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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2022-07-13 and last amended on 2022-06-30. Previous Versions

PART VICorporate Governance (continued)

Fundamental Changes (continued)

Amalgamation (continued)

Marginal note:Amalgamation agreement

  •  (1) Each applicant proposing to amalgamate shall enter into an amalgamation agreement.

  • Marginal note:Contents of agreement

    (2) Every amalgamation agreement shall set out the terms and means of effecting the amalgamation and, in particular,

    • (a) the name of the amalgamated bank and the province in which its head office is to be situated;

    • (a.1) if the amalgamated bank is to be a federal credit union, a statement that the amalgamated bank will be organized and carry on business on a cooperative basis in accordance with section 12.1;

    • (b) the name and place of ordinary residence of each proposed director of the amalgamated bank;

    • (c) the manner in which the shares or membership shares of each applicant are to be converted into shares or other securities, or into membership shares, of the amalgamated bank;

    • (d) if any shares or membership shares of an applicant are not to be converted into shares or other securities, or into membership shares, of the amalgamated bank, the amount of money or securities that the holders of those shares are to receive in addition to or in lieu of shares or other securities, or membership shares, of the amalgamated bank;

    • (e) the manner of payment of money in lieu of the issue of fractional shares of the amalgamated bank or of any other body corporate that are to be issued in the amalgamation;

    • (f) the proposed by-laws of the amalgamated bank;

    • (g) details of any other matter necessary to perfect the amalgamation and to provide for the subsequent management and operation of the amalgamated bank; and

    • (h) the proposed effective date of the amalgamation.

  • Marginal note:Cross ownership of shares

    (3) If shares or membership shares of one of the applicants are held by or on behalf of another of the applicants, other than shares or membership shares held in the capacity of a personal representative or by way of security, the amalgamation agreement must provide for the cancellation of those shares or membership shares when the amalgamation becomes effective without any repayment of capital in respect of them, and no provision may be made in the agreement for the conversion of those shares or membership shares into shares or membership shares of the amalgamated bank.

  • 1991, c. 46, s. 224
  • 2005, c. 54, s. 47
  • 2010, c. 12, s. 1998

Marginal note:Approval of agreement by Superintendent

 An amalgamation agreement must be submitted to the Superintendent for approval, and any approval of the agreement under subsection 226(4) by the holders of any class or series of shares of an applicant, and, if applicable, by the members, is invalid unless, before the date of the approval, the Superintendent has approved the agreement in writing.

  • 1991, c. 46, s. 225
  • 2007, c. 6, s. 14
  • 2010, c. 12, s. 1999(E)

Marginal note:Approval

  •  (1) The directors of each applicant must submit an amalgamation agreement for approval to a meeting of the shareholders of the applicant — or, if the applicant is a federal credit union or a local cooperative credit society, to a meeting of its members and to a meeting of its shareholders, if any.

  • Marginal note:Right to vote

    (2) Each share of an applicant carries the right to vote in respect of an amalgamation agreement whether or not it otherwise carries the right to vote.

  • Marginal note:Separate vote for class or series

    (3) The holders of shares of a class or series of shares of each applicant are entitled to vote separately as a class or series in respect of an amalgamation agreement if the agreement contains a provision that, if it were contained in a proposed amendment to the by-laws or incorporating instrument of the applicant, would entitle those holders to vote separately as a class or series.

  • Marginal note:Special resolution

    (4) Subject to subsection (3), an amalgamation agreement is approved when the shareholders of each applicant bank or body corporate have approved the amalgamation by special resolution or, if an applicant is a federal credit union or a local cooperative credit society, the members and shareholders, if any, have approved the amalgamation by separate special resolutions.

  • Marginal note:Termination

    (5) An amalgamation agreement may provide that, at any time before the issue of letters patent of amalgamation, the agreement may be terminated by the directors of an applicant even if the agreement has been approved by the shareholders — or the members and shareholders, if any — of all or any of the applicant banks or bodies corporate.

  • 1991, c. 46, s. 226
  • 2005, c. 54, s. 48
  • 2010, c. 12, s. 2000
  • 2014, c. 39, s. 275

Marginal note:Members of amalgamated federal credit union

 On the issuance of letters patent amalgamating and continuing two or more federal credit unions as one federal credit union, the members of the federal credit unions become members of the amalgamated federal credit union.

  • 2010, c. 12, s. 2001

Marginal note:Vertical short-form amalgamation

  •  (1) A bank, other than a federal credit union, may, without complying with sections 224 to 226, amalgamate with one or more bodies corporate that are incorporated by or under an Act of Parliament if the body or bodies corporate, as the case may be, are wholly-owned subsidiaries of the bank and

    • (a) the amalgamation is approved by a resolution of the directors of the bank and of each amalgamating subsidiary; and

    • (b) the resolutions provide that

      • (i) the shares of each amalgamating subsidiary will be cancelled without any repayment of capital in respect thereof,

      • (ii) the letters patent of amalgamation and the by-laws of the amalgamated bank will be the same as the incorporating instrument and the by-laws of the amalgamating bank that is the holding body corporate, and

      • (iii) no securities will be issued by the amalgamated bank in connection with the amalgamation.

  • Marginal note:Horizontal short-form amalgamation

    (2) Two or more bodies corporate incorporated by or under an Act of Parliament, none of which is a federal credit union, may amalgamate and continue as one bank, without complying with sections 224 to 226 if

    • (a) at least one of the applicants is a bank;

    • (b) the applicants are all wholly-owned subsidiaries of the same holding body corporate;

    • (c) the amalgamation is approved by a resolution of the directors of each of the applicants; and

    • (d) the resolutions provide that

      • (i) the shares of all applicants, except those of one of the applicants that is a bank, will be cancelled without any repayment of capital in respect thereof,

      • (ii) the letters patent of amalgamation and the by-laws of the amalgamated bank will be the same as the incorporating instrument and the by-laws of the amalgamating bank whose shares are not cancelled, and

      • (iii) the stated capital of the amalgamating banks and bodies corporate whose shares are cancelled will be added to the stated capital of the amalgamating bank whose shares are not cancelled.

  • 1991, c. 46, s. 227
  • 2010, c. 12, s. 2002

Marginal note:Joint application to Minister

  •  (1) Subject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 226(5), the applicants shall, within three months after the approval of the agreement in accordance with subsection 226(4) or the approval of the directors in accordance with subsection 227(1) or (2), jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one bank.

  • Marginal note:Conditions precedent to application

    (2) No application for the issue of letters patent under subsection (1) may be made unless

    • (a) notice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of each applicant is situated; and

    • (b) the application is supported by satisfactory evidence that the applicants have complied with the requirements of this Part relating to amalgamations.

  • Marginal note:Application of sections 23 to 26

    (3) If two or more bodies corporate, none of which is a bank, apply for letters patent under subsection (1), sections 23 to 26 apply in respect of the application with any modifications that the circumstances require.

  • Marginal note:Matters for consideration

    (4) Before issuing letters patent of amalgamation continuing the applicants as one bank, the Minister shall take into account all matters that the Minister considers relevant to the application, including

    • (a) the sources of continuing financial support for the amalgamated bank;

    • (b) the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of the amalgamated bank;

    • (c) the business record and experience of the applicants;

    • (d) the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;

    • (e) whether the amalgamated bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

    • (f) the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;

    • (g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated bank and its affiliates may affect the supervision and regulation of the amalgamated bank, having regard to

      • (i) the nature and extent of the proposed financial services activities to be carried out by the amalgamated bank and its affiliates, and

      • (ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the amalgamated bank;

    • (h) if the amalgamated bank will be a federal credit union, that it will be organized and carry on business on a cooperative basis in accordance with section 12.1; and

    • (i) the best interests of the financial system in Canada, including, if the amalgamated bank will be a federal credit union, the best interests of the cooperative financial system in Canada.

  • 1991, c. 46, s. 228
  • 2001, c. 9, s. 85
  • 2010, c. 12, s. 2003

Marginal note:Issue of letters patent

  •  (1) Where an application has been made to the Minister in accordance with section 228, the Minister may issue letters patent of amalgamation continuing the applicants as one bank.

  • Marginal note:Exception

    (1.1) In the case of an application made under subsection 223(1.2) or (1.3), the Minister shall not issue letters patent of amalgamation unless the Minister has issued, under subsection 35(1), letters patent continuing as a federal credit union each applicant that was a local cooperative credit society.

  • Marginal note:Letters patent

    (2) Where letters patent are issued pursuant to this section, section 28 applies with such modifications as the circumstances require in respect of the issue of the letters patent.

  • Marginal note:Publication of notice

    (3) The Superintendent shall cause to be published in the Canada Gazette notice of the issuance of letters patent pursuant to subsection (1).

  • 1991, c. 46, s. 229
  • 2014, c. 39, s. 276
  • 2016, c. 7, s. 125

Marginal note:Court enforcement

  •  (1) If a bank or any director, officer, employee or agent of a bank is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the bank or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.

  • Marginal note:Appeal

    (2) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.

  • 2001, c. 9, s. 86

Marginal note:Effect of letters patent

  •  (1) On the day provided for in the letters patent issued under section 229

    • (a) the amalgamation of the applicants and their continuance as one bank becomes effective;

    • (b) the property of each applicant continues to be the property of the amalgamated bank;

    • (c) the amalgamated bank continues to be liable for the obligations of each applicant;

    • (d) any existing cause of action, claim or liability to prosecution is unaffected;

    • (e) any civil, criminal or administrative action or proceeding pending by or against an applicant may be continued to be prosecuted by or against the amalgamated bank;

    • (f) any conviction against, or ruling, order or judgment in favour of or against, an applicant may be enforced by or against the amalgamated bank;

    • (g) if any director or officer of an applicant continues as a director or officer of the amalgamated bank, any disclosure by that director or officer of a material interest in any contract made to the applicant shall be deemed to be disclosure to the amalgamated bank; and

    • (h) [Repealed, 2001, c. 9, s. 87]

    • (i) the letters patent of amalgamation are the incorporating instrument of the amalgamated bank.

  • Marginal note:Minutes

    (2) Any deemed disclosure under paragraph (1)(g) shall be recorded in the minutes of the first meeting of directors of the amalgamated bank.

  • 1991, c. 46, ss. 230, 576
  • 1997, c. 15, s. 27
  • 1999, c. 28, s. 14
  • 2001, c. 9, s. 87

Marginal note:Transitional

  •  (1) Notwithstanding any other provision of this Act or the regulations, the Minister may, by order, on the recommendation of the Superintendent, grant to a bank in respect of which letters patent were issued under subsection 229(1) permission to

    • (a) engage in a business activity specified in the order that a bank is not otherwise permitted by this Act to engage in and that one or more of the amalgamating bodies corporate was engaging in at the time application for the letters patent was made;

    • (b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;

    • (c) [Repealed, 1994, c. 47, s. 16]

    • (d) hold assets that a bank is not otherwise permitted by this Act to hold if the assets were held by one or more of the amalgamating bodies corporate at the time the application for the letters patent was made;

    • (e) acquire and hold assets that a bank is not otherwise permitted by this Act to acquire or hold if one or more of the amalgamating bodies corporate were obliged, at the time the application for the letters patent was made, to acquire those assets; and

    • (f) maintain outside Canada any records or registers required by this Act to be maintained in Canada.

  • Marginal note:Duration of exceptions

    (2) The permission granted under any of paragraphs (1)(a) to (f) shall be expressed to be granted for a period specified in the order not exceeding

    • (a) with respect to any matter described in paragraph (1)(a), 30 days after the date of issue of the letters patent or

      • (i) if the activity is conducted under an agreement existing on the date of issue of the letters patent, the expiry of the agreement, or

      • (ii) if the bank is a federal credit union and an undertaking to cease engaging in the activity has been given under subsection 973.02(1), the cessation date set out in the undertaking in respect of the activity;

    • (b) with respect to any matter described in paragraph (1)(b), ten years; and

    • (c) with respect to any matter described in any of paragraphs (1)(d) to (f), two years.

  • Marginal note:Renewal

    (3) Subject to subsection (4), the Minister may, by order on the recommendation of the Superintendent, renew a permission granted by order under subsection (1) with respect to any matter described in any of paragraphs (1)(b) to (e) for any further period or periods that the Minister considers necessary.

  • Marginal note:Limitation

    (4) The Minister shall not grant to a bank any permission

    • (a) with respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the bank to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank that the bank will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and

    • (b) with respect to matters described in paragraphs (1)(d) and (e), that purports to be effective more than ten years after the date of issue of the letters patent.

  • 1991, c. 46, s. 231
  • 1994, c. 47, s. 16
  • 1997, c. 15, s. 28
  • 2007, c. 6, s. 15
  • 2014, c. 39, s. 277
 
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