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Bank Act (S.C. 1991, c. 46)

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Act current to 2021-11-17 and last amended on 2021-06-30. Previous Versions

PART VICorporate Governance (continued)

Fundamental Changes (continued)

Conversion into Bank with Common Shares

Marginal note:Conversion into bank with common shares

 On the application of a federal credit union, the Minister may, by letters patent, amend the federal credit union’s incorporating instrument to convert the federal credit union into a bank with common shares.

  • 2010, c. 12, s. 1995

Marginal note:Approval of conversion proposal

  •  (1) Before a federal credit union makes an application under section 216.08, the directors of the federal credit union must obtain from the members by special resolution and, if the federal credit union has issued shares, from the shareholders, by separate special resolution,

    • (a) approval of a conversion proposal that meets the requirements of the regulations and that has been approved by the Superintendent;

    • (b) confirmation of any by-law or of any amendment to or repeal of a by-law that is necessary to implement the conversion proposal; and

    • (c) authorization to make the application.

  • Marginal note:Additional information

    (2) The Minister may require the federal credit union to provide the Minister with any additional information that he or she considers necessary.

  • 2010, c. 12, s. 1995

Marginal note:Right to vote

  •  (1) For the purposes of subsection 216.09(1), each share of the federal credit union carries the right to vote in respect of any matter referred to in that subsection whether or not it otherwise carries the right to vote.

  • Marginal note:Class vote

    (2) For the purposes of subsection 216.09(1), the holders of shares of a class or series of shares of the federal credit union are entitled to vote separately as a class or series in respect of any matter referred to in that subsection.

  • 2010, c. 12, s. 1995

Marginal note:Time of application

 An application under section 216.08 may be made no later than three months after the bank’s conversion proposal has been approved by the members and shareholders, if any.

  • 2010, c. 12, s. 1995

Marginal note:Criteria for issuance of letters patent

 In determining whether to issue letters patent converting a federal credit union into a bank with common shares, the Minister must consider all matters that the Minister considers relevant, including whether

  • (a) there are no reasonable grounds for believing that the issuance of the letters patent would cause the bank with common shares to be in contravention of subsection 485(1), any regulation made under subsection 485(2) or any order made under subsection 485(3);

  • (b) the federal credit union’s conversion proposal was approved by special resolution of the members and a separate special resolution of the shareholders, if any;

  • (c) the conversion of the federal credit union into a bank with common shares may reasonably be expected to be achieved under the terms of the conversion proposal;

  • (d) the conversion is fair and reasonable to the members and shareholders, if any; and

  • (e) the conversion is in the best interests of the financial system in Canada, including the best interests of the cooperative financial system in Canada.

  • 2010, c. 12, s. 1995

Marginal note:Effect of letters patent

 If the Minister issues letters patent to amend a federal credit union’s incorporating instrument to convert it into a bank with common shares, then, on the day stated in the letters patent, members of the federal credit union become, in accordance with the conversion proposal, holders of common shares of the bank to which are attached the rights, privileges and restrictions set out in this Act.

  • 2010, c. 12, s. 1995

Marginal note:Regulations

  •  (1) The Governor in Council may make regulations

    • (a) respecting applications under section 216.08, including their form and the information to be contained in them;

    • (b) respecting conversion proposals to become a bank with common shares, including the information to be contained in them;

    • (c) respecting the by-laws that must be made or repealed, or the amendments that must be made to by-laws, to give effect to a conversion proposal to become a bank with common shares;

    • (d) respecting, for the purposes of a proposal to become a bank with common shares, the value of the converting federal credit union and of its membership shares and shares, if any, and authorizing the Superintendent to specify a day as of which those values must be estimated;

    • (e) concerning the fair and equitable treatment of members and shareholders, if any, under a federal credit union’s conversion proposal to become a bank with common shares;

    • (f) concerning the conversion of membership shares and shares, if any, of a federal credit union into common shares or other shares;

    • (g) authorizing the Superintendent to

      • (i) require a federal credit union that proposes to become a bank with common shares to hold one or more information sessions for its members and shareholders, if any, and to take other measures to assist its members and shareholders, if any, in forming a reasoned judgment on the proposal, and

      • (ii) set the rules under which the information sessions must be held;

    • (h) respecting restrictions on any fee, compensation or other consideration that may be paid, in respect of the conversion of a federal credit union into a bank with common shares, to any director, officer or employee of the federal credit union or to any entity with which a director, officer or employee of the federal credit union is associated;

    • (i) prohibiting, except for those issued as a result of the implementation of a conversion proposal, the issuance or provision during the period set out in the regulations of shares, share options or rights to acquire shares, of a bank that has been converted from a federal credit union into a bank with common shares to

      • (i) any director, officer or employee of the bank, or

      • (ii) any person who was a director, officer or employee of the federal credit union during the year preceding the effective date of conversion of the federal credit union; and

    • (j) generally, respecting the conversion of a federal credit union into a bank with common shares.

  • Marginal note:Canada Deposit Insurance Corporation Act

    (2) A regulation made under subsection (1) may provide for different provisions respecting a federal credit union that is subject to an order under paragraph 39.13(1)(a) of the Canada Deposit Insurance Corporation Act or is a bridge institution within the meaning of that Act.

  • Marginal note:Exemption by Superintendent

    (3) A regulation made under subsection (1) may provide that the Superintendent may, on any terms and conditions that the Superintendent considers appropriate, exempt a federal credit union from any requirements of that regulation.

  • Marginal note:Exemption by Minister

    (4) The Minister may, on any terms and conditions that the Minister considers appropriate, exempt a federal credit union from any requirement of this Act or the regulations if the federal credit union is applying for the approval of a proposal to convert itself into a bank with common shares and

    • (a) the Minister is of the opinion that the federal credit union is, or is about to be, in financial difficulty and that the exemption would help to facilitate an improvement in the financial condition of the federal credit union; or

    • (b) the federal credit union is subject to an order under paragraph 39.13(1)(a) of the Canada Deposit Insurance Corporation Act or is a bridge institution within the meaning of that Act.

  • 2010, c. 12, s. 1995
  • 2012, c. 5, s. 223

Amendments — By-laws

Marginal note:By-laws

  •  (1) The directors of a bank that is not a federal credit union may make, amend or repeal any by-laws, in the manner set out in subsections (2) and (3) and sections 218 to 222, to

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

    • (b) create new classes of shares;

    • (c) change the designation of any or all of the bank’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 bank’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 or the minimum or maximum number of directors, subject to subsection 159(1) and section 168;

    • (i.1) change the name of the bank; or

    • (j) change the province in which the head office of the bank is 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, 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 a by-law respecting a change to the name of the bank, approved by the Superintendent.

  • Marginal note:Letters patent

    (4) If the name of a bank or the province in Canada in which the head office of the bank is situated is changed under this section, the Superintendent may issue letters patent to amend the bank’s incorporating instrument accordingly.

  • Marginal note:Effect of letters patent

    (5) Letters patent issued under subsection (4) become effective on the day stated in the letters patent.

  • 1991, c. 46, s. 217
  • 2001, c. 9, s. 82
  • 2005, c. 54, s. 46
  • 2007, c. 6, s. 13
  • 2010, c. 12, s. 1996

Marginal note:Class vote

  •  (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 bank, 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

 A proposed addition or amendment to the by-laws referred to in subsection 218(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

 Where a special resolution referred to in subsection 217(2) so states, the directors may, without further approval of the shareholders, revoke the special resolution.

Marginal note:Proposal to amend

  •  (1) Subject to subsection (2), a director or a shareholder who is entitled to vote at an annual meeting of shareholders of a bank may, in accordance with sections 143 and 144, make a proposal to make an application referred to in section 215 or to make, amend or repeal the by-laws referred to in subsection 217(1) of the bank.

  • 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 a bank is to be considered must set out the proposal.

  • 1991, c. 46, s. 221
  • 2001, c. 9, s. 83

Marginal note:Rights preserved

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

Amalgamation

Marginal note:Application to amalgamate

  •  (1) On the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including banks that are not federal credit unions and bank holding companies, the Minister may issue letters patent amalgamating and continuing the applicants as one bank, other than a federal credit union.

  • Marginal note:Application to amalgamate — federal credit unions

    (1.1) On the joint application of two or more federal credit unions, the Minister may issue letters patent amalgamating and continuing the applicants as one federal credit union.

  • Marginal note:Federal credit union and local cooperative credit society

    (1.2) On the joint application of one or more federal credit unions and one or more local cooperative credit societies that have applied under subsection 33(3) to be continued as federal credit unions, the Minister may issue letters patent amalgamating and continuing the applicants as one federal credit union.

  • Marginal note:Local cooperative credit societies

    (1.3) On the joint application of two or more local cooperative credit societies that have applied under subsection 33(4) to be continued as federal credit unions, the Minister may issue letters patent amalgamating and continuing the applicants as one federal credit union.

  • Marginal note:Restriction

    (2) Despite subsection (1), if one of the applicants is a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies, the Minister shall not issue letters patent referred to in subsection (1) unless

    • (a) the amalgamated bank would be a widely held bank; or

    • (b) the amalgamated bank would be controlled by a widely held bank holding company that, at the time the application was made, controlled

      • (i) the applicant, or

      • (ii) any other applicant that is a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies.

  • Marginal note:Restriction

    (3) Despite subsection (1), if the amalgamated bank would be a bank with equity of twelve billion dollars or more, the Minister shall not issue letters patent referred to in that subsection unless the amalgamated bank is

    • (a) widely held;

    • (b) controlled, within the meaning of paragraphs 3(1)(a) and (d), by a widely held bank, or by a widely held bank holding company, that controlled one of the applicants at the time the application was made; or

    • (c) controlled, within the meaning of paragraph 3(1)(d), by a widely held insurance holding company, or by an eligible Canadian financial institution, as defined in subsection 370(1), other than a bank, or by an eligible foreign institution, as defined in subsection 370(1), that controlled one of the applicants at the time the application was made.

  • 1991, c. 46, s. 223
  • 2001, c. 9, s. 84
  • 2007, c. 6, s. 132
  • 2010, c. 12, s. 1997
  • 2012, c. 5, s. 8
  • 2014, c. 39, s. 274
 
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