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Bank Act (S.C. 1991, c. 46)

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Act current to 2020-05-04 and last amended on 2020-04-30. Previous Versions

PART VCapital Structure (continued)

Share Capital (continued)

Marginal note:Subsidiary holding shares

 Subject to the regulations, a bank that was in existence immediately prior to the day this Part comes into force shall cause any subsidiary of the bank that holds shares of the bank, or of any body corporate that controls the bank, or any ownership interests of any unincorporated entity that controls the bank to sell or otherwise dispose of those shares or ownership interests within six months after the day this section comes into force.

Marginal note:Reduction of capital

  •  (1) The stated capital of a bank that is not a federal credit union may be reduced by special resolution.

  • Marginal note:Reduction of capital — federal credit unions

    (1.1) The stated capital of a federal credit union may be reduced by special resolution of its members and, if it has issued shares, 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.

  • Marginal note:Limitation

    (2) A bank shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the bank is, or the reduction would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made pursuant to subsection 485(3).

  • Marginal note:Contents of special resolution

    (3) A special resolution to reduce the stated capital of a bank 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 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 or members, as the case may be, as a result of the reduction.

  • Marginal note:Conditions for approval

    (5) No approval to reduce the stated capital of a bank 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 and of the publication thereof, statements showing

    • (a) the number of the bank’s shares or membership shares, as the case may be, issued and outstanding,

    • (b) the results of the voting,

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

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

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

  • 1991, c. 46, s. 75
  • 2007, c. 6, s. 10
  • 2010, c. 12, s. 1940

Marginal note:Recovery by action

  •  (1) If any money or property was paid or distributed to a shareholder, member or other person as a consequence of a reduction of capital made contrary to section 75, a creditor of the bank may apply to a court for an order compelling the shareholder, member or other person to pay the money or deliver the property to the bank.

  • Marginal note:Shares and membership shares held by personal representative

    (2) No person holding shares or membership shares in the capacity of a personal representative and registered on the records of the bank as a shareholder or member and described in those records 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 207.

  • 1991, c. 46, s. 76
  • 2010, c. 12, s. 1941

Marginal note:Adjustment of stated capital account

  •  (1) On a purchase, redemption or other acquisition by a bank of shares or fractions of shares, or of membership shares, issued by it, other than shares or membership shares acquired under section 72 or acquired through the realization of security and sold under subsection 73(2), the bank must deduct from the stated capital account maintained for the class or series of shares, or for the membership shares, as the case may be, 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, or in respect of the membership shares, as the case may be, by the number of shares of that class or series, or the number of membership shares, as the case may be, so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series, or the number of membership shares, as the case may be, outstanding immediately before the purchase, redemption or other acquisition.

  • Marginal note:Idem

    (2) A bank shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 75.

  • Marginal note:Shares converted to another class

    (3) On a conversion of outstanding shares of a bank into shares of another class or series, or on a change of outstanding shares of the bank into shares of another class or series, the bank 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’s by-laws, where a bank 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 and converted into shares of another class or series, or changed under subsection 192.03(1) or 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.

  • 1991, c. 46, s. 77
  • 2010, c. 12, s. 1942

Marginal note:Addition to stated capital account

 On a conversion of any debt obligation of a bank into shares of a class or series of shares, or into membership shares, the bank must

  • (a) deduct from the liabilities of the bank 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, or for the membership shares, as the case may be, into which the debt obligation has been converted.

  • 1991, c. 46, s. 78
  • 2010, c. 12, s. 1943

Marginal note:Declaration of dividend or patronage allocation

  •  (1) The directors of a bank may declare and a bank may pay a dividend or patronage allocation by issuing fully paid shares or, subject to subsection 79.2(1), membership shares of the bank or options or rights to acquire fully paid shares or membership shares of the bank and, subject to subsection (4), the directors of a bank may declare and a bank may pay a dividend or patronage allocation in money or property, and if a dividend or patronage allocation 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 shall notify the Superintendent of the declaration of a dividend at least 15 days before the day fixed for its payment.

  • Marginal note:Stated capital account

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

  • Marginal note:When dividend or patronage allocation not to be declared

    (4) The directors of a bank must not declare and a bank must not pay a dividend or patronage allocation if there are reasonable grounds for believing that the bank is, or the payment would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made under subsection 485(3).

  • (5) [Repealed, 2007, c. 6, s. 11]

  • 1991, c. 46, s. 79
  • 2001, c. 9, s. 61
  • 2007, c. 6, s. 11
  • 2010, c. 12, s. 1944
 
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