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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2019-08-15 and last amended on 2019-06-21. Previous Versions

PART VICorporate Governance (continued)

Directors and Officers (continued)

Liability, Exculpation and Indemnification (continued)

Marginal note:Defence — due diligence

  •  (1) A director, officer or employee of a bank is not liable under section 207 or 210 or subsection 506(1) and has fulfilled their duty under subsection 158(2) if they exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on

    • (a) financial statements of the bank that were represented to them by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; or

    • (b) a report of a person whose profession lends credibility to a statement made by them.

  • Marginal note:Defence — good faith

    (2) A director or officer of a bank has fulfilled their duty under subsection 158(1) if they relied in good faith on

    • (a) financial statements of the bank that were represented to them by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; or

    • (b) a report of a person whose profession lends credibility to a statement made by them.

  • 1991, c. 46, s. 211
  • 2001, c. 9, s. 78
  • 2005, c. 54, s. 44

Marginal note:Indemnification

  •  (1) A bank may indemnify a director or officer of the bank, a former director or officer of the bank or another person who acts or acted, at the bank’s request, as a director or officer of or in a similar capacity for another entity against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by them in respect of any civil, criminal, administrative, investigative or other proceeding in which they are involved because of that association with the bank or other entity.

  • Marginal note:Advances

    (2) A bank may advance amounts to the director, officer or other person for the costs, charges and expenses of a proceeding referred to in subsection (1). They shall repay the amounts if they do not fulfil the conditions set out in subsection (3).

  • Marginal note:No indemnification

    (3) A bank may not indemnify a person under subsection (1) unless

    • (a) the person acted honestly and in good faith with a view to the best interests of, as the case may be, the bank or the other entity for which they acted at the bank’s request as a director or officer or in a similar capacity; and

    • (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the person had reasonable grounds for believing that their conduct was lawful.

  • Marginal note:Indemnification — derivative actions

    (4) A bank may with the approval of a court indemnify a person referred to in subsection (1) or advance amounts to them under subsection (2) — in respect of an action by or on behalf of the bank or other entity to procure a judgment in its favour to which the person is made a party because of the association referred to in subsection (1) with the bank or other entity — against all costs, charges and expenses reasonably incurred by them in connection with that action if they fulfil the conditions set out in subsection (3).

  • Marginal note:Right to indemnity

    (5) Despite subsection (1), a person referred to in that subsection is entitled to be indemnified by the bank in respect of all costs, charges and expenses reasonably incurred by them in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the person is subject because of the association referred to in subsection (1) with the bank or other entity described in that subsection if the person

    • (a) was not judged by the court or other competent authority to have committed any fault or omitted to do anything that they ought to have done; and

    • (b) fulfils the conditions set out in subsection (3).

  • Marginal note:Heirs and personal representatives

    (6) A bank may, to the extent referred to in subsections (1) to (5) in respect of the person, indemnify the heirs or personal representatives of any person whom the bank may indemnify under those subsections.

  • 1991, c. 46, s. 212
  • 2001, c. 9, s. 79(F)
  • 2005, c. 54, s. 44

Marginal note:Directors’ and officers’ insurance

 A bank may purchase and maintain insurance for the benefit of any person referred to in section 212 against any liability incurred by the person

  • (a) in the capacity of a director or an officer of the bank, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the bank; or

  • (b) in the capacity of a director or officer of another entity or while acting in a similar capacity for another entity, if they act or acted in that capacity at the bank’s request, except if the liability relates to a failure to act honestly and in good faith with a view to the best interests of the entity.

  • 1991, c. 46, s. 213
  • 2005, c. 54, s. 45

Marginal note:Application to court for indemnification

  •  (1) A bank or a person referred to in section 212 may apply to a court for an order approving an indemnity under that section and the court may so order and make any further order it thinks fit.

  • Marginal note:Notice to Superintendent

    (2) An applicant under subsection (1) shall give the Superintendent written notice of the application and the Superintendent is entitled to appear and to be heard at the hearing of the application in person or by counsel.

  • Marginal note:Other notice

    (3) On an application under subsection (1), the court may order notice to be given to any interested person and that person is entitled to appear and to be heard in person or by counsel at the hearing of the application.

Fundamental Changes

Amendments — Letters Patent

Marginal note:Incorporating instrument

 On the application of a bank duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the bank’s incorporating instrument.

  • 1991, c. 46, s. 215
  • 2001, c. 9, s. 80

Marginal note:Letters patent to amend

  •  (1) On receipt of an application referred to in section 215, the Minister may issue letters patent to effect the proposal.

  • Marginal note:Effect of letters patent

    (2) Letters patent issued pursuant to subsection (1) become effective on the day stated in the letters patent.

  • 1991, c. 46, s. 216
  • 2001, c. 9, s. 81

Conversion into Federal Credit Union

Marginal note:Conversion into federal credit union

 On the application of a bank that is not a federal credit union, the Minister may, by letters patent, amend the bank’s incorporating instrument to convert the bank into a federal credit union.

  • 2010, c. 12, s. 1995

Marginal note:Shareholder approval of conversion proposal

  •  (1) Before a bank makes an application under section 216.01, the directors of the bank must obtain from the shareholders, by 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 216.02(1), each share of the bank 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 216.02(1), the holders of shares of a class or series of shares of the bank 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 216.01 may be made no later than three months after the bank’s conversion proposal has been approved by the shareholders.

  • 2010, c. 12, s. 1995
 
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