Marginal note:Direction to transfer policies or to reinsure risks — society

• 678.5 (1) If the circumstances described in any of paragraphs 679(1.1)(a) to (e) or (g) exist in respect of a society, the Superintendent may, by order, subject to any terms and conditions the Superintendent may specify, direct it to transfer all or any portion of its policies to, or cause itself to be reinsured against all or any portion of the risks undertaken by it by, any company, society, foreign company or body corporate incorporated under the laws of a province that is authorized to transact the classes of insurance to be so transferred or reinsured.

• Marginal note:Compliance

  (2) The society shall comply with the order within the time that the Superintendent specifies in the order or within any further period specified by the Superintendent.

• Marginal note:Opportunity for representations

  (3) No order shall be issued to a society under subsection (1) unless the society is provided with a reasonable opportunity to make representations in respect of the matter.

Marginal note:Direction to transfer policies or to reinsure risks — foreign company that is a fraternal benefit society

• 678.6 (1) If the circumstances described in any of paragraphs 679(1.2)(a) to (d) or (f) exist in respect of a foreign company that is a fraternal benefit society, the Superintendent may, by order, subject to any terms and conditions the Superintendent may specify, direct it to transfer all or any portion of its policies in Canada to, or cause itself to be reinsured against all or any portion of the risks undertaken by it in respect of its policies in Canada by, any company, society, foreign company or body corporate incorporated under the laws of a province that is authorized to transact the classes of insurance to be so transferred or reinsured.

• Marginal note:Compliance

  (2) The foreign company shall comply with the order within the time that the Superintendent specifies in the order or within any further period specified by the Superintendent.

• Marginal note:Opportunity for representations

  (3) No order shall be issued to a foreign company under subsection (1) unless the foreign company is provided with a reasonable opportunity to make representations in respect of the matter.

Marginal note:Réduction de la cotisation

692. Tout montant payé à Sa Majesté ou recouvré par elle conformément à l’article 691 de la présente loi ou à l’alinéa 161(1)d), au paragraphe 161(6) ou à l’alinéa 161(8)d) de la Loi sur les liquidations et les restructurations à l’égard d’une société est imputé dans la mesure et selon les modalités réglementaires.

PART XVIREGULATION OF COMPANIES AND FOREIGN COMPANIES — COMMISSIONER

Definition of “société”

693. In the French version of this Part, “société” means a “société” or “société étrangère” within the meaning of section 2.

Marginal note:Required information

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

Marginal note:Confidential information

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

• Marginal note:Disclosure permitted

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

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

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

  • (c) to any compensation association designated by order of the Minister under subsection 449(1) or 591(1), for purposes related to its operation; and

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

Marginal note:Examination

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

• Marginal note:Access to records

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

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

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

Marginal note:Power of Commissioner on inquiry

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

Marginal note:Compliance agreement

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

PART XVIIINSURANCE HOLDING COMPANIES

Purpose

Marginal note:Purpose

699. The purpose of this Part is to provide for the incorporation, formation and regulation of insurance holding companies that are holding bodies corporate of life companies.

Division 1Interpretation

Marginal note:Definitions

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

  “affairs”

  « affaires internes »

  “affairs”, with respect to an insurance holding company, means the relationships among the insurance holding company and its affiliates and the shareholders, directors and officers of the insurance holding company and its affiliates, but does not include the business of the insurance holding company or any of its affiliates.

  “complainant”

  « plaignant »

  “complainant”, in relation to an insurance holding company or any matter concerning an insurance holding company, means

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

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

  • (c) any other person who, in the discretion of a court, is a proper person to make an application under section 912, 916 or 1031.

  “subordinated indebtedness”

  « titre secondaire »

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

• Marginal note:Provisions in other Parts

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

• Marginal note:References in other Parts

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

Division 2Status and Powers

Marginal note:Corporate powers

• 701. (1) An insurance holding company has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.

• Marginal note:Powers restricted

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

• Marginal note:Business in Canada

  (3) An insurance holding company may carry on business throughout Canada.

• Marginal note:Powers outside Canada

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

Marginal note:No invalidity

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

Marginal note:By-law not necessary

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

Marginal note:No personal liability

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

Marginal note:No constructive notice

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

Marginal note:Authority of directors and officers

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

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

• (b) the persons named as directors of the insurance holding company in the most recent return sent to the Superintendent under section 994 are not the directors of the insurance holding company,

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

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

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

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

Marginal note:Sunset provision

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

• Marginal note:Extension

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

Division 3Incorporation, Continuance and Discontinuance

Formalities of Incorporation

Marginal note:Incorporation of insurance holding company

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

Marginal note:Restrictions on incorporation

709. Letters patent incorporating an insurance holding company may not be issued if the application therefor is made by or on behalf of

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

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

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

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

Marginal note:National treatment

• 710. (1) If a proposed insurance holding company would be a subsidiary of a foreign institution that is engaged in the insurance business, letters patent to incorporate the insurance holding company may not be issued unless the Minister is satisfied that, if the application is made by a non-WTO Member foreign institution, treatment as favourable for insurance holding companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign institution principally carries on business, either directly or through a subsidiary.

• Marginal note:Part XII of the Bank Act

  (2) Nothing in subsection (1) affects the operation of Part XII of the Bank Act.

Marginal note:Application for incorporation

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

Marginal note:Matters for consideration

712. Before issuing letters patent to incorporate an insurance holding company, the Minister shall take into account all matters that the Minister considers relevant to the application, including

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

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

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

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

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

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

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

Marginal note:Contents of letters patent

• 713. (1) There shall be set out in the letters patent incorporating an insurance holding company

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

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

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

• Marginal note:Provisions in letters patent

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

• Marginal note:Terms and conditions

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

Marginal note:Letters patent of incorporation on application of life company

• 714. (1) If the Minister, under section 708, issues letters patent incorporating an insurance holding company on the application of a life company, including a converted company, there may, on the request of the company, and with the approval of the Minister, be included in the letters patent of incorporation of the insurance holding company a provision deeming shares of the insurance holding company 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.

• Marginal note:Effect of provision

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

• Marginal note:Effect of provision

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

• Marginal note:Transfer and voting of company shares

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

• Marginal note:Shareholder and policyholder approval

  (5) No provision described in subsection (1) may be included in letters patent issued under section 708 unless the application for the letters patent is accompanied by evidence that the request for the provision was approved by a special resolution of the shareholders and the policyholders of the company who are entitled to vote at a meeting of shareholders and policyholders called to consider the application.

• Marginal note:Exchange of share certificates

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

Marginal note:Proposal involving fundamental change

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

  • (a) include in the letters patent of the insurance holding company issued under section 708, 721 or 863 any provision the Minister considers necessary; or

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

• Marginal note:Regulations

  (2) The Governor in Council may make regulations

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

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

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

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

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

Marginal note:Notice of issue of letters patent

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

Marginal note:First directors

717. The first directors of an insurance holding company are the directors named in the application for letters patent to incorporate the insurance holding company.

Marginal note:Effect of letters patent

718. An insurance holding company comes into existence on the date provided therefor in its letters patent.

Continuance

Marginal note:Federal corporations

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

• Marginal note:Other corporations

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

Marginal note:Application for continuance

• 720. (1) Where a body corporate applies for letters patent under subsection 719(1) or (2), sections 709 to 712 apply in respect of the application, with such modifications as the circumstances require.

• Marginal note:Special resolution approval

  (2) Where a body corporate applies for letters patent under subsection 719(1) or (2), the application must be duly authorized by a special resolution.

• Marginal note:Copy of special resolution

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

Marginal note:Power to issue letters patent

• 721. (1) On the application of a body corporate under subsection 719(1) or (2), the Minister may, subject to this Division, issue letters patent continuing the body corporate as an insurance holding company under this Part.

• Marginal note:Issue of letters patent

  (2) Section 713 applies in respect of the issue of letters patent under subsection (1), with such modifications as the circumstances require.

Marginal note:Effect of letters patent

722. On the day set out in the letters patent continuing a body corporate as an insurance holding company under subsection 721(1),

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

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

Marginal note:Copy of letters patent

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

• Marginal note:Notice of issuance of letters patent

  (2) The Superintendent shall publish in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as an insurance holding company under this Part.

Marginal note:Effects of continuance

724. Where a body corporate is continued as an insurance holding company under this Part,

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

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

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

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

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

• (f) a person who, on the day the body corporate becomes an insurance holding company, is 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 of it, but any such right or privilege may be exercised only in accordance with this Act; and

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

Marginal note:Transitional

• 725. (1) Despite any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to an insurance holding company in respect of which letters patent were issued under subsection 721(1) permission to

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

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

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

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

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

• Marginal note:Duration

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

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

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

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

• Marginal note:Renewal

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

• Marginal note:Limitation

  (4) The Minister shall not grant to an insurance holding company any permission

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

  • (b) with respect to matters described in paragraphs (1)(c) and (d), that purports to be effective more than ten years after the effective date of the letters patent of continuance issued to continue the insurance holding company under this Part.

Discontinuance

Marginal note:Transferring to other Acts

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

• Marginal note:Conditions for approval

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

Meaning of “insurance holding company without a life company subsidiary”

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

• Marginal note:Obligation to apply

  (2) An insurance holding company without a life company subsidiary must, within thirty days after becoming an insurance holding company without a life company subsidiary, apply to be continued under subsection 726(1).

• Marginal note:Cessation of existence

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

Marginal note:Act ceases to apply

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

Marginal note:Withdrawing application

729. Where a special resolution authorizing the application under subsection 726(1) so states, the directors of an insurance holding company may, without further approval of the shareholders, withdraw the application before it is acted on.

Corporate Name

Marginal note:Prohibited names

730. An insurance holding company may not be incorporated under this Part with a name

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

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

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

  • (i) trade-mark or trade name, or

  • (ii) corporate name of a body corporate,

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

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

• (e) that is reserved under section 45 for a company or society or a proposed company or society or under section 734 for another insurance holding company or a proposed insurance holding company.

Marginal note:Affiliated insurance holding company

731. Despite section 730 and subject to section 732, an insurance holding company that is affiliated with another entity may, with the consent of that entity and the approval of the Superintendent,

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

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

Marginal note:Restriction

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

Marginal note:French or English form of name

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

• Marginal note:Mandatory abbreviation

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

• Marginal note:Alternate name

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

• Marginal note:Other name

  (4) Subject to subsection (5) and section 880, an insurance holding company may carry on business under or identify itself by a name other than its corporate name.

• Marginal note:Directions

  (5) If an insurance holding company is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the insurance holding company not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 730(a) to (e).

• Marginal note:Regulations

  (6) The Governor in Council may make regulations respecting the use of the abbreviations “ihc” or “spa” in the name of insurance holding companies.

Marginal note:Reserved name

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

Marginal note:Directing change of name

• 735. (1) If through inadvertence or otherwise an insurance holding company

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

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

  that is prohibited by section 730 or 732, the Superintendent may, by order, direct the insurance holding company to change its name and the insurance holding company shall comply with that direction.

• Marginal note:Revoking name

  (2) Where an insurance holding company has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Part, the Superintendent may revoke the name of the insurance holding company and assign to it a name and, until changed in accordance with section 849 or 851, the name of the insurance holding company is thereafter the name so assigned.

Marginal note:Subsidiaries

736. Despite subsection 47(1), a subsidiary of an insurance holding company may, with the approval in writing of the Superintendent, use the word “assurance”, “assurances”, “insurance” or “lifeco” or any word or words of import equivalent to any of those words in its name.

Definition of “reserved name”

• 737. (1) In this section, “reserved name” means a name that includes as part thereof the word “assurance”, “assurances”, “insurance”, “lifeco”, “fiduciaire”, “fiduciary”, “fiducie”, “trust”, “trustco”, “loan”, “loanco” or “prêt” or any word or words of import equivalent to any of those words.

• Marginal note:Termination of control required in certain cases

  (2) No person, other than a financial institution, who

  • (a) is carrying on business in Canada under a reserved name, and

  • (b) has control or acquires control of an insurance holding company,

  shall control the insurance holding company one year after the date of acquisition of the control.

• Marginal note:Prohibition

  (3) No person, other than a financial institution, who

  • (a) controls an entity that is not a financial institution that carries on business in Canada under a reserved name, and

  • (b) has control or acquires control of an insurance holding company,

  shall control the insurance holding company one year after the date of the acquisition of the control.

• Marginal note:Continuing control prohibited

  (4) Despite subsection (3), where a financial institution controls an entity that

  • (a) is not a financial institution,

  • (b) carries on business in Canada under a reserved name, and

  • (c) acquires control of an insurance holding company,

  the entity shall not control the insurance holding company one year after the date on which the entity acquires control of the insurance holding company.

• Marginal note:Exceptions

  (5) Subsections (2) to (4) do not apply with respect to a person or entity that was carrying on business in Canada under a reserved name on June 25, 1999.

Publication of Information

Marginal note:Publication of information

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

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

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

Division 4Organization and Commencement

Marginal note:First directors’ meeting

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

  • (a) make by-laws;

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

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

  • (d) appoint officers;

  • (e) appoint an auditor to hold office until the meeting called under subsection 740(1);

  • (f) make banking arrangements; and

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

• Marginal note:Calling directors’ meeting

  (2) An incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 817(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the insurance holding company.

Marginal note:Calling shareholders’ meeting

• 740. (1) After the meeting referred to in subsection 739(1) is held, the directors of the insurance holding company shall without delay call a meeting of the shareholders of the insurance holding company.

• Marginal note:Meeting of shareholders or incorporators

  (2) The shareholders of an insurance holding company shall, by resolution at the meeting of shareholders called under subsection (1),

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

  • (b) subject to section 803, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election; and

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

Marginal note:Term of first directors

741. A director named in the application for letters patent to incorporate an insurance holding company holds office until the election of directors at the meeting of shareholders called under subsection 740(1).

Division 5Capital Structure

Share Capital

Marginal note:Power to issue shares

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

• Marginal note:Shares

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

• Marginal note:Shares of continued insurance holding company

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

• Marginal note:Deemed share conditions

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

Marginal note:Common shares

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

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

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

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

• Marginal note:Designations of shares

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

• Marginal note:Continued insurance holding company

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

Marginal note:Classes of shares

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

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

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

• Marginal note:Shareholder approval

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

• Marginal note:Effective date

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

Marginal note:Shares in series

• 745. (1) The by-laws of an insurance holding company made pursuant to section 744 may authorize the issue of any class of shares in one or more series and may authorize the directors of the insurance holding company to fix the maximum number, if any, of shares in each series and to determine the designation, rights, privileges, restrictions and conditions attaching to the shares of each series, subject to the limitations set out in the by-laws.

• Marginal note:Series participation

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

• Marginal note:Voting rights

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

• Marginal note:Restriction on series

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

• Marginal note:Material to Superintendent

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

Marginal note:One share, one vote

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

Marginal note:Shares non-assessable

747. Shares issued by an insurance holding company are non-assessable and the shareholders are not liable to the insurance holding company or to its creditors in respect thereof.

Marginal note:Consideration for share

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

• Marginal note:Other currencies

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

Marginal note:Stated capital account

• 749. (1) An insurance holding company shall maintain a separate stated capital account for each class and series of shares it issues.

• Marginal note:Addition to stated capital account

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

• Marginal note:Exception

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

  • (a) in exchange for

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

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

  • (b) under an agreement referred to in subsection 858(1) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated insurance holding company.

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

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

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

  (5) Where an insurance holding company that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the insurance holding company as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 759(4).

Marginal note:Stated capital of continued insurance holding company

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

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

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

• Marginal note:Contributed surplus entry

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

• Marginal note:Shares issued before continuance

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

Marginal note:Pre-emptive right

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

• Marginal note:Exception

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

  • (a) for a consideration other than money;

  • (b) as a share dividend; or

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

• Marginal note:Exception

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

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

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

Marginal note:Conversion privileges

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

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

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

• Marginal note:Transferable rights

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

• Marginal note:Reserved shares

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

Marginal note:Holding of own shares

753. Except as provided in sections 754 to 756, or unless permitted by the regulations, an insurance holding company shall not

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

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

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

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

Marginal note:Purchase and redemption of shares

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

• Marginal note:Restrictions on purchase and redemption

  (2) An insurance holding company shall not make any payment to purchase or redeem any shares issued by it if there are reasonable grounds for believing that it is, or the payment would cause it to be, in contravention of a regulation referred to in subsection 992(1) or (2) or a direction made under subsection 992(3).

• Marginal note:Donated shares

  (3) An insurance holding company may accept from any shareholder a share of the insurance holding company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 757.

Marginal note:Holding as personal representative

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

• Marginal note:Security interest

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

Marginal note:Cancellation of shares

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

• Marginal note:Requirement to sell

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

Marginal note:Reduction of capital

• 757. (1) The stated capital of an insurance holding company may be reduced by special resolution.

• Marginal note:Limitation

  (2) An insurance holding company shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the insurance holding company is, or the reduction would cause the insurance holding company to be, in contravention of a regulation referred to in subsection 992(1) or (2) or in a direction made under subsection 992(3).

• Marginal note:Contents of special resolution

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

• Marginal note:Approval by Superintendent

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

• Marginal note:Conditions for approval

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

• Marginal note:Statements to be submitted

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

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

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

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

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

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

Marginal note:Recovery by action

• 758. (1) Where any money or property was paid or distributed to a shareholder or other person as a consequence of a reduction of capital made contrary to section 757, a creditor of the insurance holding company may apply to a court for an order compelling the shareholder or other person to pay the money or deliver the property to the insurance holding company.

• Marginal note:Shares held by personal representative

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

• Marginal note:Limitation

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

• Marginal note:Remedy preserved

  (4) This section does not affect any liability that arises under section 841.

Marginal note:Adjustment of stated capital account

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

• Marginal note:Adjustment of stated capital account

  (2) An insurance holding company shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 757.

• Marginal note:Shares converted to another class

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

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

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

• Marginal note:Stated capital of convertible shares

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

• Marginal note:Conversion or change of shares

  (5) Shares issued by an insurance holding company and converted into shares of another class or series, or changed under subsection 851(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.

Marginal note:Addition to stated capital account

760. On a conversion of any debt obligation of an insurance holding company into shares of a class or series of shares, the insurance holding company shall

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

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

Marginal note:Declaration of dividend

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

• Marginal note:Notice to Superintendent

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

• Marginal note:Share dividend

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

• Marginal note:When dividend not to be declared

  (4) The directors of an insurance holding company shall not declare and an insurance holding company shall not pay a dividend if there are reasonable grounds for believing that the insurance holding company is, or the payment would cause the insurance holding company to be, in contravention of a regulation referred to in subsection 992(1) or (2) or in a direction made under subsection 992(3).

Subordinated Indebtedness

Marginal note:Restriction on subordinated indebtedness

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

• Marginal note:References to subordinated indebtedness

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

• Marginal note:Other currencies

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

Security Certificates and Transfers

Marginal note:Sections 85 to 139 apply

763. Sections 85 to 139 apply in respect of insurance holding companies, subject to the following:

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

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

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

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

• (e) paragraph 92(1)(a) is to be read without reference to the words “other than section 427”;

• (f) the reference to “sections 142 to 145 and section 149” in subsection 97(1) is to be read as a reference to “sections 766 to 769 and 772”; and

• (g) the reference to “section 75 or 81” in subsection 101(3) is to be read as a reference to “section 754 or 759”.

Division 6Corporate Governance

Subdivision 1Shareholders

Place of Meetings

Marginal note:Place of meetings

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

Calling Meetings

Marginal note:Calling meetings

765. The directors of an insurance holding company

• (a) shall, after the meeting called under subsection 740(1), call the first annual meeting of shareholders of the insurance holding company, which meeting must be held not later than six months after the end of the first financial year of the insurance holding company;

• (b) shall subsequently call an annual meeting of shareholders, which meeting must be held not later than six months after the end of each financial year; and

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

Record Dates

Marginal note:Fixing record date

• 766. (1) For the purpose of determining

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

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

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

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

• Marginal note:Record date for meetings

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

• Marginal note:No record date fixed under subsection (1)

  (3) If no record date is fixed under subsection (1) for the determination of shareholders for any purpose for which a record date could have been fixed under that subsection, the record date for the determination of shareholders for that purpose is the date on which the directors pass the resolution relating to that purpose.

• Marginal note:No record date fixed for shareholders under subsection (2)

  (4) If no record date is fixed under subsection (2) for the determination of shareholders entitled to receive notice of a meeting, the record date for the determination of shareholders entitled to receive notice of, or to vote at, that meeting is

  • (a) the day immediately before the day on which the notice is given; or

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

• Marginal note:Notice of record date

  (5) Subject to subsection (6), where a record date is fixed for the determination of shareholders for any purpose, notice of the record date shall, not less than seven days before the record date, be given

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

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

• Marginal note:Exception

  (6) Notice of a record date need not be given where the requirement to give the notice is waived in writing by every holder of a share of the class or series affected by the fixing of the record date whose name is set out in the central securities register at the close of business on the day on which the directors fix the record date.

Notices of Meetings

Marginal note:Notice of meeting

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

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

  • (b) each director; and

  • (c) the auditor of the insurance holding company.

• Marginal note:Number of eligible votes

  (2) An insurance holding company in respect of which subsection 927(4) applies shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 793(1), that may be cast at the meeting as of the record date for determining the shareholders entitled to receive the notice of meeting, or, if there are to be separate votes of shareholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.

• Marginal note:Waiver of notice

  (3) An insurance holding company is not required under subsection (1) to send to a person notice of a meeting if the person waives notice of the meeting. That waiver may be in any manner.

• Marginal note:Attendance constitutes waiver

  (4) A person who attends a meeting of shareholders is deemed to have waived notice of the meeting, except where the person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

• Marginal note:Publication in newspaper

  (5) In addition to the notice required under subsection (1), where any class of shares of an insurance holding company is publicly traded on a recognized stock exchange in Canada, notice of the time and place of the 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 the place where the head office of the insurance holding company is situated and in each place in Canada where the insurance holding company has a transfer agent or where a transfer of the insurance holding company’s shares may be recorded.

• Marginal note:When notice not required

  (6) A notice of a meeting of shareholders is not required to be sent to shareholders who are not registered on the records of the insurance holding company or its transfer agent on the record date fixed or determined under subsection 766(2) or (4).

• Marginal note:Effect of default

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

Marginal note:Notice of adjourned meeting

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

• Marginal note:Notice after longer adjournment

  (2) If a meeting of shareholders is adjourned by one or more adjournments for a total of thirty days or more, notice of the continuation of the meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than ninety days, subsection 788(1) does not apply.

Marginal note:Special business

• 769. (1) All matters dealt with at a special meeting of shareholders or at an annual meeting of shareholders are deemed to be special business, except that special business does not include consideration of

  • (a) the financial statements;

  • (b) the auditor’s report;

  • (c) the election of directors; or

  • (d) the remuneration of directors and reappointment of the incumbent auditor.

• Marginal note:Notice of special business

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

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

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

Shareholder Proposals

Marginal note:Proposal

• 770. (1) A shareholder entitled to vote at an annual meeting of shareholders of an insurance holding company may

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

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

• Marginal note:Circulation of proposal

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

• Marginal note:Proponent’s statement

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

• Marginal note:Nominations for directors

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

• Marginal note:Conditions precedent for proposals

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

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

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

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

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

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

• Marginal note:Immunity for proposal and statement

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

Marginal note:Refusal of proposal

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

• Marginal note:Appeal to court

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

• Marginal note:Appeal to court

  (3) An insurance holding company or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the insurance holding company not to attach the proposal to the notice of the meeting, and the court, if it is satisfied that subsection 770(5) applies, may make such order as it thinks fit.

• Marginal note:Notice to Superintendent

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

Shareholder List

Marginal note:Shareholder list

• 772. (1) For each meeting of shareholders of an insurance holding company, the insurance holding company shall prepare a list, which may be in electronic form, of its shareholders entitled to receive notice of a meeting under paragraph 767(1)(a), arranged in alphabetical order and showing the number of shares held by each shareholder.

• Marginal note:Time to prepare list

  (2) If a record date is fixed under subsection 766(2), the list referred to in subsection (1) shall be prepared not later than ten days after that record date. If no record date is fixed under that subsection, the list shall be prepared

  • (a) at the close of business on the day before the day on which the notice of the meeting is given; or

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

• Marginal note:Effect of list

  (3) Except as otherwise provided in this Part, at a meeting to which a list prepared under subsection (1) relates, a person named in the list is entitled to vote the shares shown on the list opposite the person’s name unless

  • (a) the person has transferred the ownership of any of those shares after the record date fixed under subsection 766(2) or, if no record date is fixed, after the date on which the list was prepared, and

  • (b) the transferee of those shares

    • (i) produces properly endorsed share certificates, or

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

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

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

• Marginal note:Examination of list

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

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

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

Quorum

Marginal note:Shareholders

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

• Marginal note:Quorum at opening

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

• Marginal note:No quorum at opening

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

Marginal note:One shareholder meeting

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

Voting

Marginal note:One share — one vote

775. Subject to section 793, if a share of an insurance holding company entitles the holder of the share to vote at a meeting of shareholders, that share entitles the shareholder to one vote at the meeting.

Marginal note:Representative shareholder

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

• Marginal note:Powers of representative

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

Marginal note:Joint shareholders

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

Marginal note:Voting by hands or ballot

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

• Marginal note:Ballot

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

Resolution in lieu of Meeting

Marginal note:Resolution in lieu of meeting

• 779. (1) Except where a written statement is submitted by a director under section 809 or by an auditor under subsection 900(1),

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

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

• Marginal note:Filing resolution

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

Requisitioned Meetings

Marginal note:Requisitioned meeting

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

• Marginal note:Form

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

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

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

• Marginal note:Directors calling meeting

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

  • (a) a record date has been fixed under subsection 766(2) and notice thereof has been given under subsection 766(5);

  • (b) the directors have called a meeting of shareholders and have given notice thereof under section 767; or

  • (c) the business of the meeting as stated in the requisition includes matters described in paragraphs 770(5)(b) to (e).

• Marginal note:Shareholders’ power

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

• Marginal note:Procedure

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

• Marginal note:Reimbursement

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

Powers of the Court

Marginal note:Meeting called by court

• 781. (1) A court may order a meeting of shareholders of an insurance holding company to be called, held and conducted in such manner as the court directs where

  • (a) it is impracticable to call the meeting in the manner in which it is otherwise to be called;

  • (b) it is impracticable to conduct the meeting in the manner required by the by-laws and this Part; or

  • (c) the court thinks fit to make the order for any other reason.

• Marginal note:Who may apply for the order

  (2) The court may make that order on the application of

  • (a) the Superintendent;

  • (b) a director; or

  • (c) a shareholder entitled to vote at the meeting.

• Marginal note:Varying quorum

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

• Marginal note:Valid meeting

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

Marginal note:Court review of election

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

• Marginal note:Powers of court

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

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

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

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

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

Marginal note:Notice to Superintendent

• 783. (1) A person who makes an application under subsection 781(1) or 782(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.

• Marginal note:Superintendent representation

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

Pooling Agreements

Marginal note:Pooling agreement

784. A written agreement between two or more shareholders may provide that in exercising voting rights the shares held by them will be voted as provided in the agreement.

Subdivision 2Proxies and Restrictions on Voting

Proxies

Marginal note:Definitions

785. The following definitions apply in this Subdivision.

“registrant”

« courtier agréé »

“registrant” means a securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction.

“solicit” or “solicitation”

« sollicitation »

“solicit” or “solicitation” includes

• (a) a request for a proxy, whether or not accompanied by or included in a form of proxy,

• (b) a request to execute or not to execute a form of proxy or to revoke a proxy,

• (c) 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, and

• (d) the sending of a form of proxy to a shareholder under section 788,

but does not include

• (e) the sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder,

• (f) the performance of administrative acts or professional services on behalf of a person soliciting a proxy,

• (g) the sending by a registrant of the documents referred to in section 791, or

• (h) a 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 an insurance holding company”

« sollicitation effectuée par la direction d’une société de portefeuille d’assurances ou pour son compte »

“solicitation by or on behalf of the management of an insurance holding company” 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 insurance holding company.

Marginal note:Appointing proxyholder

• 786. (1) A 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.

• Marginal note:Execution of proxy

  (2) A form of proxy shall be executed by a shareholder or by a shareholder’s attorney authorized in writing to do so.

• Marginal note:Limit on authority

  (3) No 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 770(1).

• Marginal note:Required information

  (4) A 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.

• Marginal note:Validity of proxy

  (5) A proxy is valid only at the meeting in respect of which it is given or at a continuation of the meeting after an adjournment.

• Marginal note:Revocation of proxy

  (6) A shareholder may revoke a proxy

  • (a) by depositing an instrument in writing executed by the shareholder or by the shareholder’s attorney authorized in writing to do so

    • (i) at the head office of the insurance holding company at any time up to and including the last business day before the day of a meeting, or a continuation of a meeting after an adjournment, at which the proxy is to be used, or

    • (ii) with the chairperson of the meeting on the day of the meeting or a continuation of the meeting after an adjournment; or

  • (b) in any other manner permitted by law.

Marginal note:Deposit of proxies

• 787. (1) The 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 insurance holding company or its transfer agent.

• Marginal note:Time for deposit of proxies

  (2) The time specified for the deposit of forms of proxy may not precede the meeting or the continued meeting by more than forty-eight hours, excluding Saturdays and holidays.

Marginal note:Mandatory solicitation

• 788. (1) Subject to subsection 768(2) and subsection (2), the management of an insurance holding company shall, at the same time as they send notice of a meeting of shareholders, send a form of proxy in prescribed form to each shareholder entitled to receive notice of the meeting under section 767.

• Marginal note:Exception

  (2) If an insurance holding company has fewer than fifteen shareholders, the management of the insurance holding company is not required to send a form of proxy to the shareholders under subsection (1). For the purpose of this subsection, two or more joint shareholders are counted as one shareholder.

Marginal note:Soliciting proxies

• 789. (1) A person shall not solicit proxies unless

  • (a) in the case of solicitation by or on behalf of the management of an insurance holding company, 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 of the insurance holding company and to each shareholder whose proxy is solicited; and

  • (b) in 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 of the insurance holding company, to each shareholder whose proxy is solicited and to the insurance holding company.

• Marginal note:Copy to Superintendent

  (2) A person who sends a management proxy circular or dissident’s proxy circular shall at the same time file with the Superintendent

  • (a) in 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; and

  • (b) in 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.

• Marginal note:Exemption by Superintendent

  (3) On 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 788, and the exemption may be given retroactive effect.

• Marginal note:Reporting exemptions

  (4) The 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.

Marginal note:Attendance at meeting

• 790. (1) A person who solicits a proxy and is appointed proxyholder shall attend in person or cause an alternate proxyholder to attend every 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.

• Marginal note:Rights of proxyholder

  (2) A 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.

• Marginal note:Vote by show of hands

  (3) Where the chairperson of a meeting of shareholders declares to the meeting that, if a ballot were conducted, the total number of votes 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 in relation to any matter or group of matters is less than five per cent of all the votes that might be cast at the meeting on the ballot, unless a shareholder or proxyholder demands a ballot,

  • (a) the chairperson may conduct the vote in respect of that matter or group of matters by way of a show of hands; and

  • (b) a proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by way of a show of hands.

Marginal note:Duty of registrant

• 791. (1) Shares of an insurance holding company that are registered in the name of a registrant or registrant’s nominee and that are not beneficially owned by the registrant shall not be voted unless the registrant sends to the beneficial owner

  • (a) a copy of the notice of the meeting, annual statement, management proxy circular, 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; and

  • (b) a written request for voting instructions, except where the registrant has already received written voting instructions from the beneficial owner.

• Marginal note:When documents to be sent

  (2) The documents to be sent to the beneficial owner under subsection (1) shall be sent by the registrant without delay after the registrant receives the documents referred to in paragraph (1)(a).

• Marginal note:Where registrant not to vote shares

  (3) A registrant shall not vote or appoint a proxyholder to vote shares of an insurance holding company registered in the registrant’s name or in the name of the registrant’s nominee that the registrant does not beneficially own unless the registrant receives voting instructions from the beneficial owner.

• Marginal note:Copies

  (4) A person by or on behalf of whom a solicitation is made shall, at the request of a registrant, without delay provide the registrant, at that person’s expense, with the necessary number of copies of the documents referred to in paragraph (1)(a).

• Marginal note:Instructions to registrant

  (5) A registrant shall vote or appoint a proxyholder to vote any shares referred to in subsection (1) in accordance with any written voting instructions received from the beneficial owner.

• Marginal note:Beneficial owner as proxyholder

  (6) If requested by a beneficial owner, a registrant shall appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.

• Marginal note:Default of registrant — effect

  (7) The failure of a registrant to comply with any of subsections (1) to (6) does not render void any meeting of shareholders or any action taken at the meeting.

• Marginal note:Right of registrant limited

  (8) Nothing in this Subdivision gives a registrant the right to vote shares that the registrant is otherwise prohibited from voting.

Marginal note:Restraining order

• 792. (1) If 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 including

  • (a) an 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;

  • (b) an order requiring correction of any form of proxy or proxy circular and a further solicitation; and

  • (c) an order adjourning the meeting.

• Marginal note:Notice of application

  (2) Where a person other than the Superintendent is an applicant under subsection (1), the applicant shall give to the Superintendent notice of the application and the Superintendent is entitled to appear and to be heard in person or by counsel.

Restrictions on Voting

Meaning of “eligible votes”

• 793. (1) In 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).

• Marginal note:Restriction

  (2) At a meeting of shareholders of an insurance holding company in respect of which subsection 927(4) applies, 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 company, 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.

• Marginal note:Proxyholders

  (3) No 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).

• Marginal note:Exception

  (4) Subsections (2) and (3) do not apply in respect of a vote held under section 852.

• Marginal note:Validity of vote

  (5) A vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).

• Marginal note:Disposition of shareholdings

  (6) If, with respect to any insurance holding company, 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 insurance holding company beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the shareholder and the persons controlled by that shareholder that is specified in the order.

• Marginal note:Restriction on voting rights

  (7) If the Minister makes an order under subsection (6), 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 company beneficially owned by the person.

• Marginal note:Subsection (7) ceases to apply

  (8) Subsection (7) shall cease to apply in respect of a person when the shares to which the order relates have been disposed of.

• Marginal note:Reliance on number in notice

  (9) For 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 767(2).

• Marginal note:Designation of persons

  (10) For the purpose of this section, the Minister may, with respect to a particular insurance holding company, designate two or more persons who are parties to an agreement, commitment or understanding referred to in section 9 to be a single person.

Subdivision 3Directors and Officers

Duties

Marginal note:Duty to manage

• 794. (1) Subject to this Act, the directors of an insurance holding company shall manage or supervise the management of the business and affairs of the insurance holding company.

• Marginal note:Specific duties

  (2) Without limiting the generality of subsection (1), the directors of an insurance holding company shall

  • (a) establish an audit committee to perform the duties referred to in subsections 829(3) and (4);

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

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

  • (d) establish investment and lending policies, standards and procedures in accordance with section 968.

• Marginal note:Exception

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

  • (a) all the voting shares of the insurance holding company are beneficially owned by a Canadian financial institution described by any of paragraphs (a) to (d) of the definition “financial institution” in subsection 2(1); and

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

Marginal note:Duty of care

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

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

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

• Marginal note:Duty to comply

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

• Marginal note:No exculpation

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

Qualification and Number — Directors

Marginal note:Minimum number of directors

• 796. (1) An insurance holding company shall have at least seven directors.

• Marginal note:Residency requirement

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

Marginal note:Disqualified persons

797. The following persons are disqualified from being directors of an insurance holding company:

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

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

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

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

• (e) a person who is prohibited by subsection 793(7) or section 945 or 955 from exercising voting rights attached to shares of the insurance holding company;

• (f) a person who is an officer, director or full-time employee of an entity that is prohibited by subsection 793(7) or section 945 or 955 from exercising voting rights attached to shares of the insurance holding company;

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

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

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

Marginal note:No requirement to hold shares

798. A director of an insurance holding company is not required to hold shares of the insurance holding company.

Marginal note:Limit on directors

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

Election and Tenure — Directors

Marginal note:Number of directors

• 800. (1) Subject to subsection 796(1) and sections 803 and 851, the directors of an insurance holding company shall, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.

• Marginal note:Election at annual meeting

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

Marginal note:Term of directors

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

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

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

• Marginal note:No stated term

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

• Marginal note:Tenure of office

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

• Marginal note:Tenure of office

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

• Marginal note:Composition requirements

  (6) Where a director of an insurance holding company is elected or appointed for a term of more than one year, the insurance holding company shall comply with subsection 796(2) and section 799 at each annual meeting of shareholders during the director’s term of office as if that director were elected or appointed on that date.

Marginal note:Determining election of directors

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

• Marginal note:Equal number of votes

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

Marginal note:Cumulative voting

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

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

  • (b) each shareholder entitled to vote at an election of directors to be elected by cumulative voting 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 by cumulative voting, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;

  • (c) a separate vote shall be taken with respect to each candidate nominated for a position that is to be filled by cumulative voting unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;

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

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

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

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

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

• Marginal note:Mandatory cumulative voting

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

• Marginal note:Exception

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

  • (a) one person;

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

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

• Marginal note:Exception

  (4) Subsection (2) does not apply to an insurance holding company in respect of which subsection 927(4) applies.

• Marginal note:Transitional election

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

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

  • (b) at each succeeding annual meeting,

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

• Marginal note:Class or series of shares

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

Marginal note:Re-election of directors

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

Incomplete Elections and Director Vacancies

Marginal note:Void election or appointment

• 805. (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 796(2) or section 799, the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.

• Marginal note:Failure to elect minimum

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

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

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

Marginal note:Directors where elections incomplete or void

• 806. (1) Despite subsections 801(2) and (3) and paragraphs 803(1)(f) and 807(1)(a), where subsection 805(1) or (2) applies at the close of any meeting of shareholders of an insurance holding company, the board of directors shall, until their successors are elected or appointed, consist solely of

  • (a) where paragraph 805(2)(a) applies, the directors referred to in that paragraph; or

  • (b) where subsection 805(1) or paragraph 805(2)(b) applies, those persons who were the incumbent directors immediately before the meeting.

• Marginal note:Where there is no approved rectification plan

  (2) Despite subsections 801(2) and (3) and paragraphs 803(1)(f) and 807(1)(a), where a plan to rectify the non-compliance referred to in subsection 805(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.

• Marginal note:Directors to call meeting

  (3) Where subsection (1) or (2) applies, the board of directors referred to in that subsection shall without delay call a special meeting of shareholders to fill the vacancies, where paragraph 805(2)(a) applies, or elect a new board of directors, where subsection 805(1) or paragraph 805(2)(b) applies.

• Marginal note:Shareholder may call meeting

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

Marginal note:Ceasing to hold office

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

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

  • (b) when the director dies or resigns;

  • (c) when the director becomes disqualified under section 797 or ineligible to hold office pursuant to subsection 837(2);

  • (d) when the director is removed under section 808; or

  • (e) when the director is removed from office under section 1006 or 1007.

• Marginal note:Date of resignation

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

Marginal note:Removal of director

• 808. (1) Subject to paragraph 803(1)(g) and this section, the shareholders of an insurance holding company may by resolution at a special meeting remove any director or all the directors from office.

• Marginal note:Removal of director

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

• Marginal note:Vacancy by removal

  (3) Subject to paragraphs 803(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders at which the director is removed or, if not so filled, may be filled under section 812 or 813.

Marginal note:Statement of director

• 809. (1) A director who

  • (a) resigns,

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

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

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

• Marginal note:Statement to Superintendent

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

Marginal note:Circulation of statement

• 810. (1) An insurance holding company shall forthwith on receipt of a director’s statement referred to in subsection 809(1) relating to a matter referred to in paragraph 809(1)(b) or (c), or a director’s statement referred to in subsection 809(2), send a copy thereof to each shareholder entitled to receive a notice of meetings and to the Superintendent, unless the statement is attached to a notice of a meeting.

• Marginal note:Immunity for statement

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

Marginal note:Shareholders filling vacancy

811. The by-laws of an insurance holding company may provide that a vacancy among the directors is to be filled only by vote of

• (a) the shareholders; or

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

Marginal note:Directors filling vacancy

• 812. (1) Despite section 819 but subject to subsection (2) and sections 811 and 813, a quorum of directors may fill a vacancy among the directors except a vacancy among the directors resulting from a change in the by-laws by which the number or minimum number of directors is increased or from a failure to elect the number or minimum number of directors required by the by-laws.

• Marginal note:Where composition fails

  (2) Despite sections 811 and 819, 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 796 or 799, the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.

Marginal note:Class vacancy

813. Despite section 819 but subject to section 811, where the holders of any class or series of shares of an insurance holding company have an exclusive right to elect one or more directors and a vacancy occurs among those directors,

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

• (b) if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 796 or 799, the other directors may fill that vacancy; and

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

Marginal note:Unexpired term

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

Marginal note:Additional directors

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

• Marginal note:Term of office

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

• Marginal note:Limit on number appointed

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

Meetings of the Board

Marginal note:Meetings required

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

• Marginal note:Place for meetings

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

• Marginal note:Notice for meetings

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

Marginal note:Notice of meeting

• 817. (1) A notice of a meeting of directors shall specify each matter referred to in section 832 that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not otherwise specify the purpose of or the business to be transacted at the meeting.

• Marginal note:Waiver of notice

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

• Marginal note:Adjourned meeting

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

Marginal note:Quorum

• 818. (1) Subject to section 819, the number of directors referred to in subsection (2) constitutes a quorum at any meeting of directors or a committee of directors and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

• Marginal note:Quorum

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

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

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

• Marginal note:Director continues to be present

  (3) Any director present at a meeting of directors who is not present at any particular time during the meeting for the purposes of subsection 837(1) shall be considered as being present for the purposes of this section.

Marginal note:Resident Canadian majority

• 819. (1) The directors of an insurance holding company shall not transact business at a meeting of directors or of a committee of directors unless

  • (a) in the case of an insurance holding company that is the subsidiary of a foreign institution, at least one half, and

  • (b) in the case of any other insurance holding company, a majority

  of the directors present are resident Canadians.

• Marginal note:Exception

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

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

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

Marginal note:Electronic meeting

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

• Marginal note:Deemed present

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

Marginal note:Resolution outside board meeting

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

• Marginal note:Filing directors’ resolution

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

• Marginal note:Resolution outside committee meeting

  (3) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of a committee of directors, other than a resolution of the audit committee in carrying out its duties under subsection 829(3), is as valid as if it had been passed at a meeting of that committee.

• Marginal note:Filing committee resolution

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

Marginal note:Dissent of director

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

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

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

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

• Marginal note:Loss of right to dissent

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

• Marginal note:Dissent of absent director

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

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

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

Marginal note:Record of attendance

• 823. (1) An insurance holding company shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.

• Marginal note:Statement to shareholders

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

Marginal note:Meeting required by Superintendent

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

• Marginal note:Attendance of Superintendent

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

By-laws

Marginal note:By-laws

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

• Marginal note:Shareholder approval

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

• Marginal note:Effective date of by-law

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

• Marginal note:Effect where no shareholder approval

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

Marginal note:Shareholder proposal of by-law

826. A shareholder entitled to vote at an annual meeting of shareholders may, in accordance with sections 770 and 771, make a proposal to make, amend or repeal a by-law.

Marginal note:Deemed by-laws

• 827. (1) Any matter provided for in the incorporating instrument of a body corporate continued as an insurance holding company at the time of continuance that, under this Part, would be provided for in the by-laws of an insurance holding company is deemed to be provided for in the by-laws of the insurance holding company.

• Marginal note:By-law prevails

  (2) If a by-law of the insurance holding company made in accordance with sections 825 and 826 amends or repeals any matter referred to in subsection (1), the by-law prevails.

Committees of the Board

Marginal note:Committees

828. The directors of an insurance holding company may appoint from their number, in addition to the committees referred to in subsection 794(2), such other committees as they deem necessary and, subject to section 832, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.

Marginal note:Audit committee

• 829. (1) The audit committee of an insurance holding company shall consist of at least three directors.

• Marginal note:Membership

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

• Marginal note:Duties of audit committee

  (3) The audit committee of an insurance holding company shall

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

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

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

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

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

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

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

• Marginal note:Report

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

• Marginal note:Required meeting of directors

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

Directors and Officers — Authority

Marginal note:Chief executive officer

830. The directors of an insurance holding company shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 832, may delegate to that officer any of the powers of the directors.

Marginal note:Appointment of officers

• 831. (1) The directors of an insurance holding company may, subject to the by-laws, designate the offices of the insurance holding company, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 832, to manage the business and affairs of the insurance holding company.

• Marginal note:Directors as officers

  (2) Subject to section 799, a director of an insurance holding company may be appointed to any office of the insurance holding company.

• Marginal note:Two or more offices

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

Marginal note:Limits on power to delegate

832. The directors of an insurance holding company may not delegate any of the following powers, namely, the power to

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

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

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

• (d) declare a dividend;

• (e) authorize the redemption or other acquisition by the insurance holding company pursuant to section 754 of shares issued by the insurance holding company;

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

• (g) approve a management proxy circular;

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

• (i) adopt, amend or repeal by-laws.

Marginal note:Remuneration of directors, officers and employees

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

• Marginal note:By-law required

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

Marginal note:Validity of acts

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

• Marginal note:Validity of acts

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

Marginal note:Right to attend meetings

835. A director of an insurance holding company is entitled to attend and to be heard at every meeting of shareholders.

Conflicts of Interest

Marginal note:Disclosure of interest

• 836. (1) A director or an officer of an insurance holding company who

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

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

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

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

• Marginal note:Time of disclosure for director

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

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

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

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

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

• Marginal note:Time of disclosure for officer

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

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

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

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

• Marginal note:Time of disclosure for director or officer

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

Marginal note:Where director must abstain

• 837. (1) Where subsection 836(1) applies to a director in respect of a contract, the director shall not be present at any meeting of directors while the contract is being considered at the meeting or vote on any resolution to approve the contract unless the contract is

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

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

  • (c) a contract for indemnity under section 846 or for insurance under section 847; or

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

• Marginal note:Ineligibility

  (2) A 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 insurance holding company, any bank holding company or any financial institution that is incorporated or formed by or under an Act of Parliament.

• Marginal note:Validity of acts

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

Marginal note:Continuing disclosure

838. For the purposes of subsection 836(1), a general notice to the directors by a director or an officer declaring that the director or officer is a director or officer of an entity, or has a material interest in a person, and is to be regarded as interested in any contract made with that entity or person, is a sufficient declaration of interest in relation to any contract so made.

Marginal note:Avoidance standards

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

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

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

if the director or officer disclosed the interest in accordance with subsection 836(2), (3) or (4) or section 838 and the contract was approved by the directors or the shareholders and it was reasonable and fair to the insurance holding company at the time it was approved.

Marginal note:Application to court

840. Where a director or an officer of an insurance holding company fails to disclose an interest in a material contract in accordance with sections 836 and 838, a court may, on the application of the insurance holding company or a shareholder of the insurance holding company, set aside the contract on such terms as the court thinks fit.

Liability, Exculpation and Indemnification

Marginal note:Directors’ liability

• 841. (1) The directors of an insurance holding company who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 748(1) or the issue of subordinated indebtedness contrary to section 762 for a consideration other than money are jointly and severally liable to the insurance holding company to make good any amount by which the consideration received is less than the fair equivalent of the money that the insurance holding company would have received if the share or subordinated indebtedness had been issued for money on the date of the resolution.

• Marginal note:Further liabilities

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

  • (a) a redemption or purchase of shares contrary to section 754,

  • (b) a reduction of capital contrary to section 757,

  • (c) a payment of a dividend contrary to section 761, or

  • (d) a payment of an indemnity contrary to section 846

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

Marginal note:Contribution

• 842. (1) A director who has satisfied a judgment in relation to the director’s liability under section 841 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.

• Marginal note:Recovery

  (2) A director who is liable under section 841 is entitled to apply to a court for an order compelling a shareholder or other person to pay or deliver to the director any money or property that was paid or distributed to the shareholder or other person contrary to section 754, 757, 761 or 846.

• Marginal note:Court order

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

  • (a) order a shareholder or other person to pay or deliver to a director any money or property that was paid or distributed to the shareholder or other person contrary to section 754, 757, 761 or 846;

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

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

Marginal note:Limitation

843. An action to enforce a liability imposed by section 841 may not be commenced after two years from the date of the resolution authorizing the action complained of.

Marginal note:Liability for wages

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

• Marginal note:Conditions precedent

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

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

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

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

• Marginal note:Limitations

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

• Marginal note:Amount due after execution

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

• Marginal note:Subrogation of director

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

• Marginal note:Contribution entitlement

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

Marginal note:Reliance on statement

845. A director, an officer or an employee of an insurance holding company is not liable under subsection 795(1) or (2) or section 841 or 844 if the director, officer or employee relies in good faith on

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

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

Marginal note:Indemnification of directors and officers

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

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

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

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

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

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

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

• Marginal note:Indemnification in derivative action

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

• Marginal note:Right to indemnity

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

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

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

• Marginal note:Heirs

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

Marginal note:Directors’ and officers’ insurance

847. An insurance holding company may purchase and maintain insurance for the benefit of any person referred to in section 846 against any liability incurred by the person

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

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

Marginal note:Application to court for indemnification

• 848. (1) An insurance holding company or a person referred to in section 846 may apply to a court for an order approving an indemnity under that section and the court may so order and make any further order it thinks fit.

• Marginal note:Notice to Superintendent

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

• Marginal note:Other notice

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

Subdivision 4Fundamental Changes

Amendments — Letters Patent

Marginal note:Incorporating instrument

849. On the application of an insurance holding company duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Part to be set out in the incorporating instrument of the insurance holding company.

Marginal note:Letters patent to amend

• 850. (1) On receipt of an application referred to in section 849, the Minister may issue letters patent to effect the proposal.

• Marginal note:Effect of letters patent

  (2) Letters patent issued pursuant to subsection (1) become effective on the day stated in the letters patent.

Amendments — By-laws

Marginal note:By-laws

• 851. (1) The directors of an insurance holding company may make, amend or repeal any by-laws, in the manner set out in subsections (2) and (3) and sections 852 to 856, to

  • (a) change the maximum number, if any, of shares of any class that the insurance holding company is authorized to issue;

  • (b) create new classes of shares;

  • (c) change the designation of any or all of the insurance holding company’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 insurance holding company’s shares, whether issued or unissued;

  • (d) 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;

  • (e) 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;

  • (f) 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;

  • (g) authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series;

  • (h) revoke, diminish or enlarge any authority conferred under paragraphs (f) and (g);

  • (i) increase or decrease the number of directors, subject to subsection 796(1) and section 803;

  • (j) change the name of the insurance holding company; or

  • (k) change the place in Canada where the head office of the insurance holding company is to be situated.

• Marginal note:Shareholder approval

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

• Marginal note:Effective date of by-law

  (3) A 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 by-laws referred to in paragraph (1)(j), approved by the Superintendent in writing.

Marginal note:Class vote

• 852. (1) The 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 to

  • (a) increase 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;

  • (b) effect an exchange, reclassification or cancellation of all or part of the shares of that class;

  • (c) 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,

    • (i) remove or change prejudicially rights to accrued dividends or rights to cumulative dividends,

    • (ii) add, remove or change prejudicially redemption rights,

    • (iii) reduce or remove a dividend preference or a liquidation preference, or

    • (iv) add, remove or change prejudicially conversion privileges, options, voting, transfer or pre-emptive rights, or rights to acquire securities of the insurance holding company, or sinking fund provisions;

  • (d) increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of that class;

  • (e) create a new class of shares equal or superior to the shares of that class;

  • (f) 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; or

  • (g) effect an exchange or create a right of exchange of all or part of the shares of another class into the shares of that class.

• Marginal note:Right limited

  (2) The 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.

• Marginal note:Right to vote

  (3) Subsections (1) and (2) apply whether or not the shares of a class otherwise carry the right to vote.

Marginal note:Separate resolutions

853. A proposed addition or amendment to the by-laws referred to in subsection 852(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.

Marginal note:Revoking resolution

854. Where a special resolution referred to in subsection 851(2) so states, the directors may, without further approval of the shareholders, revoke the special resolution.

Marginal note:Proposal to amend

• 855. (1) Subject to subsection (2), a director or a shareholder who is entitled to vote at an annual meeting of shareholders of an insurance holding company may, in accordance with sections 770 and 771, make a proposal to make an application referred to in section 849 or to make, amend or repeal the by-laws referred to in subsection 851(1) of the insurance holding company.

• Marginal note:Notice of amendment

  (2) Notice of a meeting of shareholders at which a proposal to amend the incorporating instrument or to make, amend or repeal the by-laws of an insurance holding company to effect any of the changes referred to in subsection 851(1) is to be considered must set out the proposal.

Marginal note:Rights preserved

856. No amendment to the incorporating instrument or by-laws of an insurance holding company affects an existing cause of action or claim or liability to prosecution in favour of or against the insurance holding company or its directors or officers, or any civil, criminal or administrative action or proceeding to which the insurance holding company or any of its directors or officers are a party.

Amalgamation

Marginal note:Application to amalgamate

857. On the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including a company or an insurance holding company but not including a mutual company, the Minister may issue letters patent amalgamating and continuing the applicants as one insurance holding company.

Marginal note:Amalgamation agreement

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

• Marginal note:Contents of agreement

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

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

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

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

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

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

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

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

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

• Marginal note:Cross ownership of shares

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

Marginal note:Approval of agreement by Minister

859. An amalgamation agreement shall be submitted to the Minister for approval. Any approval of the agreement under subsection 860(4) by the shareholders of an applicant is invalid unless, before the date of the approval, the Minister approves the agreement in writing.

Marginal note:Approval by shareholders

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

• Marginal note:Right to vote

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

• Marginal note:Class vote

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

• Marginal note:Special resolution

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

• Marginal note:Termination

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

Marginal note:Vertical short-form amalgamation

• 861. (1) An insurance holding company may, without complying with sections 858 to 860, amalgamate with one or more bodies corporate that

  • (a) are incorporated by or under an Act of Parliament, and

  • (b) are wholly-owned subsidiaries of the insurance holding company

  if

  • (c) the amalgamation is approved by a resolution of the directors of the insurance holding company and of each amalgamating subsidiary, and

  • (d) the resolutions provide that

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

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

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

• Marginal note:Horizontal short-form amalgamation

  (2) Two or more bodies corporate that

  • (a) are incorporated by or under an Act of Parliament, and

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

  may amalgamate and continue as one insurance holding company without complying with sections 858 to 860 if

  • (c) at least one of the applicants is an insurance holding company,

  • (d) the amalgamation is approved by a resolution of the directors of each of the applicants, and

  • (e) the resolutions provide that

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

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

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

Marginal note:Joint application to Minister

• 862. (1) Subject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 860(5), the applicants shall, within three months after the approval of the agreement in accordance with subsection 860(4) or the approval of the directors in accordance with subsection 861(1) or (2), jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one insurance holding company.

• Marginal note:Conditions precedent to application

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

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

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

• Marginal note:Application of sections 709 to 711

  (3) Where two or more bodies corporate, none of which is an insurance holding company, apply for letters patent under subsection (1), sections 709 to 711 apply in respect of the application with such modifications as the circumstances require.

• Marginal note:Matters for consideration

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

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

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

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

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

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

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

  • (g) if the insurance holding company is an insurance holding company in respect of which subsection 927(5) applies or an insurance holding company in respect of which subsection 927(6) applied at any time, the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated insurance holding company and its affiliates may affect the supervision and regulation of any company that will be its subsidiary, having regard to

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

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

    and

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

• Marginal note:Restriction

  (5) The Minister may not, before January 1, 2002, issue letters patent under section 863 amalgamating a converted company in respect of which subsection 407(4) or (11) applies, a company to which subsection 407(5) or (12) applies or an insurance holding company to which subsection 407(6) or (13) applies with any other body corporate.

• Marginal note:Restriction

  (6) If one of the applicants for letters patent of amalgamation is a converted company in respect of which subsection 407(4) applies, or a company to which subsection 407(5) applies or an insurance holding company to which subsection 407(6) applies, the Minister may not issue the letters patent of amalgamation unless the amalgamated insurance holding company is widely held.

• Marginal note:Deeming

  (7) If one of the applicants for letters patent of amalgamation is a converted company in respect of which subsection 407(4) applies, a company to which subsection 407(5) applies or an insurance holding company to which subsection 407(6) applies and the letters patent of amalgamation are issued, the amalgamated insurance holding company is deemed to be an insurance holding company in respect of which subsection 927(4) applies.

Marginal note:Issue of letters patent

• 863. (1) Where an application has been made to the Minister in accordance with section 862, the Minister may issue letters patent of amalgamation continuing the applicants as one insurance holding company.

• Marginal note:Letters patent

  (2) Where letters patent are issued pursuant to this section, section 713 applies with such modifications as the circumstances require in respect of the issue of the letters patent.

• Marginal note:Publication of notice

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

Marginal note:Court enforcement

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

• Marginal note:Appeal

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

Marginal note:Effect of letters patent

• 865. (1) On the day provided for in the letters patent issued under section 863,

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

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

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

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

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

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

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

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

• Marginal note:Minutes

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

Marginal note:Transitional

• 866. (1) Despite any other provision of this Act or the regulations, the Minister may, by order, on the recommendation of the Superintendent, grant to an insurance holding company in respect of which letters patent were issued under subsection 863(1) permission to

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

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

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

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

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

• Marginal note:Duration of exceptions

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

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

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

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

• Marginal note:Renewal

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

• Marginal note:Limitation

  (4) The Minister shall not grant to an insurance holding company any permission

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

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

Transfer of Business

Marginal note:Shareholder approval

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

• Marginal note:Notice of meeting

  (2) A notice of a meeting of shareholders complying with sections 767 and 769 shall be sent in accordance with those sections to each shareholder and shall include or be accompanied by a copy or summary of the agreement of sale, lease or exchange.

• Marginal note:Shareholder approval

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

• Marginal note:Right to vote

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

• Marginal note:Class vote

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

• Marginal note:Special resolution

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

• Marginal note:Abandoning transaction

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

Subdivision 5Head Office and Corporate Records

Marginal note:Head office

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

• Marginal note:Change of head office

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

• Marginal note:Notice of change of address

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

Marginal note:Insurance holding company records

• 869. (1) An insurance holding company shall prepare and maintain records containing

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

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

  • (c) the information referred to in paragraphs 994(1)(a) and (c) to (g) contained in all returns provided to the Superintendent under section 994; and

  • (d) particulars of exceptions granted under section 725 or 866 that are from time to time applicable to the insurance holding company.

• Marginal note:Additional records

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

  • (a) corporate accounting records; and

  • (b) records containing minutes of meetings and resolutions of the directors and any committee thereof.

• Marginal note:Continued insurance holding companies

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

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

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

Marginal note:Place of records

• 870. (1) The records described in section 869 shall be kept at the head office of the insurance holding company or at such other place in Canada as the directors think fit.

• Marginal note:Notice of place of records

  (2) Where any of the records described in section 869 are not kept at the head office of an insurance holding company, the insurance holding company shall notify the Superintendent of the place where the records are kept.

• Marginal note:Inspection

  (3) The records described in section 869 shall at all reasonable times be open to inspection by the directors.

• Marginal note:Access to insurance holding company records

  (4) Shareholders and creditors of an insurance holding company and their personal representatives may examine the records referred to in subsection 869(1) during the usual business hours of the insurance holding company, and may take extracts therefrom, free of charge, or have copies made thereof on payment of a reasonable fee and, where the insurance holding company is a distributing insurance holding company within the meaning of subsection 288(1), any other person may, on payment of a reasonable fee, examine such records and take extracts therefrom or copies thereof.

• Marginal note:Copies of by-laws for shareholders

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

• Marginal note:Electronic access

  (6) An insurance holding company may make the information contained in records referred to in subsection 869(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.

Marginal note:Shareholder lists

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

• Marginal note:Affidavit and contents

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

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

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

  • (c) an undertaking that the basic list and any supplemental lists obtained pursuant to subsections (5) and (6) will not be used except as permitted under section 873,

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

• Marginal note:Entitlement

  (3) Every shareholder or creditor of an insurance holding company or the personal representative of a shareholder or creditor of an insurance holding company is entitled to a basic list of shareholders of the insurance holding company, but, if the insurance holding company is a distributing company within the meaning of subsection 288(1), any person is entitled to a basic list of shareholders of the insurance holding company on request therefor.

• Marginal note:Basic list of shareholders

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

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

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

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

• Marginal note:Supplemental lists

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

• Marginal note:When supplemental lists to be furnished

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

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

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

Marginal note:Option holders

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

Marginal note:Use of shareholder list

873. A list of shareholders obtained under section 871 shall not be used by any person except in connection with

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

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

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

Marginal note:Form of records

• 874. (1) A register or other record required or authorized by this Part to be prepared and maintained by an insurance holding company

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

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

• Marginal note:Conversion of records

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

• Marginal note:Destruction of converted records

  (3) Despite section 877, an insurance holding company may destroy any register or other record referred to in subsection (1) at any time after the register or other record has been converted to another form.

Marginal note:Protection of records

875. An insurance holding company and its agents shall take reasonable precautions to

• (a) prevent loss or destruction of,

• (b) prevent falsification of entries in,

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

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

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

Marginal note:Location and processing of information

• 876. (1) Subject to subsection (3), an insurance holding company shall maintain and process in Canada information or data relating to the preparation and maintenance of the records referred to in section 869 unless the Superintendent has, subject to any terms and conditions that the Superintendent considers appropriate, exempted the insurance holding company from the application of this section.

• Marginal note:Copies

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

• Marginal note:Information for Superintendent

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

• Marginal note:Processing information in Canada

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

• Marginal note:Insurance holding company to comply

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

• Marginal note:Guidelines

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

Marginal note:Retention of records

877. An insurance holding company shall retain

• (a) the records of the insurance holding company referred to in subsection 869(1);

• (b) any record of the insurance holding company referred to in paragraph 869(2)(a) or (b); and

• (c) the central securities register referred to in subsection 271(1).

Marginal note:Regulations

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

Subdivision 6Securities Registers

Marginal note:Sections 271 to 277 apply

879. Sections 271 to 277 apply in respect of insurance holding companies, subject to the following:

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

• (b) the reference to “Subsection 262(5) and sections 266 to 268” in subsection 271(3) is to be read as a reference to “Subsection 870(4) and sections 874 to 876”; and

• (c) the reference to “subsection 73(1)” in section 277 is to be read as a reference to “subsection 752(1)”.

Subdivision 7Corporate Name and Seal

Marginal note:Publication of name

880. An insurance holding company shall set out its name in legible characters in all contracts, 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 insurance holding company.

Marginal note:Corporate seal

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

Subdivision 8Insiders

Marginal note:Sections 288 to 295 apply

882. Sections 288 to 295 apply in respect of insurance holding companies, subject to the following:

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

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

• (c) references to “this Division” in those sections are to be read as references to “this Subdivision”.

Subdivision 9Prospectus

Marginal note:Sections 296 to 306 apply

883. Sections 296 to 306 apply in respect of insurance holding companies, subject to the following:

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

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

• (c) references to “this Division” in those sections are to be read as references to “this Subdivision”.

Subdivision 10Compulsory Acquisitions

Marginal note:Sections 307 to 316 apply

884. Sections 307 to 316 apply in respect of insurance holding companies, subject to the following:

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

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

Subdivision 11Trust Indentures

Marginal note:Sections 317 to 329 apply

885. Sections 317 to 329 apply in respect of insurance holding companies, subject to the following:

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

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

• (c) references to “this Division” in those sections are to be read as references to “this Subdivision”; and

• (d) references to “subordinated indebtedness” in those sections are to be read as references to “subordinated indebtedness” as defined in subsection 700(1).

Subdivision 12Financial Statements

Marginal note:Financial year

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

• Marginal note:First financial year

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

Marginal note:Annual financial statement

• 887. (1) The directors of an insurance holding company shall place before the shareholders at every annual meeting

  • (a) a comparative annual financial statement relating separately to

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

    • (ii) the financial year, if any, immediately preceding the financial year referred to in subparagraph (i);

  • (b) the report of the auditor of the insurance holding company; and

  • (c) any further information respecting the financial position of the insurance holding company and the results of its operations required by the by-laws of the insurance holding company to be placed before the shareholders at the annual meeting.

• Marginal note:Contents of annual statement

  (2) An annual statement of an insurance holding company must contain, with respect to each of the financial years to which it relates,

  • (a) a balance sheet as at the end of the financial year,

  • (b) a statement of income for the financial year,

  • (c) a statement of change of financial position for the financial year, and

  • (d) a statement of changes in shareholders’ equity for the financial year,

  showing such information and particulars as in the opinion of the directors are necessary to present fairly, in accordance with the accounting principles referred to in subsection (4), the financial position of the insurance holding company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the insurance holding company for that financial year.

• Marginal note:Additional information

  (3) An insurance holding company shall include with its annual statement

  • (a) a list of the subsidiaries of the insurance holding company, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 975 or pursuant to a realization of security in accordance with section 976 and which the insurance holding company would not otherwise be permitted to hold, showing, with respect to each subsidiary,

    • (i) its name and the address of its head or principal office,

    • (ii) the book value of the aggregate of any shares of the subsidiary beneficially owned by the insurance holding company and by other subsidiaries of the insurance holding company, and

    • (iii) the percentage of the voting rights attached to all the outstanding voting shares of the subsidiary that is carried by the aggregate of any voting shares of the subsidiary beneficially owned by the insurance holding company and by other subsidiaries of the insurance holding company; and

  • (b) such other information as may be prescribed in such form as may be prescribed.

• Marginal note:Accounting principles

  (4) The financial statements referred to in subsection (1), paragraph (3)(a) and subsection 889(1) shall, except as otherwise specified by the Superintendent, be prepared in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants. A reference in any provision of this Act to the accounting principles referred to in this subsection shall be construed as a reference to those generally accepted accounting principles with any specifications so made.

• Marginal note:Actuarial practices

  (5) The valuation of the amount, if any, shown in the balance sheet that is included in the annual statement of an insurance holding company in respect of the actuarial and other policy liabilities of the insurance holding company shall be in accordance with generally accepted actuarial practice with such changes as may be determined by the Superintendent and any additional directions that may be made by the Superintendent.

• Marginal note:Regulations

  (6) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).

Marginal note:Approval by directors

• 888. (1) The directors of an insurance holding company shall approve the annual statement and the approval of the directors shall be evidenced by the signature of

  • (a) the chief executive officer or, in the event of that officer’s absence or inability to act, any other officer of the insurance holding company authorized by the directors to sign in the stead of the chief executive officer; and

  • (b) one director, if the signature required by paragraph (a) is that of a director, or two directors if the signature required by that paragraph is that of an officer who is not a director.

• Marginal note:Condition precedent to publication

  (2) An insurance holding company shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).

Marginal note:Statements — subsidiaries

• 889. (1) An insurance holding company shall keep at its head office a copy of the current financial statements of each subsidiary of the insurance holding company.

• Marginal note:Examination

  (2) Subject to this section, the shareholders of an insurance holding company and their personal representatives may, on request therefor, examine the statements referred to in subsection (1) during the usual business hours of the insurance holding company and may take extracts therefrom free of charge.

• Marginal note:Barring examination

  (3) An insurance holding company may refuse to permit an examination under subsection (2) by any person.

• Marginal note:Application for order

  (4) Within fifteen days after a refusal under subsection (3), the insurance holding company shall apply to a court for an order barring the right of the person concerned to make an examination under subsection (2) and the court shall either order the insurance holding company to permit the examination or, if it is satisfied that the examination would be detrimental to the insurance holding company or to any other body corporate the financial statements of which would be subject to examination, bar the right and make any further order it thinks fit.

• Marginal note:Notice to Superintendent

  (5) An insurance holding company shall give the Superintendent and the person seeking to examine the statements referred to in subsection (1) notice of an application to a court under subsection (4), and the Superintendent and the person may appear and be heard in person or by counsel at the hearing of the application.

Marginal note:Distribution of annual statement

• 890. (1) An insurance holding company shall, not later than twenty-one days before the date of each annual meeting or before the signing of a resolution under paragraph 779(1)(b) in lieu of the annual meeting, send a copy of the documents referred to in subsections 887(1) and (3) to each shareholder at the shareholder’s recorded address, unless that time period is waived by the shareholder.

• Marginal note:Exception

  (2) An insurance holding company is not required to comply with subsection (1) with respect to shareholders who have informed the insurance holding company, in writing, that they do not wish to receive the annual statement.

• Marginal note:Effect of default

  (3) Where an insurance holding company is required to comply with subsection (1) and the insurance holding company does not comply with that subsection, the annual meeting at which the annual statement is to be considered shall be adjourned until that subsection has been complied with.

Marginal note:Copy to Superintendent

• 891. (1) Subject to subsection (2), an insurance holding company shall send to the Superintendent a copy of the documents referred to in subsections 887(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the insurance holding company.

• Marginal note:Later filing

  (2) If an insurance holding company’s shareholders sign a resolution under paragraph 779(1)(b) in lieu of an annual meeting, the insurance holding company shall send a copy of the documents referred to in subsections 887(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.

Subdivision 13Auditors

Interpretation

Marginal note:Definitions

892. The following definitions apply in this Subdivision.

“firm of accountants”

« cabinet de comptables »

“firm of accountants” means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting.

“member”

« membre »

“member”, in relation to a firm of accountants, means

• (a) an accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting; or

• (b) an accountant who is an employee of a firm of accountants.

Appointment

Marginal note:Appointment of auditor

• 893. (1) The shareholders of an insurance holding company shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting, appoint a firm of accountants to be the auditor of the insurance holding company until the close of the next annual meeting.

• Marginal note:Remuneration of auditor

  (2) The remuneration of the auditor may be fixed by ordinary resolution of the shareholders but, if not so fixed, shall be fixed by the directors.

Qualifications

Marginal note:Qualification of auditor

• 894. (1) A firm of accountants is qualified to be an auditor of an insurance holding company if

  • (a) two or more members of the firm are accountants who

    • (i) are members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,

    • (ii) have at least five years experience at a senior level in performing audits of a financial institution,

    • (iii) are ordinarily resident in Canada, and

    • (iv) are independent of the insurance holding company; and

  • (b) the member of the firm who is jointly designated by the firm and the insurance holding company to conduct the audit of the insurance holding company on behalf of the firm is qualified in accordance with paragraph (a).

• Marginal note:Independence

  (2) For the purposes of subsection (1),

  • (a) independence is a question of fact; and

  • (b) a member of a firm of accountants is deemed not to be independent of an insurance holding company if that member or any other member of the firm of accountants, or the firm of accountants,

    • (i) is a director or an officer or employee of the insurance holding company or of any affiliate of the insurance holding company or is a business partner of any director, officer or employee of the insurance holding company or of any affiliate of the insurance holding company,

    • (ii) beneficially owns or controls, directly or indirectly, a material interest in the shares of the insurance holding company or of any affiliate of the insurance holding company, or

    • (iii) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the insurance holding company within the two years immediately preceding the person’s proposed appointment as auditor of the insurance holding company, other than an affiliate that is a subsidiary of the insurance holding company acquired pursuant to section 975 or through a realization of a security pursuant to section 976.

• Marginal note:Notice of designation

  (3) Within fifteen days after the appointment of a firm of accountants as auditor of an insurance holding company, the insurance holding company and the firm of accountants shall jointly designate a member of the firm who meets the qualifications described in subsection (1) to conduct the audit of the insurance holding company on behalf of the firm and the insurance holding company shall forthwith notify the Superintendent in writing of the designation.

• Marginal note:New designation

  (4) Where for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the insurance holding company, the insurance holding company and the firm of accountants may jointly designate another member of the same firm of accountants who meets the qualifications described in subsection (1) to conduct the audit of the insurance holding company and the insurance holding company shall forthwith notify the Superintendent in writing of the designation.

• Marginal note:Deemed vacancy

  (5) In any case where subsection (4) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit of the insurance holding company, there shall be deemed to be a vacancy in the office of auditor of the insurance holding company.

Marginal note:Duty to resign

• 895. (1) An auditor that ceases to be qualified under section 894 shall resign without delay after any member of the firm of accountants becomes aware that the firm has ceased to be so qualified.

• Marginal note:Disqualification order

  (2) Any interested person may apply to a court for an order declaring that an auditor of an insurance holding company has ceased to be qualified under section 894 and declaring the office of auditor to be vacant.

Vacancies

Marginal note:Revocation of appointment

• 896. (1) The shareholders of an insurance holding company may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.

• Marginal note:Revocation of appointment

  (2) The Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 893(1) or section 898 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the insurance holding company addressed to the usual place of business of the auditor and the insurance holding company.

• Marginal note:Filling vacancy

  (3) A vacancy created by the revocation of the appointment of an auditor under subsection (1) may be filled at the meeting at which the appointment was revoked and, if not so filled, shall be filled by the directors under section 898.

Marginal note:Ceasing to hold office

• 897. (1) An auditor of an insurance holding company ceases to hold office when

  • (a) the auditor resigns; or

  • (b) the appointment of the auditor is revoked by the shareholders or the Superintendent.

• Marginal note:Effective date of resignation

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

Marginal note:Filling vacancy

• 898. (1) Subject to subsection 896(3), where a vacancy occurs in the office of auditor of an insurance holding company, the directors shall forthwith fill the vacancy, and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.

• Marginal note:Where Superintendent may fill vacancy

  (2) Where the directors fail to fill a vacancy in accordance with subsection (1), the Superintendent may fill the vacancy and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.

• Marginal note:Designation of member of firm

  (3) Where the Superintendent has, pursuant to subsection (2), appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit of the insurance holding company on behalf of the firm.

Marginal note:Right to attend meetings

• 899. (1) The auditor of an insurance holding company is entitled to receive notice of every meeting of shareholders and, at the expense of the insurance holding company, to attend and be heard at those meetings on matters relating to the duties of the auditor.

• Marginal note:Duty to attend meeting

  (2) If a director or a shareholder of an insurance holding company, whether or not the shareholder is entitled to vote at the meeting, gives written notice, not less than ten days before a meeting of shareholders, to an auditor or former auditor of the insurance holding company that the director or shareholder wishes the auditor’s attendance at the meeting, the auditor or former auditor shall attend the meeting at the expense of the insurance holding company and answer questions relating to the auditor’s or former auditor’s duties as auditor.

• Marginal note:Notice to insurance holding company

  (3) A director or shareholder who gives notice under subsection (2) shall send concurrently a copy of the notice to the insurance holding company and the insurance holding company shall forthwith send a copy thereof to the Superintendent.

• Marginal note:Superintendent may attend

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

Marginal note:Statement of auditor

• 900. (1) An auditor of an insurance holding company who

  • (a) resigns,

  • (b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of revoking the appointment of the auditor, or

  • (c) receives a notice or otherwise learns of a meeting of directors or shareholders at which another person is to be appointed in the auditor’s 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 insurance holding company and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.

• Marginal note:Statement to be sent to shareholders

  (2) Where an insurance holding company receives a written statement referred to in subsection (1) that relates to a resignation as a result of a disagreement with the directors or officers of the insurance holding company or that relates to a matter referred to in paragraph (1)(b) or (c), the insurance holding company shall forthwith send a copy of the statement to each shareholder who is entitled to vote at the annual meeting of shareholders.

Marginal note:Duty of replacement auditor

• 901. (1) If an auditor of an insurance holding company has resigned or the appointment of an auditor has been revoked, no firm shall accept an appointment or consent to be appointed as auditor of the insurance holding company until the firm has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.

• Marginal note:Exception

  (2) Despite subsection (1), a firm may accept an appointment or consent to be appointed as auditor of an insurance holding company if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.

• Marginal note:Effect of non-compliance

  (3) Unless subsection (2) applies, an appointment as auditor of an insurance holding company is void if subsection (1) has not been complied with.

Examinations and Reports

Marginal note:Auditor’s examination

• 902. (1) The auditor of an insurance holding company shall make such examination as the auditor considers necessary to enable the auditor to report on the annual statement and on other financial statements required by this Part to be placed before the shareholders, except such annual statements or parts thereof as relate to the period referred to in subparagraph 887(1)(a)(ii).

• Marginal note:Auditing standards

  (2) The auditor’s examination referred to in subsection (1) shall, except as otherwise specified by the Superintendent, be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants.

Marginal note:Right to information

• 903. (1) On the request of the auditor of an insurance holding company, the present or former directors, officers, employees or representatives of the insurance holding company shall, to the extent that they are reasonably able to do so,

  • (a) permit access to such records, assets and security held by the insurance holding company or any entity in which the insurance holding company has a substantial investment, and

  • (b) provide such information and explanations

  as are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of auditor of the insurance holding company.

• Marginal note:Directors to provide information

  (2) On the request of the auditor of an insurance holding company, the directors of the insurance holding company shall, to the extent that they are reasonably able to do so,

  • (a) obtain from the present or former directors, officers, employees and representatives of any entity in which the insurance holding company has a substantial investment the information and explanations that such persons are reasonably able to provide and that are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of auditor of the insurance holding company; and

  • (b) provide the auditor with the information and explanations so obtained.

• Marginal note:No civil liability

  (3) A person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.

Marginal note:Auditor’s report and extended examination

• 904. (1) The Superintendent may, in writing, require that the auditor of an insurance holding company report to the Superintendent on the extent of the auditor’s procedures in the examination of the annual statement and may, in writing, require that the auditor enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.

• Marginal note:Special examination

  (2) The Superintendent may, in writing, require that the auditor of an insurance holding company make a particular examination to determine whether any procedures adopted by the insurance holding company may be prejudicial to the interests of depositors, policyholders or creditors of any federal financial institution that is affiliated with the insurance holding company, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent thereon.

• Marginal note:Special examination

  (3) The Superintendent may direct that a special audit of an insurance holding company be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose a firm of accountants qualified under subsection 894(1) to be an auditor of the insurance holding company.

• Marginal note:Expenses payable by insurance holding company

  (4) The expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the insurance holding company on being approved in writing by the Superintendent.

Marginal note:Auditor’s report

• 905. (1) The auditor shall, not less than twenty-one days before the date of the annual meeting of the shareholders of the insurance holding company, make a report in writing to them on the annual statement.

• Marginal note:Audit for shareholders

  (2) In each report required under subsection (1), the auditor shall state whether, in the auditor’s opinion, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 887(4), the financial position of the insurance holding company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the insurance holding company for that financial year.

• Marginal note:Auditor’s remarks

  (3) In each report referred to in subsection (2), the auditor shall include such remarks as the auditor considers necessary when

  • (a) the examination has not been made in accordance with the auditing standards referred to in subsection 902(2);

  • (b) the annual statement has not been prepared on a basis consistent with that of the preceding financial year; or

  • (c) the annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 887(4), the financial position of the insurance holding company as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the insurance holding company for that financial year.

Marginal note:Report on directors’ statement

• 906. (1) The auditor of an insurance holding company shall, if required by the shareholders, audit and report to them on any financial statement submitted to them by the directors, and the report shall state whether, in the auditor’s opinion, the financial statement presents fairly the information required by the shareholders.

• Marginal note:Sending report

  (2) A report of the auditor made under subsection (1) shall be attached to the financial statement to which it relates and a copy of the statement and report shall be sent by the directors to every shareholder and to the Superintendent.

Marginal note:Auditor of subsidiaries

• 907. (1) An insurance holding company shall take all necessary steps to ensure that its auditor is duly appointed as the auditor of each of its subsidiaries.

• Marginal note:Subsidiary outside Canada

  (2) Subsection (1) applies in the case of a subsidiary that carries on its operations in a country other than Canada unless the laws of that country do not permit the appointment of the auditor of the insurance holding company as the auditor of that subsidiary.

• Marginal note:Exception

  (3) Subsection (1) does not apply in respect of any particular subsidiary where the insurance holding company, after having consulted its auditor, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the insurance holding company.

Marginal note:Auditor’s attendance

• 908. (1) The auditor of an insurance holding company is entitled to receive notice of every meeting of the audit committee of the insurance holding company and, at the expense of the insurance holding company, to attend and be heard at that meeting.

• Marginal note:Attendance

  (2) If so requested by a member of the audit committee, the auditor shall attend every meeting of the audit committee held during the member’s term of office.

Marginal note:Calling meeting

• 909. (1) The auditor of an insurance holding company or a member of the audit committee may call a meeting of the audit committee.

• Marginal note:Right to interview

  (2) The chief internal auditor of an insurance holding company or any officer or employee of the insurance holding company acting in a similar capacity shall, at the request of the auditor of the insurance holding company and on receipt of reasonable notice, meet with the auditor.

Marginal note:Notice of errors

• 910. (1) A director or an officer of an insurance holding company shall forthwith notify the audit committee and the auditor of the insurance holding company of any error or misstatement of which the director or officer becomes aware in an annual statement or other financial statement on which the auditor or any former auditor has reported.

• Marginal note:Error noted by auditor

  (2) If the auditor or a former auditor of an insurance holding company is notified or becomes aware of an error or misstatement in an annual statement or other financial statement on which the auditor reported and in the auditor’s opinion the error or misstatement is material, the auditor or former auditor shall inform each director of the insurance holding company accordingly.

• Marginal note:Duty of directors

  (3) Where under subsection (2) the auditor or a former auditor of an insurance holding company informs the directors of an error or misstatement in an annual statement or other financial statement, the directors shall

  • (a) prepare and issue a revised annual statement or financial statement; or

  • (b) otherwise inform the shareholders and the Superintendent of the error or misstatement.

Qualified Privilege

Marginal note:Qualified privilege for statements

911. Any oral or written statement or report made under this Part by the auditor or a former auditor of an insurance holding company has qualified privilege.

Subdivision 14Remedial Actions

Marginal note:Derivative action

• 912. (1) Subject to subsection (2), a complainant or the Superintendent may apply to a court for leave to bring an action under this Part in the name and on behalf of an insurance holding company or any of its subsidiaries, or to intervene in an action under this Part to which the insurance holding company or a subsidiary of the insurance holding company is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the insurance holding company or the subsidiary.

• Marginal note:Conditions precedent

  (2) No action may be brought and no intervention in an action may be made under subsection (1) by a complainant unless the court is satisfied that

  • (a) the complainant has given reasonable notice to the directors of the insurance holding company or the subsidiary of the complainant’s intention to apply to the court under that section if the directors of the insurance holding company or its subsidiary do not bring, diligently prosecute or defend or discontinue the action;

  • (b) the complainant is acting in good faith; and

  • (c) it appears to be in the interests of the insurance holding company or the subsidiary that the action be brought, prosecuted, defended or discontinued.

• Marginal note:Notice to Superintendent

  (3) A 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.

Marginal note:Powers of court

• 913. (1) In connection with an action brought or intervened in under subsection 912(1), the court may at any time make any order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order authorizing the Superintendent, the complainant or any other person to control the conduct of the action;

  • (b) an order giving directions for the conduct of the action;

  • (c) an order directing that any amount adjudged payable by a defendant in the action be paid, in whole or in part, directly to former and present security holders of the insurance holding company who are entitled to participate in its profits or of the subsidiary instead of to the insurance holding company or to the subsidiary; and

  • (d) an order requiring the insurance holding company or the subsidiary to pay reasonable legal fees incurred by the Superintendent or the complainant in connection with the action.

• Marginal note:Jurisdiction

  (2) Despite subsection (1), the court may not make any order in relation to any matter that would, under this Part, require the approval of the Minister or the Superintendent.

Marginal note:Status of shareholder approval

• 914. (1) An application made or an action brought or intervened in under this Subdivision 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 insurance holding company or its subsidiary has been or might be approved by the shareholders of the insurance holding company or subsidiary or both, but evidence of approval by the shareholders may be taken into account by the court in making an order under section 913.

• Marginal note:Court approval to discontinue

  (2) An application made or an action brought or intervened in under this Subdivision 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.

Marginal note:No security for costs

• 915. (1) A complainant is not required to give security for costs in any application made or any action brought or intervened in under subsection 912(1) or section 916.

• Marginal note:Interim costs

  (2) In an application made or an action brought or intervened in under this Subdivision, the court may at any time order the insurance holding company 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.

Marginal note:Application to rectify records

• 916. (1) If 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 or any other record of an insurance holding company, the insurance holding company, a security holder of the insurance holding company or any aggrieved person may apply to a court for an order that the securities register or record be rectified.

• Marginal note:Notice to Superintendent

  (2) An 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.

• Marginal note:Powers of court

  (3) In connection with an application under this section, the court may make any order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order requiring the securities register or other record of the insurance holding company to be rectified;

  • (b) an order restraining an insurance holding company from calling or holding a meeting of shareholders or paying a dividend to shareholders before the rectification;

  • (c) 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 securities register or records of the insurance holding company, whether the issue arises between two or more security holders or alleged security holders, or between the insurance holding company and any security holder or alleged security holder; and

  • (d) an order compensating a party who has incurred a loss.

Subdivision 15Liquidation and Dissolution

Interpretation

Definition of “court”

917. In this Subdivision, “court” means a court having jurisdiction in the place where the insurance holding company has its head office.

Application

Marginal note:Application of Subdivision

• 918. (1) This Subdivision does not apply to an insurance holding company that is an insolvent person or a bankrupt as those terms are defined in subsection 2(1) of the Bankruptcy and Insolvency Act.

• Marginal note:Staying proceedings on insolvency

  (2) Any proceedings taken under this Subdivision to dissolve or to liquidate and dissolve an insurance holding company shall be stayed if the insurance holding company is at any time found in a proceeding under the Bankruptcy and Insolvency Act to be an insolvent person as defined in subsection 2(1) of that Act.

• Marginal note:Winding-up and Restructuring Act does not apply

  (3) The Winding-up and Restructuring Act does not apply to an insurance holding company.

Marginal note:Returns to Superintendent

919. A liquidator appointed under this Subdivision to wind up the business of an insurance holding company shall provide the Superintendent with such information relating to the business and affairs of the insurance holding company in such form as the Superintendent requires.

Simple Liquidation

Marginal note:No property and no liabilities

• 920. (1) An insurance holding company that has no property and no liabilities may, if authorized by a special resolution of the shareholders or, if there are no shareholders, by a resolution of all the directors, apply to the Minister for letters patent dissolving the insurance holding company.

• Marginal note:Dissolution by letters patent

  (2) Where 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 insurance holding company.

• Marginal note:Effect of letters patent

  (3) An insurance holding company in respect of which letters patent are issued under subsection (2) ceases to exist on the day stated in the letters patent.

Marginal note:Proposing liquidation

• 921. (1) The voluntary liquidation and dissolution of an insurance holding company, other than an insurance holding company referred to in subsection 920(1),

  • (a) may be proposed by its directors; or

  • (b) may 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 770 and 771.

• Marginal note:Terms must be set out

  (2) A notice of any meeting of shareholders at which the voluntary liquidation and dissolution of an insurance holding company is to be proposed shall set out the terms of the proposal.

Marginal note:Shareholders’ resolution

922. Where the voluntary liquidation and dissolution of an insurance holding company is proposed, the insurance holding company may apply to the Minister for letters patent dissolving the insurance holding company if authorized by a special resolution of the shareholders or, where the insurance holding company 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.

Marginal note:Approval of Minister required

• 923. (1) No action directed toward the voluntary liquidation and dissolution of an insurance holding company shall be taken by an insurance holding company, other than as provided in sections 921 and 922, until an application made by the insurance holding company pursuant to section 922 has been approved by the Minister.

• Marginal note:Conditional approval

  (2) Where the Minister is satisfied on the basis of an application made under section 922 that the circumstances warrant the voluntary liquidation and dissolution of an insurance holding company, the Minister may approve the application.

• Marginal note:Effect of approval

  (3) Where the Minister has approved an application made pursuant to section 922 with respect to an insurance holding company, the insurance holding company shall not carry on business except to the extent necessary to complete its voluntary liquidation.

• Marginal note:Liquidation process

  (4) Where the Minister has approved an application made pursuant to section 922 with respect to an insurance holding company, the insurance holding company shall

  • (a) cause notice of the approval to be sent to each known claimant against and creditor of the insurance holding company;

  • (b) 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 insurance holding company transacted any business within the preceding twelve months;

  • (c) proceed to collect its property, dispose of property that is not to be distributed in kind to its shareholders, discharge or provide for all its obligations and do all other acts required to liquidate its business; and

  • (d) after 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.

Marginal note:Dissolution instrument

• 924. (1) Unless a court has made an order in accordance with subsection 385(1), the Minister may, if satisfied that the insurance holding company has complied with subsection 923(4) and that all the circumstances so warrant, issue letters patent dissolving the insurance holding company.

• Marginal note:Insurance holding company dissolved

  (2) An insurance holding company 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

Marginal note:Sections 385 to 406 apply

925. Sections 385 to 406 apply in respect of insurance holding companies, subject to the following:

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

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

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

• (d) those sections are to be read without reference to “policyholder”;

• (e) the reference to “subsection 331(1)” in paragraph 391(1)(i) is to be read as a reference to “subsection 887(1)”; and

• (f) the reference to “section 668” in subsection 400(2) is to be read as a reference to “section 994”.

Division 7Ownership

Marginal note:Section 406.1 applies

926. Section 406.1 applies in respect of insurance holding companies.

Marginal note:Constraining acquisition

• 927. (1) No person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of an insurance holding company or purchase or otherwise acquire control of any entity that holds any share of an insurance holding company if

  • (a) the acquisition would cause the person to have a significant interest in any class of shares of the insurance holding company; or

  • (b) where the person has a significant interest in a class of shares of the insurance holding company, the acquisition would increase the significant interest of the person in that class of shares.

• Marginal note:Amalgamation, etc., constitutes acquisition

  (2) Where, as a result of an amalgamation, merger or reorganization, the entity that results therefrom would have a significant interest in a class of shares of an insurance holding company, that entity shall be deemed to be acquiring a significant interest in that class of shares of the insurance holding company through an acquisition for which the approval of the Minister is required pursuant to subsection (1).

• Marginal note:Exemption

  (3) On application by an insurance holding company, other than an insurance holding company in respect of which subsection (4) or (6) applies, the Superintendent may exempt from the application of subsection (1) and section 934 any class of non-voting shares of the insurance holding company if the aggregate book value of the shares of the class is not more than 30 per cent of the aggregate book value of all the outstanding shares of the insurance holding company.

• Marginal note:Limitations on share holdings

  (4) Despite subsection (1), no person may be a major shareholder of an insurance holding company to which subsection 407(6) applies.

• Marginal note:Exception

  (5) Subsection (4) no longer applies in respect of any particular insurance holding company if the Minister makes an order under subsection 407(8) determining that subsection 407(4) no longer applies in respect of a converted company controlled by the insurance holding company.

• Marginal note:Limitations on share holdings

  (6) Despite subsection (1), until a day that is two years after December 31, 1999, no person may have a significant interest in any class of shares of an insurance holding company to which subsection 407(13) applies.

Marginal note:Major shareholder

• 928. (1) If an insurance holding company in respect of which subsection 927(4) applies controls a life company and a person becomes a major shareholder of the life company or of any entity that also controls the life company, the insurance holding company must to do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the life company or entity that controls the life company,

  • (a) the insurance holding company no longer controls the life company; or

  • (b) the life company or the entity that controls the life company does not have any major shareholder other than the insurance holding company or any entity that the insurance holding company controls.

• Marginal note:Exemption

  (2) Subsection (1) does not apply in respect of a life company with equity of less than two hundred and fifty million dollars, or any other amount that may be prescribed.

• Marginal note:Extension

  (3) If general market conditions so warrant and the Minister is satisfied that the insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Major shareholder

• 928.1 (1) Despite subsection 928(1), if an insurance holding company in respect of which subsection 927(4) applies controls a life company in respect of which subsection 928(1) does not apply by reason of subsection 928(2) and the equity of the life company reaches two hundred and fifty million dollars or more or any other amount that is prescribed and on the day the equity of the life company 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 life company or of any entity that also controls the life company, the insurance holding company must do all things necessary to ensure that, on the day that is three years after that day,

  • (a) the insurance holding company no longer controls the life company; or

  • (b) the life company or the entity that controls the life company does not have any major shareholder other than the insurance holding company or any entity that the insurance holding company controls.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Significant interest

• 929. (1) If an insurance holding company in respect of which subsection 927(6) applies controls a life company and a person acquires a significant interest in any class of shares of the life company or of any entity that also controls the life company, the insurance holding company must to do all things necessary to ensure that, on the day that is one year after the person acquired the significant interest in the class of shares of the life company or entity that controls the life company,

  • (a) the insurance holding company no longer controls the life company; or

  • (b) no person has a significant interest in any class of shares of the life company or the entity that controls the life company, other than the insurance holding company or any entity that the insurance holding company controls.

• Marginal note:Exemption

  (2) Subsection (1) does not apply in respect of a life company with equity of less than two hundred and fifty million dollars, or any other amount that may be prescribed.

• Marginal note:Extension

  (3) If general market conditions so warrant and the Minister is satisfied that the insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Prohibition against significant interest

930. No person who has a significant interest in any class of shares of a widely held insurance holding company in respect of which subsection 927(4) applies may have a significant interest in any class of shares of a subsidiary of the insurance holding company that is a life company or an insurance holding company.

Marginal note:Prohibition against significant interest

931. No person who has a significant interest in any class of shares of an insurance holding company may have a significant interest in any class of shares of

• (a) a widely held converted company in respect of which subsection 407(4) applies that controls the insurance holding company;

• (b) a widely held company to which subsection 407(5) applies that controls the insurance holding company; or

• (c) a widely held insurance holding company in respect of which subsection 407(6) applies that controls the insurance holding company.

Marginal note:No acquisition of control without approval

932. No person shall acquire control, within the meaning of paragraph 3(1)(d), of an insurance holding company without the prior approval of the Minister.

Marginal note:Prohibition against control

933. Despite section 932, no person shall control, within the meaning of paragraph 3(1)(d), an insurance holding company in respect of which subsection 927(4) or (6) applies.

Marginal note:Constraining registration

934. No insurance holding company shall, unless the acquisition of the share has been approved by the Minister, record in its securities register a transfer or issue of any share of the insurance holding company to any person or to any entity controlled by a person if

• (a) the transfer or issue of the share would cause the person to have a significant interest in any class of shares of the insurance holding company; or

• (b) where the person has a significant interest in a class of shares of the insurance holding company, the transfer or issue of the share would increase the significant interest of the person in that class of shares of the insurance holding company.

Marginal note:Exception for small holdings

935. Despite section 934, if, as a result of a transfer or issue of shares of a class of shares of an insurance holding company to a person, the total number of shares of that class registered in the securities register of the insurance holding company in the name of that person

• (a) would not exceed five thousand, and

• (b) would not exceed 0.1 per cent of the outstanding shares of that class,

the insurance holding company is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the insurance holding company as a result of that issue or transfer of shares.

Marginal note:Where approval not required

• 936. (1) Despite subsections 927(1) and (2) and section 934, the approval of the Minister is not required in respect of an insurance holding company, other than an insurance holding company in respect of which subsection 927(4) applies, if a person with a significant interest in a class of shares of the insurance holding company or an entity controlled by a person with a significant interest in a class of shares of the insurance holding company purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the insurance holding company to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.

• Marginal note:Percentage

  (2) Subject to subsection (3), for the purposes of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the insurance holding company on the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the insurance holding company, or of control of an entity that held shares of that class of shares of the insurance holding company, for which approval was given by the Minister.

• Marginal note:When approval not required

  (3) If a person has a significant interest in a class of shares of an insurance holding company and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the insurance holding company, or of control of an entity that held shares of that class of shares of the insurance holding company, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of

  • (a) 5 percentage points in excess of the significant interest of the person in that class of shares of the insurance holding company on the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the insurance holding company, or of control of an entity that held shares of that class of shares of the insurance holding company, for which approval was given by the Minister, and

  • (b) 10 percentage points in excess of the lowest significant interest of the person in that class of shares of the insurance holding company at any time after the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the insurance holding company, or of control of an entity that held shares of that class of shares of the insurance holding company, for which approval was given by the Minister.

• Marginal note:Exception

  (4) Subsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection would

  • (a) result in the acquisition of control of the insurance holding company by the person referred to in that subsection;

  • (b) where the person controls the insurance holding company but the voting rights attached to the aggregate of any voting shares of the insurance holding company beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the insurance holding company, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the insurance holding company;

  • (c) result in the acquisition of a significant interest in a class of shares of the insurance holding company by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; or

  • (d) result in an increase in a significant interest in a class of shares of the insurance holding company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable, and the increase is not exempted by the regulations.

• Marginal note:Regulations

  (5) The Governor in Council may make regulations

  • (a) exempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the insurance holding company by an entity controlled by the person; and

  • (b) exempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the insurance holding company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.

Marginal note:When approval not required

• 937. (1) Despite subsections 927(1) and (2) and section 934, the approval of the Minister is not required if

  • (a) the Superintendent has, by order, directed the insurance holding company to increase its capital and shares of the insurance holding company are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or

  • (b) a person who controls, within the meaning of paragraph 3(1)(a), the insurance holding company acquires additional shares of the insurance holding company.

• Marginal note:Exception

  (2) Paragraph (1)(a) does not apply in respect of an insurance holding company in respect of which subsection 927(4) or (6) applies.

• Marginal note:Pre-approval

  (3) For the purposes of subsections 927(1) and (2) and section 934, the Minister may approve

  • (a) the purchase or other acquisition of such number or percentage of shares of an insurance holding company as may be required in a particular transaction or series of transactions; or

  • (b) the purchase or other acquisition of up to a specified number or percentage of shares of an insurance holding company within a specified period.

Marginal note:Public holding requirement

• 938. (1) Every insurance holding company shall, from and after the day determined under this section in respect of that insurance holding company, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the insurance holding company and that are

  • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

  • (b) shares none of which is beneficially owned by a person who is a major shareholder of the insurance holding company in respect of the voting shares of the insurance holding company or by any entity that is controlled by a person who is a major shareholder of the insurance holding company in respect of such shares.

• Marginal note:Determination of day

  (2) If the insurance holding company has equity of one billion dollars or more on the day it comes into existence, the day referred to in subsection (1) is the day that is three years after that day and, in the case of any other insurance holding company, the day referred to in subsection (1) is the day that is three years after the day of the first annual meeting of the shareholders of the insurance holding company held after the equity of the insurance holding company first reaches one billion dollars.

• Marginal note:Extension

  (3) If general market conditions so warrant and the Minister is satisfied that an insurance holding company has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the insurance holding company must comply with subsection (1).

Marginal note:Limit on assets

• 939. (1) Unless an exemption order with respect to the insurance holding company is granted under section 941, if an insurance holding company fails to comply with section 938 in any month, the Minister may, by order, require the insurance holding company not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the insurance holding company’s average total assets in the three month period ending on the last day of the month immediately preceding the month specified in the order.

• Marginal note:Average total assets

  (2) For the purposes of subsection (1), the average total assets of an insurance holding company in a three month period shall be computed by adding the total assets of the insurance holding company as calculated for the month end of each of the three months in the period and by dividing the sum by three.

Marginal note:Increase of capital

940. Where the Superintendent has, by order, directed an insurance holding company to increase its capital and shares of the insurance holding company are issued and acquired in accordance with such terms and conditions as may be specified in the order, section 938 shall not apply in respect of the insurance holding company until such time as the Superintendent may, by order, specify.

Marginal note:Exemption by order of Minister

• 941. (1) An entity that controls an insurance holding company and that is

  • (a) an insurance holding company that is in compliance with section 938,

  • (b) a widely held bank,

  • (c) a bank that would be in compliance with section 938 if it were an insurance holding company,

  • (d) a widely held bank holding company,

  • (e) a bank holding company that would be in compliance with section 938 if it were an insurance holding company,

  • (f) a body corporate to which the Trust and Loan Companies Act applies that would be in compliance with section 938 if it were an insurance holding company,

  • (g) a company that would be in compliance with section 938 if it were an insurance holding company,

  • (h) a mutual company,

  • (i) an association to which the Cooperative Credit Associations Act applies,

  • (j) a body corporate that is incorporated and regulated by or under an Act of the legislature of a province and that is a mutual insurance corporation,

  • (k) a cooperative credit society regulated by or under an Act of the legislature of a province,

  • (l) a foreign institution, or

  • (m) a body corporate incorporated or formed by or under an Act of Parliament or of the legislature of a province whose activities, and those of any entities that it controls, are, in the opinion of the Minister, when viewed as a whole, primarily financial,

  may apply to the Minister to exempt the insurance holding company from the requirements of section 938.

• Marginal note:Terms and conditions

  (2) In the case of an entity referred to in any of paragraphs (1)(a) to (l), the Minister may grant the exemption referred to in subsection (1) subject to such terms and conditions as the Minister considers appropriate.

• Marginal note:Terms and conditions

  (3) In the case of a holding body corporate referred to in paragraph (1)(m), the Minister may grant the exemption referred to in subsection (1) only if the Minister is satisfied that the holding body corporate will, if the exemption is granted, submit to and comply with sections 803 and 938 as though the holding body corporate were an insurance holding company and the Minister may grant the exemption subject to such terms and conditions as the Minister considers appropriate.

• Marginal note:Effect of order

  (4) Subject to subsection (5) and to such terms and conditions as are set out in an exemption order granted under this section, an insurance holding company in respect of which an exemption order is granted need not comply with section 938.

• Marginal note:Expiration of exemption order

  (5) The Minister may, by order, direct that an exemption order granted under this section in respect of an insurance holding company shall expire if

  • (a) the entity that applied for the exemption order ceases to control the insurance holding company;

  • (b) in the opinion of the Minister, the activities of the holding body corporate referred to in paragraph (1)(m) that applied for the exemption order, whether carried on directly or through entities that it controls, are no longer primarily financial;

  • (c) the holding body corporate referred to in paragraph (1)(m) that applied for the exemption order ceases to comply with section 803 or 938; or

  • (d) there is a breach of any term or condition set out in the exemption order.

• Marginal note:Compliance with section 938

  (6) Where an exemption order granted under this section expires, the insurance holding company in respect of which the exemption order was granted shall comply with section 938 as of the day the exemption order expires.

• Marginal note:Limit on assets

  (7) Where an insurance holding company fails to comply with section 938 on the day referred to in subsection (6), the insurance holding company shall not, until it complies with section 938, have average total assets in any three month period ending on the last day of a subsequent month exceeding the insurance holding company’s average total assets in the three month period ending on the last day of the month immediately preceding the day referred to in subsection (6) or such later day as the Minister may, by order, specify.

• Marginal note:Application of subsection 939(2)

  (8) Subsection 939(2) applies for the purposes of subsection (7).

Marginal note:Exception

• 942. (1) If an insurance holding company fails to comply with section 938 as the result of any of the following, section 939 does not apply in respect of that insurance holding company until the expiration of six months after the day the insurance holding company failed to comply with section 938:

  • (a) a distribution to the public of voting shares of the insurance holding company;

  • (b) a redemption or purchase of voting shares of the insurance holding company;

  • (c) the exercise of any option to acquire voting shares of the insurance holding company; or

  • (d) the conversion of any convertible securities into voting shares of the insurance holding company.

• Marginal note:Shares acquiring voting rights

  (2) If as the result of an event that has occurred and is continuing, shares of an insurance holding company acquire voting rights in such number as to cause the insurance holding company to no longer be in compliance with section 938, section 939 does not apply in respect of that insurance holding company until the expiration of six months after the day the insurance holding company ceased to be in compliance with section 938 or such later day as the Minister may, by order, specify.

• Marginal note:Exemption

  (3) If a holding body corporate referred to in subsection 941(3) fails to comply with section 938 as the result of any of the following, paragraph 941(5)(c) does not apply in respect of that holding body corporate until the expiration of six months after the day the holding body corporate failed to comply with section 938:

  • (a) a distribution to the public of voting shares of the holding body corporate;

  • (b) a redemption or purchase of voting shares of the holding body corporate;

  • (c) the exercise of any option to acquire voting shares of the holding body corporate; or

  • (d) the conversion of any convertible securities into voting shares of the holding body corporate.

• Marginal note:Shares acquiring voting rights

  (4) If, as the result of an event that has occurred and is continuing, shares of a holding body corporate referred to in subsection 941(3) acquire voting rights in such number as to cause the holding body corporate to no longer be in compliance with section 938, paragraph 941(5)(c) does not apply in respect of that holding body corporate until the expiration of six months after the day the holding body corporate ceased to be in compliance with section 938 or such later day as the Minister may, by order, specify.

Marginal note:Acquisition of control permitted

• 943. (1) Subject to subsection (2) and sections 934 and 944, section 938 does not apply in respect of an insurance holding company if a person acquires control of an insurance holding company with equity of one billion dollars or more through the purchase or other acquisition of all or any number of the shares of the insurance holding company by the person or by any entity controlled by the person.

• Marginal note:Undertaking required

  (2) Subsection (1) applies only if the person provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the insurance holding company has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the insurance holding company and that are

  • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

  • (b) shares none of which is beneficially owned by a person who is a major shareholder of the insurance holding company in respect of the voting shares of the insurance holding company or by any entity that is controlled by a person who is a major shareholder of the insurance holding company in respect of such shares.

Marginal note:Application of section 938

944. At the expiration of the period for compliance with an undertaking referred to in subsection 943(2), section 938 applies in respect of the insurance holding company.

Marginal note:Restriction on voting rights

• 945. (1) If, with respect to any insurance holding company, a particular person contravenes subsection 927(1), (4) or (6) or section 930, 931, 932 or 933 or fails to comply with an undertaking referred to in subsection 943(2) or with any term or condition imposed under section 948, no person, and no entity controlled by the particular person, shall, in person or by proxy, exercise any voting rights

  • (a) that are attached to shares of the insurance holding company beneficially owned by the particular person or any entity controlled by the particular person; or

  • (b) that are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.

• Marginal note:Subsection (1) ceases to apply

  (2) Subsection (1) ceases to apply in respect of a person when, as the case may be,

  • (a) the shares to which the contravention relates have been disposed of;

  • (b) the person ceases to control the insurance holding company within the meaning of paragraph 3(1)(d);

  • (c) if the person failed to comply with an undertaking referred to in subsection 943(2), the insurance holding company complies with section 938; or

  • (d) if the person failed to comply with a term or condition imposed under section 948, the person complies with the term or condition.

• Marginal note:Saving

  (3) Despite subsection (1), if a person contravenes subsection 927(4) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the insurance holding company beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the insurance holding company, the Minister may, after a consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the insurance holding company beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.

Marginal note:Application for approval

• 946. (1) An application for an approval of the Minister required under this Division must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.

• Marginal note:Applicant

  (2) If, with respect to any particular transaction, this Division applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.

Marginal note:Matters for consideration

• 947. (1) Subject to subsection (2), if an application for an approval under section 927 is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, including

  • (a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for any company that is a subsidiary of the insurance holding company;

  • (b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of any company that is a subsidiary of the insurance holding company;

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

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

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

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

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

• Marginal note:Exception

  (2) Subject to section 933, the Minister shall take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holding

  • (a) more than 10 per cent but no more than 20 per cent of any class of the outstanding voting shares of an insurance holding company in respect of which subsection 927(4) applies; or

  • (b) more than 10 per cent but no more than 30 per cent of any class of the outstanding non-voting shares of such an insurance holding company.

• Marginal note:National treatment

  (3) Where a transaction in respect of which subsection 927(1) or (2) applies would cause an insurance holding company to become a subsidiary of a foreign institution that is engaged in the insurance business, that does not have any other insurance holding company as its subsidiary and that is a non-WTO Member foreign institution, the Minister shall not approve the transaction unless the Minister is satisfied that treatment as favourable for insurance holding companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign institution principally carries on business, either directly or through a subsidiary.

• Marginal note:Part XII of the Bank Act

  (4) Nothing in subsection (1) or (3) affects the operation of Part XII of the Bank Act.

Marginal note:Terms and conditions

948. The Minister may impose any terms and conditions in respect of an approval given under this Division that the Minister considers necessary to ensure compliance with any provision of this Act.

Marginal note:Certifying receipt of application

• 949. (1) If, in the opinion of the Superintendent, an application filed under this Division contains all the required information, the Superintendent shall without delay refer the application to the Minister and send a receipt to the applicant certifying the date on which the completed application was received by the Superintendent.

• Marginal note:Incomplete application

  (2) If, in the opinion of the Superintendent, an application filed under this Division is incomplete, the Superintendent shall send a notice to the applicant specifying the information required by the Superintendent to complete the application.

Marginal note:Notice of decision to applicant

• 950. (1) Subject to subsections (2) and (3) and 951(1), the Minister shall, within a period of thirty days after the certified date referred to in subsection 949(1), send to the applicant

  • (a) a notice approving the transaction to which the application relates; or

  • (b) where the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

• Marginal note:Notice

  (2) Subject to subsections (4) and 951(2), if an application involves the acquisition of control of an insurance holding company, the Minister shall, within a period of forty-five days after the certified date referred to in subsection 949(1), send to the applicant

  • (a) a notice approving the transaction to which the application relates; or

  • (b) where the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

• Marginal note:Extension of period for notice

  (3) Where the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall,

  • (a) within that period, send a notice to that effect to the applicant; and

  • (b) within a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within such other further period as may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.

• Marginal note:Extension of period for notice

  (4) Where the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.

Marginal note:Reasonable opportunity to make representations

• 951. (1) Where, after receipt of the notice referred to in paragraph 950(1)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister shall provide the applicant with a reasonable opportunity within a period of thirty days after the date of the notice, or within such further period as may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

• Marginal note:Reasonable opportunity to make representations

  (2) Where, after receipt of the notice referred to in paragraph 950(2)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister shall provide the applicant with a reasonable opportunity within a period of forty-five days after the date of the notice, or within such further period as may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

Marginal note:Notice of decision

• 952. (1) Within a period of thirty days after the expiration of the period for making representations referred to in subsection 951(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

• Marginal note:Notice of decision

  (2) Within a period of forty-five days after the expiration of the period for making representations referred to in subsection 951(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

Marginal note:Deemed approval

953. Where the Minister does not send a notice under subsection 950(1) or (3) or 952(1) within the period provided for in those subsections, the Minister is deemed to have approved the transaction to which the application relates.

Marginal note:Constraining registration — Crown and foreign governments

• 954. (1) No insurance holding company shall record in its securities register a transfer or issue of any share of the insurance holding company to

  • (a) Her Majesty in right of Canada or of a province or any agent or agency of Her Majesty in either of those rights; or

  • (b) the government of a foreign country or any political subdivision thereof, or any agent or agency thereof.

• Marginal note:Exception

  (2) Notwithstanding subsection (1), an insurance holding company that is a subsidiary of a foreign institution that is controlled by the government of a foreign country or any political subdivision thereof, or any agency thereof, may register a transfer or issue of a share or shares of the insurance holding company to the foreign institution or to any subsidiary of the foreign institution.

Marginal note:Suspension of voting rights held by governments

955. Notwithstanding section 775, where any voting shares of an insurance holding company are beneficially owned by

• (a) Her Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights, or

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

no person shall, in person or by proxy, exercise the voting rights attached to those shares.

Marginal note:Disposition of shareholdings

• 956. (1) If, with respect to any insurance holding company, a person contravenes subsection 927(1), (4) or (6) or section 930, 931, 932 or 933 or fails to comply with an undertaking referred to in subsection 943(2) or with any term or condition imposed under section 948, the Minister may, if the Minister considers it in the public interest to do so, by order, direct that person and any person controlled by that person to dispose of such number of shares of the insurance holding company beneficially owned by any of those persons as the Minister specifies in the order, within such time as the Minister specifies therein and in such proportion, if any, as between the person and the persons controlled by that person as is specified in the order.

• Marginal note:Representations

  (2) No direction shall be made under subsection (1) unless the Minister has provided each person to whom the direction relates and the insurance holding company concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.

• Marginal note:Appeal

  (3) Any person with respect to whom a direction has been made under subsection (1) may, within thirty days after the date of the direction, appeal the matter in accordance with section 1020.

Marginal note:Application to court

• 957. (1) Where a person fails to comply with a direction made under subsection 956(1), an application on behalf of the Minister may be made to a court for an order to enforce the direction.

• Marginal note:Court order

  (2) A court may, on an application under subsection (1), make such order as the circumstances require to give effect to the terms of the direction and may, without limiting the generality of the foregoing, require the insurance holding company concerned to sell the shares that are the subject-matter of the direction.

• Marginal note:Appeal

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

Marginal note:Interest of securities underwriter

958. This Division does not apply to a securities underwriter in respect of shares of a body corporate or ownership interests in an unincorporated entity that are acquired by the underwriter in the course of a distribution to the public of those shares or ownership interests and that are held by the underwriter for a period of not more than six months.

Marginal note:Arrangements to effect compliance

• 959. (1) The directors of an insurance holding company may make such arrangements as they deem necessary to carry out the intent of this Division and, in particular, but without limiting the generality of the foregoing, may

  • (a) require any person in whose name a share of the insurance holding company is held to submit a declaration setting out

    • (i) the beneficial ownership of the share, and

    • (ii) such other information as the directors deem relevant for the purposes of this Division;

  • (b) require any person who wishes to have a transfer of a share registered in the name of, or to have a share issued to, that person to submit a declaration referred to in paragraph (a) as though the person were the holder of that share; and

  • (c) determine the circumstances in which a declaration referred to in paragraph (a) is to be required, the form of the declaration and the times at which it is to be submitted.

• Marginal note:Order of Superintendent

  (2) The Superintendent may, by order, direct an insurance holding company to obtain from any person in whose name a share of the insurance holding company is held a declaration setting out the name of every entity controlled by that person and containing information concerning

  • (a) the ownership or beneficial ownership of the share; and

  • (b) such other related matters as are specified by the Superintendent.

• Marginal note:Compliance required

  (3) As soon as possible after receipt by an insurance holding company of a direction under subsection (2),

  • (a) the insurance holding company shall comply with the direction; and

  • (b) every person who is requested by the insurance holding company to provide a declaration containing information referred to in subsection (1) or (2) shall comply with the request.

• Marginal note:Outstanding declaration: effect

  (4) Where, pursuant to this section, a declaration is required to be submitted by a shareholder or other person in respect of the issue or transfer of any share, an insurance holding company may refuse to issue the share or register the transfer unless the required declaration is submitted.

Marginal note:Reliance on information

960. An insurance holding company and any person who is a director or an officer, employee or agent of the insurance holding company may rely on any information contained in a declaration required by the directors pursuant to section 959 or on any information otherwise acquired in respect of any matter that might be the subject of such a declaration, and no action lies against the insurance holding company or any such person for anything done or omitted to be done in good faith in reliance on any such information.

Marginal note:Exemption regulations

961. The Governor in Council may, by regulation, exempt from any of the provisions of this Division any transaction or any class of transactions involving the transfer of shares on the death of the beneficial owner thereof, or any arrangement made in contemplation of the death of the beneficial owner, to one or more members of the beneficial owner’s family, or to one or more trustees on their behalf.

Marginal note:Competition Act

962. Nothing in, or done under the authority of, this Act affects the operation of the Competition Act.

Division 8Business and Powers

Marginal note:Main business

• 963. (1) Subject to this Part, an insurance holding company shall not engage in or carry on any business other than

  • (a) acquiring, holding and administering investments that are permitted by this Part;

  • (b) providing management, advisory, financing, accounting, information processing or other prescribed services to entities in which it has a substantial investment; and

  • (c) any other prescribed business.

• Marginal note:Regulations

  (2) The Governor in Council may make regulations prescribing businesses or services for the purposes of subsection (1).

Marginal note:Restriction on partnerships

• 964. (1) Except with the approval of the Superintendent, an insurance holding company shall not be a general partner in a limited partnership or a partner in a general partnership.

• Meaning of “general partnership”

  (2) For the purposes of subsection (1), “general partnership” means any partnership other than a limited partnership.

Marginal note:Restriction on guarantees

• 965. (1) An insurance holding company shall not guarantee on behalf of any person the payment or repayment of any sum of money.

• Marginal note:Exception

  (2) Subsection (1) does not apply if

  • (a) the person on whose behalf the insurance holding company has undertaken to guarantee the payment or repayment is a subsidiary of the insurance holding company; and

  • (b) the subsidiary has an unqualified obligation to reimburse the insurance holding company for the full amount of the payment or repayment to be guaranteed.

• Marginal note:Regulations

  (3) The Governor in Council may make regulations imposing terms and conditions in respect of guarantees permitted by this section.

Division 9Investments

Interpretation

Marginal note:Definitions

• 966. (1) The definitions in subsection 490(1) apply in respect of insurance holding companies, subject to the following:

  • (a) the reference to “section 495” in the definition “permitted entity” is to be read as a reference to “section 971”; and

  • (b) the reference to “company” in the definition “permitted entity” is to be read as a reference to “insurance holding company”.

• Marginal note:Members of an insurance holding company’s group

  (2) For the purpose of this Division, a member of an insurance holding company’s group is any of the following:

  • (a) an entity referred to in any of paragraphs 971(1)(a) to (f) that controls the insurance holding company;

  • (b) a subsidiary of the insurance holding company or of an entity referred to in any of paragraphs 971(1)(a) to (f) that controls the insurance holding company;

  • (c) an entity in which the insurance holding company, or an entity referred to in any of paragraphs 971(1)(a) to (f) that controls the insurance holding company, has a substantial investment; or

  • (d) a prescribed entity in relation to the insurance holding company.

• Marginal note:Non-application of Division

  (3) This Division does not apply in respect of

  • (a) the holding of a security interest in real property, unless the security interest is prescribed under paragraph 984(a) to be an interest in real property; or

  • (b) the holding of a security interest in securities of an entity.

Investments

Marginal note:Investments

967. Subject to this Division, an insurance holding company may invest its funds in the shares of or ownership interests in any entity or make any other investment that its directors consider necessary or advisable to manage the insurance holding company’s liquidity.

General Constraints on Investments

Marginal note:Investment standards

968. The directors of an insurance holding company shall establish and the insurance holding company shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply to avoid undue risk of loss and obtain a reasonable return.

Marginal note:Restriction on control and substantial investments

• 969. (1) Subject to subsections (2) and (3), no insurance holding company shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.

• Marginal note:Exception: indirect investments

  (2) An insurance holding company may acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way of

  • (a) an acquisition of control of an entity referred to in any of paragraphs 971(1)(a) to (j), a specialized financing entity or a prescribed entity that controls or has a substantial investment in the entity; or

  • (b) an acquisition of shares or ownership interests in the entity by

    • (i) an entity referred to in any of paragraphs 971(1)(a) to (j), a specialized financing entity or a prescribed entity that is controlled by the insurance holding company, or

    • (ii) an entity controlled by an entity referred to in any of paragraphs 971(1)(a) to (j), a specialized financing entity or a prescribed entity that is controlled by the insurance holding company.

• Marginal note:Exception: temporary investments, realizations and loan workouts

  (3) An insurance holding company may acquire control of, or acquire or increase a substantial investment in, an entity by way of

  • (a) a temporary investment permitted by section 974;

  • (b) an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 975; or

  • (c) a realization of security permitted by section 976.

• Marginal note:Exception: uncontrolled event

  (4) An insurance holding company is deemed not to contravene subsection (1) if the insurance holding company acquires control of, or acquires or increases a substantial investment in, an entity solely as the result of an event not within the control of the insurance holding company.

Marginal note:Regulations re limits

970. The Governor in Council may make regulations

• (a) respecting the determination of the amount or value of loans, investments and interests for the purposes of this Division;

• (b) respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by an insurance holding company and its prescribed subsidiaries to or in a person and any persons connected with that person;

• (c) specifying the classes of persons who are connected with any person for the purposes of paragraph (b); and

• (d) prescribing terms and conditions under which an insurance holding company may acquire control of, or acquire or increase a substantial investment in, a specialized financing entity.

Subsidiaries and Equity Investments

Marginal note:Permitted investments

• 971. (1) Subject to subsections (4) to (6), an insurance holding company may acquire control of, or acquire or increase a substantial investment in,

  • (a) a company or a society;

  • (b) an insurance holding company;

  • (c) a bank;

  • (d) a bank holding company;

  • (e) a body corporate to which the Trust and Loan Companies Act applies;

  • (f) an association to which the Cooperative Credit Associations Act applies;

  • (g) a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;

  • (h) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;

  • (i) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; or

  • (j) an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.

• Marginal note:Permitted investments

  (2) Subject to subsections (3) to (6), an insurance holding company may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:

  • (a) engaging in any financial service activity or in any other activity that a life company is permitted to engage in under subsection 440(2) or section 441 or 442, other than paragraph 441(1)(h);

  • (b) acquiring or holding shares of, or ownership interests in, entities in which an insurance holding company is permitted under this Division to hold or acquire;

  • (c) engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the insurance holding company or any member of the insurance holding company’s group:

    • (i) the insurance holding company,

    • (ii) any member of the insurance holding company’s group,

    • (iii) any entity that is primarily engaged in the business of providing financial services,

    • (iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or

    • (v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

  • (d) engaging in any activity that a life company is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to

    • (i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any member of the insurance holding company’s group, or

    • (ii) if a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;

  • (e) engaging in the activities referred to in the definition “mutual fund entity” or “mutual fund distribution entity” as defined in subsection 490(1); and

  • (f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

• Marginal note:Restriction

  (3) An insurance holding company may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include

  • (a) activities that a company is not permitted to engage in under any of sections 466, 469 and 475;

  • (b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a company under paragraph 440(2)(b);

  • (c) activities that a company is not permitted to engage in under any regulation made under section 489 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;

  • (d) acquiring control of or acquiring or holding a substantial investment in another entity unless

    • (i) in the case of an entity that is controlled by the insurance holding company, a company would be permitted under Part IX to acquire a substantial investment in the other entity, or

    • (ii) in the case of an entity that is not controlled by the insurance holding company, a company would be permitted to acquire a substantial investment in the other entity under subsection 493(2), paragraph 493(3)(b) or (c) or subsection 493(4) or 495(1) or (2); or

  • (e) any prescribed activity.

• Marginal note:Control

  (4) Subject to subsection (8) and the regulations, an insurance holding company may not acquire control of, or acquire or increase a substantial investment in,

  • (a) an entity referred to in any of paragraphs (1)(a) to (j), unless

    • (i) the insurance holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

    • (ii) the insurance holding company is permitted by regulations made under paragraph 977(a) to acquire or increase the substantial investment;

  • (b) an entity whose business includes one or more of the activities referred to in paragraph (2)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the entity to material market or credit risk, including a finance entity, a factoring entity and a financial leasing entity, unless

    • (i) the insurance holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

    • (ii) the insurance holding company is permitted by regulations made under paragraph 977(a) to acquire or increase the substantial investment; or

  • (c) an entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unless

    • (i) the insurance holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,

    • (ii) the insurance holding company is permitted by regulations made under paragraph 977(a) to acquire or increase the substantial investment, or

    • (iii) subject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in paragraph (a) or (b) or an entity that is not a permitted entity.

• Marginal note:Minister’s approval

  (5) Subject to the regulations, an insurance holding company may not, without the prior written approval of the Minister,

  • (a) acquire control of an entity referred to in paragraphs (1)(g) to (i) from a person who is not a member of the insurance holding company’s group;

  • (b) acquire control of an entity referred to in paragraph (1)(j) or (4)(b), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (f) that is not a member of the insurance holding company’s group:

    • (i) a factoring entity, or

    • (ii) a financial leasing entity;

  • (c) acquire control of, or acquire or increase a substantial investment in, an entity whose business includes one or more of the activities referred to in paragraph (2)(d);

  • (d) acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 441(1)(d) or (d.1); or

  • (e) acquire control of, or acquire or increase a substantial investment in, an entity engaging in an activity prescribed for the purposes of paragraph (2)(f).

• Marginal note:Superintendent’s approval

  (6) Subject to subsection (7) and the regulations, an insurance holding company may not acquire control of, or acquire or increase a substantial investment in, an entity referred to in any of paragraphs (1)(g) to (j) and (4)(b) and (c) unless the insurance holding company obtains the approval of the Superintendent.

• Marginal note:Exception

  (7) Subsection (6) does not apply in respect of a particular transaction if

  • (a) the insurance holding company is acquiring control of an entity whose business includes an activity referred to in paragraph (2)(b), other than a specialized financing entity;

  • (b) the insurance holding company is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity; or

  • (c) the Minister has approved the transaction under subsection (5) or is deemed to have approved it under subsection 972(1).

• Marginal note:Control not required

  (8) An insurance holding company need not control an entity referred to in paragraph (1)(j), or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province, if the laws or customary business practices of the country under the laws of which the entity was incorporated or formed do not permit the insurance holding company to control the entity.

• Marginal note:Prohibition on giving up control in fact

  (9) An insurance holding company that, under subsection (4), controls an entity may not, without the prior written approval of the Minister, give up control, within the meaning of paragraph 3(1)(d), of the entity while it continues to control the entity.

• Marginal note:Giving up control

  (10) An insurance holding company that, under subsection (4), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity if

  • (a) the insurance holding company is permitted to do so by regulations made under paragraph 977(c); or

  • (b) the entity meets the conditions referred to in subparagraph (4)(c)(iii).

• Marginal note:Subsections do not apply

  (11) If an insurance holding company controls, within the meaning of paragraph 3(1)(a), (b) or (c) an entity, subsections (5) and (6) do not apply in respect of any subsequent increases by the insurance holding company of its substantial investment in the entity so long as the insurance holding company continues to control the entity.

Marginal note:Approval for indirect investments

• 972. (1) If an insurance holding company obtains the approval of the Minister under subsection 971(5) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the insurance holding company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 971(5) or the Superintendent under subsection 971(6) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the insurance holding company is deemed to have obtained the approval of the Minister or the Superintendent for that indirect acquisition or increase.

• Marginal note:Approval for indirect investments

  (2) If an insurance holding company obtains the approval of the Superintendent under subsection 971(6) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase the insurance holding company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Superintendent under that subsection and that indirect acquisition or increase is disclosed to the Superintendent in writing before the approval is obtained, the insurance holding company is deemed to have obtained the approval of the Superintendent for that indirect acquisition or increase.

Marginal note:Undertakings

• 973. (1) If an insurance holding company controls a permitted entity, other than an entity referred to in any of paragraphs 971(1)(a) to (f), the insurance holding company shall provide the Superintendent with any undertakings that the Superintendent may require regarding

  • (a) the activities of the entity; and

  • (b) access to information about the entity.

• Marginal note:Undertakings

  (2) If an insurance holding company acquires control of an entity referred to in any of paragraphs 971(1)(g) to (j), the insurance holding company shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.

• Marginal note:Agreements with other jurisdictions

  (3) The Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of any entity referred to in any of paragraphs 971(1)(g) to (j) in each province or in any other jurisdiction concerning any matters referred to in paragraphs (1)(a) and (b) or any other matter the Superintendent considers appropriate.

• Marginal note:Access to records

  (4) Despite any other provision of this Division, an insurance holding company shall not control a permitted entity, other than an entity referred to in any of paragraphs 971(1)(a) to (f), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the insurance holding company obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.

Exceptions and Exclusions

Marginal note:Temporary investments in entity

• 974. (1) Subject to subsection (3), an insurance holding company may, by way of a temporary investment, acquire control of, or acquire or increase a substantial investment in, an entity but, within two years, or any other period that may be specified or approved by the Superintendent, after acquiring control or after acquiring or increasing the substantial investment, as the case may be, it shall do all things necessary to ensure that it no longer controls the entity or has a substantial investment in the entity.

• Marginal note:Extension

  (2) The Superintendent may, in the case of any particular insurance holding company that makes an application under this subsection, extend the period of two years, or the other period specified or approved by the Superintendent, that is referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Temporary investment

  (3) If an insurance holding company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Minister under subsection 971(5) is required, the insurance holding company must, within 90 days after acquiring control or after acquiring or increasing the substantial investment,

  • (a) apply to the Minister for approval to retain control of the entity or to continue to hold the substantial investment in the entity for a period specified by the Minister or for an indeterminate period on any terms and conditions that the Minister considers appropriate; or

  • (b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the entity or does not have a substantial investment in the entity.

• Marginal note:Indeterminate extension

  (4) If an insurance holding company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Superintendent under subsection 971(6) is required, the Superintendent may, in the case of any particular insurance holding company that makes an application under this subsection, permit the insurance holding company to retain control of the entity or to continue to hold the substantial investment in the entity for an indeterminate period, on any terms and conditions that the Superintendent considers necessary.

Marginal note:Loan workouts

• 975. (1) Despite anything in this Division, if any subsidiary of an insurance holding company has made a loan to an entity and, under the terms of the agreement between the subsidiary and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the insurance holding company may acquire, through the subsidiary,

  • (a) a substantial investment in the entity to which the loan was made;

  • (b) a substantial investment in any entity that is an affiliate of the entity; or

  • (c) a substantial investment in an entity that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity to which the loan was made or any of the affiliates of that entity.

• Marginal note:Obligation of insurance holding company

  (2) If an insurance holding company acquires a substantial investment in an entity under subsection (1), the insurance holding company shall, within five years after acquiring the substantial investment, cause the subsidiary that made the loan to do all things necessary to ensure that the insurance holding company does not control the entity or have a substantial investment in the entity.

• Marginal note:Extension

  (3) The Superintendent may, in the case of any particular insurance holding company that makes an application under this subsection, extend the period of five years referred to in subsection (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception — entities controlled by foreign governments

  (4) Despite anything in this Division, if a subsidiary of an insurance holding company has made a loan to, or holds a debt obligation of, the government of a foreign country or an entity controlled by the government of a foreign country and, under the terms of the agreement between the subsidiary and that government or the entity, as the case may be, and any other documents governing the terms of the loan or debt obligation, a default has occurred, the insurance holding company may acquire, through the subsidiary, a substantial investment in that entity or in any other entity designated by that government if the acquisition is part of a debt restructuring program of that government.

• Marginal note:Time for holding substantial investment

  (5) If an insurance holding company acquires a substantial investment in any entity under subsection (4), the insurance holding company may, on any terms and conditions that the Superintendent considers appropriate, continue to hold the substantial investment for an indeterminate period or for any other period that the Superintendent may specify.

• Marginal note:Exception

  (6) If, under subsection (1), an insurance holding company acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 971, the insurance holding company may retain control of the entity or continue to hold the substantial investment for an indeterminate period, if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2), including any extension of it granted under subsection (3).

Marginal note:Realizations

• 976. (1) Despite anything in this Part, an insurance holding company may acquire control of, or a substantial investment in, an entity if the control or the substantial investment is acquired through the realization of a security interest held by a subsidiary of the insurance holding company.

• Marginal note:Disposition

  (2) Subject to subsection 756(2), if an insurance holding company acquires control of, or a substantial investment in, an entity by way of the realization of a security interest held by any of its subsidiaries, the insurance holding company shall, within five years after the day on which control or the substantial investment is acquired, cause the subsidiary to do all things necessary to ensure that the insurance holding company no longer controls the entity or has a substantial investment in the entity.

• Marginal note:Extension

  (3) The Superintendent may, in the case of any particular insurance holding company that makes an application under this subsection, extend the period of five years referred to in subsection (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception

  (4) If, under subsection (1), an insurance holding company acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 971, the insurance holding company may retain control of the entity or continue to hold the substantial investment for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2), including any extension of it granted under subsection (3).

Marginal note:Regulations restricting ownership

977. The Governor in Council may make regulations

• (a) for the purposes of subsection 971(4), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which that subsection does not apply or the insurance holding companies or other entities in respect of which that subsection does not apply, including prescribing insurance holding companies or other entities on the basis of the activities they engage in;

• (b) for the purposes of subsection 971(5) or (6), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the insurance holding companies or other entities in respect of which either of those subsections does not apply, including prescribing insurance holding companies or other entities on the basis of the activities they engage in;

• (c) for the purposes of subsection 971(10), permitting an insurance holding company to give up control of an entity; and

• (d) restricting the ownership by an insurance holding company of shares of a body corporate or of ownership interests in an unincorporated entity under sections 971 to 976 and imposing terms and conditions applicable to insurance holding companies that own such shares or interests.

Portfolio Limits

Marginal note:Exclusion from portfolio limits

• 978. (1) Subject to subsection (3), the value of all loans, investments and interests acquired by an insurance holding company and any of its prescribed subsidiaries under section 975 or as a result of a realization of a security interest is not to be included in calculating the value of loans, investments and interests of the insurance holding company and its prescribed subsidiaries under sections 979 to 981

  • (a) for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; and

  • (b) for a period of five years after the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.

• Marginal note:Extension

  (2) The Superintendent may, in the case of any particular insurance holding company, extend any period referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception

  (3) Subsection (1) does not apply to an investment or interest described in that subsection if the investment or interest is defined by a regulation made under section 984 to be an interest in real property and

  • (a) the insurance holding company or the subsidiary acquired the investment or interest as a result of the realization of a security interest securing a loan that was defined by a regulation made under section 984 to be an interest in real property; or

  • (b) the insurance holding company or the subsidiary acquired the investment or interest under section 975 as a result of a default referred to in that section in respect of a loan that was defined by a regulation made under section 984 to be an interest in real property.

Commercial Lending

Marginal note:Insurance holding companies with regulatory capital of $25 million or less

979. Subject to section 980, an insurance holding company that has twenty-five million dollars or less of regulatory capital shall not acquire control of a permitted entity that holds commercial loans and shall not permit its prescribed subsidiaries to make or acquire a commercial loan or acquire control of a permitted entity that holds commercial loans if the aggregate value of all commercial loans held by the prescribed subsidiaries of the insurance holding company exceeds, or the making or acquisition of the commercial loan or acquisition of control of the entity would cause the aggregate value of all commercial loans held by the prescribed subsidiaries of the insurance holding company to exceed, 5 per cent of the total assets of the insurance holding company.

Marginal note:Insurance holding companies with regulatory capital over $25 million

980. An insurance holding company that has twenty-five million dollars or less of regulatory capital that is controlled by a financial institution that has the equivalent of more than twenty-five million dollars of regulatory capital or an insurance holding company that has more than twenty-five million dollars of regulatory capital may acquire control of a permitted entity that holds commercial loans or permit its prescribed subsidiaries to make or acquire commercial loans or acquire control of a permitted entity that holds commercial loans if the aggregate value of all commercial loans held by the prescribed subsidiaries of the insurance holding company would thereby exceed the limit set out in section 979 only with the prior approval in writing of the Superintendent and in accordance with any terms and conditions that the Superintendent may specify.

Real Property

Marginal note:Limit on total property interest

981. An insurance holding company shall not, and shall not permit its prescribed subsidiaries to, purchase or otherwise acquire an interest in real property or make an improvement to any real property in which the insurance holding company or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the insurance holding company in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, an amount determined in accordance with the regulations.

Equities

Marginal note:Limits on equity acquisitions

982. An insurance holding company shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of a permitted entity in which the insurance holding company has, or by virtue of the acquisition would have, a substantial investment, or

• (b) acquire control of an entity that holds shares or ownership interests referred to in paragraph (a),

if the aggregate value of

• (c) all participating shares, excluding participating shares of permitted entities in which the insurance holding company has a substantial investment, and

• (d) all ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the insurance holding company has a substantial investment,

beneficially owned by the insurance holding company and its prescribed subsidiaries exceeds, or the purchase or acquisition would cause that aggregate value to exceed, an amount determined in accordance with the regulations.

Aggregate Limit

Marginal note:Aggregate limit

983. An insurance holding company shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire

  • (i) participating shares of a body corporate, other than those of a permitted entity in which the insurance holding company has, or by virtue of the acquisition would have, a substantial investment,

  • (ii) ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the insurance holding company has, or by virtue of the acquisition would have, a substantial investment, or

  • (iii) interests in real property, or

• (b) make an improvement to real property in which the insurance holding company or any of its prescribed subsidiaries has an interest

if the aggregate value of

• (c) all participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the insurance holding company and its prescribed subsidiaries, and

• (d) all interests of the insurance holding company in real property referred to in subparagraph (a)(iii)

exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, an amount determined in accordance with the regulations.

Miscellaneous

Marginal note:Regulations

984. For the purposes of this Division, the Governor in Council may make regulations

• (a) defining the interests of an insurance holding company in real property;

• (b) determining the method of valuing those interests;

• (c) exempting classes of insurance holding companies from the application of sections 978 to 983; or

• (d) respecting the determination of an amount for the purpose of each of sections 981, 982 and 983.

Marginal note:Divestment order

• 985. (1) The Superintendent may, by order, direct an insurance holding company to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Division.

• Marginal note:Divestment order

  (2) If, in the opinion of the Superintendent,

  • (a) an investment by an insurance holding company or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the insurance holding company to control the body corporate or the unincorporated entity, or

  • (b) the insurance holding company or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put before

    • (i) the board of directors of a body corporate, or

    • (ii) a similar group or committee of an unincorporated entity,

    or whereby no proposal may be approved except with the consent of the insurance holding company, the entity it controls or the nominee,

  the Superintendent may, by order, require the insurance holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the insurance holding company no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).

• Marginal note:Divestment order

  (3) If

  • (a) an insurance holding company

    • (i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 973(1), (2) or (4), or

    • (ii) is in default of an undertaking referred to in subsection 973(1) or (2) and the default is not remedied within ninety days after the day of receipt by the insurance holding company of a notice from the Superintendent of the default, or

  • (b) a permitted entity referred to in subsection 973(4) is in default of an undertaking referred to in subsection 973(4) and the default is not remedied within ninety days after the day of receipt by the insurance holding company of a notice from the Superintendent of the default,

  the Superintendent may, by order, require the insurance holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the insurance holding company no longer has a substantial investment in the entity to which the undertaking relates.

• Marginal note:Exception

  (4) Subsection (2) does not apply in respect of an entity in which an insurance holding company has a substantial investment permitted by this Division.

Marginal note:Deemed temporary investment

986. If an insurance holding company controls or has a substantial investment in an entity as permitted by this Division and the insurance holding company becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 971(5) or (6), the insurance holding company is deemed to have acquired, on the day the insurance holding company becomes aware of the change, a temporary investment in respect of which section 974 applies.

Marginal note:Asset transactions

• 987. (1) An insurance holding company shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person if

  A + B > C

  where

  A

  is the value of the assets;

  B

  is the total value of all assets that the insurance holding company and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; and

  C

  is ten per cent of the total value of the assets of the insurance holding company, as shown in the last annual statement of the insurance holding company prepared before the acquisition or transfer.

• Marginal note:Exception

  (2) The prohibition referred to in subsection (1) does not apply to

  • (a) an asset that is a debt obligation referred to in subparagraphs (b)(i) to (v) of the definition “commercial loan” in subsection 490(1); or

  • (b) a transaction or series of transactions by a subsidiary of the insurance holding company with a financial institution as a result of the subsidiary’s participation in one or more syndicated loans with that financial institution.

• Marginal note:Exception

  (3) The approval of the Superintendent is not required if

  • (a) the insurance holding company or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Division 7 or subsection 971(5) is required or the approval of the Superintendent under subsection 971(6) is required; or

  • (b) the transaction has been approved by the Minister under subsection 715(1) of this Act or subsection 678(1) of the Bank Act.

• Marginal note:Value of assets

  (4) For the purposes of “A” in subsection (1), the value of the assets is

  • (a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the insurance holding company after the acquisition, the fair market value of the assets; and

  • (b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the insurance holding company prepared before the transfer, or if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the insurance holding company before the transfer, the value of the assets as stated in the annual statement.

• Marginal note:Total value of all assets

  (5) For the purposes of subsection (1), the total value of all assets that the insurance holding company or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the insurance holding company, the fair market value of the assets of the entity at the date of the acquisition.

• Marginal note:Total value of all assets

  (6) For the purposes of subsection (1), the total value of all assets that the insurance holding company or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the insurance holding company prepared before the transfer, or if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the insurance holding company before the transfer, the value of the assets of the entity as stated in the annual statement.

Marginal note:Transitional

988. Nothing in this Division requires

• (a) the termination of a loan made before February 7, 2001;

• (b) the termination of a loan made after that date as a result of a commitment made before that date;

• (c) the disposal of an investment made before that date; or

• (d) the disposal of an investment made after that date as a result of a commitment made before that date.

But if the loan or investment would be precluded or limited by this Division, the amount of the loan or investment may not be increased after that date.

Marginal note:Saving

989. A loan or investment referred to in section 988 is deemed not to be prohibited by the provisions of this Division.

Meaning of “non-insurance entity”

• 990. (1) Subject to subsection (2), for the purpose of section 991, “non-insurance entity” means a Canadian entity, other than a company, that is controlled by an insurance holding company or in which an insurance holding company has a substantial investment.

• Marginal note:Exception

  (2) A Canadian entity is not a non-insurance entity by reason only that a subsidiary of an insurance holding company that is a company that controls, or has a substantial investment, in the Canadian entity.

Marginal note:Disclosure of status

• 991. (1) A non-insurance entity that carries on as part of its business the provision of financial services shall not borrow money in Canada from the public without disclosing that the non-insurance entity is not regulated as a financial institution in Canada.

• Marginal note:Manner of disclosure

  (2) The disclosure shall be

  • (a) in a prospectus, information circular or other offering document related to the borrowing or in a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or

  • (b) in any other manner that may be prescribed.

• Marginal note:Exception for certain borrowings

  (3) Subsection (1) does not apply

  • (a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or

  • (b) except as may be provided in any regulations, to a borrowing

    • (i) from a person in an amount of $150,000 or more, or

    • (ii) through the issue of instruments in denominations of $150,000 or more.

• Marginal note:Exception

  (4) Subsection (1) does not apply if the non-insurance entity is

  • (a) an insurance holding company or a bank holding company;

  • (b) a bank;

  • (c) an entity that is controlled by a bank holding company or in which a bank holding company has a substantial investment;

  • (d) a trust, loan or insurance corporation incorporated under an Act of Parliament or of the legislature of a province;

  • (e) a financial institution that is described in paragraph (g) of the definition “financial institution” in section 2;

  • (f) an entity referred to in paragraph 971(1)(f) or (h); or

  • (g) a prescribed entity.

Division 10Adequacy of Capital and Liquidity

Marginal note:Adequacy of capital and liquidity

• 992. (1) An insurance holding company shall, in relation to its business, maintain

  • (a) adequate capital, and

  • (b) adequate and appropriate forms of liquidity,

  and comply with any regulations in relation to capital and liquidity.

• Marginal note:Regulations and guidelines

  (2) The Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by an insurance holding company of adequate capital and adequate and appropriate forms of liquidity.

• Marginal note:Directives

  (3) Even if an insurance holding company is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the insurance holding company

  • (a) to increase its capital; or

  • (b) to provide additional liquidity in such forms and amounts as the Superintendent may require.

• Marginal note:Compliance

  (4) An insurance holding company shall comply with an order made under subsection (3) within the time specified by the Superintendent in the order.

Division 11Regulation of Insurance Holding Companies

Supervision

Returns

Marginal note:Required information

993. An insurance holding company shall provide the Superintendent with such information, at such times and in such form as the Superintendent may require.

Marginal note:Names of directors and auditors

• 994. (1) An insurance holding company shall, within thirty days after each annual meeting of the insurance holding company, provide the Superintendent with a return showing

  • (a) the name, residence and citizenship of each director holding office immediately following the meeting;

  • (b) the mailing address of each director holding office immediately following the meeting;

  • (c) the bodies corporate of which each director referred to in paragraph (a) is an officer or director and the firms of which each director is a member;

  • (d) the names of the directors referred to in paragraph (a) who are officers or employees of the insurance holding company or any affiliate of the insurance holding company, and the positions they occupy;

  • (e) the name of each committee of the insurance holding company on which each director referred to in paragraph (a) serves;

  • (f) the date of expiration of the term of each director referred to in paragraph (a); and

  • (g) the name, address and date of appointment of the auditor of the insurance holding company.

• Marginal note:Changes

  (2) Where

  • (a) any information relating to a director or auditor of an insurance holding company shown in the latest return made to the Superintendent under subsection (1), other than information referred to in paragraph (1)(c), becomes inaccurate or incomplete,

  • (b) a vacancy in the position of auditor of the insurance holding company occurs or is filled by another person, or

  • (c) a vacancy on the board of directors of the insurance holding company occurs or is filled,

  the insurance holding company shall forthwith provide the Superintendent with such information as is required to maintain the return in a complete and accurate form.

Marginal note:Copy of by-laws

995. An insurance holding company shall send to the Superintendent within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment.

Marginal note:Register for insurance holding company

• 996. (1) The Superintendent shall, in respect of each insurance holding company, cause a register to be maintained containing a copy of

  • (a) the incorporating instrument of the insurance holding company; and

  • (b) the information referred to in paragraphs 994(1)(a) and (c) to (g) contained in the latest return provided to the Superintendent under section 994.

• Marginal note:Form

  (2) The register may be maintained in

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

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

• Marginal note:Access

  (3) Persons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.

• Marginal note:Evidence

  (4) A statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent.

Marginal note:Production of information and documents

• 997. (1) The Superintendent may, by order, direct a person who controls an insurance holding company or any entity that is affiliated with an insurance holding company to provide the Superintendent with such information or documents that are specified in the order if the Superintendent believes that the production of the information or documents is necessary in order to

  • (a) determine whether the insurance holding company is complying with the provisions of this Act; or

  • (b) ascertain the financial condition of the insurance holding company.

• Marginal note:Time

  (2) Any person to whom a direction has been issued under subsection (1) shall provide the information or documents specified in the order within the time specified in the order and, where the order does not specify a time, the person shall provide the information or documents within a reasonable time.

• Marginal note:Exemption

  (3) Subsection (1) does not apply in respect of an entity that controls an insurance holding company or is affiliated with an insurance holding company where that entity is a financial institution regulated

  • (a) by or under an Act of Parliament; or

  • (b) by or under an Act of the legislature of a province where the Superintendent has entered into an agreement with the appropriate official or public body responsible for the supervision of financial institutions in that province concerning the sharing of information on such financial institutions.

Marginal note:Confidential information

• 998. (1) All information regarding the business or affairs of an insurance holding company, or regarding a person dealing with an insurance holding company, that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information, is confidential and shall be treated accordingly.

• Marginal note:Disclosure permitted

  (2) Nothing in subsection (1) prevents the Superintendent from disclosing any information

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

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

  • (c) to the Canada Deposit Insurance Corporation or any compensation association designated by order of the Minister pursuant to subsection 449(1), for purposes related to its operation, and

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

  if the Superintendent is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed.

Marginal note:Regulations

999. The Governor in Council may make regulations prohibiting, limiting or restricting the disclosure by insurance holding companies of prescribed supervisory information.

Examination of Insurance Holding Companies

Marginal note:Examination of insurance holding companies

• 1000. (1) The Superintendent, from time to time, shall make or cause to be made any examination and inquiry into the business and affairs of each insurance holding company that the Superintendent considers to be necessary or expedient to determine whether the insurance holding company is complying with the provisions of this Act and to ascertain the financial condition of the insurance holding company.

• Marginal note:Access to records of insurance holding company

  (2) The Superintendent or a person acting under the Superintendent’s direction

  • (a) has a right of access to any records, cash, assets and security held by or on behalf of an insurance holding company; and

  • (b) may require the directors, officers or auditor of an insurance holding company to provide information and explanations, to the extent that they are reasonably able to do so, in respect of the condition and affairs of the insurance holding company or any entity in which it has a substantial investment.

Marginal note:Power of Superintendent on inquiry

1001. The Superintendent has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Superintendent’s direction.

Remedial Powers

Prudential Agreements

Marginal note:Prudential agreement

1002. The Superintendent may enter into an agreement, called a “prudential agreement”, with an insurance holding company for the purposes of implementing any measure designed to protect the interests of depositors, policyholders and creditors of any federal financial institution affiliated with it.

Directions of Compliance

Marginal note:Superintendent’s directions to insurance holding companies, etc.

• 1003. (1) If, in the opinion of the Superintendent, an insurance holding company, one of its affiliates or any person with respect to an insurance holding company is committing, or is about to commit, an act or is pursuing, or is about to pursue, a course of conduct that may directly or indirectly be prejudicial to the interests of depositors, policyholders or creditors of a federal financial institution that is affiliated with the insurance holding company, the Superintendent may direct the insurance holding company to

  • (a) cease or refrain from committing the act or pursuing the course of conduct;

  • (b) cause the affiliate or person to cease or refrain from committing the act or pursuing the course of conduct, to the extent it is able to do so;

  • (c) perform any act that in the opinion of the Superintendent is necessary to remedy the situation or minimize the prejudice; or

  • (d) cause the affiliate or person to perform any act that in the opinion of the Superintendent is necessary to remedy the situation or minimize the prejudice, to the extent that the insurance holding company is able to do so.

• Marginal note:Opportunity for representations

  (2) Subject to subsection (3), no direction shall be issued unless the insurance holding company is provided with a reasonable opportunity to make representations in respect of the matter.

• Marginal note:Temporary direction

  (3) If, in the opinion of the Superintendent, the length of time required for representations to be made might be prejudicial to the public interest, the Superintendent may make a temporary direction with respect to the matters referred to in paragraphs (1)(a) to (d) having effect for a period of not more than fifteen days.

• Marginal note:Duration of temporary direction

  (4) A temporary direction continues to have effect after the expiration of the fifteen day period if no representations are made to the Superintendent within that period or, if representations have been made, the Superintendent notifies the insurance holding company that the Superintendent is not satisfied that there are sufficient grounds for revoking the direction.

Marginal note:Court enforcement

• 1004. (1) If an insurance holding company is contravening or has failed to comply with a prudential agreement entered into under section 1002 or a direction of the Superintendent issued under subsection 1003(1) or (3), or is contravening this Act, or has omitted to do any thing under this Act that it is required to do, the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the insurance holding company to comply with the direction, cease the contravention or do any thing that is required to be done, and on such application the court may so order and make any other order it thinks fit.

• Marginal note:Appeal

  (2) An appeal from a decision of a court under subsection (1) lies in the same manner, and to the same court, as an appeal from any other order of the court.

Disqualification and Removal of Directors or Senior Officers

Meaning of “senior officer”

1005. In sections 1006 and 1007, “senior officer” means the chief executive officer, secretary, treasurer or controller of an insurance holding company or any other officer reporting directly to the insurance holding company’s board of directors or chief executive officer.

Marginal note:Application

• 1006. (1) This section applies only in respect of an insurance holding company

  • (a) that has been notified by the Superintendent that this section applies to it where the insurance holding company is subject to measures designed to protect the interests of depositors, policyholders and creditors of any federal financial institution affiliated with it, which measures are contained in a prudential agreement entered into under section 1002 or an undertaking given by the insurance holding company to the Superintendent; or

  • (b) that is the subject of a direction made under section 1003, or an order made under subsection 992(3).

• Marginal note:Information to be provided

  (2) An insurance holding company shall provide the Superintendent with the name of

  • (a) each person who has been nominated for election or appointment as a member of its board of directors,

  • (b) each person who has been selected by the insurance holding company for appointment as a senior officer, and

  • (c) each person who is newly elected as a director of the insurance holding company at a meeting of shareholders and who was not proposed for election by anyone involved in the management of the insurance holding company,

  together with such other information about the background, business record and experience of the person as the Superintendent may require.

• Marginal note:When information to be provided

  (3) The information required by subsection (2) shall be provided to the Superintendent

  • (a) at least 30 days prior to the date or proposed date of the election or appointment or within such shorter period as the Superintendent may allow; or

  • (b) in the case of a person referred to in paragraph (2)(c), within 15 days after the date of the election of the person.

• Marginal note:Disqualification or removal

  (4) If the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold that position, the Superintendent may, by order,

  • (a) in the case of a person referred to in paragraph (2)(a) or (b), disqualify the person from being elected or appointed as a director of an insurance holding company or from being appointed as a senior officer; or

  • (b) in the case of a person referred to in paragraph (2)(c), remove the person from office as a director of the insurance holding company.

• Marginal note:Risk of prejudice

  (5) In forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors, policyholders and creditors of any federal financial institution affiliated with the insurance holding company would likely be prejudiced if the person were to take office or continue to hold office, as the case may be.

• Marginal note:Representations may be made

  (6) The Superintendent must in writing notify the person concerned and the insurance holding company of any action that the Superintendent proposes to take under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

• Marginal note:Prohibition

  (7) Where an order has been made under subsection (4)

  • (a) disqualifying a person from being elected or appointed to a position, the person shall not be, and the insurance holding company shall not permit the person to be, elected or appointed to the position; or

  • (b) removing a director from office, the person shall not continue to hold, and the insurance holding company shall not permit the person to continue to hold, office as a director.

Marginal note:Removal of directors or senior officers

• 1007. (1) The Superintendent may, by order, remove a person from office as a director or senior officer of an insurance holding company if the Superintendent is of the opinion that the person is not suitable to hold that office

  • (a) on the basis of the competence, business record, experience, conduct or character of the person; or

  • (b) because the person has contravened or, by action or negligence, has contributed to the contravention of

    • (i) this Act or the regulations made under it,

    • (ii) a direction made under section 1003,

    • (iii) an order made under subsection 992(3), or

    • (iv) a prudential agreement entered into under section 1002 or an undertaking given by the insurance holding company to the Superintendent.

• Marginal note:Risk of prejudice

  (2) In forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors, policyholders and creditors of any federal financial institution affiliated with the insurance holding company have been or are likely to be prejudiced by the person’s holding office as a director or senior officer.

• Marginal note:Representations may be made

  (3) The Superintendent must in writing notify the person concerned and the insurance holding company of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

• Marginal note:Suspension

  (4) If the Superintendent is of the opinion that the public interest may be prejudiced by the director or senior officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the director or senior officer. The suspension may not extend beyond 10 days after the expiration of that period.

• Marginal note:Notice of order

  (5) The Superintendent shall, without delay, notify the director or senior officer, as the case may be, and the insurance holding company of a removal order or suspension order.

• Marginal note:Consequences of removal order

  (6) The director or senior officer, as the case may be, ceases to hold that office as of the date the removal order is made or any later date specified in the order.

• Marginal note:Appeal

  (7) The director or senior officer, as the case may be, or the insurance holding company may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.

• Marginal note:Powers of Federal Court

  (8) The Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.

• Marginal note:Order not stayed by appeal

  (9) A removal order is not stayed by an appeal.

PART XVIIIADMINISTRATION

Notices and Other Documents

Marginal note:Notice to directors, etc.

• 1008. (1) A notice or document required by this Act or the regulations, or by the incorporating instrument or by-laws of a company or society, to be sent to a shareholder, policyholder or director of a company, foreign company or provincial company or to a member or director of a society may be sent by prepaid mail addressed to, or may be delivered personally to,

  • (a) the shareholder at the shareholder’s latest address as shown in the records of the company, foreign company or provincial company or its transfer agent;

  • (b) the director at the director’s latest address as shown in the records of the company, society, foreign company or provincial company, or in the latest return made under section 549, 661 or 668; and

  • (c) the policyholder or the member at the policyholder’s or member’s latest address as shown in the records of the company, society, foreign company or provincial company.

• Marginal note:Notice to directors, etc.

  (2) A notice or document required by this Act or the regulations, or by the incorporating instrument or by-laws of an insurance holding company to be sent to a shareholder or director of the insurance holding company may be sent by prepaid mail addressed to, or may be delivered personally to,

  • (a) the shareholder at the shareholder’s latest address as shown in the records of the insurance holding company or its transfer agent; and

  • (b) the director at the director’s latest address as shown in the records of the insurance holding company, or in the latest return made under section 994.

Marginal note:Presumption from return

1009. A director named in the latest return sent by a company, a society, a provincial society or an insurance holding company to the Superintendent under section 549, 661, 668 or 994 is presumed for the purposes of this Act to be a director of the company, society, provincial company or insurance holding company referred to in the return.

Marginal note:Presumption of receipt

• 1010. (1) A notice or document sent by mail in accordance with section 1008 to a shareholder, member, policyholder or director is deemed to be received by that person at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that person did not receive the notice or document at that time or at all.

• Marginal note:Undelivered notices

  (2) If a company, a society, a foreign company, a provincial company or an insurance holding company sends a notice or document to a shareholder, member or policyholder in accordance with section 1008 and the notice or document is returned on three consecutive occasions because the shareholder, member or policyholder cannot be found, the company, society, foreign company, provincial company or insurance holding company is not required to send any further notices or documents to the shareholder, member or policyholder until informed in writing of that person’s new address.

Marginal note:Service on companies, etc.

1011. A notice or document required by this Act to be sent to or served on a company, a society, a foreign company, a provincial company or an insurance holding company may be sent by registered mail to the head office or chief agency, as the case may be, of the company, society, foreign company, provincial company or insurance holding company and, if so sent, is deemed to be received or served at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that the company, society, foreign company, provincial company or insurance holding company did not receive the notice or document at that time or at all.

Marginal note:Certificate of companies, etc.

• 1012. (1) A certificate issued on behalf of a company, a society or an insurance holding company stating any fact that is set out in the incorporating instrument, the by-laws, the minutes of the meetings of the directors, a committee of directors or the shareholders, policyholders or members, or in a contract to which the company, society or insurance holding company is a party, may be signed by a director or an officer of the company, society or insurance holding company.

• Marginal note:Proof of certain cases

  (2) When introduced as evidence in any civil, criminal or administrative action or proceeding, the following are, in the absence of evidence to the contrary, proof of the facts so certified without proof of the signature or official character of the person appearing to have signed the certificate:

  • (a) a fact stated in a certificate referred to in subsection (1);

  • (b) a certified extract from a securities register of a company or of an insurance holding company; or

  • (c) a certified copy of, or an extract from, minutes of a meeting of shareholders, policyholders, members, directors or a committee of directors of a company, society or insurance holding company.

Marginal note:Entry in securities register

1013. An entry in the securities register of, or on a security certificate issued by, a company or an insurance holding company is evidence that the person in whose name the security is registered is the owner of the securities described in the register or in the certificate.

Marginal note:Verification of documents or fact

• 1014. (1) The Superintendent may require that a document or a fact stated in a document that is required by or under this Act to be sent to the Superintendent or to the Minister be verified in accordance with subsection (2).

• Marginal note:Form of proof

  (2) A document or fact required by this Act or by the Superintendent to be verified may be verified by affidavit made under oath or by statutory declaration under the Canada Evidence Act before any commissioner for oaths or for taking affidavits.

Marginal note:Alternative means of publication

• 1015. (1) Anything that is required by a provision of this Act to be published in the Canada Gazette or to be published in any other way may, instead of being published in that way, be published in any manner that may be prescribed for the purpose of that provision.

• Marginal note:Alternative means of publishing summaries

  (2) Anything that is required by a provision of this Act to be summarized in a publication may instead be summarized and published in any manner that may be prescribed for the purpose of that provision.

• Marginal note:Publication conditions

  (3) Any condition under a provision of this Act that something be published in the Canada Gazette or in any other way is satisfied if that thing is published instead in any manner that may be prescribed for the purpose of that provision.

• Marginal note:Other consequences

  (4) If a provision of this Act provides for consequences to follow the publication of something in the Canada Gazette or in any other manner, the same consequences follow the publication of that thing in any other manner that may be prescribed for the purpose of that provision.

Approvals: Terms, Conditions and Undertakings

Definition of “approval”

• 1016. (1) In this section, “approval” includes any consent, order, exemption, extension or other permission granted by the Minister or the Superintendent under this Act, and includes the issuance of letters patent.

• Marginal note:Minister — terms, conditions and undertakings

  (2) In addition to any other action that may be taken under this Act, the Minister may, in granting an approval, impose such terms and conditions or require such undertaking as the Minister considers necessary, including any terms, conditions or undertaking specified by the Superintendent to maintain or improve the safety and soundness of any financial institution regulated under an Act of Parliament and to which the approval relates or that may be affected by it.

• Marginal note:Superintendent — terms, conditions and undertakings

  (3) In addition to any other action that may be taken under this Act, the Superintendent may, in granting an approval, impose such terms and conditions or require such undertaking as the Superintendent considers necessary.

• Marginal note:Effect of non-compliance on approval

  (4) Unless otherwise expressly provided in this Act, a failure to comply with a term or condition or an undertaking imposed or required under any provision of this Act does not invalidate the approval to which the term, condition or undertaking relates.

• Marginal note:Non-compliance

  (5) In addition to any other action that may be taken under this Act, in case of non-compliance by a person with a term, condition or undertaking imposed or required under any provision of this Act, the Minister or Superintendent, as the case may be, may

  • (a) revoke, suspend or amend the approval to which the term, condition or undertaking relates; or

  • (b) apply to a court for an order directing the person to comply with the term, condition or undertaking, and on such application the court may so order and make any other order it thinks fit.

• Marginal note:Representations

  (6) Before taking any action under subsection (5), the Minister or the Superintendent, as the case may be, shall afford the person concerned a reasonable opportunity to make representations.

• Marginal note:Revocation, suspension or amendment

  (7) At the request of the person concerned, the Minister or the Superintendent, as the case may be, may revoke, suspend or amend any terms or conditions imposed by him or her or may revoke or suspend an undertaking given to him or her or approve its amendment.

Orders and Directives

Marginal note:Not statutory instruments

1017. An instrument issued or made under this Act and directed to a single company, society, foreign company, provincial company, insurance holding company or person, other than an order referred to in section 532, is not a statutory instrument for the purposes of the Statutory Instruments Act.

Marginal note:Form

1018. The Superintendent may, by order, establish the form of any application to be made to the Minister or the Superintendent under this Act.

Applications to Superintendent

Marginal note:Content of applications

• 1019. (1) The following applications to the Superintendent must contain the information, material and evidence that the Superintendent may require:

  • (a) applications for approval under subsection 69(1), 76(2), 79(4), 83(5), 84(1), 178(1) or 238(3), section 453, subsection 472(1), 495(8) or (12), 498(1) or (2) or 512(1), subparagraph 519(2)(b)(vi), section 522, subsection 523(2), 527(3) or (4), 528.3(1) or 542.03(4), section 542.09 or subsection 544.1(2), 557(1) or (2), 569(1), 597(1), 748(1), 755(2), 757(4), 762(1), 805(1), 851(3), 964(1), 971(6) or (10), 974(1) or 987(1);

  • (b) applications for consent under subsection 75(1) or 754(1);

  • (c) applications for exemptions under subsection 164.04(3), 268(1), 789(3) or 876(1); and

  • (d) applications for extensions of time under subsection 498(3) or (5), 499(4), 500(4), 557(3) or (5), 558(4), 559(4), 974(2) or (4), 975(3) or 976(3).

• Marginal note:Receipt

  (2) Without delay after receiving the application, the Superintendent shall send a receipt to the applicant certifying the date on which it was received.

• Marginal note:Notice of decision to applicant

  (3) Subject to subsection (4), the Superintendent shall, within a period of thirty days after the receipt of the application, send to the applicant

  • (a) a notice approving the application, subject to any terms and conditions that the Superintendent considers appropriate; or

  • (b) if the Superintendent is not satisfied that the application should be approved, a notice to that effect.

• Marginal note:Extension of period

  (4) If the Superintendent is unable to complete the consideration of the application within the period referred to in subsection (3), the Superintendent shall, within that period, send a notice to the applicant informing the applicant that the Superintendent has extended the period for a further period set out in the notice.

• Marginal note:Deemed approval

  (5) If the applicant does not receive the notice required by subsection (3) or, where applicable, subsection (4), within the required period, the Superintendent is deemed to have approved the application and granted the approval, consent, exemption or extension to which the application relates, regardless of whether the approval, consent, extension or exemption is to be in writing or not.

Appeals

Marginal note:Appeal to Federal Court

• 1020. (1) An appeal lies to the Federal Court from any direction of the Minister made under subsection 432(1) or 956(1).

• Marginal note:Powers

  (2) The Federal Court may, in an appeal under subsection (1),

  • (a) dismiss the appeal;

  • (b) set aside the direction or decision; or

  • (c) set aside the direction or decision and refer the matter back for redetermination.

• Marginal note:Certificate

  (3) For the purposes of an appeal under subsection (1), the Minister shall, at the request of the company, society, foreign company, provincial company, insurance holding company or person making the appeal, provide the company, society, foreign company, provincial company, insurance holding company or person with a certificate in writing setting out the direction or decision appealed from and the reasons why the direction or decision was made.

Regulations

Marginal note:Power to make regulations

1021. The Governor in Council may make regulations

• (a) prescribing anything that is required or authorized by this Act to be prescribed;

• (b) prescribing the way in which anything that is required or authorized by this Act to be prescribed is to be determined;

• (c) respecting, for any purpose of any provision of the Act, the determination of the equity of a company or an insurance holding company;

• (d) defining words and expressions to be defined for the purposes of this Act;

• (e) requiring the payment of a fee in respect of the filing, examining or issuing of any document or in respect of any action that the Superintendent is required or authorized to take under this Act, and fixing the amount of the fee or the manner of determining its amount;

• (f) respecting the regulatory capital and total assets of a company, a society, a provincial company or an insurance holding company;

• (g) respecting the standards of sound business and financial practices for companies, societies, provincial companies and foreign companies;

• (h) respecting the retention, in Canada, of assets of a company, a society or an insurance holding company;

• (i) respecting the value of assets of a company, a society or an insurance holding company to be held in Canada and the manner in which those assets are to be held;

• (j) respecting the protection and maintenance of assets of a company, a society or an insurance holding company, including regulations respecting the bonding of directors, officers and employees of a company, a society or an insurance holding company;

• (k) respecting the holding of shares and ownership interests for the purposes of section 74, 78 or 753;

• (l) respecting information, in addition to the information required by section 670 or 996, to be maintained in the register referred to in that section; and

• (m) generally for carrying out the purposes and provisions of this Act.

Delegation

Marginal note:Delegation

1022. The Minister may delegate any of the Minister’s powers, duties and functions under this Act to any Minister of State appointed under the Ministries and Ministers of State Act to assist the Minister.

PART XIXSANCTIONS

Marginal note:Offence

1023. Every person who, without reasonable cause, contravenes any provision of this Act or the regulations is guilty of an offence.

Marginal note:Undue preference to creditor

1024. Every director, officer or employee of a company or a society who wilfully gives or concurs in giving to any creditor of the company or society any fraudulent, undue or unfair preference over other creditors, by giving security to the creditor, by changing the nature of the creditor’s claim or otherwise, is guilty of an offence.

Marginal note:Failure to provide information

1025. Every person who, without reasonable cause, refuses or fails to comply with a requirement made under paragraph 674(3)(b) or 1000(3)(b) is guilty of an offence.

Marginal note:Use of name

1026. Except to the extent permitted by the regulations, every person who uses the name of a company or of an insurance holding company in a prospectus, offering memorandum, takeover bid circular, advertisement for a transaction related to securities or in any other document in connection with a transaction related to securities is guilty of an offence.

Marginal note:Punishment

• 1027. (1) Every person who is guilty of an offence under any of sections 1023 to 1026 is

  • (a) in the case of a natural person, liable

    • (i) on summary conviction, to a fine of not more than $100,000 or to imprisonment for a term of not more than twelve months, or to both, or

    • (ii) on conviction on indictment, to a fine of not more than $500,000 or to imprisonment for a term of not more than five years, or to both; and

  • (b) in the case of an entity, liable

    • (i) on summary conviction, to a fine of not more than $500,000, or

    • (ii) on conviction on indictment, to a fine of not more than $5,000,000.

• Marginal note:Order to comply

  (2) If a person has been convicted of an offence under this Act, the court may, in addition to any punishment it may otherwise impose, order the person to comply with the provisions of this Act or the regulations in respect of which the person was convicted.

• Marginal note:Additional fine

  (3) If a person has been convicted of an offence under this Act, the court may, if it is satisfied that as a result of the commission of the offence the convicted person acquired any monetary benefits or that monetary benefits accrued to the convicted person or to the spouse, common-law partner or other dependant of the convicted person, order the convicted person to pay, notwithstanding the maximum amount of any fine that may otherwise be imposed under this Act, an additional fine in an amount equal to the court’s estimation of the amount of those monetary benefits.

Marginal note:Liability of officers, directors, etc.

1028. If an entity commits an offence under this Act, any officer, director or agent of the entity who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence and liable on summary conviction or on conviction on indictment to the punishment provided under paragraph 1027(1)(a) for the offence, whether or not the entity has been prosecuted or convicted.

Marginal note:Limitation period

• 1029. (1) Proceedings by way of summary conviction in respect of an offence under a provision of this Act may be commenced at any time within, but not later than, two years after the day on which the subject-matter of the proceedings became known, in the case of an offence under a consumer provision, to the Commissioner and, in any other case, to the Superintendent.

• Marginal note:Certificate of Superintendent or Commissioner

  (2) A document appearing to have been issued by the Superintendent or Commissioner, as the case may be, certifying the day on which the subject-matter of any proceedings became known to the Superintendent or Commissioner is admissible in evidence without proof of the signature or official character of the person appearing to have signed it and is, in the absence of evidence to the contrary, proof of the matter asserted in it.

Marginal note:Effect of offence on contracts

1030. Unless otherwise expressly provided in this Act, a contravention of any provision of this Act or the regulations does not invalidate any contract entered into in contravention of the provision.

Marginal note:Compliance or restraining order

• 1031. (1) If a company, a society, a foreign company, a provincial company or an insurance holding company or any director, officer, employee or agent of one does not comply with any provision of this Act or the regulations other than a consumer provision, or, in the case of a company, a society or an insurance holding company, of the incorporating instrument or any by-law of the company, society or insurance holding company, the Superintendent, any complainant or any creditor of the company, society or insurance holding company may, in addition to any other right that person has, apply to a court for an order directing the company, society, foreign company, provincial company, insurance holding company, director, officer, employee or agent to comply with — or restraining the company, society, foreign company, provincial company, insurance holding company, director, officer, employee or agent from acting in breach of — the provision and, on the application, the court may so order and make any further order it thinks fit.

• Marginal note:Compliance or restraining order — consumer provisions

  (2) If a company or a foreign company or any director, officer, employee or agent of one does not comply with any applicable consumer provision, the Commissioner or any complainant may, in addition to any other right that person has, apply to a court for an order directing the company, foreign company, director, officer, employee or agent to comply with — or restraining the company, foreign company, director, officer, employee or agent from acting in breach of — the consumer provision and, on the application, the court may so order and make any further order it thinks fit.

Marginal note:Appeals

1032. Any decision or order of a court under this Act may be appealed to the court of appeal.

Marginal note:Recovery and application of fines

1033. All fines payable under this Act are recoverable and enforceable, with costs, at the suit of Her Majesty in right of Canada, instituted by the Attorney General of Canada, and, when recovered, belong to Her Majesty in right of Canada.