that the directors be elected for terms of one, two or three years.

• Marginal note:Term of one, two or three years

  (2) A director elected for a term of one, two or three years holds office until the close of the first, second or third annual meeting of shareholders, as the case may be, following the election of the director.

• Marginal note:No stated term

  (3) A director who is not elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting of shareholders following the election of the director.

• Marginal note:Tenure of office

  (4) It is not necessary that all directors elected at a meeting of shareholders hold office for the same term.

• Marginal note:Tenure of office

  (5) If a by-law of a bank holding company provides that the directors be elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.

• Marginal note:Composition requirements

  (6) If a director of a bank holding company is elected or appointed for a term of more than one year, the bank holding company shall comply with subsection 749(2) and section 752 at each annual meeting of shareholders during the director’s term of office as if that director were elected or appointed on that date.

Marginal note:Determining election of directors

• 755. (1) Except where this Part or the by-laws of a bank holding company provide for cumulative voting, the persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of a bank holding company shall be the directors thereof.

• Marginal note:Determining election of directors

  (2) If, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors, determine which of the persons so receiving an equal number of votes are to be elected.

Marginal note:Cumulative voting

• 756. (1) Where this Part or the by-laws provide for cumulative voting,

  • (a) there shall be a stated number of directors fixed by by-law and not a minimum and maximum number of directors;

  • (b) each shareholder entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the shareholder multiplied by the number of directors to be elected, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;

  • (c) a separate vote of shareholders shall be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;

  • (d) if a shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the shareholder is deemed to have distributed the votes equally among the candidates for whom the shareholder voted;

  • (e) if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled;

  • (f) each director ceases to hold office at the close of the next annual meeting of shareholders following the director’s election;

  • (g) a director may not be removed from office if the votes cast against the removal would be sufficient to elect the director and those votes could be voted cumulatively at an election at which the same total number of votes were cast and the same number of directors required by the by-laws were then being elected; and

  • (h) the number of directors required by the by-laws may not be decreased if the votes cast against the motion to decrease would be sufficient to elect a director and those votes could be voted cumulatively at an election at which the same total number of votes were cast and the same number of directors required by the by-laws were then being elected.

• Marginal note:Mandatory cumulative voting

  (2) Where the aggregate of the voting shares beneficially owned by a person and any entities controlled by the person carries more than 10 per cent of the voting rights attached to all the outstanding voting shares of a bank holding company, the directors shall be elected by cumulative voting.

• Marginal note:Exception

  (3) Subsection (2) does not apply if all the voting shares of the bank holding company that are outstanding are beneficially owned by

  • (a) one person;

  • (b) one person and one or more entities controlled by that person; or

  • (c) one or more entities controlled by the same person.

• Marginal note:Exception

  (4) Subsection (2) does not apply to a widely held bank holding company with equity of five billion dollars or more or to a widely held bank holding company that controls a bank to which subsection 378(1) applies.

• Marginal note:Transitional election

  (5) Where this Part or the by-laws of a bank holding company provide for cumulative voting, the shareholders of the bank holding company shall

  • (a) at the first annual meeting of shareholders held not earlier than ninety days following the date that cumulative voting is required under subsection (2) or provided for in the by-laws, and

  • (b) at each succeeding annual meeting,

  elect the stated number of directors to hold office until the close of the next annual meeting of shareholders following their election.

• Marginal note:Exception

  (6) Nothing in this Part precludes the holders of any class or series of shares of a bank holding company from having an exclusive right to elect one or more directors.

Marginal note:Re-election of directors

757. A director who has completed a term of office is, if otherwise qualified, eligible for re-election.

Incomplete Elections and Director Vacancies

Marginal note:Void election or appointment

• 758. (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 749(2) or section 752, the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.

• Marginal note:Failure to elect minimum

  (2) Where, at the close of a meeting of shareholders of a bank holding company, the shareholders have failed to elect the number or minimum number of directors required by this Part or the by-laws of a bank holding company, the purported election of directors at the meeting

  • (a) is valid if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; or

  • (b) is void if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.

Marginal note:Directors where elections incomplete or void

• 759. (1) Notwithstanding subsections 754(2) and (3) and paragraphs 756(1)(f) and 760(1)(a), where subsection 758(1) or (2) applies at the close of any meeting of shareholders of a bank holding company, the board of directors shall, until their successors are elected or appointed, consist solely of

  • (a) where paragraph 758(2)(a) applies, the directors referred to in that paragraph; or

  • (b) where subsection 758(1) or paragraph 758(2)(b) applies, the persons who were the incumbent directors immediately before the meeting.

• Marginal note:Where there is no approved rectification plan

  (2) Notwithstanding subsections 754(2) and (3) and paragraphs 756(1)(f) and 760(1)(a), where a plan to rectify the non-compliance referred to in subsection 758(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.

• Marginal note:Directors to call meeting

  (3) Where subsection (1) or (2) applies, the board of directors referred to in that subsection shall without delay call a special meeting of shareholders to fill the vacancies, where paragraph 758(2)(a) applies, or elect a new board of directors, where subsection 758(1) or paragraph 758(2)(b) applies.

• Marginal note:Shareholder may call meeting

  (4) Where the directors fail to call a special meeting required by subsection (3), the meeting may be called by any shareholder.

Marginal note:Ceasing to hold office

• 760. (1) A director ceases to hold office

  • (a) at the close of the annual meeting at which the director’s term of office expires;

  • (b) when the director dies or resigns;

  • (c) when the director becomes disqualified under section 750 or ineligible to hold office pursuant to subsection 790(2);

  • (d) when the director is removed under section 761; or

  • (e) when the director is removed from office under section 963 or 964.

• Marginal note:Date of resignation

  (2) The resignation of a director of a bank holding company becomes effective at the time a written resignation is sent to the bank holding company by the director or at the time specified in the resignation, whichever is later.

Marginal note:Removal of director

• 761. (1) Subject to paragraph 756(1)(g), the shareholders of a bank holding company may by resolution at a special meeting remove any director or all the directors from office.

• Marginal note:Exception

  (2) Where the holders of any class or series of shares of a bank holding company have the exclusive right to elect one or more directors, a director so elected may be removed only by a resolution at a meeting of the shareholders of that class or series.

• Marginal note:Vacancy by removal

  (3) Subject to paragraphs 756(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders at which the director is removed or, if not so filled, may be filled under section 765 or 766.

Marginal note:Statement of director

• 762. (1) A director who

  • (a) resigns,

  • (b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of removing the director from office, or

  • (c) receives a notice or otherwise learns of a meeting of directors or shareholders at which another person is to be appointed or elected to fill the office of director, whether because of the director’s resignation or removal or because the director’s term of office has expired or is about to expire,

  is entitled to submit to the bank holding company a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.

• Marginal note:Statement re disagreement

  (2) Where a director resigns as a result of a disagreement with the other directors or the officers of a bank holding company, the director shall submit to the bank holding company and the Superintendent a written statement setting out the nature of the disagreement.

Marginal note:Circulation of statement

• 763. (1) A bank holding company shall without delay on receipt of a director’s statement referred to in subsection 762(1) relating to a matter referred to in paragraph 762(1)(b) or (c), or a director’s statement referred to in subsection 762(2), send a copy of it to each shareholder entitled to receive a notice of meetings and to the Superintendent, unless the statement is attached to a notice of a meeting.

• Marginal note:Immunity for statement

  (2) No bank holding company or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (1).

Marginal note:Shareholders filling vacancy

764. The by-laws of a bank holding company may provide that a vacancy among the directors is to be filled only

• (a) by a vote of the shareholders; or

• (b) by a vote of the holders of any class or series of shares having an exclusive right to elect one or more directors if the vacancy occurs among the directors elected by the holders of that class or series.

Marginal note:Directors filling vacancy

• 765. (1) Notwithstanding section 772 but subject to subsection (2) and sections 764 and 766, a quorum of directors may fill a vacancy among the directors except a vacancy among the directors resulting from a change in the by-laws by which the number or minimum number of directors is increased or from a failure to elect the number or minimum number of directors required by the by-laws.

• Marginal note:Where composition fails

  (2) Notwithstanding sections 764 and 772, where by reason of a vacancy the number of directors or the composition of the board of directors fails to meet any of the requirements of section 749 or section 752, the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.

Marginal note:Class vacancy

766. Notwithstanding section 772, where the holders of any class or series of shares of a bank holding company have an exclusive right to elect one or more directors and a vacancy occurs among those directors, then, subject to section 764,

• (a) the remaining directors elected by the holders of that class or series may fill the vacancy except a vacancy resulting from an increase in the number or minimum number of directors for that class or series or from a failure to elect the number or minimum number of directors for that class or series;

• (b) if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 749 or section 752, the other directors may fill that vacancy; and

• (c) if there are no such remaining directors and paragraph (b) does not apply, any holder of shares of that class or series may call a meeting of the holders thereof for the purpose of filling the vacancy.

Marginal note:Unexpired term

767. Unless the by-laws otherwise provide, a director elected or appointed to fill a vacancy holds office for the unexpired term of the director’s predecessor in office.

Marginal note:Additional directors

• 768. (1) The directors of a bank holding company may appoint one or more additional directors where the by-laws of the bank holding company allow them to do so and the by-laws determine the minimum and maximum numbers of directors.

• Marginal note:Term of office

  (2) A director appointed under subsection (1) holds office for a term expiring not later than the close of the next annual meeting of shareholders of the bank holding company.

• Marginal note:Limit on number appointed

  (3) The total number of directors appointed under subsection (1) may not exceed one third of the number of directors elected at the previous annual meeting of shareholders of the bank holding company.

Meetings of the Board

Marginal note:Meetings required

• 769. (1) The directors shall meet at least four times during each financial year.

• Marginal note:Place for meetings

  (2) The directors may meet at any place unless the by-laws provide otherwise.

• Marginal note:Notice for meetings

  (3) The notice for the meetings must be given as required by the by-laws.

Marginal note:Notice of meeting

• 770. (1) A notice of a meeting of directors shall specify each matter referred to in section 785 that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not otherwise specify the purpose of or the business to be transacted at the meeting.

• Marginal note:Waiver of notice

  (2) A director may in any manner waive notice of a meeting of directors and the attendance of a director at a meeting of directors is a waiver of notice of that meeting except where the director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

• Marginal note:Adjourned meeting

  (3) Notice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting were announced at the original meeting.

Marginal note:Quorum

• 771. (1) Subject to section 772, the number of directors referred to in subsection (2) constitutes a quorum at any meeting of directors or a committee of directors and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

• Marginal note:Quorum

  (2) The number of directors constituting a quorum at any meeting of directors or a committee of directors shall be

  • (a) a majority of the minimum number of directors required by this Part for the board of directors or a committee of directors; or

  • (b) such greater number of directors than the number calculated pursuant to paragraph (a) as may be established by the by-laws of the bank holding company.

• Marginal note:Director continues to be present

  (3) Any director present at a meeting of directors who is not present at any particular time during the meeting for the purposes of subsection 790(1) shall be considered as being present for the purposes of this section.

Marginal note:Resident Canadian majority

• 772. (1) The directors of a bank holding company shall not transact business at a meeting of directors unless

  • (a) in the case of a bank holding company that is a subsidiary of a foreign bank, at least one half of the directors present are resident Canadians; or

  • (b) in any other case, a majority of the directors present are resident Canadians.

• Marginal note:Exception

  (2) Notwithstanding subsection (1), the directors of a bank holding company may transact business at a meeting of directors or of a committee of directors without the required proportion of directors present who are resident Canadians if

  • (a) a director who is a resident Canadian unable to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting; and

  • (b) there would have been present the required proportion of directors who are resident Canadians had that director been present at the meeting.

Marginal note:Electronic meeting

• 773. (1) Subject to the by-laws of a bank holding company, a meeting of directors or of a committee of directors may be held by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other during the meeting.

• Marginal note:Deemed present

  (2) A director participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Part to be present at that meeting.

Marginal note:Resolution outside board meeting

• 774. (1) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors.

• Marginal note:Filing directors’ resolution

  (2) A copy of the resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors.

• Marginal note:Resolution outside committee meeting

  (3) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of a committee of directors, other than a resolution of the audit committee in carrying out its duties under subsection 782(3), is as valid as if it had been passed at a meeting of that committee.

• Marginal note:Filing committee resolution

  (4) A copy of the resolution referred to in subsection (3) shall be kept with the minutes of the proceedings of that committee.

Marginal note:Dissent of director

• 775. (1) A director of a bank holding company who is present at a meeting of directors or a committee of directors is deemed to have consented to any resolution passed or action taken at that meeting unless

  • (a) the director requests that the director’s dissent be entered or the director’s dissent is entered in the minutes of the meeting;

  • (b) the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; or

  • (c) the director sends the director’s dissent by registered mail or delivers it to the head office of the bank holding company immediately after the meeting is adjourned.

• Marginal note:Loss of right to dissent

  (2) A director of a bank holding company who votes for or consents to a resolution is not entitled to dissent under subsection (1).

• Marginal note:Dissent of absent director

  (3) A director of a bank holding company who is not present at a meeting at which a resolution is passed or action taken is deemed to have consented thereto unless, within seven days after the director becomes aware of the resolution, the director

  • (a) causes the director’s dissent to be placed with the minutes of the meeting; or

  • (b) sends the director’s dissent by registered mail or delivers it to the head office of the bank holding company.

Marginal note:Record of attendance

• 776. (1) A bank holding company shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.

• Marginal note:Statement to shareholders

  (2) A bank holding company shall attach to the notice of each annual meeting it sends to its shareholders a statement showing, in respect of the financial year immediately preceding the meeting, the total number of directors’ meetings and directors’ committee meetings held during the financial year and the number of those meetings attended by each director.

Marginal note:Meeting required by Superintendent

• 777. (1) Where in the opinion of the Superintendent it is necessary, the Superintendent may, by notice in writing, require a bank holding company to hold a meeting of directors of the bank holding company to consider the matters set out in the notice.

• Marginal note:Attendance of Superintendent

  (2) The Superintendent may attend and be heard at a meeting referred to in subsection (1).

By-laws

Marginal note:By-laws

• 778. (1) Unless this Part otherwise provides, the directors of a bank holding company may by resolution make, amend or repeal any by-law that regulates the business or affairs of the bank holding company.

• Marginal note:Shareholder approval

  (2) The directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders at the next meeting of shareholders, and the shareholders may, by resolution, confirm or amend the by-law, amendment or repeal.

• Marginal note:Effective date of by-law

  (3) Unless this Part otherwise provides, a by-law, or an amendment to or a repeal of a by-law, is effective from the date of the resolution of the directors under subsection (1) until it is confirmed, confirmed as amended or rejected by the shareholders under subsection (2) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed, or confirmed as amended, it continues in effect in the form in which it was so confirmed.

• Marginal note:Effect where no shareholder approval

  (4) If a by-law, or an amendment to or a repeal of a by-law, is rejected by the shareholders, or is not submitted to the shareholders by the directors as required under subsection (2), the by-law, amendment or repeal ceases to be effective from the date of its rejection or the date of the next meeting of shareholders, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the shareholders.

Marginal note:Shareholder proposal of by-law

779. A shareholder entitled to vote at an annual meeting of shareholders may, in accordance with sections 732 and 733, make a proposal to make, amend or repeal a by-law.

Marginal note:Deemed by-laws

• 780. (1) Any matter that, immediately prior to the day a body corporate is continued as a bank holding company, was provided for in the incorporating instrument of the body corporate, and that, under this Part, would be provided for in the by-laws of a bank holding company, is deemed to be provided for in the by-laws of the bank holding company.

• Marginal note:By-law prevails

  (2) Where a by-law of the bank holding company made in accordance with sections 778 and 779 amends or repeals any matter referred to in subsection (1), the by-law prevails.

Committees of the Board

Marginal note:Committees

781. The directors of a bank holding company may appoint from their number, in addition to the committees referred to in subsection 747(2), such other committees as they deem necessary and, subject to section 785, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.

Marginal note:Audit committee

• 782. (1) The audit committee of a bank holding company shall consist of at least three directors.

• Marginal note:Membership

  (2) None of the members of the audit committee may be officers or employees of the bank holding company or any of its subsidiaries.

• Marginal note:Duties of audit committee

  (3) The audit committee of a bank holding company shall

  • (a) review the annual statement of the bank holding company before the annual statement is approved by the directors;

  • (b) review such returns of the bank holding company as the Superintendent may specify;

  • (c) require the management of the bank holding company to implement and maintain appropriate internal control procedures;

  • (d) review, evaluate and approve those procedures;

  • (e) review such investments and transactions that could adversely affect the well-being of the bank holding company as the auditor or any officer of the bank holding company may bring to the attention of the committee;

  • (f) meet with the auditor to discuss the annual statement and the returns and transactions referred to in this subsection; and

  • (g) meet with the chief internal auditor of the bank holding company, or the officer or employee of the bank holding company acting in a similar capacity, and with management of the bank holding company, to discuss the effectiveness of the internal control procedures established for the bank holding company.

• Marginal note:Report

  (4) In the case of the annual statement and returns of a bank holding company that under this Part must be approved by the directors of the bank holding company, the audit committee of the bank holding company shall report thereon to the directors before the approval is given.

• Marginal note:Required meeting of directors

  (5) The audit committee of a bank holding company may call a meeting of the directors of the bank holding company to consider any matter of concern to the committee.

Directors and Officers — Authority

Marginal note:Chief executive officer

783. The directors of a bank holding company shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 785, may delegate to that officer any of the powers of the directors.

Marginal note:Appointment of officers

• 784. (1) The directors of a bank holding company may, subject to the by-laws, designate the offices of the bank holding company, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 785, to manage the business and affairs of the bank holding company.

• Marginal note:Directors as officers

  (2) Subject to section 752, a director of a bank holding company may be appointed to any office of the bank holding company.

• Marginal note:Two or more offices

  (3) Two or more offices of a bank holding company may be held by the same person.

Marginal note:Limits on power to delegate

785. The directors of a bank holding company may not delegate any of the following powers, namely, the power to

• (a) submit to the shareholders a question or matter requiring the approval of the shareholders;

• (b) fill a vacancy among the directors or a committee of directors or in the office of the auditor of the bank holding company;

• (c) issue or cause to be issued securities except in the manner and on terms authorized by the directors;

• (d) declare a dividend;

• (e) authorize the redemption or other acquisition by the bank holding company pursuant to section 715 of shares issued by the bank holding company;

• (f) authorize the payment of a commission on a share issue;

• (g) approve a management proxy circular;

• (h) except as provided in this Part, approve the annual statement of the bank holding company and any other financial statements issued by the bank holding company; or

• (i) adopt, amend or repeal by-laws.

Marginal note:Remuneration of directors, officers and employees

• 786. (1) Subject to this section and the by-laws, the directors of a bank holding company may fix the remuneration of the directors, officers and employees of the bank holding company.

• Marginal note:By-law required

  (2) No remuneration shall be paid to a director as director until a by-law fixing the aggregate of all amounts that may be paid to all directors in respect of directors’ remuneration during a fixed period of time has been confirmed by special resolution.

Marginal note:Validity of acts

• 787. (1) An act of a director or an officer of a bank holding company is valid notwithstanding a defect in the director’s qualification or an irregularity in the director’s election or in the appointment of the director or officer.

• Marginal note:Validity of acts

  (2) An act of the board of directors of a bank holding company is valid notwithstanding a defect in the composition of the board or an irregularity in the election of the board or in the appointment of a member of the board.

Marginal note:Right to attend meetings

788. A director of a bank holding company is entitled to attend and to be heard at every meeting of shareholders.

Conflicts of Interest

Marginal note:Disclosure of interest

• 789. (1) A director or an officer of a bank holding company who

  • (a) is a party to a material contract or proposed material contract with the bank holding company,

  • (b) is a director or an officer of any entity that is a party to a material contract or proposed material contract with the bank holding company, or

  • (c) has a material interest in any person who is a party to a material contract or proposed material contract with the bank holding company

  shall disclose in writing to the bank holding company or request to have entered in the minutes of the meetings of directors the nature and extent of that interest.

• Marginal note:Time of disclosure for director

  (2) The disclosure required by subsection (1) shall be made, in the case of a director,

  • (a) at the meeting of directors at which a proposed contract is first considered;

  • (b) if the director was not then interested in a proposed contract, at the first meeting after the director becomes so interested;

  • (c) if the director becomes interested after a contract is made, at the first meeting after the director becomes so interested; or

  • (d) if a person who is interested in a contract later becomes a director, at the first meeting after that person becomes a director.

• Marginal note:Time of disclosure for officer

  (3) The disclosure required by subsection (1) shall be made, in the case of an officer who is not a director,

  • (a) forthwith after the officer becomes aware that a proposed contract is to be considered or a contract has been considered at a meeting of directors;

  • (b) if the officer becomes interested after a contract is made, forthwith after the officer becomes so interested; or

  • (c) if a person who is interested in a contract later becomes an officer, forthwith after the person becomes an officer.

• Marginal note:Time of disclosure for director or officer

  (4) If a material contract or proposed material contract is one that, in the ordinary course of business of the bank holding company, would not require approval by the directors or shareholders, a director or an officer referred to in subsection (1) shall disclose in writing to the bank holding company or request to have entered in the minutes of meetings of directors the nature and extent of the director’s or officer’s interest forthwith after the director or officer becomes aware of the contract or proposed contract.

Marginal note:Where director must abstain

• 790. (1) Where subsection 789(1) applies to a director in respect of a contract, the director shall not be present at any meeting of directors while the contract is being considered at the meeting or vote on any resolution to approve the contract unless the contract is

  • (a) an arrangement by way of security for money lent to or obligations undertaken by the director for the benefit of the bank holding company or a subsidiary of the bank holding company;

  • (b) a contract relating primarily to the director’s remuneration as a director or an officer, employee or agent of the bank holding company or a subsidiary of the bank holding company or an entity controlled by the bank holding company or an entity in which the bank holding company has a substantial investment;

  • (c) a contract for indemnity under section 799 or for insurance under section 800; or

  • (d) a contract with an affiliate of the bank holding company.

• Marginal note:Ineligibility

  (2) Any director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any bank holding company, any insurance holding company or any financial institution that is incorporated or formed by or under an Act of Parliament.

• Marginal note:Validity of acts

  (3) An act of the board of directors of a bank holding company, or of a committee of the board of directors, is not invalid because a person acting as a director had ceased under subsection (2) to hold office as a director.

Marginal note:Continuing disclosure

791. For the purposes of subsection 789(1), a general notice to the directors by a director or an officer declaring that the director or officer is a director or officer of an entity, or has a material interest in a person, and is to be regarded as interested in any contract made with that entity or person, is a sufficient declaration of interest in relation to any contract so made.

Marginal note:Avoidance standards

792. A material contract between a bank holding company and one or more of its directors or officers, or between a bank holding company and another entity of which a director or an officer of the bank holding company is a director or an officer or between a bank holding company and a person in which the director or officer has a material interest, is neither void nor voidable

• (a) by reason only of that relationship, or

• (b) by reason only that a director with an interest in the contract is present at or is counted to determine the presence of a quorum at the meeting of directors or the committee of directors that authorized the contract,

if the director or officer disclosed the interest in accordance with subsection 789(2), (3) or (4) or section 791 and the contract was approved by the directors or the shareholders and it was reasonable and fair to the bank holding company at the time it was approved.

Marginal note:Application to court

793. Where a director or an officer of a bank holding company fails to disclose an interest in a material contract in accordance with sections 789 and 791, a court may, on the application of the bank holding company or a shareholder of the bank holding company, set aside the contract on such terms as the court thinks fit.

Liability, Exculpation and Indemnification

Marginal note:Directors’ liability

• 794. (1) The directors of a bank holding company who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 709(1) or the issue of subordinated indebtedness contrary to section 723 for a consideration other than money are jointly and severally liable to the bank holding company to make good any amount by which the consideration received is less than the fair equivalent of the money that the bank holding company would have received if the share or subordinated indebtedness had been issued for money on the date of the resolution.

• Marginal note:Further liabilities

  (2) The directors of a bank holding company who vote for or consent to a resolution of the directors authorizing

  • (a) a redemption or purchase of shares contrary to section 715,

  • (b) a reduction of capital contrary to section 718,

  • (c) a payment of a dividend contrary to section 722, or

  • (d) a payment of an indemnity contrary to section 799

  are jointly and severally liable to restore to the bank holding company any amounts so distributed or paid and not otherwise recovered by the bank holding company and any amounts in relation to any loss suffered by the bank holding company.

Marginal note:Contribution

• 795. (1) A director who has satisfied a judgment in relation to the director’s liability under section 794 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.

• Marginal note:Recovery

  (2) A director who is liable under section 794 is entitled to apply to a court for an order compelling a shareholder or other person to pay or deliver to the director any money or property that was paid or distributed to the shareholder or other person contrary to section 715, 718, 722 or 799.

• Marginal note:Court order

  (3) Where an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so,

  • (a) order a shareholder or other person to pay or deliver to a director any money or property that was paid or distributed to the shareholder or other person contrary to section 715, 718, 722 or 799;

  • (b) order a bank holding company to return or issue shares to a person from whom the bank holding company has purchased, redeemed or otherwise acquired shares; or

  • (c) make any further order it thinks fit.

Marginal note:Limitation

796. An action to enforce a liability imposed by section 794 may not be commenced after two years from the date of the resolution authorizing the action complained of.

Marginal note:Liability for wages

• 797. (1) Subject to subsections (2) and (3), the directors of a bank holding company are jointly and severally liable to each employee of the bank holding company for all debts not exceeding six months wages payable to the employee for services performed for the bank holding company while they are directors.

• Marginal note:Conditions precedent

  (2) A director is not liable under subsection (1) unless

  • (a) the bank holding company has been sued for the debt within six months after it has become due and execution has been returned unsatisfied in whole or in part;

  • (b) the bank holding company has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proven within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; or

  • (c) the bank holding company has made an assignment or a receiving order has been made against it under the Bankruptcy and Insolvency Act and a claim for the debt has been proved within six months after the assignment or receiving order.

• Marginal note:Limitations

  (3) A director is not liable under subsection (1) unless the director is sued for a debt referred to in that subsection while a director or within two years after the director has ceased to be a director.

• Marginal note:Amount due after execution

  (4) Where execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.

• Marginal note:Subrogation of director

  (5) Where a director of a bank holding company pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or bankruptcy proceedings, the director is entitled to any preference that the employee would have been entitled to and, where a judgment has been obtained, the director is entitled to an assignment of the judgment.

• Marginal note:Contribution entitlement

  (6) A director of a bank holding company who has satisfied a claim under this section is entitled to a contribution from the other directors of the bank holding company who are liable for the claim.

Marginal note:Reliance on statement

798. A director, an officer or an employee of a bank holding company is not liable under subsection 748(1) or (2) or section 794 or 797 if the director, officer or employee relies in good faith on

• (a) financial statements of the bank holding company represented to the director, officer or employee by an officer of the bank holding company or in a written report of the auditor of the bank holding company fairly to reflect the financial condition of the bank holding company; or

• (b) a report of an accountant, lawyer, notary or other professional person whose profession lends credibility to a statement made by the professional person.

Marginal note:Indemnification of directors and officers

• 799. (1) Except in respect of an action by or on behalf of the bank holding company to procure a judgment in its favour, a bank holding company may indemnify

  • (a) a director or an officer of the bank holding company,

  • (b) a former director or officer of the bank holding company, or

  • (c) any person who acts or acted at the bank holding company’s request as a director or an officer of an entity of which the bank holding company is or was a shareholder or creditor

  against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment reasonably incurred by the person in respect of any civil, criminal or administrative action or proceeding to which the person is made a party by reason of being or having been a person referred to in any of paragraphs (a) to (c), if

  • (d) the director, officer or person acted honestly and in good faith with a view to the best interests of the bank holding company, and

  • (e) in the case of a criminal or administrative action or proceeding enforced by a monetary penalty, the director, officer or person had reasonable grounds for believing that the impugned conduct was lawful.

• Marginal note:Indemnification in derivative action

  (2) A bank holding company may, with the approval of a court, indemnify a person referred to in subsection (1), in respect of an action by or on behalf of the bank holding company or entity to procure a judgment in its favour to which the person is made a party by reason of being or having been a director or an officer of the bank holding company or entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the person in connection with that action if the person fulfils the conditions set out in paragraphs (1)(d) and (e).

• Marginal note:Right to indemnity

  (3) Notwithstanding anything in this section, a person referred to in subsection (1) is entitled to indemnity from the bank holding company in respect of all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the person in connection with the defence of any civil, criminal or administrative action or proceeding to which the person is made a party by reason of being or having been a director or an officer of the bank holding company or an entity, if the person seeking indemnity

  • (a) was substantially successful on the merits in the defence of the action or proceedings; and

  • (b) fulfils the conditions set out in paragraphs (1)(d) and (e).

• Marginal note:Heirs

  (4) A bank holding company may, to the extent referred to in subsections (1) to (3) in respect of the person, indemnify the heirs or personal representatives of any person the bank holding company may indemnify pursuant to subsections (1) to (3).

Marginal note:Directors’ and officers’ insurance

800. A bank holding company may purchase and maintain insurance for the benefit of any person referred to in section 799 against any liability incurred by the person

• (a) in the capacity of a director or an officer of the bank holding company, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the bank holding company; or

• (b) in the capacity of a director or an officer of another entity where the person acts or acted in that capacity at the bank holding company’s request, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the entity.

Marginal note:Application to court for indemnification

• 801. (1) A bank holding company or a person referred to in section 799 may apply to a court for an order approving an indemnity under that section and the court may so order and make any further order it thinks fit.

• Marginal note:Notice to Superintendent

  (2) An applicant under subsection (1) shall give the Superintendent written notice of the application and the Superintendent is entitled to appear and to be heard at the hearing of the application in person or by counsel.

• Marginal note:Other notice

  (3) On an application under subsection (1), the court may order notice to be given to any interested person and that person is entitled to appear and to be heard in person or by counsel at the hearing of the application.

Fundamental Changes

Amendments

Marginal note:Sections 215 to 222 apply

802. Sections 215 to 222 apply in respect of bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”;

• (b) references to “this Act” in those sections are to be read as references to “this Part”;

• (c) the reference to “subsection 159(1) and section 168” in paragraph 217(1)(i) is to be read as a reference to “subsection 749(1) and section 756”; and

• (d) the reference to “sections 143 and 144” in subsection 221(1) is to be read as a reference to “sections 732 and 733”.

Amalgamation

Marginal note:Application to amalgamate

• 803. (1) On the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including banks and bank holding companies, the Minister may issue letters patent amalgamating and continuing the applicants as one bank holding company.

• Marginal note:Restriction

  (2) Despite subsection (1), if one of the applicants is a bank holding company that controls a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies, the Minister shall not issue letters patent referred to in subsection (1) unless

  • (a) the amalgamated bank holding company would be a widely held bank holding company; or

  • (b) the amalgamated bank holding company would be controlled by a widely held bank holding company that, at the time the application was made, controlled

    • (i) the applicant, or

    • (ii) any other applicant that is a bank holding company that controls a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies.

• Marginal note:Restriction

  (3) Despite subsection (1), if the amalgamated bank holding company would be a bank holding company with equity of five billion dollars or more, the Minister shall not issue letters patent referred to in that subsection unless the amalgamated bank holding company is

  • (a) widely held;

  • (b) controlled, within the meaning of paragraphs 3(1)(a) and (d), by a widely held bank, or by a widely held bank holding company, that controlled one of the applicants at the time the application was made; or

  • (c) controlled, within the meaning of paragraph 3(1)(d), by a widely held insurance holding company, or by an eligible Canadian financial institution, within the meaning of subsection 370(1), other than a bank, or by an eligible foreign institution, within the meaning of subsection 370(1), that controlled one of the applicants at the time the application was made.

Marginal note:Amalgamation agreement

• 804. (1) Each applicant proposing to amalgamate shall enter into an amalgamation agreement.

• Marginal note:Contents of agreement

  (2) Every amalgamation agreement shall set out the terms and means of effecting the amalgamation and, in particular,

  • (a) the name of the amalgamated bank holding company and the place in Canada where its head office is to be situated;

  • (b) the name and place of ordinary residence of each proposed director of the amalgamated bank holding company;

  • (c) the manner in which the shares of each applicant are to be converted into shares or other securities of the amalgamated bank holding company;

  • (d) if any shares of an applicant are not to be converted into shares or other securities of the amalgamated bank holding company, the amount of money or securities that the holders of those shares are to receive in addition to or in lieu of shares or other securities of the amalgamated bank holding company;

  • (e) the manner of payment of money in lieu of the issue of fractional shares of the amalgamated bank holding company or of any other body corporate that are to be issued in the amalgamation;

  • (f) the proposed by-laws of the amalgamated bank holding company;

  • (g) details of any other matter necessary to perfect the amalgamation and to provide for the subsequent management and operation of the amalgamated bank holding company; and

  • (h) the proposed effective date of the amalgamation.

• Marginal note:Cross ownership of shares

  (3) If shares of one of the applicants are held by or on behalf of another of the applicants, other than shares held in the capacity of a personal representative or by way of security, the amalgamation agreement must provide for the cancellation of those shares when the amalgamation becomes effective without any repayment of capital in respect thereof, and no provision shall be made in the agreement for the conversion of those shares into shares of the amalgamated bank holding company.

Marginal note:Approval of agreement by Minister

805. An amalgamation agreement shall be submitted to the Minister for approval and any approval of such an agreement pursuant to subsection 806(4) by the holders of any class or series of shares of an applicant is invalid unless, prior to the date of the approval, the Minister has approved the agreement in writing.

Marginal note:Shareholder approval

• 806. (1) The directors of each applicant shall submit an amalgamation agreement for approval to a meeting of the holders of shares of the applicant body corporate of which they are directors and, subject to subsection (3), to the holders of each class or series of such shares.

• Marginal note:Right to vote

  (2) Each share of an applicant carries the right to vote in respect of an amalgamation whether or not it otherwise carries the right to vote.

• Marginal note:Class vote

  (3) The holders of shares of a class or series of shares of an applicant are entitled to vote separately as a class or series in respect of an amalgamation if the amalgamation agreement contains a provision that, if contained in a proposed amendment to the by-laws or incorporating instrument of the applicant, would entitle those holders to vote separately as a class or series.

• Marginal note:Special resolution

  (4) Subject to subsection (3), an amalgamation agreement is approved when the shareholders of each applicant that is a body corporate have approved the amalgamation by special resolution.

• Marginal note:Termination

  (5) An amalgamation agreement may provide that, at any time before the issue of letters patent of amalgamation, the agreement may be terminated by the directors of an applicant notwithstanding that the agreement has been approved by the shareholders of all or any of the applicant bodies corporate.

Marginal note:Vertical short-form amalgamation

• 807. (1) A bank holding company may, without complying with sections 804 to 806, amalgamate with one or more bodies corporate that are incorporated by or under an Act of Parliament if the body or bodies corporate, as the case may be, are wholly-owned subsidiaries of the bank holding company and

  • (a) the amalgamation is approved by a resolution of the directors of the bank holding company and of each amalgamating subsidiary; and

  • (b) the resolutions provide that

    • (i) the shares of each amalgamating subsidiary will be cancelled without any repayment of capital in respect thereof,

    • (ii) the letters patent of amalgamation and the by-laws of the amalgamated bank holding company will be the same as the incorporating instrument and the by-laws of the amalgamating bank holding company that is the holding body corporate, and

    • (iii) no securities will be issued by the amalgamated bank holding company in connection with the amalgamation.

• Marginal note:Horizontal short-form amalgamation

  (2) Two or more bodies corporate incorporated by or under an Act of Parliament may amalgamate and continue as one bank holding company without complying with sections 804 to 806 if

  • (a) at least one of the applicants is a bank holding company;

  • (b) the applicants are all wholly-owned subsidiaries of the same holding body corporate;

  • (c) the amalgamation is approved by a resolution of the directors of each of the applicants; and

  • (d) the resolutions provide that

    • (i) the shares of all applicants, except those of one of the applicants that is a bank holding company, will be cancelled without any repayment of capital in respect thereof,

    • (ii) the letters patent of amalgamation and the by-laws of the amalgamated bank holding company will be the same as the incorporating instrument and the by-laws of the amalgamating bank holding company whose shares are not cancelled, and

    • (iii) the stated capital of the amalgamating bank holding companies and bodies corporate whose shares are cancelled will be added to the stated capital of the amalgamating bank holding company whose shares are not cancelled.

Marginal note:Joint application to Minister

• 808. (1) Subject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 806(5), the applicants shall, within three months after the approval of the agreement in accordance with subsection 806(4) or the approval of the directors in accordance with subsection 807(1) or (2), jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one bank holding company.

• Marginal note:Conditions precedent to application

  (2) No application for the issue of letters patent under subsection (1) may be made unless

  • (a) notice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of each applicant is situated; and

  • (b) the application is supported by satisfactory evidence that the applicants have complied with the requirements of this Part relating to amalgamations.

• Marginal note:Application of sections 672 to 674

  (3) If two or more bodies corporate, none of which is a bank holding company, apply for letters patent under subsection (1), sections 672 to 674 apply in respect of the application with any modifications that the circumstances require.

• Marginal note:Matters for consideration

  (4) Before issuing letters patent of amalgamation continuing the applicants as one bank holding company, the Minister shall take into account all matters that the Minister considers relevant to the application, including

  • (a) the sources of continuing financial support for any bank that will be a subsidiary of the amalgamated bank holding company;

  • (b) the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of any bank that will be a subsidiary of the amalgamated bank holding company;

  • (c) the business record and experience of the applicants;

  • (d) the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;

  • (e) whether the amalgamated bank holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

  • (f) the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;

  • (g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated bank holding company and its affiliates may affect the supervision and regulation of any bank that will be its subsidiary, having regard to

    • (i) the nature and extent of the proposed financial services activities to be carried out by the affiliates of the amalgamated bank holding company, and

    • (ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the amalgamated bank holding company; and

  • (h) the best interests of the financial system in Canada.

Marginal note:Issue of letters patent

• 809. (1) Where an application has been made to the Minister in accordance with section 808, the Minister may issue letters patent of amalgamation continuing the applicants as one bank holding company.

• Marginal note:Letters patent

  (2) Where letters patent are issued pursuant to this section, section 676 applies with such modifications as the circumstances require in respect of the issue of the letters patent.

• Marginal note:Publication of notice

  (3) The Superintendent shall cause to be published in the Canada Gazette notice of the issuance of letters patent pursuant to subsection (1).

Marginal note:Court enforcement

• 810. (1) If a bank holding company or any director, officer, employee or agent of a bank holding company is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the bank holding company or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.

• Marginal note:Appeal

  (2) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.

Marginal note:Effect of letters patent

• 811. (1) On the day provided for in the letters patent issued under section 809,

  • (a) the amalgamation of the applicants and their continuance as one bank holding company becomes effective;

  • (b) the property of each applicant continues to be the property of the amalgamated bank holding company;

  • (c) the amalgamated bank holding company continues to be liable for the obligations of each applicant;

  • (d) any existing cause of action, claim or liability to prosecution is unaffected;

  • (e) any civil, criminal or administrative action or proceeding pending by or against an applicant may be continued to be prosecuted by or against the amalgamated bank holding company;

  • (f) any conviction against, or ruling, order or judgment in favour of or against, an applicant may be enforced by or against the amalgamated bank holding company;

  • (g) if any director or officer of an applicant continues as a director or officer of the amalgamated bank holding company, any disclosure by that director or officer of a material interest in any contract made to the applicant shall be deemed to be disclosure to the amalgamated bank holding company; and

  • (h) the letters patent of amalgamation are the incorporating instrument of the amalgamated bank holding company.

• Marginal note:Minutes

  (2) Any deemed disclosure under paragraph (1)(g) shall be recorded in the minutes of the first meeting of directors of the amalgamated bank holding company.

Marginal note:Transitional

• 812. (1) Despite any other provision of this Act or the regulations, the Minister may, by order, on the recommendation of the Superintendent, grant to a bank holding company in respect of which letters patent were issued under subsection 809(1) permission to

  • (a) engage in a business activity specified in the order that a bank holding company is not otherwise permitted by this Act to engage in and that one or more of the amalgamating bodies corporate was engaging in at the time application for the letters patent was made;

  • (b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;

  • (c) hold assets that a bank holding company is not otherwise permitted by this Act to hold if the assets were held by one or more of the amalgamating bodies corporate at the time the application for the letters patent was made;

  • (d) acquire and hold assets that a bank holding company is not otherwise permitted by this Act to acquire or hold if one or more of the amalgamating bodies corporate were obliged, at the time the application for the letters patent was made, to acquire those assets; and

  • (e) maintain outside Canada any records or registers required by this Act to be maintained in Canada and maintain and process, outside Canada, information and data relating to the preparation and maintenance of such records or registers.

• Marginal note:Duration of exceptions

  (2) The permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceeding

  • (a) with respect to any matter described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;

  • (b) with respect to any matter described in paragraph (1)(b), ten years; and

  • (c) with respect to any matter described in any of paragraphs (1)(c) to (e), two years.

• Marginal note:Renewal

  (3) Subject to subsection (4), the Minister may, by order on the recommendation of the Superintendent, renew a permission granted by order under subsection (1) with respect to any matter described in any of paragraphs (1)(b) to (d) for any further period or periods that the Minister considers necessary.

• Marginal note:Limitation

  (4) The Minister shall not grant to a bank holding company any permission

  • (a) with respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the effective date of the letters patent of amalgamation, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank holding company that the bank holding company will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and

  • (b) with respect to matters described in paragraphs (1)(c) and (d), that purports to be effective more than ten years after the effective date of the letters patent.

Transfer of Business

Marginal note:Shareholder approval

• 813. (1) A sale, lease or exchange of all or substantially all the property of a bank holding company requires the approval of the shareholders in accordance with subsections (2) to (7).

• Marginal note:Notice of meeting

  (2) A notice of a meeting of shareholders complying with sections 727 and 730 shall be sent in accordance with those sections to each shareholder and shall include or be accompanied by a copy or summary of the agreement of sale, lease or exchange.

• Marginal note:Shareholder approval

  (3) At the meeting referred to in the notice, the shareholders may authorize the sale, lease or exchange and may fix or authorize the directors to fix any of the sale’s, lease’s or exchange’s terms and conditions.

• Marginal note:Right to vote

  (4) Each share of the bank holding company carries the right to vote in respect of the proposal whether or not the share otherwise carries the right to vote.

• Marginal note:Class vote

  (5) The holders of shares of a class or series of shares of the bank holding company are entitled to vote separately as a class or series in respect of the proposal if the shares of the class or series are affected by the proposed transaction in a manner different from the shares of another class or series.

• Marginal note:Special resolution

  (6) For the purpose of subsection (1), the proposal is not approved unless the holders of the shares of each class or series of shares entitled to vote separately on the proposal have approved the proposal by special resolution.

• Marginal note:Abandoning transaction

  (7) Where a special resolution under subsection (6) approving a proposed transaction so states, the directors of a bank holding company may, subject to the rights of third parties, abandon the transaction without further approval of the shareholders.

Corporate Records

Head Office and Corporate Records

Marginal note:Head office

• 814. (1) A bank holding company shall at all times have a head office in the place within Canada specified in its incorporating instrument or by-laws.

• Marginal note:Change of head office

  (2) The directors of a bank holding company may change the address of the head office within the place specified in the incorporating instrument or by-laws.

• Marginal note:Notice of change of address

  (3) A bank holding company shall send to the Superintendent, within fifteen days after any change of address of its head office, a notice of the change of address.

Marginal note:Bank holding company records

• 815. (1) A bank holding company shall prepare and maintain records containing

  • (a) its incorporating instrument and by-laws and all amendments to them;

  • (b) minutes of meetings and resolutions of shareholders;

  • (c) the information referred to in paragraphs 951(1)(a) and (c) to (g) contained in all returns provided to the Superintendent pursuant to section 951; and

  • (d) particulars of exceptions granted under section 688 or 812 that are from time to time applicable to the bank holding company.

• Marginal note:Additional records

  (2) In addition to the records described in subsection (1), a bank holding company shall prepare and maintain adequate

  • (a) corporate accounting records; and

  • (b) records containing minutes of meetings and resolutions of the board of directors and those of its committees.

• Marginal note:Continued bank holding companies

  (3) For the purposes of paragraph (1)(b) and subsection (2),

  • (a) in the case of a body corporate continued as a bank holding company, “records” includes similar records required by law to be maintained by the body corporate before it was so continued; and

  • (b) in the case of a body corporate amalgamated and continued as a bank holding company, “records” includes similar records required by law to be maintained by the body corporate before it was so amalgamated.

Marginal note:Place of records

• 816. (1) The records described in section 815 shall be kept at the head office of the bank holding company or at such other place in Canada as the directors think fit.

• Marginal note:Notice of place of records

  (2) Where any of the records described in section 815 are not kept at the head office of a bank holding company, the bank holding company shall notify the Superintendent of the place where the records are kept.

• Marginal note:Inspection

  (3) The records described in section 815 shall at all reasonable times be open to inspection by the directors.

• Marginal note:Access to bank holding company records

  (4) Shareholders and creditors of a bank holding company and their personal representatives may examine the records referred to in subsection 815(1) during the usual business hours of the bank holding company, and may take extracts therefrom, free of charge, or have copies made thereof on payment of a reasonable fee and, where the bank holding company is a distributing bank holding company within the meaning of subsection 265(1), any other person may, on payment of a reasonable fee, examine such records and take extracts therefrom or copies thereof.

• Marginal note:Copies of by-laws

  (5) Every shareholder of a bank holding company is entitled, on request made not more frequently than once in each calendar year, to receive, free of charge, one copy of the by-laws of the bank holding company.

• Marginal note:Electronic access

  (6) A bank holding company may make the information contained in records referred to in subsection 815(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.

Marginal note:Shareholder lists

• 817. (1) A person who is entitled to a basic list of shareholders of a bank holding company (in this section referred to as the “applicant”) may request the bank holding company to furnish the applicant with a basic list within ten days after receipt by the bank holding company of the affidavit referred to in subsection (2) and, on payment of a reasonable fee by the applicant, the bank holding company shall comply with the request.

• Marginal note:Affidavit and contents

  (2) A request under subsection (1) must be accompanied by an affidavit containing

  • (a) the name and address of the applicant,

  • (b) the name and address for service of the entity, if the applicant is an entity, and

  • (c) an undertaking that the basic list and any supplemental lists obtained pursuant to subsections (5) and (6) will not be used except as permitted under section 819,

  and, if the applicant is an entity, the affidavit shall be made by a director or an officer of the entity, or any person acting in a similar capacity.

• Marginal note:Entitlement

  (3) Every shareholder or creditor of a bank holding company or the personal representative of a shareholder or creditor of a bank holding company is entitled to a basic list of shareholders of the bank holding company, but, if the bank holding company is a distributing bank holding company within the meaning of subsection 265(1), any person is entitled to a basic list of shareholders of the bank holding company on request therefor.

• Marginal note:Basic list

  (4) A basic list of shareholders of a bank holding company consists of a list of shareholders that is made up to a date not more than ten days before the receipt of the affidavit referred to in subsection (2) and that sets out

  • (a) the names of the shareholders of the bank holding company;

  • (b) the number of shares owned by each shareholder; and

  • (c) the address of each shareholder as shown in the records of the bank holding company.

• Marginal note:Supplemental lists

  (5) A person requiring a bank holding company to supply a basic list of shareholders may, if the person states in the accompanying affidavit that supplemental lists are required, request the bank holding company or its agent, on payment of a reasonable fee, to provide supplemental lists of shareholders setting out any changes from the basic list in the names and addresses of the shareholders and the number of shares owned by each shareholder for each business day following the date to which the basic list is made up.

• Marginal note:When supplemental lists to be furnished

  (6) A bank holding company or its agent shall provide a supplemental list of shareholders required under subsection (5)

  • (a) within ten days following the date the basic list is provided, where the information relates to changes that took place prior to that date; and

  • (b) within ten days following the day to which the supplemental list relates, where the information relates to changes that took place on or after the date the basic list was provided.

Marginal note:Option holders

818. A person requiring a bank holding company to supply a basic list or a supplemental list of shareholders may also require the bank holding company to include in that list the name and address of any known holder of an option or right to acquire shares of the bank holding company.

Marginal note:Use of shareholder list

819. A list of shareholders obtained under section 817 shall not be used by any person except in connection with

• (a) an effort to influence the voting of shareholders of the bank holding company;

• (b) an offer to acquire shares of the bank holding company; or

• (c) any other matter relating to the affairs of the bank holding company.

Marginal note:Form of records

• 820. (1) A register or other record required or authorized by this Part to be prepared and maintained by a bank holding company

  • (a) may be in a bound or loose-leaf form or in a photographic film form; or

  • (b) may be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

• Marginal note:Conversion of records

  (2) Registers and records maintained in one form may be converted to any other form.

• Marginal note:Destruction of converted records

  (3) Notwithstanding section 823, a bank holding company may destroy any register or other record referred to in subsection (1) at any time after the register or other record has been converted to another form.

Marginal note:Protection of records

821. A bank holding company and its agents shall take reasonable precautions to

• (a) prevent loss or destruction of,

• (b) prevent falsification of entries in,

• (c) facilitate detection and correction of inaccuracies in, and

• (d) ensure that unauthorized persons do not have access to or use of information in

the registers and records required or authorized by this Part to be prepared and maintained.

Marginal note:Location and processing of information

• 822. (1) Subject to subsection (3), a bank holding company shall maintain and process in Canada any information or data relating to the preparation and maintenance of the records referred to in section 815 unless the Superintendent has, subject to such terms and conditions as the Superintendent considers appropriate, exempted the bank holding company from the application of this section.

• Marginal note:Copies

  (2) Subject to subsections (3) and (4), a bank holding company may maintain copies of the records referred to in subsection (1) outside Canada and may further process outside Canada any information or data relating to those copies.

• Marginal note:Information for Superintendent

  (3) Where a bank holding company, in accordance with subsection (2), maintains outside Canada copies of any records referred to in subsection (1) or further processes information or data relating to those copies outside Canada, the bank holding company shall so inform the Superintendent and provide the Superintendent with a list of those copies maintained outside Canada and a description of the further processing of information or data relating to those copies outside Canada and such other information as the Superintendent may require from time to time.

• Marginal note:Processing information in Canada

  (4) If the Superintendent is at any time of the opinion that the maintenance outside Canada of any copies referred to in subsection (3), or the further processing of information or data relating to any such copies outside Canada, is incompatible with the fulfilment of the Superintendent’s responsibilities under this Part or the Superintendent is advised by the Minister that, in the opinion of the Minister, such maintenance or further processing is not in the national interest, the Superintendent shall direct the bank holding company to maintain those copies, or to further process information or data relating to those copies, in Canada.

• Marginal note:Bank holding company to comply

  (5) A bank holding company shall forthwith comply with any direction issued under subsection (4).

• Marginal note:Guidelines

  (6) The Superintendent shall issue guidelines respecting the circumstances under which an exemption referred to in subsection (1) may be available.

Marginal note:Retention of records

823. A bank holding company shall retain

• (a) the records of the bank holding company referred to in subsection 815(1);

• (b) any record of the bank holding company referred to in paragraph 815(2)(a) or (b); and

• (c) the central securities register referred to in subsection 825(1).

Marginal note:Regulations

824. The Governor in Council may make regulations respecting the records, papers and documents to be retained by a bank holding company and the length of time those records, papers and documents are to be retained.

Securities Registers

Marginal note:Central securities register

• 825. (1) A bank holding company shall maintain a central securities register in which it shall record the securities, within the meaning of section 81, issued by it in registered form, showing in respect of each class or series of securities

  • (a) the names, alphabetically arranged, and latest known addresses of the persons who are security holders, and the names and latest known addresses of the persons who have been security holders;

  • (b) the number of securities held by each security holder; and

  • (c) the date and particulars of the issue and transfer of each security.

• Marginal note:Existing and continued bank holding companies

  (2) For the purposes of subsection (1), “central securities register” includes similar registers required by law to be maintained by a body corporate continued, or amalgamated and continued, as a bank holding company under this Part before the continuance, or amalgamation, as the case may be.

• Marginal note:Application of certain provisions

  (3) Subsections 816(4) and (6) and sections 817 and 819 to 822 apply, with such modifications as the circumstances require, in respect of a central securities register.

Marginal note:Branch registers

826. A bank holding company may establish as many branch securities registers as it considers necessary.

Marginal note:Agents

827. A bank holding company may appoint an agent to maintain its central securities register and each of its branch securities registers.

Marginal note:Location of central securities register

• 828. (1) The central securities register of a bank holding company shall be maintained by the bank holding company at its head office or at any other place in Canada designated by the directors of the bank holding company.

• Marginal note:Location of branch securities register

  (2) A branch securities register of a bank holding company may be kept at any place in or outside Canada designated by the directors of the bank holding company.

Marginal note:Effect of registration

829. Registration of the issue or transfer of a security in the central securities register or in a branch securities register is complete and valid registration for all purposes.

Marginal note:Particulars in branch register

• 830. (1) A branch securities register shall only contain particulars of the securities issued or transferred at the branch for which that register is established.

• Marginal note:Particulars in central register

  (2) Particulars of each issue or transfer of a security registered in a branch securities register of a bank holding company shall also be kept in the central securities register of the bank holding company.

Marginal note:Destruction of certificates

831. A bank holding company, its agent or a trustee within the meaning of section 294 is not required to produce

• (a) a cancelled security certificate in registered form or an instrument referred to in subsection 713(1) that is cancelled or a like cancelled instrument in registered form after six years from the date of its cancellation;

• (b) a cancelled security certificate in bearer form or an instrument referred to in subsection 713(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; or

• (c) an instrument referred to in subsection 713(1) or a like instrument, irrespective of its form, after the date of its expiration.

Corporate Name and Seal

Marginal note:Publication of name

832. A bank holding company shall set out its name in legible characters in all contracts, invoices, negotiable instruments and other documents evidencing rights or obligations with respect to other parties that are issued or made by or on behalf of the bank holding company.

Marginal note:Corporate seal

833. An instrument or agreement executed on behalf of a bank holding company by a director, an officer or an agent of the bank holding company is not invalid merely because a corporate seal is not affixed thereto.

Insiders

Marginal note:Sections 265 to 272 apply

834. Sections 265 to 272 apply in respect of bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”; and

• (b) the reference to “this Act” in subsection 266(3) is to be read as a reference to “this Part”.

Prospectus

Marginal note:Sections 273 to 282 apply

835. Sections 273 to 282 apply in respect of bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”;

• (b) references to “this Act” in those sections are to be read as references to “this Part”; and

• (c) subsection 274(1) is to be read without reference to “or auditors”.

Compulsory Acquisitions

Marginal note:Sections 283 to 292 apply

836. Sections 283 to 292 apply in respect of bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”;

• (b) references to “another deposit-taking financial institution” in subsection 287(3) are to be read as references to “a deposit-taking financial institution”; and

• (c) the reference to “the Minister” in subsection 291(4) is to be read as a reference to “the Receiver General”.

Marginal note:Recovery

837. If at any time a person establishes an entitlement to any moneys paid to the Receiver General under subsection 291(4), the Receiver General shall pay an equivalent amount to that person out of the Consolidated Revenue Fund.

Trust Indentures

Marginal note:Sections 294 to 306 apply

838. Sections 294 to 306 apply in respect to bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”;

• (b) references to “this Act” in those sections are to be read as references to “this Part”; and

• (c) references to “subordinated indebtedness” in those sections are to be read as references to “subordinated indebtedness” as defined in subsection 663(1).

Financial Statements and Auditor

Annual Financial Statement

Marginal note:Financial year of bank holding company

• 839. (1) The financial year of a bank holding company ends, at the election of the bank holding company in its by-laws, on the expiration of the thirty-first day of October of each year or the thirty-first day of December of each year.

• Marginal note:First financial year

  (2) If, in any year, a bank holding company comes into existence after the first day of July, its first financial year ends, at its election in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.

Marginal note:Annual financial statement

• 840. (1) The directors of a bank holding company shall place before the shareholders at every annual meeting

  • (a) a comparative annual financial statement (in this Part referred to as an “annual statement”) relating separately to

    • (i) the financial year immediately preceding the meeting, and

    • (ii) the financial year, if any, immediately preceding the financial year referred to in subparagraph (i);

  • (b) the report of the auditor of the bank holding company; and

  • (c) any further information respecting the financial position of the bank holding company and the results of its operations required by the by-laws of the bank holding company to be placed before the shareholders at the annual meeting.

• Marginal note:Contents of annual statement

  (2) An annual statement of a bank holding company must contain, with respect to each of the financial years to which it relates,

  • (a) a balance sheet as at the end of the financial year,

  • (b) a statement of income for the financial year,

  • (c) a statement of change of financial position for the financial year, and

  • (d) a statement of changes in shareholders’ equity for the financial year,

  showing such information and particulars as in the opinion of the directors are necessary to present fairly, in accordance with the accounting principles referred to in subsection (4), the financial position of the bank holding company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank holding company for that financial year.

• Marginal note:Additional information

  (3) A bank holding company shall include with its annual statement

  • (a) a list of the subsidiaries of the bank holding company, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 934 or pursuant to a realization of security in accordance with section 935 and which the bank holding company would not otherwise be permitted to hold, showing, with respect to each subsidiary,

    • (i) its name and the address of its head or principal office,

    • (ii) the book value of the aggregate of any shares of the subsidiary beneficially owned by the bank holding company and by other subsidiaries of the bank holding company, and

    • (iii) the percentage of the voting rights attached to all the outstanding voting shares of the subsidiary that is carried by the aggregate of any voting shares of the subsidiary beneficially owned by the bank holding company and by other subsidiaries of the bank holding company; and

  • (b) such other information as the Governor in Council may, by order, require in such form as may be prescribed.

• Marginal note:Accounting principles

  (4) The financial statements referred to in subsection (1), paragraph (3)(b) and subsection 842(1) shall, except as otherwise specified by the Superintendent, be prepared in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants. A reference in any provision of this Act to the accounting principles referred to in this subsection shall be construed as a reference to those generally accepted accounting principles with any specifications so made.

• Marginal note:Regulations

  (5) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).

Marginal note:Approval by directors

• 841. (1) The directors of a bank holding company shall approve the annual statement and the approval of the directors shall be evidenced by the signature of

  • (a) the chief executive officer or, in the event of that officer’s absence or inability to act, any other officer of the bank holding company authorized by the directors to sign in the stead of the chief executive officer; and

  • (b) one director, if the signature required by paragraph (a) is that of a director, or two directors if the signature required by that paragraph is that of an officer who is not a director.

• Marginal note:Condition precedent to publication

  (2) A bank holding company shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).

Marginal note:Statements — subsidiaries

• 842. (1) A bank holding company shall keep at its head office a copy of the current financial statements of each subsidiary of the bank holding company.

• Marginal note:Examination

  (2) Subject to this section, the shareholders of a bank holding company and their personal representatives may, on request therefor, examine the statements referred to in subsection (1) during the usual business hours of the bank holding company and may take extracts therefrom free of charge.

• Marginal note:Barring examination

  (3) A bank holding company may refuse to permit an examination under subsection (2) by any person.

• Marginal note:Application for order

  (4) Within fifteen days after a refusal under subsection (3), the bank holding company shall apply to a court for an order barring the right of the person concerned to make an examination under subsection (2) and the court shall either order the bank holding company to permit the examination or, if it is satisfied that the examination would be detrimental to the bank holding company or to any other body corporate the financial statements of which would be subject to examination, bar the right and make any further order it thinks fit.

• Marginal note:Notice to Superintendent

  (5) A bank holding company shall give the Superintendent and the person seeking to examine the statements referred to in subsection (1) notice of an application to a court under subsection (4), and the Superintendent and the person may appear and be heard in person or by counsel at the hearing of the application.

Marginal note:Distribution of annual statement

• 843. (1) A bank holding company shall, not later than twenty-one days before the date of each annual meeting or before the signing of a resolution under paragraph 741(1)(b) in lieu of the annual meeting, send to each shareholder at the shareholder’s recorded address a copy of the documents referred to in subsections 840(1) and (3), unless that time period is waived by the shareholder.

• Marginal note:Exception

  (2) A bank holding company is not required to comply with subsection (1) with respect to a shareholder who has informed the bank holding company, in writing, that the shareholder does not wish to receive the annual statement.

• Marginal note:Effect of default

  (3) Where a bank holding company is required to comply with subsection (1) and the bank holding company does not comply with that subsection, the annual meeting at which the documents referred to in that subsection are to be considered shall be adjourned until that subsection has been complied with.

Marginal note:Copy to Superintendent

• 844. (1) Subject to subsection (2), a bank holding company shall send to the Superintendent a copy of the documents referred to in subsections 840(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the bank holding company.

• Marginal note:Later filing

  (2) If a bank holding company’s shareholders sign a resolution under paragraph 741(1)(b) in lieu of an annual meeting, the bank holding company shall send a copy of the documents referred to in subsections 840(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.

Auditors

Marginal note:Definitions

845. The following definitions apply in this section and sections 846 to 864.

“firm of accountants”

« cabinet de comptables »

“firm of accountants” means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting.

“member”

« membre »

“member”, in relation to a firm of accountants, means

• (a) an accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting; or

• (b) an accountant who is an employee of a firm of accountants.

Marginal note:Appointment of auditor

• 846. (1) The shareholders of a bank holding company shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting, appoint a firm of accountants to be the auditor of the bank holding company until the close of the next annual meeting.

• Marginal note:Remuneration of auditor

  (2) The remuneration of the auditor may be fixed by ordinary resolution of the shareholders but, if not so fixed, shall be fixed by the directors.

Marginal note:Qualification of auditor

• 847. (1) A firm of accountants is qualified to be an auditor of a bank holding company if

  • (a) two or more members thereof are accountants who

    • (i) are members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,

    • (ii) each have at least five years experience at a senior level in performing audits of a financial institution,

    • (iii) are ordinarily resident in Canada, and

    • (iv) are independent of the bank holding company; and

  • (b) the member of the firm jointly designated by the firm and the bank holding company to conduct the audit of the bank holding company on behalf of the firm is qualified in accordance with paragraph (a).

• Marginal note:Independence

  (2) For the purposes of subsection (1),

  • (a) independence is a question of fact; and

  • (b) a member of a firm of accountants is deemed not to be independent of a bank holding company if that member or any other member of the firm of accountants, or if the firm of accountants

    • (i) is a director or an officer or employee of the bank holding company or of any affiliate of the bank holding company or is a business partner of any director, officer or employee of the bank holding company or of any affiliate of the bank holding company,

    • (ii) beneficially owns or controls, directly or indirectly, a material interest in the shares of the bank holding company or of any affiliate of the bank holding company, or

    • (iii) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the bank holding company within the two years immediately preceding the firm’s proposed appointment as auditor of the bank holding company, other than an affiliate that is a subsidiary of the bank holding company acquired pursuant to section 934 or through a realization of security pursuant to section 935.

• Marginal note:Notice of designation

  (3) Within fifteen days after appointing a firm of accountants as auditor of a bank holding company, the bank holding company and the firm of accountants shall jointly designate a member of the firm who has the qualifications described in subsection (1) to conduct the audit of the bank holding company on behalf of the firm and the bank holding company shall forthwith notify the Superintendent in writing of the designation.

• Marginal note:New designation

  (4) Where for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the bank holding company, the bank holding company and the firm of accountants may jointly designate another member of the same firm of accountants who has the qualifications described in subsection (1) to conduct the audit of the bank holding company and the bank holding company shall forthwith notify the Superintendent in writing of the designation.

• Marginal note:Deemed vacancy

  (5) In any case where subsection (4) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit of the bank holding company, there shall be deemed to be a vacancy in the office of auditor of the bank holding company.

Marginal note:Duty to resign

• 848. (1) An auditor that ceases to be qualified under section 847 shall resign forthwith after any member of the firm becomes aware that the firm has ceased to be so qualified.

• Marginal note:Disqualification order

  (2) Any interested person may apply to a court for an order declaring that an auditor of a bank holding company has ceased to be qualified under section 847 and declaring the office of auditor to be vacant.

Marginal note:Revocation of appointment

• 849. (1) The shareholders of a bank holding company may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.

• Marginal note:Revocation of appointment

  (2) The Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 846(1) or section 851 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the bank holding company addressed to the usual place of business of the auditor and the bank holding company.

• Marginal note:Filling vacancy

  (3) A vacancy created by the revocation of the appointment of an auditor under subsection (1) may be filled at the meeting at which the appointment was revoked and, if not so filled, shall be filled by the directors under section 851.

Marginal note:Ceasing to hold office

• 850. (1) An auditor of a bank holding company ceases to hold office when

  • (a) the auditor resigns; or

  • (b) the appointment of the auditor is revoked by the shareholders or the Superintendent.

• Marginal note:Effective date of resignation

  (2) The resignation of an auditor becomes effective at the time a written resignation is sent to the bank holding company or at the time specified in the resignation, whichever is later.

Marginal note:Filling vacancy

• 851. (1) Subject to subsection 849(3), where a vacancy occurs in the office of auditor of a bank holding company, the directors shall forthwith fill the vacancy, and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.

• Marginal note:Where Superintendent may fill vacancy

  (2) Where the directors fail to fill a vacancy in accordance with subsection (1), the Superintendent may fill the vacancy and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.

• Marginal note:Designation of member of firm

  (3) Where the Superintendent has, pursuant to subsection (2), appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit of the bank holding company on behalf of the firm.

Marginal note:Right to attend meetings

• 852. (1) The auditor of a bank holding company is entitled to receive notice of every meeting of shareholders and, at the expense of the bank holding company, to attend and be heard thereat on matters relating to the duties of the auditor.

• Marginal note:Duty to attend meeting

  (2) If a director or shareholder of a bank holding company, whether or not the shareholder is entitled to vote at the meeting, gives written notice, not less than ten days before a meeting of shareholders, to an auditor or former auditor of the bank holding company that the director or shareholder wishes the auditor’s attendance at the meeting, the auditor or former auditor shall attend the meeting at the expense of the bank holding company and answer questions relating to the auditor’s or former auditor’s duties as auditor.

• Marginal note:Notice to bank holding company

  (3) A director or shareholder who gives notice under subsection (2) shall send concurrently a copy of the notice to the bank holding company and the bank holding company shall forthwith send a copy thereof to the Superintendent.

• Marginal note:Superintendent may attend

  (4) The Superintendent may attend and be heard at any meeting referred to in subsection (2).

Marginal note:Statement of auditor

• 853. (1) An auditor of a bank holding company that

  • (a) resigns,

  • (b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of revoking the appointment of the auditor, or

  • (c) receives a notice or otherwise learns of a meeting of directors or shareholders at which another firm of accountants is to be appointed in its stead, whether because of the auditor’s resignation or revocation of appointment or because the auditor’s term of office has expired or is about to expire,

  shall submit to the bank holding company and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.

• Marginal note:Statement to be sent to shareholders

  (2) Where a bank holding company receives a written statement referred to in subsection (1) that relates to a resignation as a result of a disagreement with the directors or officers of the bank holding company or that relates to a matter referred to in paragraph (1)(b) or (c), the bank holding company shall forthwith send a copy of the statement to each shareholder who is entitled to vote at the annual meeting of shareholders.

Marginal note:Duty of replacement auditor

• 854. (1) Where an auditor of a bank holding company has resigned or the appointment of an auditor has been revoked, no firm of accountants shall accept an appointment as auditor of the bank holding company or consent to be an auditor of the bank holding company until the firm of accountants has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.

• Marginal note:Exception

  (2) Notwithstanding subsection (1), a firm of accountants may accept an appointment or consent to be appointed as auditor of a bank holding company if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.

• Marginal note:Effect of non-compliance

  (3) Unless subsection (2) applies, an appointment as auditor of a bank holding company is void if subsection (1) has not been complied with.

Marginal note:Auditors’ examination

• 855. (1) The auditor of a bank holding company shall make such examination as the auditor considers necessary to enable the auditor to report on the annual statement and on other financial statements required by this Part to be placed before the shareholders, except such annual statements or parts thereof as relate to the period referred to in subparagraph 840(1)(a)(ii).

• Marginal note:Auditing standards

  (2) The examination of the auditor referred to in subsection (1) shall, except as otherwise specified by the Superintendent, be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants.

Marginal note:Right to information

• 856. (1) On the request of the auditor of a bank holding company, the present or former directors, officers, employees or agents of the bank holding company shall, to the extent that such persons are reasonably able to do so,

  • (a) permit access to such records, assets and security held by the bank holding company or any entity in which the bank holding company has a substantial investment, and

  • (b) provide such information and explanations

  as are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of the auditor of the bank holding company.

• Marginal note:Directors to provide information

  (2) On the request of the auditor of a bank holding company, the directors of the bank holding company shall, to the extent that they are reasonably able to do so,

  • (a) obtain from the present or former directors, officers, employees and agents of any entity in which the bank holding company has a substantial investment the information and explanations that such persons are reasonably able to provide and that are, in the opinion of the auditor, necessary to enable them to perform the duties of the auditor of the bank holding company; and

  • (b) provide the auditor with the information and explanations so obtained.

• Marginal note:No civil liability

  (3) A person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.

Marginal note:Auditor’s report and extended examination

• 857. (1) The Superintendent may, in writing, require that the auditor of a bank holding company report to the Superintendent on the extent of the procedures of the auditor in the examination of the annual statement and may, in writing, require that the auditor enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.

• Marginal note:Special examination

  (2) The Superintendent may, in writing, require that the auditor of a bank holding company make a particular examination to determine whether any procedures adopted by the bank holding company may be prejudicial to the interests of depositors, policyholders or creditors of any federal financial institution that is affiliated with the bank holding company, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent thereon.

• Marginal note:Special examination

  (3) The Superintendent may direct that a special audit of a bank holding company be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose a firm of accountants qualified pursuant to subsection 847(1) to be an auditor of the bank holding company.

• Marginal note:Expenses payable by bank holding company

  (4) The expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the bank holding company on being approved in writing by the Superintendent.

Marginal note:Auditor’s report

• 858. (1) The auditor shall, not less than twenty-one days before the date of the annual meeting of the shareholders of the bank holding company, make a report in writing to the shareholders on the annual statement referred to in subsection 840(1).

• Marginal note:Audit for shareholders

  (2) In each report required under subsection (1), the auditor shall state whether, in the opinion of the auditor, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 840(4), the financial position of the bank holding company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank holding company for that financial year.

• Marginal note:Auditor’s remarks

  (3) In each report referred to in subsection (2), the auditor shall include such remarks as the auditor considers necessary when

  • (a) the examination has not been made in accordance with the auditing standards referred to in subsection 855(2);

  • (b) the annual statement has not been prepared on a basis consistent with that of the preceding financial year; or

  • (c) the annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 840(4), the financial position of the bank holding company as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the bank holding company for that financial year.

Marginal note:Report on directors’ statement

• 859. (1) The auditor of a bank holding company shall, if required by the shareholders, audit and report to the shareholders on any financial statement submitted by the directors to the shareholders, and the report shall state whether, in the opinion of the auditor, the financial statement presents fairly the information required by the shareholders.

• Marginal note:Making of report

  (2) A report of the auditor made under subsection (1) shall be attached to the financial statement to which it relates and a copy of the statement and report shall be sent by the directors to every shareholder and to the Superintendent.

Marginal note:Auditor of subsidiaries

• 860. (1) A bank holding company shall take all necessary steps to ensure that each of its subsidiaries has as its auditor the auditor of the bank holding company.

• Marginal note:Subsidiary outside Canada

  (2) Subsection (1) applies in the case of a subsidiary that carries on its operations in a country other than Canada unless the laws of that country do not permit the appointment of an auditor of the bank holding company as the auditor of that subsidiary.

• Marginal note:Exception

  (3) Subsection (1) does not apply in respect of any particular subsidiary where the bank holding company, after having consulted its auditor, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the bank holding company.

Marginal note:Auditor’s attendance

• 861. (1) The auditor of a bank holding company is entitled to receive notice of every meeting of the audit committee of the bank holding company and, at the expense of the bank holding company, to attend and be heard at that meeting.

• Marginal note:Attendance

  (2) If so requested by a member of the audit committee, the auditor shall attend every meeting of the audit committee held during the member’s term of office.

Marginal note:Calling meeting

• 862. (1) The auditor of a bank holding company or a member of the audit committee may call a meeting of the audit committee.

• Marginal note:Right to interview

  (2) The chief internal auditor of a bank holding company or any officer or employee of the bank holding company acting in a similar capacity shall, at the request of the auditor of the bank holding company and on receipt of reasonable notice, meet with the auditor.

Marginal note:Notice of errors

• 863. (1) A director or an officer of a bank holding company shall forthwith notify the audit committee and the auditor of the bank holding company of any error or misstatement of which the director or officer becomes aware in an annual statement or other financial statement on which the auditor or any former auditor has reported.

• Marginal note:Error noted by auditor

  (2) If the auditor or former auditor of a bank holding company is notified or becomes aware of an error or misstatement in an annual statement or other financial statement on which the auditor reported and in the opinion of the auditor the error or misstatement is material, the auditor or former auditor shall inform each director of the bank holding company accordingly.

• Marginal note:Duty of directors

  (3) When under subsection (2) the auditor or former auditor of a bank holding company informs the directors of an error or misstatement in an annual statement or other financial statement, the directors shall

  • (a) prepare and issue a revised annual statement or financial statement; or

  • (b) otherwise inform the shareholders and the Superintendent of the error or misstatement.

Marginal note:Qualified privilege for statements

864. Any oral or written statement or report made under this Part by the auditor or former auditor of a bank holding company has qualified privilege.

Remedial Actions

Marginal note:Sections 334 to 338 apply

865. Sections 334 to 338 apply in respect of bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”; and

• (b) references to “this Act” in those sections are to be read as references to “this Part”.

Liquidation and Dissolution

Definition of “court”

866. For the purposes of subsections 346(1) and 347(1) and (2), sections 348 to 352, subsection 353(1), sections 355 and 357 to 359, subsections 363(3) and (4) and section 368, “court” means a court having jurisdiction in the place where the bank holding company has its head office.

Marginal note:Non-application of certain provisions

• 867. (1) Subsection (2) and sections 342 to 365, 368 and 868 do not apply to a bank holding company that is an insolvent person or a bankrupt as those terms are defined in subsection 2(1) of the Bankruptcy and Insolvency Act.

• Marginal note:Staying proceedings on insolvency

  (2) Any proceedings taken under this Division to dissolve or to liquidate and dissolve a bank holding company shall be stayed if the bank holding company is at any time found, in a proceeding under the Bankruptcy and Insolvency Act, to be an insolvent person as defined in subsection 2(1) of that Act.

• Marginal note:Winding-up and Restructuring Act does not apply

  (3) The Winding-up and Restructuring Act does not apply to a bank holding company.

Marginal note:Returns to Superintendent

868. A liquidator appointed under this Division to wind up the business of a bank holding company shall provide the Superintendent with such information relating to the business and affairs of the bank holding company in such form as the Superintendent requires.

Simple Liquidation

Marginal note:Sections 342 to 346 apply

869. Sections 342 to 346 apply in respect of bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”; and

• (b) the reference to “sections 143 and 144” in subsection 343(1) is to be read as a reference to “sections 732 and 733”.

Court-supervised Liquidation

Marginal note:Sections 347 to 360 apply

870. Sections 347 to 360 apply in respect of bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”;

• (b) the reference to “subsection 308(1)” in subsection 353(1) is to be read as a reference to “subsection 840(1)”; and

• (c) paragraph 354(a) is to be read without reference to “or auditors”.

General

Marginal note:Sections 361 to 365 and 368 apply

871. Sections 361 to 365 and 368 apply in respect of bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”;

• (b) references to “this Part” in those sections are to be read as references to “this Division”;

• (c) the reference to “section 632” in subsection 362(2) is to be read as a reference to “section 951”;

• (d) the reference to “section 366” in section 364 is to be read as a reference to “section 872”; and

• (e) the reference to “sections 366 and 367” in section 365 is to be read as a reference to “section 872”.

Marginal note:Unknown claimants

• 872. (1) On the dissolution of a bank holding company under this Act, the portion of the property distributable to a creditor or shareholder who cannot be found shall be converted into money and paid to the Receiver General.

• Marginal note:Constructive satisfaction

  (2) A payment under subsection (1) is deemed to be in satisfaction of a debt or claim of such creditor or shareholder.

• Marginal note:Recovery

  (3) If at any time a person establishes that he or she is entitled to any moneys paid to the Receiver General under this Act, the Receiver General shall pay an equivalent amount to him or her out of the Consolidated Revenue Fund.

Division 7Ownership

Constraints on Ownership

Marginal note:Sections 370 and 371 apply

873. Sections 370 and 371 apply in respect of bank holding companies, except that references to “bank” in section 371 are to read as references to “bank holding company”.

Marginal note:Significant interest

874. Except as permitted by this Division, no person shall have a significant interest in any class of shares of a bank holding company.

Marginal note:Acquisition of significant interest

• 875. (1) Subject to section 876, no person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of a bank holding company or purchase or otherwise acquire control of any entity that holds any share of a bank holding company if

  • (a) the acquisition would cause the person to have a significant interest in any class of shares of the bank holding company; or

  • (b) if the person has a significant interest in a class of shares of the bank holding company, the acquisition would increase the significant interest of the person in that class of shares.

• Marginal note:Amalgamation, etc., constitutes acquisition

  (2) If, as a result of an amalgamation, merger or reorganization, the entity that results would have a significant interest in a class of shares of a bank holding company, that entity is deemed to be acquiring a significant interest in that class of shares of the bank holding company through an acquisition for which the approval of the Minister is required.

Marginal note:Limitations on share holdings

• 876. (1) No person may be a major shareholder of a bank holding company with equity of five billion dollars or more.

• Marginal note:Exception — widely held bank

  (2) Subsection (1) does not apply to a widely held bank that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company with equity of five billion dollars or more if it controlled, within the meaning of those paragraphs, the bank holding company on the day the bank holding company’s equity reached five billion dollars and it has controlled, within the meaning of those paragraphs, the bank holding company since that day.

• Marginal note:Exception — widely held bank holding company

  (3) Subsection (1) does not apply to a widely held bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company with equity of five billion dollars or more if the widely held bank holding company controlled, within the meaning of those paragraphs, the bank holding company on the day the bank holding company’s equity reached five billion dollars and the widely held bank holding company has controlled, within the meaning of those paragraphs, the bank holding company since that day.

• Marginal note:Exception — insurance holding companies and certain institutions

  (4) Subsection (1) does not apply to any of the following that controls, within the meaning of paragraph 3(1)(d), the bank holding company with equity of five billion dollars or more if it controlled, within the meaning of that paragraph, the bank holding company on the day the bank holding company’s equity reached five billion dollars and it has controlled, within the meaning of that paragraph, the bank holding company since that day:

  • (a) a widely held insurance holding company;

  • (b) an eligible Canadian financial institution, other than a bank; or

  • (c) an eligible foreign institution.

• Marginal note:Exception — other entities

  (5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company with equity of five billion dollars or more if the entity is controlled, within the meaning of those paragraphs, by a widely held bank to which subsection (2) applies, or a widely held bank holding company to which subsection (3) applies, that controls the bank holding company.

• Marginal note:Exception — other entities

  (6) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the bank holding company with equity of five billion dollars or more if the entity is controlled, within the meaning of that paragraph, by

  • (a) a widely held insurance holding company to which subsection (4) applies that controls the bank holding company;

  • (b) an eligible Canadian financial institution, other than a bank, to which subsection (4) applies that controls the bank holding company; or

  • (c) an eligible foreign institution to which subsection (4) applies that controls the bank holding company.

Marginal note:Exception

• 877. (1) Despite section 876, if a bank holding company with equity of five billion dollars or more was formed as the result of an amalgamation, a person who is a major shareholder of the bank holding company on the effective date of the letters patent of amalgamation shall do all things necessary to ensure that the person is no longer a major shareholder of the bank holding company on the day that is one year after that day or on the day that is after any shorter period specified by the Minister.

• Marginal note:Exception — widely held banks and bank holding companies

  (2) Subsection (1) does not apply to a widely held bank or a widely held bank holding company that controlled, within the meaning of paragraphs 3(1)(a) and (d), one of the applicants for the letters patent of amalgamation and that has controlled, within the meaning of those paragraphs, the amalgamated bank holding company since the effective date of those letters patent.

• Marginal note:Exception — insurance holding companies and certain institutions

  (3) Subsection (1) does not apply to any of the following that controlled, within the meaning of paragraph 3(1)(d), one of the applicants for the letters patent of amalgamation if it has controlled, within the meaning of that paragraph, the amalgamated bank holding company since the effective date of those letters patent:

  • (a) a widely held insurance holding company;

  • (b) an eligible Canadian financial institution, other than a bank; or

  • (c) an eligible foreign institution.

• Marginal note:Exception — other entities

  (4) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the amalgamated bank holding company if the entity is controlled, within the meaning of those paragraphs, by a widely held bank or widely held bank holding company to which subsection (2) applies that controls the amalgamated bank holding company.

• Marginal note:Exception — other entities

  (5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the amalgamated bank holding company if the entity is controlled, within the meaning of that paragraph, by any of the following:

  • (a) a widely held insurance holding company to which subsection (3) applies that controls the amalgamated bank holding company;

  • (b) an eligible Canadian financial institution to which subsection (3) applies, other than a bank, that controls the amalgamated bank holding company; or

  • (c) an eligible foreign institution to which subsection (3) applies that controls the amalgamated bank holding company.

• Marginal note:Extension

  (6) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.

Marginal note:Limitation on share holdings

• 878. (1) If a person is a major shareholder of a bank holding company with equity of less than five billion dollars and the bank holding company’s equity reaches five billion dollars or more, the person shall do all things necessary to ensure that the person is not a major shareholder of the bank holding company on the day that is three years after the day the bank holding company’s equity reached five billion dollars.

• Marginal note:Exception

  (2) Subsection (1) does not apply if any of subsections 876(2) to (6) applies to the person in respect of the bank holding company.

• Marginal note:Extension

  (3) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.

Marginal note:Obligation of widely held bank holding company

• 879. (1) If a widely held bank holding company with equity of five billion dollars or more controls a bank and a person becomes a major shareholder of the bank or of any entity that also controls the bank, the widely held bank holding company must do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the bank or entity that controls it,

  • (a) the widely held bank holding company no longer controls the bank; or

  • (b) the bank or the entity that controls the bank does not have any major shareholder other than the widely held bank holding company or any entity that it controls.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of a bank with equity of less than two hundred and fifty million dollars, or any other prescribed amount.

• Marginal note:Extension

  (3) If general market conditions so warrant and the Minister is satisfied that the widely held bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Obligation of widely held bank holding company

• 879.1 (1) Despite subsection 879(1), if a widely held bank holding company with equity of five billion dollars or more controls a bank in respect of which that subsection does not apply by reason of subsection 879(2) and the equity of the bank reaches two hundred and fifty million dollars or more or any other amount that is prescribed and on the day the equity of the bank reaches two hundred and fifty million dollars or more or the prescribed amount, as the case may be, a person is a major shareholder of the bank or of any entity that also controls the bank, the widely held bank holding company must do all things necessary to ensure that, on the day that is three years after that day,

  • (a) the widely held bank holding company no longer controls the bank; or

  • (b) the bank or the entity that controls the bank does not have any major shareholder other than the widely held bank holding company or any entity that the widely held bank holding company controls.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the widely held bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Prohibition against significant interest

880. No person who has a significant interest in any class of shares of a widely held bank holding company with equity of five billion dollars or more may have a significant interest in any class of shares of a subsidiary of the widely held bank holding company that is a bank or a bank holding company.

Marginal note:Prohibition against significant interest

881. No person who has a significant interest in any class of shares of a bank holding company may have a significant interest in any class of shares of any widely held bank with equity of five billion dollars or more, or of any widely held bank holding company with equity of five billion dollars or more, that controls the bank holding company.

Marginal note:Prohibition against control

• 882. (1) No person shall control, within the meaning of paragraph 3(1)(d), a bank holding company with equity of five billion dollars or more.

• Marginal note:Exception — widely held bank

  (2) Subsection (1) does not apply if any of subsections 876(2) to (6) applies in respect of the person in respect of the bank holding company.

Marginal note:Restriction on control

883. No person shall, without the prior approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank holding company with equity of less than five billion dollars.

Marginal note:Deeming

884. A bank holding company with equity of less than five billion dollars that controls a bank to which subsection 378(1) applies is deemed, for the purposes of sections 156.09, 727, 876, 879, 879.1, 880, 881, 882, 888 and 890, subsection 891(2), section 893 and subsection 906(2), to be a bank holding company with equity of five billion dollars or more.

Marginal note:Prohibition

885. No person may control or be a major shareholder of a bank holding company if the person or an entity affiliated with the person

• (a) has control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in; or

• (b) engages in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in.

Marginal note:Prohibition

886. No person who controls a bank holding company or who is a major shareholder of a bank holding company, and no entity affiliated with that person, may

• (a) control or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in; or

• (b) engage in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in.

Marginal note:Constraint on registration

887. No bank holding company shall, unless the acquisition of the share has been approved by the Minister, record in its securities register a transfer or issue of any share of the bank holding company to any person or to any entity controlled by a person if

• (a) the transfer or issue of the share would cause the person to have a significant interest in any class of shares of the bank holding company; or

• (b) where the person has a significant interest in a class of shares of the bank holding company, the transfer or issue of the share would increase the significant interest of the person in that class of shares.

Marginal note:Exemption

888. On application by a bank holding company, other than a bank holding company with equity of five billion dollars or more, the Superintendent may exempt any class of non-voting shares of the bank holding company the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares of the bank holding company from the application of sections 875 and 887.

Marginal note:Exception for small holdings

889. Despite section 887, if, as a result of a transfer or issue of shares of a class of shares of a bank holding company to a person, the total number of shares of that class registered in the securities register of the bank holding company in the name of that person would not exceed five thousand and would not exceed 0.1 per cent of the outstanding shares of that class, the bank holding company is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the bank holding company as a result of that issue or transfer of shares.

Marginal note:When approval not required

• 890. (1) Despite sections 875 and 887, the approval of the Minister is not required in respect of a bank holding company with equity of less than five billion dollars if a person with a significant interest in a class of shares of the bank holding company, or an entity controlled by a person with a significant interest in a class of shares of the bank holding company, purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the bank holding company to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.

• Marginal note:Percentage

  (2) Subject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the bank holding company on the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister.

• Marginal note:When approval not required

  (3) If a person has a significant interest in a class of shares of a bank holding company and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of

  • (a) 5 percentage points in excess of the significant interest of the person in that class of shares of the bank holding company on the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister, and

  • (b) 10 percentage points in excess of the lowest significant interest of the person in that class of shares of the bank holding company at any time after the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister.

• Marginal note:Exception

  (4) Subsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection would

  • (a) result in the acquisition of control of the bank holding company by the person referred to in that subsection;

  • (b) if the person controls the bank holding company but the voting rights attached to the aggregate of any voting shares of the bank holding company beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company;

  • (c) result in the acquisition of a significant interest in a class of shares of the bank holding company by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; or

  • (d) result in an increase in a significant interest in a class of shares of the bank holding company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.

• Marginal note:Regulations

  (5) The Governor in Council may make regulations

  • (a) exempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the bank holding company by an entity controlled by the person; and

  • (b) exempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the bank holding company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.

Marginal note:When approval not required

• 891. (1) Despite sections 875 and 887, the approval of the Minister is not required if

  • (a) the Superintendent has, by order, directed the bank holding company to increase its capital and shares of the bank holding company are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or

  • (b) a person who controls, within the meaning of paragraph 3(1)(a), the bank holding company acquires additional shares of the bank holding company.

• Marginal note:Exception

  (2) Paragraph (1)(a) does not apply in respect of a bank holding company with equity of five billion dollars or more.

Marginal note:Pre-approval

892. For the purposes of sections 875 and 887, the Minister may approve

• (a) the purchase or other acquisition of any number or percentage of shares of a bank holding company that may be required in a particular transaction or series of transactions; or

• (b) the purchase or other acquisition of up to a specified number or percentage of shares of a bank holding company within a specified period.

Marginal note:Public holding requirement

• 893. (1) Every bank holding company with equity of one billion dollars or more but less than five billion dollars shall, from and after the day determined under this section in respect of that bank holding company, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company and that are

  • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

  • (b) shares none of which is beneficially owned by a person who is a major shareholder of the bank holding company in respect of the voting shares of the bank holding company or by any entity that is controlled by a person who is a major shareholder of the bank holding company in respect of such shares.

• Marginal note:Determination of day

  (2) The day referred to in subsection (1) is

  • (a) if the bank holding company had equity of one billion dollars or more but less than five billion dollars on the day the bank holding company was formed or came into existence, the day that is three years after that day; and

  • (b) in any other case, the day that is three years after the day of the first annual meeting of the shareholders of the bank holding company held after the equity of the bank holding company first reaches one billion dollars.

• Marginal note:Extension

  (3) If general market conditions so warrant and the Minister is satisfied that a bank holding company has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the bank holding company must comply with subsection (1).

Marginal note:Public holding requirement

894. If a bank holding company to which section 893 applies becomes a bank holding company with equity of five billion dollars or more, that section continues to apply to the bank holding company until no person is a major shareholder of the bank holding company, other than a person in respect of whom subsections 876(2) to (6) applies.

Marginal note:Limit on assets

• 895. (1) Unless an exemption order with respect to the bank holding company is granted under section 897, if a bank holding company fails to comply with section 893 in any month, the Minister may, by order, require the bank holding company not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the bank holding company’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.

• Marginal note:Average total assets

  (2) For the purposes of subsection (1), the average total assets of a bank holding company in a three month period is to be computed by adding the total assets of the bank holding company as calculated for the month end of each of the three months in the period and by dividing the sum by three.

• Definition of “total assets”

  (3) For the purposes of subsections (1) and (2), “total assets”, in respect of a bank holding company, has the meaning given that expression by the regulations.

Marginal note:Increase of capital

896. If the Superintendent has, by order, directed a bank holding company with equity of one billion dollars or more but less than five billion dollars to increase its capital and shares of the bank holding company are issued and acquired in accordance with any terms and conditions that may be specified in the order, section 893 does not apply in respect of the bank holding company until the time that the Superintendent may, by order, specify.

Marginal note:Exemption by order of the Minister

• 897. (1) On application by a bank holding company, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank holding company from the requirements of section 893, subject to any terms and conditions that the Minister considers appropriate.

• Marginal note:Compliance with section 893

  (2) If an exemption order granted under this section in respect of a bank holding company expires, the bank holding company shall comply with section 893 as of the day the exemption order expires.

• Marginal note:Limit on assets

  (3) If a bank holding company fails to comply with section 893 on the day referred to in subsection (2), the bank holding company shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding the bank holding company’s average total assets in the three month period ending on the last day of the month immediately before the day referred to in subsection (2) or any later day that the Minister may, by order, specify.

• Marginal note:Application of ss. 895(2) and (3)

  (4) Subsections 895(2) and (3) apply for the purposes of subsection (3).

Marginal note:Exception

• 898. (1) If a bank holding company fails to comply with section 893 as the result of any of the following, section 895 does not apply in respect of the bank holding company until the expiration of six months after the day it failed to comply with section 893:

  • (a) a distribution to the public of voting shares of the bank holding company;

  • (b) a redemption or purchase of voting shares of the bank holding company;

  • (c) the exercise of any option to acquire voting shares of the bank holding company; or

  • (d) the conversion of any convertible securities into voting shares of the bank holding company.

• Marginal note:Shares acquiring voting rights

  (2) If, as the result of an event that has occurred and is continuing, shares of a bank holding company acquire voting rights in such number as to cause the bank holding company to no longer be in compliance with section 893, section 895 does not apply in respect of that bank holding company until the expiration of six months after the day the bank holding company ceased to be in compliance with section 893 or any later day that the Minister may, by order, specify.

Marginal note:Acquisition of control permitted

• 899. (1) Subject to subsection (2) and sections 887 and 900, section 893 does not apply in respect of a bank holding company if a person acquires control of the bank holding company through the purchase or other acquisition of all or any number of the shares of the bank holding company by the person or by any entity controlled by the person.

• Marginal note:Undertaking required

  (2) Subsection (1) applies only if the person referred to in that subsection provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the bank holding company has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company and that are

  • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

  • (b) shares none of which is beneficially owned by a person who is a major shareholder of the bank holding company in respect of the voting shares of the bank holding company or by any entity that is controlled by a person who is a major shareholder of the bank holding company in respect such shares.

Marginal note:Application of section 893

900. At the expiration of the period for compliance with an undertaking referred to in subsection 899(2), section 893 shall apply in respect of the bank holding company to which the undertaking relates.

Marginal note:Restriction on voting rights

• 901. (1) If, with respect to any bank holding company, a particular person contravenes section 874, subsection 875(1), 876(1) or 878(1), section 880 or 881 or subsection 882(1) or section 883 or fails to comply with an undertaking referred to in subsection 899(2) or with any term or condition imposed under section 907, no person, and no entity controlled by the particular person, shall, in person or by proxy, exercise any voting rights

  • (a) that are attached to shares of the bank holding company beneficially owned by the particular person or any entity controlled by the particular person; or

  • (b) that are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.

• Marginal note:Subsection (1) ceases to apply

  (2) Subsection (1) shall cease to apply in respect of a person when, as the case may be,

  • (a) the shares to which the contravention relates have been disposed of;

  • (b) the person ceases to control the bank holding company within the meaning of paragraph 3(1)(d);

  • (c) if the person failed to comply with an undertaking referred to in subsection 899(2), the bank holding company complies with section 893; or

  • (d) if the person failed to comply with a term or condition imposed under section 907, the person complies with the term or condition.

• Marginal note:Saving

  (3) Despite subsection (1), if a person contravenes subsection 876(1) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the bank holding company beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the bank holding company, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the bank holding company beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.

Marginal note:Loss of control — bank and bank holding company

• 902. (1) Despite sections 876 and 882, a widely held bank or a widely held bank holding company may be a major shareholder of a bank holding company with equity of five billion dollars or more and cease to control, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank holding company on the expiration of the day specified in the agreement.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the bank or the bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Loss of control — other entities

• 903. (1) Despite sections 876 and 882, an eligible foreign institution, an eligible Canadian financial institution, other than a bank, or a widely held insurance holding company may be a major shareholder of a bank holding company with equity of five billion dollars or more and cease to control, within the meaning of paragraph 3(1)(d), the bank holding company if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank holding company on the expiration of the day specified in the agreement.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the institution or insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Change in status

• 904. (1) If a body corporate that is an eligible financial institution other than a bank controls, within the meaning of paragraph 3(1)(d), a bank holding company with equity of five billion dollars or more and the body corporate subsequently ceases to be an eligible financial institution, the body corporate must do all things necessary to ensure that, on the day that is one year after the day it ceased to be an eligible financial institution,

  • (a) it does not control, within the meaning of paragraph 3(1)(d), the bank holding company; and

  • (b) it is not a major shareholder of the bank holding company.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the body corporate has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Approval Process

Marginal note:Application for approval

• 905. (1) An application for an approval of the Minister required under this Division must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.

• Marginal note:Applicant

  (2) If, with respect to any particular transaction, this Division applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.

Marginal note:Matters for consideration

• 906. (1) Subject to subsection (2), if an application for an approval under section 875 is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, including

  • (a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support of any bank that is a subsidiary of the bank holding company;

  • (b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of any bank that is a subsidiary of the bank holding company;

  • (c) the business record and experience of the applicant or applicants;

  • (d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

  • (e) whether the bank holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

  • (f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank holding company and its affiliates on the conduct of those businesses and operations; and

  • (g) the best interests of the financial system in Canada.

• Marginal note:Exception

  (2) Subject to subsection 882(1), the Minister shall take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holding

  • (a) more than 10 per cent but no more than 20 per cent of any class of the outstanding voting shares of a widely held bank holding company with equity of five billion dollars or more; or

  • (b) more than 10 per cent but no more than 30 per cent of any class of the outstanding non-voting shares of such a bank holding company.

• Marginal note:Favourable treatment

  (3) The Minister shall not approve a transaction that would cause a bank holding company to become a subsidiary of a foreign bank within the meaning of any of paragraphs (a) to (f) of the definition “foreign bank” in section 2 that is a non-WTO Member foreign bank, unless the Minister is satisfied that treatment as favourable for bank holding companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.

Marginal note:Terms and conditions

907. The Minister may impose any terms and conditions in respect of an approval given under this Division that the Minister considers necessary to ensure compliance with any provision of this Act.

Marginal note:Certifying receipt of application

• 908. (1) If, in the opinion of the Superintendent, an application filed under this Division contains all the required information, the Superintendent shall without delay refer the application to the Minister and send a receipt to the applicant certifying the date on which the completed application was received by the Superintendent.

• Marginal note:Incomplete application

  (2) If, in the opinion of the Superintendent, an application filed under this Division is incomplete, the Superintendent shall send a notice to the applicant specifying the information required by the Superintendent to complete the application.

Marginal note:Notice of decision

• 909. (1) Subject to subsections (2) and (3) and 910(1), the Minister shall, within a period of thirty days after the certified date referred to in subsection 908(1), send to the applicant

  • (a) a notice approving the transaction to which the application relates; or

  • (b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

• Marginal note:Notice of decision

  (2) Subject to subsections (4) and 910(2), if an application involves the acquisition of control of a bank holding company, the Minister shall, within a period of forty-five days after the certified date referred to in subsection 908(1), send to the applicant

  • (a) a notice approving the transaction to which the application relates; or

  • (b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

• Marginal note:Extension of period for notice

  (3) If the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall,

  • (a) within that period, send a notice to that effect to the applicant; and

  • (b) within a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within any other further period that may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.

• Marginal note:Further extensions

  (4) If the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.

Marginal note:Reasonable opportunity to make representations

• 910. (1) If, after receipt of the notice referred to in paragraph 909(1)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of thirty days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

• Marginal note:Reasonable opportunity to make representations

  (2) If, after receipt of the notice referred to in paragraph 909(2)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of forty-five days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

Marginal note:Notice of decision

• 911. (1) Within a period of thirty days after the expiration of the period for making representations referred to in subsection 910(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

• Marginal note:Notice of decision

  (2) Within a period of forty-five days after the expiration of the period for making representations referred to in subsection 910(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

Marginal note:Deemed approval

912. If the Minister does not send a notice under subsection 909(1) or (3) or 911(1) within the period provided for in those subsections, the Minister is deemed to have approved the transaction to which the application relates.

Marginal note:Constraining registration: Crown and foreign governments

• 913. (1) No bank holding company shall record in its securities register a transfer or issue of any share of the bank holding company to

  • (a) Her Majesty in right of Canada or of a province or any agent or agency of Her Majesty in either of those rights; or

  • (b) the government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government.

• Marginal note:Exception

  (2) Despite subsection (1), a bank holding company may record in its securities register a transfer or issue of any share of the bank holding company to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country or any agent or agency of a foreign country if the bank holding company is a subsidiary of the foreign bank or foreign institution.

Marginal note:Suspension of voting rights held by governments

• 914. (1) Despite section 737, no person shall, in person or by proxy, exercise any voting rights attached to any share of a bank holding company that is beneficially owned by

  • (a) Her Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights; or

  • (b) the government of a foreign country or any political subdivision thereof, or any agency thereof.

• Marginal note:Exception

  (2) Subsection (1) does not apply to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country or any agent or agency of a foreign country and that has a significant interest in a class of shares of a bank holding company that is a subsidiary of the foreign bank or foreign institution.

Marginal note:Disposition of shareholdings

• 915. (1) If, with respect to any bank holding company, a person contravenes section 874 or subsection 875(1), 876(1) or 878(1) or section 880 or 881 or subsection 882(1) or section 883 or fails to comply with an undertaking referred to in subsection 899(2) or with any terms and conditions imposed under section 907, the Minister may, if the Minister deems it in the public interest to do so, by order, direct that person and any person controlled by that person to dispose of any number of shares of the bank holding company beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the person and the persons controlled by that person that is specified in the order.

• Marginal note:Representations

  (2) No direction shall be made under subsection (1) unless the Minister has provided each person to whom the direction relates and the bank holding company concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.

Marginal note:Appeal

916. Any person with respect to whom a direction has been made under subsection 915(1) may, within thirty days after the date of the direction, appeal the matter in accordance with section 977.

Marginal note:Application to court

• 917. (1) Where a person fails to comply with a direction made under subsection 915(1), an application on behalf of the Minister may be made to a court for an order to enforce the direction.

• Marginal note:Court order

  (2) A court may, on an application under subsection (1), make such order as the circumstances require to give effect to the terms of the direction and may, without limiting the generality of the foregoing, require the bank holding company concerned to sell the shares that are the subject-matter of the direction.

• Marginal note:Appeal

  (3) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.

Marginal note:Interest of securities underwriter

918. This Division does not apply to a securities underwriter in respect of shares of a body corporate or ownership interests in an unincorporated entity that are acquired by the underwriter in the course of a distribution to the public of those shares or ownership interests and that are held by the underwriter for a period of not more than six months.

Marginal note:Arrangements to effect compliance

• 919. (1) The directors of a bank holding company may make such arrangements as they deem necessary to carry out the intent of this Division and, in particular, but without limiting the generality of the foregoing, may

  • (a) require any person in whose name a share of the bank holding company is held to submit a declaration setting out

    • (i) the beneficial ownership of the share, and

    • (ii) such other information as the directors deem relevant for the purposes of this Division;

  • (b) require any person who wishes to have a transfer of a share registered in the name of, or to have a share issued to, that person to submit a declaration referred to in paragraph (a) as though the person were the holder of that share; and

  • (c) determine the circumstances in which a declaration referred to in paragraph (a) is to be required, the form of the declaration and the times at which it is to be submitted.

• Marginal note:Order of Superintendent

  (2) The Superintendent may, by order, direct a bank holding company to obtain from any person in whose name a share of the bank holding company is held a declaration setting out the name of every entity controlled by that person and containing information concerning

  • (a) the ownership or beneficial ownership of the share; and

  • (b) such other related matters as are specified by the Superintendent.

• Marginal note:Compliance required

  (3) As soon as possible after receipt by a bank holding company of a direction under subsection (2),

  • (a) the bank holding company shall comply with the direction; and

  • (b) every person who is requested by the bank holding company to provide a declaration containing information referred to in subsection (1) or (2) shall comply with the request.

• Marginal note:Outstanding declaration: effect

  (4) Where, pursuant to this section, a declaration is required to be submitted by a shareholder or other person in respect of the issue or transfer of any share, a bank holding company may refuse to issue the share or register the transfer unless the required declaration is submitted.

Marginal note:Reliance on information

920. A bank holding company and any person who is a director or an officer, employee or agent of the bank holding company may rely on any information contained in a declaration required by the directors pursuant to section 919 or on any information otherwise acquired in respect of any matter that might be the subject of such a declaration, and no action lies against the bank holding company or any such person for anything done or omitted to be done in good faith in reliance on any such information.

Marginal note:Competition Act

921. Nothing in, or done under the authority of, this Act affects the operation of the Competition Act.

Division 8Business and Powers

Marginal note:Main business

• 922. (1) Subject to this Part, a bank holding company shall not engage in or carry on any business other than

  • (a) acquiring, holding and administering investments that are permitted by this Part;

  • (b) providing management, advisory, financing, accounting, information processing and other prescribed services to entities in which it has a substantial investment; and

  • (c) any other prescribed business.

• Marginal note:Regulations

  (2) The Governor in Council may make regulations prescribing businesses or services for the purposes of subsection (1).

Marginal note:Restriction on guarantees

• 923. (1) A bank holding company shall not guarantee on behalf of any person the payment or repayment of any sum of money.

• Marginal note:Exception

  (2) Subsection (1) does not apply if

  • (a) the person on whose behalf the bank holding company has undertaken to guarantee the payment or repayment is a subsidiary of the bank holding company; and

  • (b) the subsidiary has an unqualified obligation to reimburse the bank holding company for the full amount of the payment or repayment to be guaranteed.

• Marginal note:Regulations

  (3) The Governor in Council may make regulations imposing terms and conditions in respect of guarantees permitted by this section.

Marginal note:Restriction on partnerships

• 924. (1) Except with the approval of the Superintendent, a bank holding company shall not be a general partner in a limited partnership or a partner in a general partnership.

• Meaning of “general partnership”

  (2) For the purposes of subsection (1), “general partnership” means any partnership other than a limited partnership.

Division 9Investments

Interpretation

Marginal note:Definitions

• 925. (1) The definitions in subsection 464(1) apply in respect of bank holding companies, except that the reference to “section 468” in the definition “permitted entity” is to be read as a reference to “section 930” and the reference to “bank” in that definition is to be read as a reference to “bank holding company”.

• Marginal note:Members of a bank holding company’s group

  (2) For the purpose of this Division, a member of a bank holding company’s group is any of the following:

  • (a) an entity referred to in any of paragraphs 930(1)(a) to (f) that controls the bank holding company;

  • (b) a subsidiary of the bank holding company or of an entity referred to in any of paragraphs 930(1)(a) to (f) that controls the bank holding company;

  • (c) an entity in which the bank holding company, or an entity referred to in any of paragraphs 930(1)(a) to (f) that controls the bank holding company, has a substantial investment; or

  • (d) a prescribed entity in relation to the bank holding company.

• Marginal note:Non-application of Division

  (3) This Division does not apply in respect of

  • (a) the holding of a security interest in real property, unless the security interest is prescribed under paragraph 941(a) to be an interest in real property; or

  • (b) the holding of a security interest in securities of an entity.

Investments

Marginal note:Investments

926. Subject to this Division, a bank holding company may invest its funds in the shares of or ownership interests in any entity or make any other investment that its directors consider necessary or advisable to manage the bank holding company’s liquidity.

General Constraints on Investments

Marginal note:Investment standards

927. The directors of a bank holding company shall establish and the bank holding company shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply to avoid undue risk of loss and obtain a reasonable return.

Marginal note:Restriction on control and substantial investments

• 928. (1) Subject to subsections (2) and (3), no bank holding company shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.

• Marginal note:Exception: indirect investments

  (2) A bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way of

  • (a) an acquisition of control of an entity referred to in any of paragraphs 930(1)(a) to (j), a specialized financing entity or a prescribed entity that controls or has a substantial investment in the entity; or

  • (b) an acquisition of shares or ownership interests in the entity by

    • (i) an entity referred to in any of paragraphs 930(1)(a) to (j), a specialized financing entity or a prescribed entity that is controlled by the bank holding company, or

    • (ii) an entity controlled by an entity referred to in any of paragraphs 930(1)(a) to (j), a specialized financing entity or a prescribed entity that is controlled by the bank holding company.

• Marginal note:Exception: temporary investments, realizations and loan workouts

  (3) A bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity by way of

  • (a) a temporary investment permitted by section 933;

  • (b) an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 934; or

  • (c) a realization of security permitted by section 935.

• Marginal note:Exception: uncontrolled event

  (4) A bank holding company is deemed not to contravene subsection (1) if the bank holding company acquires control of, or acquires or increases a substantial investment in, an entity solely as the result of an event not within the control of the bank holding company.

Marginal note:Regulations re limits

929. The Governor in Council may make regulations

• (a) respecting the determination of the amount or value of loans, investments and interests for the purposes of this Division;

• (b) respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by a bank holding company and its prescribed subsidiaries to or in a person and any persons connected with that person;

• (c) specifying the classes of persons who are connected with any person for the purposes of paragraph (b); and

• (d) prescribing terms and conditions under which a bank holding company may acquire control of, or acquire or increase a substantial investment in, a specialized financing entity.

Subsidiaries and Equity Investments

Marginal note:Permitted investments

• 930. (1) Subject to subsections (4) to (6), a bank holding company may acquire control of, or acquire or increase a substantial investment in

  • (a) a bank;

  • (b) a bank holding company;

  • (c) a body corporate to which the Trust and Loan Companies Act applies;

  • (d) an association to which the Cooperative Credit Associations Act applies;

  • (e) an insurance company or a fraternal benefit society incorporated or formed by or under the Insurance Companies Act;

  • (f) an insurance holding company;

  • (g) a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;

  • (h) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;

  • (i) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; or

  • (j) an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.

• Marginal note:Permitted investments

  (2) Subject to subsections (3) to (6), a bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:

  • (a) engaging in any financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d) or any other activity that a bank is permitted to engage in under section 410 or 411;

  • (b) acquiring or holding shares of, or ownership interests in, entities in which a bank holding company is permitted under this Division to hold or acquire;

  • (c) engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the bank holding company or any member of the bank holding company’s group:

    • (i) the bank holding company,

    • (ii) any member of the bank holding company’s group,

    • (iii) any entity that is primarily engaged in the business of providing financial services,

    • (iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or

    • (v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

  • (d) engaging in any activity that a bank is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to

    • (i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any member of the bank holding company’s group, or

    • (ii) if a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;

  • (e) engaging in the activities referred to in the definition “mutual fund entity”, “mutual fund distribution entity” or “real property brokerage entity” in subsection 464(1); and

  • (f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

• Marginal note:Restriction

  (3) A bank holding company may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include

  • (a) activities that a bank is not permitted to engage in under any of sections 412, 417 and 418;

  • (b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a bank under paragraph 409(2)(c);

  • (c) activities that a bank is not permitted to engage in under section 416 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;

  • (d) acquiring control of or acquiring or holding a substantial investment in another entity unless

    • (i) in the case of an entity that is controlled by the bank holding company, a bank would be permitted under Part IX to acquire a substantial investment in the other entity, or

    • (ii) in the case of an entity that is not controlled by the bank holding company, a bank would be permitted to acquire a substantial investment in the other entity under subsection 466(2), paragraph 466(3)(b) or (c) or subsection 466(4) or 468(1) or (2); or

  • (e) any prescribed activity.

• Marginal note:Control

  (4) Subject to subsection (8) and the regulations, a bank holding company may not acquire control of, or acquire or increase a substantial investment in,

  • (a) an entity referred to in paragraph (1)(a) or (b), unless

    • (i) the bank holding company controls, within the meaning of paragraphs 3(1)(a) and (d), the entity or would thereby acquire control, within the meaning of those paragraphs, of the entity, or

    • (ii) the bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment;

  • (b) an entity referred to in any of paragraphs (1)(c) to (j), unless

    • (i) the bank holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

    • (ii) the bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment;

  • (c) an entity whose business includes one or more of the activities referred to in paragraph (2)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the entity to material market or credit risk, including a finance entity, a factoring entity and a financial leasing entity, unless

    • (i) the bank holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

    • (ii) the bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment; or

  • (d) an entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unless

    • (i) the bank holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,

    • (ii) the bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment, or

    • (iii) subject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in any of paragraphs (a) to (c) or an entity that is not a permitted entity.

• Marginal note:Minister’s approval

  (5) Subject to the regulations, a bank holding company may not, without the prior written approval of the Minister,

  • (a) acquire control of an entity referred to in paragraphs (1)(g) to (i) from a person who is not a member of the bank holding company’s group;

  • (b) acquire control of an entity referred to in paragraph (1)(j) or (4)(c), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (f) that is not a member of the bank holding company’s group:

    • (i) a factoring entity, or

    • (ii) a financial leasing entity;

  • (c) acquire control of, or acquire or increase a substantial investment in, an entity whose business includes one or more of the activities referred to in paragraph (2)(d);

  • (d) acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 410(1)(c) or (c.1); or

  • (e) acquire control of, or acquire or increase a substantial investment in, an entity engaging in an activity prescribed for the purposes of paragraph (2)(f).

• Marginal note:Superintendent’s approval

  (6) Subject to subsection (7) and the regulations, a bank holding company may not acquire control of, or acquire or increase a substantial investment in, an entity referred to in any of paragraphs (1)(g) to (j) and (4)(c) and (d) unless the bank holding company obtains the approval of the Superintendent.

• Marginal note:Exception

  (7) Subsection (6) does not apply in respect of a particular transaction if

  • (a) the bank holding company is acquiring control of an entity whose business includes an activity referred to in paragraph (2)(b), other than a specialized financing entity;

  • (b) the bank holding company is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity; or

  • (c) the Minister has approved the transaction under subsection (5) or is deemed to have approved it under subsection 931(1).

• Marginal note:Control not required

  (8) A bank holding company need not control an entity referred to in paragraph (1)(j), or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province, if the laws or customary business practices of the country under the laws of which the entity was incorporated or formed do not permit the bank holding company to control the entity.

• Marginal note:Giving up control prohibited

  (9) A bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), an entity referred to in paragraph (1)(a) or (b) may not give up control, within the meaning of paragraph 3(1)(a) or (d), of the entity while continuing to control, within the meaning of the other paragraph, the entity.

• Marginal note:Prohibition on giving up control in fact

  (10) A bank holding company that, under paragraph (4)(b), (c) or (d), controls an entity may not, without the prior written approval of the Minister, give up control, within the meaning of paragraph 3(1)(d), of the entity while it continues to control the entity.

• Marginal note:Giving up control

  (11) A bank holding company that, under subsection (4), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity if

  • (a) the bank holding company is permitted to do so by regulations made under paragraph 936(c); or

  • (b) the entity meets the conditions referred to in subparagraph (4)(d)(iii).

• Marginal note:Subsections do not apply

  (12) If a bank holding company controls, within the meaning of paragraph 3(1)(a), (b) or (c), an entity, subsections (5) and (6) do not apply in respect of any subsequent increases by the bank holding company of its substantial investment in the entity so long as the bank holding company continues to control the entity.

Marginal note:Approval for indirect investments

• 931. (1) If a bank holding company obtains the approval of the Minister under subsection 930(5) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the bank holding company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 930(5) or the Superintendent under subsection 930(6) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the bank holding company is deemed to have obtained the approval of the Minister or the Superintendent for that indirect acquisition or increase.

• Marginal note:Approval for indirect investments

  (2) If a bank holding company obtains the approval of the Superintendent under subsection 930(6) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase the bank holding company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Superintendent under that subsection and that indirect acquisition or increase is disclosed to the Superintendent in writing before the approval is obtained, the bank holding company is deemed to have obtained the approval of the Superintendent for that indirect acquisition or increase.

Marginal note:Undertakings

• 932. (1) If a bank holding company controls a permitted entity, other than an entity referred to in any of paragraphs 930(1)(a) to (f), the bank holding company shall provide the Superintendent with any undertakings that the Superintendent may require regarding

  • (a) the activities of the entity; and

  • (b) access to information about the entity.

• Marginal note:Undertakings

  (2) If a bank holding company acquires control of an entity referred to in any of paragraphs 930(1)(g) to (j), the bank holding company shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.

• Marginal note:Agreements with other jurisdictions

  (3) The Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of any entity referred to in any of paragraphs 930(1)(g) to (j) in each province or in any other jurisdiction concerning any matters referred to in paragraphs (1)(a) and (b) or any other matter the Superintendent considers appropriate.

• Marginal note:Access to records

  (4) Despite any other provision of this Division, a bank holding company shall not control a permitted entity, other than an entity referred to in any of paragraphs 930(1)(a) to (f), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the bank holding company obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.

Exceptions and Exclusions

Marginal note:Temporary investments in entity

• 933. (1) Subject to subsection (3), a bank holding company may, by way of a temporary investment, acquire control of, or acquire or increase a substantial investment in, an entity but, within two years, or any other period that may be specified or approved by the Superintendent, after acquiring control or after acquiring or increasing the substantial investment, as the case may be, it shall do all things necessary to ensure that it no longer controls the entity or has a substantial investment in the entity.

• Marginal note:Extension

  (2) The Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of two years, or the other period specified or approved by the Superintendent, that is referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Temporary investment

  (3) If a bank holding company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Minister under subsection 930(5) is required, the bank holding company must, within 90 days after acquiring control or after acquiring or increasing the substantial investment,

  • (a) apply to the Minister for approval to retain control of the entity or to continue to hold the substantial investment in the entity for a period specified by the Minister or for an indeterminate period on any terms and conditions that the Minister considers appropriate; or

  • (b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the entity or does not have a substantial investment in the entity.

• Marginal note:Indeterminate extension

  (4) If a bank holding company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Superintendent under subsection 930(6) is required, the Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, permit the bank holding company to retain control of the entity or to continue to hold the substantial investment in the entity for an indeterminate period, on any terms and conditions that the Superintendent considers necessary.

Marginal note:Loan workouts

• 934. (1) Despite anything in this Division, if any subsidiary of a bank holding company has made a loan to an entity and, under the terms of the agreement between the subsidiary and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the bank holding company may acquire, through the subsidiary,

  • (a) a substantial investment in the entity to which the loan was made;

  • (b) a substantial investment in any entity that is an affiliate of the entity; or

  • (c) a substantial investment in an entity that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity to which the loan was made or any of the affiliates of that entity.

• Marginal note:Obligation of bank holding company

  (2) If a bank holding company acquires a substantial investment in an entity under subsection (1), the bank holding company shall, within five years after acquiring the substantial investment, cause the subsidiary that made the loan to do all things necessary to ensure that the bank holding company does not control the entity or have a substantial investment in the entity.

• Marginal note:Extension

  (3) The Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of five years referred to in subsection (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception — entities controlled by foreign governments

  (4) Despite anything in this Division, if a subsidiary of a bank holding company has made a loan to, or holds a debt obligation of, the government of a foreign country or an entity controlled by the government of a foreign country and, under the terms of the agreement between the subsidiary and that government or the entity, as the case may be, and any other documents governing the terms of the loan or debt obligation, a default has occurred, the bank holding company may acquire, through the subsidiary, a substantial investment in that entity or in any other entity designated by that government if the acquisition is part of a debt restructuring program of that government.

• Marginal note:Time for holding substantial investment

  (5) If a bank holding company acquires a substantial investment in any entity under subsection (4), the bank holding company may, on any terms and conditions that the Superintendent considers appropriate, continue to hold the substantial investment for an indeterminate period or for any other period that the Superintendent may specify.

• Marginal note:Exception

  (6) If, under subsection (1), a bank holding company acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 930, the bank holding company may retain control of the entity or continue to hold the substantial investment for an indeterminate period, if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2), including any extension of it granted under subsection (3).

Marginal note:Realizations

• 935. (1) Despite anything in this Part, a bank holding company may acquire control of, or a substantial investment in, an entity if the control or the substantial investment is acquired through the realization of a security interest held by a subsidiary of the bank holding company.

• Marginal note:Disposition

  (2) Subject to subsection 717(2), if a bank holding company acquires control of, or a substantial investment in, an entity by way of the realization of a security interest held by any of its subsidiaries, the bank holding company shall, within five years after the day on which control or the substantial investment is acquired, cause the subsidiary to do all things necessary to ensure that the bank holding company no longer controls the entity or has a substantial investment in the entity.

• Marginal note:Extension

  (3) The Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of five years referred to in subsection (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception

  (4) If, under subsection (1), a bank holding company acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 930, the bank holding company may retain control of the entity or continue to hold the substantial investment for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2), including any extension of it granted under subsection (3).

Marginal note:Regulations restricting ownership

936. The Governor in Council may make regulations

• (a) for the purposes of subsection 930(4), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which that subsection does not apply or the bank holding companies or other entities in respect of which that subsection does not apply, including prescribing bank holding companies or other entities on the basis of the activities they engage in;

• (b) for the purposes of subsection 930(5) or (6), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the bank holding companies or other entities in respect of which either of those subsections does not apply, including prescribing bank holding companies or other entities on the basis of the activities they engage in;

• (c) for the purposes of subsection 930(11), permitting a bank holding company to give up control of an entity; and

• (d) restricting the ownership by a bank holding company of shares of a body corporate or of ownership interests in an unincorporated entity under sections 930 to 935 and imposing terms and conditions applicable to bank holding companies that own such shares or interests.

Portfolio Limits

Marginal note:Exclusion from portfolio limits

• 937. (1) Subject to subsection (3), the value of all loans, investments and interests acquired by a bank holding company and any of its prescribed subsidiaries under section 934 or as a result of a realization of a security interest is not to be included in calculating the value of loans, investments and interests of the bank holding company and its prescribed subsidiaries under sections 938 to 940

  • (a) for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; and

  • (b) for a period of five years after the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.

• Marginal note:Extension

  (2) The Superintendent may, in the case of any particular bank holding company, extend any period referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception

  (3) Subsection (1) does not apply to an investment or interest described in that subsection if the investment or interest is defined by a regulation made under section 941 to be an interest in real property and

  • (a) the bank holding company or the subsidiary acquired the investment or interest as a result of the realization of a security interest securing a loan that was defined by a regulation made under section 941 to be an interest in real property; or

  • (b) the bank holding company or the subsidiary acquired the investment or interest under section 934 as a result of a default referred to in that section in respect of a loan that was defined by a regulation made under section 941 to be an interest in real property.

Real Property

Marginal note:Limit on total property interest

938. A bank holding company shall not, and shall not permit its prescribed subsidiaries to, purchase or otherwise acquire an interest in real property or make an improvement to any real property in which the bank holding company or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the bank holding company in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.

Equities

Marginal note:Limits on equity acquisitions

939. A bank holding company shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment, or

• (b) acquire control of an entity that holds shares or ownership interests referred to in paragraph (a),

if the aggregate value of

• (c) all participating shares, excluding participating shares of permitted entities in which the bank holding company has a substantial investment, and

• (d) all ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the bank holding company has a substantial investment,

beneficially owned by the bank holding company and its prescribed subsidiaries exceeds, or the purchase or acquisition would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.

Aggregate Limit

Marginal note:Aggregate limit

940. A bank holding company shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire

  • (i) participating shares of a body corporate, other than those of a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment,

  • (ii) ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment, or

  • (iii) interests in real property, or

• (b) make an improvement to real property in which the bank holding company or any of its prescribed subsidiaries has an interest

if the aggregate value of

• (c) all participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the bank holding company and its prescribed subsidiaries, and

• (d) all interests of the bank holding company in real property referred to in subparagraph (a)(iii)

exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.

Miscellaneous

Marginal note:Regulations

941. For the purposes of this Division, the Governor in Council may make regulations

• (a) defining the interests of a bank holding company in real property;

• (b) determining the method of valuing those interests; or

• (c) exempting classes of bank holding companies from the application of sections 937 to 940.

Marginal note:Divestment order

• 942. (1) The Superintendent may, by order, direct a bank holding company to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Division.

• Marginal note:Divestment order

  (2) If, in the opinion of the Superintendent,

  • (a) an investment by a bank holding company or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the bank holding company to control the body corporate or the unincorporated entity, or

  • (b) the bank holding company or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put before

    • (i) the board of directors of a body corporate, or

    • (ii) a similar group or committee of an unincorporated entity,

    or whereby no proposal may be approved except with the consent of the bank holding company, the entity it controls or the nominee,the Superintendent may, by order, require the bank holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank holding company no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).

• Marginal note:Divestment order

  (3) If

  • (a) a bank holding company

    • (i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 932(1), (2) or (4), or

    • (ii) is in default of an undertaking referred to in subsection 932(1) or (2) and the default is not remedied within ninety days after the day of receipt by the bank holding company of a notice from the Superintendent of the default, or

  • (b) a permitted entity referred to in subsection 932(4) is in default of an undertaking referred to in subsection 932(4) and the default is not remedied within ninety days after the day of receipt by the bank holding company of a notice from the Superintendent of the default,

  the Superintendent may, by order, require the bank holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank holding company no longer has a substantial investment in the entity to which the undertaking relates.

• Marginal note:Exception

  (4) Subsection (2) does not apply in respect of an entity in which a bank holding company has a substantial investment permitted by this Division.

Marginal note:Deemed temporary investment

943. If a bank holding company controls or has a substantial investment in an entity as permitted by this Division and the bank holding company becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 930(5) or (6), the bank holding company is deemed to have acquired, on the day the bank holding company becomes aware of the change, a temporary investment in respect of which section 933 applies.

Marginal note:Asset transactions

• 944. (1) A bank holding company shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person if

  A + B > C

  where

  A 

  is the value of the assets;

  B 

  is the total value of all assets that the bank holding company and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; and

  C 

  is ten per cent of the total value of the assets of the bank holding company, as shown in the last annual statement of the bank holding company prepared before the acquisition or transfer.

• Marginal note:Exception

  (2) The prohibition in subsection (1) does not apply in respect of

  • (a) assets that are debt obligations that are

    • (i) guaranteed by any financial institution,

    • (ii) fully secured by deposits with any financial institution, or

    • (iii) fully secured by debt obligations that are guaranteed by any financial institution;

  • (b) assets that are debt obligations issued

    • (i) by, or by any agency of,

      • (A) the Government of Canada,

      • (B) the government of a province,

      • (C) a municipality, or

      • (D) the government of a foreign country or any political subdivision of a foreign country, or

    • (ii) by a prescribed international agency;

  • (c) assets that are debt obligations that are guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in paragraph (b);

  • (d) assets that are debt obligations that are widely distributed, as that expression is defined by the regulations;

  • (e) assets that are debt obligations of an entity controlled by the bank holding company; or

  • (f) a transaction or series of transactions by a subsidiary of the bank holding company with a financial institution as a result of the subsidiary’s participation in one or more syndicated loans with that financial institution.

• Marginal note:Exception

  (3) The approval of the Superintendent is not required if

  • (a) the bank holding company or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Division 7 or subsection 930(5) is required or the approval of the Superintendent under subsection 930(6) is required; or

  • (b) the transaction has been approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act.

• Marginal note:Value of assets

  (4) For the purposes of “A” in subsection (1), the value of the assets is

  • (a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the bank holding company after the acquisition, the fair market value of the assets; and

  • (b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the bank holding company prepared before the transfer, or if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank holding company before the transfer, the value of the assets as stated in the annual statement.

• Marginal note:Total value of all assets

  (5) For the purposes of subsection (1), the total value of all assets that the bank holding company or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the bank holding company, the fair market value of the assets of the entity at the date of the acquisition.

• Marginal note:Total value of all assets

  (6) For the purposes of subsection (1), the total value of all assets that the bank holding company or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the bank holding company prepared before the transfer, or if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank holding company before the transfer, the value of the assets of the entity as stated in the annual statement.

Marginal note:Transitional

945. Nothing in this Division requires

• (a) the termination of a loan made before February 7, 2001;

• (b) the termination of a loan made after that date as a result of a commitment made before that date;

• (c) the disposal of an investment made before that date; or

• (d) the disposal of an investment made after that date as a result of a commitment made before that date.

But if the loan or investment would be precluded or limited by this Division, the amount of the loan or investment may not be increased after that date.

Marginal note:Saving

946. A loan or investment referred to in section 945 is deemed not to be prohibited by the provisions of this Division.

Meaning of “non-bank entity”

• 947. (1) Subject to subsection (2), for the purpose of section 948 “non-bank entity” means a Canadian entity, other than a bank, that is controlled by a bank holding company or in which a bank holding company has a substantial investment.

• Marginal note:Exception

  (2) A Canadian entity is not a non-bank entity by reason only that a subsidiary of a bank holding company that is a bank controls, or has a substantial investment in, the Canadian entity.

Marginal note:Prohibited activities

• 948. (1) A non-bank entity shall not, in Canada,

  • (a) engage in the business of accepting deposit liabilities; or

  • (b) represent to the public that any instrument issued by the non-bank entity is a deposit or that any liability incurred by the non-bank entity is a deposit.

• Marginal note:Disclosure of status

  (2) A non-bank entity that carries on as part of its business the provision of financial services shall not borrow money in Canada from the public without disclosing that

  • (a) the non-bank entity is not a member institution of the Canada Deposit Insurance Corporation;

  • (b) the liability incurred by the non-bank entity through the borrowing is not a deposit; and

  • (c) the non-bank entity is not regulated as a financial institution in Canada.

• Marginal note:Manner of disclosure

  (3) The disclosure shall be

  • (a) in a prospectus, information circular or other offering document related to the borrowing or in a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or

  • (b) in any other manner that may be prescribed.

• Marginal note:Exception for certain borrowings

  (4) Subsection (2) does not apply

  • (a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or

  • (b) except as may be provided in any regulations, to a borrowing

    • (i) from a person in an amount of $150,000 or more, or

    • (ii) through the issue of instruments in denominations of $150,000 or more.

• Marginal note:Exception

  (5) Subsections (1) and (2) do not apply if the non-bank entity is

  • (a) a trust or loan corporation incorporated under an Act of Parliament or of the legislature of a province;

  • (b) an entity referred to in paragraph 930(1)(d) or (h); or

  • (c) a prescribed entity.

• Marginal note:Exception

  (6) Subsection (2) does not apply if the non-bank entity is

  • (a) an insurance company incorporated under an Act of Parliament or of the legislature of a province;

  • (b) a bank holding company or an insurance holding company;

  • (c) an entity that is controlled by an insurance holding company or in which an insurance holding company has a substantial investment;

  • (d) a financial institution that is described in paragraph (g) of the definition “financial institution” in section 2; or

  • (e) a prescribed entity.

Division 10Adequacy of Capital and Liquidity

Marginal note:Adequacy of capital and liquidity

• 949. (1) A bank holding company shall, in relation to its business, maintain

  • (a) adequate capital, and

  • (b) adequate and appropriate forms of liquidity,

  and shall comply with any regulations in relation thereto.

• Marginal note:Regulations and guidelines

  (2) The Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by bank holding companies of adequate capital and adequate and appropriate forms of liquidity.

• Marginal note:Directives

  (3) Notwithstanding that a bank holding company is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the bank holding company

  • (a) to increase its capital; or

  • (b) to provide additional liquidity in such forms and amounts as the Superintendent may require.

• Marginal note:Compliance

  (4) A bank holding company shall comply with an order made under subsection (3) within such time as the Superintendent specifies therein.

Division 11Regulation of Bank Holding Companies

Supervision

Returns

Marginal note:Required information

950. A bank holding company shall provide the Superintendent with such information, at such times and in such form as the Superintendent may require.

Marginal note:Names of directors and auditor

• 951. (1) A bank holding company shall, within thirty days after each annual meeting of the bank holding company, provide the Superintendent with a return showing

  • (a) the name, residence and citizenship of each director holding office immediately following the meeting;

  • (b) the mailing address of each director holding office immediately following the meeting;

  • (c) the bodies corporate of which each director referred to in paragraph (a) is an officer or director and the firms of which each director is a member;

  • (d) the names of the directors referred to in paragraph (a) who are officers or employees of the bank holding company or any affiliate of the bank holding company, and the positions they occupy;

  • (e) the name of each committee of the bank holding company on which each director referred to in paragraph (a) serves;

  • (f) the date of expiration of the term of each director referred to in paragraph (a); and

  • (g) the name, address and date of appointment of the auditor of the bank holding company.

• Marginal note:Changes

  (2) Where

  • (a) any information relating to a director or an auditor of a bank holding company shown in the latest return made to the Superintendent under subsection (1), other than information referred to in paragraph (1)(c), becomes inaccurate or incomplete,

  • (b) a vacancy in the office of auditor of the bank holding company occurs or is filled by another person, or

  • (c) a vacancy on the board of directors of the bank holding company occurs or is filled,

  the bank holding company shall forthwith provide the Superintendent with such information as is required to maintain the return in a complete and accurate form.

Marginal note:Copy of by-laws

952. A bank holding company shall send to the Superintendent within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment.

Marginal note:Register of bank holding companies

• 953. (1) The Superintendent shall, in respect of each bank holding company, cause a register to be maintained containing a copy of

  • (a) the incorporating instrument of the bank holding company; and

  • (b) the information referred to in paragraphs 951(1)(a) and (c) to (g) contained in the latest return sent to the Superintendent pursuant to section 951.

• Marginal note:Form

  (2) The register may be maintained in

  • (a) a bound or loose-leaf form or in a photographic film form; or

  • (b) a system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

• Marginal note:Access

  (3) Persons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.

• Marginal note:Evidence

  (4) A statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent.

Marginal note:Production of information and documents

• 954. (1) The Superintendent may, by order, direct a person who controls a bank holding company or any entity that is affiliated with a bank holding company to provide the Superintendent with the information or documents that are specified in the order if the Superintendent believes that the production of the information or documents is necessary in order to

  • (a) determine whether the bank holding company is complying with the provisions of this Act; or

  • (b) ascertain the financial condition of the bank holding company.

• Marginal note:Time

  (2) Any person to whom a direction has been issued under subsection (1) shall provide the information or documents specified in the order within the time specified in the order and, where the order does not specify a time, the person shall provide the information or documents within a reasonable time.

• Marginal note:Exemption

  (3) Subsection (1) does not apply in respect of an entity that controls a bank holding company or is affiliated with a bank holding company where that entity is a financial institution regulated

  • (a) by or under an Act of Parliament; or

  • (b) by or under an Act of the legislature of a province where the Superintendent has entered into an agreement with the appropriate official or public body responsible for the supervision of financial institutions in that province concerning the sharing of information on such financial institutions.

Marginal note:Confidential information

• 955. (1) All information regarding the business or affairs of a bank holding company, or regarding a person dealing with a bank holding company, that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information, is confidential and shall be treated accordingly.

• Marginal note:Disclosure permitted

  (2) Nothing in subsection (1) prevents the Superintendent from disclosing any information

  • (a) to any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,

  • (b) to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,

  • (c) to the Canada Deposit Insurance Corporation or any compensation association designated by order of the Minister pursuant to subsection 449(1) of the Insurance Companies Act, for purposes related to its operation, and

  • (d) to the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions,

  if the Superintendent is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed.

Marginal note:Regulations

956. The Governor in Council may make regulations prohibiting, limiting or restricting the disclosure by bank holding companies of prescribed supervisory information.

Inspection of Bank Holding Companies

Marginal note:Examination of bank holding companies

• 957. (1) The Superintendent, from time to time, shall make or cause to be made any examination and inquiry into the business and affairs of each bank holding company that the Superintendent considers to be necessary or expedient to determine whether the bank holding company is complying with the provisions of this Act and to ascertain the financial condition of the bank holding company.

• Marginal note:Access to records of bank holding company

  (2) The Superintendent or a person acting under the Superintendent’s direction

  • (a) has a right of access to any records, cash, assets and security held by or on behalf of a bank holding company; and

  • (b) may require the directors, officers and the auditor of a bank holding company to provide information and explanations, to the extent that they are reasonably able to do so, in respect of the condition and affairs of the bank holding company or any entity in which the bank holding company has a substantial investment.

Marginal note:Power of Superintendent on inquiry

958. The Superintendent has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Superintendent’s direction.

Remedial Powers

Prudential Agreements

Marginal note:Prudential agreement

959. The Superintendent may enter into an agreement, called a “prudential agreement”, with a bank holding company for the purposes of implementing any measure designed to protect the interests of depositors, policyholders and creditors of any federal financial institution affiliated with it.

Directions of Compliance

Marginal note:Superintendent’s directions to bank holding company

• 960. (1) If, in the opinion of the Superintendent, a bank holding company, one of its affiliates or any person with respect to a bank holding company is committing, or is about to commit, an act — or is pursuing or is about to pursue a course of conduct — that may directly or indirectly be prejudicial to the interest of depositors, policyholders or creditors of a federal financial institution that is affiliated with the bank holding company, the Superintendent may direct the bank holding company to

  • (a) cease or refrain from committing the act or pursuing the course of conduct;

  • (b) cause the affiliate or person to cease or refrain from committing the act or pursuing the course of conduct, to the extent that the bank holding company is able to do so;

  • (c) perform any act that in the opinion of the Superintendent is necessary to remedy the situation or to minimize the prejudice; or

  • (d) cause the affiliate or person to perform any act that in the opinion of the Superintendent is necessary to remedy the situation or to minimize the prejudice, to the extent that the bank holding company is able to do so.

• Marginal note:Opportunity for representations

  (2) Subject to subsection (4), no direction shall be issued unless the bank holding company is provided with a reasonable opportunity to make representations in respect of the matter.

• Marginal note:Temporary direction

  (3) If, in the opinion of the Superintendent, the length of time required for representations to be made might be prejudicial to the public interest, the Superintendent may make a temporary direction with respect to the matters referred to in paragraphs (1)(a) to (d) having effect for a period of not more than fifteen days.

• Marginal note:Continued effect

  (4) A temporary direction made under subsection (3) continues to have effect after the expiration of the fifteen day period referred to in that subsection if no representations are made to the Superintendent within that period or, if representations have been made, the Superintendent notifies the bank holding company that the Superintendent is not satisfied that there are sufficient grounds for revoking the direction.

Marginal note:Court enforcement

• 961. (1) If a bank holding company is contravening or has failed to comply with a prudential agreement entered into under section 959 or a direction of the Superintendent issued to the bank holding company under section 960 or is contravening this Act or has omitted to do any thing under this Act that it is required to do, the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the bank holding company to comply with the prudential agreement or the direction, cease the contravention or do any thing that is required to be done, and on such application the court may so order and make any other order it thinks fit.

• Marginal note:Appeal

  (2) An appeal from a decision of a court under subsection (1) lies in the same manner, and to the same court, as an appeal from any other order of the court.

Disqualification and Removal of Directors or Senior Officers

Meaning of “senior officer”

962. In sections 963 and 964, “senior officer” means the chief executive officer, secretary, treasurer or controller of a bank holding company or any other officer reporting directly to the bank holding company’s board of directors or chief executive officer.

Marginal note:Application

• 963. (1) This section applies only in respect of a bank holding company

  • (a) that has been notified by the Superintendent that this section applies to it where the bank holding company is subject to measures designed to protect the interests of depositors, policyholders and creditors of any federal financial institution affiliated with it, which measures are contained in a prudential agreement entered into under section 959 or an undertaking given by the bank holding company to the Superintendent; or

  • (b) that is the subject of a direction made under section 960, or an order made under subsection 949(3).

• Marginal note:Information to be provided

  (2) A bank holding company shall provide the Superintendent with the name of

  • (a) each person who has been nominated for election or appointment as a member of its board of directors,

  • (b) each person who has been selected by the bank holding company for appointment as a senior officer, and

  • (c) each person who is newly elected as a director of the bank holding company at a meeting of shareholders and who was not proposed for election by anyone involved in the management of the bank holding company,

  together with such other information about the background, business record and experience of the person as the Superintendent may require.

• Marginal note:When information to be provided

  (3) The information required by subsection (2) shall be provided to the Superintendent

  • (a) at least 30 days prior to the date or proposed date of the election or appointment or within such shorter period as the Superintendent may allow; or

  • (b) in the case of a person referred to in paragraph (2)(c), within 15 days after the date of the election of the person.

• Marginal note:Disqualification or removal

  (4) If the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold that position, the Superintendent may, by order,

  • (a) in the case of a person referred to in paragraph (2)(a) or (b), disqualify the person from being elected or appointed as a director of a bank holding company or from being appointed as a senior officer; or

  • (b) in the case of a person referred to in paragraph (2)(c), remove the person from office as a director of the bank holding company.

• Marginal note:Risk of prejudice

  (4.1) In forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors, policyholders and creditors of any federal financial institution affiliated with the bank holding company would likely be prejudiced if the person were to take office or continue to hold office, as the case may be.

• Marginal note:Representations may be made

  (5) The Superintendent must in writing notify the person concerned and the bank holding company of any action that the Superintendent proposes to take under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

• Marginal note:Prohibition

  (6) Where an order has been made under subsection (4)

  • (a) disqualifying a person from being elected or appointed to a position, the person shall not be, and the bank holding company shall not permit the person to be, elected or appointed to the position; or

  • (b) removing a director from office, the person shall not continue to hold, and the bank holding company shall not permit the person to continue to hold, office as a director.

Marginal note:Removal of directors or senior officers

• 964. (1) The Superintendent may, by order, remove a person from office as a director or senior officer of a bank holding company if the Superintendent is of the opinion that the person is not suitable to hold that office

  • (a) on the basis of the competence, business record, experience, conduct or character of the person; or

  • (b) because the person has contravened or, by action or negligence, has contributed to the contravention of

    • (i) this Act or the regulations made under it,

    • (ii) a direction made under section 960,

    • (iii) an order made under subsection 949(3), or

    • (iv) a prudential agreement entered into under section 959 or an undertaking given by the bank holding company to the Superintendent.

• Marginal note:Risk of prejudice

  (2) In forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors, policyholders and creditors of any federal financial institution affiliated with the bank holding company have been or are likely to be prejudiced by the person’s holding office as a director or senior officer.

• Marginal note:Representations may be made

  (3) The Superintendent must in writing notify the person concerned and the bank holding company of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

• Marginal note:Suspension

  (4) If the Superintendent is of the opinion that the public interest may be prejudiced by the director or senior officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the director or senior officer. The suspension may not extend beyond 10 days after the expiration of that period.

• Marginal note:Notice of order

  (5) The Superintendent shall, without delay, notify the director or senior officer, as the case may be, and the bank holding company of a removal order or suspension order.

• Marginal note:Consequences of removal order

  (6) The director or senior officer, as the case may be, ceases to hold that office as of the date the removal order is made or any later date specified in the order.

• Marginal note:Appeal

  (7) The director or senior officer, as the case may be, or the bank holding company may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.

• Marginal note:Powers of Federal Court

  (8) The Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.

• Marginal note:Order not stayed by appeal

  (9) A removal order is not stayed by an appeal.

PART XVIADMINISTRATION

Notices and Other Documents

Marginal note:Notice to directors and shareholders

965. A notice or document required by this Act or the regulations or by the incorporating instrument or by-laws of a bank or a bank holding company to be sent to a shareholder or director of the bank or bank holding company may be sent by prepaid mail addressed to, or may be delivered personally to,

• (a) the shareholder at the shareholder’s latest address as shown in the records of the bank or bank holding company, or its transfer agent; and

• (b) the director at the director’s latest address as shown in the records of the bank or bank holding company, or in the latest return made under section 632 or 951.

Marginal note:Presumption from return

966. A director named in the latest return sent by a bank or a bank holding company to the Superintendent under section 632 or 951 is presumed for the purposes of this Act to be a director of the bank or bank holding company referred to in the return.

Marginal note:Presumption of receipt

• 967. (1) A notice or document sent by mail in accordance with section 965 to a shareholder or director is deemed to be received by the shareholder or director at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that the shareholder or director did not receive the notice or document at that time or at all.

• Marginal note:Undelivered notices

  (2) If a bank or a bank holding company sends a notice or document to a shareholder in accordance with section 965 and the notice or document is returned on three consecutive occasions because the shareholder cannot be found, the bank or bank holding company is not required to send any further notices or documents to the shareholder until informed in writing of the shareholder’s new address.

Marginal note:Service on a bank, bank holding company or authorized foreign bank

968. A notice or document required by this Act to be sent to or served on a bank, a bank holding company or an authorized foreign bank may be sent by registered mail to the head office of the bank or bank holding company, or to the principal office of the authorized foreign bank, as the case may be, and, if sent, is deemed to be received or served at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that the bank, bank holding company or authorized foreign bank did not receive it at that time or at all.

Marginal note:Certificate

• 969. (1) A certificate issued on behalf of a bank or a bank holding company stating any fact that is set out in the incorporating instrument, the by-laws, the minutes of the meetings of the directors, a committee of directors or the shareholders, or in a contract to which the bank or bank holding company is a party, may be signed by a director or an officer of the bank or bank holding company.

• Marginal note:Proof of certain cases

  (2) When introduced as evidence in any civil, criminal or administrative action or proceeding, the following are, in the absence of evidence to the contrary, proof of the facts so certified without proof of the signature or official character of the person appearing to have signed the certificate:

  • (a) a fact stated in a certificate referred to in subsection (1);

  • (b) a certified extract from a securities register of a bank or a bank holding company; or

  • (c) a certified copy of, or an extract from, minutes of a meeting of shareholders, directors or a committee of directors of a bank or a bank holding company.

Marginal note:Entry in securities register

970. An entry in the securities register of, or on a security certificate issued by, a bank or a bank holding company is evidence that the person in whose name the security is registered is the owner of the securities described in the register or in the certificate.

Marginal note:Verification of documents or fact

• 971. (1) The Superintendent may require that a document or a fact stated in a document that is required by or under this Act to be sent to the Superintendent or to the Minister be verified in accordance with subsection (2).

• Marginal note:Form of proof

  (2) A document or fact required by this Act or by the Superintendent to be verified may be verified by affidavit made under oath or by statutory declaration under the Canada Evidence Act before any commissioner for oaths or for taking affidavits.

Marginal note:Alternative means of publication

• 972. (1) Anything that is required by a provision of this Act to be published in the Canada Gazette or to be published in any other way may, instead of being published in that way, be published in any manner that may be prescribed for the purpose of that provision.

• Marginal note:Alternative means of publishing summaries

  (2) Anything that is required by a provision of this Act to be summarized in a publication may instead be summarized and published in any manner that may be prescribed for the purpose of that provision.

• Marginal note:Publication conditions

  (3) Any condition under a provision of this Act that something be published in the Canada Gazette or in any other way is satisfied if that thing is published instead in any manner that may be prescribed for the purpose of that provision.

• Marginal note:Other consequences

  (4) If a provision of this Act provides for consequences to follow the publication of something in the Canada Gazette or in any other manner, the same consequences follow the publication of that thing in any other manner that may be prescribed for the purpose of that provision.

Approvals — Terms, Conditions and Undertakings

Definition of “approval”

• 973. (1) In this section, “approval” includes any consent, order, exemption, extension or other permission granted by the Minister or the Superintendent under this Act, and includes the issuance of letters patent.

• Marginal note:Minister — terms, conditions and undertakings

  (2) In addition to any other action that may be taken under this Act, the Minister may, in granting an approval, impose such terms and conditions or require such undertaking as the Minister considers necessary, including any terms, conditions or undertaking specified by the Superintendent to maintain or improve the safety and soundness of any financial institution regulated under an Act of Parliament and to which the approval relates or that may be affected by it.

• Marginal note:Superintendent — terms, conditions and undertakings

  (3) In addition to any other action that may be taken under this Act, the Superintendent may, in granting an approval, impose such terms and conditions or require such undertaking as the Superintendent considers necessary.

• Marginal note:Effect of non-compliance on approval

  (4) Unless otherwise expressly provided in this Act, a failure to comply with a term or condition or an undertaking imposed or required under any provision of this Act does not invalidate the approval to which the term, condition or undertaking relates.

• Marginal note:Non-compliance

  (5) In addition to any other action that may be taken under this Act, in the case of non-compliance by a person with a term, condition or undertaking imposed or required under any provision of this Act, the Minister or the Superintendent, as the case may be, may

  • (a) revoke, suspend or amend the approval to which the term, condition or undertaking relates; or

  • (b) apply to a court for an order directing the person to comply with the term, condition or undertaking, and on such application the court may so order and make any other order it thinks fit.

• Marginal note:Representations

  (6) Before taking any action under subsection (5), the Minister or the Superintendent, as the case may be, shall afford the person concerned a reasonable opportunity to make representations.

• Marginal note:Revocation, suspension or amendment

  (7) At the request of the person concerned, the Minister or the Superintendent, as the case may be, may revoke, suspend or amend any terms or conditions imposed by him or her or may revoke or suspend an undertaking given to him or her or approve its amendment.

Short-term Exemption Order

Marginal note:Short-term exemption order

• 973.1 (1) Despite sections 378.1 and 378.2, paragraph 522.32(2)(b), subsection 522.32(4), paragraphs 522.32(7)(c) and (d) and sections 524.1, 524.2, 885 and 886, the Minister may, by order, provide that any of those provisions do not apply in respect of a person specified in the order for a period of up to twelve months, subject to any terms and conditions that the Minister considers appropriate.

• Marginal note:Restriction

  (2) If section 516 or 517 applies in respect of a foreign bank or an entity associated with a foreign bank, the Minister may only make an order under subsection (1) to the extent that the aggregate of the period that applied under that section and the period specified in the order under subsection (1) does not exceed twelve months.

Orders and Directives

Marginal note:Not statutory instruments

974. An instrument issued or made under this Act and directed to a single bank, bank holding company, authorized foreign bank or person, other than an order referred to in section 499, is not a statutory instrument for the purposes of the Statutory Instruments Act.

Marginal note:Form

975. The Superintendent may, by order, establish the form of any application to be made to the Minister or the Superintendent under this Act.

Applications to Superintendent

Marginal note:Content of applications

• 976. (1) The following applications to the Superintendent must contain the information, material and evidence that the Superintendent may require:

  • (a) applications for approval under subsection 65(1), 72(2), 75(4), 79(5), 80(1), 170(1), 217(3), 421(1), 468(6) or (11), 471(1) or (2) or 482(1), subparagraph 487(2)(a)(vi), section 490 or subsection 494(3) or (4), 495.3(1), 553.1(1), 709(1), 716(2), 718(4), 723(1), 758(1), 924(1), 930(6) or (11), 933(1) or 944(1);

  • (b) applications for consent under subsection 71(1) or 715(1);

  • (c) applications for exemptions under subsection 156.05(3), 245(1) or 822(1); and

  • (d) applications for extensions of time under subsection 471(3) or (5), 472(4), 473(4), 933(2) or (4), 934(3) or 935(3).

• Marginal note:Receipt

  (2) Without delay after receiving the application, the Superintendent shall send a receipt to the applicant certifying the date on which it was received.

• Marginal note:Notice of decision to applicant

  (3) Subject to subsection (4), the Superintendent shall, within a period of thirty days after the receipt of the application, send to the applicant

  • (a) a notice approving the application, subject to any terms and conditions that the Superintendent considers appropriate; or

  • (b) if the Superintendent is not satisfied that it should be approved, a notice to that effect.

• Marginal note:Extension of period

  (4) If the Superintendent is unable to complete the consideration of the application within the period referred to in subsection (3), the Superintendent shall, within that period, send a notice to the applicant informing the applicant that the Superintendent has extended the period for a further period set out in the notice.

• Marginal note:Deemed approval

  (5) If the applicant does not receive the notice required by subsection (3) and, where applicable, subsection (4), within the required period, the Superintendent is deemed to have approved the application and granted the approval, consent, extension or exemption to which the application relates, regardless of whether the approval, consent, extension or exemption is to be in writing or not.

Appeals

Marginal note:Appeal to Federal Court

• 977. (1) An appeal lies to the Federal Court from any direction of the Minister made under subsection 402(1) or 915(1).

• Marginal note:Powers

  (2) The Federal Court may, in an appeal under subsection (1),

  • (a) dismiss the appeal;

  • (b) set aside the direction or decision; or

  • (c) set aside the direction or decision and refer the matter back for re-determination.

• Marginal note:Certificate

  (3) For the purposes of an appeal under subsection (1), the Minister shall, at the request of the bank, bank holding company or person making the appeal, provide the bank, bank holding company or person with a certificate in writing setting out the direction or decision appealed from and the reasons why the direction or decision was made.

Regulations

Marginal note:Power to make regulations

978. The Governor in Council may make regulations

• (a) prescribing anything that is required or authorized by this Act to be prescribed;

• (b) prescribing the way in which anything that is required or authorized by this Act to be prescribed is to be determined;

• (c) respecting, for any purpose of any provision of the Act, the determination of the equity of a bank or a bank holding company;

• (d) defining words and expressions to be defined for the purposes of this Act;

• (e) requiring the payment of a fee in respect of the filing, examining or issuing of any document or in respect of any action that the Superintendent is required or authorized to take under this Act, and fixing the amount of the fee or the manner of determining its amount;

• (f) respecting the regulatory capital and total assets of a bank or a bank holding company;

• (g) respecting the retention, in Canada, of assets of a bank or a bank holding company;

• (h) respecting the value of assets of a bank or a bank holding company to be held in Canada and the manner in which those assets are to be held;

• (i) respecting the protection and maintenance of assets of a bank or a bank holding company, including regulations respecting the bonding of directors, officers and employees of a bank or a bank holding company;

• (j) respecting the holding of shares and ownership interests for the purposes of sections 70, 74 and 714;

• (k) respecting information, in addition to the information required by section 634 or 953, to be maintained in the register referred to in that section; and

• (l) generally for carrying out the purposes and provisions of this Act.

Delegation

Marginal note:Delegation

979. The Minister may delegate any of the Minister’s powers, duties and functions under this Act to any Minister of State appointed under the Ministries and Ministers of State Act to assist the Minister.

PART XVIISANCTIONS

Marginal note:Offence

980. Every person who, without reasonable cause, contravenes any provision of this Act or the regulations is guilty of an offence.

Marginal note:Undue preference to creditor

981. Every director, officer or employee of a bank or an authorized foreign bank who wilfully gives or concurs in giving to any creditor of the bank or authorized foreign bank any fraudulent, undue or unfair preference over other creditors, by giving security to the creditor, by changing the nature of the creditor’s claim or otherwise, is guilty of an offence.

Marginal note:Failure to provide information

982. Every person who, without reasonable cause, refuses or fails to comply with a requirement made under paragraph 643(2)(b) or 957(2)(b) is guilty of an offence.

Marginal note:Use of name

• 983. (1) Except to the extent permitted by the regulations, every person who uses the name of a bank or of a bank holding company in a prospectus, offering memorandum, takeover bid circular, advertisement for a transaction related to securities or in any other document in connection with a transaction related to securities is guilty of an offence.

• Marginal note:Unauthorized use of title “bank”, etc.

  (2) Subject to the regulations and subsections (4) to (6.1) and (10) to (12), every entity that acquires, adopts or retains a name that, in any language, includes the word “bank”, “banker” or “banking”, either alone or in combination with other words, or any word or words of import equivalent thereto, and every person who, in any language, uses the word “bank”, “banker” or “banking”, either alone or in combination with other words, or any word or words of import equivalent thereto, to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.

• Marginal note:Unauthorized use of the name of a bank holding company

  (3) Subject to the regulations and subsections (7) to (9.1), every entity that acquires, adopts or retains, in any language, the name of a bank holding company and every person who, in any language, uses the name of a bank holding company to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.

• Marginal note:Permitted use

  (4) No person commits an offence who uses the word “bank”, “banker” or “banking”

  • (a) in relation to a business that is not engaged in financial activities, unless the business is carried out by a prescribed entity;

  • (b) in a description of the corporate relationship of an entity controlled by a bank to that bank;

  • (b.1) with the approval of the Minister and subject to terms and conditions that the Minister may impose, in a description of the corporate relationship of an entity in which a bank has a substantial investment to that bank;

  • (b.2) in a description of the corporate relationship of an entity controlled by a bank holding company to that bank holding company;

  • (b.3) with the approval of the Minister and subject to terms and conditions that the Minister may impose, in a description of the corporate relationship of an entity in which a bank holding company has a substantial investment to that bank holding company;

  • (c) in an advertisement in Canada by or on behalf of a foreign bank in respect of its facilities outside Canada;

  • (d) in the identification of representative offices of a foreign bank in Canada;

  • (e) in relation to the business in Canada of an authorized foreign bank;

  • (f) in a description made in accordance with the regulations of the corporate relationship of a bank or a bank holding company with a foreign bank or an entity associated with a foreign bank within the meaning of section 507 that controls the bank or bank holding company;

  • (g) in a description made in accordance with the regulations of the corporate relationship of a prescribed Canadian entity with a foreign bank or an entity associated with a foreign bank within the meaning of section 507;

  • (h) in a description made in accordance with the regulations of the corporate relationship of a prescribed entity associated with a foreign bank within the meaning of section 507 with the foreign bank or with another prescribed entity;

  • (i) in the identification of a body corporate that was a non-bank affiliate of a foreign bank within the meaning of subsection 303(1) of the Bank Act, being chapter B-1 of the Revised Statutes of Canada, 1985, at any time before June 1, 1981;

  • (j) in the identification of a Canadian financial institution that

    • (i) was controlled by a bank that was a subsidiary of a foreign bank before June 15, 1997 but that has ceased to be so controlled,

    • (ii) is controlled by a foreign bank that, before June 15, 1997, controlled the subsidiary, and

    • (iii) used, before June 15, 1997, the word “bank”, “banker” or “banking” to identify itself; or

  • (k) in the identification of a bank holding company.

• Marginal note:Permitted use

  (5) No subsidiary of a bank commits an offence by reason only that it uses the name of the bank of which it is a subsidiary in its corporate name or a name under which it carries on business or by reason only that it uses any identifying mark, logogram or insignia of that bank in carrying on its business.

• Marginal note:Permitted use

  (5.1) No entity in which a bank has a substantial investment commits an offence by reason only that it uses the name of the bank in its corporate name or a name under which it carries on business or by reason only that it uses any identifying mark, logogram or insignia of that bank in carrying on its business if it does so with the approval of the Minister and subject to terms and conditions that the Minister may impose.

• Marginal note:Permitted use

  (6) No financial institution that was controlled by a bank on June 25, 1999 and that had a name that included the word “bank”, “banker” or “banking” on that day commits an offence by reason only that it uses that word in its name or in a name under which it carries on business if the financial institution is a subsidiary of a bank holding company that controls the bank.

• Marginal note:Permitted use

  (6.1) No financial institution in which a bank had a substantial investment on June 25, 1999 and that had a name that included the word “bank”, “banker” or “banking” on that day commits an offence by reason only that it uses that word in its name or in a name under which it carries on business if the financial institution is an entity in which the bank or a bank holding company that controls the bank has a substantial investment and the financial institution uses that word with the approval of the Minister and subject to terms and conditions that the Minister may impose.

• Marginal note:Permitted use

  (7) No subsidiary of a bank holding company commits an offence by reason only that it uses the name of the bank holding company in the subsidiary’s corporate name or in a name under which it carries on business, so long as, if the subsidiary is not a bank or a subsidiary of the bank, it does not use the word “bank”, “banker” or banking” in its corporate name or in a name under which it carries on business.

• Marginal note:Permitted use

  (7.1) No entity in which a bank holding company has a substantial investment commits an offence by reason only that it uses the name of the bank holding company in its corporate name or in a name under which it carries on business, so long as

  • (a) it uses that name with the approval of the Minister and subject to terms and conditions that the Minister may impose; and

  • (b) if the entity is not any of the following, it does not use the word “bank”, “banker” or “banking” in its corporate name or in a name under which it carries on business:

    • (i) a bank,

    • (ii) a subsidiary of a bank, and

    • (iii) an entity that has received an approval under subsection (5.1).

• Marginal note:Permitted use

  (8) No subsidiary of a bank holding company commits an offence by reason only that it uses any identifying mark, logogram or insignia of the bank holding company in carrying on the subsidiary’s business, so long as, if the subsidiary is not a bank or a subsidiary of the bank, it does not use any identifying mark, logogram or insignia that includes the word “bank”, “banker” or “banking”.

• Marginal note:Permitted use

  (8.1) No entity in which a bank holding company has a substantial investment commits an offence by reason only that it uses any identifying mark, logogram or insignia of the bank holding company in carrying on its business, so long as

  • (a) it does so with the approval of the Minister and subject to terms and conditions that the Minister may impose; and

  • (b) if the entity is not any of the following, it does not use any identifying mark, logogram or insignia that includes the word “bank”, “banker” or “banking”:

    • (i) a bank,

    • (ii) a subsidiary of a bank, and

    • (iii) an entity that has received an approval under subsection (5.1).

• Marginal note:Permitted use

  (9) No subsidiary of a bank holding company commits an offence by reason only that it uses the name of the bank holding company in a description of its corporate relationship to the bank holding company.

• Marginal note:Permitted use

  (9.1) No entity in which a bank holding company has a substantial investment commits an offence by reason only that it uses the name of the bank holding company in a description of its corporate relationship to the bank holding company if it does so with the approval of the Minister and subject to terms and conditions that the Minister may impose.

• Marginal note:Permitted use

  (10) No Canadian entity that is an entity associated with a foreign bank within the meaning of section 507 commits an offence by reason only that it uses the name of the foreign bank or any identifying mark, logogram or insignia of the foreign bank or the name of a prescribed entity associated with a foreign bank within the meaning of section 507 or any identifying mark, logogram or insignia of any such entity, so long as it does not use, in any language, the word “bank”, “banker” or “banking” and so long as

  • (a) it does so with the approval of the Minister and subject to terms and conditions that the Minister may impose; or

  • (b) it does so in prescribed circumstances and in accordance with prescribed terms and conditions.

• Marginal note:Permitted use

  (10.1) No Canadian entity in which a foreign bank or an entity associated with a foreign bank within the meaning of section 507 has a substantial investment commits an offence by reason only that it uses the name of the foreign bank or any identifying mark, logogram or insignia of the foreign bank or the name of a prescribed entity associated with a foreign bank within the meaning of section 507 or any identifying mark, logogram or insignia of that prescribed entity, so long as it does not use, in any language, the word “bank”, “banker” or “banking” and so long as

  • (a) it does so with the approval of the Minister and subject to terms and conditions that the Minister may impose; or

  • (b) it does so in prescribed circumstances and in accordance with prescribed terms and conditions.

• Marginal note:Permitted use

  (11) Subject to subsection (12), no foreign bank that carries on a business or activity referred to in section 514, 522.05, 522.18 or 522.19 and no entity incorporated or formed by or under the laws of a country other than Canada that carries on a business or activity referred to in any of those provisions and that is an entity associated with a foreign bank within the meaning of section 507 commits an offence by reason only that it uses

  • (a) its name or any of its identifying marks, logograms or insignia, or

  • (b) the name of an entity associated with a foreign bank within the meaning of section 507 or any identifying mark, logogram or insignia of that entity,

  so long as it does not use, in any language, the word “bank”, “banker” or “banking”.

• Marginal note:Permitted use

  (12) A foreign bank, or an entity associated with a foreign bank, that is referred to in subsection (11) may use the word “bank”, “banker” or “banking” in prescribed circumstances if it does so in accordance with prescribed terms and conditions.

• Marginal note:Deemed use of “bank”, etc.

  (13) For the purposes of this section, the following are deemed to be a use of the word “bank”, “banker” or “banking”:

  • (a) any statement that a business, other than a bank that is a subsidiary of a foreign bank or the business in Canada of an authorized foreign bank, is connected, associated or affiliated with a bank or a foreign bank; and

  • (b) the use of any identifying mark, logogram, insignia or name of a bank or a foreign bank or a name substantially similar to any such name.

• Marginal note:Deeming

  (14) For the purposes of this section, the use of the name of a bank holding company is deemed to include the use of any identifying mark, logogram, insignia or name of the bank holding company or a name substantially similar to any such name.

• Marginal note:Deeming

  (15) For the purposes of this section, the identifying mark, logogram or insignia of an entity is deemed to include the logo, initials or acronym of that entity.

• Marginal note:Regulations

  (16) The Governor in Council may make regulations for the purposes of subsections (1) to (3) or paragraph (4)(a), (f), (g) or (h).

Marginal note:Making false statements

• 984. (1) Every person is guilty of an offence who wilfully makes a false statement

  • (a) in a warehouse receipt or bill of lading given to a bank or authorized foreign bank under the authority of this Act; or

  • (b) in a document giving or purporting to give security on property to a bank under section 426 or 427 or to an authorized foreign bank under either of those sections as incorporated by section 555.

• Marginal note:Wilfully disposing of or withholding goods covered by security

  (2) Every person is guilty of an offence who, having possession or control of property mentioned in or covered by a warehouse receipt, bill of lading or any security given to a bank under section 426 or 427 or to an authorized foreign bank under either of those sections as incorporated by section 555, and having knowledge of the receipt, bill of lading or security, without the consent of the bank or authorized foreign bank in writing before the loan, advance, debt or liability secured by it has been fully paid

  • (a) wilfully alienates or parts with any of the property; or

  • (b) wilfully withholds from the bank or authorized foreign bank possession of any of the property if demand for its possession is made by the bank or authorized foreign bank after failure to pay the loan, advance, debt or liability.

• Marginal note:Non-compliance with requirements for sale

  (3) If a debt or liability to a bank or authorized foreign bank is secured by a warehouse receipt or bill of lading or security on property given to a bank under section 426 or 427 or to an authorized foreign bank under either of those sections as incorporated by section 555 and is not paid, the bank or authorized foreign bank is guilty of an offence if it sells the property covered by the warehouse receipt, bill of lading or security under the power of sale conferred on it by this Act without complying with the provisions of this Act applicable to the exercise of the power of sale.

• Marginal note:Acquisition of warehouse receipts, bills of lading, etc.

  (4) Every bank or authorized foreign bank that acquires or holds a warehouse receipt or bill of lading or a document signed and delivered to it giving or purporting to give to the bank security on property under section 426 or 427, or to give the authorized foreign bank security or property under either of those sections as incorporated by section 555, to secure the payment of any debt, liability, loan or advance, is guilty of an offence unless

  • (a) the debt, liability, loan or advance is contracted or made at the time of the acquisition by the bank or authorized foreign bank of the warehouse receipt, bill of lading or document;

  • (b) the debt, liability, loan or advance was contracted or made on the written promise or agreement that the warehouse receipt, bill of lading or security would be given to the bank or authorized foreign bank; or

  • (c) the acquisition or holding by the bank or authorized foreign bank of the warehouse receipt, bill of lading or security is otherwise authorized by an Act of Parliament.

• Marginal note:Definitions

  (5) For the purposes of this section, the expressions “warehouse receipt” and “bill of lading” have the meaning assigned to those expressions by section 425.

Marginal note:Punishment

• 985. (1) Every person who is guilty of an offence under any of sections 980 to 984 is

  • (a) in the case of a natural person, liable

    • (i) on summary conviction, to a fine of not more than $100,000 or to imprisonment for a term of not more than twelve months, or to both, or

    • (ii) on conviction on indictment, to a fine of not more than $500,000 or to imprisonment for a term of not more than five years, or to both; and

  • (b) in the case of an entity, liable

    • (i) on summary conviction, to a fine of not more than $500,000, or

    • (ii) on conviction on indictment, to a fine of not more than $5,000,000.

• Marginal note:Order to comply

  (2) If a person has been convicted of an offence under this Act, the court may, in addition to any punishment it may otherwise impose, order the person to comply with the provisions of this Act or the regulations in respect of which the person was convicted.

• Marginal note:Additional fine

  (3) If a person has been convicted of an offence under this Act, the court may, if it is satisfied that as a result of the commission of the offence the convicted person acquired any monetary benefits or that monetary benefits accrued to the convicted person or to the spouse, common-law partner or other dependant of the convicted person, order the convicted person to pay, notwithstanding the maximum amount of any fine that may otherwise be imposed under this Act, an additional fine in an amount equal to the court’s estimation of the amount of those monetary benefits.

Marginal note:Liability of officers, directors, etc.

986. If an entity commits an offence under this Act, any officer, director, agent or principal officer of the entity who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence and liable on summary conviction or on conviction on indictment to the punishment provided under paragraph 985(1)(a) for the offence, whether or not the entity has been prosecuted or convicted.

Marginal note:Limitation period

• 987. (1) Proceedings by way of summary conviction in respect of an offence under a provision of this Act may be commenced at any time within, but not later than, two years after the day on which the subject-matter of the proceedings became known, in the case of an offence under a consumer provision, to the Commissioner and, in any other case, to the Superintendent.

• Marginal note:Certificate of Superintendent or Commissioner

  (2) A document appearing to have been issued by the Superintendent or the Commissioner, as the case may be, certifying the day on which the subject-matter of any proceedings became known to the Superintendent or the Commissioner is admissible in evidence without proof of the signature or official character of the person appearing to have signed it and is, in the absence of evidence to the contrary, proof of the matter asserted in it.

Marginal note:Effect of offence on contracts

988. Unless otherwise expressly provided in this Act, a contravention of any provision of this Act or the regulations does not invalidate any contract entered into in contravention of the provision.

Marginal note:Compliance or restraining order — bank

• 989. (1) If a bank or a bank holding company or any director, officer, employee or agent of one does not comply with any provision of this Act or the regulations other than a consumer provision, or of the incorporating instrument or any by-law of the bank or bank holding company, the Superintendent, any complainant or any creditor of the bank or bank holding company may, in addition to any other right that that person has, apply to a court for an order directing the bank, bank holding company, director, officer, employee or agent to comply with — or restraining the bank, bank holding company, director, officer, employee or agent from acting in breach of — the provision and, on the application, the court may so order and make any further order it thinks fit.

• Marginal note:Compliance or restraining order — authorized foreign bank

  (2) If an authorized foreign bank or any of its directors, officers, employees or agents does not comply with any provision of this Act or the regulations other than a consumer provision, or of an order made under subsection 524(1), 528(1) or 534(1) in respect of the authorized foreign bank, the Superintendent, any complainant or any creditor of the authorized foreign bank may, in addition to any other right that that person has, apply to a court for an order directing the authorized foreign bank, director, officer, employee or agent to comply with — or restraining the authorized foreign bank, director, officer, employee or agent from acting in breach of — the provision and, on the application, the court may so order and make any further order it thinks fit.

• Marginal note:Compliance or restraining order — consumer provisions

  (3) If a bank or an authorized foreign bank or any director, officer, employee or agent of one does not comply with any applicable consumer provision, the Commissioner or any complainant may, in addition to any other right that that person has, apply to a court for an order directing the bank, authorized foreign bank, director, officer, employee or agent to comply with — or restraining the bank, authorized foreign bank, director, officer, employee or agent from acting in breach of — the consumer provision and, on the application, the court may so order and make any further order it thinks fit.

Marginal note:Appeals

990. Any decision or order of a court under this Act may be appealed to the court of appeal.

Marginal note:Recovery and application of fines

991. All fines payable under this Act are recoverable and enforceable, with costs, at the suit of Her Majesty in right of Canada, instituted by the Attorney General of Canada, and, when recovered, belong to Her Majesty in right of Canada.