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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2020-05-17 and last amended on 2020-05-09. Previous Versions

PART VCapital Structure (continued)

Share Capital (continued)

Marginal note:Designation of shares

 A federal credit union must not designate a class of its shares as “membership shares” or any variation of those words.

  • 2010, c. 12, s. 1931

Marginal note:Classes of shares

  •  (1) The by-laws of a bank that is not a federal credit union may provide for more than one class of shares and, if they so provide, they must set 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 bank is authorized to issue.

  • Marginal note:Shareholder approval

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

  • 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).

  • 1991, c. 46, s. 61
  • 2001, c. 9, s. 60
  • 2010, c. 12, s. 1932

Marginal note:Shares issued in series

  •  (1) The by-laws of a bank may, subject to any limitations set out in them, authorize the issue of any class of shares in one or more series and may

    • (a) fix the maximum number of shares in each series and determine the designation, rights, privileges, restrictions and conditions attaching to them; and

    • (b) authorize the directors to do anything referred to in paragraph (a).

  • Marginal note:Effective date

    (1.1) In the case of a federal credit union, a by-law referred to in subsection (1) must be made by special resolution of the members. If the federal credit union has issued shares, the by-law is not effective until it is confirmed by a separate special resolution of the shareholders, the class of shareholders or the holders of the series of shares that is affected by the by-law.

  • 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) If the directors exercise their authority under paragraph (1)(b), the directors shall, before the issue of shares of the series, send to the Superintendent particulars of the series of shares and a copy of the by-law that granted the authority to the directors.

  • 1991, c. 46, s. 62
  • 2005, c. 54, s. 8
  • 2007, c. 6, s. 8(E)
  • 2010, c. 12, s. 1933

Marginal note:One share, one vote

 Where voting rights are attached to a share of a bank, the voting rights may confer only one vote in respect of that share.

Marginal note:Shares non-assessable

 Shares issued by a bank after the coming into force of this section are non-assessable and the shareholders are not liable to the bank or to its creditors in respect thereof.

Marginal note:Consideration for share

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

  • Marginal note:Other currencies

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

Marginal note:Stated capital account

  •  (1) A bank shall maintain a separate stated capital account for each class and series of shares it issues.

  • Marginal note:Stated capital account — membership shares

    (1.1) A federal credit union must also maintain a stated capital account for the membership shares it issues.

  • Marginal note:Addition to stated capital account

    (2) A bank must record in the appropriate stated capital account the full amount of any consideration it receives for any shares or membership shares it issues.

  • Marginal note:Exception

    (3) Despite subsection (2), a bank may, subject to subsection (4), record in the stated capital account maintained for the shares of a class or series any part of the consideration it receives in an exchange if it issues shares

    • (a) in exchange for

      • (i) property of a person who immediately before the exchange did not deal with the bank at arm’s length within the meaning of that expression in the Income Tax Act,

      • (ii) shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the bank at arm’s length within the meaning of that expression in the Income Tax Act, or

      • (iii) property of a person who immediately before the exchange dealt with the bank at arm’s length within the meaning of that expression in the Income Tax Act if the person, the bank and all of the holders of shares in the class or series of shares so issued consent to the exchange;

    • (b) under an agreement referred to in subsection 224(1); or

    • (c) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated bank.

  • Marginal note:Exception

    (3.1) Despite subsection (2), a federal credit union may, subject to subsection (4), record in the stated capital account maintained for its membership shares any part of the consideration it receives in an exchange if it issues membership shares

    • (a) in exchange for

      • (i) property of a person who immediately before the exchange did not deal with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act,

      • (ii) shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act, or

      • (iii) property of a person who immediately before the exchange dealt with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act if the person, the federal credit union and all of the holders of the membership shares so issued consent to the exchange;

    • (b) under an agreement referred to in subsection 224(1); or

    • (c) to shareholders of an amalgamating body corporate who receive the membership shares in addition to or instead of securities of the amalgamated bank.

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

    (4) On the issuance of a share or membership share, a bank must not add to the appropriate stated capital account an amount greater than the amount of the consideration it receives for the share or membership share.

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

    (5) Where a bank that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the bank as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 77(4).

  • Marginal note:Constraint — federal credit union

    (6) If the bank referred to in subsection (5) is a federal credit union, the addition must be approved by special resolution of the members and by a separate special resolution of the shareholders, the class of shareholders or the holders of the series of shares that is affected by the special resolution, unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 77(4).

  • 1991, c. 46, s. 66
  • 1997, c. 15, s. 7
  • 2005, c. 54, s. 9
  • 2010, c. 12, s. 1934
 
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