Bank Act (S.C. 1991, c. 46)

Security Certificates and Transfers

Marginal note:Definitions

81 In this section and sections 82 to 135,

adverse claim

adverse claim includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in a security; (opposition)

bona fide purchaser

bona fide purchaser means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or order form or of a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank; (acheteur de bonne foi)

clearing agency

clearing agency means a person designated as a recognized clearing agency by the Superintendent; (agence de compensation et de dépôt)

delivery

delivery means voluntary transfer of possession; (livraison ou remise)

fungible

fungible, in respect of securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit; (fongibles)

genuine

genuine means free of forgery or counterfeit; (authentique)

good faith

good faith means honesty in fact in the conduct of the transaction concerned; (bonne foi)

over-issue

over-issue means the issue of securities in excess of any maximum number of securities that the issuer is authorized to issue; (émission excédentaire)

purchaser

purchaser means a person who takes an interest in a security by sale, mortgage, pledge, issue, reissue, gift or any other voluntary transaction; (acquéreur)

security

security or security certificate means an instrument issued by a bank that is

• (a) in bearer, order or registered form,

• (b) of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,

• (c) one of a class or series or by its terms divisible into a class or series of instruments, and

• (d) evidence of a share, participation or other interest in or obligation of a bank,

but does not include an instrument evidencing a deposit or, in the case of a federal credit union, a membership share; (valeur mobilière ou certificat de valeur mobilière)

securities broker

securities broker means a person who is engaged for all or part of the person’s time in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to, a customer; (courtier)

trust indenture

trust indenture has the meaning given that expression by section 294; (acte de fiducie)

unauthorized

unauthorized, in relation to a signature or an endorsement, means a signature or an endorsement made without actual, implied or apparent authority, and includes a forgery; (non autorisé)

uncertificated security

uncertificated security means a security, not evidenced by a security certificate, the issue and any transfer of which is registered or recorded in records maintained for that purpose by or on behalf of a bank; (valeur mobilière sans certificat)

valid

valid means issued in accordance with the applicable law or validated under section 97. (valide)

Marginal note:Provisions governing transfers of securities

82 The transfer of a security is governed by sections 83 to 135.

Marginal note:Security a negotiable instrument

• 83 (1) A security is a negotiable instrument but, in the case of any inconsistency between the provisions of the Bills of Exchange Act and this Act, this Act prevails to the extent of the inconsistency.

• Marginal note:Bearer form

  (2) A security is in bearer form if it is payable to bearer according to its terms and not by reason of any endorsement.

• Marginal note:Order form

  (3) A security is in order form where the security is not a share and, by its terms, it is payable to the order or assigns of any person therein specified with reasonable certainty or to the person or the person’s order.

• Marginal note:Registered form

  (4) A security is in registered form if

  • (a) it specifies a person entitled to the security or to the rights it evidences, and its transfer is capable of being recorded in a securities register; or

  • (b) it bears a statement that it is in registered form.

Marginal note:Status of guarantor

84 A guarantor for an issuer of a security is deemed to be an issuer to the extent of the guarantee, whether or not the guarantor’s obligation is noted on the security.

Marginal note:Rights of holder

• 85 (1) Subject to Part VII, every security holder is entitled at the holder’s option to a security certificate that complies with this Act or to a non-transferable written acknowledgement of the holder’s right to obtain a security certificate that complies with this Act from a bank in respect of the securities of that bank held by the security holder.

• Marginal note:Fee for security certificate

  (2) A bank may charge a fee, not exceeding a prescribed amount, for a security certificate issued in respect of a transfer.

• Marginal note:Joint holders

  (3) A bank is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery of a security certificate to one of several joint holders is sufficient delivery to all joint holders of the security.

Marginal note:Signatures

• 86 (1) A security certificate shall be signed by or bear the printed or otherwise mechanically reproduced signature of at least one of the following:

  • (a) a director or officer of the bank;

  • (b) a registrar or transfer agent of the bank or a branch transfer agent or a natural person on their behalf; or

  • (c) a trustee who certifies it in accordance with a trust indenture.

• Marginal note:Continuation of validity of signature

  (2) If a security certificate contains a person’s printed or mechanically reproduced signature, the bank may issue the security certificate even if the person has ceased to be a director or officer of the bank. The security certificate is as valid as if the person were a director or officer at the date of its issue.

Marginal note:Contents of share certificate

87 There shall be stated on the face of each share certificate issued by a bank after the coming into force of this section

• (a) the name of the bank;

• (b) a statement that the bank is subject to the Bank Act;

• (c) the name of the person to whom the share certificate is issued; and

• (d) the number and class of shares and the designation of any series that the certificate represents.

Marginal note:Restrictions and charges

• 88 (1) No charge in favour of a bank and no restriction on transfer other than a constraint under Part VII is effective against a transferee of a security issued by the bank if the transferee has no actual knowledge of the charge or restriction unless it or a reference to it is noted conspicuously on the security certificate.

• Marginal note:No restriction

  (2) If any of the issued shares of a distributing bank remain outstanding and are held by more than one person, the bank may not restrict the transfer or ownership of its shares except by way of a constraint under Part VII.

• Marginal note:Continuance

  (3) If a body corporate that is continued as a bank under this Act has outstanding security certificates and the words “private company” or “private corporation” appear on the certificates, those words are deemed to be a notice of a charge or restriction for the purposes of subsection (1).

Marginal note:Particulars of class

• 89 (1) There shall be stated legibly on a share certificate issued after the coming into force of this section by a bank that is authorized to issue shares of more than one class or series

  • (a) the rights, privileges, restrictions and conditions attached to the shares of each class and series existing when the share certificate is issued; or

  • (b) that the class or series of shares that the certificate represents has rights, privileges, restrictions or conditions attached thereto and that the bank will furnish a shareholder, on demand and without charge, with a full copy of

    • (i) the text of the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as those rights, privileges, restrictions and conditions have been fixed by the directors, and

    • (ii) the text of the authority of the directors, if the directors are so authorized, to fix the rights, privileges, restrictions and conditions of subsequent series of shares.

• Marginal note:Duty

  (2) Where a share certificate issued by a bank contains the statement mentioned in paragraph (1)(b), the bank shall provide a shareholder, on demand and without charge, with a full copy of the texts referred to in subparagraphs (1)(b)(i) and (ii).

Marginal note:Fractional share

90 A bank may issue a certificate for a fractional share or may issue in place thereof a scrip certificate in bearer form that entitles the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share.

Marginal note:Scrip certificates

91 The directors of a bank may attach conditions to any scrip certificate issued by the bank, including conditions that

• (a) the scrip certificate becomes void if not exchanged for a share certificate representing a full share before a specified date; and

• (b) any shares for which the scrip certificate is exchangeable may, notwithstanding any pre-emptive right, be issued by the bank to any person and the proceeds thereof may be distributed rateably to the holders of all the scrip certificates.

Marginal note:Holders of fractional shares

• 92 (1) A holder of a fractional share issued by a bank is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share.

• Marginal note:Holders of scrip certificates

  (2) A holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.

Marginal note:Dealings with registered owner

• 93 (1) A bank or a trustee within the meaning of section 294 may, subject to subsections 137(5) to (7) and sections 138 to 141 and 145, treat the registered owner of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payment in respect of the security and to exercise all of the rights and powers of an owner of the security.

• Marginal note:Constructive registered holder

  (2) Notwithstanding subsection (1), a bank may treat a person as a registered security holder entitled to exercise all of the rights of the security holder that the person represents, if that person provides the bank with evidence as described in subsection 127(4) that the person is

  • (a) the heir or personal representative of a deceased security holder or the personal representative of the heirs of the deceased security holder;

  • (b) the personal representative of a registered security holder who is a minor, an incompetent person or a missing person; or

  • (c) a liquidator of, or a trustee in bankruptcy for, a registered security holder.

• Marginal note:Permissible registered holder

  (3) If a person on whom the ownership of a security of a bank devolves by operation of law, other than a person described in subsection (2), provides proof of that person’s authority to exercise rights or privileges in respect of a security of the bank that is not registered in the person’s name, the bank shall, subject to this Act, treat that person as entitled to exercise those rights or privileges.

• Marginal note:Immunity of bank

  (4) A bank is not required to inquire into the existence of, or see to the performance or observance of, any duty owed to a third person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this Part, as the owner or registered holder thereof.

Marginal note:Minors

94 If a minor exercises any rights of ownership in the securities of a bank, no subsequent repudiation or avoidance is effective against the bank.

Marginal note:Joint shareholders

95 A bank may treat as owners of a security the survivors of persons to whom the security was issued as joint holders, if the bank receives proof satisfactory to it of the death of any of the joint holders.

Marginal note:Transmission of securities

• 96 (1) Subject to the provisions of Part VII and any applicable law relating to the collection of taxes, a person referred to in paragraph 93(2)(a) is entitled to become registered as the owner of a security, or to designate another person to be registered as the owner of a security, if the person referred to in paragraph 93(2)(a) delivers to the bank or its transfer agent

  • (a) the original grant of probate or of letters of administration, or a copy thereof certified to be a true copy by

    • (i) the court that granted the probate or letters of administration,

    • (ii) a trust company incorporated under the Trust and Loan Companies Act or under the laws of a province, or

    • (iii) a lawyer or notary acting on behalf of the person referred to in paragraph 93(2)(a), or

  • (b) in the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province,

  together with

  • (c) an affidavit or declaration of transmission made by the person referred to in paragraph 93(2)(a) that states the particulars of the transmission, and

  • (d) the security certificate that was owned by the deceased holder

    • (i) in the case of a transfer to the person referred to in paragraph 93(2)(a), with or without the endorsement of that person, and

    • (ii) in the case of a transfer to any other person, endorsed in accordance with section 111,

  and accompanied by any assurance the bank may require under section 127.

• Marginal note:Excepted transmissions

  (2) Notwithstanding subsection (1), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to Part VII and any applicable law relating to the collection of taxes, to become registered as the owner or to designate a person to be registered as the owner, if the personal representative delivers to the bank or its transfer agent the following documents, namely,

  • (a) the security certificate that was owned by the deceased holder; and

  • (b) reasonable proof of the governing laws, of the deceased holder’s interest in the security and of the right of the personal representative or the designated person to become the registered shareholder.

• Marginal note:Right of bank to treat as owner

  (3) Subject to Part VII, delivery of the documents referred to in this section empowers a bank or its transfer agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in paragraph 93(2)(a) or to such person as the person referred to in that paragraph may designate and, thereafter, to treat the person who becomes so registered as the owner of that security.