An Act respecting banks and bankingBank ActBank1991December
13
201303
19
B-1.01461991PreambleWhereas a strong and efficient banking sector is essential to economic growth and prosperity;Whereas a legislative framework that enables banks to compete effectively and be resilient in a rapidly evolving marketplace, taking into account the rights and interests of depositors and other consumers of banking services, contributes to stability and public confidence in the financial system and is important to the strength and security of the national economy;And whereas it is desirable and is in the national interest to provide for clear, comprehensive, exclusive, national standards applicable to banking products and banking services offered by banks;Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:2012, c. 19, s. 525.SHORT TITLE
Short titleThis Act may be cited as the Bank Act.
INTERPRETATION AND APPLICATIONDefinitions
DefinitionsIn this Act,affairsaffaires internesaffairs, with respect to a bank, an authorized foreign bank or a bank holding company, means the relationships among the bank, authorized foreign bank or bank holding company and its affiliates and the shareholders, members, directors and officers of the bank, authorized foreign bank or bank holding company and its affiliates, but does not include the business of the bank, authorized foreign bank or bank holding company or any of its affiliates;affiliategroupeaffiliate means an entity that is affiliated with another entity within the meaning of section 6;AgencyAgenceAgency means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act;annual returnétat annuelannual return means a return prepared in accordance with section 601;annual statementrapport annuelannual statement, in relation to a bank, means the annual financial statement of the bank within the meaning of paragraph 308(1)(a) and, in relation to a bank holding company, means the annual financial statement of the bank holding company within the meaning of paragraph 840(1)(a);authorized foreign bankbanque étrangère autoriséeauthorized foreign bank means a foreign bank that is the subject of an order under subsection 524(1);bankbanquebank means a bank listed in Schedule I or II;bank holding companysociété de portefeuille bancairebank holding company means a body corporate that is incorporated or formed under Part XV;bearerporteurbearer, in relation to a security, means the person in possession of a security payable to bearer or endorsed in blank;bearer formtitre au porteurbearer form, in respect of a security, means a security in bearer form as determined in accordance with subsection 83(2);beneficial ownershipvéritable propriétaire et propriété effectivebeneficial ownership includes ownership through one or more trustees, legal representatives, agents or other intermediaries;body corporatepersonne moralebody corporate means an incorporated body wherever or however incorporated;branchsuccursalebranchin respect of a bank, means an agency, the head office or any other office of the bank, andin respect of an authorized foreign bank, means an agency, the principal office or any other office of the authorized foreign bank in Canada at which is carried on the business in Canada of the authorized foreign bank;Canadian entityentité canadienneCanadian entity means an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province, or otherwise formed in Canada, and that carries on business in Canada;Canadian financial institutioninstitution financière canadienneCanadian financial institution means a financial institution that is incorporated or formed by or under an Act of Parliament or of the legislature of a province;central cooperative credit societysociété coopérative de crédit centralecentral cooperative credit society means a body corporate organized on cooperative principles by or under an Act of the legislature of a province, one of whose principal purposes is to receive deposits from and provide liquidity support to local cooperative credit societies, andwhose membership consists solely or primarily of local cooperative credit societies, orwhose directors are wholly or primarily persons elected or appointed by local cooperative credit societies;central securities register or securities registerregistre central des valeurs mobilières ou registre des valeurs mobilièrescentral securities register or securities register, in relation to a bank, means the register referred to in section 248 and, in relation to a bank holding company, means the register referred to in section 825;CommissionercommissaireCommissioner means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act;common-law partnerconjoint de faitcommon-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year;complainantplaignantcomplainant, in relation to a bank or any matter concerning a bank, meansa registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a bank or any of its affiliates,a director or an officer, or a former director or officer, of a bank or any of its affiliates,any other person who, in the discretion of a court, is a proper person to make an application under section 334, 338 or 989, ora member or a former member of a federal credit union;consumer provisiondisposition visant les consommateursconsumer provision means a provision referred to in paragraph (a) or (a.1) of the definition consumer provision in section 2 of the Financial Consumer Agency of Canada Act;courttribunalcourt meansin the Province of Ontario, the Superior Court of Justice,in the Province of Quebec, the Superior Court of the Province,in the Provinces of Nova Scotia and British Columbia, the Supreme Court of the Province,in the Provinces of New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench for the Province,in the Provinces of Prince Edward Island and Newfoundland, the trial division of the Supreme Court of the Province, andthe Supreme Court of Yukon, the Supreme Court of the Northwest Territories and the Nunavut Court of Justice;court of appealcour d’appelcourt of appeal means the court to which an appeal lies from a decision or order of a court;debt obligationtitre de créancedebt obligation means a bond, debenture, note or other evidence of indebtedness of an entity, whether secured or unsecured;delegatedéléguédelegate means a natural person appointed or elected to represent a member of a federal credit union at a meeting of members;director, board of directors or directorsadministrateur, conseil d’administration ou conseildirector means a natural person occupying the position of director, by whatever name called, of a body corporate, and board of directors or directors refers to the directors of a body corporate as a body;entityentitéentity means a body corporate, trust, partnership, fund, an unincorporated association or organization, Her Majesty in right of Canada or of a province, an agency of Her Majesty in either of such rights and the government of a foreign country or any political subdivision thereof and any agency thereof;equitycapitaux propresequity, in respect of a bank or a bank holding company, means its equity as determined in accordance with the regulations;federal credit unioncoopérative de crédit fédéralefederal credit union means a bank that, within the meaning of section 12.1, is organized and carries on business on a cooperative basis;federal financial institutioninstitution financière fédéralefederal financial institution meansa bank,a body corporate to which the Trust and Loan Companies Act applies,an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act, oran insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act;federation of cooperative credit societiesfédération de sociétés coopératives de créditfederation of cooperative credit societies means an association under the Cooperative Credit Associations Act or a federation, league or corporation incorporated or organized by or under an Act of the legislature of a province, the membership or the shareholders of which include two or more central cooperative credit societies;fiduciaryreprésentantfiduciary means any person acting in a fiduciary capacity and includes a personal representative of a deceased person;financial institutioninstitution financièrefinancial institution meansa bank or an authorized foreign bank,a body corporate to which the Trust and Loan Companies Act applies,an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act,an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act,a trust, loan or insurance corporation incorporated by or under an Act of the legislature of a province,a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,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, including portfolio management and investment counselling, anda foreign institution;foreign bankbanque étrangèreforeign bank, subject to section 12, means an entity incorporated or formed by or under the laws of a country other than Canada thatis a bank according to the laws of any foreign country where it carries on business,carries on a business in any foreign country that, if carried on in Canada, would be, wholly or to a significant extent, the business of banking,engages, directly or indirectly, in the business of providing financial services and employs, to identify or describe its business, a name that includes the word “bank”, “banque”, “banking” or “bancaire”, either alone or in combination with other words, or any word or words in any language other than English or French corresponding generally thereto,engages in the business of lending money and accepting deposit liabilities transferable by cheque or other instrument,engages, directly or indirectly, in the business of providing financial services and is affiliated with another foreign bank,controls another foreign bank, oris a foreign institution, other than a foreign bank within the meaning of any of paragraphs (a) to (f), that controls a bank incorporated or formed under this Act,but does not include a subsidiary of 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, unless the Minister has specified that subsection 378(1) no longer applies to the bank;foreign bank subsidiary[Repealed, 2001, c. 9, s. 35]foreign institutioninstitution étrangèreforeign institution means an entity that isengaged in the business of banking, the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities or is otherwise engaged primarily in the business of providing financial services, andincorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province;form of proxyformulaire de procurationform of proxy means a written or printed form that, when completed and executed by or on behalf of a shareholder, constitutes a proxy;going-private transactiontransaction de fermeturegoing-private transaction means a going-private transaction as defined in the regulations;guaranteegarantieguarantee includes a letter of credit;head officesiègehead office, in relation to a bank, means the office required to be maintained under section 237 and, in relation to a bank holding company, means the office required to be maintained under section 814;holderdétenteurholder meansin respect of a security certificate, the person in possession of the certificate issued or endorsed to that person or to bearer or in blank,in respect of the ownership of a share, the shareholder of the share within the meaning of section 7, andin respect of the ownership of a membership share, the member who holds the membership share within the meaning of section 7.1;holding body corporatesociété mèreholding body corporate means a holding body corporate within the meaning of section 4;incorporatedconstitué en personne moraleincorporated, when used with reference to a body corporate that is incorporated by or under an Act of Parliament or of the legislature of a province, also refers to a body corporate that is continued by or under any such Act;incorporating instrumentacte constitutifincorporating instrument means the special Act, letters patent, instrument of continuance or other constating instrument by which a body corporate was incorporated or continued and includes any amendment to or restatement of the constating instrument;incorporatorfondateurincorporator, in relation to a bank or a bank holding company, means a person who applied for letters patent to incorporate the bank or bank holding company, as the case may be;insurance holding companysociété de portefeuille d’assurancesinsurance holding company means a body corporate that is incorporated or formed under Part XVII of the Insurance Companies Act;issuerémetteurissuer, in respect of a security, means the entity that issues or issued the security;letters patentlettres patentesletters patent, in respect of an instrument authorized to be issued under this Act, means letters patent in a form approved by the Superintendent;local cooperative credit societysociété coopérative de crédit localelocal cooperative credit society means a body corporate organized on cooperative principles incorporated by or under an Act of the legislature of a provincewhose members or shareholders consist substantially of natural persons, andwhose principal purpose is to receive deposits from and make loans to its members and shareholders;membermembremember, in relation to a federal credit union, means a person who is one of the members of the federal credit union in accordance with subsection 47.04(2);membership shareparts socialesmembership share, in relation to a federal credit union, means an ownership interest in the federal credit union that confers the rights referred to in subsection 79.1(1);members registerregistre des membresmembers register, in relation to a federal credit union, means the register referred to in section 254.1;MinisterministreMinister means the Minister of Finance;minormineurminor has the same meaning as in the applicable provincial law and in the absence of any such law has the same meaning as the word “child” in the United Nations Convention on the Rights of the Child adopted in the United Nations General Assembly on November 20, 1989;NAFTA country resident[Repealed, 1999, c. 28, s. 1]non-WTO Member foreign bankbanque étrangère d’un non-membre de l’OMCnon-WTO Member foreign bank means a foreign bank that is not controlled by a WTO Member resident;officerdirigeantofficer meansin relation to a body corporate, a chief executive officer, president, vice-president, secretary, controller, treasurer and any other natural person designated as an officer of the body corporate by by-law or by resolution of the directors of the body corporate, andin relation to any other entity, any natural person designated as an officer of the entity by by-law, by resolution of the members thereof or otherwise;order formtitre à ordreorder form, in respect of a security, means a security in order form as determined in accordance with subsection 83(3);ordinary resolutionrésolution ordinaireordinary resolution means a resolution passed by a majority of the votes cast in respect of that resolution;patronage allocationristournepatronage allocation means an amount that a federal credit union allocates among its members based on the business done by them with or through the federal credit union;personpersonneperson means a natural person, an entity or a personal representative;personal representativereprésentant personnelpersonal representative means a person who stands in place of and represents another person and, without limiting the generality of the foregoing, includes, as the circumstances require, a trustee, an executor, an administrator, a committee, a guardian, a tutor, a curator, an assignee, a receiver, an agent or an attorney of any person, but does not include a delegate;prescribedVersion anglaise seulementprescribed means prescribed by regulation;principal officebureau principalprincipal office means, in relation to an authorized foreign bank, the office required to be maintained under section 535;principal officerdirigeant principalprincipal officer in relation to an authorized foreign bank means the person appointed under section 536;proxyprocurationproxy means a completed and executed form of proxy by means of which a shareholder appoints a proxyholder to attend and act on the shareholder’s behalf at a meeting of shareholders;proxyholderfondé de pouvoirproxyholder means the person appointed by proxy to attend and act on behalf of a shareholder at a meeting of shareholders;real propertybiens immeublesreal property includes a leasehold interest in real property;recorded addressadresse enregistréerecorded address meansin relation to a person who is a shareholder of a bank or a bank holding company, the latest postal address of the person according to its central securities register,in relation to a person who is a member of a federal credit union, the latest postal address of the person according to the members register, andin relation to a person in any other respect in relation to a bank, the latest postal address of the person according to the records of the branch concerned;registered formtitre nominatifregistered form, in respect of a security, means a security in registered form as determined in accordance with subsection 83(4);regulatory capitalcapital réglementaireregulatory capital, in respect of a bank or a bank holding company, has the meaning given that expression by the regulations;resident Canadianrésident canadienresident Canadian means a natural person who isa Canadian citizen ordinarily resident in Canada,a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, ora permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which the individual first became eligible to apply for Canadian citizenship;residential propertyimmeuble résidentielresidential property means real property consisting of buildings that are used, or are to be used, to the extent of at least one half of the floor space thereof, as one or more private dwellings;securities underwritersouscripteur à forfaitsecurities underwriter means a person who, as principal, agrees to purchase securities with a view to the distribution of the securities or who, as agent for a body corporate or other person, offers for sale or sells securities in connection with a distribution of the securities, and includes a person who participates, directly or indirectly, in a distribution of securities, other than a person whose interest in the distribution of securities is limited to receiving a distributor’s or seller’s commission payable by a securities underwriter;securitytitre ou valeur mobilièresecurity meansin relation to a body corporate, a share of any class of shares of the body corporate or a debt obligation of the body corporate, and includes a warrant of the body corporate, but does not include a deposit with a financial institution or any instrument evidencing such a deposit or, for greater certainty, a membership share, andin relation to any other entity, any ownership interest in or debt obligation of the entity;security interestsûretésecurity interest means an interest in or charge on property by way of mortgage, lien, pledge or otherwise taken by a creditor or guarantor to secure the payment or performance of an obligation;sendenvoyersend includes deliver;seriessérieseries, in respect of shares, means a division of a class of shares;shareVersion anglaise seulementshare does not include a membership share;significant interestintérêt substantielsignificant interest means a significant interest determined in accordance with section 8;special resolutionrésolution extraordinairespecial resolution means a resolution passed by a majority of not less than two thirds of the votes cast in respect of that resolution or signed by all the persons who are entitled to vote on that resolution;squeeze-out transactiontransaction d’évictionsqueeze-out transaction means a transaction by a bank that is not a distributing bank, or a bank holding company that is not a distributing bank holding company, that requires an amendment to a by-law referred to in subsection 217(1) and that would directly or indirectly result in the interest of a holder of shares of a class of shares being terminated without their consent and without substituting an interest of equivalent value in shares that are issued by the following persons and have rights and privileges equal to or greater than those of the shares of the affected class:in the case of a bank, the bank, andin the case of a bank holding company, the bank holding company;subordinated indebtednesstitre secondairesubordinated indebtedness means an instrument evidencing an indebtedness of a bank that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the bank, be subordinate in right of payment to all deposit liabilities of the bank and all other liabilities of the bank except those that, by their terms, rank equally with or are subordinate to such indebtedness;subsidiaryfilialesubsidiary means an entity that is a subsidiary of another entity as defined in section 5;substantial investmentintérêt de groupe financiersubstantial investment means a substantial investment determined in accordance with section 10;SuperintendentsurintendantSuperintendent means the Superintendent of Financial Institutions appointed pursuant to the Office of the Superintendent of Financial Institutions Act;tradeopérationtrade, in respect of securities, means any sale or disposition of securities for valuable consideration;transfertransferttransfer, in respect of securities, includes a transmission by operation of law;voting shareaction avec droit de votevoting share means a share of any class of shares of a body corporate carrying voting rights under all circumstances or by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled;WTO Member residentrésident d’un membre de l’OMCWTO Member resident means a WTO Member resident within the meaning of section 11.1.
  • 1991, c. 46, ss. 2, 572, c. 47, s. 756, c. 48, s. 494;
  • 1992, c. 51, s. 29;
  • 1993, c. 34, s. 5(F), c. 44, s. 22;
  • 1998, c. 30, ss. 13(F), 15(E);
  • 1999, c. 3, s. 14, c. 28, s. 1;
  • 2000, c. 12, s. 3;
  • 2001, c. 9, s. 35, c. 27, s. 206;
  • 2002, c. 7, s. 81(E);
  • 2005, c. 54, s. 1;
  • 2007, c. 6, s. 1;
  • 2010, c. 12, s. 1894;
  • 2012, c. 5, ss. 2, 223.
Previous Version
Interpretation
References to “authorized foreign bank”References in this Act to the carrying on of business in Canada by an authorized foreign bank and to the business in Canada of an authorized foreign bank are deemed, respectively, to be references to the carrying on of business in Canada, or to business in Canada, under Part XII.1.
  • 1999, c. 28, s. 2.
Major shareholderFor the purposes of this Act, a person is a major shareholder of a body corporate ifthe aggregate of the shares of any class of voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the body corporate; orthe aggregate of the shares of any class of non-voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the body corporate.
  • 2001, c. 9, s. 36.
Widely heldFor the purposes of this Act, an entity is widely held if it isa body corporate that has no major shareholder;a federal credit union;an insurance company incorporated or formed under a mutual plan;an association to which the Cooperative Credit Associations Act applies; ora cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province.
  • 2001, c. 9, s. 36;
  • 2010, c. 12, s. 1895.
Previous Version
Regulations — distributing bank or bank holding companyThe Governor in Council may make regulations respecting the determination of what constitutes a distributing bank or distributing bank holding company for the purposes of this Act.Exemption — bank or bank holding companyOn the application of a bank or bank holding company, the Superintendent may determine that it is not or was not a distributing bank or distributing bank holding company, as the case may be, if the Superintendent is satisfied that the determination would not prejudice any security holder of that bank or bank holding company or any holder of a membership share of that bank.Exemption — class of banks or bank holding companiesThe Superintendent may determine that members of a class of banks or bank holding companies are not or were not distributing banks or distributing bank holding companies, as the case may be, if the Superintendent is satisfied that the determination would not prejudice any security holder of a member of the class or any holder of a membership share of a bank that is a member of the class.
  • 2005, c. 54, s. 2;
  • 2010, c. 12, s. 1896.
Previous Version
ControlFor the purposes of this Act,a person controls a body corporate if securities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate;a person controls a federal credit union if the person and all of the entities controlled by the person have the right to exercise more than 50 per cent of the votes that may be cast at an annual meeting or to elect the majority of the directors of the federal credit union;a person controls an unincorporated entity, other than a limited partnership, if more than 50 per cent of the ownership interests, however designated, into which the entity is divided are beneficially owned by that person and the person is able to direct the business and affairs of the entity;the general partner of a limited partnership controls the limited partnership; anda person controls an entity if the person has any direct or indirect influence that, if exercised, would result in control in fact of the entity.Deemed controlA person who controls an entity is deemed to control any entity that is controlled, or deemed to be controlled, by the entity.Deemed controlA person is deemed to control, within the meaning of paragraph (1)(a) or (b), an entity if the aggregate ofany securities of the entity that are beneficially owned by that person, andany securities of the entity that are beneficially owned by any entity controlled by that personis such that, if that person and all of the entities referred to in paragraph (b) that beneficially own securities of the entity were one person, that person would control the entity.GuidelinesThe Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(d), make guidelines respecting what constitutes such control, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(d) in that provision shall be interpreted in accordance with the guidelines.Guidelines — federal credit unionThe Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(d), make guidelines respecting what constitutes such control of a federal credit union, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(d) in that provision is to be interpreted in accordance with the guidelines.
  • 1991, c. 46, s. 3;
  • 2001, c. 9, s. 37;
  • 2010, c. 12, s. 1897.
Previous Version
Holding body corporateA body corporate is the holding body corporate of any entity that is its subsidiary.
  • 1991, c. 46, s. 4;
  • 2001, c. 9, s. 38.
SubsidiaryAn entity is a subsidiary of another entity if it is controlled by the other entity.
  • 1991, c. 46, s. 5;
  • 2001, c. 9, s. 38.
Affiliated entitiesOne entity is affiliated with another entity if one of them is controlled by the other or both are controlled by the same person.Affiliated entitiesDespite subsection (1), for the purposes of subsections 265(1) and 283(1), one entity is affiliated with another entity if one of them is controlled, determined without regard to paragraph 3(1)(d), by the other or both are controlled, determined without regard to paragraph 3(1)(d), by the same person.
  • 1991, c. 46, s. 6;
  • 2001, c. 9, s. 39.
ShareholderFor the purposes of this Act, a person is a shareholder of a body corporate when, according to the securities register of the body corporate, the person is the owner of one or more shares of the body corporate or is entitled to be entered in the securities register or like record of the body corporate as the owner of the share or shares.Holder of a shareA reference in this Act to the holding of a share by or in the name of any person is a reference to the fact that the person is registered or is entitled to be registered in the securities register or like record of the body corporate as the holder of that share.
Holder of membership shareFor the purposes of this Act, a person is a holder of a membership share of a federal credit union if the person is the owner of one or more membership shares according to the federal credit union’s members register or is entitled to be entered in that register, or like record of the federal credit union, as the owner of one or more membership shares.References to holding membership shareA reference in this Act to the holding of a membership share by or in the name of any person is a reference to the fact that the person is registered or is entitled to be registered in a federal credit union’s members register, or like record of the federal credit union, as the holder of that membership share.
  • 2010, c. 12, s. 1898.
Significant interestA person has a significant interest in a class of shares of a bank or a bank holding company if the aggregate ofany shares of that class beneficially owned by the person, andany shares of that class beneficially owned by entities controlled by the personexceeds 10 per cent of all of the outstanding shares of that class of shares of the bank or bank holding company.Significant interest — membership sharesA person has a significant interest in the membership shares of a federal credit union if the aggregate of membership shares beneficially owned by the person and membership shares beneficially owned by entities controlled by the person exceeds 10 per cent of all of the outstanding membership shares.Increasing significant interestA person who has a significant interest in a class of shares of a bank or bank holding company increases that significant interest in the class of shares if the person or any entity controlled by the personacquires beneficial ownership of additional shares of that class, oracquires control of any entity that beneficially owns shares of that class,in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.Increasing significant interest — membership sharesA person who has a significant interest in the membership shares of a federal credit union increases that significant interest in the membership shares if the person or any entity controlled by the person acquires beneficial ownership of additional membership shares, or acquires control of any entity that beneficially owns membership shares, of the federal credit union in such number as to increase the percentage of membership shares that are beneficially owned by the person and by any entities controlled by the person.
  • 1991, c. 46, s. 8;
  • 2001, c. 9, s. 40;
  • 2010, c. 12, s. 1899.
Previous Version
Acting in concertFor the purposes of Part VII and Division 7 of Part XV, if two or more persons have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect ofshares of a bank or of a bank holding company that they beneficially own,shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a bank or of a bank holding company, orshares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of a bank or bank holding company,those persons are deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the bank or bank holding company or shares or ownership interests of the entity that are beneficially owned by them.Acting in concertWithout limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of a bank or bank holding company or shares or ownership interests of any entity referred to in paragraph (1)(b) or (c),whereby any of them or their nominees may veto any proposal put before the board of directors of the bank or bank holding company, orunder which no proposal put before the board of directors of the bank or bank holding company may be approved except with the consent of any of them or their nominees,is deemed to be an agreement, commitment or understanding referred to in subsection (1).ExceptionsFor the purposes of this section, persons shall be presumed not to have agreed to act jointly or in concert solely by reason of the fact thatone is the proxyholder of one or more of the others in respect of shares or ownership interests referred to in subsection (1); orthey vote the voting rights attached to shares or ownership interests referred to in subsection (1) in the same manner.DesignationWhere in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsections (1) and (2) exists by or among two or more persons, the Superintendent may designate those persons as persons who have agreed to act jointly or in concert.ContraventionA person contravenes a provision of Part VII or Division 7 of Part XV if the person agrees to act jointly or in concert with one or more other persons in such a manner that a deemed single person contravenes the provision.
  • 1991, c. 46, s. 9;
  • 2001, c. 9, s. 41;
  • 2007, c. 6, s. 2.
Previous Version
Acting in concert — members’ rights to voteFor the purposes of Part VII, if two or more members have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of the exercise of any right to vote at a meeting of members, those members are deemed to be a single member.ExceptionsFor the purposes of this section, members are presumed not to have agreed to act jointly or in concert solely by reason of the fact thattheir membership voting rights are vested in the same delegate or delegates; orthey exercise their membership voting rights in the same manner.DesignationIf in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsection (1) exists by or among two or more members, the Superintendent may designate those members as members who have agreed to act jointly or in concert.ContraventionA member contravenes a provision of Part VII if the member agrees to act jointly or in concert with one or more other members in such a manner that a deemed single member contravenes that provision.
  • 2010, c. 12, s. 1900.
Acting in concert — shareholders and members’ right to voteFor the purposes of Part VII, if one or more members of a federal credit union and one or more shareholders of the federal credit union have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of the exercise of their respective rights to vote, those persons are deemed to be a single person.ExceptionsFor the purposes of this section, persons are presumed not to have agreed to act jointly or in concert solely by reason of the fact thatone or more of the members is the proxyholder of one or more of the shareholders;one or more of the shareholders is a delegate of one or more of the members; orthey exercise their respective voting rights in the same manner.DesignationIf in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsection (1) exists by or among one or more members and one or more shareholders, the Superintendent may designate those members and shareholders as persons who have agreed to act jointly or in concert.ContraventionA shareholder or a member contravenes a provision of Part VII if the shareholder or member agrees to act jointly or in concert with one or more other shareholders or members in such a manner that a deemed single person contravenes that provision.
  • 2010, c. 12, s. 1900.
Substantial investment in body corporateA person has a substantial investment in a body corporate wherethe voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate;the aggregate of any shares of the body corporate beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25 per cent of the shareholders’ equity of the body corporate; orin the case of a body corporate that is a federal credit union,the voting rights of the person and of entities controlled by the person exceed 10 per cent of the aggregate of the voting rights that may be exercised by members and shareholders, orthe aggregate of any shares and membership shares of the federal credit union beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25 per cent of the members’ and shareholders’ equity of the federal credit union.Increasing substantial investment in body corporateA person who has a substantial investment in a body corporate pursuant to paragraph (1)(a) increases that substantial investment when the person or any entity controlled by the personacquires beneficial ownership of additional voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person; oracquires control of any entity that beneficially owns any voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person.IdemA person who has a substantial investment in a body corporate pursuant to paragraph (1)(b) increases that substantial investment when the person or any entity controlled by the personacquires beneficial ownership of additional shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person; oracquires control of any entity that beneficially owns any shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person.Increasing substantial investment in federal credit unionsA person who has a substantial investment in a federal credit union under subparagraph (1)(c)(i) increases that substantial investment when the percentage of the voting rights of the person and of entities controlled by the person in relation to the aggregate of the voting rights that may be exercised by members and shareholders is increased for any reason.Increasing substantial investment in federal credit unionsA person who has a substantial investment in a federal credit union under subparagraph (1)(c)(ii) increases that substantial investment whenthe person or any entity controlled by the person acquires beneficial ownership of additional shares or membership shares of the federal credit union in such number as to increase the percentage of the members’ and shareholders’ equity of the federal credit union represented by the aggregate of the shares and membership shares beneficially owned by the person and by entities controlled by the person; orthe person or any entity controlled by the person acquires control of any entity that beneficially owns shares or membership shares of the federal credit union in such number as to increase the percentage of the members’ and shareholders’ equity of the federal credit union represented by the aggregate of the shares and membership shares beneficially owned by the person and by entities controlled by the person.New substantial investmentFor greater certainty,where a person has a substantial investment in a body corporate pursuant to paragraph (1)(a) and the person, or any entity controlled by the person,purchases or otherwise acquires beneficial ownership of shares of the body corporate, oracquires control of any entity that beneficially owns shares of the body corporate,in such number as to cause the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person to exceed 25 per cent of the shareholders’ equity of the body corporate, orwhere a person has a substantial investment in a body corporate pursuant to paragraph (1)(b) and the person or any entity controlled by the personpurchases or otherwise acquires beneficial ownership of voting shares of the body corporate, oracquires control of any entity that beneficially owns voting shares of the body corporate,in such number as to cause the voting rights attached to the aggregate of the voting shares beneficially owned by the person and by any entities controlled by the person to exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate,the acquisition is deemed to cause the person to increase a substantial investment in the body corporate.New substantial investment — federal credit unionFor greater certainty,if a person has a substantial investment in a federal credit union under subparagraph (1)(c)(i) and the person, or any entity controlled by the person, purchases or otherwise acquires beneficial ownership of shares or membership shares of the federal credit union or acquires control of any entity that beneficially owns shares or membership shares of the federal credit union, the acquisition is deemed to cause the person to increase a substantial investment in the federal credit union if the percentage of the members’ and shareholders’ equity of the federal credit union represented by the aggregate of the shares and membership shares of the federal credit union beneficially owned by the person and by any entities controlled by the person exceeds 25 per cent of the members’ and shareholders’ equity of the federal credit union; orif a person has a substantial investment in a federal credit union under subparagraph (1)(c)(ii) and the person or any entity controlled by the person acquires voting rights in the federal credit union — or acquires control of any entity that has voting rights in the federal credit union — in such number that the percentage of the voting rights of the person and entities controlled by the person exceeds 10 per cent of the aggregate of the voting rights of the members and shareholders of the federal credit union, the acquisition is deemed to cause the person to increase a substantial investment in the federal credit union.Substantial investment in unincorporated entityA person has a substantial investment in an unincorporated entity where the aggregate of any ownership interests, however designated, into which the entity is divided, beneficially owned by the person and by any entities controlled by the person exceeds 25 per cent of all of the ownership interests into which the entity is divided.Increasing substantial investment in unincorporated entitiesA person who has a substantial investment in an unincorporated entity increases that substantial investment when the person or any entity controlled by the personacquires beneficial ownership of additional ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests in the unincorporated entity beneficially owned by the person and by any entities controlled by the person; oracquires control of any entity that beneficially owns ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests beneficially owned by the person and by any entities controlled by the person.
  • 1991, c. 46, s. 10;
  • 2010, c. 12, s. 1901.
Previous Version
[Repealed, 2005, c. 54, s. 3]Previous Version
WTO Member residentFor the purposes of this Act, a WTO Member resident isa natural person who is ordinarily resident in a country or territory that is a WTO Member, as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada;a body corporate, association, partnership or other organization that is incorporated, formed or otherwise organized in a country or territory that is a WTO Member, as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada, and that is controlleddirectly or indirectly, by one or more persons referred to in paragraph (a), orby a government of a WTO Member, whether federal, state or local, or an agency of one of those governments;a trust established by one or more persons referred to in paragraph (a) or (b) or a trust in which one or more of those persons have more than 50 per cent of the beneficial interest; ora body corporate, association, partnership or other organization that is controlled, directly or indirectly, by a trust referred to in paragraph (c).InterpretationFor the purposes of subsection (1),a body corporate is controlled by one or more persons ifsecurities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person or persons, andthe votes attached to those securities are sufficient to elect a majority of the directors of the body corporate;an association, partnership or other organization is controlled by one or more persons ifmore than 50 per cent of the ownership interests, however designated, into which the association, partnership or other organization is divided are beneficially owned by the person or persons, andthe person or persons are able to direct the business and affairs of the association, partnership or other organization;a body corporate, association, partnership or other organization is controlled by one or more persons if the person or persons have, directly or indirectly, control in fact of the body corporate, association, partnership or other organization; anda body corporate, association, partnership or other organization that controls another body corporate, association, partnership or other organization is deemed to control any body corporate, association, partnership or other organization that is controlled or deemed to be controlled by the other body corporate, association, partnership or other organization.
  • 1993, c. 44, s. 23;
  • 1999, c. 28, s. 3.
Exemption from foreign bank statusThe Minister may, by order, and subject to such terms and conditions as the Minister considers appropriate, exempt for the purposes of any provision of this Act any entity from being a foreign bank that, but for that order, would be a foreign bank.Revocation of orderThe Minister may, by further order, revoke or vary any order made under subsection (1), and any such revocation or variation shall come into force three months after the date the further order is made, unless the Minister and the entity to which the order relates agree that the revocation or variation should come into force at some other time agreed by them.NoticeBefore filing an application for an order referred to in subsection (1), an applicant shall publish a notice of intention to make the application in the Canada Gazette.
  • 1991, c. 46, s. 12;
  • 2001, c. 9, s. 42.1.
Cooperative basisFor the purposes of this Act, a federal credit union is organized and carries on business on a cooperative basis ifa majority of its members are natural persons;it provides financial services primarily to its members;membership in the federal credit union is wholly or primarily open, in a non-discriminatory manner, to persons who can use the services of the federal credit union and who are willing and able to accept the responsibilities of membership;each member has only one vote;a delegate has only one vote even though the delegate is a member or represents more than one member;dividends on any membership share are limited to the maximum percentage fixed in the federal credit union’s letters patent or by-laws; andsurplus funds arising from the federal credit union’s operations are usedto provide for the financial stability of the federal credit union,to develop its business,to provide or improve common services to members,to provide for reserves or dividends on membership shares and shares,for community welfare or the propagation of cooperative enterprises, oras a distribution to its members as a patronage allocation.RestrictionsParagraph (1)(c) is subject to any restrictions in the by-laws of the federal credit union on the classes of persons to which membership may be available, as long as the restrictions are consistent with applicable laws with respect to human rights.
  • 2010, c. 12, s. 1902.
Member who is shareholderFor greater certainty, a member of a federal credit union who is also a shareholder of the federal credit union may exercise the rights given to a shareholder by this Act for all shares held by the member.
  • 2010, c. 12, s. 1902.
Application
Application of ActThis Act is the charter of and applies to each bank.
  • 1991, c. 46, s. 13;
  • 1999, c. 28, s. 4;
  • 2001, c. 9, s. 43.
Schedule I and Schedule II banksSubject to this Act,there shall be set out in Schedule Ithe name of every bank named in Schedules I and II as those Schedules read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force that was not a subsidiary of a foreign bank,the name of every bank incorporated or formed under this Act that is not a subsidiary of a foreign bank, andthe province in which the head office of the bank is situated; andthere shall be set out in Schedule IIthe name of every bank named in Schedule II as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force that was a subsidiary of a foreign bank,the name of every bank incorporated or formed under this Act that is a subsidiary of a foreign bank, andthe province in which the head office of the bank is situated.Amending the schedulesWherea bank is incorporated,a body corporate is continued as a bank,one or more bodies corporate are amalgamated as a bank,the name of a bank is changed,the head office of a bank is changed,a bank becomes, or ceases to be, a subsidiary of a foreign bank,a bank is dissolved, ora bank is continued, or amalgamated and continued, as a body corporate to which another Act of Parliament applies,Schedules I and II shall be amended accordingly.Notice of amendmentsIf in any year either Schedule I or II is amended, the Superintendent shall, within sixty days after the end of the year, cause a notice to be published in the Canada Gazette showing Schedule I or II in its complete amended form as at the end of the year.
  • 1991, c. 46, s. 14;
  • 2001, c. 9, s. 43;
  • 2005, c. 54, s. 4;
  • 2007, c. 6, s. 3.
Previous Version
Schedule III authorized foreign banksThere shall be set out in Schedule IIIthe name of every authorized foreign bank and, where applicable, any other name under which it is permitted to carry on business in Canada;the province in which the principal office of the authorized foreign bank is situated; andwhether the authorized foreign bank is subject to the restrictions and requirements referred to in subsection 524(2).Amending Schedule IIISchedule III shall be amended accordingly wherean order made under subsection 524(1) is revoked;any of the information referred to in paragraph (1)(a) or (b) changes; orthe restrictions and requirements referred to in subsection 524(2) to which an authorized foreign bank is subject are added or removed.Notice of amendmentsWhere in any year Schedule III is amended, the Superintendent shall, within sixty days after the end of the year, cause a notice to be published in the Canada Gazette showing Schedule III in its complete amended form as at the end of the year.
  • 1999, c. 28, s. 5;
  • 2005, c. 54, s. 5.
Previous Version
Exemption of foreign banksThe Governor in Council may make regulations exempting any class of foreign banks from the application of any provision of this Act.
  • 2001, c. 9, s. 43.1.
STATUS AND POWERS
Corporate powersA bank has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.Powers restrictedA bank 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.Business in CanadaA bank may carry on business throughout Canada.Powers outside CanadaSubject to this Act, a bank 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.
No invalidityNo act of a bank or authorized foreign bank, including any transfer of property to or by a bank or authorized foreign bank, is invalid by reason only that the act or transfer is contrary toin the case of a bank, the bank’s incorporating instrument or this Act; orin the case of an authorized foreign bank, this Act.
  • 1991, c. 46, s. 16;
  • 1999, c. 28, s. 6.
By-law not necessaryIt is not necessary for a bank to pass a by-law in order to confer any particular power on the bank or its directors.
No personal liabilityThe shareholders of a bank are not, as shareholders, liable for any liability, act or default of the bank except as otherwise provided by this Act.No personal liability — federal credit unionsThe members of a federal credit union are not, as members, liable for any liability, act or default of the federal credit union except as otherwise provided by this Act.
  • 1991, c. 46, s. 18;
  • 2010, c. 12, s. 1903.
Previous Version
No constructive noticeNo person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a bank or authorized foreign bank by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at a branch of the bank or authorized foreign bank.
  • 1991, c. 46, s. 19;
  • 1993, c. 34, s. 6(F);
  • 1999, c. 28, s. 7.
Authority of directors and officersNo bank and no guarantor of an obligation of a bank may assert against a person dealing with the bank or against a person who has acquired rights from the bank thatthe bank’s incorporating instrument or any by-laws of the bank have not been complied with;the persons named as directors of the bank in the most recent return sent to the Superintendent under section 632 are not the directors of the bank;the place named in the incorporating instrument or by-laws of the bank is not the place where the head office of the bank is situated;a person held out by the bank as a director, officer or representative of the bank 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 or usual for a director, officer or representative; ora document issued by any director, officer or representative of the bank with actual or usual authority to issue the document is not valid or not genuine.Exception — knowledgeSubsection (1) does not apply in respect of a person who has or ought to have knowledge of a situation described in that subsection by virtue of their relationship to the bank.
  • 1991, c. 46, s. 20;
  • 1999, c. 28, s. 8;
  • 2005, c. 54, s. 6.
Previous Version
Sunset provisionSubject to subsections (2) and (4), banks shall not carry on business, and authorized foreign banks shall not carry on business in Canada, after the day that is the fifth anniversary of the day on which this section comes into force.ExtensionThe Governor in Council may, by order, extend by up to six months the time during which banks may continue to carry on business and authorized foreign banks may continue to carry on business in Canada. No more than one order may be made under this subsection.Order not a regulationThe order is not a regulation for the purposes of the Statutory Instruments Act. However, it shall be published in Part II of the Canada Gazette.ExceptionIf Parliament dissolves on the fifth anniversary of the day on which this section comes into force, on any day within the six-month period before that anniversary or on any day within an extension under subsection (2), banks may continue to carry on business, and authorized foreign banks may continue to carry on business in Canada, until the end of 180 days after the first day of the first session of the next Parliament.
  • 1991, c. 46, s. 21;
  • 1997, c. 15, s. 2;
  • 1999, c. 28, s. 9;
  • 2001, c. 9, s. 44;
  • 2006, c. 4, s. 199;
  • 2007, c. 6, s. 4;
  • 2012, c. 5, s. 3.
Previous Version
INCORPORATION AND CONTINUANCEFormalities of Incorporation
Incorporation of bankOn the application of one or more persons made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating a bank, other than a federal credit union.Incorporation of federal credit unionOn the application of five or more persons, a majority of whom are natural persons, made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating a federal credit union.
  • 1991, c. 46, s. 22;
  • 2010, c. 12, s. 1904.
Previous Version
Restrictions on incorporationLetters patent incorporating a bank may not be issued if the application therefor is made by or on behalf ofHer 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;the government of a foreign country or any political subdivision thereof;an agency of the government of a foreign country or any political subdivision thereof; oran entity that is controlled by the government of a foreign country or any political subdivision thereof, other than an entity that is a foreign bank, a foreign institution or a subsidiary of a foreign bank or foreign institution.
  • 1991, c. 46, s. 23;
  • 2001, c. 9, s. 45.
Subsidiary of foreign bankIf a proposed bank would be a subsidiary of a foreign bank, within the meaning of paragraphs (a) to (f) of the definition “foreign bank” in section 2, and the application for letters patent to incorporate the bank is made by a non-WTO Member foreign bank, letters patent to incorporate the bank may not be issued unless the Minister is satisfied that treatment as favourable for banks 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.
  • 1991, c. 46, s. 24;
  • 1999, c. 28, s. 10;
  • 2001, c. 9, s. 46.
Application for incorporationAn application for letters patent to incorporate a bank setting out the names of the first directors of the bank shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.Publishing notice of intentBefore filing an application referred to in subsection (1), the applicant or one of the applicants, as the case may be, shall, at least once a week for a period of four consecutive weeks, publish, in a form satisfactory to the Superintendent, a notice of intention to make the application in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the bank is to be situated.
Objections to incorporationAny person who objects to the proposed incorporation of a bank may, within thirty days after the date of the last publication under subsection 25(2) in respect of the proposed bank, submit the objection in writing to the Superintendent.Minister to be informedOn receipt of an objection under subsection (1), the Superintendent shall inform the Minister of the objection.Inquiry into objection and reportOn receipt of an objection under subsection (1), and if the application for the issuance of the letters patent to which the objection relates has been received, the Superintendent shall, if satisfied that it is necessary and in the public interest to do so, hold or cause to be held a public inquiry into the objection as it relates to the application and, on completion of the inquiry, the Superintendent shall report the findings of the inquiry to the Minister.Report to be made availableWithin thirty days after receiving a report under subsection (3), the Minister shall make the report available to the public.Rules governing proceedingsSubject to the approval of the Governor in Council, the Superintendent may make rules governing the proceedings at public inquiries held under this section.
Matters for considerationBefore issuing letters patent to incorporate a bank, the Minister shall take into account all matters that the Minister considers relevant to the application, includingthe nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;the business record and experience of the applicant or applicants;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;whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard tothe nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, andthe nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank;if the bank will be a federal credit union, that it will be organized and carry on business on a cooperative basis in accordance with section 12.1; andthe best interests of the financial system in Canada including, if the bank will be a federal credit union, the best interests of the cooperative financial system in Canada.
  • 1991, c. 46, s. 27;
  • 2001, c. 9, s. 47;
  • 2010, c. 12, s. 1905.
Previous Version
Contents of letters patentThere shall be set out in the letters patent incorporating a bankthe name of the bank;in the case of a bank that is to be a federal credit union, a statement that it is a federal credit union;the province in which the head office of the bank is to be situated; andthe date that the bank came, or is to come, into existence.Provisions in letters patentThe Minister may set out in the letters patent incorporating a bank 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.Terms and conditionsThe Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating a bank as the Minister considers necessary or appropriate.
  • 1991, c. 46, s. 28;
  • 2005, c. 54, s. 7;
  • 2010, c. 12, s. 1906.
Previous Version
Letters patent of incorporation on application of certain companiesIf the Minister issues letters patent, under section 22, incorporating a bank on the application of a company to which the Trust and Loan Companies Act or the Insurance Companies Act applies and the paid-in capital of the bank immediately following its incorporation will be not less than five million dollars or any greater amount that the Minister may specify under subsection 46(1), there may, on the request of the company and with the approval of the Minister, be included in the letters patent a provision deeming shares of the bank to be issued, on a share for share basis, to all shareholders of the company in exchange for all the issued and outstanding shares of the company.Effect of provisionShares of a bank deemed to be issued pursuant to 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 company for which they are exchanged and the shares of the company, on the issuance of the letters patent, become the property of the bank free and clear of any charge, encumbrance or other restriction.IdemAn exchange of shares of a company referred to in subsection (1) pursuant to a provision included in the letters patent incorporating a bank does not deprive a person who was a holder of shares of the company immediately prior to the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect thereof, but any such right or privilege shall be exercised in accordance with this Act.Transfer and voting of bank sharesNotwithstanding subsection (3), no share of a bank that is deemed to be issued pursuant to a provision included in the letters patent incorporating a bank may subsequently be transferred or voted contrary to this Act, but any shareholder of a bank who acquired shares of the bank by means of an exchange of shares of a company referred to in subsection (1) pursuant to that provision may, for a period of ten years from the date of issuance of the letters patent, exercise the voting rights attached to the shares without regard to any provisions of this Act, other than subsection (7), that would otherwise prohibit the shareholder from voting the shares.Shareholder approvalNo provision described in subsection (1) may be included in letters patent issued pursuant to section 22 unless the application therefor is accompanied by evidence that the request for such a provision was approved by a vote of at least two thirds of those shareholders of the applicant company entitled to vote thereon, present or represented by proxy and voting at a shareholders’ meeting called to consider the application.Exchange of share certificatesWhere, pursuant to a provision included in the letters patent incorporating a bank, a share exchange is deemed to have taken place, the bank shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the bank and for the exchange of those certificates for share certificates representing the shares of the company that were outstanding on the day the letters patent were issued.Shares of bank may continue to be heldNotwithstanding any other provision of this Act, where letters patent incorporating a bank include a provision described in subsection (1) and, on the date of issuance of the letters patent, another bank and any entities controlled by that other bank held, in the aggregate, more than ten per cent of any class of shares of the applicant company, that other bank may have a significant interest in any class of shares of the bank deemed to be issued pursuant to subsection (1) in exchange for the shares of the company for a period of two years from the date of issuance of the letters patent.Extension of periodOn application of a bank authorized by subsection (7) to hold, directly or through a subsidiary, shares of another bank, the Minister may, by order, extend the period referred to in subsection (7), but the aggregate of such extensions from time to time granted to a bank and of the period referred to in subsection (7) may not, in any case, exceed ten years.[Repealed, 2001, c. 9, s. 48]
  • 1991, c. 46, ss. 29, 573, c. 47, s. 756;
  • 2001, c. 9, s. 48.
Notice of issue of letters patentThe Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent incorporating a bank.
First directorsThe first directors of a bank are the directors named in the application for letters patent to incorporate the bank.
First members of federal credit unionThe incorporators of a federal credit union are deemed to be its first members.
  • 2010, c. 12, s. 1907.
Effect of letters patentA bank comes into existence on the date provided therefor in its letters patent.
Continuance
Federal corporationsA body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament, including a bank holding company, may apply to the Minister for letters patent continuing the body corporate as a bank under this Act.Other corporationsA 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 under this Act.Continuance for the purpose of amalgamationA local cooperative credit society may, if so authorized by the laws of the jurisdiction in which it is incorporated, apply to the Minister for letters patent continuing it as a federal credit union if it proposes to be continued under this Act for the purpose of amalgamating with another federal credit union in compliance with this Act.
  • 1991, c. 46, s. 33;
  • 1994, c. 24, s. 34(F);
  • 2001, c. 9, s. 49;
  • 2010, c. 12, s. 1908.
Previous Version
Application for continuanceIf a body corporate applies for letters patent under section 33, sections 23 to 27 apply in respect of the application, with any modifications that the circumstances require.Special resolution approvalIf a body corporate applies for letters patent under section 33, the application must be duly authorized by a special resolution.Copy of special resolutionA copy of the special resolution referred to in subsection (2) shall be filed with the application.
  • 1991, c. 46, s. 34;
  • 2010, c. 12, s. 1909.
Previous Version
Power to issue letters patentOn the application of a body corporate under section 33, the Minister may, subject to this Part, issue letters patent continuing the body corporate as a bank under this Act.Issue of letters patentWhere letters patent are issued to a body corporate under subsection (1), section 28 applies in respect of the issue of letters patent, with such modifications as the circumstances require.
  • 1991, c. 46, s. 35;
  • 2010, c. 12, s. 1910(E).
Previous Version
Power to issue letters patentOn the application of a local cooperative credit society under subsection 33(2), the Minister may, subject to this Part, issue letters patent continuing the local cooperative credit society as a federal credit union only if the Minister is of the opinion that the local cooperative credit society has complied with the regulations respecting notice and disclosure requirements.Power to issue letters patentOn the application of a local cooperative credit society under subsection 33(3), the Minister may, subject to this Part, issue letters patent continuing the local cooperative credit society as a federal credit union only if the Minister is of the opinion thatthe local cooperative credit society has complied with the regulations respecting notice and disclosure requirements; andthe federal credit union that results from the amalgamation will satisfy the requirements for incorporation as a federal credit union.RegulationsThe Governor in Council may make regulations respecting notice and disclosure requirements for the purpose of subsections (1) and (2).
  • 2010, c. 12, s. 1911.
Effect of letters patentOn the day set out in the letters patent continuing a body corporate as a bank,the body corporate becomes a bank as if it had been incorporated under this Act; andthe letters patent are deemed to be the incorporating instrument of the continued bank.
  • 1991, c. 46, s. 36;
  • 2010, c. 12, s. 1912(E).
Previous Version
Copy of letters patentWhere a body corporate is continued as a bank under this Part, the Superintendent shall forthwith 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 Act.Notice of issuance of letters patentThe 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 under this Act.
Effects of continuanceWhere a body corporate is continued as a bank under this Part,the property of the body corporate continues to be the property of the bank;the bank continues to be liable for the obligations of the body corporate;an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;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;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;a person who, on the day the body corporate becomes a bank, 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; andthe by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the bank.Membership sharesIn addition, if the body corporate is continued as a federal credit union,in the case of a body corporate with common shares,its common shares are deemed to be membership shares to which are attached the rights, privileges and restrictions set out in this Act,the holders of those common shares are deemed to be the members of the federal credit union, andany agreement made before continuance under which the holders of any common shares of the body corporate have agreed to vote those shares in a manner provided in the agreement is of no effect; andin the case of a body corporate that has members,the membership shares, however designated, of the body corporate are deemed to be membership shares of the federal credit union to which are attached the rights, privileges and restrictions set out in this Act,the members of the body corporate are deemed to be the members of the federal credit union, andany agreement made before continuance under which the members of the body corporate have agreed to vote in a manner provided in the agreement is of no effect.
  • 1991, c. 46, s. 38;
  • 2010, c. 12, s. 1913.
Previous Version
TransitionalNotwithstanding any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to a bank in respect of which letters patent were issued under subsection 35(1) permission toengage in a business activity specified in the order that a bank is not otherwise permitted by this Act to engage in and that the body corporate continued as the bank was engaging in at the time the application for the letters patent was made;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;[Repealed, 1994, c. 47, s. 14]hold assets that a bank is not otherwise permitted by this Act to hold if the assets were held by the body corporate continued as the bank at the time the application for the letters patent was made;acquire and hold assets that a bank is not otherwise permitted by this Act to acquire or hold if the body corporate continued as the bank was obliged, at the time the application for the letters patent was made, to acquire those assets; andmaintain outside Canada any records or registers required by this Act to be maintained in Canada.DurationThe permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceedingwith respect to any activity described in paragraph (1)(a), 30 days after the date of issue of the letters patent orif the activity is conducted under an agreement existing on the date of issue of the letters patent, the expiry of the agreement, orif the bank is a federal credit union and an undertaking to cease engaging in the activity has been given under subsection 973.02(1), the cessation date set out in the undertaking in respect of the activity;with respect to any matter described in paragraph (1)(b), ten years; andwith respect to any matter described in any of paragraphs (1)(d) to (f), two years.RenewalSubject 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 (e) for such further period or periods as the Minister considers necessary.LimitationThe Minister shall not grant to a bank any permissionwith respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the bank to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank that the bank will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; andwith respect to matters described in paragraphs (1)(d) and (e), that purports to be effective more than ten years after the date of the approval for the bank to commence and carry on business.
  • 1991, c. 46, s. 39;
  • 1994, c. 47, s. 14;
  • 1997, c. 15, s. 3;
  • 2007, c. 6, s. 5;
  • 2010, c. 12, s. 1914.
Previous Version
Discontinuance
Transferring to other federal Acts — banksA bank that is not a federal credit union mayapply, with the approval in writing of the Minister, under the Canada Business Corporations Act for a certificate of continuance as a corporation under that Act;apply, with the approval in writing of the Minister, under the Canada Cooperatives Act for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, as a cooperative under that Act;apply, under the Cooperative Credit Associations Act, for letters patent continuing the bank as an association under that Act, or amalgamating and continuing the bank as an association under that Act;apply, under the Insurance Companies Act, for letters patent continuing the bank as a company (other than a mutual company) or an insurance holding company under that Act, or amalgamating and continuing the bank as a company (other than a mutual company) or an insurance holding company under that Act; orapply, under the Trust and Loan Companies Act, for letters patent continuing the bank as a company under that Act, or amalgamating and continuing the bank as a company under that Act.Conditions for approvalThe approval referred to in paragraph (1)(a) or (b) may be given only if the Minister is satisfied thatthe bank has published, once a week for four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the bank is situated, a notice of its intention to apply for the approval;the application has been authorized by a special resolution; andthe bank does not hold deposits, other than deposits that are made by a person who controls the bank or by a person who has a significant interest in a class of shares of the bank and that are not insured by the Canada Deposit Insurance Corporation.Withdrawing applicationIf a special resolution authorizing the application for the certificate or letters patent so states, the directors of the bank may, without further approval of the shareholders, withdraw the application before it is acted on.Restriction on other transfersA bank may not apply to be continued, or to be amalgamated and continued, as the case may be, as a body corporate other than one referred to in subsection (1).
  • 1991, c. 46, s. 574;
  • 1997, c. 15, s. 4;
  • 1999, c. 28, s. 11;
  • 2001, c. 9, s. 50;
  • 2007, c. 6, s. 6;
  • 2010, c. 12, s. 1915.
Previous Version
Transferring to other federal Acts — federal credit unionA federal credit union mayapply, with the approval in writing of the Minister, under the Canada Cooperatives Act for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, as a cooperative under that Act; orapply under the Cooperative Credit Associations Act for letters patent continuing the federal credit union as an association under that Act or amalgamating and continuing the federal credit union as an association under that Act.Conditions for approvalThe approval referred to in paragraph (1)(a) may be given only if the Minister is satisfied thatthe federal credit union has published, once a week for four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where its head office is situated, a notice of its intention to apply for the approval;the application has been authorized by a special resolution of the members and, if the federal credit union has issued shares, by a separate special resolution of the shareholders of each class of shares; andthe federal credit union does not hold deposits.All shares have right to voteFor the purpose of paragraph (2)(b), each share carries the right to vote in respect of the special resolution, whether or not it otherwise carries the right to vote in respect of any other matter.Restriction on other transfersA federal credit union may not apply to be continued, or to be amalgamated and continued, as the case may be, as a body corporate other than one referred to in subsection (1).
  • 1997, c. 15, s. 4;
  • 2001, c. 9, s. 50;
  • 2007, c. 6, s. 6;
  • 2010, c. 12, s. 1916.
Previous Version
Act ceases to applyIf a bank applies for a certificate or letters patent referred to in section 39.1 or 39.2 in accordance with that section and the certificate is given or the letters patent are issued, this Act ceases to apply to the bank as of the day on which the certificate or the letters patent take effect.
  • 2010, c. 12, s. 1916.
Corporate Name
Prohibited namesA bank may not be incorporated under this Act with a namethat is prohibited by an Act of Parliament;that is, in the opinion of the Superintendent, deceptively misdescriptive;that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existingtrade-mark or trade name, orcorporate 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;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;that is reserved under section 43 for another bank or an authorized foreign bank or a proposed bank or a proposed authorized foreign bank or under section 697 for a bank holding company or a proposed bank holding company;that includes the phrase “credit union” or “coopérative de crédit”, or any abbreviation, combination or derivative of those phrases, unless it is to be a federal credit union and its name also includes the word “bank”, “banque”, “federal” or “fédérale” in conjunction with those phrases; orthat includes the words “cooperative” or “coopérative”, or any abbreviation, combination or derivative of those words, unless it is to be a federal credit union and its name also includes the word “bank”, “banque”, “federal” or “fédérale” in conjunction with those words.
  • 1991, c. 46, s. 40;
  • 1996, c. 6, s. 1;
  • 1997, c. 15, s. 5;
  • 1999, c. 28, s. 12;
  • 2001, c. 9, s. 51;
  • 2010, c. 12, s. 1917.
Previous Version
Name of federal credit unionDespite any other Act, but subject to paragraphs 40(f) and (g), a bank may be incorporated or formed under this Act with the words “credit union” “coopérative de crédit”, “cooperative” or “coopérative”, or any abbreviation, combination or derivative of those words, in its name, but only if it will be a federal credit union.
  • 2010, c. 12, s. 1918.
Affiliated bankDespite section 40, a bank that is affiliated with another entity may, with the consent of that entity, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.
  • 1991, c. 46, s. 41;
  • 1996, c. 6, s. 1;
  • 2001, c. 9, s. 52;
  • 2007, c. 6, s. 7.
Previous Version
French or English form of nameThe name of a bank 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 may use and be legally designated by any such form.Alternate nameA bank may identify itself outside Canada by its name in any language and the bank may use and be legally designated by any such form of its name outside Canada.Other nameSubject to subsection (4) and section 255, a bank may carry on business under or identify itself by a name other than its corporate name.DirectionsIf a bank is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the bank 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 40(a) to (g).
  • 1991, c. 46, s. 42;
  • 1996, c. 6, s. 2;
  • 2010, c. 12, s. 1919.
Previous Version
Reserved nameThe Superintendent may, on request, reserve for ninety days a name for a proposed bank or proposed authorized foreign bank or for a bank or authorized foreign bank that intends to change its name.
  • 1991, c. 46, s. 43;
  • 1999, c. 28, s. 13.
Directing change of nameIf through inadvertence or otherwise a bankcomes into existence or is continued with a name, oron an application to change its name, is granted a namethat is prohibited by section 40, the Superintendent may, by order, direct the bank to change its name and the bank shall comply with that direction.Revoking nameIf a bank 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 Act, the Superintendent may revoke the name of the bank and assign to it a name and, until changed in accordance with section 215 or 217, the name of the bank is thereafter the name so assigned.
  • 1991, c. 46, s. 44;
  • 1996, c. 6, s. 3;
  • 2001, c. 9, s. 53.
ORGANIZATION AND COMMENCEMENTOrganization MeetingsBanks Other Than Federal Credit Unions
First directors’ meetingAfter letters patent incorporating a bank that is not a federal credit union are issued, a meeting of the directors of the bank must be held at which the directors may, subject to this Part,make by-laws;adopt forms of share certificates and corporate records;authorize the issue of shares of the bank;appoint officers;appoint, pursuant to subsection 314(1), an auditor or auditors to hold office until the first meeting of shareholders;make banking arrangements; anddeal with any other matters necessary to organize the bank.Calling directors’ meetingAn 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 181(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the bank.
  • 1991, c. 46, s. 45;
  • 2010, c. 12, s. 1921.
Previous Version
Calling shareholders’ meetingIf at least five million dollars, or any greater amount that the Minister may specify, has been received by a bank in respect of which letters patent were issued under subsection 22(1) from the issue of its shares, the directors of the bank must without delay call a meeting of the shareholders of the bank.Meeting of shareholdersThe shareholders of a bank shall, by resolution at the meeting of shareholders called pursuant to subsection (1),approve, amend or reject any by-law made by the directors of the bank;subject to section 168, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election; andappoint an auditor or auditors to hold office until the close of the first annual meeting of shareholders.
  • 1991, c. 46, s. 46;
  • 2001, c. 9, s. 54;
  • 2010, c. 12, s. 1922.
Previous Version
Term of first directorsA director named in the application for letters patent to incorporate a bank holds office until the election of directors at the meeting of shareholders called pursuant to subsection 46(1).
  • 1991, c. 46, s. 47;
  • 2010, c. 12, s. 1923(F).
Previous Version
Federal Credit UnionsMeeting of First Directors
Organizational meetingAfter letters patent incorporating a federal credit union are issued, a meeting of its first directors must be held at which the first directors may, subject to this Part,adopt forms of certificates for membership shares, forms of share certificates and forms of corporate records;admit persons to membership in the federal credit union and issue or authorize the issuance of membership shares;authorize the issue of shares of the federal credit union;appoint officers;appoint, under subsection 314(1), an auditor or auditors to hold office until the first meeting of members;make banking arrangements; anddeal with any other matters necessary to organize the federal credit union.Calling directors’ meetingA first director may call the meeting referred to in subsection (1) by giving, subject to subsection 181(2), the other directors notice of the time and place of the meeting no fewer than five days before the meeting.
  • 2010, c. 12, s. 1924.
First Meeting of Members
Calling members’ meetingIf at least five million dollars, or any greater amount that the Minister may specify, has been received by a federal credit union in respect of which letters patent were issued under subsection 22(2) from the issue of its membership shares and shares, the directors of the federal credit union must, without delay, call a meeting of the members of the federal credit union.Meeting of membersAt the meeting, the members mustmake by-laws;elect directors in accordance with this Act and the federal credit union’s by-laws; andappoint an auditor or auditors to hold office until the close of the first annual meeting of the federal credit union.Term of office of first directorsThe term of office of the first directors ends at the close of the meeting referred to in subsection (1).
  • 2010, c. 12, s. 1924.
Membership in a Federal Credit UnionConditions of Membership
Membership governed by by-lawsSubject to the provisions of this Act, membership in a federal credit union is governed by its by-laws.Minimum membership shares requiredTo be a member of a federal credit union, a person must acquire and hold the minimum number of membership shares required under the federal credit union’s by-laws.Member who ceases to hold the minimumSubject to any limitations in the federal credit union’s by-laws, including limitations on the rights members may exercise, a member of a federal credit union who ceases to hold enough membership shares to be a member continues to be a member of the federal credit union for the purposes of this Act.Ground for expulsionFor greater certainty, subsection (3) does not prevent holding fewer than the minimum number of membership shares from being set out in the federal credit union’s by-laws as a ground for expulsion under subsection 47.06(1) or section 47.09.
  • 2010, c. 12, s. 1924.
Subscription deemed applicationA subscription for the number of membership shares in a federal credit union required by the federal credit union’s by-laws for membership constitutes an application for membership and the issue of a membership share to the applicant constitutes admission to membership.Approval requiredSubject to subsection (1), a person becomes a member of a federal credit union when the person’s application for membership is approved by the directors or an employee authorized by the federal credit union and the applicant has complied fully with the federal credit union’s by-laws governing admission of members.
  • 2010, c. 12, s. 1924.
Withdrawal and Termination
Withdrawal of membershipA member of a federal credit union may withdraw from the federal credit union at any time by giving notice in accordance with the by-laws.Deemed noticeA deceased member is deemed to have given notice to the federal credit union of their intention to withdraw on the day of their death.Rights of withdrawing memberThe by-laws of a federal credit union must set out the rights of a withdrawing member.
  • 2010, c. 12, s. 1924.
ExpulsionA member of a federal credit union may be expelled from membership, in accordance with the by-laws, by a resolution of the directors on the grounds set out in the by-laws.Member’s rights relating to expulsionThe by-laws of a federal credit union must set out the rights of members who are expelled under subsection (1), and those rights must includethe right of a member to receive advance notice of any meeting of the directors at which the board will consider a resolution to expel the member;the right of a member not to be expelled without being given an opportunity to make representations on the matter at the meeting of the directors;the right of an expelled member to appeal the decision of the directors at the next meeting of the members; andthe right of the expelled member to be reinstated as a member of the federal credit union if, at the next meeting of the members, the members, by ordinary resolution, set aside the directors’ resolution.Procedures to be set out in by-lawsThe by-laws of a federal credit union must set outthe procedures to be followed by the directors to provide the advance notice referred to in paragraph (2)(a); andthe procedures to be followed relating to the appeal referred to in paragraph (2)(c).Notice of decisionIf the directors pass a resolution expelling a member under subsection (1), the federal credit union must, within five days after the passing of the resolution, notify the member of the directors’ decision by registered letter addressed to the member at the member’s recorded address.
  • 2010, c. 12, s. 1924.
InactivityNo by-law may provide for the expulsion of a member by reason only of inactivity of the member in relation to the business or affairs of the federal credit union.
  • 2010, c. 12, s. 1924.
RedemptionNo by-law governing the withdrawal of a member from membership or the termination of the membership of a member may authorize a redemption of membership shares in contravention of section 485.
  • 2010, c. 12, s. 1924.
Termination by membersUnless the by-laws provide otherwise, the membership of a member may be terminated by a special resolution of the members. Section 47.06 applies, with any modifications that the circumstances require, to a termination by the members.
  • 2010, c. 12, s. 1924.
Winding-up proceedings in respect of memberDespite subsection 47.06(1), a federal credit union may, by written notice to a member, terminate the membership if the member is a body corporate and winding-up proceedings have commenced with respect to it.
  • 2010, c. 12, s. 1924.
General Provisions — Federal Credit Unions
ProhibitionAn entity must not become a member of a federal credit union if, as a result of becoming a member, the majority of the members of the federal credit union would not be natural persons.
  • 2010, c. 12, s. 1924.
Provision of servicesA federal credit union must provide its services primarily to its members.
  • 2010, c. 12, s. 1924.
Right to voteEach member of a federal credit union has only one vote on all matters to be decided by the members.
  • 2010, c. 12, s. 1924.
Members under 18Subject to the by-laws, a person less than 18 years of age may be admitted to membership in a federal credit union and may vote at meetings of the federal credit union.
  • 2010, c. 12, s. 1924.
Membership not transferableNo transfer of a membership is valid for any purpose.
  • 2010, c. 12, s. 1924.
Reinstatement — section 47.06A person whose membership has been terminated under section 47.06 may be reinstated as a member of the federal credit union only by ordinary resolution of the members.Reinstatement — section 47.09A person whose membership has been terminated under section 47.09 may be reinstated as a member of the federal credit union only by special resolution of the members.
  • 2010, c. 12, s. 1924.
Transfer of membership sharesNo transfer of membership shares in a federal credit union is valid unless the transfer is approved by resolution of the directors.
  • 2010, c. 12, s. 1924.
Obligation to have at least five membersA federal credit union must ensure that at all times it has at least five members.Membership too lowIf the membership of a federal credit union is reduced to fewer than five members, the federal credit union must, without delay, take the steps that are necessary tomake an application referred to in subsection 39.2(1) or section 216.08; orliquidate and dissolve the federal credit union under Part VI.
  • 2010, c. 12, s. 1924.
ExemptionThe Minister may, subject to any terms and conditions that the Minister considers appropriate, exempt any entity or federal credit union from the application of sections 47.11, 47.12 and 47.18.
  • 2010, c. 12, s. 1924.
Commencement and Carrying on of Business
Order to commence and carry on businessA bank shall not carry on any business until the Superintendent has, by order, approved the commencement and carrying on of business by the bank.DeemingIf, on the day this subsection comes into force, an order approving the commencement and carrying on of business by a bank named in Schedule I or II as those Schedules read immediately before that day, has not been made, such an order is deemed to have been made in respect of the bank on that day.Continued bankExcept in respect of a body corporate that is continued as a bank under this Act for the purposes of forthwith amalgamating with one or more bodies corporate and continuing as a bank under this Act, where letters patent continuing a body corporate as a bank under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the bank.Amalgamated bankWhere letters patent amalgamating and continuing two or more bodies corporate as a bank under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the bank.Subsection 49(2) and section 52 do not applyFor greater certainty, subsection 49(2) and section 52 do not apply in respect of a bank referred to in subsections (3) and (4).
  • 1991, c. 46, s. 48;
  • 2001, c. 9, s. 55.
Authority to make orderOn application by a bank, the Superintendent may make an order approving the commencement and carrying on of business by the bank.Statement of paymentsAn application by a bank for an order under subsection (1) must contain a statement setting out the amounts paid or to be paid by the bank in connection with its incorporation and organization.
No payments before orderUntil an order approving the commencement and carrying on of business is made for a bank, the bank must not make any payment on account of incorporation or organization expenses out of moneys received from the issue of the shares or the membership shares of the bank and interest on those moneys, except reasonable sumsfor the remuneration of not more than two officers;for the payment of costs related to the issue of shares, or membership shares, of the bank; andfor the payment of clerical assistance, legal services, accounting services, office accommodation at one location, office expenses, advertising, stationery, postage and travel expenses.
  • 1991, c. 46, s. 50;
  • 2010, c. 12, s. 1925.
Previous Version
Deposits and investments before orderWhere a bank comes into existence but no order approving the commencement and carrying on of business is made for the bank, the bank may onlydeposit, in Canada, paid-in capital of the bank in another deposit-taking Canadian financial institution; orinvest paid-in capital of the bank in unencumbered securities of the Government of Canada or the government of any province.
Conditions for orderThe Superintendent shall not make an order approving the commencement and carrying on of business by a bank until it has been shown to the satisfaction of the Superintendent thatthe meeting of shareholders of the bank referred to in subsection 46(1), or, in the case of a federal credit union, the meeting of members referred to in subsection 47.02(1), has been duly held;the bank has paid-in capital of at least five million dollars or any greater amount that is specified by the Minister under subsection 46(1) or 47.02(1);the expenses of incorporation and organization to be borne by the bank are reasonable; andall other relevant requirements of this Act have been complied with.Time limitThe Superintendent shall not make an order approving the commencement and carrying on of business by a bank more than one year after the day on which the bank comes into existence.
  • 1991, c. 46, s. 52;
  • 2001, c. 9, s. 56;
  • 2010, c. 12, s. 1926.
Previous Version
Conditions of orderAn order approving the commencement and carrying on of business by a bank may contain such conditions or limitations that are consistent with this Act and relate to the business of the bank as the Superintendent deems expedient and necessary.Deemed conditionAn order approving the commencement and carrying on of business by a federal credit union is deemed to contain a condition that the federal credit union must, on an ongoing basis, be organized and carry on business on a cooperative basis in accordance with section 12.1.
  • 1991, c. 46, s. 53;
  • 2010, c. 12, s. 1927.
Previous Version
VariationsIn respect of the order approving the commencement and carrying on of business by a bank, the Superintendent may at any time, by further order,make the order subject to such conditions or limitations that are consistent with this Act and that relate to the business of the bank as the Superintendent deems expedient and necessary, oramend or revoke any authorization contained in the order or any condition or limitation to which the order is subject, other than the condition deemed to be in the order by subsection 53(2),but before making any such further order the Superintendent shall provide the bank with an opportunity to make representations regarding that further order.[Repealed, 1996, c. 6, s. 4]
  • 1991, c. 46, s. 54;
  • 1996, c. 6, s. 4;
  • 2010, c. 12, s. 1928.
Previous Version
Limit on assetsThe Minister may, by order, require a bank not to have average total assets in any three month period ending on the last day of a month subsequent to the month specified in the order exceeding the bank’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 if the Minister is of the opinion that it is in the best interests of the financial system in Canada to do so, after having considered the Superintendent’s opinion onthe nature and extent of the financial services activities carried out by entities affiliated with the bank; andthe impact that the nature and degree of supervision and regulation of those financial services activities have on the supervision and regulation of the bank.Revocation of orderIf the Minister is of the opinion that the circumstances giving rise to the order have ceased to exist or have changed substantially, the Minister may, by further order, revoke the order.Average total assetsFor the purposes of subsection (1), the average total assets of a bank in a three month period shall be computed by adding the total assets of the bank 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 assetsFor the purposes of subsections (1) and (3), total assets, in respect of a bank, has the meaning given that expression by the regulations.
  • 2001, c. 9, s. 57.
Permission to subsidiary of foreign bankOn the recommendation of the Superintendent, the Minister may, at the same time that an order is made approving the commencement and carrying on of business by a bank that is the subsidiary of a foreign bank, by further order, grant the subsidiary permission tohold assets that banks are not otherwise permitted by this Act to hold if those assets consist of shares of a body corporate incorporated by or under an Act of Parliament or of the legislature of a province that, at the time application for letters patent incorporating the subsidiary was made, were held by the eligible foreign institution, as defined in subsection 370(1), that is the holding body corporate of the subsidiary or any affiliate of that eligible foreign institution; andhold assets that banks are not otherwise permitted by this Act to hold if, at the time application for letters patent incorporating the subsidiary was made, the assets were held by an affiliate of the eligible foreign institution, as defined in subsection 370(1), that is the holding body corporate of the subsidiary.Despite any other provision of this Act or the regulations, the subsidiary may act in accordance with that permission.Extension of permissionPermission granted to a bank by order of the Minister under subsection (1) is only for the period specified in the order. That period may not be more than two years, except that the Minister may extend the period by further order on application by the bank. The total of the period and any extensions of it may not, in any case, exceed ten years.
  • 1991, c. 46, s. 55;
  • 1997, c. 15, s. 6;
  • 1999, c. 31, s. 9;
  • 2001, c. 9, s. 58.
Public noticeOn the making of an order approving the commencement and carrying on of business by a bank, the bank shall publish a notice of the making of the order in a newspaper in general circulation at or near the place where the head office of the bank is located.Notice in Canada GazetteThe Superintendent shall cause to be published in the Canada Gazette a notice of the making of an order approving the commencement and carrying on of business by a bank.Non-application to existing bankFor greater certainty, this section does not apply to a bank referred to in subsection 48(2).
Cessation of existenceExcept for the sole purpose of winding up the bank’s affairs, a bank ceases to exist one year after the day on which its incorporating instrument became effective if it does not obtain an order approving the commencement and carrying on of business within that year.
Allowed disbursementsWhere an order approving the commencement and carrying on of business is not made for a bank, no part of the moneys of the bank shall be used for the payment of incorporation and organization expenses, other than remuneration and costs referred to in section 50, unless the payment has been approved by a special resolution.Application to court to settle disbursementsIf the amount allowed by a special resolution for the payment of any incorporation and organization expenses referred to in subsection (1) is considered insufficient by the directors or if no special resolution for the payment of such expenses is passed, the directors may apply to any court having jurisdiction in the place where the head office of the bank is situated to settle and determine the amounts to be paid out of any moneys of the bank before distribution of the balance toif the bank is not a federal credit union, the shareholders or, if there are no shareholders, to the incorporators; orif the bank is a federal credit union, its members.Notice of application to courtThe directors must, at least 21 days before the date fixed for the hearing of the application referred to in subsection (2), send to the shareholders, incorporators or members, as the case may be, a notice of the application, containing a statement of the amounts that are proposed to be settled and determined by the court.Ratio payableIn order that the amounts paid and payable under this section may be equitably borne by the shareholders, incorporators or members, as the case may be, the directors must, after the amounts of the payments have been approved by special resolution or settled and determined by a court, fix the proportionate part of the amounts chargeable to each shareholder, incorporator or member as the ratio of the amount paid in by that person to the aggregate of all the amounts paid in by the shareholders, incorporators or members.Return of excessAfter the amounts referred to in this section have been paid, the directors shall pay, with any interest earned, to the shareholders, incorporators or members, the respective balances of the moneys paid in by them, less the amount chargeable to each under subsection (4).
  • 1991, c. 46, s. 58;
  • 2010, c. 12, s. 1929.
Previous Version
CAPITAL STRUCTUREShare Capital
Power to issue sharesSubject to this Act and the by-laws of the bank, shares of a bank may be issued at such times and to such persons and for such consideration as the directors of the bank may determine.SharesShares of a bank shall be in registered form and shall be without nominal or par value.Shares of existing bankShares with nominal or par value of a bank that was in existence immediately prior to the day this Part comes into force are deemed to be shares without nominal or par value.Shares of continued bankWhere a body corporate is continued as a bank under this Act, 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.Deemed share conditionsIf a right, other than a voting right, of a holder of a share with nominal or par value of a bank referred to in subsection (3) or a body corporate continued as a bank under this Act was stated or expressed in terms of the nominal or par value of the share immediately before the coming into force of this subsection or the continuance under this Act, as the case may be, that right is deemed, after the coming into force of this Part or the continuance, as the case may be, to be the same right stated or expressed without reference to the nominal or par value of the share.
  • 1991, c. 46, s. 59;
  • 2001, c. 9, s. 59.
Common sharesA bank that is not a federal credit union must have one class of shares, to be designated as “common shares”, which are non-redeemable and in which the rights of the holders of those common shares are equal in all respects, and those rights includethe right to vote at all meetings of shareholders except where only holders of a specified class of shares are entitled to vote;the right to receive dividends declared on those shares; andthe right to receive the remaining property of the bank on dissolution.Designations of sharesNo bank shall designate more than one class of its shares as “common shares” or any variation of that term.[Repealed, 2012, c. 5, s. 4]Continued bankA body corporate continued as a bank under this Act that is not in compliance with subsection (2) on the date letters patent continuing it as a bank are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.
  • 1991, c. 46, s. 60;
  • 2010, c. 12, s. 1930;
  • 2012, c. 5, s. 4.
Previous Version
Shares of federal credit unionA federal credit union may issue shares only if its by-laws set out the following:whether the shares may be issued to persons who are not members;the maximum number, if any, of shares of any class that the federal credit union is authorized to issue;the number of classes of shares; andthe rights, privileges, restrictions and conditions attaching to the shares of each class.No automatic rightsSubject to this Act, a federal credit union must not issue any share that confers on the holder of the share the rightto vote at meetings of the federal credit union otherwise than in accordance with this Act; orto receive any of the remaining property of the federal credit union on dissolution.ExceptionA federal credit union’s by-laws may provide thata share confers on its holder the right to vote at an election of directors by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled; orthe shareholders, any class of shareholders or the holders of a series of shares, may elect a fixed number or a percentage of the directors.Limit on shareholders’ directorsDespite subsections (2) and (3), the shareholders do not have the right to elect more than 20 per cent of the directors.One share, one voteIf shareholders are entitled to vote in accordance with subsection (3) or otherwise in accordance with this Act, each share entitles the holder to one vote.
  • 2010, c. 12, s. 1931.
Designation of sharesA federal credit union must not designate a class of its shares as “membership shares” or any variation of those words.
  • 2010, c. 12, s. 1931.
Classes of sharesThe by-laws of a bank that is not a federal credit union may provide for more than one class of shares and, if they so provide, they must set outthe rights, privileges, restrictions and conditions attaching to the shares of each class; andthe maximum number, if any, of shares of any class that the bank is authorized to issue.Shareholder approvalWhere a by-law referred to in subsection (1) is made, the directors of the bank shall submit the by-law to the shareholders at the next meeting of shareholders.Effective dateA 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).
  • 1991, c. 46, s. 61;
  • 2001, c. 9, s. 60;
  • 2010, c. 12, s. 1932.
Previous Version
Shares issued in seriesThe by-laws of a bank may, subject to any limitations set out in them, authorize the issue of any class of shares in one or more series and mayfix the maximum number of shares in each series and determine the designation, rights, privileges, restrictions and conditions attaching to them; andauthorize the directors to do anything referred to in paragraph (a).Effective dateIn the case of a federal credit union, a by-law referred to in subsection (1) must be made by special resolution of the members. If the federal credit union has issued shares, the by-law is not effective until it is confirmed by a separate special resolution of the shareholders, the class of shareholders or the holders of the series of shares that is affected by the by-law.Series participationIf 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.Voting rightsWhere 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.Restriction on seriesNo 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.Material to SuperintendentIf the directors exercise their authority under paragraph (1)(b), the directors shall, before the issue of shares of the series, send to the Superintendent particulars of the series of shares and a copy of the by-law that granted the authority to the directors.
  • 1991, c. 46, s. 62;
  • 2005, c. 54, s. 8;
  • 2007, c. 6, s. 8(E);
  • 2010, c. 12, s. 1933.
Previous Version
One share, one voteWhere voting rights are attached to a share of a bank, the voting rights may confer only one vote in respect of that share.
Shares non-assessableShares issued by a bank after the coming into force of this section are non-assessable and the shareholders are not liable to the bank or to its creditors in respect thereof.
Consideration for shareNo share of any class of shares of a bank shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.Other currenciesWhen issuing shares, a bank 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.
Stated capital accountA bank shall maintain a separate stated capital account for each class and series of shares it issues.Stated capital account — membership sharesA federal credit union must also maintain a stated capital account for the membership shares it issues.Addition to stated capital accountA bank must record in the appropriate stated capital account the full amount of any consideration it receives for any shares or membership shares it issues.ExceptionDespite subsection (2), a bank may, subject to subsection (4), record in the stated capital account maintained for the shares of a class or series any part of the consideration it receives in an exchange if it issues sharesin exchange forproperty of a person who immediately before the exchange did not deal with the bank at arm’s length within the meaning of that expression in the Income Tax Act,shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the bank at arm’s length within the meaning of that expression in the Income Tax Act, orproperty of a person who immediately before the exchange dealt with the bank at arm’s length within the meaning of that expression in the Income Tax Act if the person, the bank and all of the holders of shares in the class or series of shares so issued consent to the exchange;under an agreement referred to in subsection 224(1); orto shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated bank.ExceptionDespite subsection (2), a federal credit union may, subject to subsection (4), record in the stated capital account maintained for its membership shares any part of the consideration it receives in an exchange if it issues membership sharesin exchange forproperty of a person who immediately before the exchange did not deal with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act,shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act, orproperty of a person who immediately before the exchange dealt with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act if the person, the federal credit union and all of the holders of the membership shares so issued consent to the exchange;under an agreement referred to in subsection 224(1); orto shareholders of an amalgamating body corporate who receive the membership shares in addition to or instead of securities of the amalgamated bank.Limit on addition to a stated capital accountOn the issuance of a share or membership share, a bank must not add to the appropriate stated capital account an amount greater than the amount of the consideration it receives for the share or membership share.Constraint on addition to a stated capital accountWhere a bank 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 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 77(4).Constraint — federal credit unionIf the bank referred to in subsection (5) is a federal credit union, the addition must be approved by special resolution of the members and by a separate special resolution of the shareholders, the class of shareholders or the holders of the series of shares that is affected by the special resolution, unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 77(4).
  • 1991, c. 46, s. 66;
  • 1997, c. 15, s. 7;
  • 2005, c. 54, s. 9;
  • 2010, c. 12, s. 1934.
Previous Version
Stated capital of continued bankIf a body corporate is continued as a bank under this Act, the bank must record in the stated capital account maintained for each class and series of shares, or for other ownership interests, however designated, then outstanding an amount that is equal to the aggregate ofthe aggregate amount paid up on the shares of each class and series of shares, or on the other ownership interests, immediately before the body corporate was so continued, andthe amount of the contributed surplus of the bank that is attributable to those shares or other ownership interests.Contributed surplus entryThe 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.Shares issued before continuanceAny amount unpaid in respect of a share or other ownership interest, however designated, in the body corporate, that was issued by a body corporate before it was continued as a bank under this Act and paid after it was so continued must be recorded in the stated capital account maintained by the bank for the shares of that class or series or for membership shares.
  • 1991, c. 46, s. 67;
  • 2010, c. 12, s. 1935.
Previous Version
Pre-emptive rightWhere the by-laws of a bank 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.ExceptionNotwithstanding the existence of a pre-emptive right, a shareholder of a bank has no pre-emptive right in respect of shares of a class to be issuedfor a consideration other than money;as a share dividend; orpursuant to the exercise of conversion privileges, options or rights previously granted by the bank.IdemNotwithstanding the existence of a pre-emptive right, a shareholder of a bank has no pre-emptive right in respect of shares to be issuedwhere the issue of shares to the shareholder is prohibited by this Act; orwhere, to the knowledge of the directors of the bank, 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.
Conversion privilegesA bank may issue conversion privileges, options or rights to acquire securities of the bank, and shall set out the conditions thereofin the documents that evidence the conversion privileges, options or rights; orin the securities to which the conversion privileges, options or rights are attached.Transferable rightsConversion privileges, options and rights to acquire securities of a bank 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.Reserved sharesWhere a bank has granted privileges to convert any securities issued by the bank 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 shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.
Holding of own sharesExcept as provided in sections 71 to 74, or unless permitted by the regulations, a bank shall nothold shares of the bank or of any body corporate that controls the bank;hold any ownership interests of any unincorporated entity that controls the bank;permit any of its subsidiaries to hold any shares of the bank or of any body corporate that controls the bank;if the bank is a federal credit union, permit any of its subsidiaries to hold any membership shares of the federal credit union, other than the minimum number of membership shares required by the by-laws of the federal credit union to qualify for membership in it, if any; orpermit any of its subsidiaries to hold any ownership interests of any unincorporated entity that controls the bank.
  • 1991, c. 46, s. 70;
  • 2010, c. 12, s. 1936.
Previous Version
Purchase and redemption of shares and membership sharesSubject to subsection (2) and to its by-laws, a bank may, with the consent of the Superintendent, purchase, for the purpose of cancellation, any shares or membership shares issued by it, or redeem any redeemable shares or membership shares issued by it at prices not exceeding the redemption price for the shares or membership shares calculated according to a formula stated in its by-laws or the conditions attaching to the shares or membership shares.Restrictions on purchase and redemptionA bank must not make any payment to purchase or redeem any shares or membership shares issued by it if there are reasonable grounds for believing that the bank is, or the payment would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made under subsection 485(3).Donated shares and membership sharesA bank may accept from any shareholder or member a share or membership share, as the case may be, of the bank surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share or membership share except in accordance with section 75.
  • 1991, c. 46, s. 71;
  • 2010, c. 12, s. 1937.
Previous Version
Holding as personal representativeA bank may, and may permit its subsidiaries to, hold, in the capacity of a personal representative, shares of the bank — or, if the bank is a federal credit union, membership shares of the federal credit union — or of any body corporate that controls the bank or ownership interests in any unincorporated entity that controls the bank, but only if the bank or the subsidiary does not have a beneficial interest in the shares, membership shares or ownership interests.Security interestA bank may, and may permit its subsidiaries to, by way of a security interesthold shares of the bank or of any body corporate that controls the bank, orhold any ownership interests of any entity that controls the bank,where the security interest is nominal or immaterial when measured by criteria established by the bank that have been approved in writing by the Superintendent.SavingNothing in subsection (2) precludes a bank that was in existence immediately prior to the day this Part comes into force, or any of its subsidiaries, from holding any security interest held immediately prior to the coming into force of this Part.
  • 1991, c. 46, s. 72;
  • 2005, c. 54, s. 10(F);
  • 2010, c. 12, s. 1938.
Previous Version
Exception — conditions before acquisitionA bank may permit any of its subsidiaries to acquire shares of the bank through the issuance of those shares by the bank to the subsidiary if the conditions prescribed for the purposes of this subsection are met before the subsidiary acquires the shares.Conditions after acquisitionAfter a subsidiary has acquired shares under the purported authority of subsection (1), the conditions prescribed for the purposes of this subsection must be met.Non-compliance with conditionsIf a bank permits any of its subsidiaries to acquire shares of the bank under the purported authority of subsection (1) and one or more of the conditions prescribed for the purposes of subsections (1) and (2) were not met, are not met or cease to be met, as the case may be, then, despite section 16 and subsection 66(2), the bank must comply with the prescribed requirements.
  • 2007, c. 6, s. 9.
Cancellation of shares and membership sharesSubject to subsection (2), if a bank purchases shares of the bank or fractions of shares, or membership shares of the bank, or redeems or otherwise acquires shares or membership shares of the bank, the bank must cancel those shares or membership shares.Requirement to sellWhere a bank or any of its subsidiaries, through the realization of security, acquires any shares of the bank or of any body corporate that controls the bank or any ownership interests in an unincorporated entity that controls the bank, the bank shall, or shall cause its subsidiaries to, as the case may be, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.
  • 1991, c. 46, s. 73;
  • 2010, c. 12, s. 1939.
Previous Version
Subsidiary holding sharesSubject to the regulations, a bank that was in existence immediately prior to the day this Part comes into force shall cause any subsidiary of the bank that holds shares of the bank, or of any body corporate that controls the bank, or any ownership interests of any unincorporated entity that controls the bank to sell or otherwise dispose of those shares or ownership interests within six months after the day this section comes into force.
Reduction of capitalThe stated capital of a bank that is not a federal credit union may be reduced by special resolution.Reduction of capital — federal credit unionsThe stated capital of a federal credit union may be reduced by special resolution of its members and, if it has issued shares, by a separate special resolution of the shareholders, the class of shareholders or the holders of the series of shares that is affected by the special resolution.LimitationA bank shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the bank is, or the reduction would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made pursuant to subsection 485(3).Contents of special resolutionA special resolution to reduce the stated capital of a bank shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.Approval by SuperintendentA special resolution to reduce the stated capital of a bank has no effect until it is approved in writing by the Superintendent.ExceptionSubsection (4) does not apply ifthe reduction in the stated capital is made solely as a result of changes made to the accounting principles referred to in subsection 308(4); andthere is to be no return of capital to shareholders or members, as the case may be, as a result of the reduction.Conditions for approvalNo approval to reduce the stated capital of a bank 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.Statements to be submittedIn addition to evidence of the passing of a special resolution to reduce the stated capital of a bank and of the publication thereof, statements showingthe number of the bank’s shares or membership shares, as the case may be, issued and outstanding,the results of the voting,the bank’s assets and liabilities, andthe reason why the bank seeks the reduction of capitalshall be submitted to the Superintendent at the time of the application for approval of the special resolution.
  • 1991, c. 46, s. 75;
  • 2007, c. 6, s. 10;
  • 2010, c. 12, s. 1940.
Previous Version
Recovery by actionIf any money or property was paid or distributed to a shareholder, member or other person as a consequence of a reduction of capital made contrary to section 75, a creditor of the bank may apply to a court for an order compelling the shareholder, member or other person to pay the money or deliver the property to the bank.Shares and membership shares held by personal representativeNo person holding shares or membership shares in the capacity of a personal representative and registered on the records of the bank as a shareholder or member and described in those records 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.LimitationAn 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.Remedy preservedThis section does not affect any liability that arises under section 207.
  • 1991, c. 46, s. 76;
  • 2010, c. 12, s. 1941.
Previous Version
Adjustment of stated capital accountOn a purchase, redemption or other acquisition by a bank of shares or fractions of shares, or of membership shares, issued by it, other than shares or membership shares acquired under section 72 or acquired through the realization of security and sold under subsection 73(2), the bank must deduct from the stated capital account maintained for the class or series of shares, or for the membership shares, as the case may be, 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, or in respect of the membership shares, as the case may be, by the number of shares of that class or series, or the number of membership shares, as the case may be, so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series, or the number of membership shares, as the case may be, outstanding immediately before the purchase, redemption or other acquisition.IdemA bank shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 75.Shares converted to another classOn a conversion of outstanding shares of a bank into shares of another class or series, or on a change of outstanding shares of the bank into shares of another class or series, the bank shalldeduct 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; andrecord 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.Stated capital of convertible sharesFor the purposes of subsection (3) and subject to the bank’s by-laws, where a bank 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.Conversion or change of sharesShares issued by a bank and converted into shares of another class or series, or changed under subsection 192.03(1) or 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.
  • 1991, c. 46, s. 77;
  • 2010, c. 12, s. 1942.
Previous Version
Addition to stated capital accountOn a conversion of any debt obligation of a bank into shares of a class or series of shares, or into membership shares, the bank mustdeduct from the liabilities of the bank the nominal value of the debt obligation being converted; andrecord 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, or for the membership shares, as the case may be, into which the debt obligation has been converted.
  • 1991, c. 46, s. 78;
  • 2010, c. 12, s. 1943.
Previous Version
Declaration of dividend or patronage allocationThe directors of a bank may declare and a bank may pay a dividend or patronage allocation by issuing fully paid shares or, subject to subsection 79.2(1), membership shares of the bank or options or rights to acquire fully paid shares or membership shares of the bank and, subject to subsection (4), the directors of a bank may declare and a bank may pay a dividend or patronage allocation in money or property, and if a dividend or patronage allocation is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.Notice to SuperintendentThe directors of a bank shall notify the Superintendent of the declaration of a dividend at least 15 days before the day fixed for its payment.Stated capital accountIf shares or membership shares of a bank are issued in payment of a dividend or patronage allocation, the bank must record in the stated capital account maintained or to be maintained for the shares of the class or series, or for the membership shares, issued in payment of the dividend or patronage allocation the declared amount of the dividend or patronage allocation stated as an amount of money.When dividend or patronage allocation not to be declaredThe directors of a bank must not declare and a bank must not pay a dividend or patronage allocation if there are reasonable grounds for believing that the bank is, or the payment would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made under subsection 485(3).[Repealed, 2007, c. 6, s. 11]
  • 1991, c. 46, s. 79;
  • 2001, c. 9, s. 61;
  • 2007, c. 6, s. 11;
  • 2010, c. 12, s. 1944.
Previous Version
Membership Capital
Membership sharesA federal credit union may have only one class of membership shares in which the rights of their holders are equal in all respects, and those rights include the right to receivedividends declared on those membership shares; andthe remaining property of the federal credit union on dissolution.Consideration for membership shareNo membership share of a federal credit union is to be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.Other currenciesWhen issuing membership shares, a federal credit union may provide that any aspect of the membership 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.
  • 2010, c. 12, s. 1945.
Membership sharesMembership shares may be held only by members.No right to voteThe right to vote attaches to membership and not to a membership share.Preferences, rights, etc.A federal credit union’s letters patent or by-laws may not include any preference, right, condition, restriction, limitation or prohibition on membership shares, except as provided for by this Act.
  • 2010, c. 12, s. 1945.
Issue of certificatesThe by-laws of a federal credit union may provide that no membership share certificates need be issued and, if they so provide, the federal credit union must, on the request of a member, issue a statement of the number of membership shares held by the member.CertificatesThe face of each certificate that the federal credit union issues in respect of membership shares must containthe name of the federal credit union;a statement that the federal credit union is subject to this Act;the name of the person to whom it is issued;a statement that the certificate represents membership shares in the federal credit union, and the number of the membership shares represented by the certificate;a statement that the certificate is transferable only in accordance with this Act; anda statement that there is a charge on the membership shares represented by the certificate in favour of the federal credit union for any indebtedness of the member to the federal credit union.
  • 2010, c. 12, s. 1945.
Authorized capitalThe membership shares of a federal credit union must be issued with no par value, and its by-laws must specify any limit on the number of membership shares and set out the formula to be used to determine the value of the membership shares.
  • 2010, c. 12, s. 1945.
Membership shares non-assessableMembership shares issued by a federal credit union are non-assessable, and their holders are not liable to the federal credit union or to its creditors in respect of those membership shares.
  • 2010, c. 12, s. 1945.
Continued body corporateA body corporate that is continued as a federal credit union under this Act and that is not in compliance with section 79.1 on the date letters patent continuing it as a federal credit union are issued must, within 12 months after that date, redesignate a class of its shares to comply with that section.
  • 2010, c. 12, s. 1945.
Subordinated Indebtedness
Restriction on subordinated indebtednessA bank shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.References to subordinated indebtednessA person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by a bank refer to the subordinated indebtedness otherwise than as subordinated indebtedness.Deemed not to be a depositSubordinated indebtedness issued by a bank is deemed not to be a deposit.Other currenciesWhen issuing subordinated indebtedness, a bank 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
DefinitionsIn this section and sections 82 to 135,adverse claimoppositionadverse claim includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in a security;bona fide purchaseracheteur de bonne foibona fide purchaser means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or order form or of a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank;clearing agencyagence de compensation et de dépôtclearing agency means a person designated as a recognized clearing agency by the Superintendent;deliverylivraison ou remisedelivery means voluntary transfer of possession;fungiblefongiblesfungible, in respect of securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit;genuineauthentiquegenuine means free of forgery or counterfeit;good faithbonne foigood faith means honesty in fact in the conduct of the transaction concerned;over-issueémission excédentaireover-issue means the issue of securities in excess of any maximum number of securities that the issuer is authorized to issue;purchaseracquéreurpurchaser means a person who takes an interest in a security by sale, mortgage, pledge, issue, reissue, gift or any other voluntary transaction;security or security certificatevaleur mobilière ou certificat de valeur mobilièresecurity or security certificate means an instrument issued by a bank that isin bearer, order or registered form,of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,one of a class or series or by its terms divisible into a class or series of instruments, andevidence of a share, participation or other interest in or obligation of a bank,but does not include an instrument evidencing a deposit or, in the case of a federal credit union, a membership share;securities brokercourtiersecurities broker means a person who is engaged for all or part of the person’s time in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to, a customer;trust indentureacte de fiducietrust indenture has the meaning given that expression by section 294;unauthorizednon autoriséunauthorized, in relation to a signature or an endorsement, means a signature or an endorsement made without actual, implied or apparent authority, and includes a forgery;uncertificated securityvaleur mobilière sans certificatuncertificated security means a security, not evidenced by a security certificate, the issue and any transfer of which is registered or recorded in records maintained for that purpose by or on behalf of a bank;validvalidevalid means issued in accordance with the applicable law or validated under section 97.
  • 1991, c. 46, s. 81;
  • 2010, c. 12, s. 1946.
Previous Version
Provisions governing transfers of securitiesThe transfer of a security is governed by sections 83 to 135.
Security a negotiable instrumentA security is a negotiable instrument but, in the case of any inconsistency between the provisions of the Bills of Exchange Act and this Act, this Act prevails to the extent of the inconsistency.Bearer formA security is in bearer form if it is payable to bearer according to its terms and not by reason of any endorsement.Order formA security is in order form where the security is not a share and, by its terms, it is payable to the order or assigns of any person therein specified with reasonable certainty or to the person or the person’s order.Registered formA security is in registered form ifit specifies a person entitled to the security or to the rights it evidences, and its transfer is capable of being recorded in a securities register; orit bears a statement that it is in registered form.
Status of guarantorA guarantor for an issuer of a security is deemed to be an issuer to the extent of the guarantee, whether or not the guarantor’s obligation is noted on the security.
Rights of holderSubject to Part VII, every security holder is entitled at the holder’s option to a security certificate that complies with this Act or to a non-transferable written acknowledgement of the holder’s right to obtain a security certificate that complies with this Act from a bank in respect of the securities of that bank held by the security holder.Fee for security certificateA bank may charge a fee, not exceeding a prescribed amount, for a security certificate issued in respect of a transfer.Joint holdersA bank is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery of a security certificate to one of several joint holders is sufficient delivery to all joint holders of the security.
  • 1991, c. 46, s. 85;
  • 1999, c. 31, s. 10.
SignaturesA security certificate shall be signed by or bear the printed or otherwise mechanically reproduced signature of at least one of the following:a director or officer of the bank;a registrar or transfer agent of the bank or a branch transfer agent or a natural person on their behalf; ora trustee who certifies it in accordance with a trust indenture.Continuation of validity of signatureIf a security certificate contains a person’s printed or mechanically reproduced signature, the bank may issue the security certificate even if the person has ceased to be a director or officer of the bank. The security certificate is as valid as if the person were a director or officer at the date of its issue.
  • 1991, c. 46, s. 86;
  • 2005, c. 54, s. 12.
Previous Version
Contents of share certificateThere shall be stated on the face of each share certificate issued by a bank after the coming into force of this sectionthe name of the bank;a statement that the bank is subject to the Bank Act;the name of the person to whom the share certificate is issued; andthe number and class of shares and the designation of any series that the certificate represents.
Restrictions and chargesNo charge in favour of a bank and no restriction on transfer other than a constraint under Part VII is effective against a transferee of a security issued by the bank if the transferee has no actual knowledge of the charge or restriction unless it or a reference to it is noted conspicuously on the security certificate.No restrictionIf any of the issued shares of a distributing bank remain outstanding and are held by more than one person, the bank may not restrict the transfer or ownership of its shares except by way of a constraint under Part VII.ContinuanceIf a body corporate that is continued as a bank under this Act has outstanding security certificates and the words “private company” or “private corporation” appear on the certificates, those words are deemed to be a notice of a charge or restriction for the purposes of subsection (1).
  • 1991, c. 46, s. 88;
  • 2005, c. 54, s. 13.
Previous Version
Particulars of classThere shall be stated legibly on a share certificate issued after the coming into force of this section by a bank that is authorized to issue shares of more than one class or seriesthe rights, privileges, restrictions and conditions attached to the shares of each class and series existing when the share certificate is issued; orthat the class or series of shares that the certificate represents has rights, privileges, restrictions or conditions attached thereto and that the bank will furnish a shareholder, on demand and without charge, with a full copy ofthe text of the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as those rights, privileges, restrictions and conditions have been fixed by the directors, andthe text of the authority of the directors, if the directors are so authorized, to fix the rights, privileges, restrictions and conditions of subsequent series of shares.DutyWhere a share certificate issued by a bank contains the statement mentioned in paragraph (1)(b), the bank shall provide a shareholder, on demand and without charge, with a full copy of the texts referred to in subparagraphs (1)(b)(i) and (ii).
Fractional shareA bank may issue a certificate for a fractional share or may issue in place thereof a scrip certificate in bearer form that entitles the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share.
Scrip certificatesThe directors of a bank may attach conditions to any scrip certificate issued by the bank, including conditions thatthe scrip certificate becomes void if not exchanged for a share certificate representing a full share before a specified date; andany shares for which the scrip certificate is exchangeable may, notwithstanding any pre-emptive right, be issued by the bank to any person and the proceeds thereof may be distributed rateably to the holders of all the scrip certificates.
Holders of fractional sharesA holder of a fractional share issued by a bank is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share.Holders of scrip certificatesA holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.
Dealings with registered ownerA bank or a trustee within the meaning of section 294 may, subject to subsections 137(5) to (7) and sections 138 to 141 and 145, treat the registered owner of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payment in respect of the security and to exercise all of the rights and powers of an owner of the security.Constructive registered holderNotwithstanding subsection (1), a bank may treat a person as a registered security holder entitled to exercise all of the rights of the security holder that the person represents, if that person provides the bank with evidence as described in subsection 127(4) that the person isthe heir or personal representative of a deceased security holder or the personal representative of the heirs of the deceased security holder;the personal representative of a registered security holder who is a minor, an incompetent person or a missing person; ora liquidator of, or a trustee in bankruptcy for, a registered security holder.Permissible registered holderIf a person on whom the ownership of a security of a bank devolves by operation of law, other than a person described in subsection (2), provides proof of that person’s authority to exercise rights or privileges in respect of a security of the bank that is not registered in the person’s name, the bank shall, subject to this Act, treat that person as entitled to exercise those rights or privileges.Immunity of bankA bank is not required to inquire into the existence of, or see to the performance or observance of, any duty owed to a third person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this Part, as the owner or registered holder thereof.
  • 1991, c. 46, s. 93;
  • 2001, c. 9, s. 62(F);
  • 2005, c. 54, s. 14.
Previous Version
MinorsIf a minor exercises any rights of ownership in the securities of a bank, no subsequent repudiation or avoidance is effective against the bank.
  • 1991, c. 46, s. 94;
  • 2005, c. 54, s. 15(E).
Previous Version
Joint shareholdersA bank may treat as owners of a security the survivors of persons to whom the security was issued as joint holders, if the bank receives proof satisfactory to it of the death of any of the joint holders.
Transmission of securitiesSubject to the provisions of Part VII and any applicable law relating to the collection of taxes, a person referred to in paragraph 93(2)(a) is entitled to become registered as the owner of a security, or to designate another person to be registered as the owner of a security, if the person referred to in paragraph 93(2)(a) delivers to the bank or its transfer agentthe original grant of probate or of letters of administration, or a copy thereof certified to be a true copy bythe court that granted the probate or letters of administration,a trust company incorporated under the Trust and Loan Companies Act or under the laws of a province, ora lawyer or notary acting on behalf of the person referred to in paragraph 93(2)(a), orin the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province,together withan affidavit or declaration of transmission made by the person referred to in paragraph 93(2)(a) that states the particulars of the transmission, andthe security certificate that was owned by the deceased holderin the case of a transfer to the person referred to in paragraph 93(2)(a), with or without the endorsement of that person, andin the case of a transfer to any other person, endorsed in accordance with section 111,and accompanied by any assurance the bank may require under section 127.Excepted transmissionsNotwithstanding subsection (1), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to Part VII and any applicable law relating to the collection of taxes, to become registered as the owner or to designate a person to be registered as the owner, if the personal representative delivers to the bank or its transfer agent the following documents, namely,the security certificate that was owned by the deceased holder; andreasonable proof of the governing laws, of the deceased holder’s interest in the security and of the right of the personal representative or the designated person to become the registered shareholder.Right of bank to treat as ownerSubject to Part VII, delivery of the documents referred to in this section empowers a bank or its transfer agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in paragraph 93(2)(a) or to such person as the person referred to in that paragraph may designate and, thereafter, to treat the person who becomes so registered as the owner of that security.
  • 1991, c. 46, ss. 96, 575.
Over-issueThe provisions of this Part that validate a security or compel its issue or reissue do not apply to the extent that a validation, issue or reissue would result in over-issue, butif a valid security similar in all respects to the security involved in the over-issue is reasonably available for purchase, the person entitled to the validation or issue may compel the issuer to purchase and deliver such a security to that person against surrender of the security that the person holds; orif a valid security similar in all respects to the security involved in the over-issue is not reasonably available for purchase, the person entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.Retroactive validationWhere an issuer is subsequently authorized to issue securities of a number equal to or exceeding the number of securities previously authorized plus the amount of the securities over-issued, the securities so over-issued are valid from the date of their issue.Payment not a purchase or redemptionA purchase or payment by an issuer under subsection (1) is not a purchase or payment in respect of which section 71 or 77 applies.
Burden of proofIn any action on a security,unless specifically denied in the pleadings, each signature on the security or in a necessary endorsement is admitted;a signature on the security is presumed to be genuine and authorized but, if the effectiveness of the signature is put in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;if a signature is admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defence or a defect going to the validity of the security; andif the defendant establishes that a defence or defect exists, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or any person under whom the plaintiff claims.
Securities fungibleUnless otherwise agreed, and subject to any applicable law, regulation or stock exchange rule, a person required to deliver securities may deliver any security of the specified issue in bearer form or registered in the name of the transferee or endorsed to the transferee or in blank.
Notice of defectEven against a purchaser for value and without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated therein by reference to another instrument, statute, rule, regulation or order to the extent that the terms so referred to do not conflict with the stated terms, but such a reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, notwithstanding that the security expressly states that a person accepting it admits the notice.Purchaser for valueA security is valid in the hands of a purchaser for value without notice of any defect going to its validity.Lack of genuinenessExcept as provided in section 101, the fact that a security is not genuine is a complete defence even against a purchaser for value and without notice.Ineffective defencesAll defences of an issuer, including non-delivery and conditional delivery of a security but not including lack of genuineness, are ineffective against a purchaser for value without notice of the particular defence.Staleness as defect noticeAfter an event that creates a right to immediate performance of the principal obligation evidenced by a security, or that sets a date on or after which a security is to be presented or surrendered for redemption or exchange, a purchaser is deemed to have notice of any defect in its issue or of any defence of the issuerif the event requires the payment of money or the delivery of securities, or both, on presentation or surrender of the security, and the funds or securities are available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; orif the purchaser takes the security more than two years after the date set for presentation or surrender or the date on which the performance became due.
Unauthorized signatureAn unauthorized signature on a security before or in the course of issue is ineffective, except that the signature is effective in favour of a purchaser for value and without notice of the lack of authority, if the signing has been done byan authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, or of similar securities, or their immediate preparation for signing; oran employee of the issuer or of a person referred to in paragraph (a) who, in the ordinary course of the employee’s duties, handles the security.
Completion or alterationWhere a security contains the signatures necessary to its issue or transfer but is incomplete in any other respect,any person may complete it by filling in the blanks in accordance with the person’s authority; andnotwithstanding that the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.EnforceabilityA completed security that has been improperly altered, even if fraudulently altered, remains enforceable, but only according to its original terms.
Warranties of agentsA person signing a security, as authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, warrants to a purchaser for value without notice thatthe security is genuine;the person’s acts in connection with the issue of the security are within the person’s authority; andthe person has reasonable grounds for believing that the security is in the form and within the amount the issuer is authorized to issue.Limitation of liabilityUnless otherwise agreed, a person referred to in subsection (1) does not assume any further liability for the validity of a security.
Title of purchaserSubject to Part VII, on delivery of a security the purchaser acquires the rights in the security that the purchaser’s transferor had or had authority to convey, except that the position of a purchaser who has been a party to any fraud or illegality affecting the security or who as a prior holder had notice of an adverse claim is not improved by taking from a laterbona fide purchaser.Title ofbona fide purchaserAbona fide purchaser, in addition to acquiring the rights of a purchaser, also acquires the security free from any adverse claim.Limited interest purchaserA purchaser of a limited interest acquires rights only to the extent of the interest purchased.
Deemed notice of adverse claimA purchaser of a security, or any securities broker for a seller or purchaser, is deemed to have notice of an adverse claim ifthe security, whether in bearer form or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; orthe security is in bearer form and has on it a statement that it is the property of a person other than the transferor, except that the mere writing of a name on a security is not such a statement.
Notice of fiduciary dutyNotwithstanding that a purchaser, or any securities broker for a seller or purchaser, has notice that a security is held for a third person by, or is registered in the name of or endorsed by, a fiduciary, neither the purchaser nor the securities broker has any duty to inquire into the rightfulness of the transfer or any notice of an adverse claim, except that if the purchaser or securities broker for the seller or purchaser knows that the consideration is to be used for, or that the transaction is for, the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty, the purchaser or securities broker is deemed to have notice of an adverse claim.
Staleness as noticeAn event that creates a right to immediate performance of the principal obligation evidenced by a security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange is not of itself notice of an adverse claim, except in the case of a purchasemade more than one year after any date set for such a presentation or surrender; ormade more than six months after any date set for payment of money against such a presentation or surrender if funds are available for payment on that date.
Warranties to issuerA person who presents a security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment or exchange, except that a purchaser for value without notice of an adverse claim who receives a new, reissued or re-registered security on registration of transfer warrants only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.Warranties to purchaserA person by transferring a security to a purchaser for value warrants only thatthe transfer is effective and rightful;the security is genuine and has not been materially altered; andthe person knows of nothing that might impair the validity of the security.Warranties of intermediaryWhere a security is delivered by an intermediary known by the purchaser to be entrusted with delivery of the security on behalf of another or with collection of a draft or other claim to be collected against that delivery, the intermediary by that delivery warrants only the intermediary’s own good faith and authority even if the intermediary has purchased or made advances against the draft or other claim to be collected against the delivery.Warranties of pledgeeA pledgee or other holder for purposes of security who redelivers a security received, or after payment and on order of the debtor delivers that security to a third person, gives only the warranties of an intermediary under subsection (3).Warranties of securities brokerA securities broker gives to the broker’s customer, to the issuer and to a purchaser, as the case may be, the warranties provided in subsections (1) to (4) and has the rights and privileges of a purchaser under those subsections, and those warranties of and in favour of the broker acting as an agent are in addition to warranties given by the broker’s customer and warranties given in favour of the broker’s customer.
Right to compel endorsementWhere a security in registered form is delivered to a purchaser without a necessary endorsement, the purchaser may become abona fide purchaser only as of the time the endorsement is supplied, but against the transferor the transfer is complete on delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.
Definition of appropriate personIn this section, section 111, subsections 118(1), 121(4) and 126(1) and section 130, appropriate person meansthe person specified by the security or by special endorsement to be entitled to the security;if a person described in paragraph (a) is described as a fiduciary but is no longer serving in the described capacity, either that person or that person’s successor;if the security or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons are no longer serving in the described capacity, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed;if a person described in paragraph (a) is a natural person and is without capacity to act by reason of death, incompetence, minority or other reason, the person’s fiduciary;if the security or endorsement mentioned in paragraph (a) specifies more than one person with right of survivorship and by reason of death not all of the persons can sign, the survivor or survivors;a person having power to sign under any applicable law or a power of attorney; orto the extent that a person described in any of paragraphs (a) to (f) may act through an agent, the person’s authorized agent.Determining an “appropriate person”Whether the person signing is an appropriate person is determined as of the time of signing, and an endorsement by such a person does not become unauthorized for the purposes of this Part by reason of any subsequent change of circumstances.
EndorsementAn endorsement of a security in registered form is made when an appropriate person signs, either on the security or on a separate document, an assignment or transfer of the security or a power to assign or transfer it, or when the signature of an appropriate person is written without more on the back of the security.Special or blankAn endorsement may be special or in blank.Blank endorsementAn endorsement in blank includes an endorsement to bearer.Special endorsementA special endorsement specifies the person to whom the security is to be transferred, or who has power to transfer it.Right of holderA holder may convert an endorsement in blank into a special endorsement.
Immunity of endorserUnless otherwise agreed, the endorser by the endorsement assumes no obligation that the security will be honoured by the issuer.
Partial endorsementAn endorsement purporting to be an endorsement of only part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.
Effect of failure by fiduciary to complyFailure of a fiduciary to comply with a controlling instrument or with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of a transfer, does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.
Effect of endorsement without deliveryAn endorsement of a security, whether special or in blank, does not constitute a transfer until delivery of the security on which it appears or, if the endorsement is on a separate document, until delivery of both the security and that document.
Endorsement in bearer formAn endorsement of a security in bearer form may give notice of an adverse claim under section 105 but does not otherwise affect any of the holder’s rights.
Effect of unauthorized endorsementThe owner of a security may assert the ineffectiveness of an endorsement against the issuer or any purchaser, other than a purchaser for value and without notice of an adverse claim, who has in good faith received a new, reissued or re-registered security on registration of transfer, unless the ownerhas ratified an unauthorized endorsement of the security; oris otherwise precluded from impugning the effectiveness of an unauthorized endorsement.Liability of issuerAn issuer who registers the transfer of a security on an unauthorized endorsement is liable for improper registration.
Warranties of guarantor of signatureA person who guarantees the signature of an endorser of a security warrants that, at the time of signing,the signature was genuine;the signer was an appropriate person to endorse; andthe signer had legal capacity to sign.Limitation of liabilityA person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.Warranties of guarantor of endorsementA person who guarantees the endorsement of a security warrants both the signature and the rightfulness, in all respects, of the transfer to which the signature relates, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.Extent of warrantor’s liabilityThe warranties referred to in subsections (1) to (3) are made to any person who, relying on the guarantee, takes or deals with the security, and the guarantor is liable to such a person for any loss resulting from breach of warranty.
Constructive delivery of a securityDelivery to a purchaser occurs whenthe purchaser or a person designated by the purchaser acquires possession of a security;the purchaser’s securities broker acquires possession of a security specially endorsed to or issued in the name of the purchaser;the purchaser’s securities broker sends the purchaser confirmation of the purchase and the broker in the broker’s records identifies a specific security as belonging to the purchaser; orin respect of an identified security to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.
Constructive ownership of securityA purchaser is the owner of a security held for the purchaser by a securities broker, but a purchaser is not a holder except in the cases referred to in paragraphs 119(b) and (c).Ownership of part of fungible bulkIf a security is part of a fungible bulk, a purchaser of the security is the owner of the proportionate interest in the fungible bulk.Notice to securities broker of adverse claimNotice of an adverse claim received by a securities broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent security in respect of which no notice of an adverse claim has been received.
Delivery of securityUnless otherwise agreed, if a sale of a security is made on a stock exchange or otherwise through securities brokers,the selling customer fulfils the customer’s duty to deliver when the customer delivers the security to the selling securities broker or to a person designated by the selling securities broker or causes an acknowledgement to be made to the selling securities broker that it is held for the selling securities broker; andthe selling securities broker, including a correspondent broker, acting for a selling customer fulfils the securities broker’s duty to deliver by delivering the security or a like security to the buying securities broker or to a person designated by the buying securities broker or by effecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.Duty to deliverExcept as otherwise provided in this section and unless otherwise agreed, a transferor’s duty to deliver a security under a contract of purchase is not fulfilled until the transferor delivers the security in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the security is held for the purchaser.Delivery to securities brokerA sale to a securities broker purchasing for the securities broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.Transfer through clearing agencyIf a security shown in the records of a clearing agency is evidenced bya security certificate in the custody of the clearing agency or a custodian, or a nominee of either, subject to the instructions of the clearing agency, and is in bearer form or endorsed in blank by an appropriate person or registered in the name of the clearing agency or a custodian, or of a nominee of either, oran uncertificated security registered or recorded in records maintained by or on behalf of the bank in the name of the clearing agency or a custodian, or of a nominee of either, subject to the instructions of the clearing agency,then, in addition to other methods, a transfer or pledge of the security or any interest therein may be effected by the making of an appropriate entry in the records of the clearing agency.Interest in fungible bulkUnder subsections (4) to (10), entries may be in respect of like securities or interests therein as part of a fungible bulk and may refer merely to a quantity of a particular security without reference to the name of the registered owner, certificate or bond number or the like and, in appropriate cases, may be on a net basis taking into account other transfers or pledges of the same security.Constructive endorsement and deliveryA transfer or pledge under subsections (4) to (10) has the effect of a delivery of a security in bearer form or duly endorsed in blank representing the amount of the obligation or the number of shares or rights transferred or pledged.IdemIf a pledge or the creation of a security interest is intended, the making of entries has the effect of a taking of delivery by the pledgee or a secured party and the pledgee or secured party shall be deemed to have taken possession for all purposes.HolderA person depositing a security certificate or an uncertificated security with a clearing agency, or a transferee or pledgee of a security under subsections (4) to (10), is a holder of the security and shall be deemed to have possession of the security so deposited, transferred or pledged, as the case may be, for all purposes.Not registrationA transfer or pledge under subsections (4) to (10) does not constitute a registration of transfer under sections 126 to 133.Error in recordsThat entries made in the records of the clearing agency as provided in subsection (4) are not appropriate does not affect the validity or effect of the entries nor the liabilities or obligations of the clearing agency to any person adversely affected thereby.
Right to reclaim possessionA person against whom the transfer of a security is wrongful for any reason, including the person’s incapacity, may, against anyone except abona fide purchaser,reclaim possession of the security or obtain possession of any new security evidencing all or part of the same rights; orclaim damages.Recovery where unauthorized endorsementIf the transfer of a security is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the security or a new security even from abona fide purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 117.RemediesThe right to reclaim possession of a security may be specially enforced, its transfer may be restrained and the security may be impounded pending litigation.
Right to requisites for registrationUnless otherwise agreed, a transferor shall, on demand, supply a purchaser with proof of the transferor’s authority to transfer a security or with any other requisite that is necessary to obtain registration of the transfer of a security, but if the transfer is not for value, it is not necessary for a transferor to prove authority to transfer unless the purchaser pays the reasonable and necessary costs of the proof and transfer.Rescission of transferIf a transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.
Seizure of securityNo seizure of a security or other interest evidenced thereby is effective until the person making the seizure obtains possession of the security.
No conversion if good faith deliveryAn agent or bailee who in good faith, including observance of reasonable commercial standards if the agent or bailee is in the business of buying, selling or otherwise dealing with securities of a bank, has received securities and sold, pledged or delivered them according to the instructions of the agent’s or bailee’s principal is not liable for conversion or for participation in breach of fiduciary duty even though the principal has no right to dispose of the securities.
Duty to register transferSubject to Part VII, where a security in registered form is presented for transfer, the issuer shall register the transfer ifthe security is endorsed by an appropriate person;reasonable assurance is given that the endorsement is genuine and effective;the issuer has no duty to inquire into adverse claims or has discharged any such duty;all applicable laws relating to the collection of taxes have been complied with;the transfer is rightful or is to abona fide purchaser; andthe fee, if any, referred to in subsection 85(2) has been paid.Liability for delayWhere an issuer has a duty to register a transfer of a security, the issuer is liable to the person presenting it for registration for any loss resulting from any unreasonable delay in registration or from the failure or refusal to register the transfer.
Assurance of endorsementsAn issuer may require an assurance that each necessary endorsement on a security is genuine and effective by requiring a guarantee of the signature of the person endorsing the security and by requiringif the endorsement is by an agent, reasonable assurance of authority to sign;if the endorsement is by a fiduciary, evidence of appointment or incumbency;if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; andin any other case, assurance that corresponds as closely as practicable to the foregoing.Definition of guarantee of the signatureFor the purposes of subsection (1), guarantee of the signature means a guarantee signed by or on behalf of a person whom the issuer believes, on reasonable grounds, to be a responsible person.StandardsAn issuer may adopt reasonable standards to determine responsible persons for the purposes of subsection (2).Definition of evidence of appointment or incumbencyFor the purposes of paragraph (1)(b), evidence of appointment or incumbency meansin the case of a fiduciary appointed by a court and referred to in subsection 96(1), a copy of the certified court order referred to in subsection 96(1) and dated not earlier than sixty days before the day a security is presented for transfer; orin the case of any other fiduciary, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.StandardsAn issuer may adopt reasonable standards with respect to evidence referred to in paragraph (4)(b).No notice to issuerAn issuer is deemed not to have notice of the contents of any document referred to in subsection (4) that is obtained by the issuer except to the extent that the contents relate directly to appointment or incumbency.
Notice from additional documentationIf an issuer, in relation to a transfer, demands assurance other than an assurance specified in subsection 127(1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the issuer is deemed to have notice of all matters contained therein affecting the transfer.
Limited duty of inquiryAn issuer to whom a security is presented for registration has a duty to inquire into adverse claims ifthe issuer receives written notice of an adverse claim at a time and in a manner that provides the issuer with a reasonable opportunity to act on it before the issue of a new, reissued or re-registered security and the notice discloses the name and address of the claimant, the registered owner and the issue of which the security is a part; orthe issuer is deemed to have notice of an adverse claim from a document that it obtained under section 128.Discharge of dutyAn issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address provided by the adverse claimant or, if no such address has been provided, to the adverse claimant’s residence or regular place of business, that a security has been presented for registration of transfer by a named person and that the transfer will be registered unless, within thirty days after the date of mailing of the notice, eitherthe issuer is served with a restraining order or other order of a court, orthe issuer is provided with an indemnity bond sufficient in the issuer’s judgment to protect the issuer and any registrar, transfer agent or other agent of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.
Inquiry into adverse claimsUnless an issuer is deemed to have notice of an adverse claim from a document that it obtained under section 128 or has received notice of an adverse claim under subsection 129(1), if a security presented for registration is endorsed by the appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,an issuer registering a security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and thereafter the issuer may assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular security;an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; andan issuer is deemed not to have notice of the contents of any court record or any registered document even if the record or document is in the issuer’s possession and even if the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.
Duration of notice of adverse claimA written notice of adverse claim received by an issuer is effective for twelve months after the day it was received unless the notice is renewed in writing.
Limitation on issuer’s liabilityExcept as otherwise provided in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a security ifthe necessary endorsements were on or with the security; andthe issuer had no duty to inquire into adverse claims or had discharged any such duty.Duty of issuer on defaultIf an issuer has registered a transfer of a security to a person not entitled to it, the issuer shall on demand deliver a like security to the owner unlessthe issuer is not liable by virtue of subsection (1);the owner is precluded by subsection 133(1) from asserting any claim; orthe delivery would result in over-issue in respect of which section 97 applies.
Lost or stolen securityWhere a security has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the issuer of that fact by giving the issuer written notice of the owner’s adverse claim within a reasonable time after the owner knows of the loss, destruction or taking, then, if the issuer has registered a transfer of the security before receiving the notice, the owner is precluded from asserting against the issuer any claim to a new security.Duty to issue new securityWhere the owner of a security claims that the security has been lost, destroyed or wrongfully taken, the issuer shall issue a new security in place of the original security if the ownerso requests before the issuer has notice that the security has been acquired by abona fide purchaser;provides the issuer with a sufficient indemnity bond; andsatisfies any other reasonable requirements imposed by the issuer.Duty to register transferIf, after the issue of a new security under subsection (2), abona fide purchaser of the original security presents the original security for registration of transfer, the issuer shall register the transfer unless registration would result in over-issue in respect of which section 97 applies.Right of issuer to recoverIn addition to the rights that an issuer has by reason of an indemnity bond, the issuer may recover the new security issued under subsection (2) from the person to whom it was issued or any person taking under that person other than abona fide purchaser.
Authenticating agent’s dutyAn authenticating trustee, registrar, transfer agent or other agent of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,a duty to the issuer to exercise good faith and reasonable diligence; andthe same obligations to the holder or owner of a security and the same rights, privileges and immunities as the issuer.
Notice to agentNotice to an authenticating trustee, registrar, transfer agent or other agent of an issuer is notice to the issuer in respect of the functions performed by the agent.
CORPORATE GOVERNANCEShareholders and Members
Place of meetingsMeetings of shareholders or members of a bank are to be held at the place within Canada provided for in the by-laws of the bank or, in the absence of any such provision, at the place within Canada that the directors determine.Participation by electronic meansUnless the by-laws provide otherwise, any person who is entitled to attend a meeting of shareholders or members may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting if the bank makes one available. A person who is participating in a meeting by one of those means is deemed for the purposes of this Act to be present at the meeting.RegulationsThe Governor in Council may make regulations respecting the manner of and conditions for participating in a meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting.
  • 1991, c. 46, s. 136;
  • 2005, c. 54, s. 16;
  • 2010, c. 12, s. 1948.
Previous Version
Calling meetingsThe directors of a bankmust, after the meeting called under subsection 46(1) or section 47.02, call the first annual meeting of shareholders or members, as the case may be, of the bank, which meeting must be held not later than six months after the end of the first financial year of the bank, and subsequently call an annual meeting of shareholders or members, as the case may be, which meeting must be held not later than six months after the end of each financial year; andmay at any time call a special meeting of shareholders or members.Order to delay calling annual meetingDespite subsection (1), the bank may apply to the court for an order extending the time for calling an annual meeting.Obligation to notify SuperintendentThe bank shall give notice of the application to the Superintendent before any hearing concerning the application and shall provide the Superintendent with a copy of any order that is issued.Superintendent’s right to appearThe Superintendent is entitled to appear and be heard in person or by counsel at any hearing concerning the application.Authority to fix record dateThe directors may in advance fix a record date, that is within the prescribed period, for the determination of shareholders or members for any purpose, including for a determination of which shareholders or members are entitled toreceive payment of a dividend or a patronage allocation;participate in a liquidation distribution;receive notice of a meeting of shareholders or members; orvote at a meeting of shareholders or members.Determination of record dateIf no record date is fixed,the record date for the determination of shareholders or members who are entitled to receive notice of a meeting isat the close of business on the day immediately preceding the day on which the notice is given, orif no notice is given, the day on which the meeting is held; andthe record date for the determination of shareholders or members for any other purpose, other than to establish a right to vote, is at the close of business on the day on which the directors pass a resolution in respect of that purpose.Notice of record dateIf a record date is fixed and 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 securities register at the close of business on the day on which the directors fix the record date, notice of the record date shall be given within the prescribed period byadvertisement in a newspaper in general circulation in the place where the bank’s head office is situated and in each place in Canada where the bank has a transfer agent or where a transfer of its shares may be recorded; andwritten notice to each stock exchange in Canada on which the bank’s shares are listed for trading.
  • 1991, c. 46, s. 137;
  • 2005, c. 54, s. 17;
  • 2010, c. 12, s. 1949.
Previous Version
Notice of meetingNotice of the time and place of a meeting of shareholders or members of a bank must be sent within the prescribed period toeach shareholder or member entitled to vote at the meeting;each director;the auditor or auditors of the bank; andthe Superintendent.ExceptionIn the case of a bank that is not a federal credit union and that is not a distributing bank, notice may be sent within any shorter period specified in its by-laws.Number of eligible votesA bank with equity of twelve billion dollars or more that is not a federal credit union must 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 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.Publication in newspaperIn addition to the notice required under subsection (1), where any class of shares of a bank 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 is situated and in each place in Canada where the bank has a transfer agent or where a transfer of the bank’s shares may be recorded.
  • 1991, c. 46, s. 138;
  • 2001, c. 9, s. 63;
  • 2005, c. 54, s. 18;
  • 2007, c. 6, s. 132;
  • 2010, c. 12, s. 1950;
  • 2012, c. 5, ss. 5, 223.
Previous Version
Notice not requiredA notice of a meeting is not required to be sent to shareholders or members who are not registered on the records of the bank or the bank’s transfer agent on the record date fixed under paragraph 137(5)(c) or determined under paragraph 137(6)(a).Effect of defaultFailure to receive a notice of a meeting does not deprive a shareholder or member of the right to vote at the meeting.
  • 1991, c. 46, s. 139;
  • 2005, c. 54, s. 19;
  • 2010, c. 12, s. 1951.
Previous Version
Notice of adjourned meetingIf a meeting is adjourned for less than 30 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.Notice if adjournment is longerIf a meeting is adjourned by one or more adjournments for a total of 30 days or more, notice of the continuation of the meeting must be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than 90 days, subsection 156.04(1) does not apply.
  • 1991, c. 46, s. 140;
  • 1997, c. 15, s. 8;
  • 2010, c. 12, s. 1952(E).
Previous Version
Special businessAll matters dealt with at a special meeting of shareholders or members and all matters dealt with at an annual meeting, except consideration of the financial statements, report of the auditor or auditors, election of directors, remuneration of directors and reappointment of the incumbent auditor or auditors, are deemed to be special business.Notice of special businessNotice of a meeting of shareholders or members at which special business is to be transacted muststate the nature of the special business in sufficient detail to permit a shareholder or member to form a reasoned judgment in respect of that special business; andcontain the text of any special resolution to be submitted to the meeting.
  • 1991, c. 46, s. 141;
  • 2010, c. 12, s. 1953.
Previous Version
Nominations for directorsIf shareholders of a federal credit union are entitled to elect one or more directors,a nomination for the election of a director may be made only by one or more registered holders or beneficial owners of shares representing in the aggregate not less than 5 per cent of the shares of the federal credit union or 5 per cent of the shares of a class of its shares entitled to vote at the meeting at which the election is to take place; anda notice of a meeting of shareholders must include any nomination made in accordance with paragraph (a) for the election of a director.ExceptionParagraph (1)(b) does not apply if the nomination is submitted to the federal credit union at least the prescribed number of days before the anniversary date of the previous annual meeting.
  • 2010, c. 12, s. 1954.
Waiver of noticeA shareholder, a member and any other person entitled to attend a meeting may in any manner waive notice of the meeting.Attendance is a waiverAttendance at a meeting of shareholders or members 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.
  • 1991, c. 46, s. 142;
  • 2001, c. 9, s. 64(F);
  • 2010, c. 12, s. 1955.
Previous Version
ProposalsSubject to subsections (1.1) and (1.2), a registered holder or beneficial owner of shares of a bank that is not a federal credit union that may be voted at an annual meeting of shareholders maysubmit to the bank notice of any matter that they propose to raise at the meeting (in this section and section 144 referred to as a “proposal”); anddiscuss at the meeting any matter in respect of which they would have been entitled to submit a proposal.Eligibility to submit proposalTo be eligible to submit a proposal a person shallfor at least the prescribed period be the registered holder or beneficial owner of at least the prescribed number of the bank’s outstanding shares; orhave the support of persons who, in the aggregate and including or not including the person who submits the proposal, have for at least the prescribed period been the registered holders or beneficial owners of at least the prescribed number of the bank’s outstanding shares.Information to be providedA proposal is to be accompanied by the following information:the name and address of the person submitting the proposal and the names and addresses of their supporters, if any; andthe number of shares held or owned by the person and their supporters, if any, and the date that the shares were acquired.Information not part of proposalThe information provided under subsection (1.2) does not form part of a proposal or of the supporting statement referred to in subsection (3) and is not to be included for the purpose of the prescribed maximum number of words referred to in subsection (3).Proof may be requiredIf the bank requests within the prescribed period that a person provide proof that they are eligible to submit a proposal, the person shall within the prescribed period provide proof that they meet the requirements of subsection (1.1).Management proxyA bank that solicits proxies shall, in the management proxy circular required by subsection 156.05(1), set out any proposal of a shareholder submitted for consideration at a meeting of shareholders or attach the proposal to the management proxy circular.Supporting statementAt the request of the person who submits a proposal, the bank shall set out in the management proxy circular or attach to it the person’s statement in support of the proposal and their name and address. The statement and proposal together are not to exceed the prescribed maximum number of words.Nomination of directorsA proposal may include nominations for the election of directors if it is signed by one or more registered holders or beneficial owners of shares representing in the aggregate not less than 5% of the shares of the bank or 5% of the shares of a class of its shares entitled to vote at the meeting at which the proposal is to be presented.ExemptionA bank is not required to comply with subsections (2) and (3) ifthe proposal is not submitted to the bank at least the prescribed number of days before the anniversary date of the notice of meeting that was sent to shareholders in respect of the previous annual meeting of shareholders;it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal griev­ance against the bank or its directors, officers or security holders;it clearly appears that the proposal does not relate in a significant way to the business or affairs of the bank;the person submitting the proposal failed within the prescribed period before the bank receives their proposal to present, in person or by proxy, at a meeting of shareholders a proposal that at their request had been set out in or attached to a management proxy circular;substantially the same proposal was set out in or attached to a management proxy circular or dissident’s proxy circular relating to, and presented to shareholders at, a meeting of shareholders held within the prescribed period before the receipt of the proposal and did not receive the prescribed minimum amount of support at the meeting; orthe rights conferred by subsections (1) to (4) are being abused to secure publicity.Bank may refuse to include proposalIf a person who submits a proposal fails to continue to hold or own shares in accordance with paragraph (1.1)(a) or, as the case may be, does not continue to have the support of persons who are in the aggregate the registered holders or beneficial owners of the prescribed number of shares in accordance with paragraph (1.1)(b) until the end of the meeting, the bank is not required to set out any proposal submitted by that person in or attach it to a management proxy circular for any meeting held within the prescribed period after the day of the meeting.Immunity for proposal and statementNo bank or person acting on behalf of a bank incurs any liability by reason only of circulating a proposal or statement in compliance with subsections (2) and (3).
  • 1991, c. 46, s. 143;
  • 1997, c. 15, s. 9;
  • 2005, c. 54, s. 20;
  • 2010, c. 12, s. 1956.
Previous Version
Notice of refusalIf a bank refuses to include a proposal in a management proxy circular, it shall in writing notify the person submitting the proposal of its intention to omit the proposal from the management proxy circular and of the reasons for the refusal. It shall notify the person within the prescribed period after either the day on which it receives the proposal or, if it has requested proof under subsection 143(1.4), the day on which it receives the proof.Application to courtOn the application of a person submitting a proposal who claims to be aggrieved by a bank’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 that it thinks fit.IdemA bank or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the bank to omit the proposal from the management proxy circular, and the court, if it is satisfied that subsection 143(5) applies, may make such order as it thinks fit.Notice to SuperintendentAn 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.
  • 1991, c. 46, s. 144;
  • 2005, c. 54, s. 21.
Previous Version
Proposals — members of federal credit unionSubject to subsections (2) and (3), a member of a federal credit union maysubmit to the federal credit union notice of any matter that they propose to raise at an annual meeting (in this section referred to as a “proposal”); anddiscuss at an annual meeting any matter in respect of which they would have been entitled to submit a proposal.Eligibility to submit proposalTo be eligible to submit a proposal a member must have been a member of the federal credit union for at least the prescribed period before making the proposal.Information to be providedA proposal is to be accompanied by a statement setting out the name and address of the member submitting the proposal and the period of time the member has been a member.Information not part of proposalThe information provided under subsection (3) does not form part of a proposal or of the supporting statement referred to in subsection (6) and is not included for the purposes of the prescribed maximum number of words referred to in subsection (6).Proof may be requiredIf the federal credit union requests within the prescribed period that a member provide proof that they are eligible to submit a proposal, the member must within the prescribed period provide proof that they meet the requirement of subsection (2).Proposal and statement to accompany notice of meetingA proposal submitted for consideration at a meeting must be attached to the notice of the meeting, together with, if requested by the member making the proposal, a statement in support of the proposal and the name and address of the member making the proposal. The statement and the proposal must together not exceed the prescribed maximum number of words.Nomination of directorsA proposal may include nominations for the election of directors if it is signed by the lesser of 250 members and 1 per cent of the members who are entitled to vote at the meeting.ExceptionsA federal credit union need not comply with subsection (6) ifthe proposal is not submitted to the federal credit union at least the prescribed number of days before the anniversary date of the notice of meeting that was sent to members in connection with the previous annual meeting;it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal grievance against the federal credit union or its directors, officers, members or security holders;the person submitting the proposal has failed, within the prescribed period before the federal credit union receives the person’s proposal, to present, at a meeting, a proposal that, at the person’s request, had been attached by the federal credit union to the notice of the meeting;substantially the same proposal was attached to a notice of meeting, and presented at a meeting, of the federal credit union held not more than the prescribed period before the receipt of the proposal and the proposal did not receive the prescribed minimum amount of support at the meeting; orthe rights conferred by subsection (1) are being abused to secure publicity.Federal credit union may refuse to include proposalIf a member who submits a proposal withdraws from membership in accordance with section 47.05 before the meeting, the federal credit union is not required to attach any proposal submitted by that member to the notice of a meeting held within the prescribed period following the date of the meeting.ImmunityNo federal credit union or person acting on behalf of a federal credit union incurs any liability by reason only of circulating a proposal.
  • 2010, c. 12, s. 1957.
Refusal to include proposalIf a federal credit union refuses to include a proposal in a notice of a meeting referred to in section 138, it must, within the prescribed period after the day on which it receives the proposal or the day on which it receives the proof of eligibility under subsection 144.1(5), as the case may be, notify in writing the person submitting the proposal of its intention to omit the proposal from the notice and of the reasons for the refusal.Restraining order by courtOn the application of a person submitting a proposal who claims to be aggrieved by a federal credit union’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.Order to omit proposal from noticeA federal credit union or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the federal credit union to omit the proposal from a notice of meeting, and the court, if it is satisfied that subsection 144.1(7) applies, may make any order that it thinks fit.Notice to SuperintendentAn applicant under subsection (2) or (3) must 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.
  • 2010, c. 12, s. 1957.
List of shareholders entitled to noticeA bank shall prepare an alphabet­ical list of shareholders entitled to receive notice of a meeting showing the number of shares held by each shareholderif a record date is fixed under paragraph 137(5)(c), no later than 10 days after that date; andif no record date is fixed, on the record date determined under paragraph 137(6)(a).List of members entitled to noticeA federal credit union must also prepare an alphabetical list of members entitled to receive notice of a meetingif a record date is fixed under paragraph 137(5)(c), no later than 10 days after that date; orif no record date is fixed, on the record date determined under paragraph 137(6)(a).Voting listThe bank shall prepare an alphabetical list of shareholders entitled to vote as of the record date showing the number of shares held by each shareholderif a record date is fixed under paragraph 137(5)(d), no later than 10 days after that date; andif no record date is fixed under paragraph 137(5)(d), no later than 10 days after a record date is fixed under paragraph 137(5)(c) or no later than the record date determined under paragraph 137(6)(a), as the case may be.Voting list — membersA federal credit union must also prepare an alphabetical list of members entitled to vote as of the record dateif a record date is fixed under paragraph 137(5)(d), no later than 10 days after that date; orif no record date is fixed under paragraph 137(5)(d), no later than 10 days after a record date is fixed under paragraph 137(5)(c) or no later than the record date determined under paragraph 137(6)(a), as the case may be.Entitlement to voteSubject to section 156.09, a shareholder whose name appears on a list prepared under subsection (2) is entitled to vote the shares shown opposite their name.Examination of listA shareholder of a bank that is not a federal credit union may examine the list of shareholdersduring usual business hours at the head office of the bank or at the place where its central securities register is maintained; andat the meeting of shareholders for which the list was prepared.Examination of listA person who is entitled to vote at a meeting of a federal credit union may examine a list that relates to the meetingduring usual business hours at the head office of the federal credit union or at the place where its members register or central securities register is maintained; andat the meeting for which the list was prepared.
  • 1991, c. 46, s. 145;
  • 2001, c. 9, s. 65;
  • 2005, c. 54, s. 22;
  • 2010, c. 12, s. 1958.
Previous Version
QuorumUnless 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.Quorum — membersUnless the by-laws otherwise provide, a quorum of members is present at a meeting of members of a federal credit union if at least 500 members who are entitled to vote at the meeting, or one per cent of the total number of members entitled to vote at the meeting, whichever is the lesser, are present in person or represented by a personal representative or delegate.Quorum at opening of meetingIf a quorum is present at the opening of a meeting of shareholders or members, the shareholders or members present may, unless the by-laws otherwise provide, proceed with the business of the meeting even though a quorum is not present throughout the meeting.Adjournment permittedIf a quorum is not present at the opening of a meeting of shareholders or members, the shareholders or members present may adjourn the meeting to a fixed time and place but may not transact any other business.
  • 1991, c. 46, s. 146;
  • 2010, c. 12, s. 1959.
Previous Version
One shareholder meetingIf a bank 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.
One share — one voteSubject to section 156.09, if a share of a bank entitles the holder of the share to vote at a meeting of shareholders, that share entitles the shareholder to one vote at the meeting.
  • 1991, c. 46, s. 148;
  • 2001, c. 9, s. 66.
Representative of shareholder or memberIf an entity is a shareholder or member of a bank, the bank must 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 or members of the bank.PowersA 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 or member.
  • 1991, c. 46, s. 149;
  • 2010, c. 12, s. 1960.
Previous Version
Joint shareholdersUnless 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.
Voting by hands or ballotUnless the by-laws otherwise provide, voting at a meeting of shareholders or members is to take place by show of hands except when a ballot is demanded by a person entitled to vote at the meeting.BallotA person entitled to vote at a meeting of shareholders or members may demand a ballot either before or after any vote by show of hands.Electronic votingDespite subsection (1) and unless the by-laws provide otherwise, any vote referred to in that subsection may be held entirely by means of a telephonic, electronic or other communication facility if the bank makes one available.Voting while participating electronicallyUnless the by-laws provide otherwise, any person who is participating in a meeting under subsection 136(2) and entitled to vote at that meeting may vote by means of the telephonic, electronic or other communication facility that the bank has made available for that purpose.Voting by mailThe by-laws of a federal credit union may, subject to the regulations and any conditions set out in the by-laws, allow members to vote by mail.RegulationsThe Governor in Council may make regulationsrespecting the manner of and conditions for voting at a meeting of members or shareholders by means of a telephonic, electronic or other communication facility; andrespecting the manner and conditions of voting by mail by members of federal credit unions.
  • 1991, c. 46, s. 151;
  • 2005, c. 54, s. 23;
  • 2010, c. 12, s. 1961.
Previous Version
Resolution in lieu of meetingExcept where a written statement is submitted by a director under section 174 or by an auditor under subsection 321(1),a resolution in writing signed by all the persons entitled to vote on that resolution at a meeting of shareholders or members is as valid as if it had been passed at a meeting of the shareholders or members; anda resolution in writing dealing with all matters required by this Act to be dealt with at a meeting of shareholders or members, and signed by all the persons entitled to vote at that meeting, satisfies all the requirements of this Act relating to meetings of shareholders or members.Filing resolutionA copy of every resolution referred to in subsection (1) must be kept with the minutes of the meetings.EvidenceUnless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.
  • 1991, c. 46, s. 152;
  • 2005, c. 54, s. 24;
  • 2010, c. 12, s. 1962.
Previous Version
Requisitioned meetingShareholders who together hold not less than 5 per cent of the issued and outstanding shares of a bank 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.Requisitioned meeting — membersAt least two members entitled to vote at a meeting of a federal credit union that is sought to be held, or one per cent of the total number of members entitled to vote at a meeting of a federal credit union that is sought to be held, whichever is greater, may requisition the directors to call a meeting of members, or of members and shareholders, for the purposes stated in the requisition.FormThe requisitionmust state the business to be transacted at the meeting and must be sent to each director and to the head office of the bank; andmay consist of several documents of like form, each signed by one or more shareholders or members, as the case may be.Directors calling meetingOn receipt of the requisition, the directors must call a meeting of shareholders or members, as the case may be, to transact the business stated in the requisition, unlessa record date has been fixed under paragraph 137(5)(c) and notice of it has been given under subsection 137(7);the directors have called a meeting of shareholders or members, as the case may be, and have given the notice required by section 138; orthe business of the meeting as stated in the requisition includes matters described in paragraphs 143(5)(b) to (e) or 144.1(8)(b) to (e).Power of others to call meetingIf the directors do not call a meeting within 21 days after receiving the requisition, any person who signed the requisition may call the meeting.ProcedureA 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 Act.ReimbursementUnless the shareholders or members, as the case may be, otherwise resolve at a meeting called under subsection (4), the bank must reimburse the shareholders or members for any expenses reasonably incurred by them in requisitioning, calling and holding the meeting.
  • 1991, c. 46, s. 153;
  • 2005, c. 54, s. 25;
  • 2010, c. 12, s. 1963.
Previous Version
Court may order meeting to be calledA court may, on the application of a director of a bank, a person who is entitled to vote at a meeting of shareholders or members of a bank or the Superintendent, order a meeting to be called, held or conducted in the manner that the court directs ifit is impracticable to call the meeting within the time or in the manner in which it is to be called;it is impracticable to conduct the meeting in the manner required by this Act or the by-laws; orthe court thinks that the meeting ought to be called, held or conducted within the time or in the manner that it directs for any other reason.Varying quorumWithout restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Act be varied or dispensed with at a meeting called, held and conducted pursuant to this section.Valid meetingA meeting called, held and conducted under this section is for all purposes a meeting of shareholders or members, as the case may be, of the bank duly called, held and conducted.
  • 1991, c. 46, s. 154;
  • 2005, c. 54, s. 26;
  • 2010, c. 12, s. 1964.
Previous Version
Court review of electionA bank or any of its shareholders, members or directors 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.Powers of courtOn an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;an order declaring the result of the disputed election or appointment;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 until a new election is held or the new appointment is made;an order determining the voting rights of shareholders and of persons claiming to own shares; andan order determining the voting rights of members and of persons claiming to be members.
  • 1991, c. 46, s. 155;
  • 2010, c. 12, s. 1965.
Previous Version
Notice to SuperintendentA person who makes an application under subsection 154(1) or 155(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.Superintendent representationThe Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).
Proxies
DefinitionsThe definitions in this section apply in this section and sections 156.02 to 156.08.intermediaryintermédiaireintermediary means a person who holds a security on behalf of another person who is not the registered holder of the security, and includesa securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction;a securities depositary;a financial institution;in respect of a clearing agency, a securities dealer, trust company, association within the meaning of section 2 of the Cooperative Credit Associations Act, bank or other person, including another clearing agency, on whose behalf the clearing agency or its nominee holds securities of an issuer;a trustee or administrator of a self-administered retirement savings plan, retirement income fund or education savings plan or another similar self-administered savings or investment plan that is registered under the Income Tax Act;a nominee of a person referred to in any of paragraphs (a) to (e); anda person who performs functions similar to those performed by a person referred to in any of paragraphs (a) to (e) and holds a security registered in their name, or in the name of their nominee, on behalf of another person who is not the registered holder of the security.registrant[Repealed, 2005, c. 54, s. 27]solicit or solicitationsollicitationsolicit or solicitation includesa request for a proxy, whether or not accompanied by or included in a form of proxy,a request to execute or not to execute a form of proxy or to revoke a proxy,the sending of a form of proxy or other communication to a shareholder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, andthe sending of a form of proxy to a shareholder under section 156.04,but does not includethe sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder,the performance of administrative acts or professional services on behalf of a person soliciting a proxy,the sending by a registrant of the documents referred to in section 156.07, ora solicitation by a person in respect of shares of which that person is the beneficial owner.solicitation by or on behalf of the management of a banksollicitation effectuée par la direction d’une banque ou pour son comptesolicitation by or on behalf of the management of a bank means a solicitation by any person pursuant to a resolution or instruction of, or with the acquiescence of, the directors or a committee of the directors of the bank.
  • 1997, c. 15, s. 10;
  • 2005, c. 54, s. 27.
Previous Version
Appointing proxyholderA shareholder who is entitled to vote at a meeting of shareholders may, by executing a form of proxy, appoint a proxyholder or one or more alternate proxyholders, who are not required to be shareholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.Execution of proxyA form of proxy shall be executed by a shareholder or by a shareholder’s attorney authorized in writing to do so.Limit on authorityNo appointment of a proxyholder provides authority for the proxyholder to act in respect of the appointment of an auditor or the election of a director unless a nominee proposed in good faith for the appointment or election is named in the form of proxy, a management proxy circular, a dissident’s proxy circular or a proposal under subsection 143(1).Required informationA form of proxy must indicate, in bold-face type, that the shareholder by whom or on whose behalf it is executed may appoint a proxyholder, other than a person designated in the form of proxy, to attend and act on the shareholder’s behalf at a meeting to which the proxy relates, and must contain instructions as to the manner in which the shareholder may do so.Validity of proxyA proxy is valid only at the meeting in respect of which it is given or at a continuation of the meeting after an adjournment.Revocation of proxyA shareholder may revoke a proxyby depositing an instrument in writing executed by the shareholder or by the shareholder’s attorney authorized in writing to do soat the head office of the bank at any time up to and including the last business day before the day of a meeting, or a continuation of the meeting after an adjournment, at which the proxy is to be used, orwith the chairperson of the meeting on the day of the meeting or a continuation of the meeting after an adjournment; orin any other manner permitted by law.
  • 1997, c. 15, s. 10.
Deposit of proxiesThe directors may specify, in a notice calling a meeting of shareholders or a continuation of a meeting of shareholders after an adjournment, a time before which executed forms of proxy to be used at the meeting or the continued meeting must be deposited with the bank or its transfer agent. The time specified may not be more than forty-eight hours, excluding Saturdays and holidays, before the meeting or the continued meeting.
  • 1997, c. 15, s. 10.
Mandatory solicitationSubject to subsection 140(2) and subsection (2), the management of a bank shall, concurrently with giving notice of a meeting of shareholders, send a form of proxy in prescribed form to each shareholder entitled to receive notice of the meeting.ExceptionThe management of a bank is not required to send a form of proxy under subsection (1) if the bankis not a distributing bank; andhas 50 or fewer shareholders who are entitled to vote at a meeting, two or more joint holders of a share being counted as one shareholder.
  • 1997, c. 15, s. 10;
  • 2005, c. 54, s. 28.
Previous Version
Soliciting proxiesA person shall not solicit proxies unlessin the case of solicitation by or on behalf of the management of a bank, a management proxy circular in prescribed form, either as an appendix to, or as a separate document accompanying, the notice of the meeting, is sent to the auditor or auditors of the bank and to each shareholder whose proxy is solicited; andin the case of any other solicitation, a dissident’s proxy circular in prescribed form stating the purposes of the solicitation is sent to the auditor or auditors of the bank, to each shareholder whose proxy is solicited and to the bank.Copy to SuperintendentA person who sends a management proxy circular or dissident’s proxy circular shall at the same time file with the Superintendentin the case of a management proxy circular, a copy of it together with a copy of the notice of meeting, form of proxy and any other documents for use in connection with the meeting; andin the case of a dissident’s proxy circular, a copy of it together with a copy of the form of proxy and any other documents for use in connection with the meeting.Exemption by SuperintendentOn the application of an interested person, the Superintendent may, on any terms that the Superintendent thinks fit, exempt the person from any of the requirements of subsection (1) and section 156.04, and the exemption may be given retroactive effect.Reporting exemptionsThe Superintendent shall set out in a periodical available to the public the particulars of each exemption granted under subsection (3) together with the reasons for the exemption.
  • 1997, c. 15, s. 10.
Attendance at meetingA person who solicits a proxy and is appointed proxyholder shall attend in person or cause an alternate proxyholder to attend the meeting in respect of which the proxy is valid, and the proxyholder or alternate proxyholder shall comply with the directions of the shareholder who executed the form of proxy.Rights of proxyholderA proxyholder or an alternate proxyholder has the same rights as the appointing shareholder to speak at a meeting of shareholders in respect of any matter, to vote by way of ballot at the meeting and, except where a proxyholder or an alternate proxyholder has conflicting instructions from more than one shareholder, to vote at the meeting in respect of any matter by way of a show of hands.Vote by show of handsDespite subsections (1) and (2) and unless a shareholder or proxyholder demands a ballot, if the chairperson of a meeting of shareholders declares to the meeting that, if a ballot were conducted, the total number of votes attached to shares represented at the meeting by proxy required to be voted against what, to the knowledge of the chairperson, would be the decision of the meeting on a matter or group of matters is less than 5% of all the votes that might be cast by shareholders in person or by proxy,the chairperson may conduct the vote in respect of that matter or group of matters by way of a show of hands; anda proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by way of a show of hands.
  • 1997, c. 15, s. 10;
  • 2005, c. 54, s. 30.
Previous Version
Duty of intermediaryShares of a bank that are registered in the name of an intermediary or an intermediary’s nominee and not beneficially owned by the intermediary may not be voted unless the intermediary sends to the beneficial ownera copy of the notice of the meeting, annual statement, management proxy circular and dissident’s proxy circular and any other documents, other than the form of proxy, that were sent to shareholders by or on behalf of any person for use in connection with the meeting; anda written request for voting instructions except if the intermediary has already received written voting instructions from the beneficial owner.When documents to be sentThe intermediary shall send the documents referred to in subsection (1) without delay after they receive the documents referred to in paragraph (1)(a).Restriction on votingAn intermediary or a proxyholder appointed by them may not vote shares that the intermediary does not beneficially own and that are registered in the name of the intermediary or their nominee unless the intermediary or proxyholder, as the case may be, receives written voting instructions from the beneficial owner.CopiesA person by or on behalf of whom a solicitation is made shall on request and without delay provide the intermediary, at the person’s expense, with the necessary number of copies of the documents referred to in paragraph (1)(a).Instructions to intermediaryThe intermediary shall vote or appoint a proxyholder to vote in accordance with any written voting instructions received from the beneficial owner.Beneficial owner as proxyholderIf a beneficial owner so requests and provides an intermediary with the appropriate documentation, the intermediary shall appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.Effect of intermediary’s failure to complyThe failure of an intermediary to comply with any of subsections (1) to (6) does not render void any meeting of shareholders or any action taken at the meeting.Intermediary may not voteNothing in this Part gives an intermediary the right to vote shares that they are otherwise prohibited from voting.
  • 1997, c. 15, s. 10;
  • 2005, c. 54, s. 31.
Previous Version
ExemptionThe Governor in Council may make regulations respecting the conditions under which a bank is exempt from any of the requirements of sections 156.02 to 156.07.
  • 2005, c. 54, s. 31.
Restraining orderIf a form of proxy, management proxy circular or dissident’s proxy circular contains an untrue statement of a material fact or omits to state a material fact that is required to be contained in it or that is necessary to make a statement contained in it not misleading in light of the circumstances in which the statement is made, an interested person or the Superintendent may apply to a court and the court may make any order it thinks fit, includingan order restraining the solicitation or the holding of the meeting, or restraining any person from implementing or acting on a resolution passed at the meeting, to which the form of proxy, management proxy circular or dissident’s proxy circular relates;an order requiring correction of any form of proxy or proxy circular and a further solicitation; andan order adjourning the meeting.Notice of applicationWhere a person other than the Superintendent is an applicant under subsection (1), the applicant shall give notice of the application to the Superintendent and the Superintendent is entitled to appear and to be heard in person or by counsel.
  • 1997, c. 15, s. 10.
Restrictions on Voting
Meaning of eligible votesIn this section, eligible votes means the total number of votes that may be cast by or on behalf of shareholders on a vote of shareholders or a vote of holders of a class or series of shares, as the case may be, in respect of any particular matter, calculated without regard to subsection (2).RestrictionAt a meeting of shareholders of a bank with equity of twelve billion dollars or more, no person and no entity controlled by any person may, in respect of any vote of shareholders or holders of any class or series of shares of the bank, cast votes in respect of any shares beneficially owned by the person or the entity that are, in aggregate, more than 20 per cent of the eligible votes that may be cast in respect of that vote.Exception — federal credit unionSubsection (2) does not apply in respect of a meeting of shareholders or members of a federal credit union.ProxyholdersNo person who is a proxyholder for a person or for an entity controlled by a person may cast votes to which the proxy relates that the person or entity may not cast by reason of subsection (2).ExceptionIf a person is, with respect to a bank, a person referred to in subsection 375(1), subsections (2) and (3) do not apply with respect to votes cast by or on behalf of the person during any period that the person is entitled under section 375 to remain a major shareholder of the bank.ExceptionSubsections (2) and (3) do not apply in respect of votes cast by or on behalf of any entity that controls the bank or any entity that is controlled by an entity that controls the bank.ExceptionSubsection (2) does not apply in respect of a vote held under section 218.Validity of voteA vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).Disposition of shareholdingsIf, with respect to any bank, a person contravenes subsection (2) or (3), the Minister may, by order, direct the shareholder of the shares to which the contravention relates or any person controlled by that shareholder to dispose of any number of shares of the bank 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 shareholder and the persons controlled by that shareholder that is specified in the order.Restriction on voting rightsIf the Minister makes an order under subsection (8), the person to whom the order relates may not, in person or by proxy, exercise any voting rights that are attached to shares of the bank beneficially owned by the person.Subsection (9) ceases to applySubsection (9) ceases to apply in respect of a person when the shares to which the order relates have been disposed of.Reliance on number in noticeFor the purpose of this section, a person is entitled to rely on the number of eligible votes set out in a notice of a meeting under subsection 138(1.1).Designation of personsFor the purpose of this section, the Minister may, with respect to a particular bank, designate two or more persons who are parties to an agreement, commitment or understanding referred to in section 9 to be a single person.
  • 2001, c. 9, s. 67;
  • 2007, c. 6, s. 132;
  • 2010, c. 12, s. 1966;
  • 2012, c. 5, s. 6.
Previous Version
Directors and OfficersDuties
Duty to manageSubject to this Act, the directors of a bank shall manage or supervise the management of the business and affairs of the bank.Specific dutiesWithout limiting the generality of subsection (1), the directors of a bank shallestablish an audit committee to perform the duties referred to in subsections 194(3) and (4);establish a conduct review committee to perform the duties referred to in subsection 195(3);establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;designate a committee of the board of directors to monitor the procedures referred to in paragraph (c);establish procedures to provide disclosure of information to customers of the bank that is required to be disclosed by this Act and for dealing with complaints as required by subsection 455(1);designate a committee of the board of directors to monitor the procedures referred to in paragraph (e) and satisfy itself that they are being adhered to by the bank; andestablish investment and lending policies, standards and procedures in accordance with section 465.ExceptionParagraphs (2)(a) and (b) do not apply to the directors of a bank ifall the voting shares of the bank are beneficially owned by a Canadian financial institution described in any of paragraphs (a) to (d) of the definition financial institution in section 2; andthe audit committee or conduct review committee of the financial institution performs for and on behalf of the bank all the functions that would otherwise be required to be performed by the audit committee or conduct review committee of the bank under this Act.
  • 1991, c. 46, s. 157;
  • 1997, c. 15, s. 11;
  • 2001, c. 9, s. 68(F).
Duty of careEvery director and officer of a bank in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shallact honestly and in good faith with a view to the best interests of the bank; andexercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.Duty to complyEvery director, officer and employee of a bank shall comply with this Act, the regulations, the bank’s incorporating instrument and the by-laws of the bank.No exculpationNo provision in any contract, in any resolution or in the by-laws of a bank relieves any director, officer or employee of the bank 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
Minimum number of directorsA bank shall have at least seven directors.Residency requirementAt least one half of the directors of a bank that is a subsidiary of a foreign bank and a majority of the directors of any other bank must be, at the time of each director’s election or appointment, resident Canadians.
  • 1991, c. 46, s. 159;
  • 2001, c. 9, s. 69;
  • 2007, c. 6, s. 12.
Previous Version
Directors as membersNot less than two thirds of the directors of a federal credit union, or any greater proportion that is provided for by the by-laws, must be members of the federal credit union or representatives of members of the federal credit union.
  • 2010, c. 12, s. 1967.
Disqualified personsThe following persons are disqualified from being directors of a bank:a person who is less than eighteen years of age;a person who is of unsound mind and has been so found by a court in Canada or elsewhere;a person who has the status of a bankrupt;a person who is not a natural person;a person who is prohibited by section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;a person who is an officer, director or full time employee of an entity that is prohibited by section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;a person who is an officer, director, employee or agent of — or any other person acting on behalf of — an eligible agent within the meaning of subsection 370(1);a person who is an agent or employee of Her Majesty in right of Canada or in right of a province;a minister of Her Majesty in right of Canada or in right of a province;a person who is an agent or employee of the government of a foreign country or any political subdivision thereof; andif the bank is a federal credit union, a person who fails to meet any of the qualification requirements set out in its by-laws.
  • 1991, c. 46, s. 160;
  • 1994, c. 47, s. 15;
  • 1997, c. 15, s. 12;
  • 2001, c. 9, s. 70;
  • 2010, c. 12, s. 1968;
  • 2012, c. 19, s. 330, c. 31, s. 109.
Previous Version
ExceptionParagraph 160(g) does not apply to a person ifthe person is employed in a department or agency of the Government of Canada that is not involved in the regulation or supervision of financial institutions;the person’s duties do not involve financial institutions; andthe bank is controlled by a local cooperative credit society, as defined in section 2 of the Cooperative Credit Associations Act, in which the following persons, in aggregate, hold more than 50 per cent or, if a percentage has been prescribed for the purpose of this paragraph, the prescribed percentage, of the ownership interests in the local cooperative credit society, namely,employees of Her Majesty in right of Canada or of a province,former employees of Her Majesty in right of Canada or of a province,the spouse or common-law partner of a person referred to in subparagraph (i) or (ii), anda child who is less than eighteen years of age of a person referred to in subparagraph (i) or (ii).
  • 2001, c. 9, s. 71.
No shareholder requirementA director of a bank is not required to hold shares of the bank.
Affiliated personThe Governor in Council may make regulations specifying the circumstances under which a natural person is affiliated with a bank for the purposes of this Act.
Affiliated director determinationNotwithstanding section 162, the Superintendent may determine that a particular director is affiliated with a bank for the purposes of this Act if, in the opinion of the Superintendent, the director has a significant or sufficient commercial, business or financial relationship with the bank or with an affiliate of the bank to the extent that the relationship can be construed as being material to the director and can reasonably be expected to affect the exercise of the director’s best judgment.Notification by SuperintendentA determination by the Superintendent under subsection (1)becomes effective on the day of the next annual meeting of the persons who are entitled to elect directors unless a notice in writing by the Superintendent revoking the determination is received by the bank prior to that day; andceases to be in effect on the day of the next annual meeting of those persons after a notice in writing by the Superintendent revoking the determination is received by the bank.
  • 1996, c. 6, s. 5;
  • 2010, c. 12, s. 1969.
Previous Version
Unaffiliated directorsAt the election of directors at each annual meeting of a bank and at all times until the day of the next annual meeting, no more than two thirds of the directors may be persons affiliated with the bank.ExceptionSubsection (1) does not apply where all the voting shares of a bank, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.Determination of affiliationFor the purposes of subsection (1), whether or not a person is affiliated with a bank is to be determined as at the day the notice of the annual meeting is sent under section 138 and that determination becomes effective on the day of that meeting, and a person is deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders or members, as the case may be.TransitionalSubsection (1) does not apply in respect of a bank that was in existence immediately prior to the day that subsection comes into force until the day that is three years after the day that subsection comes into force.
  • 1991, c. 46, s. 163;
  • 2010, c. 12, s. 1970.
Previous Version
Limit on directorsNo more than 15 per cent of the directors of a bank may, at each director’s election or appointment, be employees of the bank or a subsidiary of the bank, except that up to four persons who are employees of the bank or a subsidiary of the bank may be directors of the bank if those directors constitute not more than one half of the directors of the bank.
Election and Tenure — Directors
Number of directorsSubject to subsection 159(1) and sections 168 and 217, the directors of a bank that is not a federal credit union must, 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.Number of directors — federal credit unionSubject to subsection 159(1), the members of a federal credit union must, by by-law, determine the number of directors or the minimum and maximum number of directors.Election at annual meetingA by-law made under subsection (1) or (2) 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 or members, as the case may be, be the number that is fixed by the directors before the annual meeting.
  • 1991, c. 46, s. 165;
  • 2010, c. 12, s. 1971.
Previous Version
Election or appointment as directorThe election or appointment of a person as a director is subject to the following:the person was present at the meeting when the election or appointment took place and did not refuse to hold office as a director; orthe person was not present at the meeting when the election or appointment took place butconsented in writing to hold office as a director before the election or appointment or within 10 days after it, oracted as a director after the election or appointment.
  • 2005, c. 54, s. 32.
Term of directorsExcept where this Act or the by-laws of a bank provide for cumulative voting, a bank may, by by-law, provide that the directors be elected for terms of one, two or three years.Term of one, two or three yearsA director elected for a term of one, two or three years holds office until the close, as the case may be, of the first, second or third annual meeting of shareholders or members, as the case may be, following the election of the director.No stated termA 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 or members, as the case may be, following the election of the director.Tenure of officeIt is not necessary that all directors elected at a meeting of shareholders or members hold office for the same term.IdemIf a by-law of a bank 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.Composition requirementsSubject to subsection 163(4), if a director of a bank is elected or appointed for a term of more than one year, the bank must comply with subsections 159(2) and 163(1) and section 164 at each annual meeting of shareholders or members, as the case may be, during the director’s term of office as if that director were elected or appointed on that date.
  • 1991, c. 46, s. 166;
  • 2010, c. 12, s. 1972.
Previous Version
Determining election of directorsExcept where this Act or the by-laws of a bank 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 shall be the directors thereof.IdemIf, 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.
Cumulative votingWhere this Act or the by-laws provide for cumulative voting,there shall be a stated number of directors fixed by by-law and not a minimum and maximum number of directors;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;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;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;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;each director ceases to hold office at the close of the next annual meeting of shareholders following the director’s election;a director may be removed from office only if the number of votes cast in favour of a motion to remove the director is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion; andthe number of directors required by the by-laws may be decreased only if the number of votes cast in favour of a motion to decrease the number of directors is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion.Mandatory cumulative votingWhere 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, the directors shall be elected by cumulative voting.ExceptionSubsection (2) does not applywhere all the voting shares of the bank that are outstanding are beneficially owned byone person,one person and one or more entities controlled by that person, orone or more entities controlled by the same person;in respect of a bank that was in existence immediately prior to the day that subsection comes into force whose shareholders are confined to entities incorporated or formed by or under an Act of Parliament or of the legislature of a province that are, in the opinion of the directors, operating as credit unions or cooperative associations.ExceptionSubsection (2) does not apply to a widely held bank with equity of twelve billion dollars or more or to a bank in respect of which subsection 378(1) applies.Transitional electionWhere this Act or the by-laws of a bank provide for cumulative voting, the shareholders of the bank shall,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, andat 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.ExceptionNothing in this Act precludes the holders of any class or series of shares of a bank from having an exclusive right to elect one or more directors.
  • 1991, c. 46, s. 168;
  • 1997, c. 15, s. 14;
  • 2001, c. 9, s. 73;
  • 2005, c. 54, s. 33;
  • 2007, c. 6, s. 132;
  • 2012, c. 5, s. 7.
Previous Version
No cumulative votingDespite section 168 or any provision of its by-laws, cumulative voting is not permitted in a federal credit union.
  • 2010, c. 12, s. 1973.
Re-election of directorsA director who has completed a term of office is, if otherwise qualified, eligible for re-election.
Incomplete Elections and Director Vacancies
Void election or appointmentIf, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 159(2) or 163(1) or section 164, 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.Failure to elect minimumIf, at the close of a meeting of shareholders or members of a bank, the shareholders or members have failed to elect the number or minimum number of directors required by this Act or the by-laws of a bank, the purported election of directors at the meetingis 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; oris 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.[Repealed, 1997, c. 15, s. 15]
  • 1991, c. 46, s. 170;
  • 1997, c. 15, s. 15;
  • 2010, c. 12, s. 1974.
Previous Version
Directors where elections or appointments incomplete or voidDespite subsections 166(2) and (3) and paragraphs 168(1)(f) and 172(1)(a), if subsection 170(1) or (2) applies at the close of any meeting of shareholders or members of a bank, the board of directors, until their successors are elected or appointed, consists solely ofwhere paragraph 170(2)(a) applies, the directors referred to in that paragraph; orwhere subsection 170(1) or paragraph 170(2)(b) applies, the persons who were the incumbent directors immediately before the meeting.Where there is no approved rectification planNotwithstanding subsections 166(2) and (3) and paragraphs 168(1)(f) and 172(1)(a), where a plan to rectify the non-compliance referred to in subsection 170(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.Directors to call meetingIf subsection (1) or (2) applies, the board of directors referred to in that subsection must, without delay, call a special meeting of shareholders or members, as the case may be, to fill the vacancies if paragraph 170(2)(a) applies, or elect a new board of directors if subsection 170(1) or paragraph 170(2)(b) applies.Others may call meetingIf the directors fail to call a special meeting required by subsection (3), the meeting may be called by any person who would be entitled to vote at the meeting.
  • 1991, c. 46, s. 171;
  • 1997, c. 15, s. 16;
  • 2010, c. 12, s. 1975.
Previous Version
Ceasing to hold officeA director ceases to hold officeat the close of the annual meeting at which the director’s term of office expires;when the director dies or resigns;when the director becomes disqualified under section 160 or ineligible to hold office pursuant to subsection 203(2);when the director is removed under section 173; orwhen the director is removed from office under section 647 or 647.1.Date of resignationThe resignation of a director of a bank becomes effective at the time a written resignation is sent to the bank by the director or at the time specified in the resignation, whichever is later.
  • 1991, c. 46, s. 172;
  • 2001, c. 9, s. 74.
Removal of directorSubject to paragraph 168(1)(g), the shareholders of a bank that is not a federal credit union may by resolution at a special meeting of shareholders remove any director or all the directors from office.Removal of director — federal credit unionA director of a federal credit union may be removed from office by resolution at a special meeting of the persons who are entitled to vote in the election of that director.ExceptionWhere the holders of any class or series of shares of a bank 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.Exception — membersIf members of a federal credit union have the exclusive right to elect one or more directors, a director so elected may be removed only by a resolution of the members having that right.Vacancy by removalSubject to paragraphs 168(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders or members, as the case may be, at which the director is removed or, if not so filled, may be filled under section 177 or 178.
  • 1991, c. 46, s. 173;
  • 2010, c. 12, s. 1976.
Previous Version
Statement of directorA director whoresigns,receives a notice or otherwise learns of a meeting called for the purpose of removing the director from office, orreceives a notice or otherwise learns of a meeting of directors, shareholders or members 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 a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.Statement re disagreementWhere a director resigns as a result of a disagreement with the other directors or the officers of a bank, the director shall submit to the bank and the Superintendent a written statement setting out the nature of the disagreement.
  • 1991, c. 46, s. 174;
  • 2010, c. 12, s. 1977.
Previous Version
Circulation of statementA bank that is not a federal credit union must without delay on receipt of a director’s statement referred to in subsection 174(1) relating to a matter referred to in paragraph 174(1)(b) or (c), or a director’s statement referred to in subsection 174(2), send a copy of it to each shareholder entitled to receive a notice of meetings and to the Superintendent, unless the statement is included in or attached to a management proxy circular required by subsection 156.05(1).Circulation of statement — federal credit unionA federal credit union must, without delay on receipt of a director’s statement referred to in subsection 174(1) relating to a matter referred to in paragraph 174(1)(b) or (c), or a director’s statement referred to in subsection 174(2), send a copy of it to the Superintendent, to each member and, if the director was elected by the holders of shares of a class, to those shareholders.Immunity for statementNo bank or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (1) or (2).
  • 1991, c. 46, s. 175;
  • 1997, c. 15, s. 17;
  • 2010, c. 12, s. 1978.
Previous Version
Shareholders filling vacancyThe by-laws of a bank that is not a federal credit union may provide that a vacancy among the directors is to be filled onlyby a vote of the shareholders; orby 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.Filling vacancy — federal credit unionThe by-laws of a federal credit union may provide that a vacancy among its directors is to be filled by election or appointment by members only or by an election or appointment by persons having an exclusive right to elect or appoint one or more directors if the vacancy occurs among the directors appointed or elected by those persons.
  • 1991, c. 46, s. 176;
  • 2010, c. 12, s. 1978.
Previous Version
Directors filling vacancyDespite section 183 but subject to subsection (2) and sections 176 and 178, a quorum of directors may fill a vacancy among the directors except a vacancy resulting from a change in the by-laws by which the number or the minimum or maximum number of directors is increased or from a failure to elect the number or minimum number of directors provided for in the by-laws.Where composition failsNotwithstanding sections 176 and 183, 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 159, subsection 163(1) and section 164, the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.
  • 1991, c. 46, s. 177;
  • 2005, c. 54, s. 34.
Previous Version
Class vacancyDespite section 183, if a class of persons have an exclusive right to elect one or more directors and a vacancy occurs among those directors, then, subject to section 176,the remaining directors elected by those persons may fill the vacancy except one resulting from an increase in the number or the minimum or maximum number of directors who may be elected by that class from a failure to elect the number or minimum number of directors provided for in the by-laws for that class;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 159, subsection 163(1) and section 164, the other directors may fill that vacancy; andif there are no such remaining directors and paragraph (b) does not apply, any person of that class may call a meeting of the class for the purpose of filling the vacancy.
  • 1991, c. 46, s. 178;
  • 2005, c. 54, s. 35;
  • 2010, c. 12, s. 1979.
Previous Version
Unexpired termUnless 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.AffiliationNotwithstanding subsection 163(3), the affiliation of a person to be elected or appointed to fill a vacancy shall be determined as at the date of the person’s election or appointment and that person shall be deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders.
Additional directorsThe directors of a bank that is not a federal credit union may appoint one or more additional directors if the by-laws of the bank allow them to do so and the by-laws determine the minimum and maximum numbers of directors.Term of officeA 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.Limit on number appointedThe 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.
  • 1997, c. 15, s. 18;
  • 2010, c. 12, s. 1980.
Previous Version
Meetings of the Board
Meetings requiredThe directors shall meet at least four times during each financial year.Place for meetingsThe directors may meet at any place unless the by-laws provide otherwise.Notice for meetingsThe notice for the meetings must be given as required by the by-laws.
  • 1991, c. 46, s. 180;
  • 1997, c. 15, s. 19.
Notice of meetingA notice of a meeting of directors shall specify each matter referred to in section 198 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.Waiver of noticeA 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.Adjourned meetingNotice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting was announced at the original meeting.
QuorumSubject to section 183, 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.IdemThe number of directors constituting a quorum at any meeting of directors or a committee of directors shall bea majority of the minimum number of directors required by this Act for the board of directors or a committee of directors; orsuch greater number of directors than the number calculated pursuant to paragraph (a) as may be established by the by-laws of the bank.Director continues to be presentA director who is present at a meeting of directors or of a committee of directors but is not, in accordance with subsection 203(1), present at any particular time during the meeting is considered to be present for the purposes of this section.
  • 1991, c. 46, s. 182;
  • 2005, c. 54, s. 36.
Previous Version
Resident Canadian majorityThe directors of a bank shall not transact business at a meeting of directors or of a committee of directors unlessin the case of a bank that is a subsidiary of a foreign bank, at least one half of the directors present are resident Canadians; orin any other case, a majority of the directors present are resident Canadians.ExceptionNotwithstanding subsection (1), the directors of a bank 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 ifa 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; andthere would have been present the required proportion of directors who are resident Canadians had that director been present at the meeting.
  • 1991, c. 46, s. 183;
  • 2001, c. 9, s. 75.
Directors of federal credit unionThe directors of a federal credit union that has issued shares that provide for the election of directors must not transact business at a meeting of directors or of a committee of directors unless the majority of the directors present at the meeting are members.
  • 2010, c. 12, s. 1981.
Presence of unaffiliated directorThe directors of a bank shall not transact business at a meeting of directors unless at least one of the directors who is not affiliated with the bank is present.ExceptionDespite subsection (1), the directors of a bank may transact business at a meeting of directors if a director who is not affiliated with the bank and who is not able to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting.ExceptionSubsection (1) does not apply if all the voting shares of the bank, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.
  • 2001, c. 9, s. 76.
Electronic meetingSubject to the by-laws of a bank, 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.Deemed presentA director participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Act to be present at that meeting.
Resolution outside board meetingA 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.Filing directors’ resolutionA copy of the resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors.Resolution outside committee meetingA 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 194(3) or a resolution of the conduct review committee in carrying out its duties under subsection 195(3), is as valid as if it had been passed at a meeting of that committee.Filing committee resolutionA copy of the resolution referred to in subsection (3) shall be kept with the minutes of the proceedings of that committee.EvidenceUnless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.
  • 1997, c. 15, s. 20;
  • 2005, c. 54, s. 37.
Previous Version
Dissent of directorA director of a bank 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 unlessthe director requests that the director’s dissent be entered or the director’s dissent is entered in the minutes of the meeting;the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; orthe director sends the director’s dissent by registered mail or delivers it to the head office of the bank immediately after the meeting is adjourned.Loss of right to dissentA director of a bank who votes for or consents to a resolution is not entitled to dissent under subsection (1).Dissent of absent directorA director of a bank 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 directorcauses the director’s dissent to be placed with the minutes of the meeting; orsends the director’s dissent by registered mail or delivers it to the head office of the bank.
Record of attendanceA bank shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.Statement to shareholders and membersA bank must attach to the notice of each annual meeting it sends to its shareholders or members, as the case may be, 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.
  • 1991, c. 46, s. 186;
  • 1997, c. 15, s. 21;
  • 2010, c. 12, s. 1982.
Previous Version
Meeting required by SuperintendentWhere in the opinion of the Superintendent it is necessary, the Superintendent may, by notice in writing, require a bank to hold a meeting of directors of the bank to consider the matters set out in the notice.Attendance of SuperintendentThe Superintendent may attend and be heard at a meeting referred to in subsection (1).
By-laws
By-lawsUnless this Act otherwise provides, the directors of a bank that is not a federal credit union may by resolution make, amend or repeal any by-law that regulates the business or affairs of the bank.Shareholder approvalThe 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.Effective date of by-lawUnless this Act 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.Effect where no shareholder approvalIf 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.
  • 1991, c. 46, s. 188;
  • 2010, c. 12, s. 1983.
Previous Version
Shareholder proposal of by-lawA shareholder entitled to vote at an annual meeting of shareholders may, in accordance with sections 143 and 144, make a proposal to make, amend or repeal a by-law.
  • 1991, c. 46, s. 189;
  • 2010, c. 12, s. 1984(F).
Previous Version
By-laws of existing bankSubject to section 191, where a by-law of a bank that was in existence immediately prior to the day this section comes into force was in effect immediately prior to that day, the by-law continues in effect until amended or repealed, unless it is contrary to a provision of this Act.
By-laws re remunerationA by-law of a bank respecting the remuneration of the directors of the bank, as directors, that is in effect on the coming into force of this section ceases to have effect on the day on which the first annual meeting is held following the coming into force of this section.Existing by-lawsA by-law made by the directors of a bank under section 45 of the Bank Act, being chapter B-1 of the Revised Statutes of Canada, 1985, as that section read immediately prior to the day this section comes into force, and not confirmed by the shareholders of the bank in accordance with that section on or before the day this section comes into force, continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders following the day this section comes into force.Shareholder approvalA by-law referred to in subsection (2) shall be submitted to the shareholders at the first meeting of shareholders following the coming into force of this section.Application of ss. 188(3) and (4) and 189Subsections 188(3) and (4) and section 189 apply in respect of a by-law referred to in this section as if it were a by-law made under section 188.
Deemed by-lawsAny matter that,immediately prior to the day this section comes into force, was provided for in the incorporating instrument of a bank that was in existence immediately prior to that day, orimmediately prior to the day a body corporate is continued as a bank other than a federal credit union, was provided for in the incorporating instrument of the body corporate,and that, under this Act, would be provided for in the by-laws of a bank, is deemed to be provided for in the by-laws of the bank.By-law prevailsWhere a by-law of the bank made in accordance with sections 188 and 189 amends or repeals any matter referred to in subsection (1), the by-law prevails.
  • 1991, c. 46, s. 192;
  • 2010, c. 12, s. 1985.
Previous Version
By-laws — mandatory provisionsThe by-laws of a federal credit union must provide forthe qualifications of members and the procedures for acceptance of members;the membership obligations of members, including any obligation to use the services of the federal credit union and any fees to be paid by members;the rights of joint members, if any;the fact that a delegate has only one vote even though the delegate is a member or represents more than one member;the limit, if any, on the number of membership shares;the selection, qualifications, term of office and removal of directors and members of committees of directors;the manner of distribution of any surplus earnings arising from the operations of the federal credit union;the rights of withdrawing members and members who are expelled;if the federal credit union wishes to permit members or shareholders to attend a meeting of the federal credit union by means of a communication facility referred to in subsection 136(2), the ways in which votes must be held; andthe date on which the federal credit union’s financial year ends.By-laws — other provisionsThe by-laws of a federal credit union may provide for any other matter that the members consider necessary or desirable, includingrestrictions on the classes of persons to which membership may be available, as long as the restrictions are consistent with applicable laws with respect to human rights;the representation of members by delegates;the distribution of patronage allocations;the manner of distribution of any remaining property on the voluntary liquidation and dissolution of the federal credit union;a formula for calculating the value of membership shares;a formula for calculating the redemption price of membership shares; andvoting by mail.Selection and removal of delegatesIf the by-laws of a federal credit union provide for the representation of members by delegates, the by-laws must set out procedures for their selection and removal.
  • 2010, c. 12, s. 1986.
CopiesEach member and shareholder of a federal credit union may on request, not more than once in each calendar year, receive free of charge one copy of the letters patent and by-laws of the federal credit union, and one copy of any amendments to them.CopiesThe federal credit union must provide each creditor, and, if the federal credit union is a distributing federal credit union, any other person, on payment of a reasonable fee, with a copy of the federal credit union’s letters patent and by-laws.
  • 2010, c. 12, s. 1986.
Making or amendment of by-law by membersThe members of a federal credit union may, by special resolution, make, amend or repeal any by-law that regulates the business and affairs of the federal credit union, including a by-law changing the federal credit union’s name or the province in which its head office is situated.Making or amendment of by-law by directorsUnless the by-laws of a federal credit union provide otherwise, the directors may, by special resolution, make a by-law or amend a by-law of the federal credit union, including a by-law changing the federal credit union’s name or the province in which its head office is situated, but only if the by-law or amendment is not contrary to a by-law made by the members.ApprovalThe directors must present a by-law or an amendment to a by-law that is made under subsection (2) to the members at the next meeting of members and the members may, by special resolution, confirm or amend it.By-law not confirmedIf a by-law or an amendment to a by-law made by the directors is not confirmed, with or without amendments, under subsection (3), the by-law or amendment is repealed as of the date of the meeting of members at which it was not confirmed.Effective date of by-lawIf a by-law, or an amendment to or a repeal of a by-law, made under subsection (1) or (2) does any thing referred to in subsection 218(1) in relation to any class or series of shares, the by-law, amendment or repeal is not effective until it is confirmed or confirmed as amended by the holders of shares of that class or series in accordance with section 218.Effective date of by-lawIf a by-law or an amendment to a by-law made under subsection (1) or (2) changes the name of the federal credit union, the by-law or the amendment is not effective until it is approved by the Superintendent.Letters patentIf the name of a federal credit union or the province in which its head office is situated is changed under subsection (1) or (2), the Superintendent may issue letters patent to amend the federal credit union’s incorporating instrument accordingly.Effect of letters patentLetters patent issued under subsection (7) become effective on the day stated in the letters patent.
  • 2010, c. 12, s. 1986.
Proposal of by-lawA member may, in accordance with section 144.1, make a proposal to make, amend or repeal a by-law.
  • 2010, c. 12, s. 1986.
Effective date of by-lawA by-law or an amendment to or repeal of a by-law made by the members is effective from the later of the date of the resolution made under subsection 192.03(1) and the date specified in the by-law, amendment or repeal.Effective date of by-lawA by-law or an amendment to a by-law made by the directors of a federal credit union is effective from the later of the date the by-law is made or amended by the directors and the date specified in the by-law, until it is confirmed, with or without amendment, under subsection 192.03(3) or repealed under subsection 192.03(4) and, if the by-law is confirmed, or confirmed as amended, it is in effect in the form in which it was so confirmed.If by-law not approvedIf a by-law or an amendment to a by-law made by the directors under subsection 192.03(2) is not submitted by the directors to the next meeting of the members as required under subsection 192.03(3), the by-law or amendment ceases to be effective from the date of that meeting.New resolution of directorsIf a by-law or an amendment to a by-law made by the directors under subsection 192.03(2) is repealed under subsection 192.03(4) or ceases to be effective under subsection (3), no subsequent resolution of the directors to make or amend a by-law that has substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the members.
  • 2010, c. 12, s. 1986.
By-laws of continued body corporateSubject to section 192.05, the by-laws of a body corporate that is continued as a federal credit union under this Act continue in effect until amended or repealed, unless contrary to a provision of this Act.
  • 2010, c. 12, s. 1986.
Existing resolutionsIf the remuneration of directors of a body corporate that is continued as a federal credit union was, immediately before the issuance of the federal credit union’s letters patent, fixed by a resolution of the directors, that resolution continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the federal credit union’s members.
  • 2010, c. 12, s. 1986.
Deemed by-lawsAny matter provided for in the incorporating instrument of a body corporate that is continued as a federal credit union that, under this Act, is to be provided for in the by-laws of a federal credit union is deemed to be provided for in the by-laws of the federal credit union.By-law prevailsIf a by-law of the federal credit union made in accordance with section 192.03 amends or repeals any matter referred to in subsection (1), the by-law prevails.
  • 2010, c. 12, s. 1986.
Rights preservedNo amendment to the letters patent or by-laws of a federal credit union affects an existing cause of action or claim or liability to prosecution in favour of or against the federal credit union or its directors or officers, or any civil, criminal or administrative action or proceeding to which the federal credit union or any of its directors or officers are a party.
  • 2010, c. 12, s. 1986.
By-laws bindingSubject to this Act, every by-law of a federal credit union binds the federal credit union and its members to the same extent as ifeach member had duly approved the by-law; andthere were in the by-law a covenant under seal on the part of each member, and the successors and assigns of the member, to conform to the by-law.
  • 2010, c. 12, s. 1986.
Committees of the Board
CommitteesThe directors of a bank may appoint from their number, in addition to the committees referred to in subsection 157(2), such other committees as they deem necessary and, subject to section 198, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.
Audit committeeThe audit committee of a bank shall consist of at least three directors.MembershipA majority of the members of the audit committee must consist of directors who are not persons affiliated with the bank and none of the members of the audit committee may be officers or employees of the bank or a subsidiary of the bank.Duties of audit committeeThe audit committee of a bank shallreview the annual statement of the bank before the annual statement is approved by the directors;review such returns of the bank as the Superintendent may specify;require the management of the bank to implement and maintain appropriate internal control procedures;review, evaluate and approve those procedures;review such investments and transactions that could adversely affect the well-being of the bank as the auditor or auditors or any officer of the bank may bring to the attention of the committee;meet with the auditor or auditors to discuss the annual statement and the returns and transactions referred to in this subsection; andmeet with the chief internal auditor of the bank, or the officer or employee of the bank acting in a similar capacity, and with management of the bank, to discuss the effectiveness of the internal control procedures established for the bank.ReportIn the case of the annual statement and returns of a bank that under this Act must be approved by the directors of the bank, the audit committee of the bank shall report thereon to the directors before the approval is given.Required meeting of directorsThe audit committee of a bank may call a meeting of the directors of the bank to consider any matter of concern to the committee.TransitionalSubsection (2), in so far as it relates to the affiliation of directors with the bank, does not apply in respect of a bank that was in existence immediately prior to the day that subsection comes into force until the day that is three years after the day that subsection comes into force.
  • 1991, c. 46, s. 194;
  • 1997, c. 15, s. 22.
Conduct review committeeThe conduct review committee of a bank shall consist of at least three directors.MembershipA majority of the members of the conduct review committee of a bank must consist of directors who are not persons affiliated with the bank and none of the members of the conduct review committee may be officers or employees of the bank or a subsidiary of the bank.Duties of conduct review committeeThe conduct review committee of a bank shallrequire the management of the bank to establish procedures for complying with Part XI;review those procedures and their effectiveness in ensuring that the bank is complying with Part XI;if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of the bank,establish policies for entering into transactions referred to in subsection 495.1(1), andreview transactions referred to in subsection 495.3(1); andreview the practices of the bank to ensure that any transactions with related parties of the bank that may have a material effect on the stability or solvency of the bank are identified.Bank report to SuperintendentA bank shall report to the Superintendent on the mandate and responsibilities of the conduct review committee and the procedures referred to in paragraph (3)(a).Committee report to directorsAfter each meeting of the conduct review committee of the bank, the committee shall report to the directors of the bank on matters reviewed by the committee.Directors’ report to SuperintendentWithin ninety days after the end of each financial year, the directors of a bank shall report to the Superintendent on what the conduct review committee did during the year in carrying out its responsibilities under subsection (3).[Repealed, 1997, c. 15, s. 23]
  • 1991, c. 46, s. 195;
  • 1997, c. 15, s. 23;
  • 2001, c. 9, s. 77.
Directors and Officers — Authority
Chief executive officerThe directors of a bank shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 198, may delegate to that officer any of the powers of the directors.[Repealed, 1997, c. 15, s. 24]
  • 1991, c. 46, s. 196;
  • 1997, c. 15, s. 24.
Appointment of officersThe directors of a bank may, subject to the by-laws, designate the offices of the bank, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 198, to manage the business and affairs of the bank.Directors as officersSubject to section 164, a director of a bank may be appointed to any office of the bank.Two or more officesTwo or more offices of a bank may be held by the same person.
Limits on power to delegateThe directors of a bank that is not a federal credit union may not delegate the power tosubmit to the shareholders a question or matter requiring the approval of the shareholders;fill a vacancy among the directors, on a committee of directors or in the office of auditor, or appoint additional directors;issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 62, except in accordance with any authorization made by the directors;declare a dividend;authorize the redemption or other acquisition by the bank pursuant to section 71 of shares issued by the bank;authorize the payment of a commission on a share issue;approve a management proxy circular;except as provided in this Act, approve the annual statement of the bank and any other financial statements issued by the bank; oradopt, amend or repeal by-laws.
  • 1991, c. 46, s. 198;
  • 1997, c. 15, s. 25;
  • 2005, c. 54, s. 38;
  • 2010, c. 12, s. 1987.
Previous Version
Limits on power to delegateThe directors of a federal credit union may not delegate the power tosubmit to the members or shareholders a question or matter requiring their approval;admit members, except in accordance with any authorization made by the members;fill a vacancy among the directors, on a committee of directors or in the office of auditor;issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 62, except in accordance with any authorization made by the directors;declare a dividend on membership shares or shares or allocate an amount as a patronage allocation;authorize the redemption or other acquisition by the federal credit union under section 71 of membership shares, or shares, issued by the federal credit union;authorize the payment of a commission on a share issue;approve a management proxy circular;except as provided in this Act, approve the annual statement of the federal credit union and any other financial statements it issued;expel members; oradopt or amend by-laws.
  • 2010, c. 12, s. 1988.
Remuneration of directors, officers and employeesSubject to this section and the by-laws, the directors of a bank may fix the remuneration of the directors, officers and employees of the bank.By-law requiredNo 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.
  • 1991, c. 46, s. 199;
  • 1994, c. 26, s. 4.
Validity of actsAn act of a director or an officer of a bank 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.IdemAn act of the board of directors of a bank 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.
Right to attend meetingsA director of a bank is entitled to attend and to be heard at every meeting of shareholders or members.
  • 1991, c. 46, s. 201;
  • 2010, c. 12, s. 1989.
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Conflicts of Interest
Disclosure of interestA director or officer of a bank shall disclose to the bank, in writing or by requesting to have it entered in the minutes of a meeting of directors or a meeting of a committee of directors, the nature and extent of any interest they have in a material contract or material transaction with the bank, whether entered into or proposed, if theyare a party to the contract or transaction;are a director or officer of a party to the contract or transaction or a person acting in a similar capacity; orhave a material interest in a party to the contract or transaction.Time of disclosure — directorThe disclosure shall be made in the case of a directorat the meeting of directors, or of a committee of directors, at which the proposed contract or transaction is first considered;if at the time of the meeting referred to in paragraph (a) the director was not interested in the proposed contract or transaction, at the first one after they become interested in it;if the director becomes interested after a contract or transaction is entered into, at the first one after they become interested; orif a person who is interested in a contract or transaction becomes a director, at the first one after they become a director.Time of disclosure — officerThe disclosure shall be made in the case of an officer who is not a directorimmediately after they become aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors or of a committee of directors;if they become interested after the contract or transaction is entered into, immediately after they become interested; orif a person who is interested in a contract or transaction becomes an officer, immediately after they become an officer.Time of disclosure — contract not requiring approvalIf the material contract or material transaction, whether entered into or proposed, is one that in the ordinary course of the bank’s business would not require approval by the directors, shareholders or members, as the case may be, the director or officer must disclose to the bank, in writing or by requesting to have it entered in the minutes of a meeting of directors or of a committee of directors, the nature and extent of their interest immediately after they become aware of the contract or transaction.
  • 1991, c. 46, s. 202;
  • 2005, c. 54, s. 39;
  • 2010, c. 12, s. 1990.
Previous Version
Director to abstainA director who is required to make a disclosure under subsection 202(1) shall not be present at any meeting of directors, or of a committee of directors, while the contract or transaction is being considered or vote on any resolution to approve it unless the contract or transactionrelates primarily to their remuneration as a director, officer, employee or agent of the bank, an entity controlled by the bank or an entity in which the bank has a substantial investment;is for indemnity under section 212 or insurance under section 213; oris with an affiliate of the bank.IneligibilityAny 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 financial institution that is incorporated or formed by or under an Act of Parliament.Validity of actsAn act of the board of directors of a bank, 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.
  • 1991, c. 46, s. 203;
  • 1997, c. 15, s. 26;
  • 2005, c. 54, s. 40.
Previous Version
General noticeFor the purposes of subsection 202(1), a general notice to the directors declaring that a director or officer is to be regarded as interested for any of the following reasons in a contract or transaction entered into with a party is a sufficient declaration of interest in relation to any contract or transaction with that party:the director or officer is a director or officer of a party referred to in paragraph 202(1)(b) or (c) or a person acting in a similar capacity;the director or officer has a material interest in the party; orthere has been a material change in the nature of the director’s or officer’s interest in the party.Access to disclosuresThe shareholders and members of the bank may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 202(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the bank.
  • 1991, c. 46, s. 204;
  • 2001, c. 9, s. 77.1(F);
  • 2005, c. 54, s. 41;
  • 2010, c. 12, s. 1991.
Previous Version
Avoidance standardsA contract or transaction for which disclosure is required under subsection 202(1) is not invalid and a director or officer is not accountable to the bank or its shareholders or members for any profit realized from it by reason only of the director’s or officer’s interest in the contract or transaction or the fact that the director was present or was counted to determine whether a quorum existed at the meeting of directors, or of a committee of directors, that considered it ifthe director or officer disclosed their interest in accordance with section 202 and subsection 204(1);the directors approved the contract or transaction; andthe contract or transaction was reasonable and fair to the bank at the time that it was approved.ConfirmationEven if the conditions set out in subsection (1) are not met, a director or officer acting honestly and in good faith is not accountable to the bank or its shareholders or members for any profit realized from a contract or transaction for which disclosure was required and the contract or transaction is not invalid by reason only of the director’s or officer’s interest in it ifthe contract or transaction is approved or confirmed by special resolution atin the case of a bank that is not a federal credit union, a meeting of shareholders, orin the case of a federal credit union, at a meeting of its members and, if it has shareholders, at a meeting of its shareholders;disclosure of the interest was made to the shareholders or, in the case of a federal credit union, to the members and shareholders, if any, in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; andthe contract or transaction was reasonable and fair to the bank at the time that it was approved or confirmed.
  • 1991, c. 46, s. 205;
  • 2005, c. 54, s. 41;
  • 2010, c. 12, s. 1992.
Previous Version
Court may set aside or require accountingIf a director or officer of a bank fails to comply with any of sections 202 to 205, a court, on application of the bank or any of its shareholders or members, may set aside the contract or transaction on any terms that the court thinks fit and may require the director or officer to account to the bank for any profit or gain realized on it.
  • 1991, c. 46, s. 206;
  • 2005, c. 54, s. 41;
  • 2010, c. 12, s. 1992.
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Liability, Exculpation and Indemnification
Director’s liabilityDirectors of a bank who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 65(1), the issue of a membership share contrary to subsection 79.1(2) or the issue of subordinated indebtedness contrary to section 80 for a consideration other than money are jointly and severally, or solidarily, liable to the bank to make good any amount by which the consideration received is less than the fair equivalent of the money that the bank would have received if the share, membership share or subordinated indebtedness had been issued for money on the date of the resolution.Further liabilityDirectors of a bank who vote for or consent to a resolution of the directors authorizing any of the following are jointly and severally, or solidarily, liable to restore to the bank any amounts so distributed or paid and not otherwise recovered by the bank and any amounts in relation to any loss suffered by the bank:a redemption or purchase of shares or membership shares contrary to section 71;a reduction of capital contrary to section 75;a payment of a dividend or patronage allocation contrary to section 79;a payment of an indemnity contrary to section 212; orany transaction contrary to Part XI.
  • 1991, c. 46, s. 207;
  • 2005, c. 54, s. 42(E);
  • 2010, c. 12, s. 1992.
Previous Version
ContributionA director who has satisfied a judgment in relation to the director’s liability under section 207 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.RecoveryA director who is liable under section 207 is entitled to apply to a court for an order compelling a shareholder, member or other person to pay or deliver to the directorany money or property that was paid or distributed to the shareholder, member or other person contrary to section 71, 75, 79 or 212; oran amount equal to the value of the loss suffered by the bank as a result of any transaction contrary to Part XI.Court orderWhere an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so,order a shareholder, member or other person to pay or deliver to a director any money or property that was paid or distributed to the shareholder, member or other person contrary to section 71, 75, 79 or 212 or any amount referred to in paragraph (2)(b);order a bank to return or issue shares or membership shares to a person from whom the bank has purchased, redeemed or otherwise acquired shares or membership shares; ormake any further order it thinks fit.
  • 1991, c. 46, s. 208;
  • 2010, c. 12, s. 1993.
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LimitationAn action to enforce a liability imposed by section 207 may not be commenced after two years from the date of the resolution authorizing the action complained of.
Directors liable for wagesSubject to subsections (2) and (3), the directors of a bank are jointly and severally, or solidarily, liable to each employee of the bank for all debts not exceeding six months wages payable to the employee for services performed for the bank while they are directors.Conditions precedentA director is not liable under subsection (1) unlessthe bank 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;the bank 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; ora winding-up order has been issued in respect of the bank under the Winding-up and Restructuring Act and a claim for the debt has been allowed or proven within six months after the issue of the winding-up order.LimitationsA 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.Amount due after executionWhere execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.Subrogation of directorWhere a director of a bank pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or winding-up 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.Contribution entitlementA director of a bank who has satisfied a claim under this section is entitled to a contribution from the other directors of the bank who are liable for the claim.
  • 1991, c. 46, s. 210;
  • 1996, c. 6, s. 167;
  • 2005, c. 54, s. 43(E).
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Defence — due diligenceA director, officer or employee of a bank is not liable under section 207 or 210 or subsection 506(1) and has fulfilled their duty under subsection 158(2) if they exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith onfinancial statements of the bank that were represented to them by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; ora report of a person whose profession lends credibility to a statement made by them.Defence — good faithA director or officer of a bank has fulfilled their duty under subsection 158(1) if they relied in good faith onfinancial statements of the bank that were represented to them by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; ora report of a person whose profession lends credibility to a statement made by them.
  • 1991, c. 46, s. 211;
  • 2001, c. 9, s. 78;
  • 2005, c. 54, s. 44.
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IndemnificationA bank may indemnify a director or officer of the bank, a former director or officer of the bank or another person who acts or acted, at the bank’s request, as a director or officer of or in a similar capacity for another entity against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by them in respect of any civil, criminal, administrative, investigative or other proceeding in which they are involved because of that association with the bank or other entity.AdvancesA bank may advance amounts to the director, officer or other person for the costs, charges and expenses of a proceeding referred to in subsection (1). They shall repay the amounts if they do not fulfil the conditions set out in subsection (3).No indemnificationA bank may not indemnify a person under subsection (1) unlessthe person acted honestly and in good faith with a view to the best interests of, as the case may be, the bank or the other entity for which they acted at the bank’s request as a director or officer or in a similar capacity; andin the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the person had reasonable grounds for believing that their conduct was lawful.Indemnification — derivative actionsA bank may with the approval of a court indemnify a person referred to in subsection (1) or advance amounts to them under subsection (2) — in respect of an action by or on behalf of the bank or other entity to procure a judgment in its favour to which the person is made a party because of the association referred to in subsection (1) with the bank or other entity — against all costs, charges and expenses reasonably incurred by them in connection with that action if they fulfil the conditions set out in subsection (3).Right to indemnityDespite subsection (1), a person referred to in that subsection is entitled to be indemnified by the bank in respect of all costs, charges and expenses reasonably incurred by them in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the person is subject because of the association referred to in subsection (1) with the bank or other entity described in that subsection if the personwas not judged by the court or other competent authority to have committed any fault or omitted to do anything that they ought to have done; andfulfils the conditions set out in subsection (3).Heirs and personal representativesA bank may, to the extent referred to in subsections (1) to (5) in respect of the person, indemnify the heirs or personal representatives of any person whom the bank may indemnify under those subsections.
  • 1991, c. 46, s. 212;
  • 2001, c. 9, s. 79(F);
  • 2005, c. 54, s. 44.
Previous Version
Directors’ and officers’ insuranceA bank may purchase and maintain insurance for the benefit of any person referred to in section 212 against any liability incurred by the personin the capacity of a director or an officer of the bank, 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; orin the capacity of a director or officer of another entity or while acting in a similar capacity for another entity, if they act or acted in that capacity at the bank’s request, except if the liability relates to a failure to act honestly and in good faith with a view to the best interests of the entity.
  • 1991, c. 46, s. 213;
  • 2005, c. 54, s. 45.
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Application to court for indemnificationA bank or a person referred to in section 212 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.Notice to SuperintendentAn 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.Other noticeOn 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 ChangesAmendments — Letters Patent
Incorporating instrumentOn the application of a bank duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the bank’s incorporating instrument.
  • 1991, c. 46, s. 215;
  • 2001, c. 9, s. 80.
Letters patent to amendOn receipt of an application referred to in section 215, the Minister may issue letters patent to effect the proposal.Effect of letters patentLetters patent issued pursuant to subsection (1) become effective on the day stated in the letters patent.
  • 1991, c. 46, s. 216;
  • 2001, c. 9, s. 81.
Conversion into Federal Credit Union
Conversion into federal credit unionOn the application of a bank that is not a federal credit union, the Minister may, by letters patent, amend the bank’s incorporating instrument to convert the bank into a federal credit union.
  • 2010, c. 12, s. 1995.
Shareholder approval of conversion proposalBefore a bank makes an application under section 216.01, the directors of the bank must obtain from the shareholders, by special resolution,approval of a conversion proposal that meets the requirements of the regulations and that has been approved by the Superintendent;confirmation of any by-law or of any amendment to or repeal of a by-law that is necessary to implement the conversion proposal; andauthorization to make the application.Additional informationThe Minister may require the federal credit union to provide the Minister with any additional information that he or she considers necessary.
  • 2010, c. 12, s. 1995.
Right to voteFor the purposes of subsection 216.02(1), each share of the bank carries the right to vote in respect of any matter referred to in that subsection whether or not it otherwise carries the right to vote.Class voteFor the purposes of subsection 216.02(1), the holders of shares of a class or series of shares of the bank are entitled to vote separately as a class or series in respect of any matter referred to in that subsection.
  • 2010, c. 12, s. 1995.
Time of applicationAn application under section 216.01 may be made no later than three months after the bank’s conversion proposal has been approved by the shareholders.
  • 2010, c. 12, s. 1995.
Criteria for issuance of letters patentIn determining whether to issue letters patent to amend a bank’s incorporating instrument to convert it into a federal credit union, the Minister must consider all matters that the Minister considers relevant, including whetherthe applicant bank will, on the issuance of the letters patent, be organized and carry on business on a cooperative basis in accordance with section 12.1;there are no reasonable grounds for believing that the issuance of the letters patent would cause the federal credit union to be in contravention of subsection 485(1), any regulation made under subsection 485(2) or any order made under subsection 485(3);the bank’s conversion proposal was approved by special resolution of the shareholders;the conversion of the bank into a federal credit union may reasonably be expected to be achieved under the terms of the conversion proposal;the conversion is fair and reasonable to the shareholders; andthe conversion is in the best interests of the financial system in Canada, including the best interests of the cooperative financial system in Canada.
  • 2010, c. 12, s. 1995.
Effect of letters patentIf the Minister issues letters patent to amend a bank’s incorporating instrument to convert it into a federal credit union, then, on the day stated in the letters patent,the holders of the common shares of the bank are deemed to be the members of the federal credit union;any common shares of the bank that are not to be converted into shares of the federal credit union according to the bank’s conversion proposal are deemed to be membership shares of the federal credit union to which are attached the rights, privileges and restrictions set out in this Act; andany common shares of the bank that are to be converted into shares of the federal credit union according to the bank’s conversion proposal are deemed to be shares of the federal credit union to which are attached the rights, privileges and restrictions set out in this Act.
  • 2010, c. 12, s. 1995.
RegulationsThe Governor in Council may make regulationsrespecting applications under section 216.01, including their form and the information to be contained in them;respecting conversion proposals to become a federal credit union, including the information to be contained in them;respecting the by-laws that must be made or repealed, or the amendments that must be made to by-laws, to give effect to a conversion proposal to become a federal credit union; andgenerally, respecting the conversion of a bank into a federal credit union.Conversion of common sharesRegulations made under paragraph (1)(b) must provide that a conversion proposal must provide that at least one common share held by every holder of common shares is converted into a membership share.Canada Deposit Insurance Corporation ActA regulation made under subsection (1) may provide for different provisions respecting a bank that is subject to an order under paragraph 39.13(1)(a) of the Canada Deposit Insurance Corporation Act or is a bridge institution within the meaning of that Act.Exemption by SuperintendentA regulation made under subsection (1) may provide that the Superintendent may, on any terms and conditions that the Superintendent considers appropriate, exempt a bank from any requirements of that regulation.Exemption by MinisterThe Minister may, on any terms and conditions that the Minister considers appropriate, exempt a bank from any requirement of this Act or the regulations if the bank is applying for the approval of a proposal to convert itself into a federal credit union andthe Minister is of the opinion that the bank is, or is about to be, in financial difficulty and that the exemption would help to facilitate an improvement in the financial condition of the bank; oris subject to an order under paragraph 39.13(1)(a) of the Canada Deposit Insurance Corporation Act or is a bridge institution within the meaning of that Act.
  • 2010, c. 12, s. 1995.
Conversion into Bank with Common Shares
Conversion into bank with common sharesOn the application of a federal credit union, the Minister may, by letters patent, amend the federal credit union’s incorporating instrument to convert the federal credit union into a bank with common shares.
  • 2010, c. 12, s. 1995.
Approval of conversion proposalBefore a federal credit union makes an application under section 216.08, the directors of the federal credit union must obtain from the members by special resolution and, if the federal credit union has issued shares, from the shareholders, by separate special resolution,approval of a conversion proposal that meets the requirements of the regulations and that has been approved by the Superintendent;confirmation of any by-law or of any amendment to or repeal of a by-law that is necessary to implement the conversion proposal; andauthorization to make the application.Additional informationThe Minister may require the federal credit union to provide the Minister with any additional information that he or she considers necessary.
  • 2010, c. 12, s. 1995.
Right to voteFor the purposes of subsection 216.09(1), each share of the federal credit union carries the right to vote in respect of any matter referred to in that subsection whether or not it otherwise carries the right to vote.Class voteFor the purposes of subsection 216.09(1), the holders of shares of a class or series of shares of the federal credit union are entitled to vote separately as a class or series in respect of any matter referred to in that subsection.
  • 2010, c. 12, s. 1995.
Time of applicationAn application under section 216.08 may be made no later than three months after the bank’s conversion proposal has been approved by the members and shareholders, if any.
  • 2010, c. 12, s. 1995.
Criteria for issuance of letters patentIn determining whether to issue letters patent converting a federal credit union into a bank with common shares, the Minister must consider all matters that the Minister considers relevant, including whetherthere are no reasonable grounds for believing that the issuance of the letters patent would cause the bank with common shares to be in contravention of subsection 485(1), any regulation made under subsection 485(2) or any order made under subsection 485(3);the federal credit union’s conversion proposal was approved by special resolution of the members and a separate special resolution of the shareholders, if any;the conversion of the federal credit union into a bank with common shares may reasonably be expected to be achieved under the terms of the conversion proposal;the conversion is fair and reasonable to the members and shareholders, if any; andthe conversion is in the best interests of the financial system in Canada, including the best interests of the cooperative financial system in Canada.
  • 2010, c. 12, s. 1995.
Effect of letters patentIf the Minister issues letters patent to amend a federal credit union’s incorporating instrument to convert it into a bank with common shares, then, on the day stated in the letters patent, members of the federal credit union become, in accordance with the conversion proposal, holders of common shares of the bank to which are attached the rights, privileges and restrictions set out in this Act.
  • 2010, c. 12, s. 1995.
RegulationsThe Governor in Council may make regulationsrespecting applications under section 216.08, including their form and the information to be contained in them;respecting conversion proposals to become a bank with common shares, including the information to be contained in them;respecting the by-laws that must be made or repealed, or the amendments that must be made to by-laws, to give effect to a conversion proposal to become a bank with common shares;respecting, for the purposes of a proposal to become a bank with common shares, the value of the converting federal credit union and of its membership shares and shares, if any, and authorizing the Superintendent to specify a day as of which those values must be estimated;concerning the fair and equitable treatment of members and shareholders, if any, under a federal credit union’s conversion proposal to become a bank with common shares;concerning the conversion of membership shares and shares, if any, of a federal credit union into common shares or other shares;authorizing the Superintendent torequire a federal credit union that proposes to become a bank with common shares to hold one or more information sessions for its members and shareholders, if any, and to take other measures to assist its members and shareholders, if any, in forming a reasoned judgment on the proposal, andset the rules under which the information sessions must be held;respecting restrictions on any fee, compensation or other consideration that may be paid, in respect of the conversion of a federal credit union into a bank with common shares, to any director, officer or employee of the federal credit union or to any entity with which a director, officer or employee of the federal credit union is associated;prohibiting, except for those issued as a result of the implementation of a conversion proposal, the issuance or provision during the period set out in the regulations of shares, share options or rights to acquire shares, of a bank that has been converted from a federal credit union into a bank with common shares toany director, officer or employee of the bank, orany person who was a director, officer or employee of the federal credit union during the year preceding the effective date of conversion of the federal credit union; andgenerally, respecting the conversion of a federal credit union into a bank with common shares.Canada Deposit Insurance Corporation ActA regulation made under subsection (1) may provide for different provisions respecting a federal credit union that is subject to an order under paragraph 39.13(1)(a) of the Canada Deposit Insurance Corporation Act or is a bridge institution within the meaning of that Act.Exemption by SuperintendentA regulation made under subsection (1) may provide that the Superintendent may, on any terms and conditions that the Superintendent considers appropriate, exempt a federal credit union from any requirements of that regulation.Exemption by MinisterThe Minister may, on any terms and conditions that the Minister considers appropriate, exempt a federal credit union from any requirement of this Act or the regulations if the federal credit union is applying for the approval of a proposal to convert itself into a bank with common shares andthe Minister is of the opinion that the federal credit union is, or is about to be, in financial difficulty and that the exemption would help to facilitate an improvement in the financial condition of the federal credit union; orthe federal credit union is subject to an order under paragraph 39.13(1)(a) of the Canada Deposit Insurance Corporation Act or is a bridge institution within the meaning of that Act.
  • 2010, c. 12, s. 1995;
  • 2012, c. 5, s. 223.
Amendments — By-laws
By-lawsThe directors of a bank that is not a federal credit union may make, amend or repeal any by-laws, in the manner set out in subsections (2) and (3) and sections 218 to 222, tochange the maximum number, if any, of shares of any class that the bank is authorized to issue;create new classes of shares;change the designation of any or all of the bank’s shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of any or all of the bank’s shares, whether issued or unissued;change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series;divide a class of shares, whether issued or unissued, into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;authorize the directors to divide any class of unissued shares into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series;revoke, diminish or enlarge any authority conferred under paragraphs (f) and (g);increase or decrease the number of directors or the minimum or maximum number of directors, subject to subsection 159(1) and section 168;change the name of the bank; orchange the province in which the head office of the bank is situated.Shareholder approvalThe 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, and the shareholders may, by special resolution, confirm, amend or reject the by-law, amendment or repeal.Effective date of by-lawA by-law, or an amendment to or a repeal of a by-law, made under subsection (1) is not effective until it is confirmed or confirmed as amended by the shareholders under subsection (2) and, in the case of a by-law respecting a change to the name of the bank, approved by the Superintendent.Letters patentIf the name of a bank or the province in Canada in which the head office of the bank is situated is changed under this section, the Superintendent may issue letters patent to amend the bank’s incorporating instrument accordingly.Effect of letters patentLetters patent issued under subsection (4) become effective on the day stated in the letters patent.
  • 1991, c. 46, s. 217;
  • 2001, c. 9, s. 82;
  • 2005, c. 54, s. 46;
  • 2007, c. 6, s. 13;
  • 2010, c. 12, s. 1996.
Previous Version
Class voteThe holders of shares of a class or, subject to subsection (2), of a series are, unless the by-laws otherwise provide in the case of an amendment to the by-laws referred to in paragraph (a), (b) or (e), entitled to vote separately as a class or series on a proposal to amend the by-laws toincrease or decrease any maximum number of authorized shares of that class, or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the shares of that class;effect an exchange, reclassification or cancellation of all or part of the shares of that class;add, change or remove the rights, privileges, restrictions or conditions attached to the shares of that class and, without limiting the generality of the foregoing,remove or change prejudicially rights to accrued dividends or rights to cumulative dividends,add, remove or change prejudicially redemption rights,reduce or remove a dividend preference or a liquidation preference, oradd, remove or change prejudicially conversion privileges, options, voting, transfer or pre-emptive rights, or rights to acquire securities of the bank, or sinking fund provisions;increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of that class;create a new class of shares equal or superior to the shares of that class;make any class of shares having rights or privileges inferior to the shares of that class equal or superior to the shares of that class; oreffect an exchange or create a right of exchange of all or part of the shares of another class into the shares of that class.Right limitedThe holders of a series of shares of a class are entitled to vote separately as a series under subsection (1) if that series is affected by an addition or amendment to the by-laws in a manner different from other shares of the same class.Right to voteSubsections (1) and (2) apply whether or not the shares of a class otherwise carry the right to vote.
Separate resolutionsA proposed addition or amendment to the by-laws referred to in subsection 218(1) is adopted when the holders of the shares of each class or series entitled to vote separately thereon as a class or series have approved the addition or amendment by a special resolution.
Revoking resolutionWhere a special resolution referred to in subsection 217(2) so states, the directors may, without further approval of the shareholders, revoke the special resolution.
Proposal to amendSubject to subsection (2), a director or a shareholder who is entitled to vote at an annual meeting of shareholders of a bank may, in accordance with sections 143 and 144, make a proposal to make an application referred to in section 215 or to make, amend or repeal the by-laws referred to in subsection 217(1) of the bank.Notice of amendmentNotice of a meeting of shareholders at which a proposal to amend the incorporating instrument or to make, amend or repeal the by-laws of a bank is to be considered must set out the proposal.
  • 1991, c. 46, s. 221;
  • 2001, c. 9, s. 83.
Rights preservedNo amendment to the incorporating instrument or by-laws of a bank affects an existing cause of action or claim or liability to prosecution in favour of or against the bank or its directors or officers, or any civil, criminal or administrative action or proceeding to which the bank or any of its directors or officers are a party.
Amalgamation
Application to amalgamateOn the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including banks that are not federal credit unions and bank holding companies, the Minister may issue letters patent amalgamating and continuing the applicants as one bank, other than a federal credit union.Application to amalgamate — federal credit unionsOn the joint application of two or more federal credit unions, the Minister may issue letters patent amalgamating and continuing the applicants as one federal credit union.RestrictionDespite subsection (1), if one of the applicants is 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) unlessthe amalgamated bank would be a widely held bank; orthe amalgamated bank would be controlled by a widely held bank holding company that, at the time the application was made, controlledthe applicant, orany other applicant that is 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.RestrictionDespite subsection (1), if the amalgamated bank would be a bank with equity of twelve billion dollars or more, the Minister shall not issue letters patent referred to in that subsection unless the amalgamated bank iswidely held;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; orcontrolled, within the meaning of paragraph 3(1)(d), by a widely held insurance holding company, or by an eligible Canadian financial institution, as defined in subsection 370(1), other than a bank, or by an eligible foreign institution, as defined in subsection 370(1), that controlled one of the applicants at the time the application was made.
  • 1991, c. 46, s. 223;
  • 2001, c. 9, s. 84;
  • 2007, c. 6, s. 132;
  • 2010, c. 12, s. 1997;
  • 2012, c. 5, s. 8.
Previous Version
Amalgamation agreementEach applicant proposing to amalgamate shall enter into an amalgamation agreement.Contents of agreementEvery amalgamation agreement shall set out the terms and means of effecting the amalgamation and, in particular,the name of the amalgamated bank and the province in which its head office is to be situated;if the amalgamated bank is to be a federal credit union, a statement that the amalgamated bank will be organized and carry on business on a cooperative basis in accordance with section 12.1;the name and place of ordinary residence of each proposed director of the amalgamated bank;the manner in which the shares or membership shares of each applicant are to be converted into shares or other securities, or into membership shares, of the amalgamated bank;if any shares or membership shares of an applicant are not to be converted into shares or other securities, or into membership shares, of the amalgamated bank, 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, or membership shares, of the amalgamated bank;the manner of payment of money in lieu of the issue of fractional shares of the amalgamated bank or of any other body corporate that are to be issued in the amalgamation;the proposed by-laws of the amalgamated bank;details of any other matter necessary to perfect the amalgamation and to provide for the subsequent management and operation of the amalgamated bank; andthe proposed effective date of the amalgamation.Cross ownership of sharesIf shares or membership shares of one of the applicants are held by or on behalf of another of the applicants, other than shares or membership 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 or membership shares when the amalgamation becomes effective without any repayment of capital in respect of them, and no provision may be made in the agreement for the conversion of those shares or membership shares into shares or membership shares of the amalgamated bank.
  • 1991, c. 46, s. 224;
  • 2005, c. 54, s. 47;
  • 2010, c. 12, s. 1998.
Previous Version
Approval of agreement by SuperintendentAn amalgamation agreement must be submitted to the Superintendent for approval, and any approval of the agreement under subsection 226(4) by the holders of any class or series of shares of an applicant, and, if applicable, by the members, is invalid unless, before the date of the approval, the Superintendent has approved the agreement in writing.
  • 1991, c. 46, s. 225;
  • 2007, c. 6, s. 14;
  • 2010, c. 12, s. 1999(E).
Previous Version
ApprovalThe directors of each applicant must submit an amalgamation agreement for approval to a meeting of the shareholders of the applicant — or, if the applicant is a federal credit union, to a meeting of its members and to a meeting of its shareholders, if any.Right to voteEach share of an applicant carries the right to vote in respect of an amalgamation agreement whether or not it otherwise carries the right to vote.Separate vote for class or seriesThe holders of shares of a class or series of shares of each applicant are entitled to vote separately as a class or series in respect of an amalgamation agreement if the agreement contains a provision that, if it were 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.Special resolutionSubject to subsection (3), an amalgamation agreement is approved when the shareholders of each applicant bank or body corporate have approved the amalgamation by special resolution or, if an applicant bank is a federal credit union, the members and shareholders, if any, have approved the amalgamation by separate special resolutions.TerminationAn 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 even if the agreement has been approved by the shareholders — or the members and shareholders, if any — of all or any of the applicant banks or bodies corporate.
  • 1991, c. 46, s. 226;
  • 2005, c. 54, s. 48;
  • 2010, c. 12, s. 2000.
Previous Version
Members of amalgamated federal credit unionOn the issuance of letters patent amalgamating and continuing two or more federal credit unions as one federal credit union, the members of the federal credit unions become members of the amalgamated federal credit union.
  • 2010, c. 12, s. 2001.
Vertical short-form amalgamationA bank, other than a federal credit union, may, without complying with sections 224 to 226, 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 andthe amalgamation is approved by a resolution of the directors of the bank and of each amalgamating subsidiary; andthe resolutions provide thatthe shares of each amalgamating subsidiary will be cancelled without any repayment of capital in respect thereof,the letters patent of amalgamation and the by-laws of the amalgamated bank will be the same as the incorporating instrument and the by-laws of the amalgamating bank that is the holding body corporate, andno securities will be issued by the amalgamated bank in connection with the amalgamation.Horizontal short-form amalgamationTwo or more bodies corporate incorporated by or under an Act of Parliament, none of which is a federal credit union, may amalgamate and continue as one bank, without complying with sections 224 to 226 ifat least one of the applicants is a bank;the applicants are all wholly-owned subsidiaries of the same holding body corporate;the amalgamation is approved by a resolution of the directors of each of the applicants; andthe resolutions provide thatthe shares of all applicants, except those of one of the applicants that is a bank, will be cancelled without any repayment of capital in respect thereof,the letters patent of amalgamation and the by-laws of the amalgamated bank will be the same as the incorporating instrument and the by-laws of the amalgamating bank whose shares are not cancelled, andthe stated capital of the amalgamating banks and bodies corporate whose shares are cancelled will be added to the stated capital of the amalgamating bank whose shares are not cancelled.
  • 1991, c. 46, s. 227;
  • 2010, c. 12, s. 2002.
Previous Version
Joint application to MinisterSubject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 226(5), the applicants shall, within three months after the approval of the agreement in accordance with subsection 226(4) or the approval of the directors in accordance with subsection 227(1) or (2), jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one bank.Conditions precedent to applicationNo application for the issue of letters patent under subsection (1) may be made unlessnotice 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; andthe application is supported by satisfactory evidence that the applicants have complied with the requirements of this Part relating to amalgamations.Application of sections 23 to 26If two or more bodies corporate, none of which is a bank, apply for letters patent under subsection (1), sections 23 to 26 apply in respect of the application with any modifications that the circumstances require.Matters for considerationBefore issuing letters patent of amalgamation continuing the applicants as one bank, the Minister shall take into account all matters that the Minister considers relevant to the application, includingthe sources of continuing financial support for the amalgamated bank;the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of the amalgamated bank;the business record and experience of the applicants;the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;whether the amalgamated bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated bank and its affiliates may affect the supervision and regulation of the amalgamated bank, having regard tothe nature and extent of the proposed financial services activities to be carried out by the amalgamated bank and its affiliates, andthe 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;if the amalgamated bank will be a federal credit union, that it will be organized and carry on business on a cooperative basis in accordance with section 12.1; andthe best interests of the financial system in Canada, including, if the amalgamated bank will be a federal credit union, the best interests of the cooperative financial system in Canada.
  • 1991, c. 46, s. 228;
  • 2001, c. 9, s. 85;
  • 2010, c. 12, s. 2003.
Previous Version
Issue of letters patentWhere an application has been made to the Minister in accordance with section 228, the Minister may issue letters patent of amalgamation continuing the applicants as one bank.Letters patentWhere letters patent are issued pursuant to this section, section 28 applies with such modifications as the circumstances require in respect of the issue of the letters patent.Publication of noticeThe Superintendent shall cause to be published in the Canada Gazette notice of the issuance of letters patent pursuant to subsection (1).
Court enforcementIf a bank or any director, officer, employee or agent of a bank 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 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.AppealAn 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.
  • 2001, c. 9, s. 86.
Effect of letters patentOn the day provided for in the letters patent issued under section 229the amalgamation of the applicants and their continuance as one bank becomes effective;the property of each applicant continues to be the property of the amalgamated bank;the amalgamated bank continues to be liable for the obligations of each applicant;any existing cause of action, claim or liability to prosecution is unaffected;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;any conviction against, or ruling, order or judgment in favour of or against, an applicant may be enforced by or against the amalgamated bank;if any director or officer of an applicant continues as a director or officer of the amalgamated bank, 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; and[Repealed, 2001, c. 9, s. 87]the letters patent of amalgamation are the incorporating instrument of the amalgamated bank.MinutesAny deemed disclosure under paragraph (1)(g) shall be recorded in the minutes of the first meeting of directors of the amalgamated bank.
  • 1991, c. 46, ss. 230, 576;
  • 1997, c. 15, s. 27;
  • 1999, c. 28, s. 14;
  • 2001, c. 9, s. 87.
TransitionalNotwithstanding any other provision of this Act or the regulations, the Minister may, by order, on the recommendation of the Superintendent, grant to a bank in respect of which letters patent were issued under subsection 229(1) permission toengage in a business activity specified in the order that a bank 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;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;[Repealed, 1994, c. 47, s. 16]hold assets that a bank 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;acquire and hold assets that a bank 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; andmaintain outside Canada any records or registers required by this Act to be maintained in Canada.Duration of exceptionsThe permission granted under any of paragraphs (1)(a) to (f) shall be expressed to be granted for a period specified in the order not exceedingwith 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;with respect to any matter described in paragraph (1)(b), ten years; andwith respect to any matter described in any of paragraphs (1)(d) to (f), two years.RenewalSubject 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 (e) for any further period or periods that the Minister considers necessary.LimitationThe Minister shall not grant to a bank any permissionwith respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the bank to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank that the bank will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; andwith respect to matters described in paragraphs (1)(d) and (e), that purports to be effective more than ten years after the date of issue of the letters patent.
  • 1991, c. 46, s. 231;
  • 1994, c. 47, s. 16;
  • 1997, c. 15, s. 28;
  • 2007, c. 6, s. 15.
Previous Version
Transfer of Business
Sale by bankA bank may sell all or substantially all of its assets to a financial institution incorporated by or under an Act of Parliament or to an authorized foreign bank in respect of its business in Canada if the purchasing financial institution or authorized foreign bank assumes all or substantially all of the liabilities of the bank.Sale agreementAn agreement of purchase and sale (in subsection (3), section 233, subsections 234(1) and (4) and section 236 referred to as a “sale agreement”) shall set out the terms of, and means of effecting, the sale of assets referred to in subsection (1).ConsiderationNotwithstanding anything in this Act, the consideration for a sale referred to in subsection (1) may be cash or fully paid securities of the purchasing financial institution or authorized foreign bank or in part cash and in part fully paid securities of the purchasing financial institution or authorized foreign bank or any other consideration that is provided for in the sale agreement.
  • 1991, c. 46, s. 232;
  • 1999, c. 28, s. 15.
Agreement to SuperintendentA sale agreement must be sent to the Superintendent before it is submitted to shareholders or to members and shareholders, as the case may be, of the selling bank under subsection 234(1).
  • 1991, c. 46, s. 233;
  • 2007, c. 6, s. 16;
  • 2010, c. 12, s. 2004.
Previous Version
Shareholder approvalThe directors of a selling bank must submit a sale agreement for approval to a meeting of shareholders, or, if the bank is a federal credit union, to a meeting of members and shareholders of the bank and, subject to subsection (3), to the holders of each class or series of shares of the bank.Right to voteEach share of a selling bank carries the right to vote in respect of a sale referred to in subsection 232(1) whether or not the share otherwise carries the right to vote.Class voteThe holders of shares of a class or series of shares of a selling bank are entitled to vote separately as a class or series in respect of a sale referred to in subsection 232(1) only if the shares of the class or series are affected by the sale in a manner different from the shares of another class or series.Special resolutionA sale agreement is approved when the shareholders and the holders of each class or series of shares entitled to vote separately as a class or series under subsection (3) of the selling bank have approved the sale by special resolution and, if the selling bank is a federal credit union, the members have also approved the sale by a separate special resolution.
  • 1991, c. 46, s. 234;
  • 2010, c. 12, s. 2005.
Previous Version
Abandoning saleIf a special resolution approving a sale under subsection 234(4) so states, the directors of a selling bank may, subject to the rights of third parties, abandon the sale without further approval of the shareholders or the members and shareholders, as the case may be.
  • 1991, c. 46, s. 235;
  • 2010, c. 12, s. 2006.
Previous Version
Application to MinisterSubject to subsection (2), unless a sale agreement is abandoned in accordance with section 235, the selling bank shall, within three months after the approval of the sale agreement in accordance with subsection 234(4), apply to the Minister for approval of the sale agreement.Conditions precedent to applicationNo application for approval under subsection (1) may be made unlessnotice 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 the selling bank is situated; andthe application is supported by satisfactory evidence that the selling bank has complied with the requirements of sections 232 to 235 and this section.Approval by MinisterA sale agreement has no force or effect until it has been approved by the Minister.IdemWhere an application has been made to the Minister in accordance with subsections (1) and (2), the Minister may approve the sale agreement to which the application relates.
Corporate RecordsHead Office and Corporate Records
Head officeA bank shall at all times have a head office in the province specified in its incorporating instrument or by-laws.Change of head officeThe directors of a bank may change the address of the head office within the province specified in the incorporating instrument or by-laws.Notice of change of addressA bank shall send to the Superintendent, within fifteen days after any change of address of its head office, a notice of the change of address.
  • 1991, c. 46, s. 237;
  • 2005, c. 54, s. 49.
Previous Version
Bank recordsA bank shall prepare and maintain records containingits incorporating instrument and the by-laws of the bank and all amendments thereto;minutes of meetings and resolutions of shareholders and members;the information referred to in paragraphs 632(1)(a), (c) and (e) to (h) contained in all returns provided to the Superintendent pursuant to section 632;particulars of any authorizations, conditions and limitations established by the Superintendent pursuant to section 53 or subsection 54(1) that are from time to time applicable to the bank;particulars of exceptions granted under section 39, 55 or 231 that are from time to time applicable to the bank; andparticulars from Schedule I or II that are applicable to the bank as they are from time to time amended and published in the Canada Gazette.Additional recordsIn addition to the records described in subsection (1), a bank shall prepare and maintain adequatecorporate accounting records;records containing minutes of meetings and resolutions of the directors and any committee thereof; andrecords showing, for each customer of the bank, on a daily basis, particulars of the transactions between the bank and that customer and the balance owing to or by the bank in respect of that customer and, if the bank is a federal credit union, whether the customer is a member of the federal credit union.Continued banksFor the purposes of paragraph (1)(b) and subsection (2),in the case of a body corporate continued as a bank under this Act, records includes similar records required by law to be maintained by the body corporate before it was so continued; andin the case of a body corporate amalgamated and continued as a bank under this Act, records includes similar records required by law to be maintained by the body corporate before it was so amalgamated.
  • 1991, c. 46, s. 238;
  • 1997, c. 15, s. 29(E);
  • 1999, c. 28, s. 16;
  • 2010, c. 12, s. 2007.
Previous Version
Place of recordsThe records described in section 238 shall be kept at the head office of the bank or at such other place in Canada as the directors think fit.Notice of place of recordsWhere any of the records described in section 238 are not kept at the head office of a bank, the bank shall notify the Superintendent of the place where the records are kept.ExceptionSubsection (1) does not apply in respect of records of a branch of the bank outside Canada or in respect of customers of such a branch.InspectionThe records described in section 238, other than those described in paragraph 238(2)(c), shall at all reasonable times be open to inspection by the directors.Access to bank recordsShareholders, members and creditors of a bank and their personal representatives may examine the records referred to in subsection 238(1) during the usual business hours of the bank and may take extracts from them free of charge or have copies of them made on payment of a reasonable fee. If the bank is a distributing bank, any other person may on payment of a reasonable fee examine those records during the usual business hours of the bank and take extracts from them or have copies of them made.Electronic accessA bank may make the information contained in records referred to in subsection 238(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.Copies of by-lawsEvery shareholder and every member of a bank 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.
  • 1991, c. 46, s. 239;
  • 2001, c. 9, s. 88;
  • 2005, c. 54, s. 50;
  • 2010, c. 12, s. 2008.
Previous Version
ListsA person who is entitled to a basic list of shareholders or members of a bank (in this section referred to as the “applicant”) may request the bank to furnish the applicant with a basic list within ten days after receipt by the bank of the affidavit referred to in subsection (2) and, on payment of a reasonable fee by the applicant, the bank must comply with the request.Affidavit and contentsA request under subsection (1) must be accompanied by an affidavit containingthe name and address of the applicant,the name and address for service of the entity, if the applicant is an entity, andan 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 242,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.Entitlement to listA shareholder, member or creditor of a bank or their personal representative — or, if the bank is a distributing bank, any person — is entitled to a basic list of shareholders or members of the bank.Basic listA basic list of shareholders or members of a bank consists of a list of shareholders or members 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 outthe names of the shareholders or members, as the case may be, of the bank;the number of shares owned by each shareholder, or the number of membership shares owned by each member, as the case may be; andthe address of each shareholder or member as shown in the records of the bank.Supplemental listsA person requiring a bank to supply a basic list may, if the person states in the accompanying affidavit that supplemental lists are required, request the bank or its agent, on payment of a reasonable fee, to provide supplemental lists of shareholders or members setting out any changes from the basic list in the names and addresses of the shareholders or members, as the case may be, and the number of shares owned by each shareholder, or the number of membership shares owned by each member, as the case may be, for each business day following the date to which the basic list is made up.When supplemental lists to be furnishedA bank or its agent shall provide a supplemental list of shareholders required under subsection (5)within ten days following the date the basic list is provided, where the information relates to changes that took place prior to that date; andwithin 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.
  • 1991, c. 46, s. 240;
  • 2005, c. 54, s. 51;
  • 2010, c. 12, s. 2009.
Previous Version
Option holdersA person requiring a bank to supply a basic list or a supplemental list of shareholders or members may also require the bank to include in that list the name and address of any known holder of an option or right to acquire shares of the bank.
  • 1991, c. 46, s. 241;
  • 2010, c. 12, s. 2010(E).
Previous Version
Use of listNo person shall use a list of shareholders or members obtained under section 240 except in connection withan effort to influence the voting of shareholders or members of the bank;an offer to acquire shares of the bank; orany other matter relating to the affairs of the bank.
  • 1991, c. 46, s. 242;
  • 2010, c. 12, s. 2011.
Previous Version
Form of recordsA register or other record required or authorized by this Act to be prepared and maintained by a bankmay be in a bound or loose-leaf form or in a photographic film form; ormay 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.Conversion of recordsRegisters and records maintained in one form may be converted to any other form.Destruction of converted recordsNotwithstanding section 246, a bank 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.
Protection of recordsA bank and its agents shall take reasonable precautions toprevent loss or destruction of,prevent falsification of entries in,facilitate detection and correction of inaccuracies in, andensure that unauthorized persons do not have access to or use of information inthe registers and records required or authorized by this Act to be prepared and maintained.
Requirement to maintain copies and process information in CanadaIf the Superintendent is of the opinion that it is incompatible with the fulfilment of the Superintendent’s responsibilities under this Act for a bank to maintain, in another country, copies of records referred to in section 238 or of its central securities register or members register or for a bank to process, in another country, information or data relating to the preparation and maintenance of those records or of its central securities register or members register — or if the Superintendent is advised by the Minister that, in the opinion of the Minister, it is not in the national interest for a bank to do any of those activities in another country — the Superintendent must direct the bank to not maintain those copies, or to not process the information or data, as the case may be, in that other country or to maintain those copies or to process the information or data only in Canada.Bank to complyA bank shall without delay comply with any direction issued under subsection (1).
  • 1991, c. 46, s. 245;
  • 2001, c. 9, s. 89;
  • 2005, c. 54, s. 52;
  • 2007, c. 6, s. 17;
  • 2010, c. 12, s. 2012.
Previous Version
Retention of recordsA bank shall retainthe records of the bank referred to in subsection 238(1);any record of the bank referred to in paragraph 238(2)(a) or (b);the central securities register referred to in subsection 248(1); andthe members register referred to in subsection 254.1(1).IdemA bank shall retain all signature cards and signing authorities or copies thereof relating to any deposit or instrument in respect of which the bank has paid an amount to the Bank of Canada pursuant to section 438 until the Bank of Canada notifies the bank that they need no longer be retained.EvidenceCopies of the signature cards and signing authorities referred to in subsection (2) may be kept in any manner or form referred to in paragraphs 243(1)(a) and (b) and any such copies, or prints therefrom, are admissible in evidence in the same manner and to the same extent as the original signature cards and signing authorities.ReliefNothing in this section affects the operation of any statute of limitation or prescription or relieves the bank from any obligation to the Bank of Canada in respect of any deposit or instrument in respect of which section 438 applies.
  • 1991, c. 46, s. 246;
  • 2010, c. 12, s. 2013.
Previous Version
RegulationsThe Governor in Council may make regulations respecting the records, papers and documents to be retained by a bank and the length of time those records, papers and documents are to be retained.
Securities Registers
Central securities registerA bank 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 securitiesthe 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;the number of securities held by each security holder; andthe date and particulars of the issue and transfer of each security.Existing and continued banksFor the purposes of subsection (1), “central securities register” includes similar registers required by law to be maintained by a bank that was in existence immediately prior to the day that subsection comes into force or by a body corporate continued, or amalgamated and continued, as a bank under this Act before the continuance, amalgamation or coming into force of that subsection, as the case may be.Access to central securities registerShareholders and creditors of a bank and their personal representatives — and, if the bank is a federal credit union, its members and their personal representatives — may examine the central securities register during the usual business hours of the bank and may take extracts from it free of charge or have copies of it made on payment of a reasonable fee. If the bank is a distributing bank, any other person may, on payment of a reasonable fee, examine the central securities register during the usual business hours of the bank and take extracts from it or have copies of it made.Electronic accessThe bank may make the information contained in the central securities register available by any mechanical or electronic data processing system or other information storage device that is capable of reproducing it in intelligible written form within a reasonable time.Affidavit and undertakingA person who wishes to examine the central securities register, take extracts from it or have copies of it made shall provide the bank with an affidavit containing their name and address — or if they are an entity, the name and address for service of the entity — and with an undertaking that the information contained in the register will not be used except in the same way as a list of shareholders may be used under section 242. In the case of an entity, the affidavit is to be sworn by a director or officer of the entity or a person acting in a similar capacity.Supplemental informationA person who wishes to examine a central securities register, take extracts from it or have copies of it made may on payment of a reasonable fee, if they state in the accompanying affidavit that supplementary information is required, request the bank or its agent to provide supplementary information setting out any changes made to the register.When supplementary information to be providedA bank or its agent shall provide the supplementary information within10 days after the day on which the central securities register is examined if the changes take place before that day; and10 days after the day to which the supplementary information relates if the changes take place on or after the day on which the central securities register is examined.
  • 1991, c. 46, s. 248;
  • 2001, c. 9, s. 90;
  • 2005, c. 54, s. 53;
  • 2010, c. 12, s. 2014.
Previous Version
Branch registersA bank may establish as many branch securities registers as it considers necessary.
AgentsA bank may appoint an agent to maintain its central securities register and each of its branch securities registers.
Location of central securities registerThe central securities register of a bank shall be maintained by the bank at its head office or at any other place in Canada designated by the directors of the bank.Location of branch securities registerA branch securities register of a bank may be kept at any place in or outside Canada designated by the directors of the bank.
Effect of registrationRegistration 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.
Particulars in branch registerA branch securities register shall only contain particulars of the securities issued or transferred at the branch for which that register is established.Particulars in central registerParticulars of each issue or transfer of a security registered in a branch securities register of a bank shall also be kept in the central securities register of the bank.
Destruction of certificatesA bank, its agent or a trustee within the meaning of section 294 is not required to producea cancelled security certificate in registered form or an instrument referred to in subsection 69(1) that is cancelled or a like cancelled instrument in registered form after six years from the date of its cancellation;a cancelled security certificate in bearer form or an instrument referred to in subsection 69(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; oran instrument referred to in subsection 69(1) or a like instrument, irrespective of its form, after the date of its expiration.
Members Register
Members registerA federal credit union must maintain a members register in which it must recordthe names, alphabetically arranged, and latest known addresses of the members and former members of the federal credit union;the number of membership shares held by each member; andthe date and particulars of the issue and transfer of each membership share.Similar registersFor the purposes of subsection (1), “members register” includes similar registers required by law to be maintained by a body corporate that was continued, or amalgamated and continued, as a federal credit union before the continuance or amalgamation and continuance.Access to members registerMembers, shareholders and creditors of a federal credit union, and their personal representatives, may examine the members register during the usual business hours of the federal credit union and may take extracts from it free of charge or have copies of it made on payment of a reasonable fee. If the federal credit union is a distributing bank, any other person may, on payment of a reasonable fee, examine the members register during the usual business hours of the bank and take extracts from it or have copies of it made.Electronic accessThe federal credit union may make the information contained in the members register available by any mechanical or electronic data processing system or other information storage device that is capable of reproducing it in intelligible written form within a reasonable time.Affidavit and undertakingA person who wishes to examine the members register, take extracts from it or have copies of it made must provide the federal credit union with an affidavit containing their name and address — or, if they are an entity, the name and address for service of the entity — and an undertaking that the information contained in the register will not be used except in the same way as a list of shareholders or members may be used under section 242. In the case of an entity, the affidavit is to be sworn by a director or officer of the entity or a person acting in a similar capacity.Supplementary informationA person who wishes to examine a members register, take extracts from it or have copies of it made may, on payment of a reasonable fee, if they state in the accompanying affidavit that supplementary information is required, request the federal credit union or its agent to provide supplementary information setting out any changes made to the register.When supplementary information to be providedA federal credit union or its agent must provide the supplementary information within10 days after the day on which the members register is examined if the changes take place before that day; and10 days after the day to which the supplementary information relates if the changes take place on or after the day on which the members register is examined.
  • 2010, c. 12, s. 2015.
Branch members registersA federal credit union may establish as many branch members registers as it considers necessary.
  • 2010, c. 12, s. 2015.
AgentsA federal credit union may appoint an agent to maintain its members register and each of its branch members registers.
  • 2010, c. 12, s. 2015.
Location of members registerThe members register of a federal credit union is to be maintained by the federal credit union at its head office or at any other place in Canada designated by the federal credit union’s directors.Location of branch members registerA branch members register of a federal credit union may be kept at any place in or outside Canada designated by the directors of the federal credit union.
  • 2010, c. 12, s. 2015.
Particulars in branch members registerA branch members register must contain only particulars of the membership shares issued or transferred at the branch for which that register is established.Particulars in members registerParticulars of each issue or transfer of a membership share registered in a branch members register of a federal credit union must also be kept in the members register of the federal credit union.
  • 2010, c. 12, s. 2015.
Cancelled membership share certificatesA federal credit union, its agent or a trustee within the meaning of section 294 is not required to produce a cancelled membership share certificate in registered form after six years from the day on which it is cancelled.
  • 2010, c. 12, s. 2015.
Corporate Name and Seal
Publication of nameA bank 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.
Corporate sealA bank may adopt a corporate seal and change one that it adopted.Validity of unsealed documentsA document executed on behalf of a bank is not invalid merely because a corporate seal is not affixed to it.
  • 1991, c. 46, s. 256;
  • 2005, c. 54, s. 54.
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[Repealed, 1997, c. 15, s. 30]
Insiders
DefinitionsIn this section and sections 266 to 272,affiliategroupeaffiliate means a body corporate that is affiliated with another body corporate within the meaning of subsection 6(2);business combinationregroupement d’entreprisesbusiness combination means an acquisition of all or substantially all of the assets of one body corporate by another, an amalgamation of two or more bodies corporate or any similar reorganization between two or more bodies corporate;calloption d’achatcall means an option, transferable by delivery, to demand delivery of a specified number or amount of shares at a fixed price within a specified time but does not include an option or right to acquire shares of the body corporate that granted the option or right to acquire;distributing bank[Repealed, 2005, c. 54, s. 55]insider[Repealed, 2005, c. 54, s. 55]officerdirigeant d’une banqueofficer, in relation to a bank, meansan officer as defined in paragraph (a) of the definition “officer” in section 2, orany natural person who performs functions for the bank similar to those performed by a person referred to in paragraph (a) of the definition “officer” in section 2;putoption de venteput means an option, transferable by delivery, to deliver a specified number or amount of shares at a fixed price within a specified time;shareactionshare means a voting share and includesa security currently convertible into a voting share,a currently exercisable option or a right to acquire a voting share or a security referred to in paragraph (a), anda membership share.ControlFor the purposes of this section and sections 266 to 272, a person controls a body corporate when the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(d).[Repealed, 2005, c. 54, s. 55]
  • 1991, c. 46, s. 265;
  • 2005, c. 54, s. 55;
  • 2010, c. 12, s. 2016.
Previous Version
Insider Reporting
Insider reportAn insider shall submit an insider report in accordance with the regulations.
  • 1991, c. 46, s. 266;
  • 1997, c. 15, s. 31;
  • 2005, c. 54, s. 56.
Previous Version
Exemption by SuperintendentOn application by an insider, the Superintendent may in writing and on any terms that the Superintendent thinks fit exempt the insider from any of the requirements of section 266. The exemption may be given retroactive effect and the Superintendent shall publish the partic­ulars of the exemption and the reasons for it in a periodical available to the public.
  • 1991, c. 46, s. 267;
  • 2005, c. 54, s. 56.
Previous Version
[Repealed, 2005, c. 54, s. 56]Previous Version
RegulationsThe Governor in Council may make regulations for carrying out the purposes of sections 266 and 267, includingdefining insider for the purposes of sections 266 and 267;respecting the form and content of an insider report; andrespecting the submission or publication of an insider report.
  • 1991, c. 46, s. 268;
  • 2005, c. 54, s. 56.
Previous Version
[Repealed, 2005, c. 54, s. 56]Previous Version
Insider Trading
Meaning of insiderIn this section, insider means with respect to a distributing banka director or officer of the bank;a director or officer of a subsidiary of the bank;a director or officer of a body corporate that enters into a business combination with the bank; ora person employed or retained by the bank.Prohibition — short saleNo insider may knowingly sell, directly or indirectly, a security of a distributing bank or of any of the distributing bank’s affiliates if the insider does not own or has not fully paid for the security.ExceptionDespite subsection (2), an insider may sell a security that they do not own if they own another security that is convertible into the security that was sold or they own an option or right to acquire the security that was sold, and if within 10 days after the sale theyexercise the conversion privilege, option or right and deliver the security so acquired to the purchaser; ortransfer the convertible security, option or right to the purchaser.Prohibition — calls and putsNo insider may knowingly, directly or indirectly, buy or sell a call or put in respect of a security of a bank or of any of the bank’s affiliates.
  • 1991, c. 46, s. 270;
  • 2005, c. 54, s. 57.
Previous Version
Civil remedies
Extended meaning of insiderIn this section and sections 271.1 and 272, insider with respect to a bank meansthe bank;an affiliate of the bank;a director or officer of the bank or of any person described in paragraph (b), (d) or (f);a person who beneficially owns directly or indirectly, or who exercises control or direction over or has a combination of ownership, control and direction in respect of, shares of the bank carrying more than the prescribed percentage of the voting rights attached to all of the bank’s outstanding shares not including shares held by the person as underwriter while those shares are in the course of a distribution to the public;a person, other than a person described in paragraph (f), who is employed or retained by the bank or by a person described in paragraph (f);a person who engages in or proposes to engage in any business or professional activity with or on behalf of the bank;a person who received material confidential information concerning the bank while they were a person described in any of paragraphs (a) to (f);a person who receives material confidential information from a person who is and who they know or ought reasonably to have known is a person described in this subsection, including in this paragraph, or subsection (3) or (4); ora prescribed person.Extended meaning of insider — federal credit unionIn addition to subsection (1), in this section and sections 271.1 and 272, insider with respect to a bank that is a federal credit union means a member of the federal credit union who holds more than the prescribed percentage of the membership shares of the federal credit union.Extended meaning of securityFor the purposes of this section, each of the following is deemed to be a security of a bank:a membership share of the bank, if the bank is a federal credit union;a put, call, option or other right or obligation to purchase or sell a security of the bank; anda security of another entity, the market price of which varies materially with the market price of the securities of the bank.Deemed insider — take-over bid or business combinationFor the purposes of this section and subsection 271.1(1), a person who proposes to make a take-over bid as defined in the regulations for securities of a bank or to enter into a business combination with a bank is an insider of the bank with respect to material confidential information obtained from the bank.Deemed insider — affiliate or associateAn insider of a person referred to in subsection (3), or the person’s affiliate or associate, is an insider of the bank referred to in that subsection. Paragraphs (1)(b) to (i) apply in making this determination except that references to “bank” are to be read as references to “person described in subsection (3)”.Meaning of associateIn subsection (4), associate means with respect to a persona body corporate that the person directly or indirectly controls, determined without regard to paragraph 3(1)(d), or of which they beneficially own shares or securities currently convertible into shares carrying more than 10% of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing or a currently exercisable option or right to purchase the shares or convertible securities;a partner of the person acting on behalf of the partnership of which they are partners;a trust or estate in which the person has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity;a spouse or common-law partner of the person;a child of the person or of their spouse or common-law partner; orif that relative has the same residence as the person, a relative of the person or of their spouse or common-law partner.Insider trading — compensation to sellers and purchasersAn insider of a bank who purchases or sells a security of the bank with knowledge of confidential information that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the bank is liable to compensate the seller or purchaser of the security, as the case may be, for any loss suffered by them as a result of the purchase or sale unless the insider establishes thatthe insider reasonably believed that the information had been generally disclosed;the information was known or ought reasonably to have been known by the seller or purchaser; orthe purchase or sale of the security took place in the prescribed circumstances.Insider trading — compensation to bankThe insider is accountable to the bank for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (6) unless they establish the circumstances described in paragraph (6)(a).
  • 1991, c. 46, s. 271;
  • 2005, c. 54, s. 57;
  • 2010, c. 12, s. 2017.
Previous Version
Tipping — compensation to sellers and purchasersAn insider of a bank who discloses confidential information with respect to the bank that has not been generally disclosed and that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the bank is liable to compensate any person who subsequently sells securities of the bank to or purchases them from any person who received the information unless the insider establishes thatthe insider reasonably believed that the information had been generally disclosed;the information was known or ought reasonably to have been known by the person who alleges that they suffered the loss;if the insider is not a person described in subsection 271(3) or (4), the disclosure of the information was necessary in the course of their business; orif the insider is a person described in subsection 271(3) or (4), the disclosure of the information was necessary to effect the take-over bid or business combination.Tipping — compensation to bankThe insider is accountable to the bank for any benefit or advantage received or receivable by them as a result of a disclosure of information as described in subsection (1) unless they establish the circumstances described in paragraph (1)(a), (c) or (d).
  • 2005, c. 54, s. 57.
Measure of damagesThe court may assess damages under subsection 271(6) or 271.1(1) in accord­ance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in respect of a security of a distributing bank, the court shall consider the following:if the plaintiff is a purchaser, the price that they paid for the security less the average market price of the security over the 20 trading days immediately following general disclosure of the information; andif the plaintiff is a seller, the average market price of the security over the 20 trading days immediately following general disclosure of the information, less the price that they received for the security.Liability — more than one insiderIf more than one insider is liable under subsection 271(6) or 271.1(1) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.LimitationAn action to enforce a right created by subsection 271(6) or (7) or section 271.1 may be commenced only within two years after discovery of the facts that gave rise to the cause of action.
  • 1991, c. 46, s. 272;
  • 2005, c. 54, s. 57.
Previous Version
Prospectus
DistributionNo person, including a bank, shall distribute securities of a bank that is not a federal credit union except in accordance with the regulations made under subsection (2).RegulationsThe Governor in Council may make regulations respecting the distribution of securities of a bank that is not a federal credit union, includingrespecting the information that is to be disclosed by such a bank before the distribution of any of its securities, including the information that is to be included in a prospectus;respecting the manner of disclosure and the form of the information that is to be disclosed; andexempting any class of distribution of securities from the application of subsection (1).
  • 1991, c. 46, s. 273;
  • 2005, c. 54, s. 57;
  • 2012, c. 5, s. 9.
Previous Version
Distribution — federal credit unionNo person, including a bank, shall distribute securities of a federal credit union except in accordance with the regulations made under subsection (2).RegulationsThe Governor in Council may make regulations respecting the distribution of securities of a federal credit union, includingrespecting the information that is to be disclosed by a federal credit union before the distribution of any of its securities, including the information that is to be included in a prospectus;respecting the manner of disclosure and the form of the information that is to be disclosed; andexempting any class of distribution of securities from the application of subsection (1).
  • 2012, c. 5, s. 10.
Order of exemptionOn application by a bank or any person proposing to make a distribution, the Superintendent may, by order, exempt that distribution from the application of any regulations made under subsection 273(2) or 273.1(2) if the Superintendent is satisfied that the bank or federal credit union, as the case may be, has disclosed or is about to disclose, in compliance with the laws of the relevant jurisdiction, information relating to the distribution that in form and content substantially complies with the requirements of those regulations.ConditionsAn order under subsection (1) may contain any conditions or limitations that the Superintendent deems appropriate.
  • 1991, c. 46, s. 274;
  • 2005, c. 54, s. 57;
  • 2012, c. 5, s. 11.
Previous Version
Going-private Transactions and Squeeze-out Transactions
Going-private transactionsA bank may carry out a going-private transaction if it complies with any applicable provincial securities laws.
  • 1991, c. 46, s. 275;
  • 1994, c. 26, s. 5(F);
  • 1999, c. 31, s. 11;
  • 2005, c. 54, s. 57.
Previous Version
Squeeze-out transactionsNo bank may carry out a squeeze-out transaction unless, in addition to any approval by holders of shares required by or under this Act or the bank’s by-laws, the transaction is approved by ordinary resolution of the holders of each class of shares affected by the transaction, voting separately, whether or not the shares otherwise carry the right to vote. However, the following do not have the right to vote on the resolution:affiliates of the bank; andholders of shares that following the squeeze-out transaction would be entitled to consideration of greater value or to superior rights or privileges than those available to other holders of shares of the same class.
  • 1991, c. 46, s. 276;
  • 1999, c. 31, s. 12;
  • 2005, c. 54, s. 57.
Previous Version
Right to dissentA holder of shares of a bank may dissent if the bank resolves to carry out a going-private transaction or squeeze-out transaction that affects those shares.Payment for sharesIn addition to any other right that the shareholder may have, but subject to subsection (25), a shareholder who complies with this section is, when the action approved by the resolution from which the shareholder dissents becomes effective, entitled to be paid by the bank the fair value of the shares in respect of which the shareholder dissents, determined as of the close of business on the day before the resolution was adopted by the shareholders.No partial dissentA dissenting shareholder may claim under this section only with respect to all of the shares of a class held on behalf of any one beneficial owner and registered in the name of the dissenting shareholder.ObjectionA dissenting shareholder shall send to the bank, at or before any meeting of shareholders at which a resolution referred to in subsection (2) is to be voted on by the shareholders, a written objection to the resolution unless the bank did not give notice to the shareholder of the purpose of the meeting and their right to dissent.Notice that resolution was adoptedThe bank shall within 10 days after the day on which the shareholders adopt the resolution send to each shareholder who sent an objection under subsection (4) notice that the resolution was adopted. If it is necessary for the Minister or Superintendent to approve the transaction within the meaning of subsection 973(1) before it becomes effective, the bank shall send notice within 10 days after the approval. Notice is not required to be sent to a shareholder who voted for the resolution or one who has withdrawn their objection.Demand for paymentA dissenting shareholder shall within 20 days after receiving the notice referred to in subsection (5) — or, if they do not receive it, within 20 days after learning that the resolution was adopted by the shareholders — send to the bank a written notice containingtheir name and address;the number and class of shares in respect of which they dissent; anda demand for payment of the fair value of those shares.Share certificatesA dissenting shareholder shall within 30 days after sending a notice under subsection (6) send the certificates representing the shares in respect of which they dissent to the bank or its transfer agent.ForfeitureA dissenting shareholder who fails to comply with subsection (7) has no right to make a claim under this section.Endorsing certificateA bank or its transfer agent shall endorse on any share certificate received in accordance with subsection (7) a notice that the holder is a dissenting shareholder under this section and shall without delay return the share certificates to the dissenting shareholder.Suspension of rightsOn sending a notice under subsection (6), a dissenting shareholder ceases to have any rights as a shareholder other than to be paid the fair value of their shares as determined under this section. However, the shareholder’s rights are reinstated as of the date the notice was sent ifthe shareholder withdraws the notice before the bank makes an offer under subsection (11);the bank fails to make an offer in accordance with subsection (11) and the shareholder withdraws the notice; orthe directors revoke under section 220 the special resolution that was made in respect of the going-private transaction or squeeze-out transaction.Offer to payA bank shall, no later than seven days after the later of the day on which the action approved by the resolution from which the shareholder dissents becomes effective and the day on which the bank received the notice referred to in subsection (6), send to each dissenting shareholder who sent a noticea written offer to pay for their shares in an amount considered by the directors of the bank to be the fair value, accompanied by a statement showing how the fair value was determined; orif subsection (25) applies, a notice that it is unable to lawfully pay dissenting shareholders for their shares.Same termsEvery offer made under subsection (11) for shares of the same class or series is to be on the same terms.PaymentSubject to subsection (25), a bank shall pay for the shares of a dissenting shareholder within 10 days after the day on which an offer made under subsection (11) is accepted, but the offer lapses if the bank does not receive an acceptance within 30 days after the day on which the offer is made.Court may fix fair valueIf a bank fails to make an offer under subsection (11) or if a dissenting shareholder fails to accept an offer, the bank may, within 50 days after the day on which the action approved by the resolution from which the shareholder dissents becomes effective or within any further period that a court may allow, apply to the court to fix a fair value for the shares of any dissenting shareholder.Shareholder applicationIf a bank fails to apply to a court under subsection (14), a dissenting shareholder may apply to a court for the same purpose within a further period of 20 days or within any further period that the court may allow.VenueAn application under subsection (14) or (15) is to be made to a court having jurisdiction where the bank’s head office is situated or, if the bank carries on business in the province in which the dissenting shareholder resides, in that province.No security for costsA dissenting shareholder is not required to give security for costs in an application made under subsection (14) or (15).Parties and SuperintendentOn an application to a court under subsection (14) or (15),all dissenting shareholders whose shares have not been purchased by the bank are to be joined as parties and are bound by the decision of the court;the bank shall notify each of them of the date, place and consequences of the application and their right to appear and be heard in person or by counsel; andthe bank shall notify the Superintendent of the date and place of the application and the Superintendent may appear and be heard in person or by counsel.Powers of courtOn an application to a court under subsection (14) or (15), the court may determine whether any other person is a dissenting shareholder and is to be joined as a party and the court shall then fix a fair value for the shares of all dissenting shareholders.AppraisersThe court may appoint one or more appraisers to assist the court to fix a fair value for the shares of the dissenting shareholders.Final orderThe final order of the court is to be rendered against the bank in favour of each dissenting shareholder for the value of the shares as fixed by the court.InterestThe court may allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date the action approved by the resolution from which the shareholder dissents becomes effective until the date of payment.Notice that s. (25) appliesIf subsection (25) applies, the bank shall within 10 days after an order is made under subsection (21) notify each dissenting shareholder that it is unable to lawfully pay dissenting shareholders for their shares.Effect of s. (25)If subsection (25) applies, a dissenting shareholder may by written notice delivered to the bank within 30 days after receiving notice under subsection (23)withdraw their notice of dissent, in which case the bank is deemed to consent to the withdrawal and the shareholder is reinstated to their full rights as a shareholder; orretain their status as a claimant against the bank, to be paid as soon as the bank is able to lawfully pay them or, in a liquidation, to be ranked subordinate to the rights of the bank’s creditors but in priority to its shareholders.LimitationA bank may not make a payment to a dissenting shareholder under this section if there are reasonable grounds for believing that the bank is or the payment would cause the bank to be in contravention of a regulation referred to in subsection 485(1) or (2) or of an order made under subsection 485(3).
  • 1991, c. 46, s. 277;
  • 2005, c. 54, s. 57.
Previous Version
[Repealed, 2005, c. 54, s. 57]Previous Version
[Repealed, 2005, c. 54, s. 57]Previous Version
[Repealed, 2005, c. 54, s. 57]Previous Version
[Repealed, 2005, c. 54, s. 57]Previous Version
[Repealed, 2005, c. 54, s. 57]Previous Version
Compulsory Acquisitions
DefinitionsIn this section and sections 284 to 293,affiliategroupeaffiliate means a body corporate that is affiliated with another body corporate within the meaning of subsection 6(2);associate of the offerorassocié du pollicitantassociate of the offeror meansa body corporate that an offeror, directly or indirectly, controls, determined without regard to paragraph 3(1)(d), or of which an offeror beneficially owns shares or securities currently convertible into shares carrying more than 10 per cent of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing, or a currently exercisable option or right to purchase the shares or the convertible securities,a partner of the offeror acting on behalf of the partnership of which they are partners,a trust or estate in which the offeror has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity,a spouse or common-law partner of the offeror,a child of the offeror or of the offeror’s spouse or common-law partner, ora relative of the offeror or of the offeror’s spouse or common-law partner, if that relative has the same residence as the offeror;dissenting offereepollicité opposantdissenting offeree means a holder of a share who does not accept a take-over bid or a subsequent holder of the share who acquires it from the first-mentioned holder;exempt offer[Repealed, 2005, c. 54, s. 58]offereepollicitéofferee means a person to whom a take-over bid is made;offeree bankbanque pollicitéeofferee bank means a bank the shares of which are the object of a take-over bid;offerorpollicitantofferor means a person, other than an agent, who makes a take-over bid, and includes two or more persons who, directly or indirectly,make take-over bids jointly or in concert, orintend to exercise jointly or in concert voting rights attached to shares for which a take-over bid is made;shareactionshare means a share with or without voting rights and includesa security that is currently convertible into a share, anda currently exercisable option or right to acquire a share or a security referred to in paragraph (a);take-over bidoffre d’achat visant à la mainmisetake-over bid means an offer made by an offeror at approximately the same time to all of the shareholders of a distributing bank to acquire all of the shares of a class of issued shares, and includes an offer by a distributing bank to repurchase all of the shares of a class.ControlFor the purposes of this section and sections 284 to 293, a person controls a body corporate when the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(d).Date of bidA take-over bid is deemed to be dated as of the date on which it is sent.
  • 1991, c. 46, s. 283;
  • 2000, c. 12, s. 4;
  • 2005, c. 54, s. 58.
Previous Version
Right to acquire sharesIf, within one hundred and twenty days after the date of a take-over bid, the bid is accepted by the holders of not less than 90 per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, the offeror is entitled, on complying with sections 285 to 290, subsections 291(1) and (2) and section 292, to acquire the shares held by the dissenting offerees.
  • 1991, c. 46, s. 284;
  • 2005, c. 54, s. 59(F).
Previous Version
Offeror’s notice to dissentersAn offeror may acquire shares held by a dissenting offeree by sending by registered mail within sixty days after the date of termination of the take-over bid and in any event within one hundred and eighty days after the date of the take-over bid, an offeror’s notice to each dissenting offeree and to the Superintendent stating thatofferees holding not less than 90 per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, have accepted the take-over bid;the offeror is bound to take up and pay for or has taken up and paid for the shares of the offerees who accepted the take-over bid;a dissenting offeree is required to electto transfer the dissenting offeree’s shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid, orto demand payment of the fair value of the dissenting offeree’s shares in accordance with sections 289 to 292 by notifying the offeror within twenty days after receipt of the offeror’s notice;a dissenting offeree who does not notify the offeror in accordance with paragraph 286(b) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid; anda dissenting offeree must send the dissenting offeree’s shares to which the take-over bid relates to the offeree bank within twenty days after the dissenting offeree receives the offeror’s notice.Notice of adverse claimConcurrently with sending the offeror’s notice under subsection (1), the offeror shall send to the offeree bank a notice of adverse claim in accordance with subsection 129(1) with respect to each share held by a dissenting offeree.
  • 1991, c. 46, s. 285;
  • 2005, c. 54, s. 60.
Previous Version
Share certificates and electionA dissenting offeree to whom a notice is sent under subsection 285(1) shall within 20 days after receiving the noticesend to the offeree bank the share certificates representing the shares to which the take-over bid relates; andelect to transfer the shares to the offeror on the same terms as those on which the offeror acquired shares from the offerees who accepted the take-over bid or to demand payment of the fair value of the shares in accordance with sections 289 to 292 by notifying the offeror.
  • 1991, c. 46, s. 286;
  • 2005, c. 54, s. 61.
Previous Version
Deemed electionA dissenting offeree who does not notify the offeror in accordance with paragraph 286(b) is deemed to have elected to transfer the shares to the offeror on the same terms as those on which the offeror acquired shares from the offerees who accepted the take-over bid.
  • 2005, c. 54, s. 61.
Payment to offeree bankWithin 20 days after the offeror sends a notice under subsection 285(1), the offeror shall pay the money, or transfer the other consideration, to the offeree bank that the offeror would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to transfer their shares in accordance with paragraph 286(b).Consideration in trustAn offeree bank is deemed to hold in a fiduciary capacity for the dissenting offerees the money or other consideration it receives under subsection (1).Deposit or custodyAn offeree bank shall deposit the money received under subsection (1) in a separate account in another deposit-taking financial institution in Canada and the offeree bank shall place any other consideration in the custody of another deposit-taking financial institution in Canada.
  • 1991, c. 46, s. 287;
  • 2005, c. 54, s. 62.
Previous Version
Fiduciary capacity of bankA bank that is making a take-over bid to repurchase all of the shares of a class is deemed to hold in a fiduciary capacity for the dissenting shareholders the money that it would have had to pay, and the other consideration that it would have had to transfer, to a dissenting offeree if the dissenting offeree had elected to transfer their shares in accordance with paragraph 286(b). The bank shall within 20 days after a notice is sent under subsection 285(1) deposit the money in a separate account in another deposit-taking financial institution in Canada and place any other consideration in the custody of another deposit-taking financial institution in Canada.
  • 2005, c. 54, s. 63.
Duty of offeree bankWithin thirty days after an offeror sends an offeror’s notice under subsection 285(1), the offeree bank shallif the payment or transfer required by subsection 287(1) is made, issue to the offeror a share certificate in respect of the shares that were held by the dissenting offerees;give to each dissenting offeree who elects to transfer shares under paragraph 286(b) and who sends the share certificates as required under paragraph 286(a) the money or other consideration to which they are entitled, disregarding fractional shares, which may be paid for in money; andif the payment or transfer required by subsection 287(1) is made and the money or other consideration is deposited as required by subsections 287(2) and (3) or by section 287.1, send to each dissenting offeree who has not sent share certificates as required under paragraph 286(a) a notice stating thattheir shares have been cancelled,the offeree bank or its designated person holds in a fiduciary capacity for that offeree the money or other consideration to which they are entitled as payment for or in exchange for the shares, andthe offeree bank will, subject to sections 289 to 292, send that money or other consideration to that offeree without delay after receiving the share certificates.
  • 1991, c. 46, s. 288;
  • 2005, c. 54, s. 64.
Previous Version
Court may fix fair valueIf a dissenting offeree has elected to demand payment of the fair value of their shares under paragraph 286(b), the offeror may, within 20 days after it has paid the money or transferred the other consideration under subsection 287(1), apply to a court to fix the fair value of the shares of that dissenting offeree.IdemIf an offeror fails to apply to a court under subsection (1), a dissenting offeree may apply to a court for the same purpose within a further period of twenty days.VenueAn application under subsection (1) or (2) shall be made to a court having jurisdiction in the place at which the head office of the bank is situated or in the province in which the dissenting offeree resides if the bank carries on business in that province.No security for costsA dissenting offeree is not required to give security for costs in an application made under subsection (1) or (2).
  • 1991, c. 46, s. 289;
  • 2005, c. 54, s. 65.
Previous Version
Parties and noticeOn an application under subsection 289(1) or (2),all dissenting offerees who have made elections to demand payment under paragraph 286(b) and whose shares have not been acquired by the offeror shall be joined as parties and are bound by the decision of the court; andthe offeror shall notify each affected dissenting offeree of the date, place and consequences of the application and of the dissenting offeree’s right to appear and be heard in person or by counsel at the hearing of the application.
  • 1991, c. 46, s. 290;
  • 2005, c. 54, s. 66.
Previous Version
Powers of courtOn an application to a court under subsection 289(1) or (2), the court may determine whether any other person is a dissenting offeree who should be joined as a party, and the court shall then fix a fair value for the shares of all dissenting offerees.AppraisersA court may in its discretion appoint one or more appraisers to assist the court in fixing a fair value for the shares of a dissenting offeree.Final orderThe final order of a court shall be made against the offeror in favour of each dissenting offeree and for the amount for each dissenting offeree’s shares as fixed by the court.Additional powers of courtIn connection with proceedings under subsection 289(1) or (2), a court may make any order it thinks fit and, without limiting the generality of the foregoing, mayfix the amount of money or other consideration that is deemed to be held in a fiduciary capacity under subsection 287(2) or section 287.1;order that the money or other consideration is to be held in trust by a person other than the offeree bank;allow a reasonable rate of interest on the amount payable to each dissenting offeree from the date the dissenting offeree sends the share certificates required under section 286 until the date of payment; ororder that any money payable to a shareholder who cannot be found is to be paid to the Minister.
  • 1991, c. 46, s. 291;
  • 2005, c. 54, s. 67.
Previous Version
Status of dissenterWhere no application is made to a court under subsection 289(2) within the period set out in that subsection, a dissenting offeree is deemed to have elected to transfer the dissenting offeree’s shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.
Obligation to acquire sharesIf a shareholder who holds shares of an offeree bank does not receive the notice referred to in subsection 285(1), the shareholder may require the offeror to acquire the shareswithin 90 days after the date of termination of the take-over bid; orif the shareholder did not receive an offer under the take-over bid, within 90 days after the later ofthe date of termination of the take-over bid, andthe day on which the shareholder learned of the take-over bid.Acquisition on same termsIf the shareholder requires the offeror to acquire shares, the offeror shall acquire them on the same terms as those on which the offeror acquires shares from offerees who accept the take-over bid.
  • 2005, c. 54, s. 68.
Payment of unclaimed moneyThe Minister shall pay to the Bank of Canada any amounts paid to the Minister under subsection 291(4), and section 367 applies in respect thereof as if the amounts paid under subsection 291(4) had been paid under subsection 366(3).
Trust Indentures
DefinitionsIn this section and sections 295 to 306,event of defaultcas de défautevent of default means, in relation to a trust indenture, an event specified in the trust indenture on the occurrence of which the principal, interest and other moneys payable thereunder become or may be declared to be payable before maturity, but the event is not an event of default until all the conditions set out in the trust indenture in connection with the giving of notice of the event have been satisfied or the period of time for giving the notice has elapsed;issuerémetteurissuer means a bank that has issued, is about to issue or is in the process of issuing subordinated indebtedness;trusteefiduciairetrustee means any person appointed as trustee under the terms of a trust indenture to which a bank is a party, and includes any successor trustee;trust indentureacte de fiducietrust indenture means any deed, indenture or other instrument, including any supplement or amendment thereto, made by a bank under which the bank issues subordinated indebtedness and in which a person is appointed as trustee for the holders of the subordinated indebtedness issued thereunder.
ApplicationSections 296 to 306 apply in respect of a trust indenture if the subordinated indebtedness issued or to be issued under the trust indenture is part of a distribution to the public.
ExemptionThe Superintendent may, in writing, exempt a trust indenture from the application of sections 297 to 306 if, in the Superintendent’s opinion, the trust indenture and the subordinated indebtedness are subject to a law of a province or other jurisdiction, other than Canada, that is substantially equivalent to the provisions of this Act relating to trust indentures.
Conflict of interestNo person shall be appointed as trustee if at the time of the appointment there is a material conflict of interest between the person’s role as trustee and any other role of the person.Eliminating conflict of interestA trustee shall, within ninety days after the trustee becomes aware that a material conflict of interest exists,eliminate the conflict of interest; orresign from office.
Validity despite conflictA trust indenture and any subordinated indebtedness issued thereunder are valid notwithstanding a material conflict of interest of the trustee.
Removal of trusteeIf a trustee is appointed in contravention of subsection 297(1) or if a trustee contravenes subsection 297(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on such terms as it thinks fit.
Trustee qualificationsA trustee, or at least one of the trustees if more than one is appointed, must bea trust company pursuant to subsection 57(2) of the Trust and Loan Companies Act; ora body corporate that is incorporated by or under an Act of the legislature of a province and authorized to carry on business as a trustee.
  • 1991, c. 46, ss. 300, 577;
  • 2007, c. 6, s. 18.
Previous Version
List of security holdersA holder of subordinated indebtedness issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, within fifteen days after the delivery to the trustee of the statutory declaration, a list setting outthe names and addresses of the registered holders of the outstanding subordinated indebtedness,the principal amount of outstanding subordinated indebtedness owned by each such holder, andthe aggregate principal amount of subordinated indebtedness outstandingas shown on the records maintained by the trustee on the day the statutory declaration is delivered to that trustee.Duty of issuerOn the demand of a trustee, the issuer of subordinated indebtedness shall provide the trustee with the information required to enable the trustee to comply with subsection (1).Where applicant is entityWhere the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection shall be made by a director or an officer of the entity or a person acting in a similar capacity.Contents of statutory declarationThe statutory declaration required under subsection (1) must statethe name and address of the person requiring the trustee to provide the list and, if the person is an entity, the address for service thereof; andthat the list will not be used except as permitted by subsection (5).Use of listNo person shall use a list obtained under this section except in connection withan effort to influence the voting of the holders of subordinated indebtedness;an offer to acquire subordinated indebtedness; orany other matter relating to the subordinated indebtedness or the affairs of the issuer or guarantor thereof.
Compliance with trust indenturesAn issuer or a guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall, before undertakingthe issue, certification and delivery of subordinated indebtedness under the trust indenture, orthe satisfaction and discharge of the trust indenture,provide the trustee with evidence of compliance with the conditions in the trust indenture in respect thereof.Compliance by issuer or guarantorOn the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall provide the trustee with evidence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.Evidence of complianceThe following documents constitute evidence of compliance for the purposes of subsections (1) and (2):a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been complied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; andan opinion or report of the auditors of the issuer or guarantor, or such other accountant as the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires compliance with conditions that are subject to review by auditors.Further evidence of complianceThe evidence of compliance referred to in subsection (3) shall include a statement by the person giving the evidencedeclaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; anddeclaring that the person has made such examination or investigation as the person believes necessary to enable the statements to be made or the opinions contained or expressed therein to be given.
Trustee may require evidenceOn the request of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with evidence in such form as the trustee requires of compliance with any condition thereof relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.Certificate of complianceAt least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars thereof.
Notice of defaultA trustee shall, within thirty days after the trustee becomes aware of the occurrence thereof, give to the holders of subordinated indebtedness issued under a trust indenture notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the subordinated indebtedness to withhold the notice and so informs the issuer and guarantor in writing.
Duty of careIn exercising a trustee’s powers and discharging a trustee’s duties, the trustee shallact honestly and in good faith with a view to the best interests of the holders of the subordinated indebtedness issued under the trust indenture; andexercise the care, diligence and skill of a reasonably prudent trustee.Reliance on statementsNotwithstanding subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.
No exculpationNo term of a trust indenture or of any agreement between a trustee and the holders of subordinated indebtedness issued thereunder or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by sections 297, 301 and 304 and subsection 305(1).
Financial Statements and AuditorsAnnual Financial Statement
Financial yearThe financial year of a bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in each year.First financial yearIf a bank, after the first day of July in any year, obtains an order approving the commencement and carrying on of business, the first financial year of the bank ends, at the election of the bank 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.ExceptionDespite subsection (1), the financial year of 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 ends on the expiration of the thirty-first day of October in each year unless the bank elects in its by-laws to have its financial year end on the thirty-first day of December in each year.
  • 1991, c. 46, s. 307;
  • 2001, c. 9, s. 91.
Annual financial statementThe directors of a bank must place before the shareholders or members, as the case may be, at every annual meetinga comparative annual financial statement (in this Act referred to as an “annual statement”) relating separately tothe financial year immediately preceding the meeting, andthe financial year, if any, immediately preceding the financial year referred to in subparagraph (i);the report of the auditor or auditors of the bank; andany further information respecting the financial position of the bank and the results of its operations required by the by-laws of the bank to be placed before the shareholders or members at the annual meeting.Annual statement — contentsWith respect to each of the financial years to which it relates, the annual statement of a bank must contain the prescribed statements and any information that is in the opinion of the directors necessary to present fairly, in accord­ance with the accounting principles referred to in subsection (4), the financial position of the bank 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 for that financial year.Additional informationA bank shall include with its annual statementa list of the subsidiaries of the bank, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 472 or pursuant to a realization of security in accordance with section 473 and which the bank would not otherwise be permitted to hold, showing, with respect to each subsidiary,its name and the address of its head or principal office,the book value of the aggregate of any shares of the subsidiary beneficially owned by the bank and by other subsidiaries of the bank, andthe 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 and by other subsidiaries of the bank;in the case of a federal credit union, a statement that sets outthe number of its members at the end of the financial year,the percentage of financial services that during the financial year were transacted with members on the basis of the gross revenue of the federal credit union for the financial year,the percentage of its members who are natural persons at the end of the financial year, andwhether the federal credit union was organized and carrying on business on a cooperative basis at the end of the financial year in accordance with section 12.1; andsuch other information as the Governor in Council may, by order, require in such form as may be prescribed.Accounting principlesThe financial statements referred to in subsection (1), paragraph (3)(b) and subsection 310(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.RegulationsThe Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).
  • 1991, c. 46, s. 308;
  • 1997, c. 15, s. 33;
  • 2001, c. 9, s. 92;
  • 2005, c. 54, s. 69;
  • 2010, c. 12, s. 2018.
Previous Version
Annual statement — approvalThe directors of a bank shall approve the annual statement and their approval shall be evidenced by the signature or a printed or otherwise mechanically reproduced facsimile of the signature ofthe chief executive officer or, in the event of that officer’s absence or inability to act, any other officer of the bank authorized by the directors to sign in the stead of the chief executive officer; andone 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.Condition precedent to publicationA bank shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).
  • 1991, c. 46, s. 309;
  • 2005, c. 54, s. 70.
Previous Version
Statements — subsidiariesA bank shall keep at its head office a copy of the current financial statements of each subsidiary of the bank.ExaminationSubject to this section, the shareholders and members of a bank and their personal representatives may, on request, examine the statements referred to in subsection (1) during the usual business hours of the bank and may take extracts from those statements free of charge.Barring examinationA bank may refuse to permit an examination under subsection (2) by any person.Application for orderWithin fifteen days after a refusal under subsection (3), the bank 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 to permit the examination or, if it is satisfied that the examination would be detrimental to the bank 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.Notice to SuperintendentA bank 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.
  • 1991, c. 46, s. 310;
  • 2010, c. 12, s. 2019.
Previous Version
Distribution of annual statementA bank must, not later than 21 days before the date of each annual meeting or before the signing of a resolution under paragraph 152(1)(b) in lieu of the annual meeting, send to each shareholder or, in the case of a federal credit union, to each member and shareholder, if any, a copy of the documents referred to in subsections 308(1) and (3), unless that time period is waived by the shareholder or member, as the case may be.ExceptionA bank is not required to comply with subsection (1) with respect to a person who has informed the bank, in writing, that the person does not wish to receive the annual statement.Effect of defaultWhere a bank is required to comply with subsection (1) and the bank 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.
  • 1991, c. 46, s. 311;
  • 1997, c. 15, s. 34;
  • 2005, c. 54, s. 71;
  • 2010, c. 12, ss. 2020, 2135.
Previous Version
Copy to SuperintendentSubject to subsection (2), a bank must send to the Superintendent a copy of the documents referred to in subsections 308(1) and (3) not later than 21 days before the date of each annual meeting of shareholders or members of the bank.Later filingIf a bank’s shareholders or members sign a resolution under paragraph 152(1)(b) in lieu of an annual meeting, the bank must send a copy of the documents referred to in subsections 308(1) and (3) to the Superintendent not later than 30 days after the signing of the resolution.
  • 1991, c. 46, s. 312;
  • 1997, c. 15, s. 35;
  • 2001, c. 9, s. 93;
  • 2010, c. 12, s. 2021.
Previous Version
Auditors
DefinitionsFor the purposes of this section and sections 314 to 333,firm of accountantscabinet de comptablesfirm 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;membermembremember, in relation to a firm of accountants, meansan accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting, oran accountant who is an employee of a firm of accountants.
Appointment of auditorsThe shareholders of a bank, or the members of a federal credit union, must, by ordinary resolution at the first meeting of shareholders or members, as the case may be, and at each succeeding annual meeting, appoint a firm of accountants to be the auditor of the bank until the close of the next annual meeting.AuditorsThe shareholders of a bank, or the members of a federal credit union, may, by ordinary resolution at the first meeting of shareholders or members, as the case may be, and at each succeeding annual meeting, appoint two firms of accountants to be the auditors of the bank until the close of the next annual meeting.Remuneration of auditorsThe remuneration of the auditor or auditors may be fixed by ordinary resolution of the shareholders or members of the federal credit union but, if not so fixed, must be fixed by the directors.
  • 1991, c. 46, s. 314;
  • 2010, c. 12, s. 2022.
Previous Version
Qualification of auditorsA firm of accountants is qualified to be an auditor of a bank iftwo or more members thereof are accountants whoare members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,each have at least five years experience at a senior level in performing audits of a financial institution,are ordinarily resident in Canada, andare independent of the bank; andthe member of the firm jointly designated by the firm and the bank to conduct the audit of the bank on behalf of the firm is qualified in accordance with paragraph (a).IndependenceFor the purposes of subsection (1),independence is a question of fact; anda member of a firm of accountants is deemed not to be independent of a bank if that member, a business partner of that member or the firm of accountantsis a business partner, director, officer or employee of the bank or of any affiliate of the bank or is a business partner of any director, officer or employee of the bank or of any affiliate of the bank,beneficially owns or controls, directly or indirectly, a material interest in the shares or membership shares of the bank or of any affiliate of the bank, orhas been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the bank within the two years immediately preceding the firm’s proposed appointment as auditor of the bank, other than an affiliate that is a subsidiary of the bank acquired pursuant to section 472 or through a realization of security pursuant to section 473.Business partnersFor the purposes of subsection (2), a business partner of a member of a firm of accountants includesanother member of the firm; anda shareholder of the firm or of a business partner of the member.Notice of designationWithin fifteen days after appointing a firm of accountants as auditor of a bank, the bank 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 on behalf of the firm and the bank shall forthwith notify the Superintendent in writing of the designation.New designationWhere for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the bank, the bank 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 and the bank shall forthwith notify the Superintendent in writing of the designation.Deemed vacancyIn 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, there shall be deemed to be a vacancy in the office of auditor of the bank.
  • 1991, c. 46, s. 315;
  • 2001, c. 9, s. 94;
  • 2005, c. 54, s. 72;
  • 2010, c. 12, s. 2023.
Previous Version
Duty to resignAn auditor that ceases to be qualified under section 315 shall resign forthwith after any member of the firm becomes aware that the firm has ceased to be so qualified.Disqualification orderAny interested person may apply to a court for an order declaring that an auditor of a bank has ceased to be qualified under section 315 and declaring the office of auditor to be vacant.
Revocation of appointmentThe shareholders of a bank or the members of a federal credit union may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.IdemThe Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 314(1) or section 319 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the bank addressed to the usual place of business of the auditor and the bank.Filling vacancyA 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 319.
  • 1991, c. 46, s. 317;
  • 2010, c. 12, s. 2024.
Previous Version
Ceasing to hold officeAn auditor of a bank ceases to hold office whenthe auditor resigns; orthe appointment of the auditor is revoked by the Superintendent or by the shareholders or, if the bank is a federal credit union, by the members.Effective date of resignationThe resignation of an auditor becomes effective at the time a written resignation is sent to the bank or at the time specified in the resignation, whichever is later.
  • 1991, c. 46, s. 318;
  • 2010, c. 12, s. 2025.
Previous Version
Filling vacancySubject to subsection 317(3), where a vacancy occurs in the office of auditor of a bank, 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.Where Superintendent may fill vacancyWhere 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.Designation of member of firmWhere 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 on behalf of the firm.
Right to attend meetingsThe auditor or auditors of a bank are entitled to receive notice of every meeting of shareholders and, if the bank is a federal credit union, every meeting of its members and, at the expense of the bank, to attend and be heard at the meeting on matters relating to the duties of the auditor or auditors.Duty to attend meetingIf a director, shareholder or member of a bank, whether or not that person is entitled to vote at the meeting, gives written notice, not less than 10 days before the meeting, to an auditor or former auditor of the bank that the director, member or shareholder wishes the auditor’s attendance at the meeting, the auditor or former auditor must attend the meeting, at the expense of the bank, and answer questions relating to the auditor’s or former auditor’s duties as auditor.Notice to bankThe person who gives notice under subsection (2) must send concurrently a copy of the notice to the bank and the bank must, without delay, send a copy of it to the Superintendent.Superintendent may attendThe Superintendent may attend and be heard at any meeting referred to in subsection (2).
  • 1991, c. 46, s. 320;
  • 2010, c. 12, s. 2026.
Previous Version
Statement of auditorAn auditor of a bank thatresigns,receives a notice or otherwise learns of a meeting of shareholders, or, if the bank is a federal credit union, of a meeting of members, called for the purpose of revoking the appointment of the auditor, orreceives a notice or otherwise learns of a meeting of directors or shareholders, or, if the bank is a federal credit union, of a meeting of members, 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 and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.Other statementsIn the case of a proposed replacement of an auditor whether because of removal or the expiry of their term, the bank shall make a statement of the reasons for the proposed replacement and the proposed replacement auditor may make a statement in which they comment on those reasons.Statements to be sentThe bank must send a copy of the statements referred to in subsections (1) and (1.1) without delay to every shareholder, or, if the bank is a federal credit union, to every member, entitled to vote at the annual meeting of shareholders or of members and to the Superintendent.
  • 1991, c. 46, s. 321;
  • 2005, c. 54, s. 73;
  • 2010, c. 12, s. 2027.
Previous Version
Duty of replacement auditorWhere an auditor of a bank has resigned or the appointment of an auditor has been revoked, no firm of accountants shall accept an appointment as auditor of the bank or consent to be an auditor of the bank 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.ExceptionNotwithstanding subsection (1), a firm of accountants may accept an appointment or consent to be appointed as auditor of a bank if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.Effect of non-complianceUnless subsection (2) applies, an appointment as auditor of a bank is void if subsection (1) has not been complied with.
Auditors’ examinationThe auditor or auditors of a bank must make any examination that the auditor or auditors consider necessary to enable the auditor or auditors to report on the annual statement and on other financial statements required by this Act to be placed before the shareholders or, if the bank is a federal credit union, the members, except any annual statements or parts of those statements that relate to the period referred to in subparagraph 308(1)(a)(ii).Auditing standardsThe examination of the auditor or auditors 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.
  • 1991, c. 46, s. 323;
  • 2010, c. 12, s. 2028.
Previous Version
Right to informationOn the request of the auditor or auditors of a bank, the present or former directors, officers, employees or agents of the bank shall, to the extent that such persons are reasonably able to do so,permit access to such records, assets and security held by the bank or any entity in which the bank has a substantial investment, andprovide such information and explanationsas are, in the opinion of the auditor or auditors, necessary to enable the auditor or auditors to perform the duties of the auditor or auditors of the bank.Directors to provide informationOn the request of the auditor or auditors of a bank, the directors of the bank shall, to the extent that they are reasonably able to do so,obtain from the present or former directors, officers, employees and agents of any entity in which the bank 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 or auditors, necessary to enable them to perform the duties of the auditor or auditors of the bank; andprovide the auditor or auditors with the information and explanations so obtained.No civil liabilityA 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.
Auditors’ report and extended examinationThe Superintendent may, in writing, require that the auditor or auditors of a bank report to the Superintendent on the extent of the procedures of the auditor or auditors in the examination of the annual statement and may, in writing, require that the auditor or auditors enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor or auditors shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.Special examinationThe Superintendent may, in writing, require that the auditor or auditors of a bank make a particular examination relating to the adequacy of the procedures adopted by the bank for the safety of its creditors and shareholders and, if the bank is a federal credit union, for the safety of its members, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent.IdemThe Superintendent may direct that a special audit of a bank 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 315(1) to be an auditor of the bank.Expenses payable by bankThe expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the bank on being approved in writing by the Superintendent.
  • 1991, c. 46, s. 325;
  • 1999, c. 31, s. 13(F);
  • 2010, c. 12, s. 2029.
Previous Version
Auditors’ reportThe auditor or auditors must, not less than 21 days before the date of the annual meeting of the shareholders of the bank or, if the bank is a federal credit union, of the annual meeting of the members, make a report in writing to the shareholders or members, as the case may be, on the annual statement referred to in subsection 308(1).Audit for shareholdersIn each report required under subsection (1), the auditor or auditors shall state whether, in the opinion of the auditor or auditors, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the bank 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 for that financial year.Auditors’ remarksIn each report referred to in subsection (2), the auditor or auditors shall include such remarks as the auditor or auditors consider necessary whenthe examination has not been made in accordance with the auditing standards referred to in subsection 323(2);the annual statement has not been prepared on a basis consistent with that of the preceding financial year; orthe annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the bank 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 for that financial year.
  • 1991, c. 46, s. 326;
  • 2010, c. 12, s. 2030.
Previous Version
Report on directors’ statementThe auditor or auditors of a bank must, if required by the shareholders or, if the bank is a federal credit union, by the members or shareholders, if any, audit and report to the shareholders or members, as the case may be, on any financial statement submitted by the directors to the shareholders or members, and the report must state whether, in their opinion, the financial statement presents fairly the information required by the shareholders or members.Making of reportA report of the auditor or auditors made under subsection (1) must be attached to the financial statement to which it relates and a copy of the statement and report must be sent by the directors to the Superintendent, to every shareholder and, if the bank is a federal credit union, to every member and shareholder, if any.
  • 1991, c. 46, s. 327;
  • 2010, c. 12, s. 2031.
Previous Version
Report to officersIt is the duty of the auditor or auditors of a bank to report in writing to the chief executive officer and chief financial officer of the bank any transactions or conditions that have come to the attention of the auditor or auditors affecting the well-being of the bank that in the opinion of the auditor or auditors are not satisfactory and require rectification and, without restricting the generality of the foregoing, the auditor or auditors shall, as occasion requires, make a report to those officers in respect oftransactions of the bank that have come to the attention of the auditor or auditors and that in the opinion of the auditor or auditors have not been within the powers of the bank, andloans owing to the bank by any person the aggregate amount of which exceeds one half of one per cent of the regulatory capital of the bank and in respect of which, in the opinion of the auditor or auditors, loss to the bank is likely to occur,but when a report required under paragraph (b) has been made in respect of loans to any person, it is not necessary to report again in respect of loans to that person unless, in the opinion of the auditor or auditors, the amount of the loss likely to occur has increased.Transmission of reportWhere the auditor or auditors of a bank make a report under subsection (1),the auditor or auditors shall transmit the report, in writing, to the chief executive officer and chief financial officer of the bank;the report shall be presented to the first meeting of the directors following its receipt;the report shall be incorporated in the minutes of that meeting; andthe auditor or auditors shall, at the time of transmitting the report to the chief executive officer and chief financial officer, provide the audit committee of the bank and the Superintendent with a copy.
  • 1991, c. 46, s. 328;
  • 2005, c. 54, s. 74.
Previous Version
Auditors of subsidiariesA bank shall take all necessary steps to ensure that each of its subsidiaries has as its auditor the auditor or one of the auditors of the bank.Subsidiary outside CanadaSubsection (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 as the auditor of that subsidiary.ExceptionSubsection (1) does not apply in respect of any particular subsidiary where the bank, after having consulted its auditor or auditors, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the bank.
Auditors’ attendanceThe auditor or auditors of a bank are entitled to receive notice of every meeting of the audit committee and the conduct review committee of the bank and, at the expense of the bank, to attend and be heard at that meeting.AttendanceIf so requested by a member of the audit committee, the auditor or auditors shall attend every meeting of the audit committee held during the member’s term of office.
  • 1991, c. 46, s. 330;
  • 1993, c. 34, s. 7(F).
Calling meetingThe auditor or auditors of a bank or a member of the audit committee may call a meeting of the audit committee.Right to interviewThe chief internal auditor of a bank or any officer or employee of the bank acting in a similar capacity shall, at the request of the auditor or auditors of the bank and on receipt of reasonable notice, meet with the auditor or auditors.
Notice of errorsA director or an officer of a bank shall forthwith notify the audit committee and the auditor or auditors of the bank 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 auditors or any former auditor or auditors have reported.Error noted by auditorsIf the auditor or auditors or former auditor or auditors of a bank are notified or become aware of an error or misstatement in an annual statement or other financial statement on which the auditor or auditors reported and in the opinion of the auditor or auditors the error or misstatement is material, the auditor or auditors or former auditor or auditors shall inform each director of the bank accordingly.Duty of directorsWhen under subsection (2) the auditor or auditors or former auditor or auditors of a bank inform the directors of an error or misstatement in an annual statement or other financial statement, the directors shallprepare and issue a revised annual statement or financial statement; orotherwise inform the shareholders, and, if the bank is a federal credit union, its members, and the Superintendent of the error or misstatement.
  • 1991, c. 46, s. 332;
  • 2010, c. 12, s. 2032.
Previous Version
Qualified privilege for statementsAny oral or written statement or report made under this Act by the auditor or auditors or former auditor or auditors of a bank has qualified privilege.
Remedial Actions
Derivative actionSubject to subsection (2), a complainant or the Superintendent may apply to a court for leave to bring an action under this Act in the name and on behalf of a bank or any of its subsidiaries, or to intervene in an action under this Act to which the bank or a subsidiary of the bank is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the bank or the subsidiary.Conditions precedentNo action may be brought and no intervention in an action may be made under subsection (1) by a complainant unless the court is satisfied thatthe complainant has, not less than 14 days before bringing the application or as otherwise ordered by the court, given notice to the directors of the bank or the bank’s subsidiary of the complainant’s intention to apply to the court under subsection (1) if the directors of the bank or the bank’s subsidiary do not bring, diligently prosecute or defend or discontinue the action;the complainant is acting in good faith; andit appears to be in the interests of the bank or the subsidiary that the action be brought, prosecuted, defended or discontinued.Notice to SuperintendentA complainant under subsection (1) shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.
  • 1991, c. 46, s. 334;
  • 2005, c. 54, s. 75.
Previous Version
Powers of courtIn connection with an action brought or intervened in under subsection 334(1), the court may at any time make any order it thinks fit including, without limiting the generality of the foregoing,an order authorizing the Superintendent, the complainant or any other person to control the conduct of the action;an order giving directions for the conduct of the action;an order directing that any amount adjudged payable by a defendant in the action be paid, in whole or in part, directly to the following instead of to the bank or the subsidiary:if the bank is not a federal credit union, former and present security holders of the bank or subsidiary, orif the bank is a federal credit union, former and present members or security holders of the federal credit union or former and present security holders of the subsidiary; andan order requiring the bank or the subsidiary to pay reasonable legal fees incurred by the Superintendent or the complainant in connection with the action.JurisdictionNotwithstanding subsection (1), the court may not make any order in relation to any matter that would, under this Act, require the approval of the Minister or the Superintendent.
  • 1991, c. 46, s. 335;
  • 2010, c. 12, s. 2033.
Previous Version
Status of approvalAn application made or an action brought or intervened in under subsection 334(1) or section 338 need not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or duty owed to the bank or its subsidiary has been or might be approved by the shareholders or members of the bank, or by the shareholders of the subsidiary, but evidence of approval by the shareholders or the members, as the case may be, may be taken into account by the court in making an order under section 335.Court approval to discontinueAn application made or an action brought or intervened in under subsection 334(1) or section 338 shall not be stayed, discontinued, settled or dismissed for want of prosecution without the approval of the court given on such terms as the court thinks fit and, if the court determines that the interests of any complainant might be substantially affected by any stay, discontinuance, settlement or dismissal, the court may order any party to the application or action to give notice to the complainant.
  • 1991, c. 46, s. 336;
  • 2010, c. 12, s. 2034.
Previous Version
No security for costsA complainant is not required to give security for costs in any application made or any action brought or intervened in under subsection 334(1) or section 338.Interim costsIn an application made or an action brought or intervened in under subsection 334(1) or section 338, the court may at any time order the bank or its subsidiary to pay to the complainant interim costs, including legal fees and disbursements, but the complainant may be held accountable by the court for those interim costs on final disposition of the application or action.
  • 1991, c. 46, s. 337;
  • 2005, c. 54, s. 76(F).
Previous Version
Application to rectify recordsIf the name of a person is alleged to be or to have been wrongly entered or retained in, or wrongly deleted or omitted from, the securities register, the members register or any other record of a bank, the bank, a security holder of the bank, a member of the bank or any aggrieved person may apply to a court for an order that the register or record be rectified.Notice to SuperintendentAn applicant under this section shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.Powers of courtIn connection with an application under this section, the court may make any order it thinks fit including, without limiting the generality of the foregoing,an order requiring the register or other record of the bank to be rectified;an order restraining a bank from calling or holding a meeting of shareholders or members, or paying a dividend or patronage allocation, before the rectification;an order determining the right of a party to the proceedings to have the party’s name entered or retained in, or deleted or omitted from, the register or records of the bank, whether the issue arises between two or more security holders or alleged security holders, or two or more members or alleged members, or between the bank and any security holder or alleged security holder or member or alleged member; andan order compensating a party who has incurred a loss.
  • 1991, c. 46, s. 338;
  • 2010, c. 12, s. 2035.
Previous Version
Liquidation and Dissolution
Definition of courtFor 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 has its head office.
Application of subsection (2) and sections 341 to 368Subsection (2) and sections 341 to 368 do not apply to a bank that is insolvent within the meaning of the Winding-up and Restructuring Act.Staying proceedings on insolvencyAny proceedings taken under this Part to dissolve or to liquidate and dissolve a bank shall be stayed if the bank is at any time found to be insolvent within the meaning of the Winding-up and Restructuring Act.
  • 1991, c. 46, s. 340;
  • 1996, c. 6, s. 167.
Returns to SuperintendentA liquidator appointed under this Part to wind up the business of a bank shall provide the Superintendent with such information relating to the business and affairs of the bank in such form as the Superintendent requires.
Simple Liquidation
No property and no liabilitiesA bank that has no property and no liabilities may apply to the Minister for letters patent dissolving the bank if it is authorized byin the case of a bank that is not a federal credit union, a special resolution of the shareholders or, if there are no shareholders, by a resolution of all the directors; orin the case of a federal credit union, a special resolution of the members and a separate special resolution of the shareholders, if any.Dissolution by letters patentWhere the Minister has received an application under subsection (1) and is satisfied that all the circumstances so warrant, the Minister may issue letters patent dissolving the bank.Effect of letters patentA bank in respect of which letters patent are issued under subsection (2) ceases to exist on the day stated in the letters patent.
  • 1991, c. 46, s. 342;
  • 2010, c. 12, s. 2036.
Previous Version
Proposing liquidationThe voluntary liquidation and dissolution of a bank, other than a bank referred to in subsection 342(1),may be proposed by its directors;may, if the bank is not a federal credit union, be initiated by way of a proposal made by a shareholder who is entitled to vote at an annual meeting of shareholders in accordance with sections 143 and 144; ormay, if the bank is a federal credit union, be initiated by way of a proposal made by a member in accordance with section 144.1.Terms must be set outA notice of any meeting at which the voluntary liquidation and dissolution of a bank is to be proposed must set out the terms of the proposal.
  • 1991, c. 46, s. 343;
  • 2010, c. 12, s. 2037.
Previous Version
ResolutionsIf the voluntary liquidation and dissolution of a bank is proposed, the bank may apply to the Minister for letters patent dissolving the bankif, in the case of a bank that is not a federal credit union, it is authorized by a special resolution of the shareholders or, if the bank has issued more than one class of shares, by special resolution of each class of shareholders whether or not those shareholders are otherwise entitled to vote; orif, in the case of a federal credit union, it is authorized by a special resolution of the members and, if the federal credit union has issued one or more classes of shares, by separate special resolution of each class of shareholders whether or not those shareholders are otherwise entitled to vote.
  • 1991, c. 46, s. 344;
  • 2010, c. 12, s. 2038.
Previous Version
Approval of Minister requiredNo action directed toward the voluntary liquidation and dissolution of a bank shall be taken by a bank, other than as provided in sections 343 and 344, until an application made by the bank pursuant to section 344 has been approved by the Minister.Conditional approvalWhere the Minister is satisfied on the basis of an application made pursuant to section 344 that the circumstances warrant the voluntary liquidation and dissolution of a bank, the Minister may, by order, approve the application.Effect of approvalWhere the Minister has approved an application made pursuant to section 344 with respect to a bank, the bank shall not carry on business except to the extent necessary to complete its voluntary liquidation.Liquidation processWhere the Minister has approved an application made pursuant to section 344 with respect to a bank, the bank shallcause notice of the approval to be sent to each known claimant against and creditor of the bank;publish notice of the approval once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the bank transacted any business within the preceding twelve months;proceed to collect its property, dispose of property that is not to be distributed in kind to its shareholders or members, as the case may be, discharge all its obligations and do all other acts required to liquidate its business; andafter giving the notice required under paragraphs (a) and (b) and adequately providing for the payment or discharge of all its obligations, distribute its remaining property, either in money or in kind, among its shareholders, according to their respective rights, or its members, as the case may be.
  • 1991, c. 46, s. 345;
  • 2010, c. 12, s. 2039.
Previous Version
Dissolution instrumentUnless a court has made an order in accordance with subsection 347(1), the Minister may, if satisfied that the bank has complied with subsection 345(4) and that all the circumstances so warrant, issue letters patent dissolving the bank.Bank dissolvedA bank in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the day stated in the letters patent.
Court-supervised Liquidation
Application for court supervisionThe Superintendent or any interested person may, at any time during the liquidation of a bank, apply to a court for an order for the continuance of the voluntary liquidation under the supervision of the court in accordance with this section and sections 348 to 360 and on such application the court may so order and make any further order it thinks fit.IdemAn application under subsection (1) to a court to supervise a voluntary liquidation shall state the reasons, verified by an affidavit of the applicant, why the court should supervise the liquidation.Notice to SuperintendentWhere a person, other than the Superintendent, makes an application under subsection (1), the person shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.
Court supervision thereafterWhen a court makes an order under subsection 347(1), the liquidation of the bank shall continue under the supervision of the court.Commencement of liquidationThe supervision of the liquidation of a bank by the court pursuant to an order made under subsection 347(1) commences on the day the order is made.
Powers of courtIn connection with the liquidation and dissolution of a bank, the court may, where it is satisfied that the bank is able to pay or adequately provide for the discharge of all its obligations, make any order it thinks fit including, without limiting the generality of the foregoing,an order to liquidate;an order appointing a liquidator, with or without security, fixing a liquidator’s remuneration and replacing a liquidator;an order appointing inspectors or referees, specifying their powers, fixing their remuneration and replacing inspectors or referees;an order determining the notice to be given to any interested person, or dispensing with notice to any person;an order determining the validity of any claims made against the bank;an order, at any stage of the proceedings, restraining the directors and officers of the bank fromexercising any of their powers, orcollecting or receiving any debt or other property of the bank, and from paying out or transferring any property of the bank, except as permitted by the court;an order determining and enforcing the duty or liability of any present or former director, officer, shareholder or memberto the bank, orfor an obligation of the bank;an order approving the payment, satisfaction or compromise of claims against the bank and the retention of assets for that purpose, and determining the adequacy of provisions for the payment, discharge or transfer of any obligation of the bank, whether liquidated, unliquidated, future or contingent;with the concurrence of the Superintendent, an order providing for the disposal or destruction of the documents, records or registers of the bank;on the application of a creditor, an inspector or the liquidator, an order giving directions on any matter arising in the liquidation;after notice has been given to all interested parties, an order relieving the liquidator from any omission or default on such terms as the court thinks fit and confirming any act of the liquidator;subject to sections 356 to 358, an order approving any proposed, interim or final distribution to shareholders or members, as the case may be, or incorporators, in money or in property;an order disposing of any property belonging to creditors, shareholders, members and incorporators who cannot be found;on the application of any director, officer, shareholder, member, incorporator, creditor or the liquidator,an order staying the liquidation proceedings on such terms and conditions as the court thinks fit,an order continuing or discontinuing the liquidation proceedings, oran order to the liquidator to restore to the bank all of its remaining property; andafter the liquidator has rendered the liquidator’s final account to the court, an order directing the bank to apply to the Minister for letters patent dissolving the bank.
  • 1991, c. 46, s. 349;
  • 2005, c. 54, s. 77(F);
  • 2010, c. 12, s. 2040.
Previous Version
Cessation of business and powersWhere a court makes an order for the liquidation of a bank,the bank continues in existence but shall cease to carry on business, except the business that is, in the opinion of the liquidator, required for an orderly liquidation; andthe powers of the directors, shareholders and members are vested in the liquidator and cease to be vested in the directors, shareholders and members, except as specifically authorized by the court.Delegation by liquidatorA liquidator may delegate any of the powers vested by paragraph (1)(b) to the directors, shareholders or members, if any.
  • 1991, c. 46, s. 350;
  • 2010, c. 12, s. 2041.
Previous Version
Appointment of liquidatorWhen making an order for the liquidation of a bank, or at any later time, the court may appoint any person, including a director, an officer, a shareholder or a member of the bank or any other bank, as liquidator of the bank.
  • 1991, c. 46, s. 351;
  • 2010, c. 12, s. 2042.
Previous Version
Vacancy in liquidator’s officeWhere an order for the liquidation of a bank has been made and the office of liquidator is or becomes vacant, the property of the bank is under the control of the court until the office of liquidator is filled.
Duties of liquidatorA liquidator shallforthwith after appointment give notice thereof to the Superintendent and to each claimant and creditor of the bank known to the liquidator;forthwith after appointment publish notice thereof once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the bank has transacted any business within the preceding twelve months, requiringany person indebted to the bank to render an account and pay to the liquidator at the time and place specified in the notice any amount owing,any person possessing property of the bank to deliver it to the liquidator at the time and place specified in the notice, andany person having a claim against the bank, whether liquidated, unliquidated, future or contingent, to present particulars thereof in writing to the liquidator not later than sixty days after the first publication of the notice;take into custody and control the property of the bank;open and maintain a trust account for the moneys received by the liquidator in the course of the liquidation of the bank;keep accounts of the moneys received and paid out by the liquidator in the course of the liquidation of the bank;maintain separate lists of members and of each class of creditors, shareholders and other persons having claims against the bank;if at any time the liquidator determines that the bank is unable to pay or adequately provide for the discharge of its obligations, apply to the court for directions;deliver to the court and to the Superintendent, at least once in every twelve month period after the liquidator’s appointment or more often as the court requires, the annual statement of the bank prepared in accordance with subsection 308(1) or prepared in such manner as the liquidator thinks proper or as the court requires; andafter the final accounts are approved by the court, distribute any remaining property of the bank among the shareholders, incorporators or members, according to their respective rights.Powers of liquidatorA liquidator mayretain lawyers, notaries, accountants, appraisers and other professional advisers;bring, defend or take part in any civil, criminal or administrative action or proceeding in the name and on behalf of the bank;carry on the business of the bank as required for an orderly liquidation;sell by public auction or private sale any property of the bank;do all acts and execute documents in the name and on behalf of the bank;borrow money on the security of the property of the bank;settle or compromise any claims by or against the bank; anddo all other things necessary for the liquidation of the bank and distribution of its property.
  • 1991, c. 46, s. 353;
  • 2010, c. 12, s. 2043.
Previous Version
Due diligenceA liquidator is not liable if they exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith onfinancial statements of the bank represented to the liquidator by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; ora report of a person whose profession lends credibility to a statement made by them.
  • 1991, c. 46, s. 354;
  • 2005, c. 54, s. 78.
Previous Version
Examination of othersWhere a liquidator has reason to believe that any property of the bank is in the possession or under the control of a person or that a person has concealed, withheld or misappropriated any such property, the liquidator may apply to the court for an order requiring that person to appear before the court at the time and place designated in the order and to be examined.Restoration and compensationWhere an examination conducted pursuant to subsection (1) discloses that a person has concealed, withheld or misappropriated any property of the bank, the court may order that person to restore the property or pay compensation to the liquidator.
Costs of liquidationA liquidator shall pay the costs of liquidation out of the property of the bank and shall pay or make adequate provision for all claims against the bank.
Final accountsWithin one year after the appointment of a liquidator and after paying or making adequate provision for all claims against the bank, the liquidator shall apply to the courtfor approval of the final accounts of the liquidator and for an order permitting the distribution, in money or in kind, of the remaining property of the bank to its shareholders, or members, if any, or to the incorporators, according to their respective rights; orfor an extension of time, setting out the reasons therefor.Application by shareholder or memberIf a liquidator fails to make the application required by subsection (1), a shareholder of the bank or, if there are no shareholders of the bank, an incorporator — or, if the bank is a federal credit union, a member or shareholder of the federal credit union or, if there are no members or shareholders, an incorporator — may apply to the court for an order for the liquidator to show cause why a final accounting and distribution should not be made.Notification of final accountsA liquidator must give notice of their intention to make an application under subsection (1) to the Superintendent, to each inspector appointed under section 349, to each shareholder of the bank or, if there are no shareholders, to each incorporator and to any person who provided a security or fidelity bond for the liquidation. If the bank is a federal credit union, the liquidator must also give the notice to each member of the federal credit union.PublicationThe liquidator shall publish the notice required under subsection (3) in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the bank has transacted any business within the preceding twelve months or as otherwise directed by the court.
  • 1991, c. 46, s. 357;
  • 2010, c. 12, s. 2044.
Previous Version
Final orderIf the court approves the final accounts rendered by a liquidator, the court shall make an orderdirecting the bank to apply to the Minister for letters patent dissolving the bank;directing the custody or disposal of the documents, records and registers of the bank; anddischarging the liquidator except in respect of the duty of a liquidator under subsection (2).Delivery of orderThe liquidator shall forthwith send a certified copy of the order referred to in subsection (1) to the Superintendent.
Right to distribution of moneyIf in the course of the liquidation of a bank that is not a federal credit union the shareholders resolve, or the liquidator proposes, to exchange all or substantially all of the remaining property of the bank for securities of another entity that are to be distributed to the shareholders or to the incorporators — or to distribute all or part of the remaining property of the bank to the shareholders or to the incorporators in kind — a shareholder or incorporator may apply to the court for an order requiring the distribution of the remaining property of the bank to be in money.Right to distribution of money — federal credit unionIf in the course of the liquidation of a federal credit union the members resolve, or the liquidator proposes, to exchange all or substantially all of the remaining property of the federal credit union for securities of another entity that are to be distributed to the members or to members and shareholders — or to distribute all or part of the remaining property of the federal credit union to the members or to members and shareholders in kind — a member or shareholder may apply to the court for an order requiring the distribution of the remaining property of the federal credit union to be in money.Powers of courtOn an application under subsection (1) or (2) , the court may orderall of the remaining property of the bank to be converted into and distributed in money; orthe claim of any person applying under this section to be satisfied by a distribution in money.Order by courtIf an order is made by a court under paragraph (3)(b), the courtmust fix a fair value on the share of the property of the bank attributable to the person;may in its discretion appoint one or more appraisers to assist the court in fixing a fair value in accordance with paragraph (a); andmust render a final order against the bank in favour of the person for the amount of the share of the bank’s property attributable to the person.
  • 1991, c. 46, s. 359;
  • 2010, c. 12, s. 2045.
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Dissolution by letters patentOn an application made pursuant to an order under paragraph 358(1)(a), the Minister may issue letters patent dissolving the bank.Bank dissolvedA bank in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the date of the issuance of the letters patent.
General
Definition of shareholder, member and incorporatorIn sections 363 and 364, shareholder, member and incorporator include the heirs and personal representatives of a shareholder, member or incorporator, respectively.
  • 1991, c. 46, s. 361;
  • 2010, c. 12, s. 2046.
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Continuation of actionsNotwithstanding the dissolution of a bank under this Part,a civil, criminal or administrative action or proceeding commenced by or against the bank before its dissolution may be continued as if the bank had not been dissolved;a civil, criminal or administrative action or proceeding may be brought against the bank within two years after its dissolution as if the bank had not been dissolved; andany property that would have been available to satisfy any judgment or order if the bank had not been dissolved remains available for that purpose.Service on bankService of a document on a bank after its dissolution may be effected by serving the document on a person shown as a director in the incorporating instrument of the bank or, if applicable, in the latest return sent to the Superintendent under section 632.
  • 1991, c. 46, s. 362;
  • 1999, c. 28, s. 17.
Limitations on liabilityDespite the dissolution of a bank, a shareholder, member or incorporator to whom any of its property has been distributed is liable to any person claiming under subsection 362(1) to the extent of the amount received by that shareholder, member or incorporator on the distribution.LimitationAn action to enforce liability under subsection (1) may not be commenced except within two years after the date of the dissolution of the bank.Action against classA court may order an action referred to in subsections (1) and (2) to be brought against the persons who were shareholders, members or incorporators as a class, subject to any conditions that the court thinks fit.ReferenceIf the plaintiff establishes a claim in an action under subsection (3), the court may refer the proceedings to a referee or other officer of the court who mayadd as a party to the proceedings each person found by the plaintiff to have been a shareholder, member or incorporator;determine, subject to subsection (1), the amount that each person who was a shareholder, member or incorporator must contribute towards satisfaction of the plaintiff’s claim; anddirect payment of the amounts so determined.
  • 1991, c. 46, s. 363;
  • 2010, c. 12, s. 2047.
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Persons who cannot be foundIf a creditor, shareholder, member or incorporator to whom property is to be distributed on the dissolution of a bank cannot be found, the portion of the property to be distributed to that creditor, shareholder, member or incorporator is to be converted into money and paid in accordance with section 366.
  • 1991, c. 46, s. 364;
  • 2010, c. 12, s. 2048.
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Vesting in CrownSubject to subsection 362(1) and sections 366 and 367, property of a bank that has not been disposed of at the date of the dissolution of the bank vests in Her Majesty in right of Canada.
Unclaimed money on winding-upDespite the Winding-up and Restructuring Act, if the business of a bank is being wound up, the liquidator or the bank must pay to the Minister on demand and in any event before the final winding-up of that business any amount that is payable by the liquidator or the bank to a creditor, shareholder, member or incorporator of the bank to whom payment of that amount has not, for any reason, been made.RecordsIf a liquidator or a bank makes a payment to the Minister under subsection (1) with respect to a creditor, shareholder, member or incorporator, the liquidator or bank must concurrently forward to the Minister all documents, records and registers in the possession of the liquidator or bank that relate to the entitlement of the creditor, shareholder, member or incorporator.Payment to Bank of CanadaThe Minister shall pay to the Bank of Canada all amounts paid to the Minister under subsection (1) and shall provide the Bank of Canada with any document, record or register received by the Minister under subsection (2).Liquidator and bank dischargedPayment by a liquidator or a bank to the Minister under subsection (1) discharges the liquidator and the bank in respect of which the payment is made from all liability for the amount so paid, and payment by the Minister to the Bank of Canada under subsection (3) discharges the Minister from all liability for the amount so paid.
  • 1991, c. 46, s. 366;
  • 1996, c. 6, s. 167;
  • 2010, c. 12, s. 2049.
Previous Version
Liability of Bank of CanadaSubject to section 22 of the Bank of Canada Act, where payment has been made to the Bank of Canada of an amount under subsection 366(3), the Bank of Canada, if payment is demanded by a person who, but for subsection 366(4), would be entitled to receive payment of that amount from the liquidator, the bank or the Minister, is liable to pay to that person at its head office an amount equal to the amount so paid to it, with interest thereon for the period, not exceeding ten years, from the day on which the payment was received by the Bank of Canada until the date of payment to the person, at such rate and computed in such manner as the Minister determines.Enforcing liabilityThe liability of the Bank of Canada under subsection (1) may be enforced by action against the Bank of Canada in the court in the province in which the debt or instrument was payable.
Custody of records after dissolutionA person who has been granted custody of the documents, records and registers of a dissolved bank shall keep them available for production for six years following the date of the dissolution of the bank or until the expiration of such shorter period as may be ordered by the court when it orders the dissolution.
InsolvencyIn the case of the insolvency of a bank,the payment of any amount due to Her Majesty in right of Canada, in trust or otherwise, except indebtedness evidenced by subordinated indebtedness, shall be a first charge on the assets of the bank;the payment of any amount due to Her Majesty in right of a province, in trust or otherwise, except indebtedness evidenced by subordinated indebtedness, shall be a second charge on the assets of the bank;the payment of the deposit liabilities of the bank and all other liabilities of the bank, except the liabilities referred to in paragraphs (d) and (e), shall be a third charge on the assets of the bank;subordinated indebtedness of the bank and all other liabilities that by their terms rank equally with or subordinate to such subordinated indebtedness shall be a fourth charge on the assets of the bank; andthe payment of any fines and penalties for which the bank is liable shall be a last charge on the assets of the bank.Priority not affectedNothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of a bank.PrioritiesPriorities within each of paragraphs (1)(a) to (e) shall be determined in accordance with the laws governing priorities and, where applicable, by the terms of the indebtedness and liabilities referred to therein.
  • 1991, c. 46, s. 369;
  • 2001, c. 9, s. 95.
OWNERSHIPDefinitions and Interpretation
DefinitionsIn this Part,agentmandataireagent meansin relation to Her Majesty in right of Canada or of a province, any agent of Her Majesty in either of those rights and includes a municipal or public body empowered to perform a function of government in Canada or any entity empowered to perform a function or duty on behalf of Her Majesty in either of those rights, but does not includean official or entity performing a function or duty in connection with the administration or management of the estate or property of a natural person,an official or entity performing a function or duty in connection with the administration, management or investment of a fund established to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons, or moneys derived from such a fund, orthe trustee of any trust for the administration of a fund to which Her Majesty in either of those rights contributes and of which an official or entity that is an agent of Her Majesty in either of those rights is a trustee, andin relation to the government of a foreign country or any political subdivision thereof, a person empowered to perform a function or duty on behalf of the government of the foreign country or political subdivision, other than a function or duty in connection with the administration or management of the estate or property of a natural person;eligible agentmandataire admissibleeligible agent means an agent or agency of Her Majesty in right of Canada or of a province or an agent or agency of a government of a foreign country or any political subdivision of a foreign countrywhose mandate is publicly available;that controls the assets of an investment fund in a manner intended to maximize long-term risk-adjusted returns and that fund isone to which, as the case may be, Her Majesty in right of Canada or of a province or the government of a foreign country or political subdivision contributes, orestablished to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons; andwhose decisions with respect to the assets of the fund referred to in paragraph (b) are not influenced in any significant way by, as the case may be, Her Majesty in right of Canada or of the province or the government of the foreign country or the political subdivision.eligible Canadian financial institutioninstitution financière canadienne admissibleeligible Canadian financial institution means a Canadian financial institution that is a body corporate and that is widely held;eligible financial institutioninstitution financière admissibleeligible financial institution means an eligible Canadian financial institution or an eligible foreign institution;eligible foreign institutioninstitution étrangère admissibleeligible foreign institution meansa foreign bank that, in the opinion of the Minister, after consultation with the Superintendent, is regulated as or like a bank, according to the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business, ora foreign institution that, in the opinion of the Minister,is, with respect to its provision of financial services, regulated in the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business, andis widely held;foreign institutioninstitution étrangèreforeign institution means an entity that isengaged in the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities, andincorporated or formed otherwise than by or under an Act of Parliament or the legislature of a province.[Repealed, 2001, c. 9, s. 96]
  • 1991, c. 46, s. 370, c. 48, s. 494;
  • 2001, c. 9, s. 96;
  • 2012, c. 19, s. 331.
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AssociatesFor the purpose of determining ownership of a bank, if two persons who each beneficially own shares or membership shares of a bank are associated with each other, those persons are deemed to be a single person who beneficially owns the aggregate number of shares and membership shares of the bank beneficially owned by them.AssociatesFor the purposes of subsection (1), a person who beneficially owns shares or membership shares of a bank is associated with another person who beneficially owns shares or membership shares of the bank ifone person is Her Majesty in right of Canada and the other person is Her Majesty in right of a province or one person is Her Majesty in right of a province and the other person is Her Majesty in right of another province;each person is an agent of Her Majesty in right of Canada or in right of a province;each person is an official, a trustee or an entity referred to in subparagraphs (a)(ii) and (iii) of the definition “agent” in subsection 370(1);each person is an entity owned or controlled by Her Majesty in right of Canada or in right of a province that is not an agent of Her Majesty and is not empowered to perform a function or duty on behalf of Her Majesty;both persons are trustees of any trusts for the administration of funds to which Her Majesty in right of Canada contributes and of which no official or entity that is an agent of Her Majesty in such right is a trustee;both persons are trustees of any trusts for the administration of funds to which Her Majesty in right of a particular province contributes and of which no official or entity that is an agent of Her Majesty in right of that province is a trustee;one person is a local cooperative credit society and the other person is a central cooperative credit society of which the first person is a member;both persons are local cooperative credit societies that are members of the same central cooperative credit society;one person is a central cooperative credit society, the other person is a federation of cooperative credit societies of which the first is a member, and both persons are incorporated or organized by or pursuant to legislation enacted by the same legislative body;both persons are central cooperative credit societies that are members of the same federation of cooperative credit societies, and both persons and the federation of cooperative credit societies are incorporated or organized by or pursuant to legislation enacted by the same legislative body; orboth persons are associated within the meaning of paragraphs (a) to (j) with the same person.
  • 1991, c. 46, s. 371;
  • 2001, c. 9, s. 97;
  • 2010, c. 12, s. 2050.
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AssociatesDespite section 371, for the purpose of determining ownership of a bank by an eligible agent, where two persons, at least one of whom is an eligible agent, are associated with each other, those persons are deemed to be a single eligible agent who beneficially owns the aggregate number of shares of the bank beneficially owned by them.AssociatesFor the purposes of subsection (1), a person is associated with another person ifeach person is an agent or agency of Her Majesty in right of Canada;each person is an agent or agency of Her Majesty in right of the same province;each person is an agent or agency of a government of the same foreign country or a political subdivision of the same foreign country;one person is Her Majesty in right of Canada and the other person is an agent or agency of Her Majesty in that right;one person is Her Majesty in right of a province and the other person is an agent or agency of Her Majesty in right of that province; orone person is a government of a foreign country or any political subdivision of a foreign country and the other person is its agent or agency.
  • 2012, c. 19, s. 332.
Ownership of BanksConstraints on Ownership
Significant interestExcept as permitted by this Part, no person shall have a significant interest in any class of shares, or in membership shares, of a bank.
  • 1991, c. 46, s. 372;
  • 2001, c. 9, s. 98;
  • 2010, c. 12, s. 2051.
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[Repealed, 2001, c. 9, s. 98]
Acquisition of significant interestSubject to this Part, no person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share or membership share of a bank or purchase or otherwise acquire control of any entity that holds any share or membership share of a bank ifthe acquisition would cause the person to have a significant interest in any class of shares or in membership shares of the bank, as the case may be; orwhere the person has a significant interest in a class of shares or in membership shares of the bank, the acquisition would increase the significant interest of the person in that class or in the membership shares, as the case may be.Amalgamation, etc., constitutes acquisitionIf the entity that would result from an amalgamation, a merger or a reorganization would have a significant interest in a class of shares or in membership shares of a bank, the entity is deemed to be acquiring a significant interest in that class of shares or in membership shares, as the case may be, through an acquisition for which the approval of the Minister is required under subsection (1).
  • 1991, c. 46, s. 373;
  • 1994, c. 47, s. 17;
  • 1997, c. 15, s. 37(E);
  • 2001, c. 9, s. 98;
  • 2007, c. 6, s. 19;
  • 2010, c. 12, s. 2051.
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[Repealed, 1999, c. 28, s. 18]
Limitations on share holdingsNo person may be a major shareholder of a bank with equity of twelve billion dollars or more.Exception — federal credit unionSubsection (1) does not apply in respect of a person who is a major shareholder of a federal credit union.Exception — widely held bankSubsection (1) does not apply to a widely held bank that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of twelve billion dollars or more if it controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached twelve billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day.Exception — widely held bank holding companySubsection (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 with equity of twelve billion dollars or more ifthe bank holding company controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached twelve billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day;the bank holding company acquired control, within the meaning of those paragraphs, of the bank under section 677 or 678 and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day the bank holding company acquired control; orthe bank was a subsidiary of another bank that was continued under section 684 as the bank holding company and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day it came into existence as a bank holding company.Exception — insurance holding companies and certain institutionsSubsection (1) does not apply to any of the following that controls, within the meaning of paragraph 3(1)(d), the bank with equity of twelve billion dollars or more if it controlled, within the meaning of that paragraph, the bank on the day the bank’s equity reached twelve billion dollars and it has controlled, within the meaning of that paragraph, the bank since that day:a widely held insurance holding company;an eligible Canadian financial institution, other than a bank; oran eligible foreign institution.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of twelve 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.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the bank with equity of twelve billion dollars or more if the entity is controlled, within the meaning of that paragraph, bya widely held insurance holding company to which subsection (4) applies that controls the bank;an eligible Canadian financial institution to which subsection (4) applies, other than a bank, that controls the bank; oran eligible foreign institution to which subsection (4) applies that controls the bank.
  • 1991, c. 46, s. 374, c. 48, s. 494;
  • 2001, c. 9, s. 98;
  • 2007, c. 6, s. 132;
  • 2010, c. 12, s. 2052;
  • 2012, c. 5, s. 12.
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ExceptionDespite section 374, if a bank with equity of twelve billion dollars or more was formed as the result of an amalgamation, a person who is a major shareholder of the bank 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 on the day that is one year after that day or on the day that is after any shorter period specified by the Minister.Exception — federal credit unionSubsection (1) does not apply in respect of a person who is a major shareholder of a federal credit union.Exception — widely held banks and bank holding companiesSubsection (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 since the effective date of those letters patent.Exception — insurance holding companies and certain institutionsSubsection (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 since the effective date of those letters patent:a widely held insurance holding company;an eligible Canadian financial institution, other than a bank; oran eligible foreign institution.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the amalgamated bank 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.Exception — other entitiesSubsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the amalgamated bank if the entity is controlled, within the meaning of that paragraph, by any of the following:a widely held insurance holding company to which subsection (3) applies that controls the amalgamated bank;an eligible Canadian financial institution to which subsection (3) applies, other than a bank, that controls the amalgamated bank; oran eligible foreign institution to which subsection (3) applies that controls the amalgamated bank.ExtensionIf 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.
  • 2001, c. 9, s. 98;
  • 2007, c. 6, s. 132;
  • 2010, c. 12, s. 2053;
  • 2012, c. 5, s. 13.
Previous Version
Limitation on share holdingsIf a person is a major shareholder of a bank with equity of less than twelve billion dollars and the bank’s equity reaches twelve billion dollars or more, the person shall do all things necessary to ensure that the person is not a major shareholder of the bank on the day that is three years after the day the bank’s equity reached twelve billion dollars.Exception — federal credit unionSubsection (1) does not apply in respect of a person who is a major shareholder of a federal credit union.ExceptionSubsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.ExtensionIf 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.
  • 1991, c. 46, s. 375;
  • 2001, c. 9, s. 98;
  • 2007, c. 6, s. 132;
  • 2010, c. 12, s. 2054;
  • 2012, c. 5, s. 14.
Previous Version
Obligation of widely held bankIf a widely held bank with equity of twelve billion dollars or more controls another bank and a person becomes a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the other bank or entity that controls the other bank,the widely held bank no longer controls the other bank; orthe other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.Exception — federal credit unionSubsection (1) does not apply in respect of a federal credit union that controls a bank.ExceptionSubsection (1) does not apply in respect of a bank with equity of less than two hundred and fifty million dollars or any other amount that is prescribed.ExtensionIf general market conditions so warrant and the Minister is satisfied that the widely held bank 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.
  • 1991, c. 46, s. 376;
  • 2001, c. 9, s. 98;
  • 2007, c. 6, s. 132;
  • 2010, c. 12, s. 2055;
  • 2012, c. 5, s. 15.
Previous Version
Obligation of widely held bankDespite subsection 376(1), if a widely held bank with equity of twelve billion dollars or more controls a bank (in this subsection referred to as the “other bank”) in respect of which that subsection does not apply by reason of subsection 376(2) and the equity of the other 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 other 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 other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is three years after that day,the widely held bank no longer controls the other bank; orthe other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.Exception — federal credit unionSubsection (1) does not apply in respect of a federal credit union that controls a bank.ExtensionIf general market conditions so warrant and the Minister is satisfied that the widely held bank 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.
  • 2001, c. 9, s. 98;
  • 2007, c. 6, s. 132;
  • 2010, c. 12, s. 2056;
  • 2012, c. 5, s. 16.
Previous Version
Prohibition against significant interestNo person who has a significant interest in any class of shares of a widely held bank with equity of twelve billion dollars or more may have a significant interest in any class of shares of a subsidiary of the widely held bank that is a bank or a bank holding company.Exception — federal credit unionSubsection (1) does not apply in respect of a person who has a significant interest in any class of shares of a federal credit union.
  • 1991, c. 46, s. 578;
  • 1997, c. 15