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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)

Corporate Records (continued)

Civil remedies (continued)

Marginal note:Tipping — compensation to sellers and purchasers

  •  (1) An insider of a bank who discloses confidential information with respect to the bank that has not been generally disclosed and that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the bank is liable to compensate any person who subsequently sells securities of the bank to or purchases them from any person who received the information unless the insider establishes that

    • (a) the insider reasonably believed that the information had been generally disclosed;

    • (b) the information was known or ought reasonably to have been known by the person who alleges that they suffered the loss;

    • (c) if the insider is not a person described in subsection 271(3) or (4), the disclosure of the information was necessary in the course of their business; or

    • (d) if the insider is a person described in subsection 271(3) or (4), the disclosure of the information was necessary to effect the take-over bid or business combination.

  • Marginal note:Tipping — compensation to bank

    (2) The insider is accountable to the bank for any benefit or advantage received or receivable by them as a result of a disclosure of information as described in subsection (1) unless they establish the circumstances described in paragraph (1)(a), (c) or (d).

  • 2005, c. 54, s. 57

Marginal note:Measure of damages

  •  (1) The court may assess damages under subsection 271(6) or 271.1(1) in accord­ance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in respect of a security of a distributing bank, the court shall consider the following:

    • (a) if the plaintiff is a purchaser, the price that they paid for the security less the average market price of the security over the 20 trading days immediately following general disclosure of the information; and

    • (b) if the plaintiff is a seller, the average market price of the security over the 20 trading days immediately following general disclosure of the information, less the price that they received for the security.

  • Marginal note:Liability — more than one insider

    (2) If more than one insider is liable under subsection 271(6) or 271.1(1) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.

  • Marginal note:Limitation

    (3) An action to enforce a right created by subsection 271(6) or (7) or section 271.1 may be commenced only within two years after discovery of the facts that gave rise to the cause of action.

  • 1991, c. 46, s. 272
  • 2005, c. 54, s. 57

Prospectus

Marginal note:Distribution

  •  (1) No person, including a bank, shall distribute securities of a bank that is not a federal credit union except in accordance with the regulations made under subsection (2).

  • Marginal note:Regulations

    (2) The Governor in Council may make regulations respecting the distribution of securities of a bank that is not a federal credit union, including

    • (a) respecting the information that is to be disclosed by such a bank before the distribution of any of its securities, including the information that is to be included in a prospectus;

    • (b) respecting the manner of disclosure and the form of the information that is to be disclosed; and

    • (c) exempting any class of distribution of securities from the application of subsection (1).

  • 1991, c. 46, s. 273
  • 2005, c. 54, s. 57
  • 2012, c. 5, s. 9

Marginal note:Distribution — federal credit union

  •  (1) No person, including a bank, shall distribute securities of a federal credit union except in accordance with the regulations made under subsection (2).

  • Marginal note:Regulations

    (2) The Governor in Council may make regulations respecting the distribution of securities of a federal credit union, including

    • (a) respecting the information that is to be disclosed by a federal credit union before the distribution of any of its securities, including the information that is to be included in a prospectus;

    • (b) respecting the manner of disclosure and the form of the information that is to be disclosed; and

    • (c) exempting any class of distribution of securities from the application of subsection (1).

  • 2012, c. 5, s. 10

Marginal note:Order of exemption

  •  (1) On application by a bank or any person proposing to make a distribution, the Superintendent may, by order, exempt that distribution from the application of any regulations made under subsection 273(2) or 273.1(2) if the Superintendent is satisfied that the bank or federal credit union, as the case may be, has disclosed or is about to disclose, in compliance with the laws of the relevant jurisdiction, information relating to the distribution that in form and content substantially complies with the requirements of those regulations.

  • Marginal note:Conditions

    (2) An order under subsection (1) may contain any conditions or limitations that the Superintendent deems appropriate.

  • 1991, c. 46, s. 274
  • 2005, c. 54, s. 57
  • 2012, c. 5, s. 11

Going-private Transactions and Squeeze-out Transactions

Marginal note:Going-private transactions

 A bank may carry out a going-private transaction if it complies with any applicable provincial securities laws.

  • 1991, c. 46, s. 275
  • 1994, c. 26, s. 5(F)
  • 1999, c. 31, s. 11
  • 2005, c. 54, s. 57

Marginal note:Squeeze-out transactions

 No bank may carry out a squeeze-out transaction unless, in addition to any approval by holders of shares required by or under this Act or the bank’s by-laws, the transaction is approved by ordinary resolution of the holders of each class of shares affected by the transaction, voting separately, whether or not the shares otherwise carry the right to vote. However, the following do not have the right to vote on the resolution:

  • (a) affiliates of the bank; and

  • (b) holders of shares that following the squeeze-out transaction would be entitled to consideration of greater value or to superior rights or privileges than those available to other holders of shares of the same class.

  • 1991, c. 46, s. 276
  • 1999, c. 31, s. 12
  • 2005, c. 54, s. 57

Marginal note:Right to dissent

  •  (1) A holder of shares of a bank may dissent if the bank resolves to carry out a going-private transaction or squeeze-out transaction that affects those shares.

  • Marginal note:Payment for shares

    (2) In addition to any other right that the shareholder may have, but subject to subsection (25), a shareholder who complies with this section is, when the action approved by the resolution from which the shareholder dissents becomes effective, entitled to be paid by the bank the fair value of the shares in respect of which the shareholder dissents, determined as of the close of business on the day before the resolution was adopted by the shareholders.

  • Marginal note:No partial dissent

    (3) A dissenting shareholder may claim under this section only with respect to all of the shares of a class held on behalf of any one beneficial owner and registered in the name of the dissenting shareholder.

  • Marginal note:Objection

    (4) A dissenting shareholder shall send to the bank, at or before any meeting of shareholders at which a resolution referred to in subsection (2) is to be voted on by the shareholders, a written objection to the resolution unless the bank did not give notice to the shareholder of the purpose of the meeting and their right to dissent.

  • Marginal note:Notice that resolution was adopted

    (5) The bank shall within 10 days after the day on which the shareholders adopt the resolution send to each shareholder who sent an objection under subsection (4) notice that the resolution was adopted. If it is necessary for the Minister or Superintendent to approve the transaction within the meaning of subsection 973(1) before it becomes effective, the bank shall send notice within 10 days after the approval. Notice is not required to be sent to a shareholder who voted for the resolution or one who has withdrawn their objection.

  • Marginal note:Demand for payment

    (6) A dissenting shareholder shall within 20 days after receiving the notice referred to in subsection (5) — or, if they do not receive it, within 20 days after learning that the resolution was adopted by the shareholders — send to the bank a written notice containing

    • (a) their name and address;

    • (b) the number and class of shares in respect of which they dissent; and

    • (c) a demand for payment of the fair value of those shares.

  • Marginal note:Share certificates

    (7) A dissenting shareholder shall within 30 days after sending a notice under subsection (6) send the certificates representing the shares in respect of which they dissent to the bank or its transfer agent.

  • Marginal note:Forfeiture

    (8) A dissenting shareholder who fails to comply with subsection (7) has no right to make a claim under this section.

  • Marginal note:Endorsing certificate

    (9) A bank or its transfer agent shall endorse on any share certificate received in accordance with subsection (7) a notice that the holder is a dissenting shareholder under this section and shall without delay return the share certificates to the dissenting shareholder.

  • Marginal note:Suspension of rights

    (10) On sending a notice under subsection (6), a dissenting shareholder ceases to have any rights as a shareholder other than to be paid the fair value of their shares as determined under this section. However, the shareholder’s rights are reinstated as of the date the notice was sent if

    • (a) the shareholder withdraws the notice before the bank makes an offer under subsection (11);

    • (b) the bank fails to make an offer in accordance with subsection (11) and the shareholder withdraws the notice; or

    • (c) the directors revoke under section 220 the special resolution that was made in respect of the going-private transaction or squeeze-out transaction.

  • Marginal note:Offer to pay

    (11) A bank shall, no later than seven days after the later of the day on which the action approved by the resolution from which the shareholder dissents becomes effective and the day on which the bank received the notice referred to in subsection (6), send to each dissenting shareholder who sent a notice

    • (a) a written offer to pay for their shares in an amount considered by the directors of the bank to be the fair value, accompanied by a statement showing how the fair value was determined; or

    • (b) if subsection (25) applies, a notice that it is unable to lawfully pay dissenting shareholders for their shares.

  • Marginal note:Same terms

    (12) Every offer made under subsection (11) for shares of the same class or series is to be on the same terms.

  • Marginal note:Payment

    (13) Subject to subsection (25), a bank shall pay for the shares of a dissenting shareholder within 10 days after the day on which an offer made under subsection (11) is accepted, but the offer lapses if the bank does not receive an acceptance within 30 days after the day on which the offer is made.

  • Marginal note:Court may fix fair value

    (14) If a bank fails to make an offer under subsection (11) or if a dissenting shareholder fails to accept an offer, the bank may, within 50 days after the day on which the action approved by the resolution from which the shareholder dissents becomes effective or within any further period that a court may allow, apply to the court to fix a fair value for the shares of any dissenting shareholder.

  • Marginal note:Shareholder application

    (15) If a bank fails to apply to a court under subsection (14), a dissenting shareholder may apply to a court for the same purpose within a further period of 20 days or within any further period that the court may allow.

  • Marginal note:Venue

    (16) An application under subsection (14) or (15) is to be made to a court having jurisdiction where the bank’s head office is situated or, if the bank carries on business in the province in which the dissenting shareholder resides, in that province.

  • Marginal note:No security for costs

    (17) A dissenting shareholder is not required to give security for costs in an application made under subsection (14) or (15).

  • Marginal note:Parties and Superintendent

    (18) On an application to a court under subsection (14) or (15),

    • (a) all dissenting shareholders whose shares have not been purchased by the bank are to be joined as parties and are bound by the decision of the court;

    • (b) the bank shall notify each of them of the date, place and consequences of the application and their right to appear and be heard in person or by counsel; and

    • (c) the bank shall notify the Superintendent of the date and place of the application and the Superintendent may appear and be heard in person or by counsel.

  • Marginal note:Powers of court

    (19) On an application to a court under subsection (14) or (15), the court may determine whether any other person is a dissenting shareholder and is to be joined as a party and the court shall then fix a fair value for the shares of all dissenting shareholders.

  • Marginal note:Appraisers

    (20) The court may appoint one or more appraisers to assist the court to fix a fair value for the shares of the dissenting shareholders.

  • Marginal note:Final order

    (21) The final order of the court is to be rendered against the bank in favour of each dissenting shareholder for the value of the shares as fixed by the court.

  • Marginal note:Interest

    (22) The court may allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date the action approved by the resolution from which the shareholder dissents becomes effective until the date of payment.

  • Marginal note:Notice that s. (25) applies

    (23) If subsection (25) applies, the bank shall within 10 days after an order is made under subsection (21) notify each dissenting shareholder that it is unable to lawfully pay dissenting shareholders for their shares.

  • Marginal note:Effect of s. (25)

    (24) If subsection (25) applies, a dissenting shareholder may by written notice delivered to the bank within 30 days after receiving notice under subsection (23)

    • (a) withdraw their notice of dissent, in which case the bank is deemed to consent to the withdrawal and the shareholder is reinstated to their full rights as a shareholder; or

    • (b) retain their status as a claimant against the bank, to be paid as soon as the bank is able to lawfully pay them or, in a liquidation, to be ranked subordinate to the rights of the bank’s creditors but in priority to its shareholders.

  • Marginal note:Limitation

    (25) A bank may not make a payment to a dissenting shareholder under this section if there are reasonable grounds for believing that the bank is or the payment would cause the bank to be in contravention of a regulation referred to in subsection 485(1) or (2) or of an order made under subsection 485(3).

  • 1991, c. 46, s. 277
  • 2005, c. 54, s. 57
 
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