Bank Act (S.C. 1991, c. 46)

Marginal note:Shares issued in series

• 62 (1) The by-laws of a bank may, subject to any limitations set out in them, authorize the issue of any class of shares in one or more series and may

  • (a) fix the maximum number of shares in each series and determine the designation, rights, privileges, restrictions and conditions attaching to them; and

  • (b) authorize the directors to do anything referred to in paragraph (a).

• Marginal note:Effective date

  (1.1) In the case of a federal credit union, a by-law referred to in subsection (1) must be made by special resolution of the members. If the federal credit union has issued shares, the by-law is not effective until it is confirmed 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 by-law.

• Marginal note:Series participation

  (2) If any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.

• Marginal note:Voting rights

  (3) Where voting rights are attached to any series of a class of shares, the shares of every other series of that class shall have the same voting rights.

• Marginal note:Restriction on series

  (4) No rights, privileges, restrictions or conditions attached to a series of shares authorized under this section confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.

• Marginal note:Material to Superintendent

  (5) If the directors exercise their authority under paragraph (1)(b), the directors shall, before the issue of shares of the series, send to the Superintendent particulars of the series of shares and a copy of the by-law that granted the authority to the directors.

Marginal note:One share, one vote

63 Where voting rights are attached to a share of a bank, the voting rights may confer only one vote in respect of that share.

Marginal note:Shares non-assessable

64 Shares issued by a bank after the coming into force of this section are non-assessable and the shareholders are not liable to the bank or to its creditors in respect thereof.

Marginal note:Consideration for share

• 65 (1) No share of any class of shares of a bank shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.

• Marginal note:Other currencies

  (2) When issuing shares, a bank may provide that any aspect of the shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.

Marginal note:Stated capital account

• 66 (1) A bank shall maintain a separate stated capital account for each class and series of shares it issues.

• Marginal note:Stated capital account — membership shares

  (1.1) A federal credit union must also maintain a stated capital account for the membership shares it issues.

• Marginal note:Addition to stated capital account

  (2) A bank must record in the appropriate stated capital account the full amount of any consideration it receives for any shares or membership shares it issues.

• Marginal note:Exception

  (3) Despite subsection (2), a bank may, subject to subsection (4), record in the stated capital account maintained for the shares of a class or series any part of the consideration it receives in an exchange if it issues shares

  • (a) in exchange for

    • (i) property of a person who immediately before the exchange did not deal with the bank at arm’s length within the meaning of that expression in the Income Tax Act,

    • (ii) shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the bank at arm’s length within the meaning of that expression in the Income Tax Act, or

    • (iii) property of a person who immediately before the exchange dealt with the bank at arm’s length within the meaning of that expression in the Income Tax Act if the person, the bank and all of the holders of shares in the class or series of shares so issued consent to the exchange;

  • (b) under an agreement referred to in subsection 224(1); or

  • (c) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated bank.

• Marginal note:Exception

  (3.1) Despite subsection (2), a federal credit union may, subject to subsection (4), record in the stated capital account maintained for its membership shares any part of the consideration it receives in an exchange if it issues membership shares

  • (a) in exchange for

    • (i) property of a person who immediately before the exchange did not deal with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act,

    • (ii) shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act, or

    • (iii) property of a person who immediately before the exchange dealt with the federal credit union at arm’s length within the meaning of that expression in the Income Tax Act if the person, the federal credit union and all of the holders of the membership shares so issued consent to the exchange;

  • (b) under an agreement referred to in subsection 224(1); or

  • (c) to shareholders of an amalgamating body corporate who receive the membership shares in addition to or instead of securities of the amalgamated bank.

• Marginal note:Limit on addition to a stated capital account

  (4) On the issuance of a share or membership share, a bank must not add to the appropriate stated capital account an amount greater than the amount of the consideration it receives for the share or membership share.

• Marginal note:Constraint on addition to a stated capital account

  (5) Where a bank that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the bank as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 77(4).

• Marginal note:Constraint — federal credit union

  (6) If the bank referred to in subsection (5) is a federal credit union, the addition must be approved by special resolution of the members and 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, unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 77(4).

Marginal note:Stated capital of continued bank

• 67 (1) If a body corporate is continued as a bank under this Act, the bank must record in the stated capital account maintained for each class and series of shares, or for other ownership interests, however designated, then outstanding an amount that is equal to the aggregate of

  • (a) the aggregate amount paid up on the shares of each class and series of shares, or on the other ownership interests, immediately before the body corporate was so continued, and

  • (b) the amount of the contributed surplus of the bank that is attributable to those shares or other ownership interests.

• Marginal note:Contributed surplus entry

  (2) The amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (1)(b) shall be deducted from the contributed surplus account of the bank.

• Marginal note:Shares issued before continuance

  (3) Any amount unpaid in respect of a share or other ownership interest, however designated, in the body corporate, that was issued by a body corporate before it was continued as a bank under this Act and paid after it was so continued must be recorded in the stated capital account maintained by the bank for the shares of that class or series or for membership shares.

Marginal note:Pre-emptive right

• 68 (1) Where the by-laws of a bank so provide, no shares of any class shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.

• Marginal note:Exception

  (2) Notwithstanding the existence of a pre-emptive right, a shareholder of a bank has no pre-emptive right in respect of shares of a class to be issued

  • (a) for a consideration other than money;

  • (b) as a share dividend; or

  • (c) pursuant to the exercise of conversion privileges, options or rights previously granted by the bank.

• Marginal note:Idem

  (3) Notwithstanding the existence of a pre-emptive right, a shareholder of a bank has no pre-emptive right in respect of shares to be issued

  • (a) where the issue of shares to the shareholder is prohibited by this Act; or

  • (b) where, to the knowledge of the directors of the bank, the offer of shares to a shareholder whose recorded address is in a country other than Canada ought not to be made unless the appropriate authority in that country is provided with information in addition to that submitted to the shareholders at the last annual meeting.

Marginal note:Conversion privileges

• 69 (1) A bank may issue conversion privileges, options or rights to acquire securities of the bank, and shall set out the conditions thereof

  • (a) in the documents that evidence the conversion privileges, options or rights; or

  • (b) in the securities to which the conversion privileges, options or rights are attached.

• Marginal note:Transferable rights

  (2) Conversion privileges, options and rights to acquire securities of a bank may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.

• Marginal note:Reserved shares

  (3) Where a bank has granted privileges to convert any securities issued by the bank into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the bank shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.

Marginal note:Holding of own shares

70 Except as provided in sections 71 to 74, or unless permitted by the regulations, a bank shall not

• (a) hold shares of the bank or of any body corporate that controls the bank;

• (b) hold any ownership interests of any unincorporated entity that controls the bank;

• (c) permit any of its subsidiaries to hold any shares of the bank or of any body corporate that controls the bank;

• (c.1) if the bank is a federal credit union, permit any of its subsidiaries to hold any membership shares of the federal credit union, other than the minimum number of membership shares required by the by-laws of the federal credit union to qualify for membership in it, if any; or

• (d) permit any of its subsidiaries to hold any ownership interests of any unincorporated entity that controls the bank.

Marginal note:Purchase and redemption of shares and membership shares

• 71 (1) Subject to subsection (2) and to its by-laws, a bank may, with the consent of the Superintendent, purchase, for the purpose of cancellation, any shares or membership shares issued by it, or redeem any redeemable shares or membership shares issued by it at prices not exceeding the redemption price for the shares or membership shares calculated according to a formula stated in its by-laws or the conditions attaching to the shares or membership shares.

• Marginal note:Restrictions on purchase and redemption

  (2) A bank must not make any payment to purchase or redeem any shares or membership shares issued by it 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).

• Marginal note:Donated shares and membership shares

  (3) A bank may accept from any shareholder or member a share or membership share, as the case may be, of the bank surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share or membership share except in accordance with section 75.

Marginal note:Holding as personal representative

• 72 (1) A bank may, and may permit its subsidiaries to, hold, in the capacity of a personal representative, shares of the bank — or, if the bank is a federal credit union, membership shares of the federal credit union — or of any body corporate that controls the bank or ownership interests in any unincorporated entity that controls the bank, but only if the bank or the subsidiary does not have a beneficial interest in the shares, membership shares or ownership interests.

• Marginal note:Security interest

  (2) A bank may, and may permit its subsidiaries to, by way of a security interest

  • (a) hold shares of the bank or of any body corporate that controls the bank, or

  • (b) hold any ownership interests of any entity that controls the bank,

  where the security interest is nominal or immaterial when measured by criteria established by the bank that have been approved in writing by the Superintendent.

• Marginal note:Saving

  (3) Nothing in subsection (2) precludes a bank that was in existence immediately prior to the day this Part comes into force, or any of its subsidiaries, from holding any security interest held immediately prior to the coming into force of this Part.

Marginal note:Exception — conditions before acquisition

• 72.1 (1) A bank may permit any of its subsidiaries to acquire shares of the bank through the issuance of those shares by the bank to the subsidiary if the conditions prescribed for the purposes of this subsection are met before the subsidiary acquires the shares.

• Marginal note:Conditions after acquisition

  (2) After a subsidiary has acquired shares under the purported authority of subsection (1), the conditions prescribed for the purposes of this subsection must be met.

• Marginal note:Non-compliance with conditions

  (3) If a bank permits any of its subsidiaries to acquire shares of the bank under the purported authority of subsection (1) and one or more of the conditions prescribed for the purposes of subsections (1) and (2) were not met, are not met or cease to be met, as the case may be, then, despite section 16 and subsection 66(2), the bank must comply with the prescribed requirements.