Marginal note:Director to abstain
203. (1) A 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 transaction
(a) relates 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;
(b) is for indemnity under section 212 or insurance under section 213; or
(c) is with an affiliate of the bank.
(2) Any director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any financial institution that is incorporated or formed by or under an Act of Parliament.
Marginal note:Validity of acts
(3) An act of the board of directors of a bank, 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.
Marginal note:General notice
204. (1) For 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:
(a) 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;
(b) the director or officer has a material interest in the party; or
(c) there has been a material change in the nature of the director’s or officer’s interest in the party.
Marginal note:Access to disclosures
(2) The 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.
Marginal note:Avoidance standards
205. (1) A 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 if
(a) the director or officer disclosed their interest in accordance with section 202 and subsection 204(1);
(b) the directors approved the contract or transaction; and
(c) the contract or transaction was reasonable and fair to the bank at the time that it was approved.
(2) Even 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 if
(a) the contract or transaction is approved or confirmed by special resolution at
(i) in the case of a bank that is not a federal credit union, a meeting of shareholders, or
(ii) in the case of a federal credit union, at a meeting of its members and, if it has shareholders, at a meeting of its shareholders;
(b) 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; and
(c) the 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.
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