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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2020-10-05 and last amended on 2020-05-09. Previous Versions

PART XVBank Holding Companies (continued)

DIVISION 5Capital Structure (continued)

Share Capital (continued)

Marginal note:Reduction of capital

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

  • Marginal note:Limitation

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

  • Marginal note:Contents of special resolution

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

  • Marginal note:Approval by Superintendent

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

  • Marginal note:Exception

    (4.1) Subsection (4) does not apply if

    • (a) the reduction in the stated capital is made solely as a result of changes made to the accounting principles referred to in subsection 308(4); and

    • (b) there is to be no return of capital to shareholders as a result of the reduction.

  • Marginal note:Conditions for approval

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

  • Marginal note:Statements to be submitted

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

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

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

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

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

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

  • 2001, c. 9, s. 183
  • 2007, c. 6, s. 112

Marginal note:Recovery by action

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

  • Marginal note:Shares held by personal representative

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

  • Marginal note:Limitation

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

  • Marginal note:Remedy preserved

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

  • 2001, c. 9, s. 183

Marginal note:Adjustment of stated capital account

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

  • Marginal note:Adjustment of stated capital account

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

  • Marginal note:Shares converted to another class

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

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

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

  • Marginal note:Stated capital of convertible shares

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

  • Marginal note:Conversion or change of shares

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

  • 2001, c. 9, s. 183

Marginal note:Addition to stated capital account

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

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

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

  • 2001, c. 9, s. 183

Marginal note:Declaration of dividend

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

  • Marginal note:Notice to Superintendent

    (2) The directors of a bank holding company shall notify the Superintendent of the declaration of a dividend at least 15 days before the day fixed for its payment.

  • Marginal note:Share dividend

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

  • Marginal note:When dividend not to be declared

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

  • 2001, c. 9, s. 183
  • 2007, c. 6, s. 113

Subordinated Indebtedness

Marginal note:Restriction on subordinated indebtedness

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

  • Marginal note:References to subordinated indebtedness

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

  • Marginal note:Other currencies

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

  • 2001, c. 9, s. 183
 
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