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Insurance Companies Act (S.C. 1991, c. 47)

Act current to 2021-02-15 and last amended on 2019-06-17. Previous Versions

Insurance Companies Act

S.C. 1991, c. 47

Assented to 1991-12-13

An Act respecting insurance companies and fraternal benefit societies

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

Short Title

Marginal note:Short title

 This Act may be cited as the Insurance Companies Act.

PART IInterpretation and Application

Definitions

Marginal note:Definitions

  •  (1) In this Act,

    actuary

    actuary means a Fellow of the Canadian Institute of Actuaries; (actuaire)

    adjustable policy

    adjustable policy means an adjustable policy as defined in the regulations; (police ajustable)

    affairs

    affairs, with respect to a company, means the relationships among the company and its affiliates and the shareholders, policyholders, directors and officers of the company and its affiliates, but does not include the business of the company or any of its affiliates; (affaires internes)

    affiliate

    affiliate means an entity that is affiliated with another entity within the meaning of section 6; (groupe)

    Agency

    Agency means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act; (Agence)

    annual return

    annual return means a return prepared in accordance with subsection 665(1) or (2); (état annuel)

    annual statement

    annual statement, in relation to a company, means the annual financial statement of the company within the meaning of paragraph 331(1)(a) and, in relation to an insurance holding company, means the annual financial statement of the insurance holding company within the meaning of paragraph 887(1)(a); (rapport annuel)

    assets in Canada

    assets in Canada means the assets that have been vested in trust for a foreign company under Part XIII; (actif au Canada)

    auditor

    auditor includes a firm of accountants; (vérificateur)

    bank holding company

    bank holding company means a body corporate that is incorporated or formed under Part XV of the Bank Act; (société de portefeuille bancaire)

    bearer

    bearer, in relation to a security, means the person in possession of a security payable to bearer or endorsed in blank; (porteur)

    bearer form

    bearer form, in respect of a security, means a security in bearer form as determined in accordance with subsection 87(2); (titre au porteur)

    beneficial ownership

    beneficial ownership includes ownership through one or more trustees, legal representatives, agents or other intermediaries; (véritable propriétaire et propriété effective)

    body corporate

    body corporate means an incorporated body wherever or however incorporated; (personne morale)

    Canadian financial institution

    Canadian financial institution means a financial institution that is incorporated or formed by or under an Act of Parliament or of the legislature of a province; (institution financière canadienne)

    central securities register

    central securities register or securities register, in relation to a company or an insurance holding company, means the register referred to in section 271; (registre central des valeurs mobilières ou registre des valeurs mobilières)

    class

    class, in respect of insurance or an insurance policy, means a class determined in accordance with section 12; (branche)

    Commissioner

    Commissioner means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act; (commissaire)

    common-law partner

    common-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year; (conjoint de fait)

    company

    company means a body corporate referred to in subsection 13(1); (société)

    complainant

    complainant, in relation to a company or any matter concerning a company, means

    • (a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of the company or any of its affiliates,

    • (a.1) a policyholder entitled to vote at a meeting of policyholders or shareholders and policyholders of the company,

    • (b) a director or an officer, or a former director or officer, of the company or any of its affiliates, or

    • (c) any other person who, in the discretion of a court, is a proper person to make an application under section 371, 375 or 1031; (plaignant)

    consumer provision

    consumer provision means a provision referred to in paragraph (c) or (c.1) of the definition consumer provision in section 2 of the Financial Consumer Agency of Canada Act; (disposition visant les consommateurs)

    converted company

    converted company means a mutual company that has been converted under this Act into a company with common shares; (société transformée)

    court

    court means

    • (a) in the Province of Ontario, the Superior Court of Justice,

    • (b) in the Province of Quebec, the Superior Court of the Province,

    • (c) in the Provinces of Nova Scotia, British Columbia and Prince Edward Island, the Supreme Court of the Province,

    • (d) in the Provinces of New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench for the Province,

    • (e) in the Province of Newfoundland and Labrador, the Trial Division of the Supreme Court of the Province, and

    • (f) in Yukon and the Northwest Territories, the Supreme Court, and in Nunavut, the Nunavut Court of Justice; (tribunal)

    court of appeal

    court of appeal means the court to which an appeal lies from a decision or order of a court; (cour d’appel)

    debt obligation

    debt obligation means a bond, debenture, note or other evidence of indebtedness of an entity, whether secured or unsecured; (titre de créance)

    director

    director means a natural person occupying the position of director, by whatever name called, of a body corporate, and board of directors or directors refers to the directors of a body corporate as a body and, in the case of a society, refers to the supreme governing body of the society; (administrateur, conseil d’administration ou conseil)

    equity

    equity, in respect of a company or an insurance holding company, means its equity as determined in accordance with the regulations; (capitaux propres)

    entity

    entity means a body corporate, trust, partnership, fund, an unincorporated association or organization, Her Majesty in right of Canada or of a province, an agency of Her Majesty in either of such rights and the government of a foreign country or any political subdivision thereof and any agency thereof; (entité)

    federal credit union

    federal credit union has the same meaning as in section 2 of the Bank Act; (coopérative de crédit fédérale)

    federal financial institution

    federal financial institution means

    fiduciary

    fiduciary means any person acting in a fiduciary capacity and includes a personal representative of a deceased person; (représentant)

    financial institution

    financial institution means

    • (a) a company or a society,

    • (b) a bank or an authorized foreign bank within the meaning of section 2 of the Bank Act,

    • (c) a body corporate to which the Trust and Loan Companies Act applies,

    • (d) an association to which the Cooperative Credit Associations Act applies,

    • (e) a trust, loan or insurance corporation incorporated by or under an Act of the legislature of a province,

    • (f) a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,

    • (g) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities, including portfolio management and investment counselling, and

    • (h) a foreign institution; (institution financière)

    financial year

    financial year, in respect of a foreign company, means a calendar year; (exercice)

    foreign company

    foreign company means an entity that is the subject of an order made under subsection 574(1); (société étrangère)

    foreign institution

    foreign institution means an entity that is

    • (a) engaged in the business of banking, the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities or is otherwise engaged primarily in the business of providing financial services, and

    • (b) incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province; (institution étrangère)

    former-Act company

    former-Act company means a body corporate referred to in paragraph 13(1)(b); (société antérieure)

    former-Act society

    former-Act society means a body corporate referred to in paragraph 13(2)(b); (société de secours antérieure)

    form of proxy

    form of proxy means a written or printed form that, when completed and executed by or on behalf of a shareholder or a policyholder, or, in the case of a fraternal benefit society, a member, constitutes a proxy; (formulaire de procuration)

    fraternal benefit society

    fraternal benefit society means a body corporate

    • (a) that is without share capital,

    • (b) that has a representative form of government, and

    • (c) that was incorporated for fraternal, benevolent or religious purposes, including the provision of insurance benefits solely to its members or the spouses, common-law partners or children of its members; (société de secours mutuel)

    going-private transaction

    going-private transaction means a going-private transaction as defined in the regulations; (transaction de fermeture)

    guarantee

    guarantee includes a letter of credit; (garantie)

    head office

    head office means

    • (a) in relation to a company, the office required to be maintained by the company under section 260,

    • (b) in relation to a society, the office required to be maintained by the society under section 544, and

    • (c) in relation to an insurance holding company, the office required to be maintained by the insurance holding company under section 868; (siège)

    holder

    holder means

    • (a) in respect of a security certificate, the person in possession of the certificate issued or endorsed to that person or to bearer or in blank, and

    • (b) in respect of the ownership of a share, the shareholder of the share within the meaning of section 7; (détenteur)

    holding body corporate

    holding body corporate means a holding body corporate within the meaning of section 4; (société mère)

    incorporated

    incorporated, when used with reference to a body corporate that is incorporated by or under an Act of Parliament or of the legislature of a province, also refers to a body corporate that is continued by or under any such Act; (constitué en personne morale)

    incorporating instrument

    incorporating instrument means the special Act, letters patent, instrument of continuance or other constating instrument by which a body corporate was incorporated or continued and includes any amendment to or restatement of the constating instrument; (acte constitutif)

    incorporator

    incorporator, in relation to a company or an insurance holding company, means a person who applied for letters patent to incorporate the company or insurance holding company, as the case may be; (fondateur)

    insurance holding company

    insurance holding company means a body corporate that is incorporated or formed under Part XVII; (société de portefeuille d’assurances)

    issuer

    issuer, in respect of a security, means the entity that issues or issued the security; (émetteur)

    letters patent

    letters patent, in respect of an instrument authorized to be issued under this Act, means letters patent in a form approved by the Superintendent; (lettres patentes)

    life company

    life company means a company or a provincial company that is permitted to insure risks falling within the class of life insurance, other than a company or a provincial company that is also permitted to insure risks falling within any other class of insurance other than accident and sickness insurance, credit protection insurance and other approved products insurance; (société d’assurance-vie)

    marine company

    marine company means a company that is incorporated for the sole purpose of insuring risks within the class of marine insurance; (société d’assurance maritime)

    Minister

    Minister means the Minister of Finance; (ministre)

    minor

    minor has the same meaning as in the applicable provincial law and in the absence of any such law has the same meaning as the word “child” in the United Nations Convention on the Rights of the Child adopted in the United Nations General Assembly on November 20, 1989; (mineur)

    mutual company

    mutual company means

    • (a) a company that is incorporated or continued as a mutual company under this Act,

    • (b) a former-Act company that, on the coming into force of this paragraph, has no issued and outstanding shares, or

    • (c) a company that is converted into a mutual company under sections 226 to 236,

    and that is not converted into a company with common shares under this Act; (société mutuelle)

    non-WTO Member foreign institution

    non-WTO Member foreign institution means a foreign institution that is not controlled by a WTO Member resident; (institution étrangère d’un non-membre de l’OMC)

    officer

    officer means

    • (a) in relation to a body corporate, a chief executive officer, president, vice-president, secretary, controller, treasurer and any other natural person designated as an officer of the body corporate by by-law or by resolution of the directors of the body corporate, and

    • (b) in relation to any other entity, any natural person designated as an officer of the entity by by-law, by resolution of the members thereof or otherwise; (dirigeant)

    order form

    order form, in respect of a security, means a security in order form as determined in accordance with subsection 87(3); (titre à ordre)

    ordinary resolution

    ordinary resolution means a resolution passed by a majority of the votes cast by or on behalf of the shareholders or policyholders who voted in respect of that resolution; (résolution ordinaire)

    participating policy

    participating policy means a policy issued by a company that entitles its holder to participate in the profits of the company; (police à participation)

    participating policyholder

    participating policyholder means the holder of a participating policy; (souscripteur avec participation)

    person

    person means a natural person, an entity or a personal representative; (personne)

    personal representative

    personal representative means a person who stands in place of and represents another person and, without limiting the generality of the foregoing, includes, as the circumstances require, a trustee, an executor, an administrator, a committee, a guardian, a tutor, a curator, an assignee, a receiver, an agent or an attorney of any person; (représentant personnel)

    policy

    policy means any written contract of insurance or reinsurance whether contained in one or more documents and, in the case of insurance in a fraternal benefit society, any contract of insurance whether evidenced by a written document or not and any certificate of membership relating in any way to insurance, and includes any annuity contract and any endowment insurance contract; (police)

    policy in Canada

    policy in Canada[Repealed, 2007, c. 6, s. 186]

    policyholder in Canada

    policyholder in Canada[Repealed, 2007, c. 6, s. 186]

    prescribed

    prescribed means prescribed by regulation; (Version anglaise seulement)

    property and casualty company

    property and casualty company means a company or a provincial company that is not a life company or a marine company; (société d’assurances multirisques)

    provincial company

    provincial company means, subject to subsection (1.1),

    • (a) [Repealed, 2001, c. 9, s. 345]

    • (b) Antigonish Farmers’ Mutual Fire Insurance Company,

    • (c) Clare Mutual Insurance Company,

    • (d) The Halifax Insurance Company, or

    • (e) Pictou County Farmers’ Mutual Fire Insurance Company,

    or, if the name of such company is changed, includes the successor company by its new name; (société provinciale)

    proxy

    proxy means a completed and executed form of proxy by means of which a shareholder or policyholder or, in the case of a society, a member, appoints a proxyholder to attend and act on behalf of the shareholder, policyholder or member at a meeting of shareholders, policyholders or members; (procuration)

    proxyholder

    proxyholder means the person appointed by proxy to attend and act on behalf of a shareholder or a policyholder or, in the case of a society, a member at a meeting of shareholders, policyholders or members; (fondé de pouvoir)

    real property

    real property includes a leasehold interest in real property; (biens immeubles)

    recorded address

    recorded address means

    • (a) in relation to a person who is a shareholder of a company or an insurance holding company, the latest postal address of the person according to the central securities register of the company or the insurance holding company, as the case may be, and

    • (b) in relation to a person in any other respect, the latest postal address of the person according to the records of the company or insurance holding company; (adresse enregistrée)

    registered form

    registered form, in respect of a security, means a security in registered form as determined in accordance with subsection 87(4); (titre nominatif)

    regulatory capital

    regulatory capital, in respect of a company, a society, a provincial company or an insurance holding company, has the meaning given that expression by the regulations; (capital réglementaire)

    resident Canadian

    resident Canadian means a natural person who is

    • (a) a Canadian citizen ordinarily resident in Canada,

    • (b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or

    • (c) a permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which the individual first became eligible to apply for Canadian citizenship; (résident canadien)

    residential property

    residential property means real property consisting of buildings that are used, or are to be used, to the extent of at least one half of the floor space thereof, as one or more private dwellings; (immeuble résidentiel)

    securities underwriter

    securities underwriter means a person who, as principal, agrees to purchase securities with a view to the distribution of the securities or who, as agent for a body corporate or other person, offers for sale or sells securities in connection with a distribution of the securities, and includes a person who participates, directly or indirectly, in a distribution of securities, other than a person whose interest in the distribution of securities is limited to receiving a distributor’s or seller’s commission payable by a securities underwriter; (souscripteur à forfait)

    security

    security means

    • (a) in relation to a body corporate, a share of any class of shares of the body corporate or a debt obligation of the body corporate, and includes a warrant of the body corporate, but does not include a deposit with a financial institution or any instrument evidencing such a deposit, and

    • (b) in relation to any other entity, any ownership interest in or debt obligation of the entity,

    but does not include a policy; (titre ou valeur mobilière)

    security interest

    security interest means an interest in or charge on property by way of mortgage, lien, pledge or otherwise taken by a creditor or guarantor to secure the payment or performance of an obligation; (sûreté)

    send

    send includes deliver; (envoyer)

    series

    series, in respect of shares, means a division of a class of shares; (série)

    significant interest

    significant interest means a significant interest determined in accordance with section 8; (intérêt substantiel)

    society

    society means a body corporate referred to in subsection 13(2) that is a fraternal benefit society; (société de secours)

    special resolution

    special resolution means a resolution passed by a majority of not less than two thirds of the votes cast by or on behalf of the shareholders and policyholders and, in the case of a fraternal benefit society, the members, who voted in respect of that resolution or signed by all the shareholders, policyholders and members entitled to vote on that resolution; (résolution extraordinaire)

    squeeze-out transaction

    squeeze-out transaction means a transaction by a company that is not a distributing company, or an insurance holding company that is not a distributing insurance holding company, that requires an amendment to a by-law referred to in subsection 238(1) or 851(1), as the case may be, and that would directly or indirectly result in the interest of a holder of shares of a class of shares being terminated without their consent and without substituting an interest of equivalent value in shares that are issued by the following persons and have rights and privileges equal to or greater than those of the shares of the affected class:

    • (a) in the case of a company, the company, and

    • (b) in the case of an insurance holding company, the insurance holding company; (transaction d’éviction)

    subordinated indebtedness

    subordinated indebtedness means an instrument evidencing an indebtedness of a company that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the company, be subordinate in right of payment to all policy liabilities of the company and all other liabilities of the company except those other liabilities that, by their terms, rank equally with or are subordinate to such indebtedness; (titre secondaire)

    subsidiary

    subsidiary means an entity that is a subsidiary of another entity within the meaning of section 5; (filiale)

    substantial investment

    substantial investment means a substantial investment determined in accordance with section 10; (intérêt de groupe financier)

    Superintendent

    Superintendent means the Superintendent of Financial Institutions appointed pursuant to the Office of the Superintendent of Financial Institutions Act; (surintendant)

    total assets

    total assets, in respect of a company, society, provincial company or insurance holding company, has the meaning given that expression by the regulations; (actif total)

    trade

    trade, in respect of securities, means any sale or disposition of securities for valuable consideration; (opération)

    transfer

    transfer, in respect of securities, includes a transmission by operation of law; (transfert)

    voting share

    voting share means a share of any class of shares of a body corporate carrying voting rights under all circumstances or by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled; (action avec droit de vote)

    WTO Member resident

    WTO Member resident means a WTO Member resident within the meaning of section 11.1. (résident d’un membre de l’OMC)

  • Marginal note:Provincial company status

    (1.1) A company referred to in the definition provincial company in subsection (1) ceases to be a provincial company for the purposes of this Act if the order made by the Superintendent under subsection 657(1) approving the commencement and carrying on of business by the company is revoked.

  • Marginal note:Policy loans

    (2) For greater certainty, any reference in this Act to a loan does not include, unless otherwise provided, a reference to an advance on the security or against the cash surrender value of a policy.

  • Marginal note:Major shareholder

    (3) For the purposes of this Act, a person is a major shareholder of a body corporate if

    • (a) the aggregate of the shares of any class of voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the body corporate; or

    • (b) the aggregate of the shares of any class of non-voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the body corporate.

  • Marginal note:Widely held

    (4) For the purposes of this Act, a body corporate is widely held if it has no major shareholder.

  • 1991, c. 47, ss. 2, 758, c. 48, s. 495
  • 1992, c. 51, s. 55
  • 1996, c. 6, s. 66
  • 1997, c. 15, s. 165
  • 1998, c. 30, ss. 13(F), 15(E)
  • 1999, c. 3, s. 70, c. 28, s. 118
  • 2000, c. 12, s. 153
  • 2001, c. 9, s. 345, c. 27, s. 255
  • 2002, c. 7, s. 187(E)
  • 2005, c. 54, s. 214
  • 2007, c. 6, s. 186
  • 2010, c. 12, s. 2117
  • 2012, c. 5, s. 122
  • 2014, c. 39, s. 302
  • 2015, c. 3, s. 120

Interpretation

Marginal note:Regulations — distributing company or insurance holding company

  •  (1) The Governor in Council may make regulations respecting the determination of what constitutes a distributing company or distributing insurance holding company for the purposes of this Act.

  • Marginal note:Exemption — company or insurance holding company

    (2) On the application of a company or insurance holding company, the Superintendent may determine that it is not or was not a distributing company or distributing insurance holding company, as the case may be, if the Superintendent is satisfied that the determination would not prejudice any security holder of that company or insurance holding company.

  • Marginal note:Exemption — class of companies or insurance holding companies

    (3) The Superintendent may determine that members of a class of companies or insurance holding companies are not or were not distributing companies or distributing insurance holding companies, as the case may be, if the Superintendent is satisfied that the determination would not prejudice any security holder of a member of the class.

  • 2005, c. 54, s. 215

Marginal note:Control

  •  (1) For the purposes of this Act,

    • (a) a person controls a body corporate if securities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate;

    • (b) a person controls an unincorporated entity, other than a limited partnership, if more than 50 per cent of the ownership interests, however designated, into which the entity is divided are beneficially owned by that person and the person is able to direct the business and affairs of the entity;

    • (c) the general partner of a limited partnership controls the limited partnership; and

    • (d) a person controls an entity if the person has any direct or indirect influence that, if exercised, would result in control in fact of the entity.

  • Marginal note:Deemed control

    (2) A person who controls an entity is deemed to control any entity that is controlled, or deemed to be controlled, by the entity.

  • Marginal note:Deemed control

    (3) A person is deemed to control, within the meaning of paragraph (1)(a) or (b), an entity if the aggregate of

    • (a) any securities of the entity that are beneficially owned by that person, and

    • (b) any securities of the entity that are beneficially owned by any entity controlled by that person

    is such that, if that person and all of the entities referred to in paragraph (b) that beneficially own securities of the entity were one person, that person would control the entity.

  • Marginal note:Guidelines

    (4) The Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(d), make guidelines respecting what constitutes such control, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(d) in that provision shall be interpreted in accordance with the guidelines.

  • 1991, c. 47, s. 3
  • 2001, c. 9, s. 346

Marginal note:Holding body corporate

 A body corporate is the holding body corporate of any entity that is its subsidiary.

  • 1991, c. 47, s. 4
  • 2001, c. 9, s. 347

Marginal note:Subsidiary

 An entity is a subsidiary of another entity if it is controlled by the other entity.

  • 1991, c. 47, s. 5
  • 2001, c. 9, s. 347

Marginal note:Affiliated entities

  •  (1) One entity is affiliated with another entity if one of them is controlled by the other or both are controlled by the same person.

  • Marginal note:Affiliated entities

    (2) Despite subsection (1), for the purposes of Divisions VIII and X of Part VI and Subdivisions 8 and 10 of Division 6 of Part XVII, one entity is affiliated with another entity if one of them is controlled, determined without regard to paragraph 3(1)(d), by the other or both are controlled, determined without regard to paragraph 3(1)(d), by the same person.

  • 1991, c. 47, s. 6
  • 2001, c. 9, s. 348

Marginal note:Shareholder

  •  (1) For the purposes of this Act, a person is a shareholder of a body corporate when, according to the securities register of the body corporate, the person is the owner of one or more shares of the body corporate or is entitled to be entered in the securities register or like record of the body corporate as the owner of the share or shares.

  • Marginal note:Holder of a share

    (2) A reference in this Act to the holding of a share by or in the name of any person is a reference to the fact that the person is registered or is entitled to be registered in the securities register or like record of the body corporate as the holder of that share.

Marginal note:Significant interest

  •  (1) A person has a significant interest in a class of shares of a company or an insurance holding company if the aggregate of

    • (a) any shares of that class beneficially owned by the person, and

    • (b) any shares of that class beneficially owned by entities controlled by the person

    exceeds 10 per cent of all of the outstanding shares of that class of shares of the company or insurance holding company, as the case may be.

  • Marginal note:Increasing significant interest

    (2) A person who has a significant interest in a class of shares of a company or insurance holding company increases that significant interest in the class of shares if the person or any entity controlled by the person

    • (a) acquires beneficial ownership of additional shares of that class, or

    • (b) acquires control of any entity that beneficially owns shares of that class,

    in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.

  • 1991, c. 47, s. 8
  • 2001, c. 9, s. 349

Marginal note:Acting in concert

  •  (1) For the purposes of Part VII and Division 7 of Part XVII, if two or more persons have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of

    • (a) shares of a company or of an insurance holding company that they beneficially own,

    • (b) shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a company or of an insurance holding company, or

    • (c) shares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of a company or insurance holding company,

    those persons are deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the company or insurance holding company or shares or ownership interests of the entity that are beneficially owned by them.

  • Marginal note:Acting in concert

    (2) Without limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of a company or insurance holding company or shares or ownership interests of any entity referred to in paragraph (1)(b) or (c),

    • (a) whereby any of them or their nominees may veto any proposal put before the board of directors of the company or insurance holding company, as the case may be, or

    • (b) under which no proposal put before the board of directors of the company or insurance holding company, as the case may be, may be approved except with the consent of any of them or their nominees,

    is deemed to be an agreement, commitment or understanding referred to in subsection (1).

  • Marginal note:Exceptions

    (3) For the purposes of this section, persons shall be presumed not to have agreed to act jointly or in concert solely by reason of the fact that

    • (a) one is the proxyholder of one or more of the others in respect of shares or ownership interests referred to in subsection (1); or

    • (b) they vote the voting rights attached to shares or ownership interests referred to in subsection (1) in the same manner.

  • Marginal note:Designation

    (4) Where in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsections (1) and (2) exists by or among two or more persons, the Superintendent may designate those persons as persons who have agreed to act jointly or in concert.

  • Marginal note:Contravention

    (5) A person contravenes a provision of Part VII or Division 7 of Part XVII if the person agrees to act jointly or in concert with one or more other persons in such a manner that a deemed single person contravenes the provision.

  • 1991, c. 47, s. 9
  • 2001, c. 9, s. 350
  • 2007, c. 6, s. 187

Marginal note:Substantial investment in body corporate

  •  (1) A person has a substantial investment in a body corporate where

    • (a) the voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate; or

    • (b) the aggregate of any shares of the body corporate beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25 per cent of the shareholders’ equity of the body corporate.

  • Marginal note:Increasing substantial investment in body corporate

    (2) A person who has a substantial investment in a body corporate pursuant to paragraph (1)(a) increases that substantial investment when the person or any entity controlled by the person

    • (a) acquires beneficial ownership of additional voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person; or

    • (b) acquires control of any entity that beneficially owns any voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person.

  • Marginal note:Idem

    (3) A person who has a substantial investment in a body corporate pursuant to paragraph (1)(b) increases that substantial investment when the person or any entity controlled by the person

    • (a) acquires beneficial ownership of additional shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person; or

    • (b) acquires control of any entity that beneficially owns any shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person.

  • Marginal note:New substantial investment

    (4) For greater certainty,

    • (a) where a person has a substantial investment in a body corporate pursuant to paragraph (1)(a) and the person, or any entity controlled by the person,

      • (i) purchases or otherwise acquires beneficial ownership of shares of the body corporate, or

      • (ii) acquires control of any entity that beneficially owns shares of the body corporate,

      in such number as to cause the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person to exceed 25 per cent of the shareholders’ equity of the body corporate, or

    • (b) where a person has a substantial investment in a body corporate pursuant to paragraph (1)(b) and the person or any entity controlled by the person

      • (i) purchases or otherwise acquires beneficial ownership of voting shares of the body corporate, or

      • (ii) acquires control of any entity that beneficially owns voting shares of the body corporate,

      in such number as to cause the voting rights attached to the aggregate of the voting shares beneficially owned by the person and by any entities controlled by the person to exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the company,

    the acquisition is deemed to cause the person to increase a substantial investment in the body corporate.

  • Marginal note:Substantial investment in unincorporated entity

    (5) A person has a substantial investment in an unincorporated entity where the aggregate of any ownership interests, however designated, into which the entity is divided, beneficially owned by the person and by any entities controlled by the person exceeds 25 per cent of all of the ownership interests into which the entity is divided.

  • Marginal note:Increasing substantial investment in unincorporated entities

    (6) A person who has a substantial investment in an unincorporated entity increases that substantial investment when the person or any entity controlled by the person

    • (a) acquires beneficial ownership of additional ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests in the unincorporated entity beneficially owned by the person and by any entities controlled by the person; or

    • (b) acquires control of any entity that beneficially owns ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests beneficially owned by the person and by any entities controlled by the person.

 [Repealed, 2005, c. 54, s. 216]

Marginal note:WTO Member resident

  •  (1) For the purposes of this Act, a WTO Member resident is

    • (a) a natural person who is ordinarily resident in a country or territory that is a WTO Member as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada;

    • (b) a body corporate, association, partnership or other organization that is incorporated, formed or otherwise organized in a country or territory that is a WTO Member, as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada, and that is controlled,

      • (i) directly or indirectly, by one or more persons referred to in paragraph (a), or

      • (ii) by a government of a WTO Member, whether federal, state or local, or an agency of one of those governments;

    • (c) a trust established by one or more persons referred to in paragraph (a) or (b) or a trust in which one or more of those persons have more than 50 per cent of the beneficial interest; or

    • (d) a body corporate, association, partnership or other organization that is controlled, directly or indirectly, by a trust referred to in paragraph (c).

  • Marginal note:Interpretation

    (2) For the purposes of subsection (1),

    • (a) a body corporate is controlled by one or more persons if

      • (i) securities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person or persons, and

      • (ii) the votes attached to those securities are sufficient to elect a majority of the directors of the body corporate;

    • (b) an association, partnership or other organization is controlled by one or more persons if

      • (i) more than 50 per cent of the ownership interests, however designated, into which the association, partnership or other organization is divided are beneficially owned by the person or persons, and

      • (ii) the person or persons are able to direct the business and affairs of the association, partnership or other organization;

    • (c) a body corporate, association, partnership or other organization is controlled by one or more persons if the person or persons have, directly or indirectly, control in fact of the body corporate, association, partnership or other organization; and

    • (d) a body corporate, association, partnership or other organization that controls another body corporate, association, partnership or other organization is deemed to control any body corporate, association, partnership or other organization that is controlled or deemed to be controlled by the other body corporate, association, partnership or other organization.

  • 1999, c. 28, s. 119

Marginal note:Class of insurance

  •  (1) A class of insurance is a class set out in the schedule.

  • Marginal note:Reference to particular class

    (2) A reference in this Act to a particular class of insurance is a reference to the insurance of risks falling within that particular class determined in accordance with subsections (3) to (6) and the schedule.

  • Marginal note:Property

    (3) A class of insurance that includes insurance against the loss of, or damage to, property includes insurance against loss of use, occupancy, rents and profits resulting from that loss or damage.

  • Marginal note:Personal injuries and death

    (4) Unless specifically mentioned in the schedule, no class of insurance includes insurance against liability arising out of bodily injury to, or the death of, a natural person or the loss of, or damage to, property.

  • Marginal note:Idem

    (5) A class of insurance that includes insurance against liability arising out of bodily injury to, or the death of, a natural person or the loss of, or damage to, property includes insurance against loss, damage or expenses incident to a claim giving rise to that liability.

  • Marginal note:Endowments

    (6) The class of life insurance includes the issuance of endowment insurance the funds of which are to be paid at a fixed or determinable future time if the person whose life is insured is then alive or at the person’s death if the person dies before that time.

  • Marginal note:Amendment

    (7) The Governor in Council may, by order, amend subsections (3) to (5) and the schedule.

  • 1991, c. 47, s. 12
  • 2007, c. 6, s. 188

Application

Marginal note:Application of Act

  •  (1) This Act applies to every body corporate

    • (a) that is incorporated or continued as a company under this Act, or

    • (b) to which any of the provisions of Parts I, II, III and VII and either or both of Parts IV and VI of the Canadian and British Insurance Companies Act applied immediately before the coming into force of this section

    and that is not discontinued under this Act.

  • Marginal note:Application of certain provisions

    (2) This Part, Parts II to IV, sections 224, 225, 245 to 258 and 489 and Parts X, XII, XV, XVI and XVIII to XX apply to every body corporate that is not discontinued under this Act and

    • (a) that is incorporated or continued as a society under this Act; or

    • (b) to which any of the provisions of Parts I and II, Part III, except section 77, Part IV, except sections 123 to 130 and 153 to 158, and Parts V and VII of the Canadian and British Insurance Companies Act applied before June 1, 1992.

  • 1991, c. 47, s. 13
  • 1997, c. 15, s. 167
  • 1999, c. 31, s. 138
  • 2001, c. 9, s. 352
  • 2005, c. 54, s. 217

Marginal note:Conflicting provisions

 Where there is a conflict or inconsistency between a provision of this Act and a provision of the incorporating instrument of a former-Act company or former-Act society, the provision of this Act prevails.

PART IIStatus and Powers

Marginal note:Corporate powers

  •  (1) A company or society has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.

  • Marginal note:Powers restricted

    (2) Neither a company nor a society shall carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.

  • Marginal note:Business in Canada

    (3) A company or society may carry on business throughout Canada.

  • Marginal note:Powers outside Canada

    (4) Subject to this Act, a company or society has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.

Marginal note:No invalidity

 No act of a company or society, including any transfer of property to or by a company or society, is invalid by reason only that the act or transfer is contrary to the company’s or society’s incorporating instrument or this Act.

Marginal note:By-law not necessary

 It is not necessary for a company to pass a by-law in order to confer any particular power on the company or its directors.

Marginal note:No personal liability

  •  (1) The shareholders and participating policyholders of a company are not, as shareholders or policyholders, liable for any liability, act or default of the company except as otherwise provided by this Act.

  • Marginal note:Idem

    (2) The members of a society are not, as members, liable for any liability, act or default of the society except as otherwise provided by this Act.

Marginal note:No constructive notice

 No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a company or society by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at an office of the company or society.

Marginal note:Authority of directors and officers

  •  (1) No company or society and no guarantor of an obligation of a company or society may assert against a person dealing with the company or society or against a person who has acquired rights from the company or society that

    • (a) the company’s or society’s incorporating instrument or any by-laws of the company or society have not been complied with;

    • (b) the persons named as directors of the company or society in the most recent return sent to the Superintendent under section 549 or 668 are not the directors of the company or society;

    • (c) the place named in the incorporating instrument or by-laws of the company or society is not the place where the head office of the company or society is situated;

    • (d) a person held out by the company or society as a director, officer or representative of the company or society has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the company or society or usual for a director, officer or representative; or

    • (e) a document issued by any director, officer or representative of the company or society with actual or usual authority to issue the document is not valid or not genuine.

  • Marginal note:Exception — knowledge

    (2) Subsection (1) does not apply in respect of a person who has or ought to have knowledge of a situation described in that subsection by virtue of their relationship to the company or society.

  • 1991, c. 47, s. 20
  • 2005, c. 54, s. 218

Marginal note:Sunset provision

  •  (1) Subject to subsections (2) and (4), companies and societies shall not carry on business, and foreign companies shall not carry on business in Canada, after the fifth anniversary of the day on which the Budget Implementation Act, 2018, No. 1 receives royal assent.

  • Marginal note:Extension

    (2) The Governor in Council may, by order, extend by up to six months the time during which companies and societies may continue to carry on business and foreign companies may continue to carry on business in Canada. No more than one order may be made under this subsection.

  • Marginal note:Order not a regulation

    (3) The order is not a regulation for the purposes of the Statutory Instruments Act. However, it shall be published in Part II of the Canada Gazette.

  • Marginal note:Exception — dissolution

    (4) If Parliament dissolves on the fifth anniversary of the day on which the Budget Implementation Act, 2018, No. 1 receives royal assent or on any day within the six-month period before that anniversary or on any day within an extension ordered under subsection (2), companies and societies may continue to carry on business, and foreign companies may continue to carry on business in Canada, until the end of the 180th day after the first day of the first session of the next Parliament.

  • 1991, c. 47, s. 21
  • 1997, c. 15, s. 168
  • 2001, c. 9, s. 353
  • 2006, c. 4, s. 201
  • 2007, c. 6, s. 189
  • 2012, c. 5, s. 123
  • 2016, c. 7, s. 120
  • 2018, c. 12, s. 357

PART IIIIncorporation, Continuance and Discontinuance

Formalities of Incorporation

Marginal note:Incorporation of company or society

 On the application of one or more persons made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating a company or society.

Marginal note:Restrictions on incorporation

  •  (1) Letters patent incorporating a company or society may not be issued if the application therefor is made by or on behalf of

    • (a) Her Majesty in right of Canada or in right of a province, an agency of Her Majesty in either of those rights, or an entity controlled by Her Majesty in either of those rights;

    • (b) the government of a foreign country or any political subdivision thereof;

    • (c) an agency of the government of a foreign country or any political subdivision thereof; or

    • (d) an entity, other than a foreign institution or any subsidiary of a foreign institution, that is controlled by the government of a foreign country or any political subdivision thereof.

  • Marginal note:Societies

    (2) Letters patent incorporating a society may not be issued if the society is to operate for profit or as a commercial enterprise or its property is not to be under the control of persons periodically elected by members of the society.

  • 1991, c. 47, s. 23
  • 1997, c. 15, s. 169

Marginal note:National treatment

  •  (1) If a proposed company would be a subsidiary of a foreign institution that is engaged in the insurance business, letters patent to incorporate the company may not be issued unless the Minister is satisfied that, if the application is made by a non-WTO Member foreign institution, treatment as favourable for companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign institution principally carries on business, either directly or through a subsidiary.

  • Marginal note:Part XII of the Bank Act

    (2) Nothing in subsection (1) affects the operation of Part XII of the Bank Act.

  • 1991, c. 47, s. 24
  • 1999, c. 28, s. 120
  • 2001, c. 9, s. 354

Marginal note:Application for incorporation

  •  (1) An application for letters patent to incorporate a company or society setting out the names of the first directors of the company or society shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.

  • Marginal note:Publishing notice of intent

    (2) Before filing an application referred to in subsection (1), the applicant or one of the applicants, as the case may be, shall, at least once a week for a period of four consecutive weeks, publish, in a form satisfactory to the Superintendent, a notice of intention to make the application in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the company or society is to be situated.

Marginal note:Objections to incorporation

  •  (1) Any person who objects to the proposed incorporation of a company or society may, within thirty days after the date of the last publication under subsection 25(2) in respect of the proposed company or society, submit the objection in writing to the Superintendent.

  • Marginal note:Minister to be informed

    (2) On receipt of an objection under subsection (1), the Superintendent shall inform the Minister of the objection.

  • Marginal note:Inquiry into objection and report

    (3) On receipt of an objection under subsection (1), and if the application for the issuance of the letters patent to which the objection relates has been received, the Superintendent shall, if satisfied that it is necessary and in the public interest to do so, hold or cause to be held a public inquiry into the objection as it relates to the application and, on completion of the inquiry, the Superintendent shall report the findings of the inquiry to the Minister.

  • Marginal note:Report to be made available

    (4) Within thirty days after receiving a report under subsection (3), the Minister shall make the report available to the public.

  • Marginal note:Rules governing proceedings

    (5) Subject to the approval of the Governor in Council, the Superintendent may make rules governing the proceedings at public inquiries held under this section.

Marginal note:Matters for consideration

 Before issuing letters patent to incorporate a company or society, the Minister shall take into account all matters that the Minister considers relevant to the application, including

  • (a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the company or society;

  • (b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the company or society;

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

  • (d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

  • (e) whether the company or society 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 applicant or applicants with those of the company or society on the conduct of those operations and businesses; and

  • (g) the best interests of the financial system in Canada.

  • 1991, c. 47, s. 27
  • 2001, c. 9, s. 355

Marginal note:Contents of letters patent

  •  (1) There shall be set out in the letters patent incorporating a company or society

    • (a) the name of the company or society;

    • (b) the province in which the head office of the company or society is to be situated;

    • (c) the date that the company or society came, or is to come, into existence; and

    • (d) in the case of letters patent incorporating a company, whether the company is to be a mutual company.

  • Marginal note:Fraternal benefit societies

    (2) In addition to the information required to be included under subsection (1), there shall be set out in the letters patent of a society

    • (a) the criteria for membership in the society;

    • (b) the manner in which the capital of the society is to be acquired; and

    • (c) the disposition to be made of the property of the society on liquidation.

  • Marginal note:Provisions in letters patent

    (3) The Minister may set out in the letters patent incorporating a company or society any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed company or society.

  • Marginal note:Terms and conditions

    (4) The Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating a company or society as the Minister considers necessary or appropriate.

  • 1991, c. 47, s. 28
  • 2005, c. 54, s. 219

Marginal note:Letters patent of incorporation on application of converted companies

  •  (1) If the Minister, under section 22, issues letters patent incorporating a company on the application of a converted company in respect of which subsection 407(4) or (11) applies or applied at any time, the Minister may include in the letters patent of incorporation of the company a provision deeming shares of the company to be issued, on a share for share basis, to all shareholders of the converted company in exchange for all the issued and outstanding shares of the converted company.

  • Marginal note:Effect of provision

    (2) Shares of a company deemed to be issued under subsection (1) are subject to the same designation, rights, privileges and restrictions or conditions and, subject to any agreement to the contrary, to the same charges, encumbrances and other restrictions as the shares of the converted company for which they are exchanged and the shares of the converted company, on the issuance of the letters patent, become the property of the company free and clear of any charge, encumbrance or other restriction.

  • Marginal note:Effect of provision

    (3) An exchange of shares of a converted company referred to in subsection (1) under a provision included in the letters patent incorporating a company does not deprive a person who was a holder of shares of the converted company immediately before the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect of the shares, but that right or privilege must be exercised in accordance with this Act.

  • Marginal note:Transfer and voting of company shares

    (4) Despite subsection (3), no share of a company that is deemed to be issued under a provision included in the letters patent incorporating a company may subsequently be transferred or voted contrary to this Act.

  • Marginal note:Shareholder and policyholder approval

    (5) No provision described in subsection (1) may be included in letters patent issued under section 22 unless the application for the letters patent is accompanied by evidence that the request for the provision was approved by a special resolution of the shareholders and policyholders of the converted company who are entitled to vote at a meeting of shareholders and policyholders called to consider the application.

  • Marginal note:Exchange of share certificates

    (6) If, under a provision included in the letters patent incorporating a company, a share exchange is deemed to have taken place, the company shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the company and for the exchange of those certificates for share certificates representing the shares of the converted company that were outstanding on the day the letters patent were issued.

  • 2001, c. 9, s. 356

Marginal note:Proposal involving fundamental change

  •  (1) On application, made in accordance with the regulations, by a converted company in respect of which subsection 407(4) or (11) applies or applied at any time to give effect to a proposal to incorporate a company as the holding body corporate of the converted company, to continue a body corporate as a company that is the holding body corporate of the converted company or to amalgamate two or more bodies corporate and continue those bodies corporate as a company that is the holding body corporate of the converted company — and to make any other fundamental change to the converted company, including an exchange of any or all of the shares of the converted company for shares of the company —, the Minister may, to give effect to the proposal,

    • (a) include in the letters patent of the company issued under section 22, 34 or 251 any provision the Minister considers necessary; or

    • (b) despite any provision of the Act specified in regulations made under paragraph (2)(e), give any approval that the Minister considers necessary.

  • Marginal note:Regulations

    (2) The Governor in Council may make regulations

    • (a) respecting applications referred to in subsection (1), including their form and the information to be contained in them, and authorizing the Superintendent to require additional information in respect of such applications;

    • (b) respecting proposals to which subsection (1) applies, including the information to be contained in the proposals and the times within which the transactions involved in them must occur;

    • (c) respecting the procedures to be followed by a converted company that makes an application under subsection (1);

    • (d) respecting the approval, confirmation or authorization, if any, of all or any portion of proposals to which subsection (1) applies, including the approval of shareholders and policyholders and including the terms and conditions of those approvals, confirmations or authorizations and their effect; and

    • (e) specifying provisions of the Act for the purpose of paragraph (1)(b).

  • 2001, c. 9, s. 356

Marginal note:Notice of issue of letters patent

 The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent incorporating a company or society.

Marginal note:First directors

 The first directors of a company or society are the directors named in the application for letters patent to incorporate the company or society.

Marginal note:Effect of letters patent

 A company or society comes into existence on the date provided therefor in its letters patent.

Continuance

Marginal note:Federal corporations

  •  (1) A body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament, including an insurance holding company but not including a federal credit union, may apply to the Minister for letters patent continuing the body corporate as a company under this Act.

  • Marginal note:Other corporations

    (2) A body corporate incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the body corporate as a company under this Act.

  • Marginal note:Fraternal benefit societies

    (3) A fraternal benefit society incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the fraternal benefit society as a society.

  • 1991, c. 47, s. 32
  • 1994, c. 24, s. 34(F)
  • 1997, c. 15, s. 170
  • 2001, c. 9, s. 357
  • 2010, c. 12, s. 2118

Marginal note:Application for continuance

  •  (1) Where a body corporate applies for letters patent under subsection 32(1), (2) or (3), sections 23 to 27 apply in respect of the application, with such modifications as the circumstances require.

  • Marginal note:Special resolution approval

    (2) Where a body corporate applies for letters patent under subsection 32(1), (2) or (3), the application must be duly authorized by a special resolution.

  • Marginal note:Copy of special resolution

    (3) A copy of the special resolution referred to in subsection (2) shall be filed with the application.

  • 1991, c. 47, s. 33
  • 1997, c. 15, s. 171

Marginal note:Power to issue letters patent

  •  (1) On the application of a body corporate under subsection 32(1) or (2), the Minister may, subject to this Part, issue letters patent continuing the body corporate as a company under this Act.

  • Marginal note:Power to issue letters patent to fraternal benefit society

    (2) On the application of a fraternal benefit society under subsection 32(3), the Minister may, subject to this Part, issue letters patent continuing the fraternal benefit society as a society.

  • Marginal note:Issue of letters patent

    (3) Section 28 applies in respect of the issue of letters patent under subsection (1) or (2), with such modifications as the circumstances require.

  • 1991, c. 47, s. 34
  • 1997, c. 15, s. 172

Marginal note:Effect of letters patent

  •  (1) On the day set out in the letters patent continuing a body corporate as a company under subsection 34(1),

    • (a) the body corporate becomes a company as if it had been incorporated under this Act; and

    • (b) the letters patent are deemed to be the incorporating instrument of the continued company.

  • Marginal note:Effect of letters patent — society

    (2) On the day set out in the letters patent continuing a fraternal benefit society as a society under subsection 34(2),

    • (a) the fraternal benefit society becomes a society as if it had been incorporated under this Act; and

    • (b) the letters patent are deemed to be the incorporating instrument of the continued society.

  • 1991, c. 47, s. 35
  • 1997, c. 15, s. 173

Marginal note:Copy of letters patent

  •  (1) Where a body corporate is continued as a company or society under this Part, the Superintendent shall without delay send a copy of the letters patent to the appropriate official or public body in the jurisdiction in which the body corporate was authorized to apply to be continued under this Act.

  • Marginal note:Notice of issuance of letters patent

    (2) The Superintendent shall publish in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as a company or society under this Act.

  • 1991, c. 47, s. 36
  • 1997, c. 15, s. 174(E)

Marginal note:Effects of continuance

 Where a body corporate is continued as a company or society under this Part,

  • (a) the property of the body corporate continues to be the property of the company or society;

  • (b) the company or society continues to be liable for the obligations of the body corporate;

  • (c) an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;

  • (d) a civil, criminal or administrative action or proceeding pending by or against the body corporate may continue to be prosecuted by or against the company or society;

  • (e) a conviction against, or any ruling, order or judgment in favour of or against the body corporate may be enforced by or against the company or society;

  • (f) a person who, on the day the body corporate becomes a company or society, is the holder of a security issued by the body corporate is not deprived of any right or privilege available to the person at that time in respect of the security or relieved of any liability in respect of it, but any such right or privilege may be exercised only in accordance with this Act; and

  • (g) the by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the company or society.

  • 1991, c. 47, s. 37
  • 1997, c. 15, s. 175

Marginal note:Transitional

  •  (1) Notwithstanding any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to a company or society in respect of which letters patent were issued under subsection 34(1) or (2) permission to

    • (a) engage in a business activity specified in the order that the company or society would not otherwise be permitted by this Act to engage in and that the body corporate continued as the company or society was engaging in at the time the 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. 119]

    • (d) hold assets that the company or society would not otherwise be permitted by this Act to hold, if the assets were held by the body corporate continued as the company or society at the time the application for the letters patent was made;

    • (e) acquire and hold assets that the company or society would not otherwise be permitted by this Act to acquire or hold, if the body corporate continued as the company or society was 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

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

    • (a) with respect to any activity described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;

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

  • Marginal note:Limitation

    (4) The Minister shall not grant to a company or society 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 company or society to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the company or society that the company or society 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 the approval for the company or society to commence and carry on business.

  • 1991, c. 47, s. 38
  • 1994, c. 47, s. 119
  • 1997, c. 15, s. 176
  • 2007, c. 6, s. 190

Discontinuance

Marginal note:Transferring to other federal Acts

  •  (1) A company or society may

    • (a) apply, under the Bank Act, for letters patent continuing the company or society as a bank or a bank holding company under that Act, or amalgamating and continuing the company or society as a bank or a bank holding company under that Act;

    • (b) apply, with the approval in writing of the Minister, under the Canada Business Corporations Act for a certificate of continuance as a corporation under that Act;

    • (c) apply, with the approval in writing of the Minister, under the Canada Cooperatives Act for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, as a cooperative under that Act;

    • (d) apply, under the Cooperative Credit Associations Act, for letters patent continuing the company or society as an association under that Act, or amalgamating and continuing the company or society as an association under that Act; or

    • (e) apply, under the Trust and Loan Companies Act, for letters patent continuing the company or society as a company under that Act, or amalgamating and continuing the company or society as a company under of that Act.

  • Marginal note:Continuance under the Canada Not-for-profit Corporations Act

    (2) A society may also, with the approval in writing of the Minister, apply under the Canada Not-for-profit Corporations Act, for a certificate of continuance under that Act.

  • Marginal note:Conditions for approval

    (3) The approval referred to in paragraph (1)(b) or (c) or subsection (2) may be given only if the Minister is satisfied that

    • (a) the company or society has published, once a week for four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the company or society is situated, a notice of its intention to apply for the approval;

    • (b) the company or society has discharged, or provided for the discharge of, all its policy liabilities;

    • (c) the company or society will not, unless it is an entity referred to in paragraph 47(2)(b) or (c), use the word “assurance”, “assurances” or “insurance” in its name after the certificate or letters patent are issued in respect of the company or society; and

    • (d) the application has been authorized by a special resolution.

  • Marginal note:Withdrawing application

    (4) If a special resolution authorizing the application for the certificate or letters patent so states, the directors of a company or society may, without further approval of the shareholders, policyholders entitled to vote or members, withdraw the application before it is acted on.

  • Marginal note:Restriction on other transfers

    (5) A company or society may not apply to be continued, or to be amalgamated and continued, as the case may be, as a body corporate other than one referred to in subsection (1) or (2).

  • 1991, c. 47, ss. 39, 759
  • 1994, c. 24, s. 34(F)
  • 2001, c. 9, s. 358
  • 2007, c. 6, s. 191
  • 2009, c. 23, s. 331

Marginal note:Act ceases to apply

 If a company or society applies for a certificate or letters patent referred to in section 39 in accordance with that section and the certificate is given or the letters patent are issued, this Act ceases to apply to the company or society as of the day the certificate or the letters patent take effect.

  • 1991, c. 47, s. 40
  • 2001, c. 9, s. 358
  • 2007, c. 6, s. 191

 [Repealed, 2001, c. 9, s. 358]

Corporate Name

Marginal note:Prohibited names

  •  (1) A company or society may not be incorporated under this Act with a name

    • (a) that is prohibited by an Act of Parliament;

    • (b) that is, in the opinion of the Superintendent, deceptively misdescriptive;

    • (c) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existing

      • (i) trademark or trade name, or

      • (ii) corporate name of a body corporate,

      except where the trademark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name and consent to the use of the trademark, trade name or corporate name is signified to the Superintendent in such manner as the Superintendent may require;

    • (d) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any entity carries on business or is identified; or

    • (e) that is reserved under section 45 for another company or society or a proposed company or society or under section 734 for an insurance holding company or a proposed insurance holding company.

  • Marginal note:Exception

    (2) Paragraph (1)(a) does not apply with respect to any former-Act company or former-Act society incorporated by or under an Act of Parliament that expressly authorizes the use of any name that would otherwise be prohibited.

  • 1991, c. 47, s. 42
  • 1996, c. 6, s. 67
  • 1997, c. 15, s. 177
  • 2001, c. 9, s. 359
  • 2014, c. 20, s. 366(E)

Marginal note:Affiliated company or society

 Despite section 42, a company or society that is affiliated with another entity may, with the consent of that entity, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.

  • 1991, c. 47, s. 43
  • 1996, c. 6, s. 68
  • 2001, c. 9, s. 360
  • 2007, c. 6, s. 192

Marginal note:French or English form of name

  •  (1) The name of a company or society may be set out in its letters patent in an English form, a French form, an English form and a French form or in a combined English and French form, and the company or society may use and be legally designated by any such form.

  • Marginal note:Alternate name

    (2) A company or society may identify itself outside Canada by its name in any language and the company or society may use and be legally designated by any such form of its name outside Canada.

  • Marginal note:Other name

    (3) Subject to subsection (4) and section 278, a company or society may carry on business under or identify itself by a name other than its corporate name.

  • Marginal note:Directions

    (4) Where a company or society is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the company or society not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 42(1)(a) to (e).

  • 1991, c. 47, s. 44
  • 1996, c. 6, s. 69

Marginal note:Reserved name

 The Superintendent may, on request, reserve for ninety days a name for a proposed company or society or for a company or society that intends to change its name.

Marginal note:Directing change of name

  •  (1) If through inadvertence or otherwise a company or society

    • (a) comes into existence or is continued with a name, or

    • (b) on an application to change its name, is granted a name

    that is prohibited by section 42, the Superintendent may, by order, direct the company or society to change its name and the company or society shall comply with that direction.

  • Marginal note:Revoking name

    (2) If a company or society has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Act, the Superintendent may revoke the name of the company or society and assign to it a name and, until changed in accordance with section 224, 238 or 544.1, the name of the company or society is thereafter the name so assigned.

  • 1991, c. 47, s. 46
  • 1996, c. 6, s. 70
  • 2001, c. 9, s. 361

Marginal note:Restriction on use of name

  •  (1) No entity incorporated or formed by or under an Act of Parliament shall use the word “assurance”, “assurances”, “insurance” or “lifeco” or any word or words of import equivalent to any of those words in its name.

  • Marginal note:Exceptions

    (2) Subsection (1) does not apply to

    • (a) a company or society;

    • (a.1) an insurance holding company;

    • (b) an entity the business of which is not financial activities;

    • (c) an entity that is primarily engaged in insurance brokerage or insurance agency services; or

    • (d) an entity that was, on the day immediately preceding the day on which that subsection comes into force, using the word “assurance”, “assurances”, “insurance” or “lifeco” or any word or words of import equivalent to any of those words in its name.

  • 1991, c. 47, s. 47
  • 1996, c. 6, s. 70
  • 2001, c. 9, s. 362

Marginal note:Subsidiaries

 Despite subsection 47(1), a subsidiary of a company or society may use the company’s or society’s name in its name.

  • 1991, c. 47, s. 48
  • 1996, c. 6, s. 70
  • 2001, c. 9, s. 363

Definition of reserved name

  •  (1) In this section, reserved name means a name that includes as part thereof the word “assurance”, “assurances”, “insurance”, “lifeco”, “fiduciaire”, “fiduciary”, “fiducie”, “trust”, “trustco”, “loan”, “loanco” or “prêt” or any word or words of import equivalent to any of those words.

  • Marginal note:Termination of control required in certain cases

    (2) No person, other than a financial institution, who

    • (a) is carrying on business in Canada under a reserved name, and

    • (b) has control or acquires control of a company,

    shall control the company on the later of

    • (c) one year after this section comes into force, and

    • (d) one year after the date of acquisition of the control.

  • Marginal note:Prohibition

    (3) No person, other than a financial institution, who

    • (a) controls an entity that is not a financial institution that carries on business in Canada under a reserved name, and

    • (b) has control or acquires control of a company,

    shall control the company on the later of

    • (c) one year after this section comes into force, and

    • (d) one year after the date of the acquisition of the control.

  • Marginal note:Continuing control prohibited

    (4) Notwithstanding subsection (3), where a financial institution controls an entity that

    • (a) is not a financial institution,

    • (b) carries on business in Canada under a reserved name, and

    • (c) has control or acquires control of a company,

    the entity shall not control the company on the later of

    • (d) one year after this section comes into force, and

    • (e) one year after the date on which the entity acquires control of the company.

  • Marginal note:Exceptions

    (5) Subsections (2) to (4) do not apply with respect to a person or entity that was carrying on business in Canada under a reserved name on the day immediately preceding the day on which those subsections come into force.

  • 1996, c. 6, s. 70

PART IVOrganization and Commencement

Organization Meetings

Marginal note:First directors’ meeting

  •  (1) After letters patent incorporating a company or society are issued, a meeting of the directors of the company or society shall be held at which the directors shall appoint an actuary to be the actuary of the company or society and may, subject to this Part,

    • (a) make by-laws;

    • (b) adopt forms of share certificates and corporate records;

    • (c) authorize the issue of shares of the company;

    • (d) appoint officers;

    • (e) appoint an auditor to hold office until the meeting called pursuant to subsection 50(1), (2) or (3);

    • (f) make banking arrangements; and

    • (g) deal with any other matters necessary to organize the company or society.

  • Marginal note:Calling directors’ meeting

    (2) An incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 190(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the company or society.

Marginal note:Calling shareholders’ meeting

  •  (1) If at least five million dollars, or any greater amount that the Minister may specify, has been received by a company, other than a mutual company, in respect of which letters patent were issued under section 22 from the issue of its shares, the directors of the company shall without delay call a meeting of the shareholders of the company.

  • Marginal note:Calling incorporators’ meeting

    (2) Where such amount as the Minister may specify has been received by a mutual company in respect of which letters patent were issued pursuant to section 22 from its incorporators, the directors of the mutual company shall forthwith call a meeting of the incorporators of the mutual company.

  • Marginal note:Calling meeting of supreme governing body

    (3) Where such amount as the Minister may specify has been received by a society in respect of which letters patent were issued pursuant to section 22 from its incorporators, the directors of the society shall forthwith call a meeting of the supreme governing body of the society.

  • Marginal note:Meeting of shareholders or incorporators

    (4) The shareholders or incorporators of a company or the supreme governing body of a society shall, by resolution at the meeting of shareholders or incorporators called pursuant to subsection (1), (2) or (3),

    • (a) approve, amend or reject any by-law made by the directors of the company or society;

    • (b) subject to section 176, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders and policyholders or members following the election; and

    • (c) appoint an auditor to hold office until the close of the first annual meeting of shareholders and policyholders or, in the case of a society, until the close of the first general meeting of members.

  • 1991, c. 47, s. 50
  • 2001, c. 9, s. 364

Marginal note:Term of first directors

 A director named in the application for letters patent to incorporate a company or society holds office until the election of directors at the meeting of shareholders or incorporators or of the supreme governing body called pursuant to subsection 50(1), (2) or (3).

Commencement and Carrying on of Business

Marginal note:Order to commence and carry on business

  •  (1) Subject to subsection (6), a company or society shall not carry on any business until the Superintendent has, by order, approved the commencement and carrying on of business by the company or society.

  • Marginal note:Former-Act companies and societies

    (2) A certificate of registry issued to a company or society under Part III of the Canadian and British Insurance Companies Act, or any other authorization, that is in effect immediately before the coming into force of this Part is deemed to be an order of the Superintendent of indeterminate duration under subsection 53(1) and the company or society remains subject to any and all other restrictions and conditions in the certificate.

  • Marginal note:Continued company or society

    (3) Except in respect of a body corporate that is continued as a company or society under this Act for the purposes of amalgamating without delay with one or more bodies corporate and continuing as a company or society under this Act, where letters patent continuing a body corporate as a company or society under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the company or society.

  • Marginal note:Amalgamated company or society

    (4) Where letters patent amalgamating and continuing two or more bodies corporate as a company or society under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the company or society.

  • Marginal note:Subsection 53(2) and section 57 do not apply

    (5) For greater certainty, subsection 53(2) and section 57 do not apply in respect of a company or society referred to in subsections (3) and (4).

  • Marginal note:Marine insurance

    (6) A company that is not a marine company may insure risks in the class of marine insurance without an order under subsection (1).

  • Marginal note:Transitional

    (7) Every former-Act company and former-Act society that deposited securities with the Receiver General pursuant to section 76 or 82 of the Canadian and British Insurance Companies Act shall apply for the return of those securities within such period following the coming into force of this section as may be fixed by order of the Governor in Council.

  • 1991, c. 47, s. 52
  • 1997, c. 15, s. 178
  • 2007, c. 6, s. 193

Marginal note:Authority to make order

  •  (1) On application by a company or society, the Superintendent may make an order approving the commencement and carrying on of business by the company or society.

  • Marginal note:Statement of payments

    (2) An application by a company or society for an order under subsection (1) must contain a statement setting out the amounts paid or to be paid by the company or society in connection with its incorporation and organization.

Marginal note:No payments before order

 Until an order approving the commencement and carrying on of business is made in respect of a company or society, the company or society shall not make any payment on account of incorporation or organization expenses out of moneys received from the paid-in capital of the company or society and interest on those moneys, except reasonable sums

  • (a) for the remuneration of not more than two officers;

  • (b) for the payment of costs related to the issue of shares; and

  • (c) for the payment of clerical assistance, legal services, accounting services, office accommodation at one location, office expenses, advertising, stationery, postage and travel expenses.

  • 1991, c. 47, s. 54
  • 2007, c. 6, s. 194

Marginal note:Expenses charged to paid-in capital

 All incorporation and organization expenses of a company or society shall be charged to the paid-in capital of the company or society and shall not in any way be charged directly or indirectly to policyholders.

Marginal note:Deposits and investments before order

  •  (1) Subject to subsection (2), where a company or society comes into existence but no order approving the commencement and carrying on of business is made for the company or society, the company or society may only

    • (a) deposit, in Canada, paid-in capital of the company or society in a deposit-taking Canadian financial institution; or

    • (b) invest paid-in capital of the company or society in unencumbered securities of the Government of Canada or the government of any province.

  • Marginal note:Exception

    (2) Subsection (1) does not apply in respect of any company incorporated for the sole purpose of insuring risks in the class of marine insurance.

Marginal note:Conditions for order

  •  (1) The Superintendent shall not make an order approving the commencement and carrying on of business by a company or society until

    • (a) it has been shown to the satisfaction of the Superintendent that

      • (i) the meeting of shareholders, incorporators or supreme governing body of the company or society referred to in subsection 50(1), (2) or (3) has been duly held,

      • (ii) the company or society has paid-in capital of

        • (A) such amount as is specified by the Minister under subsection 50(2) or (3), in the case of a mutual company or a society, or

        • (B) at least five million dollars or any greater amount that is specified by the Minister under subsection 50(1), in the case of a company other than a mutual company,

      • (iii) the expenses of incorporation and organization to be borne by the company or society are reasonable, and

      • (iv) all other relevant requirements of this Act have been complied with; and

    • (b) in the case of a society, the society has filed with the Superintendent

      • (i) a report of an actuary appointed by the society, in such form as the Superintendent may require, on the results of an actuarial valuation of each of the benefit funds maintained by the society, having regard to the prospective liabilities of and contributions to each fund,

      • (ii) the opinion of the actuary that the assets of the society applicable to each fund, together with the contributions to be received thereafter from the members, are sufficient to provide for the payment at maturity of all of the obligations of the fund without deduction or abatement, and

      • (iii) a statement of its condition and affairs in such detail as the Superintendent may require, as at the date of the valuation referred to in subparagraph (i).

  • Marginal note:Restrictions re societies

    (2) No order approving the commencement and carrying on of business of a society shall be made if the society operates for profit or as a commercial or business enterprise or the property or funds of the society are under the control of persons not periodically elected by members of the society.

  • Marginal note:Time limit

    (3) The Superintendent shall not make an order approving the commencement and carrying on of business by a company or society more than one year after the day on which the company or society comes into existence.

  • 1991, c. 47, s. 57
  • 1997, c. 15, s. 179
  • 2001, c. 9, s. 365

Marginal note:Order to specify classes of insurance

  •  (1) An order approving the commencement and carrying on of business by a company shall specify the classes of insurance risks that the company is permitted to insure pursuant to section 443.

  • Marginal note:Conditions of order

    (2) An order approving the commencement and carrying on of business by a company or society may contain such conditions or limitations that are consistent with this Act and relate to the business of the company or society as the Superintendent deems expedient and necessary.

Marginal note:Variations

  •  (1) In respect of the order approving the commencement and carrying on of business by a company or society, the Superintendent may at any time, by further order,

    • (a) specify additional classes of insurance risks that the company is permitted to insure pursuant to section 443,

    • (b) make the order subject to such conditions or limitations that are consistent with this Act and that relate to the business of the company or society as the Superintendent deems expedient and necessary, or

    • (c) amend or revoke any authorization contained in the order or any condition or limitation to which the order is subject,

    but before making any such further order the Superintendent shall provide the company or society with an opportunity to make representations regarding that further order.

  • (2) to (6) [Repealed, 1996, c. 6, s. 71]

  • 1991, c. 47, s. 59
  • 1996, c. 6, s. 71

Marginal note:Limit on assets

  •  (1) The Minister may, by order, require a company that is a converted company in respect of which the Minister has issued an order under subsection 407(8) or a converted company in respect of which subsection 407(11) applied at any time not to have average total assets in any three month period ending on the last day of a month subsequent to the month specified in the order exceeding the company’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order if the Minister is of the opinion that it is in the best interests of the financial system in Canada to do so, after having considered the Superintendent’s opinion on

    • (a) the nature and extent of the financial services activities carried out by entities affiliated with the company; and

    • (b) the impact that the nature and degree of supervision and regulation of those financial services activities have on the supervision and regulation of the company.

  • Marginal note:Revocation of order

    (2) If the Minister is of the opinion that the circumstances giving rise to the order have ceased to exist or have changed substantially, the Minister may, by further order, revoke the order.

  • Marginal note:Average total assets

    (3) For the purposes of subsection (1), the average total assets of a company in a three month period shall be computed by adding the total assets of the company as calculated for the month end of each of the three months in the period and by dividing the sum by three.

  • 2001, c. 9, s. 366

Marginal note:Public notice

  •  (1) On the making of an order approving the commencement and carrying on of business by a company or society, the company or society shall publish a notice of the making of the order in a newspaper in general circulation at or near the place where the head office of the company or society is located.

  • Marginal note:Notice in Canada Gazette

    (2) The Superintendent shall cause to be published in the Canada Gazette a notice of the making of an order approving the commencement and carrying on of business by a company or society.

  • Marginal note:Non-application to former-Act company or society

    (3) For greater certainty, this section does not apply to a company or society referred to in subsection 52(2).

Marginal note:Cessation of existence

  •  (1) Subject to subsection (2), except for the sole purpose of winding up the company’s or society’s affairs, a company or society ceases to exist one year after the day on which its incorporating instrument became effective if it does not obtain an order approving the commencement and carrying on of business within that year.

  • Marginal note:Marine insurance

    (2) A company that was incorporated for the sole purpose of insuring risks in the class of marine insurance ceases to exist one year after the day on which its incorporating instrument became effective if, in the opinion of the Superintendent, the company is not, by that date, actively engaged in insuring those risks.

Marginal note:Allowed disbursements

  •  (1) Where

    • (a) an order approving the commencement and carrying on of business is not made for a company or society, or

    • (b) the Superintendent is of the opinion that a company referred to in subsection 61(2) is not actively engaged in insuring risks in the class of marine insurance,

    no part of the moneys of the company or society shall be used for the payment of incorporation and organization expenses, other than remuneration and costs referred to in section 54, unless the payment has been approved by a special resolution.

  • Marginal note:Application to court to settle disbursements

    (2) If the amount allowed by a special resolution for the payment of any incorporation and organization expenses referred to in subsection (1) is considered insufficient by the directors or if no special resolution for the payment of such expenses is passed, the directors may apply to any court having jurisdiction in the place where the head office of the company or society is situated to settle and determine the amounts to be paid out of any moneys of the company or society before distribution of the balance to the shareholders or, where there are no shareholders, to the incorporators.

  • Marginal note:Notice of application to court

    (3) The directors shall, at least twenty-one days prior to the date fixed for the hearing of the application referred to in subsection (2), send to the shareholders or incorporators, as the case may be, a notice of the application, which notice shall contain a statement of the amounts that are proposed to be settled and determined by the court.

  • Marginal note:Ratio payable

    (4) In order that the amounts paid and payable under this section may be equitably borne by the shareholders or incorporators, as the case may be, the directors shall, after the amounts of the payments have been approved by special resolution or settled and determined by a court, fix the proportionate part thereof chargeable to each shareholder or incorporator as the ratio of the amount paid in by the shareholder or incorporator to the aggregate of all the amounts paid in by the shareholders or incorporators.

  • Marginal note:Return of excess

    (5) After the amounts referred to in this section have been paid, the directors shall pay, with any interest earned thereon, to the shareholders or incorporators, the respective balances of the moneys paid in by them, less the amount chargeable to each shareholder or incorporator under subsection (4).

PART VCapital Structure

Share Capital

Marginal note:Power to issue shares

  •  (1) Subject to this Act and the by-laws of the company, shares of a company may be issued at such times and to such persons and for such consideration as the directors of the company may determine.

  • (2) and (3) [Repealed, 1997, c. 15, s. 180]

  • Marginal note:Shares

    (4) Shares of a company shall be in registered form and shall be without nominal or par value.

  • Marginal note:Shares of former-Act company

    (5) Shares with nominal or par value of a former-Act company are deemed to be shares without nominal or par value.

  • Marginal note:Shares of continued company

    (6) Where a body corporate is continued as a company under this Act, shares with nominal or par value issued by the body corporate before it was so continued are deemed to be shares without nominal or par value.

  • Marginal note:Deemed share conditions

    (7) Where any right of a holder of a share with nominal or par value of a former-Act company or a body corporate continued as a company under this Act, other than a voting right, was stated or expressed in terms of the nominal or par value of the share immediately before the coming into force of this Part or the continuance under this Act, as the case may be, that right is thereafter deemed to be the same right stated or expressed without reference to the nominal or par value of the share.

  • 1991, c. 47, s. 63
  • 1997, c. 15, s. 180

Marginal note:Common shares

  •  (1) A company, other than a mutual company, shall have one class of shares, to be designated as “common shares”, which are non-redeemable and in which the rights of the holders thereof are equal in all respects, and those rights include

    • (a) the right to vote at all meetings of shareholders except where only holders of a specified class of shares, or policyholders, are entitled to vote;

    • (b) the right to receive dividends declared on those shares; and

    • (c) the right to receive the remaining property of the company on dissolution that pertains to shareholders.

  • Marginal note:Designations of shares

    (2) No company shall designate more than one class of its shares as “common shares” or any variation of that term.

  • (3) [Repealed, 2012, c. 5, s. 124]

  • Marginal note:Continued company

    (4) A body corporate continued as a company under this Act that is not in compliance with subsection (2) on the date letters patent continuing it as a company are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.

  • 1991, c. 47, s. 64
  • 2012, c. 5, s. 124

Marginal note:Classes of shares

  •  (1) The by-laws of a company may provide for one or more classes of shares and, if they so provide, shall set out

    • (a) the rights, privileges, restrictions and conditions attaching to the shares of each class; and

    • (b) the maximum number, if any, of shares of any class that the company is authorized to issue.

  • Marginal note:Shareholder approval

    (2) Where a by-law referred to in subsection (1) is made, the directors of the company shall submit the by-law to the shareholders and policyholders at the next meeting of shareholders and policyholders.

  • Marginal note:Effective date

    (3) A by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders and policyholders at the meeting referred to in subsection (2).

  • 1991, c. 47, s. 65
  • 1997, c. 15, s. 181
  • 2001, c. 9, s. 367

Marginal note:Shares issued in series

  •  (1) The by-laws of a company 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: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.

  • 1991, c. 47, s. 66
  • 2005, c. 54, s. 220
  • 2007, c. 6, s. 195(E)

Marginal note:One share, one vote

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

Marginal note:Shares non-assessable

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

Marginal note:Consideration for share

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

  • Marginal note:Transitional

    (2) Where any share of a company is not fully paid for on the day this Part comes into force, the provisions of the Canadian and British Insurance Companies Act that applied to the company immediately prior to that day and that relate to

    • (a) the liability of holders of shares of a company that are not fully paid for and the enforcement of that liability,

    • (b) the forfeiture of the share, and

    • (c) the forfeiture of the right to vote the share

    continue to apply in respect of that share.

  • Marginal note:Other currencies

    (3) When issuing shares, a company 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

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

  • Marginal note:Addition to stated capital account

    (2) A company shall record in the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.

  • Marginal note:Exception

    (2.1) Despite subsection (2), a company may, subject to subsection (2.2), 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 company 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 company 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 company at arm’s length within the meaning of that expression in the Income Tax Act if the person, the company 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 246(1); or

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

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

    (2.2) On the issuance of a share, a company shall not add to the stated capital account in respect of the share an amount greater than the amount of the consideration it receives for the share.

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

    (2.3) Where a company 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 company 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 81(4).

  • Marginal note:Stated capital of former-Act company

    (3) On the coming into force of this Part, a former-Act company shall record in the stated capital account maintained for each class and series of shares 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 immediately before the coming into force of this Part, and

    • (b) the amount of the contributed surplus of the company that is attributable to those shares.

  • Marginal note:Contributed surplus entry

    (4) The amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (3)(b) shall be deducted from the contributed surplus account of the company.

  • Marginal note:Share issued before coming into force

    (5) Any amount unpaid in respect of a share issued by a former-Act company before the coming into force of this Part and paid after the coming into force of this Part shall be recorded in the stated capital account maintained by the company for the shares of that class or series.

  • 1991, c. 47, s. 70
  • 1997, c. 15, s. 182
  • 2005, c. 54, s. 221

Marginal note:Stated capital of continued company

  •  (1) Where a body corporate is continued as a company under this Act, the company shall record in the stated capital account maintained for each class and series of shares 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 immediately before the body corporate was so continued, and

    • (b) the amount of the contributed surplus of the company that is attributable to those shares.

  • 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 company.

  • Marginal note:Shares issued before continuance

    (3) Any amount unpaid in respect of a share issued by a body corporate before it was continued as a company under this Act and paid after it was so continued shall be recorded in the stated capital account maintained by the company for the shares of that class or series.

Marginal note:Pre-emptive right

  •  (1) Where the by-laws of a company 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 company 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 company.

  • Marginal note:Idem

    (3) Notwithstanding the existence of a pre-emptive right, a shareholder of a company 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 company, 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

  •  (1) A company may issue conversion privileges, options or rights to acquire securities of the company, 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 company 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 company has granted privileges to convert any securities issued by the company 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 company 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

 Except as provided in sections 75 to 78, or unless permitted by the regulations, a company shall not

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

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

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

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

Marginal note:Purchase and redemption of shares

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

  • Marginal note:Restrictions on purchase and redemption

    (2) A company shall not make any payment to purchase or redeem any shares issued by it if there are reasonable grounds for believing that the company is, or the payment would cause the company to be, in contravention of subsection 515(1), any regulation made under subsection 515(2) or any order made under subsection 515(3).

  • Marginal note:Donated shares

    (3) A company may accept from any shareholder a share of the company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 79.

  • 1991, c. 47, s. 75
  • 2007, c. 6, s. 196

Marginal note:Holding as personal representative

  •  (1) A company may, and may permit its subsidiaries to, hold, in the capacity of a personal representative, shares of the company or of any body corporate that controls the company or ownership interests in any unincorporated entity that controls the company, but only where the company or the subsidiary does not have a beneficial interest in the shares or ownership interests.

  • Marginal note:Security interest

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

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

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

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

  • Marginal note:Saving

    (3) Nothing in subsection (2) precludes a former-Act company or any of its subsidiaries from holding any security interest held immediately prior to the coming into force of this Part.

  • 1991, c. 47, s. 76
  • 2005, c. 54, s. 222(F)

Marginal note:Exception — conditions before acquisition

  •  (1) A company may permit any of its subsidiaries to acquire shares of the company through the issuance of those shares by the company 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 company permits any of its subsidiaries to acquire shares of the company 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 70(2), the company must comply with the prescribed requirements.

  • 2007, c. 6, s. 197

Marginal note:Holding in market-indexed segregated fund

 A company may hold shares of the company or shares or ownership interests of an entity that controls the company, if

  • (a) the shares or ownership interests are assets of a fund maintained by the company as required by paragraph 451(b); and

  • (b) the assets of the fund reflect the securities upon which a generally recognized market index is based and the weighting of those securities in that index.

  • 1997, c. 15, s. 183
  • 2001, c. 9, s. 368

Marginal note:Mutual fund entity’s or closed-end fund’s holding in company

 If a mutual fund entity, as defined in subsection 490(1), or a closed-end fund, as defined in that subsection, becomes a subsidiary of a company by reason of the company investing, in the entity or fund, assets of a fund maintained by the company as required by paragraph 451(b), the company may permit the entity or fund to hold shares of the company, or shares or ownership interests of an entity that controls the company, as long as the assets of the mutual fund entity or closed-end fund reflect the securities upon which a generally recognized market index is based and the weighting of those securities in that index.

  • 2012, c. 5, s. 125

Marginal note:Cancellation of shares

  •  (1) Subject to subsection (2), where a company purchases shares of the company or fractions thereof or redeems or otherwise acquires shares of the company, the company shall cancel those shares.

  • Marginal note:Requirement to sell

    (2) Where a company or any of its subsidiaries, through the realization of security, acquires any shares of the company or of any body corporate that controls the company or any ownership interests in an unincorporated entity that controls the company, the company shall, or shall cause its subsidiaries to, as the case may be, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.

Marginal note:Subsidiary holding shares

 Subject to the regulations, a former-Act company shall cause any subsidiary of the company that holds shares of the company, or of any body corporate that controls the company, or any ownership interests of any unincorporated entity that controls the company to sell or otherwise dispose of those shares or ownership interests within six months after the day this section comes into force.

Marginal note:Reduction of capital

  •  (1) The stated capital of a company may be reduced by special resolution.

  • Marginal note:Limitation

    (2) A company shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the company is, or the reduction would cause the company to be, in contravention of subsection 515(1), any regulation made under subsection 515(2) or any order made under subsection 515(3).

  • Marginal note:Contents of special resolution

    (3) A special resolution to reduce the stated capital of a company shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.

  • Marginal note:Approval by Superintendent

    (4) A special resolution to reduce the stated capital of a company has no effect until it is approved in writing by the Superintendent.

  • Marginal note:Exception

    (4.1) Subsection (4) does not apply if

    • (a) the reduction in the stated capital is made solely as a result of changes made to the accounting principles referred to in subsection 331(4); and

    • (b) there is to be no return of capital to shareholders or policyholders as a result of the reduction.

  • Marginal note:Conditions for approval

    (5) No approval to reduce the stated capital of a company may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.

  • Marginal note:Statements to be submitted

    (6) In addition to evidence of the passing of a special resolution to reduce the stated capital of a company and of the publication thereof, statements showing

    • (a) the number of the company’s shares issued and outstanding,

    • (b) the results of the voting by policyholders and by class of shares of the company,

    • (c) the company’s assets and liabilities, and

    • (d) the reason why the company seeks the reduction of capital

    shall be submitted to the Superintendent at the time of the application for approval of the special resolution.

  • 1991, c. 47, s. 79
  • 2007, c. 6, s. 198

Marginal note:Recovery by action

  •  (1) Where any money or property was paid or distributed to a shareholder or other person as a consequence of a reduction of capital made contrary to section 79, a creditor of the company may apply to a court for an order compelling the shareholder or other person to pay the money or deliver the property to the company.

  • Marginal note:Shares held by personal representative

    (2) No person holding shares in the capacity of a personal representative and registered on the records of the company as a shareholder and therein described as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.

  • Marginal note:Limitation

    (3) An action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.

  • Marginal note:Remedy preserved

    (4) This section does not affect any liability that arises under section 216.

Marginal note:Adjustment of stated capital account

  •  (1) On a purchase, redemption or other acquisition by a company of shares or fractions thereof issued by it, other than shares acquired pursuant to section 76 or acquired through the realization of security and sold pursuant to subsection 77(2), the company shall deduct from the stated capital account maintained for the class or series of shares so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series by the number of shares of that class or series so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.

  • Marginal note:Idem

    (2) A company shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 79.

  • Marginal note:Shares converted to another class

    (3) On a conversion of outstanding shares of a company into shares of another class or series, or on a change of outstanding shares of the company into shares of another class or series, the company shall

    • (a) deduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; and

    • (b) record the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.

  • Marginal note:Stated capital of convertible shares

    (4) For the purposes of subsection (3) and subject to the company’s by-laws, where a company issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.

  • Marginal note:Conversion or change of shares

    (5) Shares issued by a company and converted into shares of another class or series, or changed under subsection 238(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.

Marginal note:Addition to stated capital account

 On a conversion of any debt obligation of a company into shares of a class or series of shares, the company shall

  • (a) deduct from the liabilities of the company the nominal value of the debt obligation being converted; and

  • (b) record the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the class or series of shares into which the debt obligation has been converted.

Marginal note:Declaration of dividend

  •  (1) The directors of a company may declare and a company may pay a dividend by issuing fully paid shares of the company or options or rights to acquire fully paid shares of the company and, subject to subsection (4), the directors of a company may declare and a company may pay a dividend in money or property, and, if a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.

  • Marginal note:Notice to Superintendent

    (2) The directors of a company shall notify the Superintendent of the declaration of a dividend at least 15 days before the day fixed for its payment.

  • Marginal note:Share dividend

    (3) If shares of a company are issued in payment of a dividend, the company shall record in the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend the declared amount of the dividend stated as an amount of money.

  • Marginal note:When dividend not to be declared

    (4) The directors of a company shall not declare and a company shall not pay a dividend if there are reasonable grounds for believing that the company is, or the payment would cause the company to be, in contravention of subsection 515(1), any regulation made under subsection 515(2) or any order made under subsection 515(3).

  • (5) [Repealed, 2007, c. 6, s. 199]

  • (6) to (8) [Repealed, 1997, c. 15, s. 184]

  • 1991, c. 47, s. 83
  • 1997, c. 15, s. 184
  • 2001, c. 9, s. 369
  • 2007, c. 6, s. 199

Restrictions Specific to Shares of Mutual Companies

Marginal note:Definitions

 The definitions in this section apply in this section and in sections 83.02 to 83.11.

participating share

participating share means a share issued by a mutual company that confers on the holder of the share the right to receive remaining property of the company on the dissolution of the company. (action participante)

participating shareholder

participating shareholder means the holder of a participating share. (actionnaire participant)

participating shareholder account

participating shareholder account means an account that a mutual company is required by section 83.04 to maintain. (compte des actionnaires participants)

  • 1997, c. 15, s. 185

Marginal note:Voting rights

  •  (1) Except as provided in subsections (2) and (3), a mutual company shall not issue any share that confers on its holder the right to vote at meetings of the shareholders and policyholders of the company.

  • Marginal note:Exception — specified events or conditions

    (2) A share may confer on its holder the right to vote where an event has occurred and is continuing or a condition is fulfilled.

  • Marginal note:Exception — election of directors

    (3) Subject to subsection 173(4.1), participating shares may confer on their holders the right to elect the number of directors indicated in the company’s by-laws.

  • 1997, c. 15, s. 185

Marginal note:Participating shares

 A mutual company shall not issue participating shares unless the by-laws of the company authorize it to issue participating shares.

  • 1997, c. 15, s. 185

Marginal note:Participating shareholder accounts

 A mutual company that issues participating shares shall maintain separate accounts, in the form and manner determined by the Superintendent, in respect of those shares.

  • 1997, c. 15, s. 185

Marginal note:Allocation of income

 There shall be credited to, or debited from, a participating shareholder account that portion of the income or losses of the company for a financial year, including accrued capital gains or losses, whether or not realized, that is determined in accordance with a method that is

  • (a) in the written opinion of the actuary of the company, fair and equitable to the participating policyholders of the company;

  • (b) approved by resolution of the directors, after considering the written opinion of the actuary; and

  • (c) not disallowed by the Superintendent, on the ground that it is not fair and equitable to the participating policyholders, within sixty days after receiving the resolution.

  • 1997, c. 15, s. 185

Marginal note:Allocation of expenses

 There shall be debited from a participating shareholder account that portion of the expenses, including taxes, of the company for a financial year that is determined in accordance with a method that is

  • (a) in the written opinion of the actuary of the company, fair and equitable to the participating policyholders of the company;

  • (b) approved by resolution of the directors, after considering the written opinion of the actuary; and

  • (c) not disallowed by the Superintendent, on the ground that it is not fair and equitable to the participating policyholders, within sixty days after receiving the resolution.

  • 1997, c. 15, s. 185

Marginal note:Filing of allocation method

 A mutual company the directors of which by resolution approve a method of allocating its income and losses and expenses to a participating shareholder account shall, within thirty days after the making of the resolution, file a copy of it with the Superintendent, together with a copy of the written opinion of the actuary of the company and any other information relevant to the allocation method that the Superintendent requests.

  • 1997, c. 15, s. 185

Marginal note:Review of allocation method

 The actuary of a company shall annually report in writing to the directors on the fairness and equitableness of the method used by the company for allocating its income and losses and expenses to a participating shareholder account.

  • 1997, c. 15, s. 185

Marginal note:Payment of dividends

 A mutual company that pays a dividend under section 83 on participating shares shall debit from the participating shareholder account in respect of those shares

  • (a) in the case of a dividend paid by issuing fully paid shares, the amount recorded as stated capital in respect of the dividend as required by subsection 83(3); and

  • (b) in any other case, the amount or value of the dividend.

  • 1997, c. 15, s. 185

Marginal note:Participating share redemptions, etc.

  •  (1) On a purchase, redemption or other acquisition by a company of participating shares issued by it or fractions of participating shares issued by it, other than participating shares held under section 76 or acquired through the realization of security and sold as required by subsection 77(2), there shall be debited from the participating shareholder account for the class or series of shares so purchased, redeemed or otherwise acquired the amount determined by the formula

    A × B/C

    where

    A
    is the balance of the participating shareholder account for the shares of that class or series immediately before the purchase, redemption or other acquisition;
    B
    is the number of shares of that class or series so purchased, redeemed or otherwise acquired; and
    C
    is the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.
  • Marginal note:Shares converted to another class

    (2) On a conversion of outstanding participating shares of a company into shares of another class or series, or on a change of outstanding participating shares of the company into shares of another class or series

    • (a) there shall be deducted from the participating shareholder account maintained for the class or series of participating shares converted or changed the amount determined by the formula

      A × B/C

      where

      A
      is the balance of the participating shareholder account for the shares of that class or series immediately before the conversion or change,
      B
      is the number of shares of that class or series converted or changed, and
      C
      is the number of shares of that class or series outstanding immediately before the conversion or change; and
    • (b) if the shares of that other class or series are participating shares, the amount determined under the formula in paragraph (a) shall be credited to the participating shareholder account for those participating shares.

  • Marginal note:Participating shareholder account for convertible participating shares

    (3) For the purposes of subsection (2) and subject to the company’s by-laws, where a company issues two classes of participating shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount in a participating shareholder account attributable to a share in either class is the amount determined by the formula

    A/B

    where

    A
    is the total of the balances of the participating shareholder accounts of both classes; and
    B
    is the number of outstanding shares of both classes immediately before the conversion.
  • 1997, c. 15, s. 185

Marginal note:Remaining property on dissolution

 The remaining property of a company that a participating shareholder of the company is entitled to receive on the dissolution of the company shall not exceed the sum of all amounts each of which is the amount in respect of a class or series of participating shares of the company determined by the formula

A × B/C

where

A
is the balance in the participating shareholder account for the shares of that class or series immediately before the dissolution;
B
is the number of shares of that class or series held by the participating shareholder immediately before the dissolution; and
C
is the number of shares of that class or series immediately before the dissolution.
  • 1997, c. 15, s. 185

Subordinated Indebtedness

Marginal note:Restriction on subordinated indebtedness

  •  (1) A company shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.

  • Marginal note:References to subordinated indebtedness

    (2) A person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by a company refer to the subordinated indebtedness otherwise than as subordinated indebtedness.

  • Marginal note:Other currencies

    (3) When issuing subordinated indebtedness, a company may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.

Security Certificates and Transfers

Marginal note:Definitions

 In this section and sections 86 to 139,

adverse claim

adverse claim includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in a security; (opposition)

bona fide purchaser

bona fide purchaser means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or order form or of a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank; (acheteur de bonne foi)

clearing agency

clearing agency means a person designated as a recognized clearing agency by the Superintendent; (agence de compensation et de dépôt)

delivery

delivery means voluntary transfer of possession; (livraison ou remise)

fungible

fungible, in respect of securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit; (fongibles)

genuine

genuine means free of forgery or counterfeit; (authentique)

good faith

good faith means honesty in fact in the conduct of the transaction concerned; (bonne foi)

over-issue

over-issue means the issue of securities in excess of any maximum number of securities that the issuer is authorized to issue; (émission excédentaire)

purchaser

purchaser means a person who takes an interest in a security by sale, mortgage, pledge, issue, reissue, gift or any other voluntary transaction; (acquéreur)

securities broker

securities broker means a person who is engaged for all or part of the person’s time in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to, a customer; (courtier)

security

security or security certificate means an instrument issued by a company that is

  • (a) in bearer, order or registered form,

  • (b) of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,

  • (c) one of a class or series or by its terms divisible into a class or series of instruments, and

  • (d) evidence of a share, participation or other interest in or obligation of a company,

but does not include a policy; (valeur mobilière ou certificat de valeur mobilière)

trust indenture

trust indenture has the meaning given that expression by section 317; (acte de fiducie)

unauthorized

unauthorized, in relation to a signature or an endorsement, means a signature or an endorsement made without actual, implied or apparent authority, and includes a forgery; (non autorisé)

uncertificated security

uncertificated security means a security, not evidenced by a security certificate, the issue and any transfer of which is registered and recorded in records maintained for that purpose by or on behalf of a company; (valeur mobilière sans certificat)

valid

valid means issued in accordance with the applicable law or validated under section 101. (valide)

Marginal note:Provisions governing transfers of securities

 The transfer of a security is governed by sections 87 to 139.

Marginal note:Security a negotiable instrument

  •  (1) A security is a negotiable instrument but, in the case of any inconsistency between the provisions of the Bills of Exchange Act and this Act, this Act prevails to the extent of the inconsistency.

  • Marginal note:Bearer form

    (2) A security is in bearer form if it is payable to bearer according to its terms and not by reason of any endorsement.

  • Marginal note:Order form

    (3) A security is in order form where the security is not a share and, by its terms, it is payable to the order or assigns of any person therein specified with reasonable certainty or to the person or the person’s order.

  • Marginal note:Registered form

    (4) A security is in registered form if

    • (a) it specifies a person entitled to the security or to the rights it evidences, and its transfer is capable of being recorded in a securities register; or

    • (b) it bears a statement that it is in registered form.

Marginal note:Status of guarantor

 A guarantor for an issuer of a security is deemed to be an issuer to the extent of the guarantee, whether or not the guarantor’s obligation is noted on the security.

Marginal note:Rights of holder

  •  (1) Subject to Part VII, every security holder is entitled at the holder’s option to a security certificate that complies with this Act or to a non-transferable written acknowledgement of the holder’s right to obtain a security certificate that complies with this Act from a company in respect of the securities of that company held by the security holder.

  • Marginal note:Fee for security certificate

    (2) A company may charge a fee, not exceeding a prescribed amount, for a security certificate issued in respect of a transfer.

  • Marginal note:Joint holders

    (3) A company is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery of a security certificate to one of several joint holders is sufficient delivery to all joint holders of the security.

  • 1991, c. 47, s. 89
  • 1999, c. 31, s. 139

Marginal note:Signatures

  •  (1) A security certificate shall be signed by or bear the printed or otherwise mechanically reproduced signature of at least one of the following:

    • (a) a director or officer of the company;

    • (b) a registrar or transfer agent of the company or a branch transfer agent or a natural person on their behalf; or

    • (c) a trustee who certifies it in accordance with a trust indenture.

  • Marginal note:Continuation of validity of signature

    (2) If a security certificate contains a person’s printed or mechanically reproduced signature, the company may issue the security certificate even if the person has ceased to be a director or officer of the company. The security certificate is as valid as if the person were a director or officer at the date of its issue.

  • 1991, c. 47, s. 90
  • 2005, c. 54, s. 224

Marginal note:Contents of share certificate

 There shall be stated on the face of each share certificate issued by a company after the coming into force of this section

  • (a) the name of the company;

  • (b) a statement that the company is subject to the Insurance Companies Act;

  • (c) the name of the person to whom the share certificate is issued; and

  • (d) the number and class of shares and the designation of any series that the certificate represents.

Marginal note:Restrictions and charges

  •  (1) No charge in favour of a company and no restriction on transfer, other than a constraint under Part VII other than section 427, is effective against a transferee of a security issued by the company if the transferee has no actual knowledge of the charge or restriction unless it or a reference to it is noted conspicuously on the security certificate.

  • Marginal note:No restriction

    (2) If any of the issued shares of a distributing company remain outstanding and are held by more than one person, the company may not restrict the transfer or ownership of its shares except by way of a constraint under Part VII.

  • Marginal note:Continuance

    (3) If a body corporate that is continued as a company under this Act has outstanding security certificates and the words “private company” or “private corporation” appear on the certificates, those words are deemed to be a notice of a charge or restriction for the purposes of subsection (1).

  • 1991, c. 47, s. 92
  • 1996, c. 6, s. 71.1
  • 2005, c. 54, s. 225

Marginal note:Particulars of class

  •  (1) There shall be stated legibly on a share certificate issued after the coming into force of this section by a company that is authorized to issue shares of more than one class or series

    • (a) the rights, privileges, restrictions and conditions attached to the shares of each class and series existing when the share certificate is issued; or

    • (b) that the class or series of shares that the certificate represents has rights, privileges, restrictions or conditions attached thereto and that the company will furnish a shareholder, on demand and without charge, with a full copy of

      • (i) the text of the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as those rights, privileges, restrictions and conditions have been fixed by the directors, and

      • (ii) the text of the authority of the directors, if the directors are so authorized, to fix the rights, privileges, restrictions and conditions of subsequent series of shares.

  • Marginal note:Duty

    (2) Where a share certificate issued by a company contains the statement mentioned in paragraph (1)(b), the company shall provide a shareholder, on demand and without charge, with a full copy of the texts referred to in subparagraphs (1)(b)(i) and (ii).

Marginal note:Fractional share

 A company may issue a certificate for a fractional share or may issue in place thereof a scrip certificate in bearer form that entitles the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share.

Marginal note:Scrip certificates

 The directors of a company may attach conditions to any scrip certificate issued by the company, including conditions that

  • (a) the scrip certificate becomes void if not exchanged for a share certificate representing a full share before a specified date; and

  • (b) any shares for which the scrip certificate is exchangeable may, notwithstanding any pre-emptive right, be issued by the company to any person and the proceeds thereof may be distributed rateably to the holders of all the scrip certificates.

Marginal note:Holders of fractional shares

  •  (1) A holder of a fractional share issued by a company is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share.

  • Marginal note:Holders of scrip certificates

    (2) A holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.

Marginal note:Dealings with registered holder

  •  (1) A company or a trustee within the meaning of section 317 may, subject to sections 142 to 145 and 149, treat the registered owner of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payment in respect of the security and to exercise all of the rights and powers of an owner of the security.

  • Marginal note:Constructive registered holder

    (2) Notwithstanding subsection (1), a company may treat a person as a registered security holder entitled to exercise all of the rights of the security holder that the person represents, if that person provides the company with evidence as described in subsection 131(4) that the person is

    • (a) the heir or personal representative of a deceased security holder or the personal representative of the heirs of the deceased security holder;

    • (b) the personal representative of a registered security holder who is a minor, an incompetent person or a missing person; or

    • (c) a liquidator of, or a trustee in bankruptcy for, a registered security holder.

  • Marginal note:Permissible registered holder

    (3) If a person on whom the ownership of a security of a company devolves by operation of law, other than a person described in subsection (2), provides proof of that person’s authority to exercise rights or privileges in respect of a security of the company that is not registered in the person’s name, the company shall, subject to this Act, treat that person as entitled to exercise those rights or privileges.

  • Marginal note:Immunity of company

    (4) A company is not required to inquire into the existence of, or see to the performance or observance of, any duty owed to a third person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this Part, as the owner or registered holder thereof.

  • 1991, c. 47, s. 97
  • 2005, c. 54, s. 226(E)

Marginal note:Minors

 If a minor exercises any rights of ownership in the securities of a company, no subsequent repudiation or avoidance is effective against the company.

  • 1991, c. 47, s. 98
  • 2005, c. 54, s. 227(E)

Marginal note:Joint shareholders

 A company may treat as owners of a security the survivors of persons to whom the security was issued as joint holders, if the company receives proof satisfactory to it of the death of any of the joint holders.

Marginal note:Transmission of securities

  •  (1) Subject to the provisions of Part VII and any applicable law relating to the collection of taxes, a person referred to in paragraph 97(2)(a) is entitled to become registered as the owner of a security, or to designate another person to be registered as the owner of a security, if the person referred to in paragraph 97(2)(a) delivers to the company or its transfer agent

    • (a) the original grant of probate or of letters of administration, or a copy thereof certified to be a true copy by

      • (i) the court that granted the probate or letters of administration,

      • (ii) a trust company incorporated under the Trust and Loan Companies Act or under the laws of a province, or

      • (iii) a lawyer or notary acting on behalf of the person referred to in paragraph 97(2)(a), or

    • (b) in the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province,

    together with

    • (c) an affidavit or declaration of transmission made by the person referred to in paragraph 97(2)(a) that states the particulars of the transmission, and

    • (d) the security certificate that was owned by the deceased holder

      • (i) in the case of a transfer to the person referred to in paragraph 97(2)(a), with or without the endorsement of that person, and

      • (ii) in the case of a transfer to any other person, endorsed in accordance with section 115,

    and accompanied by any assurance the company may require under section 131.

  • Marginal note:Excepted transmissions

    (2) Notwithstanding subsection (1), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to Part VII and any applicable law relating to the collection of taxes, to become registered as the owner or to designate a person to be registered as the owner, if the personal representative delivers to the company or its transfer agent the following documents, namely,

    • (a) the security certificate that was owned by the deceased holder; and

    • (b) reasonable proof of the governing laws, of the deceased holder’s interest in the security and of the right of the personal representative or the designated person to become the registered shareholder.

  • Marginal note:Right of company to treat as owner

    (3) Subject to Part VII, delivery of the documents referred to in this section empowers a company or its transfer agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in paragraph 97(2)(a) or to such person as the person referred to in that paragraph may designate and, thereafter, to treat the person who becomes so registered as the owner of that security.

  • 1991, c. 47, ss. 100, 758

Marginal note:Over-issue

  •  (1) The provisions of this Part that validate a security or compel its issue or reissue do not apply to the extent that a validation, issue or reissue would result in over-issue, but

    • (a) if a valid security similar in all respects to the security involved in the over-issue is reasonably available for purchase, the person entitled to the validation or issue may compel the issuer to purchase and deliver such a security to that person against surrender of the security that the person holds; or

    • (b) if a valid security similar in all respects to the security involved in the over-issue is not reasonably available for purchase, the person entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.

  • Marginal note:Retroactive validation

    (2) Where an issuer is subsequently authorized to issue securities of a number equal to or exceeding the number of securities previously authorized plus the amount of the securities over-issued, the securities so over-issued are valid from the date of their issue.

  • Marginal note:Payment not a purchase or redemption

    (3) A purchase or payment by an issuer under subsection (1) is not a purchase or payment in respect of which section 75 or 81 applies.

Marginal note:Burden of proof

 In any action on a security,

  • (a) unless specifically denied in the pleadings, each signature on the security or in a necessary endorsement is admitted;

  • (b) a signature on the security is presumed to be genuine and authorized but, if the effectiveness of the signature is put in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;

  • (c) if a signature is admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defence or a defect going to the validity of the security; and

  • (d) if the defendant establishes that a defence or defect exists, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or any person under whom the plaintiff claims.

Marginal note:Securities fungible

 Unless otherwise agreed, and subject to any applicable law, regulation or stock exchange rule, a person required to deliver securities may deliver any security of the specified issue in bearer form or registered in the name of the transferee or endorsed to the transferee or in blank.

Marginal note:Notice of defect

  •  (1) Even against a purchaser for value and without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated therein by reference to another instrument, statute, rule, regulation or order to the extent that the terms so referred to do not conflict with the stated terms, but such a reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, notwithstanding that the security expressly states that a person accepting it admits the notice.

  • Marginal note:Purchaser for value

    (2) A security is valid in the hands of a purchaser for value without notice of any defect going to its validity.

  • Marginal note:Lack of genuineness

    (3) Except as provided in section 105, the fact that a security is not genuine is a complete defence even against a purchaser for value and without notice.

  • Marginal note:Ineffective defences

    (4) All defences of an issuer, including non-delivery and conditional delivery of a security but not including lack of genuineness, are ineffective against a purchaser for value without notice of the particular defence.

  • Marginal note:Staleness as defect notice

    (5) After an event that creates a right to immediate performance of the principal obligation evidenced by a security, or that sets a date on or after which a security is to be presented or surrendered for redemption or exchange, a purchaser is deemed to have notice of any defect in its issue or of any defence of the issuer

    • (a) if the event requires the payment of money or the delivery of securities, or both, on presentation or surrender of the security, and the funds or securities are available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or

    • (b) if the purchaser takes the security more than two years after the date set for presentation or surrender or the date on which the performance became due.

Marginal note:Unauthorized signature

 An unauthorized signature on a security before or in the course of issue is ineffective, except that the signature is effective in favour of a purchaser for value and without notice of the lack of authority, if the signing has been done by

  • (a) an authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, or of similar securities, or their immediate preparation for signing; or

  • (b) an employee of the issuer or of a person referred to in paragraph (a) who, in the ordinary course of the employee’s duties, handles the security.

Marginal note:Completion or alteration

  •  (1) Where a security contains the signatures necessary to its issue or transfer but is incomplete in any other respect,

    • (a) any person may complete it by filling in the blanks in accordance with the person’s authority; and

    • (b) notwithstanding that the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.

  • Marginal note:Enforceability

    (2) A completed security that has been improperly altered, even if fraudulently altered, remains enforceable, but only according to its original terms.

Marginal note:Warranties of agents

  •  (1) A person signing a security, as authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, warrants to a purchaser for value without notice that

    • (a) the security is genuine;

    • (b) the person’s acts in connection with the issue of the security are within the person’s authority; and

    • (c) the person has reasonable grounds for believing that the security is in the form and within the amount the issuer is authorized to issue.

  • Marginal note:Limitation of liability

    (2) Unless otherwise agreed, a person referred to in subsection (1) does not assume any further liability for the validity of a security.

Marginal note:Title of purchaser

  •  (1) Subject to Part VII, on delivery of a security the purchaser acquires the rights in the security that the purchaser’s transferor had or had authority to convey, except that the position of a purchaser who has been a party to any fraud or illegality affecting the security or who as a prior holder had notice of an adverse claim is not improved by taking from a later bona fide purchaser.

  • Marginal note:Title of bona fide purchaser

    (2) A bona fide purchaser, in addition to acquiring the rights of a purchaser, also acquires the security free from any adverse claim.

  • Marginal note:Limited interest purchaser

    (3) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

Marginal note:Deemed notice of adverse claim

 A purchaser of a security, or any securities broker for a seller or purchaser, is deemed to have notice of an adverse claim if

  • (a) the security, whether in bearer form or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; or

  • (b) the security is in bearer form and has on it a statement that it is the property of a person other than the transferor, except that the mere writing of a name on a security is not such a statement.

Marginal note:Notice of fiduciary duty

 Notwithstanding that a purchaser, or any securities broker for a seller or purchaser, has notice that a security is held for a third person by, or is registered in the name of or endorsed by, a fiduciary, neither the purchaser nor the securities broker has any duty to inquire into the rightfulness of the transfer or any notice of an adverse claim, except that if the purchaser or securities broker for the seller or purchaser knows that the consideration is to be used for, or that the transaction is for, the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty, the purchaser or securities broker is deemed to have notice of an adverse claim.

Marginal note:Staleness as notice

 An event that creates a right to immediate performance of the principal obligation evidenced by a security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange is not of itself notice of an adverse claim, except in the case of a purchase

  • (a) made more than one year after any date set for such a presentation or surrender; or

  • (b) made more than six months after any date set for payment of money against such a presentation or surrender if funds are available for payment on that date.

Marginal note:Warranties to issuer

  •  (1) A person who presents a security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment or exchange, except that a purchaser for value without notice of an adverse claim who receives a new, reissued or re-registered security on registration of transfer warrants only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.

  • Marginal note:Warranties to purchaser

    (2) A person by transferring a security to a purchaser for value warrants only that

    • (a) the transfer is effective and rightful;

    • (b) the security is genuine and has not been materially altered; and

    • (c) the person knows of nothing that might impair the validity of the security.

  • Marginal note:Warranties of intermediary

    (3) Where a security is delivered by an intermediary known by the purchaser to be entrusted with delivery of the security on behalf of another or with collection of a draft or other claim to be collected against that delivery, the intermediary by that delivery warrants only the intermediary’s own good faith and authority even if the intermediary has purchased or made advances against the draft or other claim to be collected against the delivery.

  • Marginal note:Warranties of pledgee

    (4) A pledgee or other holder for purposes of security who redelivers a security received, or after payment and on order of the debtor delivers that security to a third person, gives only the warranties of an intermediary under subsection (3).

  • Marginal note:Warranties of securities broker

    (5) A securities broker gives to the broker’s customer, to the issuer and to a purchaser, as the case may be, the warranties provided in subsections (1) to (4) and has the rights and privileges of a purchaser under those subsections, and those warranties of and in favour of the broker acting as an agent are in addition to warranties given by the broker’s customer and warranties given in favour of the broker’s customer.

Marginal note:Right to compel endorsement

 Where a security in registered form is delivered to a purchaser without a necessary endorsement, the purchaser may become a bona fide purchaser only as of the time the endorsement is supplied, but against the transferor the transfer is complete on delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.

Definition of appropriate person

  •  (1) In this section, section 115, subsections 122(1), 125(4) and 130(1) and section 134, appropriate person means

    • (a) the person specified by the security or by special endorsement to be entitled to the security;

    • (b) if a person described in paragraph (a) is described as a fiduciary but is no longer serving in the described capacity, either that person or that person’s successor;

    • (c) if the security or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons are no longer serving in the described capacity, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed;

    • (d) if a person described in paragraph (a) is a natural person and is without capacity to act by reason of death, incompetence, minority or other reason, the person’s fiduciary;

    • (e) if the security or endorsement mentioned in paragraph (a) specifies more than one person with right of survivorship and by reason of death not all of the persons can sign, the survivor or survivors;

    • (f) a person having power to sign under any applicable law or a power of attorney; or

    • (g) to the extent that a person described in any of paragraphs (a) to (f) may act through an agent, the person’s authorized agent.

  • Determining an appropriate person

    (2) Whether the person signing is an appropriate person is determined as of the time of signing, and an endorsement by such a person does not become unauthorized for the purposes of this Part by reason of any subsequent change of circumstances.

Marginal note:Endorsement

  •  (1) An endorsement of a security in registered form is made when an appropriate person signs, either on the security or on a separate document, an assignment or transfer of the security or a power to assign or transfer it, or when the signature of an appropriate person is written without more on the back of the security.

  • Marginal note:Special or blank

    (2) An endorsement may be special or in blank.

  • Marginal note:Blank endorsement

    (3) An endorsement in blank includes an endorsement to bearer.

  • Marginal note:Special endorsement

    (4) A special endorsement specifies the person to whom the security is to be transferred, or who has power to transfer it.

  • Marginal note:Right of holder

    (5) A holder may convert an endorsement in blank into a special endorsement.

Marginal note:Immunity of endorser

 Unless otherwise agreed, the endorser by the endorsement assumes no obligation that the security will be honoured by the issuer.

Marginal note:Partial endorsement

 An endorsement purporting to be an endorsement of only part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

Marginal note:Effect of failure by fiduciary to comply

 Failure of a fiduciary to comply with a controlling instrument or with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of a transfer, does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.

Marginal note:Effect of endorsement without delivery

 An endorsement of a security, whether special or in blank, does not constitute a transfer until delivery of the security on which it appears or, if the endorsement is on a separate document, until delivery of both the security and that document.

Marginal note:Endorsement in bearer form

 An endorsement of a security in bearer form may give notice of an adverse claim under section 109 but does not otherwise affect any of the holder’s rights.

Marginal note:Effect of unauthorized endorsement

  •  (1) The owner of a security may assert the ineffectiveness of an endorsement against the issuer or any purchaser, other than a purchaser for value and without notice of an adverse claim, who has in good faith received a new, reissued or re-registered security on registration of transfer, unless the owner

    • (a) has ratified an unauthorized endorsement of the security; or

    • (b) is otherwise precluded from impugning the effectiveness of an unauthorized endorsement.

  • Marginal note:Liability of issuer

    (2) An issuer who registers the transfer of a security on an unauthorized endorsement is liable for improper registration.

Marginal note:Warranties of guarantor of signature

  •  (1) A person who guarantees the signature of an endorser of a security warrants that, at the time of signing,

    • (a) the signature was genuine;

    • (b) the signer was an appropriate person to endorse; and

    • (c) the signer had legal capacity to sign.

  • Marginal note:Limitation of liability

    (2) A person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.

  • Marginal note:Warranties of guarantor of endorsement

    (3) A person who guarantees the endorsement of a security warrants both the signature and the rightfulness, in all respects, of the transfer to which the signature relates, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.

  • Marginal note:Extent of warrantor’s liability

    (4) The warranties referred to in subsections (1) to (3) are made to any person who, relying on the guarantee, takes or deals with the security, and the guarantor is liable to such a person for any loss resulting from breach of warranty.

Marginal note:Constructive delivery of a security

 Delivery to a purchaser occurs when

  • (a) the purchaser or a person designated by the purchaser acquires possession of a security;

  • (b) the purchaser’s securities broker acquires possession of a security specially endorsed to or issued in the name of the purchaser;

  • (c) the purchaser’s securities broker sends the purchaser confirmation of the purchase and the broker in the broker’s records identifies a specific security as belonging to the purchaser; or

  • (d) in respect of an identified security to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.

Marginal note:Constructive ownership of security

  •  (1) A purchaser is the owner of a security held for the purchaser by a securities broker, but a purchaser is not a holder except in the cases referred to in paragraphs 123(b) and (c).

  • Marginal note:Ownership of part of fungible bulk

    (2) If a security is part of a fungible bulk, a purchaser of the security is the owner of the proportionate interest in the fungible bulk.

  • Marginal note:Notice to securities broker of adverse claim

    (3) Notice of an adverse claim received by a securities broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent security in respect of which no notice of an adverse claim has been received.

Marginal note:Delivery of security

  •  (1) Unless otherwise agreed, if a sale of a security is made on a stock exchange or otherwise through securities brokers,

    • (a) the selling customer fulfils the customer’s duty to deliver when the customer delivers the security to the selling securities broker or to a person designated by the selling securities broker or causes an acknowledgement to be made to the selling securities broker that it is held for the selling securities broker; and

    • (b) the selling securities broker, including a correspondent broker, acting for a selling customer fulfils the securities broker’s duty to deliver by delivering the security or a like security to the buying securities broker or to a person designated by the buying securities broker or by effecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.

  • Marginal note:Duty to deliver

    (2) Except as otherwise provided in this section and unless otherwise agreed, a transferor’s duty to deliver a security under a contract of purchase is not fulfilled until the transferor delivers the security in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the security is held for the purchaser.

  • Marginal note:Delivery to securities broker

    (3) A sale to a securities broker purchasing for the securities broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.

  • Marginal note:Transfer through clearing agency

    (4) If a security shown in the records of a clearing agency is evidenced by

    • (a) a security certificate in the custody of the clearing agency or a custodian, or a nominee of either, subject to the instructions of the clearing agency, and is in bearer form or endorsed in blank by an appropriate person or registered in the name of the clearing agency or a custodian, or of a nominee of either, or

    • (b) an uncertificated security registered or recorded in records maintained by or on behalf of the company in the name of the clearing agency or a custodian, or of a nominee of either, subject to the instructions of the clearing agency,

    then, in addition to other methods, a transfer or pledge of the security or any interest therein may be effected by the making of an appropriate entry in the records of the clearing agency.

  • Marginal note:Interest in fungible bulk

    (5) Under subsections (4) to (10), entries may be in respect of like securities or interests therein as part of a fungible bulk and may refer merely to a quantity of a particular security without reference to the name of the registered owner, certificate or bond number or the like and, in appropriate cases, may be on a net basis taking into account other transfers or pledges of the same security.

  • Marginal note:Constructive endorsement and delivery

    (6) A transfer or pledge under subsections (4) to (10) has the effect of a delivery of a security in bearer form or duly endorsed in blank representing the amount of the obligation or the number of shares or rights transferred or pledged.

  • Marginal note:Idem

    (7) If a pledge or the creation of a security interest is intended, the making of entries has the effect of a taking of delivery by the pledgee or a secured party and the pledgee or secured party shall be deemed to have taken possession for all purposes.

  • Marginal note:Holder

    (8) A person depositing a security certificate or an uncertificated security with a clearing agency, or a transferee or pledgee of a security under subsections (4) to (10), is a holder of the security and shall be deemed to have possession of the security so deposited, transferred or pledged, as the case may be, for all purposes.

  • Marginal note:Not registration

    (9) A transfer or pledge under subsections (4) to (10) does not constitute a registration of transfer under sections 130 to 137.

  • Marginal note:Error in records

    (10) That entries made in the records of the clearing agency as provided in subsection (4) are not appropriate does not affect the validity or effect of the entries nor the liabilities or obligations of the clearing agency to any person adversely affected thereby.

Marginal note:Right to reclaim possession

  •  (1) A person against whom the transfer of a security is wrongful for any reason, including the person’s incapacity, may, against anyone except a bona fide purchaser,

    • (a) reclaim possession of the security or obtain possession of any new security evidencing all or part of the same rights; or

    • (b) claim damages.

  • Marginal note:Recovery where unauthorized endorsement

    (2) If the transfer of a security is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the security or a new security even from a bona fide purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 121.

  • Marginal note:Remedies

    (3) The right to reclaim possession of a security may be specially enforced, its transfer may be restrained and the security may be impounded pending litigation.

Marginal note:Right to requisites for registration

  •  (1) Unless otherwise agreed, a transferor shall, on demand, supply a purchaser with proof of the transferor’s authority to transfer a security or with any other requisite that is necessary to obtain registration of the transfer of a security, but if the transfer is not for value, it is not necessary for a transferor to prove authority to transfer unless the purchaser pays the reasonable and necessary costs of the proof and transfer.

  • Marginal note:Rescission of transfer

    (2) If a transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.

Marginal note:Seizure of security

 No seizure of a security or other interest evidenced thereby is effective until the person making the seizure obtains possession of the security.

Marginal note:No conversion if good faith delivery

 An agent or bailee who in good faith, including observance of reasonable commercial standards if the agent or bailee is in the business of buying, selling or otherwise dealing with securities of a company, has received securities and sold, pledged or delivered them according to the instructions of the agent’s or bailee’s principal is not liable for conversion or for participation in breach of fiduciary duty even though the principal has no right to dispose of the securities.

Marginal note:Duty to register transfer

  •  (1) Subject to Part VII, where a security in registered form is presented for transfer, the issuer shall register the transfer if

    • (a) the security is endorsed by an appropriate person;

    • (b) reasonable assurance is given that the endorsement is genuine and effective;

    • (c) the issuer has no duty to inquire into adverse claims or has discharged any such duty;

    • (d) all applicable laws relating to the collection of taxes have been complied with;

    • (e) the transfer is rightful or is to a bona fide purchaser; and

    • (f) the fee, if any, referred to in subsection 89(2) has been paid.

  • Marginal note:Liability for delay

    (2) Where an issuer has a duty to register a transfer of a security, the issuer is liable to the person presenting it for registration for any loss resulting from any unreasonable delay in registration or from the failure or refusal to register the transfer.

Marginal note:Assurance of endorsements

  •  (1) An issuer may require an assurance that each necessary endorsement on a security is genuine and effective by requiring a guarantee of the signature of the person endorsing the security and by requiring

    • (a) if the endorsement is by an agent, reasonable assurance of authority to sign;

    • (b) if the endorsement is by a fiduciary, evidence of appointment or incumbency;

    • (c) if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

    • (d) in any other case, assurance that corresponds as closely as practicable to the foregoing.

  • Definition of guarantee of the signature

    (2) For the purposes of subsection (1), guarantee of the signature means a guarantee signed by or on behalf of a person whom the issuer believes, on reasonable grounds, to be a responsible person.

  • Marginal note:Standards

    (3) An issuer may adopt reasonable standards to determine responsible persons for the purposes of subsection (2).

  • Definition of evidence of appointment or incumbency

    (4) For the purposes of paragraph (1)(b), evidence of appointment or incumbency means

    • (a) in the case of a fiduciary appointed by a court and referred to in subsection 100(1), a copy of the certified court order referred to in subsection 100(1) and dated not earlier than sixty days before the day a security is presented for transfer; or

    • (b) in the case of any other fiduciary, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.

  • Marginal note:Standards

    (5) An issuer may adopt reasonable standards with respect to evidence referred to in paragraph (4)(b).

  • Marginal note:No notice to issuer

    (6) An issuer is deemed not to have notice of the contents of any document referred to in subsection (4) that is obtained by the issuer except to the extent that the contents relate directly to appointment or incumbency.

Marginal note:Notice from additional documentation

 If an issuer, in relation to a transfer, demands assurance other than an assurance specified in subsection 131(1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the issuer is deemed to have notice of all matters contained therein affecting the transfer.

Marginal note:Limited duty of inquiry

  •  (1) An issuer to whom a security is presented for registration has a duty to inquire into adverse claims if

    • (a) the issuer receives written notice of an adverse claim at a time and in a manner that provides the issuer with a reasonable opportunity to act on it before the issue of a new, reissued or re-registered security and the notice discloses the name and address of the claimant, the registered owner and the issue of which the security is a part; or

    • (b) the issuer is deemed to have notice of an adverse claim from a document that it obtained under section 132.

  • Marginal note:Discharge of duty

    (2) An issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address provided by the adverse claimant or, if no such address has been provided, to the adverse claimant’s residence or regular place of business, that a security has been presented for registration of transfer by a named person and that the transfer will be registered unless, within thirty days after the date of mailing of the notice, either

    • (a) the issuer is served with a restraining order or other order of a court, or

    • (b) the issuer is provided with an indemnity bond sufficient in the issuer’s judgment to protect the issuer and any registrar, transfer agent or other agent of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.

Marginal note:Inquiry into adverse claims

 Unless an issuer is deemed to have notice of an adverse claim from a document that it obtained under section 132 or has received notice of an adverse claim under subsection 133(1), if a security presented for registration is endorsed by the appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,

  • (a) an issuer registering a security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and thereafter the issuer may assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular security;

  • (b) an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; and

  • (c) an issuer is deemed not to have notice of the contents of any court record or any registered document even if the record or document is in the issuer’s possession and even if the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.

Marginal note:Duration of notice of adverse claim

 A written notice of adverse claim received by an issuer is effective for twelve months after the day it was received unless the notice is renewed in writing.

Marginal note:Limitation on issuer’s liability

  •  (1) Except as otherwise provided in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a security if

    • (a) the necessary endorsements were on or with the security; and

    • (b) the issuer had no duty to inquire into adverse claims or had discharged any such duty.

  • Marginal note:Duty of issuer on default

    (2) If an issuer has registered a transfer of a security to a person not entitled to it, the issuer shall on demand deliver a like security to the owner unless

    • (a) the issuer is not liable by virtue of subsection (1);

    • (b) the owner is precluded by subsection 137(1) from asserting any claim; or

    • (c) the delivery would result in over-issue in respect of which section 101 applies.

Marginal note:Lost or stolen security

  •  (1) Where a security has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the issuer of that fact by giving the issuer written notice of the owner’s adverse claim within a reasonable time after the owner knows of the loss, destruction or taking, then, if the issuer has registered a transfer of the security before receiving the notice, the owner is precluded from asserting against the issuer any claim to a new security.

  • Marginal note:Duty to issue new security

    (2) Where the owner of a security claims that the security has been lost, destroyed or wrongfully taken, the issuer shall issue a new security in place of the original security if the owner

    • (a) so requests before the issuer has notice that the security has been acquired by a bona fide purchaser;

    • (b) provides the issuer with a sufficient indemnity bond; and

    • (c) satisfies any other reasonable requirements imposed by the issuer.

  • Marginal note:Duty to register transfer

    (3) If, after the issue of a new security under subsection (2), a bona fide purchaser of the original security presents the original security for registration of transfer, the issuer shall register the transfer unless registration would result in over-issue in respect of which section 101 applies.

  • Marginal note:Right of issuer to recover

    (4) In addition to the rights that an issuer has by reason of an indemnity bond, the issuer may recover the new security issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a bona fide purchaser.

Marginal note:Authenticating agent’s duty

 An authenticating trustee, registrar, transfer agent or other agent of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,

  • (a) a duty to the issuer to exercise good faith and reasonable diligence; and

  • (b) the same obligations to the holder or owner of a security and the same rights, privileges and immunities as the issuer.

Marginal note:Notice to agent

 Notice to an authenticating trustee, registrar, transfer agent or other agent of an issuer is notice to the issuer in respect of the functions performed by the agent.

PART VICorporate Governance

DIVISION IShareholders and Policyholders

Place of Meetings

Marginal note:Place of meetings

  •  (1) Meetings of shareholders or policyholders of a company shall be held at the place within Canada provided for in the by-laws of the company or, in the absence of any such provision, at the place within Canada that the directors determine.

  • Marginal note:Participation by electronic means

    (2) Unless the by-laws provide otherwise, any person who is entitled to attend a meeting of shareholders or policyholders may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting if the company makes one available. A person who is participating in a meeting by one of those means is deemed for the purposes of this Act to be present at the meeting.

  • Marginal note:Regulations

    (3) The Governor in Council may make regulations respecting the manner of and conditions for participating in a meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting.

  • 1991, c. 47, s. 140
  • 2005, c. 54, s. 228

Calling Meetings

Marginal note:Calling meetings

  •  (1) The directors of a company

    • (a) shall, after the meeting called pursuant to subsection 50(1) or (2), call the first annual meeting of shareholders and policyholders of the company, which meeting must be held not later than six months after the end of the first financial year of the company;

    • (b) shall subsequently call an annual meeting of shareholders and policyholders, which meeting must be held not later than six months after the end of each financial year; and

    • (c) may at any time call a special meeting of shareholders or policyholders.

  • Marginal note:Order to delay calling annual meeting

    (2) Despite subsection (1), the company may apply to the court for an order extending the time for calling an annual meeting.

  • Marginal note:Obligation to notify Superintendent

    (3) The company shall give notice of the application to the Superintendent before any hearing concerning the application and shall provide the Superintendent with a copy of any order that is issued.

  • Marginal note:Superintendent’s right to appear

    (4) The Superintendent is entitled to appear and be heard in person or by counsel at any hearing concerning the application.

  • 1991, c. 47, s. 141
  • 2005, c. 54, s. 229

Record Dates

Marginal note:Authority to fix record date

  •  (1) The directors may in advance fix a record date, that is within the prescribed period, for the determination of

    • (a) shareholders who are entitled to receive payment of a dividend;

    • (b) shareholders or policyholders who are entitled to participate in a liquidation distribution;

    • (c) shareholders

      • (i) who are entitled to receive notice of a meeting of shareholders or a meeting of shareholders and policyholders,

      • (ii) who are entitled to vote at a meeting of shareholders or at a meeting of shareholders and policyholders, or

      • (iii) for any other purpose;

    • (d) policyholders who are entitled to

      • (i) receive notice of a meeting of policyholders or a meeting of shareholders and policyholders, or

      • (ii) vote at a meeting of policyholders or at a meeting of shareholders and policyholders; or

    • (e) policyholders for any other purpose except

      • (i) the right to receive payment of a policy dividend or bonus,

      • (ii) any purpose where the determination of policyholders is governed by contract, and

      • (iii) the right to receive benefits in respect of the conversion of a mutual company into a company with common shares.

  • Marginal note:Determination of record date — shareholders

    (2) If no record date is fixed,

    • (a) the record date for the determination of shareholders who are entitled to receive notice of a meeting of shareholders or a meeting of shareholders and policyholders is

      • (i) at the close of business on the day immediately preceding the day on which the notice is given, or

      • (ii) if no notice is given, the day on which the meeting is held; and

    • (b) the record date for the determination of shareholders for any other purpose, other than to establish a shareholder’s right to vote, is at the close of business on the day on which the directors pass a resolution in respect of that purpose.

  • Marginal note:Determination of record date — policyholders

    (3) If no record date is fixed,

    • (a) the record date for the determination of policyholders who are entitled to receive notice of a meeting of policyholders or a meeting of shareholders and policyholders is

      • (i) at the close of business on the day immediately preceding the day on which the notice is given, or

      • (ii) if no notice is given, the day on which the meeting is held;

    • (b) the record date for the determination of policyholders entitled to vote at a meeting is the day on which the meeting is held; and

    • (c) the record date for the determination of policyholders for any other purpose is at the close of business on the day on which the directors pass a resolution in respect of that purpose.

  • Marginal note:Notice of record date — shareholders

    (4) If a record date is fixed and unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the securities register at the close of business on the day on which the directors fix the record date, notice of the record date shall be given within the prescribed period by

    • (a) advertisement in a newspaper in general circulation in the place where the company’s head office is situated and in each place in Canada where the company has a transfer agent or where a transfer of its shares may be recorded; and

    • (b) written notice to each stock exchange in Canada on which the company’s shares are listed for trading.

  • 1991, c. 47, s. 142
  • 1997, c. 15, s. 186
  • 1999, c. 1, s. 1
  • 2005, c. 54, s. 230

Notices of Meetings

Marginal note:Notice of meeting

  •  (1) Notice of the time and place of a meeting of a company’s shareholders or policyholders shall be sent within the prescribed period to

    • (a) each shareholder entitled to vote at the meeting;

    • (b) each policyholder who is determined under subsection (1.4) or (1.6) to be entitled to notice if no business referred to in subparagraphs (c)(i) to (iii) is to be dealt with;

    • (c) each policyholder entitled to vote at the meeting if any of the following business is to be dealt with:

      • (i) authorizing the company to apply to the Minister for approval of a mutualization proposal or amalgamation agreement,

      • (ii) confirming a by-law changing the rights of policyholders to vote at meetings or the province in which the head office of the company is situated, or

      • (iii) approving an agreement setting out the terms and means of effecting the transfer of all or substantially all of the company’s policies or the reinsurance of all or substantially all of the company’s policies;

    • (d) each director;

    • (e) the auditor of the company;

    • (f) the actuary of the company; and

    • (g) the Superintendent.

  • Marginal note:Exception

    (1.001) In the case of a company that is not a distributing company and does not have any policyholders entitled to vote, notice may be sent within any shorter period specified in its by-laws.

  • Marginal note:Number of eligible votes

    (1.01) A converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 164.08(1), that may be cast at the meeting as of the record date for determining the shareholders or policyholders entitled to receive the notice of meeting or, if there are to be separate votes of shareholders or policyholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.

  • Marginal note:Waiver of notice

    (1.1) A company is not required under subsection (1) to send to a person notice of a meeting if the person waives notice of the meeting. That waiver may be in any manner.

  • Marginal note:Attendance constitutes waiver

    (1.2) A person who attends a meeting of shareholders or policyholders is deemed to have waived notice of the meeting, except where the person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

  • Marginal note:Practices of policyholder notification

    (1.3) A company shall adopt and follow either of the two practices set out in subsections (1.4) and (1.5) for the notification of policyholders under paragraph (1)(b).

  • Marginal note:First practice

    (1.4) One practice requires the company to send the notice to each policyholder entitled to vote at the meeting. If that practice is adopted, each of those policyholders is entitled to notice under paragraph (1)(b).

  • Marginal note:Second practice

    (1.5) The other practice requires the company, at the time of the application for or issuance of a policy that gives the policyholder the right to vote at meetings of the shareholders and policyholders of the company, and after that time at least once every three years,

    • (a) to advise the policyholder of the policyholder’s right to attend and to vote in person or by proxy at those meetings; and

    • (b) to provide the policyholder with a form on which the policyholder may indicate whether the policyholder wants to receive notices of those meetings.

  • Marginal note:Notice under second practice

    (1.6) If a company chooses the practice under subsection (1.5), each policyholder entitled to vote at a meeting is entitled to notice under paragraph (1)(b) if, within three years before the record date fixed under subparagraph 142(1)(d)(i) or determined under paragraph 142(3)(a), they complete and return to the company the form referred to in paragraph (1.5)(b) indicating that they want to receive notice or they indicate to the satisfaction of the company that they want to receive notice.

  • Marginal note:Exemption

    (2) The Minister may exempt a company from the application of paragraph (1)(c) with respect to business consisting of the approval of an amalgamation agreement, having regard to the size of the company and of the companies or bodies corporate with which it proposes to amalgamate.

  • Marginal note:Publication in newspaper

    (3) In addition to the notice required under subsection (1),

    • (a) where any class of shares of a company is publicly traded on a recognized stock exchange in Canada, notice of the time and place of the meeting of shareholders shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in the place where the head office of the company is situated and in each place in Canada where the company has a transfer agent or where a transfer of the company’s shares may be recorded; or

    • (b) notice of the time and place of the meeting of policyholders of the company and, where a company follows the practice under subsection (1.5), information on the means by which any policyholder can receive the notice required under subsection (1), shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in the place where the head office of the company is situated and in each region of Canada in which more than one per cent of the total number of policyholders entitled to vote at the meeting reside.

  • Marginal note:Notice not required — shareholders

    (4) Notice of a meeting is not required to be sent to shareholders who are not registered on the records of the company or the company’s transfer agent on the record date fixed under subparagraph 142(1)(c)(i) or determined under paragraph 142(2)(a).

  • Marginal note:Notice not required — policyholders

    (5) Notice of a meeting at which business referred to in paragraph (1)(c) is to be dealt with is not required to be sent to policyholders who become policyholders after the record date fixed under subparagraph 142(1)(d)(i) or determined under paragraph 142(3)(a).

  • Marginal note:Effect of default

    (6) Failure to receive a notice of a meeting of shareholders or policyholders does not deprive a shareholder or policyholder of the right to vote at the meeting.

  • 1991, c. 47, s. 143
  • 1993, c. 34, s. 78
  • 1997, c. 15, s. 187
  • 1999, c. 1, s. 2
  • 2001, c. 9, s. 370
  • 2005, c. 54, s. 231

Marginal note:Notice of adjourned meeting

  •  (1) If a meeting of shareholders or policyholders is adjourned for less than thirty days, it is not necessary, unless the by-laws otherwise provide, to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned.

  • Marginal note:Notice after longer adjournment

    (2) If a meeting of shareholders or policyholders is adjourned by one or more adjournments for a total of thirty days or more, notice of the continuation of the meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than ninety days, subsection 164.03(1) does not apply.

  • 1991, c. 47, s. 144
  • 1997, c. 15, s. 188

Marginal note:Special business

  •  (1) All matters dealt with at a special meeting of shareholders or policyholders or at an annual meeting of shareholders and policyholders are deemed to be special business, except that special business does not include consideration of

    • (a) the financial statements;

    • (b) the auditor’s report;

    • (c) the actuary’s report;

    • (d) the election of directors;

    • (e) the remuneration of directors and reappointment of the incumbent auditor; or

    • (f) the description of the roles of the actuary and the auditor in the preparation and audit of the financial statements.

  • Marginal note:Notice of special business

    (2) Notice of a meeting of shareholders or policyholders at which special business is to be transacted must

    • (a) state the nature of the special business in sufficient detail to permit a shareholder or policyholder to form a reasoned judgment thereon;

    • (b) contain the text of any special resolution to be submitted to the meeting; and

    • (c) state, where a management proxy circular is sent to shareholders concurrently with the notice, that a policyholder is entitled on request to receive a copy of the management proxy circular.

  • Marginal note:Exemption

    (3) The Superintendent may exempt a company from the application of paragraph (2)(b) in relation to policyholders, on condition that, instead of sending the policyholders the text of a special resolution to be submitted to a meeting, the company send the policyholders a summary of the text.

  • 1991, c. 47, s. 145
  • 1997, c. 15, s. 189

 [Repealed, 1997, c. 15, s. 190]

Shareholder and Policyholder Proposals

Marginal note:Proposal

  •  (1) Subject to subsections (1.1) and (1.2), a registered holder or beneficial owner of shares that may be voted — or a policyholder entitled to vote — at an annual meeting of shareholders and policyholders may

    • (a) submit to the company notice of any matter that they propose to raise at the meeting (in this section and section 148 referred to as a “proposal”); and

    • (b) discuss at the meeting any matter in respect of which they would have been entitled to submit a proposal.

  • Marginal note:Eligibility to submit proposal

    (1.1) To be eligible to submit a proposal a person shall

    • (a) for at least the prescribed period be the registered holder or beneficial owner of at least the prescribed number of the company’s outstanding shares;

    • (b) have the support of persons who, in the aggregate and including or not including the person who submits the proposal, have for at least the prescribed period been the registered holders or beneficial owners of at least the prescribed number of the company’s outstanding shares; or

    • (c) be a policyholder entitled to vote at an annual meeting of the company’s shareholders and policyholders.

  • Marginal note:Information to be provided

    (1.2) A proposal submitted by a registered holder or beneficial owner is to be accompanied by the following information:

    • (a) the name and address of the person submitting the proposal and the names and addresses of their supporters, if any; and

    • (b) the number of shares held or owned by the person and their supporters, if any, and the date that the shares were acquired.

  • Marginal note:Information not part of proposal

    (1.3) The information provided under subsection (1.2) does not form part of a proposal or of the supporting statement referred to in subsection (3) and is not to be included for the purpose of the prescribed maximum number of words referred to in subsection (3).

  • Marginal note:Proof may be required

    (1.4) If the company requests within the prescribed period that a person provide proof that they are eligible to submit a proposal, the person shall within the prescribed period provide proof that they meet the requirements of subsection (1.1).

  • Marginal note:Circulation of proposal

    (2) A company shall attach any proposal of a shareholder or policyholder submitted for consideration at a meeting of shareholders and policyholders to the notice of the meeting.

  • Marginal note:Supporting statement

    (3) At the request of the person who submits a proposal, the company shall attach to the notice of the meeting the person’s statement in support of the proposal and their name and address. The statement and proposal together are not to exceed the prescribed maximum number of words.

  • Marginal note:Nomination of directors

    (4) A proposal may include nominations for the election of directors if it is signed by

    • (a) in the case of nominations for the directors to be elected by shareholders, one or more registered holders or beneficial owners of shares representing in the aggregate not less than 5% of the shares of the company or 5% of the shares of a class of its shares entitled to vote at the meeting at which the proposal is to be presented; and

    • (b) in the case of nominations for the directors to be elected by policyholders, the lesser of 250 policyholders and 1% of the policyholders who are entitled to vote at the meeting.

  • Marginal note:Conditions precedent for proposals

    (5) A company is not required to comply with subsections (2) and (3) if

    • (a) the proposal is not submitted to the company at least the prescribed number of days before the anniversary date of the notice of meeting that was sent to shareholders and policyholders in respect of the previous annual meeting of shareholders and policyholders;

    • (b) it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal griev­ance against the company or its directors, officers or security holders;

    • (b.1) it clearly appears that the proposal does not relate in a significant way to the business or affairs of the company;

    • (c) the person submitting the proposal failed within the prescribed period before the company receives their proposal to present, in person or by proxy, at a meeting of shareholders or policyholders a proposal that at their request had been attached to a notice of meeting;

    • (d) substantially the same proposal was set out in or attached to a dissident’s proxy circular or attached to a notice of meeting relating to, and was presented to shareholders or policyholders at, a meeting of shareholders or policyholders held within the prescribed period before the receipt of the proposal and did not receive the prescribed minimum amount of support at the meeting;

    • (e) the rights conferred by subsections (1) to (4) are being abused to secure publicity;

    • (f) in the case of a proposal submitted by a policyholder that relates to business that is referred to in paragraph 143(1)(c), the proposal is not signed by at least five hundred policyholders entitled to vote at the meeting to which the proposal is to be presented, or one per cent of the total number of those policyholders, whichever is lesser;

    • (g) in the case of any other proposal submitted by a policyholder, the proposal is not signed by at least one hundred policyholders entitled to vote at the meeting to which the proposal is to be presented;

    • (h) in the case of a proposal submitted by a policyholder, the proposal

      • (i) relates to the management of the ordinary business and affairs of the company, or

      • (ii) would, if implemented, result in a change in the character or direction of the company that would have a material adverse effect on the ability of the company to meet the reasonable expectations of the company’s participating policyholders as to the net cost of their insurance; or

      • (iii) [Repealed, 1996, c. 6, s. 72]

    • (i) in the case of a proposal submitted by a policyholder or a shareholder of a mutual company, the proposal would result in the mutual company being converted into a company with common shares.

  • Marginal note:Company may refuse to include proposal

    (5.1) If a person who submits a proposal fails to continue to hold or own shares in accordance with paragraph (1.1)(a) or, as the case may be, does not continue to have the support of persons who are in the aggregate the registered holders or beneficial owners of the prescribed number of shares in accordance with paragraph (1.1)(b) until the end of the meeting, the company is not required to attach any proposal submitted by that person to a notice of meeting for any meeting held within the prescribed period after the day of the meeting.

  • Marginal note:Immunity for proposal and statement

    (6) No company or person acting on behalf of a company incurs any liability by reason only of circulating a proposal or statement in compliance with subsections (2) and (3).

  • 1991, c. 47, s. 147
  • 1996, c. 6, s. 72
  • 1997, c. 15, s. 191
  • 2001, c. 9, s. 371(F)
  • 2005, c. 54, s. 232

Marginal note:Notice of refusal

  •  (1) If a company refuses to attach a proposal to a notice of a meeting, it shall in writing notify the person submitting the proposal of its intention not to attach the proposal to the notice of the meeting and of the reasons for the refusal. It shall notify the person within the prescribed period after either the day on which it receives the proposal or, if it has requested proof under subsection 147(1.4), the day on which it receives the proof.

  • Marginal note:Application to court

    (2) On the application of a person submitting a proposal who claims to be aggrieved by a company’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order that it thinks fit.

  • Marginal note:Idem

    (3) A company or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the company not to attach the proposal to the notice of the meeting, and the court, if it is satisfied that subsection 147(5) applies, may make such order as it thinks fit.

  • Marginal note:Notice to Superintendent

    (4) An applicant under subsection (2) or (3) shall give the Superintendent written notice of the application and the Superintendent may appear and be heard at the hearing of the application in person or by counsel.

  • 1991, c. 47, s. 148
  • 2005, c. 54, s. 233

Shareholder and Policyholder Lists

Marginal note:Lists of shareholders and policyholders

  •  (1) A company shall prepare an alphabetical list

    • (a) of shareholders entitled to receive notice of a meeting showing the number of shares held by each shareholder

      • (i) if a record date is fixed under subparagraph 142(1)(c)(i), no later than 10 days after that date, and

      • (ii) if no record date is fixed, on the record date determined under paragraph 142(2)(a); and

    • (b) of policyholders entitled to vote at a meeting

      • (i) if a record date is fixed under subparagraph 142(1)(d)(ii), no later than the day on which the meeting is held, and

      • (ii) if no record date is fixed, on the record date determined under paragraph 142(3)(b).

  • Marginal note:Shareholder voting list

    (1.1) The company shall prepare an alphabetical list of shareholders entitled to vote as of the record date showing the number of shares held by each shareholder

    • (a) if a record date is fixed under subparagraph 142(1)(c)(ii), no later than 10 days after that date; and

    • (b) if no record date is fixed under subparagraph 142(1)(c)(ii), no later than 10 days after a record date is fixed under subparagraph 142(1)(c)(i) or no later than the record date determined under paragraph 142(2)(a), as the case may be.

  • (1.2) [Repealed, 2005, c. 54, s. 234]

  • Marginal note:Entitlement to vote — shareholders

    (2) Subject to section 164.08, a shareholder whose name appears on a list prepared under subsection (1.1) is entitled to vote the shares shown opposite their name.

  • Marginal note:Entitlement to vote — policyholders

    (3) A policyholder whose name appears on a list prepared under paragraph (1)(b) is entitled to vote at the meeting to which the list relates.

  • Marginal note:Examination of shareholder list

    (4) A shareholder or policyholder may examine the list of shareholders

    • (a) during usual business hours at the head office of the company or at the place where its central securities register is maintained; and

    • (b) at the meeting of shareholders for which the list was prepared.

  • Marginal note:Verification of right of policyholder to vote

    (5) A shareholder or policyholder of a company may, at the meeting of policyholders for which the list referred to in subsection (1) was prepared, require the company to verify from that list whether a person identified both by name and by some other distinguishing feature is entitled to vote at that meeting.

  • 1991, c. 47, s. 149
  • 1997, c. 15, s. 192
  • 1999, c. 1, s. 3
  • 2005, c. 54, s. 234

Quorum

Marginal note:Shareholders

  •  (1) Unless the by-laws otherwise provide, a quorum of shareholders is present at a meeting of shareholders if the holders of a majority of the shares who are entitled to vote at the meeting are present in person or represented by proxyholders.

  • Marginal note:Policyholders

    (2) Unless the by-laws otherwise provide, a quorum of policyholders is present at a meeting of policyholders if at least five hundred policyholders who are entitled to vote at the meeting, or one per cent of the total number of those policyholders, whichever is lesser, are present in person or represented by proxyholders.

  • Marginal note:Shareholders and policyholders

    (3) Unless the by-laws otherwise provide, a quorum of shareholders and policyholders is present at a meeting of shareholders and policyholders if the holders of a majority of the shares and at least five hundred policyholders, or one per cent of the total number of policyholders, whichever is lesser, who are entitled to vote at the meeting are present in person or represented by proxyholders.

  • Marginal note:Quorum at opening

    (4) If a quorum is present at the opening of a meeting of shareholders or policyholders, the shareholders or policyholders present may, unless the by-laws otherwise provide, proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting.

  • Marginal note:No quorum at opening

    (5) If a quorum is not present at the opening of a meeting of shareholders or policyholders, the shareholders or policyholders present may adjourn the meeting to a fixed time and place but may not transact any other business.

  • 1991, c. 47, s. 150
  • 2001, c. 9, s. 372

Marginal note:One shareholder meeting

 If a company has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or represented by a proxyholder constitutes a meeting of shareholders or a meeting of shareholders of that class or series.

Voting

Marginal note:One share — one vote

 Subject to section 164.08, if a share of a company entitles the holder of the share to vote at a meeting of shareholders or shareholders and policyholders, that share entitles the shareholder to one vote at the meeting.

  • 1991, c. 47, s. 152
  • 2001, c. 9, s. 373

Marginal note:One vote for each participating policyholder

  •  (1) Subject to subsection 149(3), the holder of one or more participating policies issued by a company is entitled to attend a meeting of policyholders or shareholders and policyholders of the company and is entitled to one vote at that meeting.

  • Marginal note:Exception

    (2) Notwithstanding subsection (1) but subject to subsection 149(3), the holder of a participating policy that was issued by a former-Act company before June 1, 1992 is entitled to more than one vote, or to a fraction of a vote, at a meeting of policyholders or shareholders and policyholders of the company in accordance with the terms of the policy or the provisions of the incorporating instrument or the by-laws of the company that had not been repealed and had not otherwise ceased to have effect before that date.

  • 1991, c. 47, s. 153
  • 1997, c. 15, s. 193

Marginal note:Other policyholders entitled to vote

  •  (1) Subject to subsection 149(3), the holder of one or more policies, other than participating policies, issued by a company is entitled to attend a meeting of policyholders or shareholders and policyholders of the company, and is entitled to one vote at that meeting, where

    • (a) the terms of one or more of those policies entitle the policyholder to vote at the meeting; or

    • (b) the by-laws of the company entitle the policyholder to vote at the meeting.

  • Marginal note:Exception

    (2) Notwithstanding subsection (1) but subject to subsection 149(3), the holder of a policy, other than a participating policy, that was issued by a former-Act company before June 1, 1992 is entitled to more than one vote, or to a fraction of a vote, at a meeting of policyholders or shareholders and policyholders of the company in accordance with the terms of the policy or the provisions of the incorporating instrument or the by-laws of the company that had not been repealed and had not otherwise ceased to have effect before that date.

  • Marginal note:One policyholder — one vote

    (3) Subject to subsection 149(3), the holder of one or more participating policies issued by a company and one or more policies, other than participating policies, referred to in subsection (1)

    • (a) is entitled to one vote as the holder of one or more participating policies and to another vote as the holder of one or more policies, other than participating policies, referred to in that subsection where this Act provides for participating policyholders to vote separately from other policyholders who are entitled to vote, or for those other policyholders to vote separately from participating policyholders;

    • (b) is not otherwise entitled to more than one vote at a meeting of policyholders; and

    • (c) is not otherwise entitled to more than one vote at a meeting of shareholders and policyholders, unless the holder is also a shareholder, in which case the holder is entitled to one vote as a policyholder and is also entitled to vote his or her shares.

  • 1991, c. 47, s. 154
  • 1997, c. 15, s. 194

Marginal note:Representative shareholder or policyholder

  •  (1) If an entity is a shareholder or policyholder of a company, the company shall recognize any natural person authorized by a resolution of the directors or governing body or similar authority of the entity to represent it at meetings of shareholders or policyholders of the company.

  • Marginal note:Idem

    (2) A natural person authorized under subsection (1) to represent an entity may exercise on behalf of the entity all the powers the entity could exercise if the entity were a natural person who was a shareholder or policyholder.

Marginal note:Joint shareholders or policyholders

 Unless the by-laws otherwise provide, if two or more persons hold shares or policies jointly, one of those holders present at a meeting of shareholders or policyholders may in the absence of the others vote the shares or policies, but if two or more of those persons who are present in person or represented by proxyholder vote, they shall vote as one on the shares or policies jointly held by them.

Marginal note:Voting by hands or ballot

  •  (1) Unless the by-laws otherwise provide, voting at a meeting of shareholders or policyholders shall take place by show of hands except when a ballot is demanded by a shareholder, policyholder or proxyholder entitled to vote at the meeting.

  • Marginal note:Ballot

    (2) A shareholder, policyholder or proxyholder may demand a ballot either before or after any vote by show of hands.

  • Marginal note:Electronic voting

    (3) Despite subsection (1) and unless the by-laws provide otherwise, any vote referred to in that subsection may be held entirely by means of a telephonic, electronic or other communication facility if the company makes one available.

  • Marginal note:Voting while participating electronically

    (4) Unless the by-laws provide otherwise, any person who is participating in a meeting of shareholders or policyholders under subsection 140(2) and entitled to vote at that meeting may vote by means of the telephonic, electronic or other communication facility that the company has made available for that purpose.

  • Marginal note:Regulations

    (5) The Governor in Council may make regulations respecting the manner of and conditions for voting at a meeting of shareholders or policyholders by means of a telephonic, electronic or other communication facility.

  • 1991, c. 47, s. 157
  • 2005, c. 54, s. 235

Resolution in lieu of Meeting

Marginal note:Resolution in lieu of meeting

  •  (1) Except where a written statement is submitted by a director under section 182 or by an auditor under subsection 344(1),

    • (a) a resolution in writing signed by all the shareholders and policyholders entitled to vote on that resolution at a meeting of shareholders or policyholders is as valid as if it had been passed at a meeting of the shareholders or policyholders; and

    • (b) a resolution in writing dealing with all matters required by this Act to be dealt with at a meeting of shareholders or policyholders, and signed by all the shareholders and policyholders entitled to vote at that meeting, satisfies all the requirements of this Act relating to meetings of shareholders or policyholders.

  • Marginal note:Filing resolution

    (2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings of shareholders or policyholders.

  • Marginal note:Evidence

    (3) Unless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.

  • 1991, c. 47, s. 158
  • 2005, c. 54, s. 236

Requisitioned Meetings

Marginal note:Requisitioned meeting

  •  (1) Shareholders who together hold not less than 5 per cent of the issued and outstanding shares of a company that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders or shareholders and policyholders for the purposes stated in the requisition.

  • Marginal note:Idem

    (2) At least five hundred policyholders entitled to vote at a meeting sought to be held, or one per cent of the total number of those policyholders, whichever is greater, may requisition the directors to call a meeting of policyholders or shareholders and policyholders for the purposes stated in the requisition.

  • Marginal note:Form

    (3) A requisition referred to in subsection (1) or (2)

    • (a) must state the business to be transacted at the meeting and must be sent to each director and to the head office of the company; and

    • (b) may consist of several documents of like form, each signed by one or more shareholders or policyholders.

  • Marginal note:Directors calling meeting

    (4) On receipt of a requisition referred to in subsection (1) or (2), the directors shall call a meeting of shareholders or policyholders to transact the business stated in the requisition, unless

    • (a) a record date has been fixed under subparagraph 142(1)(c)(i) or (d)(i) and notice of it has been given under subsection 142(4);

    • (b) the directors have called a meeting of shareholders or policyholders and have given notice thereof under section 143; or

    • (c) the business of the meeting as stated in the requisition includes matters described in paragraphs 147(5)(b) to (e), (h) and (i).

  • Marginal note:Shareholders’ and policyholders’ power

    (5) If the directors do not call a meeting within twenty-one days after receiving a requisition referred to in subsection (1) or (2), any shareholder or policyholder who signed the requisition may call the meeting.

  • Marginal note:Procedure

    (6) A meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called pursuant to the by-laws and this Act.

  • Marginal note:Reimbursement

    (7) Unless the shareholders or policyholders otherwise resolve at a meeting called under subsection (5), the company shall reimburse the shareholders or policyholders for any expenses reasonably incurred by them in requisitioning, calling and holding the meeting.

  • 1991, c. 47, s. 159
  • 1997, c. 15, s. 195
  • 2005, c. 54, s. 237

Powers of the Court

Marginal note:Court may order meeting to be called

  •  (1) A court may, on the application of a director, a shareholder or policyholder who is entitled to vote or the Superintendent, order a meeting to be called, held or conducted in the manner that the court directs if

    • (a) it is impracticable to call the meeting within the time or in the manner in which it is to be called;

    • (b) it is impracticable to conduct the meeting in the manner required by this Act or the by-laws; or

    • (c) the court thinks that the meeting ought to be called, held or conducted within the time or in the manner that it directs for any other reason.

  • (1.1) [Repealed, 2005, c. 54, s. 238]

  • Marginal note:Varying quorum

    (2) Without restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Act be varied or dispensed with at a meeting called, held and conducted pursuant to this section.

  • Marginal note:Valid meeting

    (3) A meeting called, held and conducted pursuant to this section is for all purposes a meeting of shareholders or policyholders of the company duly called, held and conducted.

  • 1991, c. 47, s. 160
  • 1997, c. 15, s. 196
  • 2005, c. 54, s. 238

Marginal note:Court review of election

  •  (1) A company or a shareholder, policyholder or director of a company may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the company.

  • Marginal note:Powers of court

    (2) On an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,

    • (a) an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;

    • (b) an order declaring the result of the disputed election or appointment;

    • (c) an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the company until a new election is held or the new appointment is made; and

    • (d) an order determining the voting rights of shareholders, persons claiming to own shares, policyholders and persons claiming to be policyholders.

Marginal note:Notice to Superintendent

  •  (1) A person who makes an application under subsection 160(1) or 161(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.

  • Marginal note:Superintendent representation

    (2) The Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).

Pooling Agreements

Marginal note:Pooling agreement

 A written agreement between two or more shareholders or policyholders may provide that in exercising voting rights the shares or policies held by them will be voted as provided in the agreement.

DIVISION I.1Proxies

Marginal note:Definitions

 The definitions in this section apply in this Division.

intermediary

intermediary means a person who holds a security on behalf of another person who is not the registered holder of the security, and includes

  • (a) a securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction;

  • (b) a securities depositary;

  • (c) a financial institution;

  • (d) in relation to a clearing agency, a securities dealer, trust company, association within the meaning of section 2 of the Cooperative Credit Associations Act, bank or other person, including another clearing agency, on whose behalf the clearing agency or its nominee holds securities of an issuer;

  • (e) a trustee or administrator of a self-administered retirement savings plan, retirement income fund or education savings plan or another similar self-administered savings or investment plan registered under the Income Tax Act;

  • (f) a nominee of a person referred to in any of paragraphs (a) to (e); and

  • (g) a person who performs functions similar to those performed by a person referred to in any of paragraphs (a) to (e) and holds a security registered in their name, or in the name of their nominee, on behalf of another person who is not the registered holder of the security. (intermédiaire)

registrant

registrant[Repealed, 2005, c. 54, s. 239]

solicit

solicit or solicitation includes

  • (a) a request for a proxy, whether or not accompanied by or included in a form of proxy,

  • (b) a request to execute or not to execute a form of proxy or to revoke a proxy,

  • (c) the sending of a form of proxy or other communication to a shareholder or policyholder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, and

  • (d) the sending of a form of proxy to a shareholder or a policyholder under section 164.03,

but does not include

  • (e) the sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder or policyholder,

  • (f) the performance of administrative acts or professional services on behalf of a person soliciting a proxy,

  • (g) the sending by a registrant of the documents referred to in section 164.06, or

  • (h) a solicitation by a person in respect of shares of which that person is the beneficial owner. (sollicitation)

solicitation by or on behalf of the management of a company

solicitation by or on behalf of the management of a company means a solicitation by any person pursuant to a resolution or instruction of, or with the acquiescence of, the directors or a committee of the directors of the company. (sollicitation effectuée par la direction d’une société ou pour son compte)

  • 1991, c. 47, s. 164
  • 1997, c. 15, s. 197
  • 2005, c. 54, s. 239

Marginal note:Appointing proxyholder

  •  (1) A shareholder or policyholder who is entitled to vote at a meeting of shareholders or policyholders may, by executing a form of proxy, appoint a proxyholder or one or more alternate proxyholders, who are not required to be shareholders or policyholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.

  • Marginal note:Execution of proxy

    (2) A form of proxy shall be executed by a shareholder or policyholder or by a shareholder’s or policyholder’s attorney authorized in writing to do so.

  • Marginal note:Limit on authority

    (3) No appointment of a proxyholder provides authority for the proxyholder to act in respect of the appointment of an auditor or the election of a director unless a nominee proposed in good faith for the appointment or election is named in the form of proxy, a management proxy circular, a dissident’s proxy circular or a proposal under subsection 147(1).

  • Marginal note:Required information

    (4) A form of proxy must indicate, in bold-face type, that the shareholder or policyholder by whom or on whose behalf it is executed may appoint a proxyholder, other than a person designated in the form of proxy, to attend and act on the shareholder’s or policyholder’s behalf at a meeting to which the proxy relates, and must contain instructions as to the manner in which the shareholder or policyholder may do so.

  • Marginal note:Validity of proxy

    (5) A proxy is valid only at the meeting in respect of which it is given or at a continuation of the meeting after an adjournment.

  • Marginal note:Revocation of proxy

    (6) A shareholder or policyholder may revoke a proxy

    • (a) by depositing an instrument in writing executed by the shareholder or policyholder or by the shareholder’s or policyholder’s attorney authorized in writing to do so

      • (i) at the head office of the company at any time up to and including the last business day before the day of a meeting, or a continuation of a meeting after an adjournment, at which the proxy is to be used, or

      • (ii) with the chairperson of the meeting on the day of the meeting or a continuation of the meeting after an adjournment; or

    • (b) in any other manner permitted by law.

  • 1997, c. 15, s. 197

Marginal note:Deposit of proxies

  •  (1) The directors may specify, in a notice calling a meeting of shareholders or policyholders or a continuation of a meeting of shareholders or policyholders after an adjournment, a time before which executed forms of proxy to be used at the meeting or the continued meeting must be deposited with the company or its transfer agent.

  • Marginal note:Time for deposit of proxies

    (2) The time specified for the deposit of forms of proxy may not precede the meeting or the continued meeting by more than

    • (a) forty-eight hours, excluding Saturdays and holidays, in the case of forms of proxy executed by shareholders; and

    • (b) ten days, in the case of forms of proxy executed by policyholders.

  • 1997, c. 15, s. 197

Marginal note:Mandatory solicitation

  •  (1) Subject to subsection 144(2) and subsection (2), the management of a company shall, at the same time as they send notice of a meeting of shareholders and policyholders, send a form of proxy in prescribed form to each shareholder entitled to receive notice of the meeting and to each policyholder entitled to receive notice of the meeting under section 143.

  • Marginal note:Exception

    (2) The management of a company is not required to send a form of proxy to shareholders under subsection (1) if the company

    • (a) is not a distributing company; and

    • (b) has 50 or fewer shareholders who are entitled to vote at a meeting, two or more joint holders of a share being counted as one shareholder.

  • Marginal note:Optional solicitation

    (3) The management of a company may send forms of proxy referred to in subsection (1) to policyholders who are entitled to vote at the meeting but not entitled to receive notice of the meeting under section 143, if the management

    • (a) sends forms of proxy referred to in that subsection to all policyholders who are entitled to vote at the meeting but not entitled to receive notice of the meeting under that section; and

    • (b) at the same time sends to each of the policyholders referred to in paragraph (a) a notice of the meeting as if those policyholders were persons entitled under that subsection to notice of the meeting.

  • Marginal note:Deeming rule for other provisions

    (4) For the purposes of this Act other than this section, if notices of a meeting are sent to policyholders under paragraph (3)(b), those policyholders are deemed to have been entitled under paragraph 143(1)(b) to receive notice of the meeting.

  • 1997, c. 15, s. 197
  • 2005, c. 54, s. 240

Marginal note:Soliciting proxies

  •  (1) A person shall not solicit proxies unless

    • (a) in the case of solicitation by or on behalf of the management of a company, a management proxy circular in prescribed form, either as an appendix to or as a separate document accompanying the notice of the meeting, is sent to the auditor of the company and to each shareholder or policyholder whose proxy is solicited; and

    • (b) in the case of any other solicitation, a dissident’s proxy circular in prescribed form stating the purposes of the solicitation is sent to the auditor of the company, to each shareholder or policyholder whose proxy is solicited and to the company.

  • Marginal note:Copy to Superintendent

    (2) A person who sends a management proxy circular or dissident’s proxy circular shall at the same time file with the Superintendent

    • (a) in the case of a management proxy circular, a copy of it together with a copy of the notice of meeting, form of proxy and any other documents for use in connection with the meeting; and

    • (b) in the case of a dissident’s proxy circular, a copy of it together with a copy of the form of proxy and any other documents for use in connection with the meeting.

  • Marginal note:Exemption by Superintendent

    (3) On the application of an interested person, the Superintendent may, on any terms that the Superintendent thinks fit, exempt the person from any of the requirements of subsection (1) and section 164.03, and the exemption may be given retroactive effect.

  • Marginal note:Reporting exemptions

    (4) The Superintendent shall set out in a periodical available to the public the particulars of each exemption granted under subsection (3) together with the reasons for the exemption.

  • 1997, c. 15, s. 197

Marginal note:Attendance at meeting

  •  (1) A person who solicits a proxy and is appointed proxyholder shall attend in person or cause an alternate proxyholder to attend every meeting in respect of which the proxy is valid, and the proxyholder or alternate proxyholder shall comply with the directions of the shareholder or policyholder who executed the form of proxy.

  • Marginal note:Rights of proxyholder

    (2) A proxyholder or an alternate proxyholder has the same rights as the appointing shareholder or policyholder to speak at a meeting of shareholders or policyholders in respect of any matter, to vote by way of ballot at the meeting and, except where a proxyholder or an alternate proxyholder has conflicting instructions from more than one shareholder or policyholder, to vote at the meeting in respect of any matter by way of a show of hands.

  • Marginal note:Vote by show of hands

    (3) Despite subsections (1) and (2) and unless a shareholder, policyholder or proxyholder demands a ballot, if the chairperson of a meeting of shareholders or policyholders declares to the meeting that, if a ballot were conducted, the total number of votes represented at the meeting by proxy required to be voted against what, to the knowledge of the chairperson, would be the decision of the meeting on a matter or group of matters is less than 5% of all the votes that might be cast by shareholders or policyholders, in person or by proxy,

    • (a) the chairperson may conduct the vote in respect of that matter or group of matters by way of a show of hands; and

    • (b) a proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by way of a show of hands.

  • 1997, c. 15, s. 197
  • 2005, c. 54, s. 242

Marginal note:Duty of intermediary

  •  (1) Shares of a company that are registered in the name of an intermediary or an intermediary’s nominee and not beneficially owned by the intermediary may not be voted unless the intermediary sends to the beneficial owner

    • (a) a copy of the notice of the meeting, annual statement, management proxy circular and dissident’s proxy circular and any other documents, other than the form of proxy, that were sent to shareholders by or on behalf of any person for use in connection with the meeting; and

    • (b) a written request for voting instructions except if the intermediary has already received written voting instructions from the beneficial owner.

  • Marginal note:When documents to be sent

    (2) The intermediary shall send the documents referred to in subsection (1) without delay after they receive the documents referred to in paragraph (1)(a).

  • Marginal note:Restriction on voting

    (3) An intermediary or a proxyholder appointed by them may not vote shares that the intermediary does not beneficially own and that are registered in the name of the intermediary or their nominee unless the intermediary or proxyholder, as the case may be, receives written voting instructions from the beneficial owner.

  • Marginal note:Copies

    (4) A person by or on behalf of whom a solicitation is made shall on request and without delay provide the intermediary, at the person’s expense, with the necessary number of copies of the documents referred to in paragraph (1)(a).

  • Marginal note:Instructions to intermediary

    (5) The intermediary shall vote or appoint a proxyholder to vote in accordance with any written voting instructions received from the beneficial owner.

  • Marginal note:Beneficial owner as proxyholder

    (6) If a beneficial owner so requests and provides an intermediary with appropriate documentation, the intermediary shall appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.

  • Marginal note:Effect of intermediary’s failure to comply

    (7) The failure of an intermediary to comply with any of subsections (1) to (6) does not render void any meeting of shareholders or policyholders or any action taken at the meeting.

  • Marginal note:Intermediary may not vote

    (8) Nothing in this Division gives an intermediary the right to vote shares that they are otherwise prohibited from voting.

  • 1997, c. 15, s. 197
  • 2005, c. 54, s. 243

Marginal note:Exemption

 The Governor in Council may make regulations respecting the conditions under which a company is exempt from any of the requirements of sections 164.01 to 164.06.

  • 2005, c. 54, s. 243

Marginal note:Restraining order

  •  (1) If a form of proxy, management proxy circular or dissident’s proxy circular contains an untrue statement of a material fact or omits to state a material fact that is required to be contained in it or that is necessary to make a statement contained in it not misleading in light of the circumstances in which the statement is made, an interested person or the Superintendent may apply to a court and the court may make any order it thinks fit including

    • (a) an order restraining the solicitation or the holding of the meeting, or restraining any person from implementing or acting on a resolution passed at the meeting, to which the form of proxy, management proxy circular or dissident’s proxy circular relates;

    • (b) an order requiring correction of any form of proxy or proxy circular and a further solicitation; and

    • (c) an order adjourning the meeting.

  • Marginal note:Notice of application

    (2) Where a person other than the Superintendent is an applicant under subsection (1), the applicant shall give to the Superintendent notice of the application and the Superintendent is entitled to appear and to be heard in person or by counsel.

  • 1997, c. 15, s. 197

DIVISION I.2Restrictions on Voting

Meaning of eligible votes

  •  (1) In this section, eligible votes means the total number of votes that may be cast by or on behalf of shareholders and policyholders on a vote of shareholders or shareholders and policyholders or a vote of holders of a class or series of shares, as the case may be, in respect of any particular matter, calculated without regard to subsection (2).

  • Marginal note:Restriction

    (2) At a meeting of shareholders and policyholders of a company in respect of which subsection 407(4) applies or of a company to which subsection 407(5) applies, no person and no entity controlled by any person may, in respect of any vote of shareholders or shareholders and policyholders or holders of any class or series of shares of the company, cast votes in respect of any shares beneficially owned by the person or the entity that are, in aggregate, more than 20 per cent of the eligible votes that may be cast in respect of that vote.

  • Marginal note:Proxyholders

    (3) No person who is a proxyholder for a person or for an entity controlled by a person may cast votes to which the proxy relates that the person or entity may not cast by reason of subsection (2).

  • Marginal note:Exception

    (4) Subsections (2) and (3) do not apply in respect of votes cast by or on behalf of

    • (a) a company to which subsection 407(5) applies, or an insurance holding company to which subsection 407(6) applies, that controls the company; or

    • (b) any entity that is controlled by a company or an insurance holding company referred to in paragraph (a).

  • Marginal note:Exception

    (5) Subsections (2) and (3) do not apply in respect of a vote held under section 239.

  • Marginal note:Validity of vote

    (6) A vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).

  • Marginal note:Disposition of shareholdings

    (7) If, with respect to any company, a person contravenes subsection (2) or (3), the Minister may, by order, direct the shareholder of the shares to which the contravention relates or any person controlled by that shareholder to dispose of any number of shares of the company beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the shareholder and the persons controlled by that shareholder that is specified in the order.

  • Marginal note:Restriction on voting rights

    (8) If the Minister makes an order under subsection (7), the person to whom the order relates may not, in person or by proxy, exercise any voting rights that are attached to shares of the company beneficially owned by the person.

  • Marginal note:Subsection (8) ceases to apply

    (9) Subsection (8) ceases to apply in respect of a person when the shares to which the order relates have been disposed of.

  • Marginal note:Reliance on number in notice

    (10) For the purpose of this section, a person is entitled to rely on the number of eligible votes set out in a notice of a meeting under subsection 143(1.01).

  • Marginal note:Designation of persons

    (11) For the purpose of this section, the Minister may, with respect to a particular company, designate two or more persons who are parties to an agreement, commitment or understanding referred to in section 9 to be a single person.

  • 2001, c. 9, s. 374

DIVISION IIDirectors and Officers

Duties

Marginal note:Duty to manage

  •  (1) Subject to this Act, the directors of a company shall manage or supervise the management of the business and affairs of the company.

  • Marginal note:Specific duties

    (2) Without limiting the generality of subsection (1), the directors of a company shall

    • (a) establish an audit committee to perform the duties referred to in subsections 203(3) and (4);

    • (b) establish a conduct review committee to perform the duties referred to in subsection 204(3);

    • (c) establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;

    • (d) designate a committee of the board of directors to monitor the procedures referred to in paragraph (c);

    • (e) in the case of a company that issues participating policies, establish, before issuing any participating policies or, in the case of a former-Act company, within six months after the coming into force of this Part, a policy for determining the dividends and bonuses to be paid to the participating policyholders;

    • (e.1) establish a policy respecting the management of each of the participating accounts maintained under section 456,

      • (i) if the company has participating policyholders on the day on which this paragraph comes into force, within six months after that day, and

      • (ii) in any other case, before issuing a participating policy;

    • (e.2) establish criteria for changes made by the company to the premium or charge for insurance, amount of insurance or surrender value in respect of its adjustable policies,

      • (i) if the company has adjustable policyholders on the day on which this paragraph comes into force, within six months after that day, and

      • (ii) in any other case, before issuing an adjustable policy;

    • (f) establish procedures to provide disclosure of information to customers of the company that is required to be disclosed by this Act and for dealing with complaints as required by section 486;

    • (g) designate a committee of the board of directors to monitor the procedures referred to in paragraph (f) and satisfy itself that they are being adhered to by the company;

    • (h) establish investment and lending policies, standards and procedures in accordance with section 492; and

    • (i) in the case of a former-Act company, appoint the actuary of the company forthwith after the coming into force of this Part.

  • Marginal note:Exception

    (3) Paragraphs (2)(a) and (b) do not apply to the directors of a company where

    • (a) all the voting shares of the company, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution described by any of paragraphs (a) to (d) of the definition financial institution in subsection 2(1);

    • (b) there are no policyholders who are entitled to vote; and

    • (c) the audit committee or the conduct review committee of the Canadian financial institution referred to in paragraph (a) performs for and on behalf of the company all the functions that would otherwise be required to be performed by the audit committee or conduct review committee of the company under this Act.

  • Marginal note:Report of actuary — par. (2)(e)

    (3.1) The company’s actuary shall report to the directors in writing on the fairness to participating policyholders of any policy to be established or amended under paragraph (2)(e) and report at least once during each financial year on its continuing fairness. In the case of a policy established before the day on which this subsection comes into force, the actuary shall within six months after that day report on its fairness to participating policyholders and report at least once during each financial year on its continuing fairness.

  • Marginal note:Report of actuary — par. (2)(e.1)

    (3.2) The company’s actuary shall report to the directors in writing on the fairness to participating policyholders of any policy to be established or amended under paragraph (2)(e.1) and report at least once during each financial year on its continuing fairness.

  • Marginal note:Report of actuary — par. (2)(e.2)

    (3.3) The company’s actuary shall report to the directors in writing on the fairness to adjustable policyholders of the criteria to be established or amended under paragraph (2)(e.2) and report at least once during each financial year on their continuing fairness.

  • Marginal note:Consideration of reports

    (3.4) The directors shall consider the report prepared under subsection (3.1), (3.2) or (3.3) before establishing or amending a policy under paragraph (2)(e) or (e.1) or the criteria under paragraph (2)(e.2), as the case may be.

  • Marginal note:Generally accepted actuarial practice

    (3.5) The report of the actuary referred to in subsections (3.1) to (3.3) shall be prepared in accordance with generally accepted actuarial practice with such changes as may be determined by the Superintendent and any additional directions that may be made by the Superintendent.

  • Marginal note:Copy to Superintendent

    (4) The company shall, within 30 days after a policy is established or amended under paragraph (2)(e) or (e.1) or criteria are established or amended under paragraph (2)(e.2), send a copy to the Superintendent.

  • Marginal note:Access to policies

    (4.1) The company shall on request and free of charge send a copy of a policy established or amended under paragraph (2)(e) or (e.1) to a shareholder or participating policyholder and on payment of a reasonable fee to any other person.

  • Marginal note:Access to criteria

    (4.2) The company shall on request and free of charge send a copy of the criteria referred to in paragraph (2)(e.2) to an adjustable policyholder and on payment of a reasonable fee to any other person.

  • Marginal note:Regulations

    (5) The Governor in Council may make regulations respecting the content of the policies established under paragraphs (2)(e) and (e.1) and of the criteria established under paragraph (2)(e.2).

  • 1991, c. 47, s. 165
  • 1997, c. 15, s. 199
  • 2001, c. 9, s. 375(F)
  • 2005, c. 54, s. 244

Marginal note:Duty of care

  •  (1) Every director and officer of a company in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shall

    • (a) act honestly and in good faith with a view to the best interests of the company; and

    • (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

  • Marginal note:Duty to comply

    (2) Every director, officer and employee of a company shall comply with this Act, the regulations, the company’s incorporating instrument and the by-laws of the company.

  • Marginal note:No exculpation

    (3) No provision in any contract, in any resolution or in the by-laws of a company relieves any director, officer or employee of the company from the duty to act in accordance with this Act and the regulations or relieves a director, officer or employee from liability for a breach thereof.

Qualification and Number — Directors

Marginal note:Minimum number of directors

  •  (1) A company shall have at least seven directors.

  • Marginal note:Residency requirement

    (2) At least one half of the directors of a company that is a subsidiary of a foreign institution or of a prescribed holding body corporate of a foreign institution and a majority of the directors of any other company must be, at the time of each director’s election or appointment, resident Canadians.

  • 1991, c. 47, s. 167
  • 2001, c. 9, s. 376
  • 2007, c. 6, s. 201

Marginal note:Disqualified persons

  •  (1) The following persons are disqualified from being directors of a company:

    • (a) a person who is less than eighteen years of age;

    • (b) a person who is of unsound mind and has been so found by a court in Canada or elsewhere;

    • (c) a person who has the status of a bankrupt;

    • (d) a person who is not a natural person;

    • (e) a person who is prohibited by subsection 164.08(8) or section 418 or 430 from exercising voting rights attached to shares of the company;

    • (f) a person who is an officer, director or full time employee of an entity that is prohibited by subsection 164.08(8) or section 418 or 430 from exercising voting rights attached to shares of the company;

    • (f.1) a person who is an officer, director, employee or agent of — or any other person acting on behalf of — an eligible agent within the meaning of section 406.1;

    • (g) [Repealed, 2013, c. 40, s. 164]

    • (h) a minister of Her Majesty in right of Canada or in right of a province;

    • (i) a person who is an agent or employee of the government of a foreign country or any political subdivision thereof; and

    • (j) a person who is an insurance agent or broker of the company.

  • Marginal note:Shareholders disqualified

    (2) A shareholder of a company is disqualified from being a policyholders’ director of the company.

  • (3) [Repealed, 2013, c. 40, s. 164]

  • 1991, c. 47, s. 168
  • 1994, c. 47, s. 120
  • 1997, c. 15, s. 200
  • 2001, c. 9, s. 377
  • 2012, c. 19, s. 339, c. 31, s. 131
  • 2013, c. 40, s. 164

Marginal note:No requirement to hold shares or policies

 A director of a company is not required to hold shares of or a policy issued by the company.

Marginal note:Affiliated person

 The Governor in Council may make regulations specifying the circumstances under which a natural person is affiliated with a company for the purposes of this Act.

Marginal note:Affiliated director determination

  •  (1) Notwithstanding section 170, the Superintendent may determine that a particular director is affiliated with a company for the purposes of this Act if, in the opinion of the Superintendent, the director has a significant or sufficient commercial, business or financial relationship with the company or with an affiliate of the company to the extent that the relationship can be construed as being material to the director and can reasonably be expected to affect the exercise of the director’s best judgment.

  • Marginal note:Notification by Superintendent

    (2) A determination by the Superintendent under subsection (1)

    • (a) becomes effective on the day of the next annual meeting of the shareholders and policyholders unless a notice in writing by the Superintendent revoking the determination is received by the company prior to that day; and

    • (b) ceases to be in effect on the day of the next annual meeting of the shareholders and policyholders after a notice in writing by the Superintendent revoking the determination is received by the company.

  • 1996, c. 6, s. 73

Marginal note:Unaffiliated directors

  •  (1) At the election of directors at each annual meeting of the shareholders and policyholders of a company and at all times until the day of the next annual meeting no more than two thirds of the directors may be persons affiliated with the company.

  • Marginal note:Exception

    (2) Subsection (1) does not apply where

    • (a) all the voting shares of a company, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament; and

    • (b) there are no policyholders who are entitled to vote.

  • Marginal note:Determination of affiliation

    (3) For the purposes of subsection (1), whether or not a person is affiliated with a company shall be determined as of the day the notice of the annual meeting is sent to shareholders and policyholders pursuant to section 143 and that determination becomes effective on the day of that meeting, and a person shall be deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of shareholders and policyholders.

Marginal note:Limit on directors

 No more than 15 per cent of the directors of a company may, at each director’s election or appointment, be employees of the company or a subsidiary of the company, except that up to four persons who are employees of the company or a subsidiary of the company may be directors of the company if those directors constitute not more than one half of the directors of the company.

Election and Tenure — Directors

Marginal note:Number of directors

  •  (1) Subject to subsection 167(1) and sections 176 and 238, the directors of a company shall, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.

  • Marginal note:Shareholders’ and policyholders’ directors

    (2) Subject to subsection 167(1) and sections 176 and 238, the directors of a company that has common shares and policyholders who are entitled to vote at an annual meeting of shareholders and policyholders shall by by-law determine the number of directors, or the minimum and maximum number of directors, who are to be elected by the shareholders and the number, or the minimum and maximum number, who are to be elected by the policyholders.

  • Marginal note:Election at annual meeting

    (3) A by-law made pursuant to subsection (1) that provides for a minimum and maximum number of directors may provide that the number of directors, shareholders’ directors or policyholders’ directors to be elected at any annual meeting of the shareholders and policyholders be such number as is fixed by the directors prior to the annual meeting.

  • Marginal note:Minimum

    (4) If a company has common shares and policyholders who are entitled to vote at an annual meeting of shareholders and policyholders, the number of shareholders’ directors and the number of policyholders’ directors, whether determined by by-law or fixed by the directors, must each be at least one third of the total number of directors.

  • Marginal note:Mutual company

    (4.1) Where the shareholders of a mutual company are entitled to elect one or more directors of the company, not more than one third of the directors may be elected by the shareholders.

  • Marginal note:Shareholders’ and policyholders’ directors

    (5) In making by-laws for the purposes of subsection (2), the directors shall designate every member of the board as being either a shareholders’ director or a policyholders’ director.

  • 1991, c. 47, s. 173
  • 1996, c. 6, s. 74
  • 1997, c. 15, s. 202

Marginal note:Election or appointment as director

 The election or appointment of a person as a director is subject to the following conditions:

  • (a) the person was present at the meeting when the election or appointment took place and did not refuse to hold office as a director; or

  • (b) the person was not present at the meeting when the election or appointment took place but

    • (i) consented in writing to hold office as a director before the election or appointment or within 10 days after it, or

    • (ii) acted as a director after the election or appointment.

  • 2005, c. 54, s. 245

Marginal note:Term of directors

  •  (1) Except where this Act or the by-laws of a company provide for cumulative voting, the company may, by by-law, provide that the directors be elected for terms of one, two or three years.

  • Marginal note:Idem

    (2) Where this Act or the by-laws of a company provide for cumulative voting to elect the shareholders’ directors, the company may, by by-law, provide that the policyholders’ directors be elected for terms of one, two or three years.

  • Marginal note:Term of one, two or three years

    (3) A director elected for a term of one, two or three years holds office until the close of the first, second or third annual meeting of shareholders and policyholders, as the case may be, following the election of the director.

  • Marginal note:No stated term

    (4) A director who is not elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting of shareholders and policyholders following the election of the director.

  • Marginal note:Tenure of office

    (5) It is not necessary that all directors elected at a meeting of shareholders or policyholders hold office for the same term.

  • Marginal note:Idem

    (6) If a by-law of a company provides that the directors be elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.

  • Marginal note:Composition requirements

    (7) Where a director of a company is elected or appointed for a term of more than one year, the company shall comply with subsections 167(2) and 171(1), section 172 and subsection 173(4) at each annual meeting of shareholders and policyholders during the director’s term of office as if that director were elected or appointed on that date.

  • Marginal note:Transitional

    (8) Subsection (7) does not apply in respect of a former-Act company until the day of the third annual meeting of shareholders and policyholders after the coming into force of this section.

Marginal note:Determining election of directors

  •  (1) Except where this Act or the by-laws of a company provide for cumulative voting, the persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of a company shall be the directors thereof.

  • Marginal note:No right to vote

    (2) A shareholder of a company that has common shares and policyholders who are entitled to vote at an annual meeting of shareholders and policyholders

    • (a) is not entitled to vote for the policyholders’ directors if the shareholder is not a policyholder; and

    • (b) is not entitled to vote any shares for the policyholders’ directors.

  • Marginal note:Idem

    (3) The holder of a policy issued by a company that has common shares and policyholders who are entitled to vote at an annual meeting of shareholders and policyholders

    • (a) is not entitled to vote for the shareholders’ directors if the policyholder is not a shareholder; and

    • (b) is not entitled to vote as a policyholder for the shareholders’ directors.

  • Marginal note:Equal number of votes

    (4) If, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors, determine which of the persons so receiving an equal number of votes are to be elected.

Marginal note:Cumulative voting

  •  (1) Where this Act or the by-laws provide for cumulative voting,

    • (a) there shall be a stated number determined by by-law, and not a minimum and maximum number, of directors, in the case of a company that has no policyholders who are entitled to vote at an annual meeting of shareholders and policyholders, or of shareholders’ directors, in the case of a company that has such policyholders;

    • (b) each shareholder entitled to vote at an election of directors to be elected by cumulative voting has the right to cast a number of votes equal to the number of votes attached to the shares held by the shareholder multiplied by the number of directors to be elected by cumulative voting, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;

    • (c) a separate vote shall be taken with respect to each candidate nominated for a position that is to be filled by cumulative voting unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;

    • (d) if a shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the shareholder is deemed to have distributed the votes equally among the candidates for whom the shareholder voted;

    • (e) if the number of candidates nominated exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled;

    • (f) each director elected by cumulative voting ceases to hold office at the close of the next annual meeting of shareholders and policyholders following the director’s election;

    • (g) a director elected by cumulative voting may be removed from office only if the number of votes cast in favour of a motion to remove the director is greater than the product of the number of directors required by the by-laws to be elected by cumulative voting and the number of votes cast against the motion; and

    • (h) the number of directors required by the by-laws to be elected by cumulative voting may be decreased only if the number of votes cast in favour of a motion to decrease the number of directors is greater than the product of the number of directors required by the by-laws to be elected by cumulative voting and the number of votes cast against the motion.

  • Marginal note:Mandatory cumulative voting

    (2) Where the aggregate of the voting shares beneficially owned by a person and any entities controlled by the person carries more than 10 per cent of the voting rights attached to all the outstanding voting shares of a company, the directors to be elected by shareholders shall be elected by cumulative voting.

  • Marginal note:Exception

    (3) Subsection (2) does not apply where all the voting shares of the company that are outstanding, other than directors’ qualifying shares, if any, are beneficially owned by

    • (a) one person;

    • (b) one person and one or more entities controlled by that person; or

    • (c) one or more entities controlled by the same person.

  • Marginal note:Exception

    (3.1) Subsection (2) does not apply to a converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies.

  • Marginal note:Transitional election

    (4) Where this Act or the by-laws of a company provide for cumulative voting, the shareholders of the company shall,

    • (a) at the first annual meeting of shareholders and policyholders held not earlier than ninety days following the date that cumulative voting is required under subsection (2) or provided for in the by-laws, and

    • (b) at each succeeding annual meeting,

    elect the stated number of directors to hold office until the close of the next annual meeting of shareholders and policyholders following their election.

  • Marginal note:Class or series of shares

    (5) Nothing in this Act precludes the holders of any class or series of shares of a company from having an exclusive right to elect one or more directors.

  • 1991, c. 47, s. 176
  • 1996, c. 6, s. 74.1
  • 1997, c. 15, s. 203
  • 2001, c. 9, s. 379
  • 2005, c. 54, s. 246

Marginal note:Re-election of directors

 A director who has completed a term of office is, if otherwise qualified, eligible for re-election.

Incomplete Elections and Director Vacancies

Marginal note:Void election or appointment

  •  (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 167(2) or 171(1), section 172 or subsection 173(4) or (4.1), the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.

  • Marginal note:Failure to elect minimum

    (2) Where, at the close of a meeting of shareholders or policyholders of a company, the shareholders or policyholders have failed to elect the number or minimum number of directors required by this Act or the by-laws of a company, the purported election of directors at the meeting

    • (a) is valid if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; or

    • (b) is void if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.

  • (3) and (4) [Repealed, 1997, c. 15, s. 204]

  • 1991, c. 47, s. 178
  • 1997, c. 15, s. 204

Marginal note:Directors where elections incomplete or void

  •  (1) Notwithstanding subsections 174(3) and (4) and paragraphs 176(1)(f) and 180(1)(a), where subsection 178(1) or (2) applies at the close of any meeting of shareholders or policyholders of a company, the board of directors shall, until their successors are elected or appointed, consist solely of

    • (a) where paragraph 178(2)(a) applies, the directors referred to in that paragraph; or

    • (b) where subsection 178(1) or paragraph 178(2)(b) applies, those persons who were the incumbent directors immediately before the meeting.

  • Marginal note:Where there is no approved rectification plan

    (2) Notwithstanding subsections 174(3) and (4) and paragraphs 176(1)(f) and 180(1)(a), where a plan to rectify the non-compliance referred to in subsection 178(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.

  • Marginal note:Directors to call meeting

    (3) Where subsection (1) or (2) applies, the board of directors referred to in that subsection shall without delay call a special meeting of shareholders or policyholders to fill the vacancies, where paragraph 178(2)(a) applies, or elect a new board of directors, where subsection 178(1) or paragraph 178(2)(b) applies.

  • Marginal note:Shareholder or policyholder may call meeting

    (4) Where the directors fail to call a special meeting required by subsection (3), the meeting may be called by any shareholder or policyholder entitled to vote.

  • 1991, c. 47, s. 179
  • 1997, c. 15, s. 205

Marginal note:Ceasing to hold office

  •  (1) A director ceases to hold office

    • (a) at the close of the annual meeting at which the director’s term of office expires;

    • (b) when the director dies or resigns;

    • (c) when the director becomes disqualified under section 168 or ineligible to hold office pursuant to subsection 212(2);

    • (d) when the director is removed under section 181; or

    • (e) when the director is removed from office under section 678.1 or 678.2.

  • Marginal note:Date of resignation

    (2) The resignation of a director of a company becomes effective at the time a written resignation is sent to the company by the director or at the time specified in the resignation, whichever is later.

  • 1991, c. 47, s. 180
  • 2001, c. 9, s. 380

Marginal note:Removal of director

  •  (1) Subject to paragraph 176(1)(g) and this section, the shareholders or policyholders of a company may by resolution at a special meeting remove any director or all the directors from office.

  • Marginal note:Exception

    (2) A shareholders’ director may be removed only by a resolution of the shareholders at a meeting of shareholders or shareholders and policyholders.

  • Marginal note:Idem

    (3) A policyholders’ director may be removed only by a resolution of the policyholders at a meeting of policyholders or shareholders and policyholders.

  • Marginal note:Idem

    (4) Where the holders of any class or series of shares of a company have the exclusive right to elect one or more directors, a director so elected may be removed only by a resolution at a meeting of the shareholders of that class or series.

  • Marginal note:Vacancy by removal

    (5) Subject to paragraphs 176(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders or policyholders at which the director is removed or, if not so filled, may be filled under section 185 or 187.

Marginal note:Statement of director

  •  (1) A director who

    • (a) resigns,

    • (b) receives a notice or otherwise learns of a meeting of shareholders or policyholders called for the purpose of removing the director from office, or

    • (c) receives a notice or otherwise learns of a meeting of directors or shareholders or policyholders at which another person is to be appointed or elected to fill the office of director, whether because of the director’s resignation or removal or because the director’s term of office has expired or is about to expire,

    is entitled to submit to the company a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.

  • Marginal note:Statement to Superintendent

    (2) Where a director resigns as a result of a disagreement with the other directors or the officers of a company, the director shall submit to the company and the Superintendent a written statement setting out the nature of the disagreement.

Marginal note:Circulation of statement

  •  (1) A company shall forthwith on receipt of a director’s statement referred to in subsection 182(1) relating to a matter referred to in paragraph 182(1)(b) or (c), or a director’s statement referred to in subsection 182(2), send a copy thereof to each shareholder and policyholder entitled to receive a notice of meetings under paragraph 143(1)(a) or (b) and to the Superintendent, unless the statement is attached to a notice of a meeting.

  • Marginal note:Immunity for statement

    (2) No company or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (1).

Marginal note:Shareholders or policyholders filling vacancy

 The by-laws of a company may provide that a vacancy among the directors is to be filled only by vote of

  • (a) the shareholders or policyholders;

  • (b) the shareholders, if the vacancy occurs among the shareholders’ directors;

  • (c) the policyholders, if the vacancy occurs among the policyholders’ directors; or

  • (d) the holders of any class or series of shares having an exclusive right to elect one or more directors if the vacancy occurs among the directors elected by the holders of that class or series.

Marginal note:Directors filling vacancy

  •  (1) Despite section 192 but subject to subsection (2) and sections 184, 186 and 187, a quorum of directors may fill a vacancy among the directors except a vacancy resulting from a change in the by-laws by which the number or the minimum or maximum number of directors is increased or from a failure to elect the number or minimum number of directors provided for in the by-laws.

  • Marginal note:Where composition fails

    (2) Notwithstanding sections 184 and 192, where by reason of a vacancy the number of directors or the composition of the board of directors fails to meet any of the requirements of section 167, subsection 171(1), section 172 and subsection 173(4), the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.

  • 1991, c. 47, s. 185
  • 2005, c. 54, s. 247

Marginal note:Vacancy among shareholders’ or policyholders’ directors

 Notwithstanding section 192 but subject to sections 184 and 187, where a company has shareholders’ directors and policyholders’ directors and a vacancy occurs among those directors,

  • (a) the remaining shareholders’ directors or policyholders’ directors, as the case may be, may fill the vacancy except one resulting from an increase in the number or the minimum or maximum number — or from a failure to elect the number or minimum number — of shareholders’ directors or policyholders’ directors provided for in the by-laws;

  • (b) if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 167, subsection 171(1), section 172 and subsection 173(4), the other directors may fill that vacancy; and

  • (c) if there are no such remaining directors and paragraph (b) does not apply, any shareholder or policyholder entitled to vote may call a meeting of shareholders or policyholders for the purpose of filling the vacancy.

  • 1991, c. 47, s. 186
  • 2005, c. 54, s. 248

Marginal note:Class vacancy

 Notwithstanding section 192 but subject to section 184, where the holders of any class or series of shares of a company have an exclusive right to elect one or more directors and a vacancy occurs among those directors,

  • (a) the remaining directors elected by the holders of that class or series of shares may fill the vacancy except one resulting from an increase in the number or the minimum or maximum number of directors for that class or series or from a failure to elect the number or minimum number of directors provided for in the by-laws for that class or series;

  • (b) if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 167, subsection 171(1), section 172 and subsection 173(4), the other directors may fill that vacancy; and

  • (c) if there are no such remaining directors and paragraph (b) does not apply, any holder of shares of that class or series may call a meeting of the holders thereof for the purpose of filling the vacancy.

  • 1991, c. 47, s. 187
  • 2005, c. 54, s. 249

Marginal note:Unexpired term

  •  (1) Unless the by-laws otherwise provide, a director elected or appointed to fill a vacancy holds office for the unexpired term of the director’s predecessor in office.

  • Marginal note:Affiliation

    (2) Notwithstanding subsection 171(3), the affiliation of a person to be elected or appointed to fill a vacancy shall be determined as at the date of the person’s election or appointment and that person shall be deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders and policyholders.

Marginal note:Additional directors

  •  (1) Shareholders’ directors may appoint one or more additional directors as shareholders’ directors, and policyholders’ directors may appoint one or more additional directors as policyholders’ directors, where the by-laws of the company allow them to do so and the by-laws determine the minimum and maximum numbers of shareholders’ directors and policyholders’ directors.

  • Marginal note:Term of office

    (2) A director appointed under subsection (1) holds office for a term expiring not later than the close of the next annual meeting of shareholders or policyholders of the company.

  • Marginal note:Limit on number appointed

    (3) The total number of directors appointed under subsection (1) may not exceed one third of the number of directors elected at the previous annual meeting of shareholders or policyholders of the company.

  • 1997, c. 15, s. 206

Meetings of the Board

Marginal note:Meetings required

  •  (1) The directors shall meet at least four times during each financial year.

  • Marginal note:Place for meetings

    (2) The directors may meet at any place unless the by-laws provide otherwise.

  • Marginal note:Notice for meetings

    (3) The notice for the meetings must be given as required by the by-laws.

  • 1991, c. 47, s. 189
  • 1997, c. 15, s. 207

Marginal note:Notice of meeting

  •  (1) A notice of a meeting of directors shall specify each matter referred to in section 207 that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not otherwise specify the purpose of or the business to be transacted at the meeting.

  • Marginal note:Waiver of notice

    (2) A director may in any manner waive notice of a meeting of directors and the attendance of a director at a meeting of directors is a waiver of notice of that meeting except where the director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

  • Marginal note:Adjourned meeting

    (3) Notice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting was announced at the original meeting.

Marginal note:Quorum

  •  (1) Subject to section 192, the number of directors referred to in subsection (2) constitutes a quorum at any meeting of directors or a committee of directors and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

  • Marginal note:Idem

    (2) The number of directors constituting a quorum at any meeting of directors or a committee of directors shall be

    • (a) a majority of the minimum number of directors required by this Act for the board of directors or a committee of directors; or

    • (b) such greater number of directors than the number calculated pursuant to paragraph (a) as may be established by the by-laws of the company.

  • Marginal note:Director continues to be present

    (3) A director who is present at a meeting of directors or of a committee of directors but is not, in accordance with subsection 212(1), present at any particular time during the meeting is considered to be present for the purposes of this section.

  • 1991, c. 47, s. 191
  • 2005, c. 54, s. 250

Marginal note:Resident Canadian majority

  •  (1) The directors of a company shall not transact business at a meeting of directors unless

    • (a) in the case of a company that is the subsidiary of a foreign institution, at least one half of the directors present are resident Canadians; and

    • (b) in the case of any other company, a majority of the directors present are resident Canadians.

  • Marginal note:Exception

    (2) Despite subsection (1), the directors of a company may transact business at a meeting of directors without the required proportion of directors who are resident Canadians if

    • (a) a director who is a resident Canadian unable to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting; and

    • (b) there would have been present the required proportion of directors who are resident Canadians had that director been present at the meeting.

  • 1991, c. 47, s. 192
  • 2013, c. 33, s. 107

Marginal note:Presence of unaffiliated director

  •  (1) The directors of a company shall not transact business at a meeting of directors unless at least one of the directors who is not affiliated with the company is present.

  • Marginal note:Exception

    (2) Despite subsection (1), the directors of a company may transact business at a meeting of directors if a director who is not affiliated with the company and who is not able to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting.

  • Marginal note:Exception

    (3) Subsection (1) does not apply if all the voting shares of the company, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.

  • 2001, c. 9, s. 381

Marginal note:Electronic meeting

  •  (1) Subject to the by-laws of a company, a meeting of directors or of a committee of directors may be held by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other during the meeting.

  • Marginal note:Deemed present

    (2) A director participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Act to be present at that meeting.

Marginal note:Resolution outside board meeting

  •  (1) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors.

  • Marginal note:Filing directors’ resolution

    (2) A copy of the resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors.

  • Marginal note:Resolution outside committee meeting

    (3) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of a committee of directors, other than a resolution of the audit committee in carrying out its duties under subsection 203(3) or a resolution of the conduct review committee in carrying out its duties under subsection 204(3), is as valid as if it had been passed at a meeting of that committee.

  • Marginal note:Filing committee resolution

    (4) A copy of the resolution referred to in subsection (3) shall be kept with the minutes of the proceedings of that committee.

  • Marginal note:Evidence

    (5) Unless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.

  • 1997, c. 15, s. 208
  • 2005, c. 54, s. 251

Marginal note:Dissent of director

  •  (1) A director of a company who is present at a meeting of directors or a committee of directors is deemed to have consented to any resolution passed or action taken at that meeting unless

    • (a) the director requests that the director’s dissent be entered or the director’s dissent is entered in the minutes of the meeting;

    • (b) the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; or

    • (c) the director sends the director’s dissent by registered mail or delivers it to the head office of the company immediately after the meeting is adjourned.

  • Marginal note:Loss of right to dissent

    (2) A director of a company who votes for or consents to a resolution is not entitled to dissent under subsection (1).

  • Marginal note:Dissent of absent director

    (3) A director of a company who is not present at a meeting at which a resolution is passed or action taken is deemed to have consented thereto unless, within seven days after the director becomes aware of the resolution, the director

    • (a) causes the director’s dissent to be placed with the minutes of the meeting; or

    • (b) sends the director’s dissent by registered mail or delivers it to the head office of the company.

Marginal note:Record of attendance

  •  (1) A company shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.

  • Marginal note:Statement to shareholders and policyholders

    (2) A company shall attach to the notice of each annual meeting it sends to its shareholders and policyholders a statement showing, in respect of the financial year immediately preceding the meeting, the total number of directors’ meetings and directors’ committee meetings held during the financial year and the number of those meetings attended by each director.

  • 1991, c. 47, s. 195
  • 1997, c. 15, s. 209

Marginal note:Meeting required by Superintendent

  •  (1) Where in the opinion of the Superintendent it is necessary, the Superintendent may, by notice in writing, require a company to hold a meeting of directors of the company to consider the matters set out in the notice.

  • Marginal note:Attendance of Superintendent

    (2) The Superintendent may attend and be heard at a meeting referred to in subsection (1).

By-laws

Marginal note:By-laws

  •  (1) Unless this Act otherwise provides, the directors of a company may by resolution make, amend or repeal any by-law that regulates the business or affairs of the company.

  • Marginal note:Shareholder and policyholder 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 policyholders at the next meeting of shareholders and policyholders, and the shareholders and policyholders may, by resolution, confirm or amend the by-law, amendment or repeal.

  • Marginal note:Separate vote

    (2.1) If a by-law made, amended or repealed under subsection (1) deals with the quorum of policyholders at a meeting of shareholders and policyholders, the policyholders who are entitled to vote on a resolution to confirm or amend the by-law, amendment or repeal are entitled to vote on it separately from the shareholders.

  • Marginal note:Effective date of by-law

    (3) Unless this Act otherwise provides, a by-law, or an amendment to or a repeal of a by-law, is effective from the date of the resolution of the directors under subsection (1) until it is confirmed, confirmed as amended or rejected by the shareholders and policyholders under subsection (2) or (2.1) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed, or confirmed as amended, it continues in effect in the form in which it was so confirmed.

  • Marginal note:Effect where no shareholder or policyholder approval

    (4) If a by-law, or an amendment to or a repeal of a by-law, is rejected by the shareholders and policyholders, or is not submitted to the shareholders and policyholders by the directors as required under subsection (2), the by-law, amendment or repeal ceases to be effective from the date of its rejection or the date of the next meeting of shareholders and policyholders, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the shareholders and policyholders.

  • 1991, c. 47, s. 197
  • 2001, c. 9, s. 382

Marginal note:Shareholder or policyholder proposal of by-law

 A shareholder or policyholder entitled to vote at an annual meeting of shareholders and policyholders may, in accordance with sections 147 and 148, make a proposal to make, amend or repeal a by-law.

Marginal note:By-laws of former-Act company

  •  (1) Subject to section 200, where a by-law of a former-Act company is in effect on the coming into force of this section, the by-law continues in effect until amended or repealed, unless it is contrary to a provision of this Act.

  • Marginal note:Unconfirmed by-laws

    (2) A by-law made by the directors of a company under section 23 of the Canadian and British Insurance Companies Act, as that section read immediately before the coming into force of this section, and not confirmed at a general or annual meeting of the company in accordance with section 24 of that Act on or before the coming into force of this section, continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders and policyholders following the coming into force of this section.

  • Marginal note:Shareholder and policyholder approval

    (3) A by-law referred to in subsection (2) shall be submitted to the shareholders and policyholders at the first meeting of the shareholders and policyholders following the coming into force of this section.

  • Marginal note:Application of ss. 197(3) and (4) and 198

    (4) Subsections 197(3) and (4) and section 198 apply in respect of a by-law referred to in this section as if it were a by-law made under section 197.

Marginal note:Resolutions re remuneration

  •  (1) Where the remuneration of directors of a former-Act company was, immediately prior to the coming into force of this section, fixed by a resolution of the shareholders or policyholders of the company that was passed pursuant to subsection 135(1) of the Canadian and British Insurance Companies Act, that resolution continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders and policyholders following the coming into force of this section.

  • Marginal note:Existing resolutions

    (2) Where the remuneration of directors of a former-Act company was, immediately prior to the coming into force of this section, fixed by a resolution of the directors, that resolution continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders and policyholders following the coming into force of this section.

Marginal note:Deemed by-laws

  •  (1) Any matter provided for in the incorporating instrument of a former-Act company on the coming into force of this section, or of a body corporate continued as a company under this Act at the time of continuance that, under this Act, would be provided for in the by-laws of a company is deemed to be provided for in the by-laws of the company.

  • Marginal note:By-law prevails

    (2) Where a by-law of the company made in accordance with sections 197 and 198 amends or repeals any matter referred to in subsection (1), the by-law prevails.

Committees of the Board

Marginal note:Committees

 The directors of a company may appoint from their number, in addition to the committees referred to in subsection 165(2), such other committees as they deem necessary and, subject to section 207, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.

Marginal note:Audit committee

  •  (1) The audit committee of a company shall consist of at least three directors.

  • Marginal note:Membership

    (2) A majority of the members of the audit committee must consist of directors who are not persons affiliated with the company and none of the members of the audit committee may be officers or employees of the company or a subsidiary of the company.

  • Marginal note:Duties of audit committee

    (3) The audit committee of a company shall

    • (a) review the annual statement of the company before the annual statement is approved by the directors;

    • (b) review such returns of the company as the Superintendent may specify;

    • (c) require the management of the company to implement and maintain appropriate internal control procedures;

    • (c.1) review, evaluate and approve those procedures;

    • (d) review such investments and transactions that could adversely affect the well-being of the company as the auditor or any officer of the company may bring to the attention of the committee;

    • (e) meet with the auditor to discuss the annual statement and the returns and transactions referred to in this subsection;

    • (f) meet with the actuary of the company to discuss the parts of the annual statement and the annual return filed under section 665 prepared by the actuary; and

    • (g) meet with the chief internal auditor of the company, or the officer or employee of the company acting in a similar capacity, and with management of the company, to discuss the effectiveness of the internal control procedures established for the company.

  • Marginal note:Report

    (4) In the case of the annual statement and returns of a company that under this Act must be approved by the directors of the company, the audit committee of the company shall report thereon to the directors before the approval is given.

  • Marginal note:Required meeting of directors

    (5) The audit committee of a company may call a meeting of the directors of the company to consider any matter of concern to the committee.

  • 1991, c. 47, s. 203
  • 1997, c. 15, s. 210

Marginal note:Conduct review committee

  •  (1) The conduct review committee of a company shall consist of at least three directors.

  • Marginal note:Membership

    (2) A majority of the members of the conduct review committee of a company must consist of directors who are not persons affiliated with the company and none of the members of the conduct review committee may be officers or employees of the company or a subsidiary of the company.

  • Marginal note:Duties of conduct review committee

    (3) The conduct review committee of a company shall

    • (a) require the management of the company to establish procedures for complying with Part XI;

    • (b) review those procedures and their effectiveness in ensuring that the company is complying with Part XI;

    • (b.1) if an insurance holding company or a bank holding company that is widely held has a significant interest in any class of shares of the company,

      • (i) establish policies for entering into transactions referred to in subsection 528.1(1), and

      • (ii) review transactions referred to in subsection 528.3(1); and

    • (c) review the practices of the company to ensure that any transactions with related parties of the company that may have a material effect on the stability or solvency of the company are identified.

  • Marginal note:Company report to Superintendent

    (4) A company shall report to the Superintendent on the mandate and responsibilities of the conduct review committee and the procedures referred to in paragraph (3)(a).

  • Marginal note:Committee report to directors

    (5) After each meeting of the conduct review committee of a company, the committee shall report to the directors of the company on matters reviewed by the committee.

  • Marginal note:Directors’ report to Superintendent

    (6) Within ninety days after the end of each financial year, the directors of a company shall report to the Superintendent on what the conduct review committee did during the year in carrying out its responsibilities under subsection (3).

  • 1991, c. 47, s. 204
  • 1997, c. 15, s. 211
  • 2001, c. 9, s. 383

Directors and Officers — Authority

Marginal note:Chief executive officer

 The directors of a company shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 207, may delegate to that officer any of the powers of the directors.

Marginal note:Appointment of officers

  •  (1) The directors of a company may, subject to the by-laws, designate the offices of the company, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 207, to manage the business and affairs of the company.

  • Marginal note:Directors as officers

    (2) Subject to section 172, a director of a company may be appointed to any office of the company.

  • Marginal note:Two or more offices

    (3) Two or more offices of a company may be held by the same person.

Marginal note:Limits on power to delegate

 The directors of a company may not delegate any of the following powers, namely, the power to

  • (a) submit to the shareholders or policyholders a question or matter requiring the approval of the shareholders or policyholders;

  • (b) fill a vacancy among the directors, on a committee of directors or in the office of auditor or actuary, or appoint additional directors;

  • (c) issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 66, except in accordance with any authorization made by the directors;

  • (d) declare a dividend on shares or a policy dividend, bonus or other benefit payable to policyholders, other than a dividend on a group policy that is a participating policy;

  • (e) authorize the redemption or other acquisition by the company pursuant to section 75 of shares issued by the company;

  • (f) authorize the payment of a commission on a share issue;

  • (g) approve a management proxy circular;

  • (h) except as provided in this Act, approve the annual statement of the company and any other financial statements issued by the company; or

  • (i) adopt, amend or repeal by-laws.

  • 1991, c. 47, s. 207
  • 1997, c. 15, s. 212
  • 2005, c. 54, s. 252

Marginal note:Remuneration of directors, officers and employees

  •  (1) Subject to this section and the by-laws, the directors of a company may fix the remuneration of the directors, officers and employees of the company.

  • Marginal note:By-law required

    (2) No remuneration shall be paid to a director as director until a by-law fixing the aggregate of all amounts that may be paid to all directors in respect of directors’ remuneration during a fixed period of time has been confirmed by special resolution.

  • 1991, c. 47, s. 208
  • 1994, c. 26, s. 37

Marginal note:Validity of acts

  •  (1) An act of a director or an officer of a company is valid notwithstanding a defect in the director’s qualification or an irregularity in the director’s election or in the appointment of the director or officer.

  • Marginal note:Idem

    (2) An act of the board of directors of a company is valid notwithstanding a defect in the composition of the board or an irregularity in the election of the board or in the appointment of a member of the board.

Marginal note:Right to attend meetings

 A director of a company is entitled to attend and to be heard at every meeting of shareholders or policyholders.

Conflicts of Interest

Marginal note:Disclosure of interest

  •  (1) A director or officer of a company shall disclose to the company, in writing or by requesting to have it entered in the minutes of a meeting of directors or a meeting of a committee of directors, the nature and extent of any interest they have in a material contract or material transaction with the company, whether entered into or proposed, if they

    • (a) are a party to the contract or transaction;

    • (b) are a director or officer of a party to the contract or transaction or a person acting in a similar capacity; or

    • (c) have a material interest in a party to the contract or transaction.

  • Marginal note:Time of disclosure — director

    (2) The disclosure shall be made in the case of a director

    • (a) at the meeting of directors, or of a committee of directors, at which the proposed contract or transaction is first considered;

    • (b) if at the time of the meeting referred to in paragraph (a) the director was not interested in the proposed contract or transaction, at the first one after they become interested in it;

    • (c) if the director becomes interested after a contract or transaction is entered into, at the first one after they become interested; or

    • (d) if a person who is interested in a contract or transaction becomes a director, at the first one after they become a director.

  • Marginal note:Time of disclosure — officer

    (3) The disclosure shall be made in the case of an officer who is not a director

    • (a) immediately after they become aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors or of a committee of directors;

    • (b) if they become interested after the contract or transaction is entered into, immediately after they become interested; or

    • (c) if a person who is interested in a contract or transaction becomes an officer, immediately after they become an officer.

  • Marginal note:Time of disclosure — contract not requiring approval

    (4) If the material contract or material transaction, whether entered into or proposed, is one that in the ordinary course of the company’s business would not require approval by the directors, shareholders or policyholders, the director or officer shall disclose to the company, in writing or by requesting to have it entered in the minutes of a meeting of directors or of a committee of directors, the nature and extent of their interest immediately after they become aware of the contract or transaction.

  • 1991, c. 47, s. 211
  • 2005, c. 54, s. 253

Marginal note:Director to abstain

  •  (1) A director who is required to make a disclosure under subsection 211(1) shall not be present at any meeting of directors, or of a committee of directors, while the contract or transaction is being considered or vote on any resolution to approve it unless the contract or transaction

    • (a) relates primarily to their remuneration as a director, officer, employee or agent of the company, an entity controlled by the company or an entity in which the company has a substantial investment;

    • (b) is for indemnity under section 221 or insurance under section 222; or

    • (c) is with an affiliate of the company.

  • Marginal note:Ineligibility

    (2) Any director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any financial institution that is incorporated or formed by or under an Act of Parliament.

  • Marginal note:Validity of acts

    (3) An act of the board of directors of a company or of a committee of the board of directors is not invalid because a person acting as a director had ceased under subsection (2) to hold office as a director.

  • 1991, c. 47, s. 212
  • 1997, c. 15, s. 213
  • 2005, c. 54, s. 254

Marginal note:General notice

  •  (1) For the purposes of subsection 211(1), a general notice to the directors declaring that a director or officer is to be regarded as interested for any of the following reasons in a contract or transaction entered into with a party is a sufficient declaration of interest in relation to any contract or transaction with that party:

    • (a) the director or officer is a director or officer of a party referred to in paragraph 211(1)(b) or (c) or a person acting in a similar capacity;

    • (b) the director or officer has a material interest in the party; or

    • (c) there has been a material change in the nature of the director’s or officer’s interest in the party.

  • Marginal note:Access to disclosures

    (2) A policyholder who is entitled to vote or a shareholder may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 211(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the company.

  • 1991, c. 47, s. 213
  • 2005, c. 54, s. 255

Marginal note:Avoidance standards

  •  (1) A contract or transaction for which disclosure is required under subsection 211(1) is not invalid and a director or officer is not accountable to the company or its shareholders or policyholders for any profit realized from it by reason only of the director’s or officer’s interest in the contract or transaction or the fact that the director was present or was counted to determine whether a quorum existed at the meeting of directors, or of a committee of directors, that considered it if

    • (a) the director or officer disclosed their interest in accordance with section 211 and subsection 213(1);

    • (b) the directors approved the contract or transaction; and

    • (c) the contract or transaction was reasonable and fair to the company at the time that it was approved.

  • Marginal note:Confirmation by shareholders and policyholders

    (2) Even if the conditions set out in subsection (1) are not met, a director or officer acting honestly and in good faith is not accountable to the company or its shareholders or policyholders for any profit realized from a contract or transaction for which disclosure was required and the contract or transaction is not invalid by reason only of the director’s or officer’s interest in it if

    • (a) the contract or transaction is approved or confirmed by special resolution at a meeting of shareholders and policyholders;

    • (b) disclosure of the interest was made to the shareholders and to the policyholders entitled to vote in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; and

    • (c) the contract or transaction was reasonable and fair to the company at the time that it was approved or confirmed.

  • 1991, c. 47, s. 214
  • 2005, c. 54, s. 255

Marginal note:Court may set aside or require accounting

 If a director or officer of a company fails to comply with any of sections 211 to 214, a court, on application of the company or any of its policyholders entitled to vote or its shareholders, may set aside the contract or transaction on any terms that the court thinks fit and may require the director or officer to account to the company for any profit or gain realized on it.

  • 1991, c. 47, s. 215
  • 2005, c. 54, s. 255

Liability, Exculpation and Indemnification

Marginal note:Director liability

  •  (1) Directors of a company who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 69(1) or the issue of subordinated indebtedness contrary to section 84 for a consideration other than money are jointly and severally, or solidarily, liable to the company to make good any amount by which the consideration received is less than the fair equivalent of the money that the company would have received if the share or subordinated indebtedness had been issued for money on the date of the resolution.

  • Marginal note:Further liability

    (2) Directors of a company who vote for or consent to a resolution of the directors authorizing any of the following are jointly and severally, or solidarily, liable to restore to the company any amounts so distributed or paid and not otherwise recovered by the company and any amounts in relation to any loss suffered by the company:

    • (a) a redemption or purchase of shares contrary to section 75;

    • (b) a reduction of capital contrary to section 79;

    • (c) a payment of a dividend contrary to section 83;

    • (d) a payment of an indemnity contrary to section 221; or

    • (e) any transaction contrary to Part XI.

  • 1991, c. 47, s. 216
  • 2005, c. 54, s. 256(E)

Marginal note:Contribution

  •  (1) A director who has satisfied a judgment in relation to the director’s liability under section 216 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.

  • Marginal note:Recovery

    (2) A director who is liable under section 216 is entitled to apply to a court for an order compelling a shareholder or other person to pay or deliver to the director

    • (a) any money or property that was paid or distributed to the shareholder or other person contrary to section 75, 79, 83 or 221; or

    • (b) an amount equal to the value of the loss suffered by the company as a result of any transaction contrary to Part XI.

  • Marginal note:Court order

    (3) Where an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so,

    • (a) order a shareholder or other person to pay or deliver to a director any money or property that was paid or distributed to the shareholder or other person contrary to section 75, 79, 83 or 221 or any amount referred to in paragraph (2)(b);

    • (b) order a company to return or issue shares to a person from whom the company has purchased, redeemed or otherwise acquired shares; or

    • (c) make any further order it thinks fit.

Marginal note:Limitation

 An action to enforce a liability imposed by section 216 may not be commenced after two years from the date of the resolution authorizing the action complained of.

Marginal note:Directors liable for wages

  •  (1) Subject to subsections (2) and (3), the directors of a company are jointly and severally, or solidarily, liable to each employee of the company for all debts not exceeding six months wages payable to the employee for services performed for the company while they are directors.

  • Marginal note:Conditions precedent

    (2) A director is not liable under subsection (1) unless

    • (a) the company has been sued for the debt within six months after it has become due and execution has been returned unsatisfied in whole or in part;

    • (b) the company has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proven within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; or

    • (c) a winding-up order has been issued in respect of the company under the Winding-up and Restructuring Act and a claim for the debt has been allowed or proven within six months after the issue of the winding-up order.

  • Marginal note:Limitations

    (3) A director is not liable under subsection (1) unless the director is sued for a debt referred to in that subsection while a director or within two years after the director has ceased to be a director.

  • Marginal note:Amount due after execution

    (4) Where execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.

  • Marginal note:Subrogation of director

    (5) Where a director of a company pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or winding-up proceedings, the director is entitled to any preference that the employee would have been entitled to and, where a judgment has been obtained, the director is entitled to an assignment of the judgment.

  • Marginal note:Contribution entitlement

    (6) A director of a company who has satisfied a claim under this section is entitled to a contribution from the other directors of the company who are liable for the claim.

  • 1991, c. 47, s. 219
  • 1996, c. 6, s. 167
  • 2005, c. 54, s. 257(E)

Marginal note:Defence — due diligence

  •  (1) A director, officer or employee of a company is not liable under section 216 or 219 or subsection 539(1) and has fulfilled their duty under subsection 166(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 company that were represented to them by an officer of the company or in a written report of the auditor of the company fairly to reflect the financial condition of the company; 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 company has fulfilled their duty under subsection 166(1) if they relied in good faith on

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

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

  • 1991, c. 47, s. 220
  • 2001, c. 9, s. 384
  • 2005, c. 54, s. 258

Marginal note:Indemnification

  •  (1) A company may indemnify a director or officer of the company, a former director or officer of the company or another person who acts or acted, at the company’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 company or other entity.

  • Marginal note:Advances

    (2) A company 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 company 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 company or the other entity for which they acted at the company’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 company 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 company 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 company 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 company 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 company 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 company 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 company may indemnify under those subsections.

  • 1991, c. 47, s. 221
  • 2001, c. 9, s. 385(F)
  • 2005, c. 54, s. 258

Marginal note:Directors’ and officers’ insurance

 A company may purchase and maintain insurance for the benefit of any person referred to in section 221 against any liability incurred by the person

  • (a) in the capacity of a director or an officer of the company, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the company; 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 company’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. 47, s. 222
  • 2005, c. 54, s. 259

Marginal note:Application to court for indemnification

  •  (1) A company or a person referred to in section 221 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.

DIVISION IIIFundamental Changes

Amendments — Letters Patent

Marginal note:Incorporating instrument

 On the application of a company or society 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 incorporating instrument of the company or society.

  • 1991, c. 47, s. 224
  • 1997, c. 15, s. 214
  • 2001, c. 9, s. 386

Marginal note:Letters patent to amend

  •  (1) On receipt of an application referred to in section 224, 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. 47, s. 225
  • 2001, c. 9, s. 387

Mutualization

Marginal note:Mutualization

  •  (1) On the application of a company that has common shares but does not have securities that are not convertible into common shares until after, or options or rights to acquire those shares that are not exercisable until after, the time of the application, the Minister may approve a proposal to convert the company into a mutual company by the purchase, or other acquisition, for the purpose of cancellation of those shares, securities, options and rights.

  • Marginal note:Definitions

    (2) In sections 227 to 236,

    common share

    common share includes

    • (a) a security currently convertible into a common share, and

    • (b) a currently exercisable option or a right to acquire a common share or a security referred to in paragraph (a); (action ordinaire)

    mutualization proposal

    mutualization proposal means a proposal referred to in subsection (1). (proposition de mutualisation)

  • Marginal note:Saving

    (3) Nothing in this section or sections 227 to 236 limits the powers of companies under subsection 75(1).

Marginal note:Contents of mutualization proposal

  •  (1) Every mutualization proposal shall set out the terms and means of effecting the conversion, and, in particular,

    • (a) the manner in which all issued and outstanding shares of the company, other than shares that may be issued by a mutual company, are to be purchased or otherwise acquired for the purpose of cancellation;

    • (b) the price to be paid for those shares;

    • (c) the nature of the consideration to be paid for those shares;

    • (d) the amount of any dividends to be paid to the holders of those shares after their purchase or other acquisition;

    • (e) the period within which the company intends to purchase or otherwise acquire those shares;

    • (f) the anticipated date when the company will become a mutual company; and

    • (g) the proposed by-laws of the converted company.

  • Marginal note:Idem

    (2) The mutualization proposal shall also contain such other information and evidence as the Minister may require.

Marginal note:Shareholder and policyholder approval

  •  (1) The directors of a company that makes a mutualization proposal shall, before applying to the Minister for approval of the proposal, submit it for approval to a meeting of the shareholders and policyholders entitled to vote and, subject to subsection (3), to the holders of each class or series of shares.

  • Marginal note:Right to vote

    (2) Each share of a company that makes a mutualization proposal carries the right to vote in respect of the proposal whether or not it otherwise carries the right to vote.

  • Marginal note:Class vote

    (3) The holders of shares of a class or series of shares of a company that makes a mutualization proposal are entitled to vote separately as a class or series in respect of the proposal.

  • Marginal note:Policyholder vote

    (4) Policyholders who are entitled to vote are entitled to vote separately from shareholders in respect of a mutualization proposal.

  • Marginal note:Special resolution

    (5) Subject to subsections (3) and (4), a mutualization proposal is approved when the shareholders and the policyholders who are entitled to vote have approved the proposal by special resolution.

Marginal note:Application to Minister

  •  (1) A company shall, within three months after the approval of a mutualization proposal in accordance with section 228, apply to the Minister for approval of the proposal.

  • Marginal note:Criteria for approval

    (2) In determining whether to approve a mutualization proposal, the Minister shall consider all matters that the Minister considers relevant and may not approve the proposal unless satisfied that

    • (a) the proposal was approved by the shareholders and policyholders pursuant to section 228;

    • (b) the conversion of the company into a mutual company may reasonably be expected to be achieved under the terms of the proposal and in accordance with this section and sections 230 to 236;

    • (c) there are no reasonable grounds for believing that the conversion would cause the company to be in contravention of subsection 515(1), any regulation made under subsection 515(2) or any order made under subsection 515(3);

    • (d) the stated capital of the company has ceased to be an important factor in safeguarding the interests of the policyholders of the company, having regard to the quality and amount of the assets of the company, the surplus of the company relative to its liabilities, the nature of the business carried on by the company and any other considerations deemed by the Minister to be relevant;

    • (e) the price fixed by the directors for the purchase or other acquisition of the common shares of the company under the proposal is fair and reasonable in the circumstances; and

    • (f) the proposal is in the best interests of the financial system in Canada.

  • 1991, c. 47, s. 229
  • 2007, c. 6, s. 202

Marginal note:Effect of Minister’s approval

  •  (1) Where the Minister approves a mutualization proposal made by a company,

    • (a) the company may not issue any shares other than a share that may be issued by a mutual company;

    • (b) the company may solicit offers from the holders of the shares of the company that are to be purchased or otherwise acquired to effect the conversion of the company but shall not purchase or otherwise acquire those shares until the approval of the Superintendent under section 234 is obtained; and

    • (c) any change in the proposal must be approved by the shareholders and policyholders and by the Minister.

  • Marginal note:Application of ss. 228 to 230

    (2) Sections 228 to 230 apply with such modifications as the circumstances require in respect of changes in mutualization proposals.

Marginal note:Register to be kept

 A company shall prepare and maintain a register recording the offers for sale of shares under the terms of a mutualization proposal in the order in which those offers are received by the company, showing, in respect of each offer,

  • (a) the date of receipt by the company of the offer;

  • (b) the name and address of the shareholder making the offer;

  • (c) the number of shares so offered by the shareholder making the offer;

  • (d) the price at which each of the shares so offered may be purchased or otherwise acquired;

  • (e) the date of purchase, if any, of each of the shares so offered and the number of shares purchased; and

  • (f) the date of withdrawal, if any, of the offer and the number of shares affected by the withdrawal.

Marginal note:Application to Superintendent

 A company that holds binding offers from the holders of at least ninety per cent of each class of shares for the purchase or other acquisition of those shares pursuant to a mutualization proposal shall apply to the Superintendent for approval of the purchase or other acquisition of the shares.

Marginal note:Criteria for approval

 The Superintendent shall approve the purchase or other acquisition of shares pursuant to a mutualization proposal if the Superintendent is satisfied that

  • (a) the purchase or other acquisition of shares would not cause the company to be in contravention of subsection 515(1), any regulation made under subsection 515(2) or any order made under subsection 515(3); and

  • (b) the stated capital of the shares has, in the opinion of the Superintendent, ceased to be an important factor in safeguarding the interests of the policyholders of the company, having regard to the quality and amount of the assets of the company, the surplus of the company relative to its liabilities, the nature of the business carried on by the company and any other considerations deemed by the Superintendent to be relevant.

  • 1991, c. 47, s. 233
  • 2007, c. 6, s. 203

Marginal note:Effect of Superintendent’s approval

 Where the Superintendent approves the purchase or other acquisition of shares of a company pursuant to a mutualization proposal, the company

  • (a) shall, within the period set out in the mutualization proposal, purchase or otherwise acquire the shares for the purchase or other acquisition of which pursuant to the proposal the company holds binding offers; and

  • (b) may acquire the remaining shares in accordance with Division X, which applies in respect of that acquisition with such modifications as the circumstances require, as if each reference in that Division to

    • (i) the “offeree company” or the “offeror” were a reference to the “company”,

    • (ii) a “dissenting offeree” were a reference to a holder of a share of the company who has not offered to sell his or her share under the terms of the mutualization proposal,

    • (iii) an “offeree who accepted the take-over bid” were a reference to a holder of a share of the company who has offered to sell his or her share under the terms of the mutualization proposal, and

    • (iv) the “date of the take-over bid” or the “date of termination of the take-over bid” were a reference to the date on which the Superintendent approves the purchase or other acquisition of the shares of the company pursuant to a mutualization proposal.

Marginal note:Payment

 Notwithstanding anything in this Act, a company may, with the approval of the Superintendent, pay for shares purchased or otherwise acquired pursuant to a mutualization proposal by

  • (a) making a promissory note that is, or issuing debt securities that are, payable at a fixed or determinable future time not later than ten years after the date of its making or their issue; or

  • (b) issuing shares that a mutual company may issue.

Marginal note:Conversion into mutual company

  •  (1) Where a company purchases or otherwise acquires all of its common shares pursuant to a mutualization proposal,

    • (a) the company shall cancel those shares; and

    • (b) the directors of the company shall apply to the Minister for the issue of letters patent to effect the conversion of the company into a mutual company.

  • Marginal note:Issue of letters patent

    (2) On receipt of an application referred to in subsection (1), the Minister shall issue letters patent to effect the conversion of the company into a mutual company.

  • Marginal note:Effect of letters patent

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

Conversion into Company with Common Shares

Marginal note:Definitions

 The following definitions apply in sections 237 to 237.2.

conversion proposal

conversion proposal means a proposal to convert a mutual company into a company with common shares. (proposition de transformation)

converting company

converting company has the meaning given to that expression by the regulations. (société en transformation)

eligible policyholder

eligible policyholder has the meaning given to that expression by the regulations. (souscripteur admissible)

letters patent of conversion

letters patent of conversion means letters patent issued under paragraph 237(1)(b). (lettres patentes de transformation)

  • 1999, c. 1, s. 4
  • 2011, c. 15, s. 30

Marginal note:Conversion into company with common shares

  •  (1) On the application of a mutual company made in accordance with the regulations, the Minister may, on the recommendation of the Superintendent,

    • (a) approve a conversion proposal; and

    • (b) issue letters patent of conversion to effect the conversion proposal.

  • Marginal note:Special meeting of eligible policyholders

    (1.1) Before an application is made under subsection (1), the directors of the company must call a special meeting of eligible policyholders to obtain

    • (a) approval of the conversion proposal;

    • (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:Notice of meeting and policyholder list

    (1.2) A company shall, in respect of a special meeting,

    • (a) send, not less than 45 days and not more than 75 days before the meeting, to each eligible policyholder a notice of the time and place of the meeting, describing the conversion proposal in sufficient detail to permit a policyholder to form a reasoned judgment about the terms of the proposal and its impact on both policyholders and the company, together with the prescribed information in respect of the conversion proposal; and

    • (b) prepare, not less than 45 days before the meeting, a list, which may be in electronic form, of all eligible policyholders.

  • Marginal note:Application of subsection 149(5)

    (1.3) Subsection 149(5) applies, with any modifications that the circumstances require, in respect of the list of eligible policyholders.

  • Marginal note:Entitlement to notice and right to vote

    (1.4) Only eligible policyholders are entitled to notice of and to vote at a special meeting.

  • Marginal note:Special resolution

    (1.5) Any approval, confirmation or authorization referred to in subsection (1.1) must be given by special resolution of the eligible policyholders.

  • Marginal note:Regulations

    (2) The Governor in Council may make regulations

    • (a) respecting the application referred to in subsection (1), including the form of the application and the information to be contained in the application, and authorizing the Superintendent to require additional information in order to make a recommendation;

    • (a.01) respecting the process that precedes the calling of a special meeting under subsection (1.1), including the development of a conversion proposal, and respecting the calling of that meeting;

    • (a.1) respecting the conversion proposal, including the information to be contained in the conversion proposal, and authorizing the Superintendent to approve the measures to be taken by the converting company in respect of any proposed amendment to the conversion proposal;

    • (a.2) respecting the value of a converting company for the purposes of the regulations and authorizing the Superintendent to specify a day at which the value shall be estimated by the converting company;

    • (b) concerning the fair and equitable treatment of policyholders under a conversion proposal;

    • (c) governing the ownership of shares issued by a mutual company that has been converted into a company with common shares, including limiting the circumstances in which the Minister may give approval under subsection 407(1);

    • (c.1) respecting the authorization by the Superintendent of the sending of a notice of a special meeting referred to in subsection (1.1), including

      • (i) prescribing the information to be submitted by the converting company in support of an authorization,

      • (ii) authorizing the Superintendent to consider information in addition to that referred to in subparagraph (i), and

      • (iii) authorizing the Superintendent to require that information, in addition to the prescribed information referred to in paragraph (1.2)(a), be sent with a notice;

    • (c.2) authorizing the Superintendent to

      • (i) require the converting company to hold one or more information sessions for eligible policyholders and to take other measures to assist eligible policyholders in forming a reasoned judgment on the conversion proposal, and

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

    • (c.3) respecting restrictions on any fee, compensation or other consideration that may be paid, in respect of the conversion of a mutual company into a company with common shares, to any director, officer or employee of the company or to any entity with which a director, officer or employee of the company is associated;

    • (c.4) prohibiting, during the period set out in the regulations, the issuance or provision of shares, share options or rights to acquire shares, of a company that has been converted from a mutual company into a company with common shares to

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

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

    • (d) generally, respecting the conversion of a mutual company into a company with common shares.

  • Marginal note:Regulations made under paragraph (2)(a.01)

    (2.1) Regulations made under paragraph (2)(a.01) may provide for court intervention in the process referred to in that paragraph, including the circumstances in which the court is to be seized of any matter in relation to that process, and may govern the court’s powers and procedures in that regard. They may also govern authorizations by the Superintendent in respect of notices to be sent in the context of that process.

  • Marginal note:Exemption by Superintendent

    (3) A regulation made under subsection (2) may provide that the Superintendent may, on such terms and conditions as the Superintendent considers appropriate, exempt a company from prescribed requirements of that regulation.

  • Marginal note:Exemption by Minister

    (4) The Minister may, on such terms and conditions as the Minister considers appropriate, exempt a company from any requirement of this Act or the regulations if

    • (a) the company is a mutual company applying for the approval of a proposal to convert the company into a company with common shares; and

    • (b) the Minister is of the opinion that the company 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 company.

  • 1991, c. 47, s. 237
  • 1994, c. 26, s. 38(E)
  • 1997, c. 15, s. 215
  • 1999, c. 1, s. 5
  • 2014, c. 20, s. 211

Marginal note:Effect of letters patent of conversion

  •  (1) Letters patent of conversion become effective on the day stated in the letters patent of conversion, and on that day

    • (a) the company ceases to be a mutual company; and

    • (b) the policyholders of the company cease to have any rights with respect to or any interest in the company as a mutual company.

  • Marginal note:Consideration for shares

    (2) For the purposes of subsection 69(1) and section 70, shares issued by a company under a conversion proposal are deemed to be fully paid for in money and the amount of consideration received by the company for those shares is deemed to be equal to the book value of the company immediately after the effective date of its conversion, determined in accordance with the accounting principles referred to in subsection 331(4) and calculated without taking into account any amounts remaining at that time in the participating accounts that the company maintains under section 456.

  • 1997, c. 15, s. 216
  • 1999, c. 1, s. 6

Marginal note:Distribution prohibited

  •  (1) A mutual company shall not take any action or series of actions directed toward the distribution of all or part of its property to its policyholders or shareholders or the provision of any other benefit to its policyholders or shareholders, other than as provided in subsections 237(1) to (1.2), until a conversion proposal has been approved by the Minister under subsection 237(1).

  • Marginal note:Exception

    (2) Nothing in subsection (1) prevents

    • (a) the directors of the company from declaring a dividend on shares or a policy dividend, bonus or other benefit payable to policyholders in the ordinary course of business; or

    • (b) the company from paying or otherwise satisfying a dividend, bonus or other benefit referred to in paragraph (a).

  • Marginal note:Non-application

    (3) This section does not apply to a company that is insolvent within the meaning of the Winding-up and Restructuring Act.

  • 2011, c. 15, s. 31

Amendments — By-laws

Marginal note:By-laws

  •  (1) The directors of a company may make, amend or repeal any by-laws, in the manner set out in subsections (2) and (3) and sections 239 to 244, to

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

    • (b) create new classes of shares;

    • (c) change the designation of any or all of the company’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 company’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) change the rights of policyholders to vote at meetings of shareholders or policyholders, subject to subsection 153(1);

    • (i.1) change the name of the company;

    • (j) increase or decrease the number of directors, the minimum or maximum number of directors, the number of directors who are to be elected by the shareholders or the number of directors who are to be elected by the policyholders, subject to subsections 167(1) and 173(4) and (4.1) and section 176; or

    • (k) change the province in which the head office of the company is situated.

  • Marginal note:Shareholder or policyholder 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 policyholders entitled to vote, and the shareholders and policyholders may, by special resolution, confirm, amend or reject the by-law, amendment or repeal.

  • Marginal note:Right to vote

    (2.1) The by-laws of a company may provide that each participating share, as defined in section 83.01, of a mutual company carries the right to vote on a proposed addition or amendment to the by-laws to do anything referred to in any of paragraphs (1)(a) to (h), (j) and (k). Where that right is provided for in the by-laws, each of those shares carries that right even if they do not otherwise carry the right to vote.

  • Marginal note:Separate vote

    (2.2) The holders of shares who are entitled under subsection (2.1) to vote on a proposed addition or amendment referred to in that subsection are entitled to vote on it separately from policyholders.

  • 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 and policyholders under subsection (2) and, in the case of a by-law respecting a change to the name of the company, approved by the Superintendent.

  • Marginal note:Letters patent

    (4) If the name of a company or the province in Canada in which the head office of the company is situated is changed under this section, the Superintendent may issue letters patent to amend the company’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. 47, s. 238
  • 1997, c. 15, s. 217
  • 2001, c. 9, s. 388
  • 2005, c. 54, s. 260
  • 2007, c. 6, s. 204

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 company, 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:Participating policyholder vote

  •  (1) Participating policyholders are entitled to vote separately on a proposal to amend the by-laws to add to, change or remove the rights of policyholders, other than participating policyholders, to vote at meetings of shareholders or policyholders.

  • Marginal note:Policyholder vote

    (2) Policyholders who are entitled to vote, other than participating policyholders, are entitled to vote separately on a proposal to amend the by-laws to add to, change or remove the rights of policyholders, other than participating policyholders, to vote at meetings of shareholders or policyholders.

  • Marginal note:Right limited

    (3) The holders of a class of non-participating policies who are entitled to vote are entitled to vote separately as a class if the right to vote attached to policies of that class is added to, changed or removed by an addition or amendment to the by-laws in a manner different from the right to vote attached to other non-participating policies.

Marginal note:Separate resolutions

  •  (1) A proposed addition or amendment to the by-laws referred to in subsection 239(1) is adopted when the holders of the shares of each class or series entitled to vote separately thereon as a class or series and the policyholders have approved the addition or amendment by a special resolution.

  • Marginal note:Idem

    (2) A proposed addition or amendment to the by-laws referred to in section 240 is adopted when the participating policyholders, the non-participating policyholders who are entitled to vote and the holders of each class of non-participating policies entitled to vote separately thereon as a class and the shareholders have approved the addition or amendment by a special resolution.

Marginal note:Revoking resolution

 Where a special resolution referred to in subsection 238(2) so states, the directors may, without further approval of the shareholders or policyholders, revoke the special resolution.

Marginal note:Proposal to amend

  •  (1) Subject to subsection (2), a director or a shareholder or policyholder who is entitled to vote at an annual meeting of shareholders and policyholders of a company may, in accordance with sections 147 and 148, make a proposal to make an application referred to in section 224 or to make, amend or repeal the by-laws referred to in subsection 238(1) of the company.

  • Marginal note:Notice of amendment

    (2) Notice of a meeting of shareholders or policyholders at which a proposal to amend the incorporating instrument or to make, amend or repeal the by-laws of a company to effect any of the changes referred to in subsection 238(1) is to be considered must set out the proposal.

  • 1991, c. 47, s. 243
  • 2001, c. 9, s. 389

Marginal note:Rights preserved

 No amendment to the incorporating instrument or by-laws of a company affects an existing cause of action or claim or liability to prosecution in favour of or against the company or its directors or officers, or any civil, criminal or administrative action or proceeding to which the company 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 companies and insurance holding companies but not including federal credit unions, the Minister may issue letters patent amalgamating and continuing the applicants as one mutual company.

  • Marginal note:Application to amalgamate

    (2) On the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including companies — other than mutual companies — and insurance holding companies but not including federal credit unions, the Minister may issue letters patent amalgamating and continuing the applicants as one company.

  • Marginal note:Application to amalgamate societies

    (3) On the joint application of two or more societies, the Minister may issue letters patent amalgamating and continuing the applicants as one society.

  • 1991, c. 47, s. 245
  • 1997, c. 15, s. 218
  • 2001, c. 9, s. 390
  • 2010, c. 12, s. 2119

Marginal note:Amalgamation agreement

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

  • Marginal note:Contents of agreement — company

    (2) Every amalgamation agreement for an amalgamation to which subsection 245(1) or (2) applies shall set out the terms and means of effecting the amalgamation and, in particular,

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

    • (b) whether the amalgamated company is to be a mutual company or a company with common shares;

    • (c) the name and place of ordinary residence of each proposed director of the amalgamated company;

    • (d) the manner in which any shares of each applicant are to be converted into shares or other securities of the amalgamated company;

    • (e) if any shares of an applicant are not to be converted into shares or other securities of the amalgamated company, 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 of the amalgamated company;

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

    • (g) the proposed by-laws of the amalgamated company;

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

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

  • Marginal note:Contents of agreement — society

    (2.1) Every amalgamation agreement for an amalgamation to which subsection 245(3) applies shall set out the terms and means of effecting the amalgamation and, in particular,

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

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

    • (c) the proposed by-laws of the amalgamated society;

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

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

  • Marginal note:Cross ownership of shares

    (3) If shares of one of the applicants are held by or on behalf of another of the applicants, other than 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 when the amalgamation becomes effective without any repayment of capital in respect thereof, and no provision shall be made in the agreement for the conversion of those shares into shares of the amalgamated company.

  • 1991, c. 47, s. 246
  • 1997, c. 15, s. 219
  • 2005, c. 54, s. 261

Marginal note:Approval of agreement by Superintendent

  •  (1) An amalgamation agreement must be submitted to the Superintendent for approval and any approval of the agreement under subsection 248(5) by the shareholders, policyholders or members of an applicant is invalid unless, before the date of the approval, the Superintendent has approved the agreement in writing.

  • Marginal note:Report of independent actuary

    (2) An amalgamation agreement submitted to the Superintendent for approval must be accompanied by the report of an independent actuary on the agreement.

  • 1991, c. 47, s. 247
  • 1997, c. 15, s. 220(E)
  • 2007, c. 6, s. 205

Marginal note:Approval by shareholders, policyholders and members

  •  (1) The directors of each applicant shall submit an amalgamation agreement for approval

    • (a) to a meeting of the shareholders and policyholders entitled to vote of the applicant company of which they are directors and to the holders of each class or series of shares;

    • (b) to a meeting of the shareholders of the body corporate of which they are directors and to the holders of each class or series of shares; or

    • (c) to a meeting of the members of the applicant society of which they are directors.

  • 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:Policyholder vote

    (4) Policyholders who are entitled to vote are entitled to vote separately from shareholders in respect of an amalgamation agreement.

  • Marginal note:Special resolution

    (5) Subject to subsections (3) and (4), an amalgamation agreement is approved when it has been approved by special resolution by

    • (a) the shareholders and the policyholders who are entitled to vote of each applicant company;

    • (b) the shareholders of each applicant body corporate; and

    • (c) the members of each applicant society.

  • Marginal note:Termination

    (6) 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 though the agreement has been approved by the shareholders, policyholders or members of all or any of the applicant companies, bodies corporate or societies.

  • 1991, c. 47, s. 248
  • 1997, c. 15, s. 221
  • 2005, c. 54, s. 262

Marginal note:Vertical short-form amalgamation

  •  (1) A company that does not have any participating policyholders may, without complying with sections 246 to 248, amalgamate with one or more bodies corporate that

    • (a) are incorporated by or under an Act of Parliament,

    • (b) are wholly-owned subsidiaries of the company, and

    • (c) do not have any participating policyholders

    if

    • (d) the amalgamation is approved by a resolution of the directors of the company and of each amalgamating subsidiary, and

    • (e) 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 company will be the same as the incorporating instrument and the by-laws of the amalgamating company that is the holding body corporate, and

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

  • Marginal note:Horizontal short-form amalgamation

    (2) Two or more bodies corporate that

    • (a) are incorporated by or under an Act of Parliament,

    • (b) are wholly-owned subsidiaries of the same holding body corporate, and

    • (c) do not have any participating policyholders

    may amalgamate and continue as one company without complying with sections 246 to 248 if

    • (d) at least one of the applicants is a company,

    • (e) the amalgamation is approved by a resolution of the directors of each of the applicants, and

    • (f) the resolutions provide that

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

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

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

  • 1991, c. 47, s. 249
  • 2005, c. 54, s. 263

Marginal note:Joint application to Minister

  •  (1) Subject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 248(6), the applicants shall, within three months after the approval of the agreement in accordance with subsection 248(5) or the approval of the directors in accordance with subsection 249(1) or (2), jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one company or society.

  • 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 company or society, 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 company or society, 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 company or society;

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

    • (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 company or society 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) if one of the applicants is a converted company in respect of which the Minister has issued an order under subsection 407(8) or a converted company in respect of which subsection 407(11) applied at any time, or a body corporate that controls, within the meaning of paragraph 3(1)(d), such a company, the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated company and its affiliates may affect the supervision and regulation of the amalgamated company, having regard to

      • (i) the nature and extent of the proposed financial services activities to be carried out by the amalgamated company 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 company; and

    • (h) the best interests of the financial system in Canada.

  • Marginal note:Restriction

    (5) The Minister may not, before January 1, 2002, issue letters patent under section 251 amalgamating a converted company in respect of which subsection 407(4) or (11) applies, a company to which subsection 407(5) or (12) applies or an insurance holding company to which subsection 407(6) or (13) applies with any other body corporate.

  • Marginal note:Restriction

    (6) If one of the applicants for letters patent of amalgamation is a converted company in respect of which subsection 407(4) applies, or a company to which subsection 407(5) applies or an insurance holding company to which subsection 407(6) applies, the Minister may not issue the letters patent of amalgamation unless the amalgamated company is

    • (a) widely held; or

    • (b) controlled, within the meaning of paragraph 3(1)(d), by a company to which subsection 407(5) applies, or by an insurance holding company to which subsection 407(6) applies, that controlled one of the applicants at the time the application was made.

  • Marginal note:Deeming

    (7) If one of the applicants for letters patent of amalgamation is a converted company in respect of which subsection 407(4) applies, a company to which subsection 407(5) applies or an insurance holding company to which subsection 407(6) applies and the letters patent of amalgamation are issued, the amalgamated company is deemed to be a converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies, as the case may be.

  • 1991, c. 47, s. 250
  • 1997, c. 15, s. 222
  • 2001, c. 9, s. 391

Marginal note:Issue of letters patent

  •  (1) Where an application has been made to the Minister in accordance with section 250, the Minister may issue letters patent of amalgamation continuing the applicants as one company or 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. 47, s. 251
  • 1997, c. 15, s. 223

Marginal note:Court enforcement

  •  (1) If a company or society, or any director, officer, employee or agent of a company or society, 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 company or society, 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. 392

Marginal note:Effect of letters patent

  •  (1) On the day provided for in the letters patent issued under section 251

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

    • (b) the property of each applicant continues to be the property of the amalgamated company or society;

    • (c) the amalgamated company or society 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 company or society;

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

    • (g) if any director or officer of an applicant continues as a director or officer of the amalgamated company, 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 company; and

    • (h) the letters patent of amalgamation are the incorporating instrument of the amalgamated company or society.

  • 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 company.

  • 1991, c. 47, s. 252
  • 1997, c. 15, s. 224

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 company or society in respect of which letters patent were issued under subsection 251(1) permission to

    • (a) engage in a business activity specified in the order that the company or society would not otherwise be 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. 121]

    • (d) hold assets that the company or society would not otherwise be 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 the company or society would not otherwise be 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 subsection (1) 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), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;

    • (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, on the recommendation of the Superintendent, may by order 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 company or society 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 company or society to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the company or society that the company or society 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. 47, s. 253
  • 1994, c. 47, s. 121
  • 1997, c. 15, s. 225
  • 2007, c. 6, s. 206

Transfer of Business and Reinsurance

Marginal note:Restricted transactions

  •  (1) Except in accordance with this section or an order made under subsection 678.5(1), a company or society shall not

    • (a) cause itself to be reinsured, on an assumption basis, against all or any portion of the risks undertaken under its policies; or

    • (b) sell all or substantially all of its assets.

    • (c) [Repealed, 2007, c. 6, s. 207]

  • Marginal note:Approval of the Minister

    (2) A company or society may, with the approval of the Minister,

    • (a) cause itself to be reinsured, on an assumption basis, against all or substantially all of the risks undertaken under its policies, by one or more of the following entities:

      • (i) a company or society,

      • (ii) a foreign company that, in Canada, reinsures those risks,

      • (iii) a body corporate incorporated or formed by or under the laws of a province, if the Superintendent has entered into satisfactory arrangements concerning the reinsurance with either or both of the body corporate and the appropriate official or public body responsible for the supervision of the body corporate, or

      • (iv) an entity that is authorized to reinsure those risks, if the risks were undertaken outside Canada by the company or society; or

    • (b) sell all or substantially all of its assets.

  • Marginal note:Approval of the Superintendent

    (2.01) A company or society may, with the approval of the Superintendent, cause itself to be reinsured, on an assumption basis, against less than substantially all of the risks undertaken under its policies, by one or more of the following entities:

    • (a) a company or society;

    • (b) a foreign company that, in Canada, reinsures those risks;

    • (c) a body corporate incorporated or formed by or under the laws of a province, if the Superintendent has entered into satisfactory arrangements concerning the reinsurance with either or both of the body corporate and the appropriate official or public body responsible for the supervision of the body corporate; or

    • (d) an entity that is authorized to reinsure those risks, if the risks were undertaken outside Canada by the company or society.

  • Marginal note:Prescribed transactions

    (2.1) The approval of the Minister or Superintendent is not required for a prescribed transaction or a transaction in a prescribed class of transactions.

  • Marginal note:Procedure

    (3) The company or society must, at least 30 days before it applies for the Minister’s or Superintendent’s approval, publish a notice in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the company or society is situated stating the day on or after which it will apply.

  • Marginal note:Information

    (4) Where a company or society publishes a notice referred to in subsection (3), the Superintendent may direct the company or society to provide its shareholders, policyholders and members with such information as the Superintendent may require.

  • Marginal note:Report of independent actuary

    (4.1) An application for approval under paragraph (2)(a) must, if the Superintendent so requires, be accompanied by the report of an independent actuary on the proposed reinsurance agreement.

  • Marginal note:Inspection

    (5) If a company or society publishes a notice referred to in subsection (3), it must make the agreement for the transaction that the Minister or Superintendent is asked to approve available at its head office for the inspection of its shareholders, policyholders and members for at least 30 days after the publication of the notice and must provide a copy of the agreement to any shareholder, policyholder or member who requests one by writing to the head office of the company or society.

  • Marginal note:Superintendent may shorten periods

    (6) If the Superintendent is of the opinion that it is in the best interests of a group of policyholders affected by the transaction that the Minister or the Superintendent is asked to approve, the Superintendent may shorten the periods of 30 days referred to in subsections (3) and (5).

  • 1991, c. 47, s. 254
  • 1997, c. 15, s. 226
  • 2001, c. 9, s. 393
  • 2007, c. 6, s. 207

Marginal note:Taking of effect of approval

 A transaction referred to in subsection 254(2) or (2.01) has no effect until it has been approved by the Minister or the Superintendent, as the case may be.

  • 1991, c. 47, s. 255
  • 1997, c. 15, s. 227
  • 2007, c. 6, s. 208

 [Repealed, 2007, c. 6, s. 208]

Marginal note:Shareholder and policyholder approval

  •  (1) A company or society proposing to transfer all or substantially all of its policies, to cause itself to be reinsured, on an assumption basis, against all or substantially all of the risks undertaken under its policies, or to sell all or substantially all of its assets shall submit the proposal for approval to a meeting of the shareholders and policyholders who are entitled to vote, or to a meeting of members, and, subject to subsection (3), to the holders of each class or series of shares.

  • Marginal note:Notice to Superintendent

    (1.1) A company or society proposing to transfer all or substantially all of its policies must give notice of the proposal to the Superintendent.

  • Marginal note:Information

    (1.2) After receiving the notice, the Superintendent may direct the company or society to provide its shareholders, policyholders and members with any information that the Superintendent may require.

  • Marginal note:Right to vote

    (2) Each share of the company carries the right to vote in respect of the proposal whether or not the share otherwise carries the right to vote.

  • Marginal note:Class vote

    (3) The holders of shares of a class or series of shares of the company are entitled to vote separately as a class or series in respect of the proposal if the shares of the class or series are affected by the proposed transaction in a manner different from the shares of another class or series.

  • Marginal note:Policyholder vote

    (4) Policyholders who are entitled to vote are entitled to vote separately from shareholders in respect of the proposal.

  • Marginal note:Special resolution

    (5) For the purpose of subsection (1), and subject to subsections (3) and (4), the proposal is not approved by the shareholders and the policyholders who are entitled to vote or the members unless they approve it by special resolution.

  • Marginal note:Abandoning transfer or reinsurance

    (6) Where a special resolution under subsection (5) approving a proposed transaction so states, the directors of a company or society may, subject to the rights of third parties, abandon the transaction without further approval of the shareholders, policyholders or members.

  • Marginal note:Application to Minister

    (7) Except in the case of a transaction to transfer all or substantially all of a company’s or society’s policies, the company or society shall, within three months after the approval of the transaction in accordance with subsection (5), apply to the Minister for approval of the transaction, unless the transaction is abandoned in accordance with subsection (6).

  • Marginal note:When section does not apply

    (8) This section does not apply if the transfer or reinsurance is made under an order made under subsection 678.5(1).

  • 1991, c. 47, s. 257
  • 1997, c. 15, s. 227
  • 2001, c. 9, s. 394
  • 2007, c. 6, s. 209

Marginal note:Regulations

 The Governor in Council may, for the purposes of section 254 or 257, make regulations respecting the circumstances in which companies or societies are deemed to be causing themselves to be reinsured, on an assumption basis, against risks undertaken under their policies.

  • 1991, c. 47, s. 258
  • 1997, c. 15, s. 227
  • 2007, c. 6, s. 210

 [Repealed, 1997, c. 15, s. 227]

DIVISION IVHead Office and Corporate Records

Marginal note:Head office

  •  (1) A company shall at all times have a head office in the province specified in its incorporating instrument or by-laws.

  • Marginal note:Change of head office

    (2) The directors of a company may change the address of the head office within the province specified in the incorporating instrument or by-laws.

  • Marginal note:Notice of change of address

    (3) A company shall send to the Superintendent, within fifteen days after any change of address of its head office, a notice of the change of address.

  • 1991, c. 47, s. 260
  • 2005, c. 54, s. 264

Marginal note:Company records

  •  (1) A company shall prepare and maintain records containing

    • (a) its incorporating instrument and the by-laws of the company and all amendments thereto;

    • (b) minutes of meetings and resolutions of shareholders or policyholders;

    • (c) the information referred to in paragraphs 668(1)(a), (c) and (e) to (h) contained in all returns provided to the Superintendent pursuant to section 668;

    • (d) particulars of any authorizations, conditions and limitations established by the Superintendent under subsection 58(1) or (2) or 59(1) that are from time to time applicable to the company; and

    • (e) particulars of exceptions granted under section 38 or 253 that are from time to time applicable to the company.

  • Marginal note:Additional records

    (2) In addition to the records described in subsection (1), a company shall prepare and maintain adequate

    • (a) corporate accounting records;

    • (b) records containing minutes of meetings and resolutions of the directors and any committee thereof; and

    • (c) records showing, for each customer of, or claimant under a policy issued by, the company, the amount owing to the company and the nature of the liabilities of the company to the customer or claimant.

  • Marginal note:Former-Act and continued companies

    (3) For the purposes of paragraph (1)(b) and subsection (2),

    • (a) in the case of a body corporate continued as a company under this Act, records includes similar records required by law to be maintained by the body corporate before it was so continued;

    • (b) in the case of a body corporate amalgamated and continued as a company under this Act, records includes similar records required by law to be maintained by the body corporate before it was so amalgamated; and

    • (c) in the case of a former-Act company, records includes similar records required by law to be maintained by the company before the coming into force of this section.

  • 1991, c. 47, s. 261
  • 1997, c. 15, s. 228(E)
  • 2007, c. 6, s. 211(E)

Marginal note:Place of records

  •  (1) The records described in section 261 shall be kept at the head office of the company or at such other place in Canada as the directors think fit.

  • Marginal note:Notice of place of records

    (2) Where any of the records described in section 261 are not kept at the head office of a company, the company shall notify the Superintendent of the place where the records are kept.

  • Marginal note:Exception

    (3) Subsection (1) does not apply in respect of records of an office of the company outside Canada or in respect of customers of such an office.

  • Marginal note:Inspection

    (4) The records described in section 261, other than those described in paragraph 261(2)(c), shall at all reasonable times be open to inspection by the directors.

  • Marginal note:Access to company records

    (5) A company’s shareholders, policyholders entitled to vote and creditors and their personal representatives may examine the records referred to in subsection 261(1) during the usual business hours of the company and may take extracts from them free of charge or have copies of them made on payment of a reasonable fee. If the company is a distributing company, any other person may on payment of a reasonable fee examine those records during the usual business hours of the company and take extracts from them or have copies of them made.

  • Marginal note:Electronic access

    (5.1) A company may make the information contained in records referred to in subsection 261(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.

  • Marginal note:Copies of by-laws for shareholders

    (6) Every shareholder of a company is entitled, on request made not more often than once in each calendar year, to receive free of charge one copy of the by-laws of the company.

  • Marginal note:Copies of by-laws for policyholders

    (7) Every policyholder of a company who is entitled to vote at a meeting of policyholders or shareholders and policyholders of the company is entitled, on request made not more often than once in each calendar year, to receive free of charge one copy of the by-laws of the company.

  • 1991, c. 47, s. 262
  • 1997, c. 15, s. 229
  • 2001, c. 9, s. 395
  • 2005, c. 54, s. 265

Marginal note:Shareholder lists

  •  (1) A person who is entitled to a basic list of shareholders of a company (in this section referred to as the “applicant”) may request the company to furnish the applicant with a basic list within ten days after receipt by the company of the affidavit referred to in subsection (2) and, on payment of a reasonable fee by the applicant, the company shall comply with the request.

  • Marginal note:Affidavit and contents

    (2) A request under subsection (1) must be accompanied by an affidavit containing

    • (a) the name and address of the applicant,

    • (b) the name and address for service of the entity, if the applicant is an entity, and

    • (c) an undertaking that the basic list and any supplemental lists obtained pursuant to subsections (5) and (6) will not be used except as permitted under section 265,

    and, if the applicant is an entity, the affidavit shall be made by a director or an officer of the entity, or any person acting in a similar capacity.

  • Marginal note:Entitlement to list

    (3) A company’s shareholders, policyholders entitled to vote and creditors and their personal representatives are — or if the company is a distributing company, any person is — entitled to a basic list of shareholders of the company.

  • Marginal note:Basic list of shareholders

    (4) A basic list of shareholders of a company consists of a list of shareholders that is made up to a date not more than ten days before the receipt of the affidavit referred to in subsection (2) and that sets out

    • (a) the names of the shareholders of the company;

    • (b) the number of shares owned by each shareholder; and

    • (c) the address of each shareholder as shown in the records of the company.

  • Marginal note:Supplemental lists

    (5) A person requiring a company to supply a basic list of shareholders may, if the person states in the accompanying affidavit that supplemental lists are required, request the company or its agent, on payment of a reasonable fee, to provide supplemental lists of shareholders setting out any changes from the basic list in the names and addresses of the shareholders and the number of shares owned by each shareholder for each business day following the date to which the basic list is made up.

  • Marginal note:When supplemental lists to be furnished

    (6) A company or its agent shall provide a supplemental list of shareholders required under subsection (5)

    • (a) within ten days following the date the basic list is provided, where the information relates to changes that took place prior to that date; and

    • (b) within ten days following the day to which the supplemental list relates, where the information relates to changes that took place on or after the date the basic list was provided.

  • 1991, c. 47, s. 263
  • 2005, c. 54, s. 266

Marginal note:Option holders

 A person requiring a company to supply a basic list or a supplemental list of shareholders may also require the company to include in that list the name and address of any known holder of an option or right to acquire shares of the company.

Marginal note:Use of shareholder list

 A list of shareholders obtained under section 263 shall not be used by any person except in connection with

  • (a) an effort to influence the voting of shareholders of the company;

  • (b) an offer to acquire shares of the company; or

  • (c) any other matter relating to the affairs of the company.

Marginal note:Form of records

  •  (1) A register or other record required or authorized by this Act to be prepared and maintained by a company

    • (a) may be in a bound or loose-leaf form or in a photographic film form; or

    • (b) may be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

  • Marginal note:Conversion of records

    (2) Registers and records maintained in one form may be converted to any other form.

  • Marginal note:Destruction of converted records

    (3) Notwithstanding section 269, a company may destroy any register or other record referred to in subsection (1) at any time after the register or other record has been converted to another form.

Marginal note:Protection of records

 A company and its agents shall take reasonable precautions to

  • (a) prevent loss or destruction of,

  • (b) prevent falsification of entries in,

  • (c) facilitate detection and correction of inaccuracies in, and

  • (d) ensure that unauthorized persons do not have access to or use of information in,

the registers and records required or authorized by this Act to be prepared and maintained.

Marginal note:Requirement to maintain copies and process information in Canada

  •  (1) If the Superintendent is of the opinion that it is incompatible with the fulfilment of the Superintendent’s responsibilities under this Act for a company to maintain, in another country, copies of records referred to in section 261 or of its central securities register or for a company to process, in another country, information or data relating to the preparation and maintenance of those records or of its central securities register — or if the Superintendent is advised by the Minister that, in the opinion of the Minister, it is not in the national interest for a company to do any of those activities in another country — the Superintendent shall direct the company to not maintain those copies, or to not process the information or data, as the case may be, in that other country or to maintain those copies or to process the information or data only in Canada.

  • Marginal note:Company to comply

    (2) A company shall without delay comply with any direction issued under subsection (1).

  • 1991, c. 47, s. 268
  • 2001, c. 9, s. 396
  • 2005, c. 54, s. 267
  • 2007, c. 6, s. 212

Marginal note:Retention of records

 A company shall retain

  • (a) the records of the company referred to in subsection 261(1);

  • (b) any record of the company referred to in paragraph 261(2)(a) or (b); and

  • (c) the central securities register referred to in subsection 271(1).

Marginal note:Regulations

 The Governor in Council may make regulations respecting the records, papers and documents to be retained by a company and the length of time those records, papers and documents are to be retained.

DIVISION VSecurities Registers

Marginal note:Central securities register

  •  (1) A company shall maintain a central securities register in which it shall record the securities, within the meaning of section 85, issued by it in registered form, showing in respect of each class or series of securities

    • (a) the names, alphabetically arranged, and latest known addresses of the persons who are security holders, and the names and latest known addresses of the persons who have been security holders;

    • (b) the number of securities held by each security holder; and

    • (c) the date and particulars of the issue and transfer of each security.

  • Marginal note:Former-Act and continued companies

    (2) For the purposes of subsection (1), central securities register includes similar registers required by law to be maintained by a former-Act company or by a body corporate continued, or amalgamated and continued, as a company under this Act before the continuance, amalgamation or coming into force of this section, as the case may be.

  • Marginal note:Access to central securities register

    (3) A company’s shareholders, policyholders entitled to vote and creditors and their personal representatives may examine the central securities register during the usual business hours of the company and may take extracts from it free of charge or have copies of it made on payment of a reasonable fee. If the company is a distributing company, any other person may on payment of a reasonable fee examine the central securities register during the usual business hours of the company and take extracts from it or have copies of it made.

  • Marginal note:Electronic access

    (4) The company may make the information contained in the central securities register available by any mechanical or electronic data processing system or other information storage device that is capable of reproducing it in intelligible written form within a reasonable time.

  • Marginal note:Affidavit and undertaking

    (5) A person who wishes to examine the central securities register, take extracts from it or have copies of it made shall provide the company with an affidavit containing their name and address — or if they are an entity, the name and address for service of the entity — and with an undertaking that the information contained in the register will not be used except in the same way as a list of shareholders may be used under section 265. In the case of an entity, the affidavit is to be sworn by a director or officer of the entity or a person acting in a similar capacity.

  • Marginal note:Supplementary information

    (6) A person who wishes to examine a central securities register, take extracts from it or have copies of it made may on payment of a reasonable fee, if they state in the accompanying affidavit that supplementary information is required, request the company or its agent to provide supplementary information setting out any changes made to the register.

  • Marginal note:When supplementary information to be provided

    (7) A company or its agent shall provide the supplementary information within

    • (a) 10 days after the day on which the central securities register is examined if the changes take place before that day; and

    • (b) 10 days after the day to which the supplementary information relates if the changes take place on or after the day on which the central securities register is examined.

  • 1991, c. 47, s. 271
  • 2001, c. 9, s. 397
  • 2005, c. 54, s. 268

Marginal note:Branch registers

 A company may establish as many branch securities registers as it considers necessary.

Marginal note:Agents

 A company may appoint an agent to maintain its central securities register and each of its branch securities registers.

Marginal note:Location of central securities register

  •  (1) The central securities register of a company shall be maintained by the company at its head office or at any other place in Canada designated by the directors of the company.

  • Marginal note:Location of branch securities register

    (2) A branch securities register of a company may be kept at any place in or outside Canada designated by the directors of the company.

Marginal note:Effect of registration

 Registration of the issue or transfer of a security in the central securities register or in a branch securities register is complete and valid registration for all purposes.

Marginal note:Particulars in branch register

  •  (1) A branch securities register shall only contain particulars of the securities issued or transferred at the branch for which that register is established.

  • Marginal note:Particulars in central securities register

    (2) Particulars of each issue or transfer of a security registered in a branch securities register of a company shall also be kept in the central securities register of the company.

Marginal note:Destruction of certificates

 A company, its agent or a trustee within the meaning of section 317 is not required to produce

  • (a) a cancelled security certificate in registered form or an instrument referred to in subsection 73(1) that is cancelled or a like cancelled instrument in registered form after six years from the date of its cancellation;

  • (b) a cancelled security certificate in bearer form or an instrument referred to in subsection 73(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; or

  • (c) an instrument referred to in subsection 73(1) or a like instrument, irrespective of its form, after the date of its expiration.

DIVISION VICorporate Name and Seal

Marginal note:Publication of name

 A company shall set out its name in legible characters in all contracts, premium notices, applications for policies, policies, negotiable instruments and other documents evidencing rights or obligations with respect to other parties that are issued or made by or on behalf of the company.

Marginal note:Corporate seal

  •  (1) A company may adopt a corporate seal and change one that it adopted.

  • Marginal note:Validity of unsealed documents

    (2) A document executed on behalf of a company is not invalid merely because a corporate seal is not affixed to it.

  • 1991, c. 47, s. 279
  • 2005, c. 54, s. 269

DIVISION VII[Repealed, 1997, c. 15, s. 230]

DIVISION VIIIInsiders

Interpretation

Marginal note:Definitions

  •  (1) In this Division,

    affiliate

    affiliate means a body corporate that is affiliated with another body corporate within the meaning of subsection 6(2); (groupe)

    business combination

    business combination means an acquisition of all or substantially all of the assets of one body corporate by another, an amalgamation of two or more bodies corporate or any similar reorganization between two or more bodies corporate; (regroupement d’entreprises)

    call

    call means an option, transferable by delivery, to demand delivery of a specified number or amount of shares at a fixed price within a specified time but does not include an option or right to acquire shares of the body corporate that granted the option or right to acquire; (option d’achat)

    distributing company

    distributing company[Repealed, 2005, c. 54, s. 270]

    insider

    insider[Repealed, 2005, c. 54, s. 270]

    officer

    officer, in relation to a company, means

    • (a) an officer as defined in paragraph (a) of the definition officer in section 2, or

    • (b) any natural person who performs functions for the company similar to those performed by a person referred to in paragraph (a) of the definition officer in section 2; (dirigeant d’une société)

    put

    put means an option, transferable by delivery, to deliver a specified number or amount of shares at a fixed price within a specified time; (option de vente)

    share

    share means a voting share and includes

    • (a) a security currently convertible into a voting share, and

    • (b) a currently exercisable option or a right to acquire a voting share or a security referred to in paragraph (a). (action)

  • Marginal note:Control

    (2) For the purposes of this Division, a person controls a body corporate where the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(d).

  • (3) and (4) [Repealed, 2005, c. 54, s. 270]

  • 1991, c. 47, s. 288
  • 2005, c. 54, s. 270

Insider Reporting

Marginal note:Insider report

 An insider shall submit an insider report in accordance with the regulations.

  • 1991, c. 47, s. 289
  • 1997, c. 15, s. 231
  • 2005, c. 54, s. 271

Marginal note:Exemption by Superintendent

 On application by an insider, the Superintendent may in writing and on any terms that the Superintendent thinks fit exempt the insider from any of the requirements of section 289. The exemption may be given retroactive effect and the Superintendent shall publish the particulars of the exemption and the reasons for it in a periodical available to the public.

  • 1991, c. 47, s. 290
  • 2005, c. 54, s. 271

 [Repealed, 2005, c. 54, s. 271]

Marginal note:Regulations

 The Governor in Council may make regulations for carrying out the purposes of sections 289 and 290, including

  • (a) defining “insider” for the purposes of sections 289 and 290;

  • (b) respecting the form and content of an insider report; and

  • (c) respecting the submission or publication of an insider report.

  • 1991, c. 47, s. 291
  • 2005, c. 54, s. 271

 [Repealed, 2005, c. 54, s. 271]

Insider Trading

Meaning of insider

  •  (1) In this section, insider means with respect to a distributing company

    • (a) a director or officer of the company;

    • (b) a director or officer of a subsidiary of the company;

    • (c) a director or officer of a body corporate that enters into a business combination with the company; or

    • (d) a person employed or retained by the company.

  • Marginal note:Prohibition — short sale

    (2) No insider may knowingly sell, directly or indirectly, a security of a distributing company or of any of the distributing company’s affiliates if the insider does not own or has not fully paid for the security.

  • Marginal note:Exception

    (3) Despite subsection (2), an insider may sell a security that they do not own if they own another security that is convertible into the security that was sold or they own an option or right to acquire the security that was sold, and if within 10 days after the sale they

    • (a) exercise the conversion privilege, option or right and deliver the security so acquired to the purchaser; or

    • (b) transfer the convertible security, option or right to the purchaser.

  • Marginal note:Prohibition — calls and puts

    (4) No insider may knowingly, directly or indirectly, buy or sell a call or put in respect of a security of a company or of any of the company’s affiliates.

  • 1991, c. 47, s. 293
  • 2005, c. 54, s. 272

Civil remedies

Extended meaning of insider

  •  (1) In this section and sections 294.1 and 295, insider with respect to a company means

    • (a) the company;

    • (b) an affiliate of the company;

    • (c) a director or officer of the company or of any person described in paragraph (b), (d) or (f);

    • (d) a person who beneficially owns directly or indirectly, or who exercises control or direction over or has a combination of ownership, control and direction in respect of, shares of the company carrying more than the prescribed percentage of the voting rights attached to all of the company’s outstanding shares not including shares held by the person as underwriter while those shares are in the course of a distribution to the public;

    • (e) a person, other than a person described in paragraph (f), who is employed or retained by the company or by a person described in paragraph (f);

    • (f) a person who engages in or proposes to engage in any business or professional activity with or on behalf of the company;

    • (g) a person who received material confidential information concerning the company while they were a person described in any of paragraphs (a) to (f);

    • (h) a person who receives material confidential information from a person who is and who they know or ought reasonably to have known is a person described in this subsection, including in this paragraph, or subsection (3) or (4); or

    • (i) a prescribed person.

  • Extended meaning of security

    (2) For the purposes of this section, each of the following is deemed to be a security of a company:

    • (a) a put, call, option or other right or obligation to purchase or sell a security of the company; and

    • (b) a security of another entity, the market price of which varies materially with the market price of the securities of the company.

  • Marginal note:Deemed insider — take-over bid or business combination

    (3) For the purposes of this section and subsection 294.1(1), a person who proposes to make a take-over bid as defined in the regulations for securities of a company or to enter into a business combination with a company is an insider of the company with respect to material confidential information obtained from the company.

  • Marginal note:Deemed insider — affiliate or associate

    (4) An insider of a person referred to in subsection (3), or the person’s affiliate or associate, is an insider of the company referred to in that subsection. Paragraphs (1)(b) to (i) apply in making this determination except that references to “company” are to be read as references to “person described in subsection (3)”.

  • Meaning of associate

    (5) In subsection (4), associate means with respect to a person

    • (a) a body corporate that the person directly or indirectly controls, determined without regard to paragraph 3(1)(d), or of which they beneficially own shares or securities currently convertible into shares carrying more than 10% of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing or a currently exercisable option or right to purchase the shares or convertible securities;

    • (b) a partner of the person acting on behalf of the partnership of which they are partners;

    • (c) a trust or estate in which the person has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity;

    • (d) a spouse or common-law partner of the person;

    • (e) a child of the person or of their spouse or common-law partner; or

    • (f) if that relative has the same residence as the person, a relative of the person or of their spouse or common-law partner.

  • Marginal note:Insider trading — compensation to sellers and purchasers

    (6) An insider of a company who purchases or sells a security of the company with knowledge of confidential information that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the company is liable to compensate the seller or purchaser of the security, as the case may be, for any loss suffered by them as a result of the purchase or sale 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 seller or purchaser; or

    • (c) the purchase or sale of the security took place in the prescribed circumstances.

  • Marginal note:Insider trading — compensation to company

    (7) The insider is accountable to the company for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (5), unless they establish the circumstances described in paragraph (6)(a).

  • 1991, c. 47, s. 294
  • 2005, c. 54, s. 272

Marginal note:Tipping — compensation to sellers and purchasers

  •  (1) An insider of a company who discloses confidential information with respect to the company 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 company is liable to compensate any person who subsequently sells securities of the company 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 294(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 294(3) or (4), the disclosure of the information was necessary to effect the take-over bid or business combination.

  • Marginal note:Tipping — compensation to company

    (2) The insider is accountable to the company 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. 272

Marginal note:Measure of damages

  •  (1) The court may assess damages under subsection 294(6) or 294.1(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 company, 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 294(6) or 294.1(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 294(6) or (7) or section 294.1 may be commenced only within two years after discovery of the facts that gave rise to the cause of action.

  • 1991, c. 47, s. 295
  • 2005, c. 54, s. 272

DIVISION IXProspectus

Marginal note:Distribution

  •  (1) No person including a company shall distribute securities of a company 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 company, including

    • (a) respecting the information that is to be disclosed by a company 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. 47, s. 296
  • 2005, c. 54, s. 272

Marginal note:Order of exemption

  •  (1) On application by a company 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 296(2) if the Superintendent is satisfied that the company 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. 47, s. 297
  • 2005, c. 54, s. 272

DIVISION IX.1Going-private Transactions and Squeeze-out Transactions

Marginal note:Going-private transactions

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

  • 1991, c. 47, s. 298
  • 2005, c. 54, s. 272

Marginal note:Squeeze-out transactions

 No company 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 company’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 company; 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. 47, s. 299
  • 1994, c. 26, s. 39(F)
  • 1999, c. 31, s. 140
  • 2005, c. 54, s. 272

Marginal note:Right to dissent

  •  (1) A holder of shares of a company may dissent if the company 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 company 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 policyholders entitled to vote and 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 company, at or before any meeting of shareholders and policyholders at which a resolution referred to in subsection (2) is to be voted on by the policyholders entitled to vote and the shareholders, a written objection to the resolution unless the company 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 company shall within 10 days after the day on which the policyholders entitled to vote and 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 1016(1) before it becomes effective, the company 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 policyholders entitled to vote and the shareholders — send to the company 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 company 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 company 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 company makes an offer under subsection (11);

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

    • (c) the directors revoke under section 242 the special resolution that was made in respect of the going-private transaction or squeeze-out transaction.

  • Marginal note:Offer to pay

    (11) A company 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 company 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 company 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 company 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 company 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 company fails to make an offer under subsection (11) or if a dissenting shareholder fails to accept an offer, the company 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 company 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 company’s head office is situated or, if the company 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

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

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

    • (b) the company 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 company 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 company 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 company 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 company within 30 days after receiving notice under subsection (23)

    • (a) withdraw their notice of dissent, in which case the company 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 company, to be paid as soon as the company is able to lawfully pay them or, in a liquidation, to be ranked subordinate to the rights of the company’s creditors but in priority to its shareholders.

  • Marginal note:Limitation

    (25) A company may not make a payment to a dissenting shareholder under this section if there are reasonable grounds for believing that the company is or the payment would cause the company to be in contravention of a regulation referred to in subsection 515(1) or (2) or 516(1) or (2) or of an order made under subsection 515(3) or 516(4).

  • 1991, c. 47, s. 300
  • 1999, c. 31, s. 141
  • 2005, c. 54, s. 272

 [Repealed, 2005, c. 54, s. 272]

 [Repealed, 2005, c. 54, s. 272]

 [Repealed, 2005, c. 54, s. 272]

 [Repealed, 2005, c. 54, s. 272]

 [Repealed, 2005, c. 54, s. 272]

 [Repealed, 2005, c. 54, s. 272]

DIVISION XCompulsory Acquisitions

Marginal note:Definitions

  •  (1) In this Division,

    affiliate

    affiliate means a body corporate that is affiliated with another body corporate within the meaning of subsection 6(2); (groupe)

    associate of the offeror

    associate of the offeror means

    • (a) a body corporate that an offeror, directly or indirectly, controls, determined without regard to paragraph 3(1)(d), or of which an offeror beneficially owns shares or securities currently convertible into shares carrying more than 10 per cent of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing, or a currently exercisable option or right to purchase the shares or the convertible securities,

    • (b) a partner of the offeror acting on behalf of the partnership of which they are partners,

    • (c) a trust or estate in which the offeror has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity,

    • (d) a spouse or common-law partner of the offeror,

    • (e) a child of the offeror or of the offeror’s spouse or common-law partner, or

    • (f) a relative of the offeror or of the offeror’s spouse or common-law partner, if that relative has the same residence as the offeror; (associé du pollicitant)

    dissenting offeree

    dissenting offeree means a holder of a share who does not accept a take-over bid or a subsequent holder of the share who acquires it from the first-mentioned holder; (pollicité opposant)

    exempt offer

    exempt offer[Repealed, 2005, c. 54, s. 273]

    offeree

    offeree means a person to whom a take-over bid is made; (pollicité)

    offeree company

    offeree company means a company the shares of which are the object of a take-over bid; (société pollicitée)

    offeror

    offeror means a person, other than an agent, who makes a take-over bid, and includes two or more persons who, directly or indirectly,

    • (a) make take-over bids jointly or in concert, or

    • (b) intend to exercise jointly or in concert voting rights attached to shares for which a take-over bid is made; (pollicitant)

    share

    share means a share with or without voting rights and includes

    • (a) a security that is currently convertible into a share, and

    • (b) a currently exercisable option or right to acquire a share or a security referred to in paragraph (a); (action)

    take-over bid

    take-over bid means an offer made by an offeror at approximately the same time to all of the shareholders of a distributing company to acquire all of the shares of a class of issued shares, and includes an offer by a distributing company to repurchase all of the shares of a class. (offre d’achat visant à la mainmise)

  • Marginal note:Control

    (2) For the purposes of this Division, a person controls a body corporate when the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(d).

  • Marginal note:Date of bid

    (3) A take-over bid is deemed to be dated as of the date on which it is sent.

  • 1991, c. 47, s. 307
  • 2000, c. 12, s. 154
  • 2005, c. 54, s. 273

Marginal note:Right to acquire shares

 If, within one hundred and twenty days after the date of a take-over bid, the bid is accepted by the holders of not less than 90 per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, the offeror is entitled, on complying with this Division, to acquire the shares held by the dissenting offerees.

  • 1991, c. 47, s. 308
  • 2005, c. 54, s. 274(F)

Marginal note:Offeror’s notice to dissenters

  •  (1) An offeror may acquire shares held by a dissenting offeree by sending by registered mail within sixty days after the date of termination of the take-over bid and in any event within one hundred and eighty days after the date of the take-over bid, an offeror’s notice to each dissenting offeree and to the Superintendent stating that

    • (a) offerees holding not less than 90 per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, have accepted the take-over bid;

    • (b) the offeror is bound to take up and pay for or has taken up and paid for the shares of the offerees who accepted the take-over bid;

    • (c) a dissenting offeree is required to elect

      • (i) to transfer the dissenting offeree’s shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid, or

      • (ii) to demand payment of the fair value of the dissenting offeree’s shares in accordance with sections 313 to 316 by notifying the offeror within twenty days after receipt of the offeror’s notice;

    • (d) a dissenting offeree who does not notify the offeror in accordance with paragraph 310(b) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid; and

    • (e) a dissenting offeree must send the dissenting offeree’s shares to which the take-over bid relates to the offeree company within twenty days after the dissenting offeree receives the offeror’s notice.

  • Marginal note:Notice of adverse claim

    (2) Concurrently with sending the offeror’s notice under subsection (1), the offeror shall send to the offeree company a notice of adverse claim in accordance with subsection 133(1) with respect to each share held by a dissenting offeree.

  • 1991, c. 47, s. 309
  • 2005, c. 54, s. 275

Marginal note:Share certificates and election

 A dissenting offeree to whom a notice is sent under subsection 309(1) shall within 20 days after receiving the notice

  • (a) send to the offeree company the share certificates representing the shares to which the take-over bid relates; and

  • (b) elect to transfer the shares to the offeror on the same terms as those on which the offeror acquired shares from the offerees who accepted the take-over bid or to demand payment of the fair value of the shares in accordance with sections 313 to 316 by notifying the offeror.

  • 1991, c. 47, s. 310
  • 2005, c. 54, s. 276

Marginal note:Deemed election

 A dissenting offeree who does not notify the offeror in accordance with paragraph 310(b) is deemed to have elected to transfer the shares to the offeror on the same terms as those on which the offeror acquired shares from the offerees who accepted the take-over bid.

  • 2005, c. 54, s. 276

Marginal note:Payment to offeree company

  •  (1) Within 20 days after the offeror sends a notice under subsection 309(1), the offeror shall pay the money, or transfer the other consideration, to the offeree company that the offeror would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to transfer their shares in accordance with paragraph 310(b).

  • Marginal note:Consideration in trust

    (2) An offeree company is deemed to hold in a fiduciary capacity for the dissenting offerees the money or other consideration it receives under subsection (1).

  • Marginal note:Deposit or custody

    (3) An offeree company shall deposit the money received under subsection (1) in a separate account in a deposit-taking financial institution in Canada and the offeree company shall place any other consideration in the custody of a deposit-taking financial institution in Canada.

  • 1991, c. 47, s. 311
  • 2005, c. 54, s. 277

Marginal note:Fiduciary capacity of company

 A company that is making a take-over bid to repurchase all of the shares of a class is deemed to hold in a fiduciary capacity for the dissenting shareholders the money that it would have had to pay, and the other consideration that it would have had to transfer, to a dissenting offeree if the dissenting offeree had elected to transfer their shares in accordance with paragraph 310(b). The company shall within 20 days after a notice is sent under subsection 309(1) deposit the money in a separate account in a deposit-taking financial institution in Canada and place any other consideration in the custody of a deposit-taking financial institution in Canada.

  • 2005, c. 54, s. 278

Marginal note:Duty of offeree company

 Within thirty days after an offeror sends an offeror’s notice under subsection 309(1), the offeree company shall

  • (a) if the payment or transfer required by subsection 311(1) is made, issue to the offeror a share certificate in respect of the shares that were held by the dissenting offerees;

  • (b) give to each dissenting offeree who elects to transfer shares under paragraph 310(b) and who sends the share certificates as required under paragraph 310(a) the money or other consideration to which they are entitled, disregarding fractional shares, which may be paid for in money; and

  • (c) if the payment or transfer required by subsection 311(1) is made and the money or other consideration is deposited as required by subsections 311(2) and (3) or by section 311.1, send to each dissenting offeree who has not sent share certificates as required under paragraph 310(a) a notice stating that

    • (i) their shares have been cancelled,

    • (ii) the offeree company or its designated person holds in a fiduciary capacity for that offeree the money or other consideration to which they are entitled as payment for or in exchange for the shares, and

    • (iii) the offeree company will, subject to sections 313 to 316, send that money or other consideration to that offeree without delay after receiving the share certificates.

  • 1991, c. 47, s. 312
  • 2005, c. 54, s. 279

Marginal note:Court may fix fair value

  •  (1) If a dissenting offeree has elected to demand payment of the fair value of their shares under paragraph 310(b), the offeror may, within 20 days after it has paid the money or transferred the other consideration under subsection 311(1), apply to a court to fix the fair value of the shares of that dissenting offeree.

  • Marginal note:Idem

    (2) If an offeror fails to apply to a court under subsection (1), a dissenting offeree may apply to a court for the same purpose within a further period of twenty days.

  • Marginal note:Venue

    (3) An application under subsection (1) or (2) shall be made to a court having jurisdiction in the place at which the head office of the company is situated or in the province in which the dissenting offeree resides if the company carries on business in that province.

  • Marginal note:No security for costs

    (4) A dissenting offeree is not required to give security for costs in an application made under subsection (1) or (2).

  • 1991, c. 47, s. 313
  • 2005, c. 54, s. 280

Marginal note:Parties and notice

 On an application under subsection 313(1) or (2),

  • (a) all dissenting offerees who have made elections to demand payment under paragraph 310(b) and whose shares have not been acquired by the offeror shall be joined as parties and are bound by the decision of the court; and

  • (b) the offeror shall notify each affected dissenting offeree of the date, place and consequences of the application and of the dissenting offeree’s right to appear and be heard in person or by counsel at the hearing of the application.

  • 1991, c. 47, s. 314
  • 2005, c. 54, s. 281

Marginal note:Powers of court

  •  (1) On an application to a court under subsection 313(1) or (2), the court may determine whether any other person is a dissenting offeree who should be joined as a party, and the court shall then fix a fair value for the shares of all dissenting offerees.

  • Marginal note:Appraisers

    (2) A court may in its discretion appoint one or more appraisers to assist the court in fixing a fair value for the shares of a dissenting offeree.

  • Marginal note:Final order

    (3) The final order of a court shall be made against the offeror in favour of each dissenting offeree and for the amount for each dissenting offeree’s shares as fixed by the court.

  • Marginal note:Additional powers of court

    (4) In connection with proceedings under subsection 313(1) or (2), a court may make any order it thinks fit and, without limiting the generality of the foregoing, may

    • (a) fix the amount of money or other consideration that is deemed to be held in a fiduciary capacity under subsection 311(2) or section 311.1;

    • (b) order that the money or other consideration is to be held in trust by a person other than the offeree company;

    • (c) allow a reasonable rate of interest on the amount payable to each dissenting offeree from the date the dissenting offeree sends the share certificates required under section 310 until the date of payment; or

    • (d) order that any money payable to a shareholder who cannot be found be paid to the Receiver General.

  • Marginal note:Recovery

    (5) If at any time a person establishes an entitlement to any moneys paid to the Receiver General under this section, the Receiver General shall pay an equivalent amount to that person out of the Consolidated Revenue Fund.

  • 1991, c. 47, s. 315
  • 2005, c. 54, s. 282

Marginal note:Status of dissenter

 Where no application is made to a court under subsection 313(2) within the period set out in that subsection, a dissenting offeree is deemed to have elected to transfer the dissenting offeree’s shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.

Marginal note:Obligation to acquire shares

  •  (1) If a shareholder who holds shares of an offeree company does not receive the notice referred to in subsection 309(1), the shareholder may require the offeror to acquire the shares

    • (a) within 90 days after the date of termination of the take-over bid; or

    • (b) if the shareholder did not receive an offer under the take-over bid, within 90 days after the later of

      • (i) the date of termination of the take-over bid, and

      • (ii) the day on which the shareholder learned of the take-over bid.

  • Marginal note:Acquisition on same terms

    (2) If the shareholder requires the offeror to acquire shares, the offeror shall acquire them on the same terms as those on which the offeror acquires shares from offerees who accept the take-over bid.

  • 2005, c. 54, s. 283

DIVISION XITrust Indentures

Marginal note:Definitions

 In this Division,

event of default

event of default means, in relation to a trust indenture, an event specified in the trust indenture on the occurrence of which the principal, interest and other moneys payable thereunder become or may be declared to be payable before maturity, but the event is not an event of default until all the conditions set out in the trust indenture in connection with the giving of notice of the event have been satisfied or the period of time for giving the notice has elapsed; (cas de défaut)

issuer

issuer means a company that has issued, is about to issue or is in the process of issuing subordinated indebtedness; (émetteur)

trustee

trustee means any person appointed as trustee under the terms of a trust indenture to which a company is a party, and includes any successor trustee; (fiduciaire)

trust indenture

trust indenture means any deed, indenture or other instrument, including any supplement or amendment thereto, made by a company under which the company issues subordinated indebtedness and in which a person is appointed as trustee for the holders of the subordinated indebtedness issued thereunder. (acte de fiducie)

Marginal note:Application

 This Division applies in respect of a trust indenture if the subordinated indebtedness issued or to be issued under the trust indenture is part of a distribution to the public.

Marginal note:Exemption

 The Superintendent may, in writing, exempt a trust indenture from the application of this Division if, in the Superintendent’s opinion, the trust indenture and the subordinated indebtedness are subject to a law of a province or other jurisdiction, other than Canada, that is substantially equivalent to the provisions of this Act relating to trust indentures.

Marginal note:Conflict of interest

  •  (1) No person shall be appointed as trustee if at the time of the appointment there is a material conflict of interest between the person’s role as trustee and any other role of the person.

  • Marginal note:Eliminating conflict of interest

    (2) A trustee shall, within ninety days after the trustee becomes aware that a material conflict of interest exists,

    • (a) eliminate the conflict of interest; or

    • (b) resign from office.

Marginal note:Validity despite conflict

 A trust indenture and any subordinated indebtedness issued thereunder are valid notwithstanding a material conflict of interest of the trustee.

Marginal note:Removal of trustee

 If a trustee is appointed in contravention of subsection 320(1) or if a trustee contravenes subsection 320(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on such terms as it thinks fit.

Marginal note:Trustee qualifications

 A trustee, or at least one of the trustees if more than one is appointed, must be

  • (a) a trust company pursuant to subsection 57(2) of the Trust and Loan Companies Act; or

  • (b) a body corporate that is incorporated by or under an Act of the legislature of a province and authorized to carry on business as a trustee.

  • 1991, c. 47, ss. 323, 758
  • 2007, c. 6, s. 213

Marginal note:List of security holders

  •  (1) A holder of subordinated indebtedness issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, within fifteen days after the delivery to the trustee of the statutory declaration, a list setting out

    • (a) the names and addresses of the registered holders of the outstanding subordinated indebtedness,

    • (b) the principal amount of outstanding subordinated indebtedness owned by each such holder, and

    • (c) the aggregate principal amount of subordinated indebtedness outstanding

    as shown on the records maintained by the trustee on the day the statutory declaration is delivered to that trustee.

  • Marginal note:Duty of issuer

    (2) On the demand of a trustee, the issuer of subordinated indebtedness shall provide the trustee with the information required to enable the trustee to comply with subsection (1).

  • Marginal note:Where applicant is entity

    (3) Where the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection shall be made by a director or an officer of the entity or a person acting in a similar capacity.

  • Marginal note:Contents of statutory declaration

    (4) The statutory declaration required under subsection (1) must state

    • (a) the name and address of the person requiring the trustee to provide the list and, if the person is an entity, the address for service thereof; and

    • (b) that the list will not be used except as permitted by subsection (5).

  • Marginal note:Use of list

    (5) No person shall use a list obtained under this section except in connection with

    • (a) an effort to influence the voting of the holders of subordinated indebtedness;

    • (b) an offer to acquire subordinated indebtedness; or

    • (c) any other matter relating to the subordinated indebtedness or the affairs of the issuer or guarantor thereof.

Marginal note:Compliance with trust indentures

  •  (1) An issuer or a guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall, before undertaking

    • (a) the issue, certification and delivery of subordinated indebtedness under the trust indenture, or

    • (b) the satisfaction and discharge of the trust indenture,

    provide the trustee with evidence of compliance with the conditions in the trust indenture in respect thereof.

  • Marginal note:Compliance by issuer or guarantor

    (2) On the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall provide the trustee with evidence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.

  • Marginal note:Evidence of compliance

    (3) The following documents constitute evidence of compliance for the purposes of subsections (1) and (2):

    • (a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;

    • (b) an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been complied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; and

    • (c) an opinion or report of the auditors of the issuer or guarantor, or such other accountant as the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires compliance with conditions that are subject to review by auditors.

  • Marginal note:Further evidence of compliance

    (4) The evidence of compliance referred to in subsection (3) shall include a statement by the person giving the evidence

    • (a) declaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);

    • (b) describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; and

    • (c) declaring that the person has made such examination or investigation as the person believes necessary to enable the statements to be made or the opinions contained or expressed therein to be given.

Marginal note:Trustee may require evidence

  •  (1) On the request of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with evidence in such form as the trustee requires of compliance with any condition thereof relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.

  • Marginal note:Certificate of compliance

    (2) At least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars thereof.

Marginal note:Notice of default

 A trustee shall, within thirty days after the trustee becomes aware of the occurrence thereof, give to the holders of subordinated indebtedness issued under a trust indenture notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the subordinated indebtedness to withhold the notice and so informs the issuer and guarantor in writing.

Marginal note:Duty of care

  •  (1) In exercising a trustee’s powers and discharging a trustee’s duties, the trustee shall

    • (a) act honestly and in good faith with a view to the best interests of the holders of the subordinated indebtedness issued under the trust indenture; and

    • (b) exercise the care, diligence and skill of a reasonably prudent trustee.

  • Marginal note:Reliance on statements

    (2) Notwithstanding subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.

Marginal note:No exculpation

 No term of a trust indenture or of any agreement between a trustee and the holders of subordinated indebtedness issued thereunder or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by sections 320, 324 and 327 and subsection 328(1).

DIVISION XIIFinancial Statements

Marginal note:Financial year

  •  (1) The financial year of a company ends, at the election of the company in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in each year.

  • Marginal note:First financial year

    (2) Where a company has, after the first day of July in any year, obtained an order approving the commencement and carrying on of business, the first financial year of the company ends, at the election of the company in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.

Marginal note:Annual financial statement

  •  (1) The directors of a company shall place before the shareholders and policyholders at every annual meeting

    • (a) a comparative annual financial statement relating separately to

      • (i) the financial year immediately preceding the meeting, and

      • (ii) the financial year, if any, immediately preceding the financial year referred to in subparagraph (i);

    • (a.1) in the case of a company that has participating policyholders, the information prescribed in respect of the policies established under paragraphs 165(2)(e) and (e.1) and the other prescribed information;

    • (b) the report of the auditor of the company;

    • (c) the report of the actuary of the company;

    • (d) a description of the roles of the actuary of the company and the auditor of the company in the preparation and audit of the annual statement; and

    • (e) any further information respecting the financial position of the company and the results of its operations required by the by-laws of the company to be placed before the shareholders and policyholders at the annual meeting.

  • Marginal note:Annual statement — contents

    (2) With respect to each of the financial years to which it relates, the annual statement of a company must contain the prescribed statements and any information that is in the opinion of the directors necessary to present fairly, in accordance with the accounting principles referred to in subsection (4), the financial position of the company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the company for that financial year.

  • Marginal note:Additional information

    (3) A company shall include with its annual statement

    • (a) in the case of a company that has participating policyholders, a summary of the policies established under paragraphs 165(2)(e) and (e.1);

    • (b) a list of the subsidiaries of the company, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 499 or pursuant to a realization of security in accordance with section 500 and which the company would not otherwise be permitted to hold, showing, with respect to each subsidiary,

      • (i) its name and the address of its head or principal office,

      • (ii) the book value of the aggregate of any shares of the subsidiary beneficially owned by the company and by other subsidiaries of the company, and

      • (iii) the percentage of the voting rights attached to all the outstanding voting shares of the subsidiary that is carried by the aggregate of any voting shares of the subsidiary beneficially owned by the company and by other subsidiaries of the company; and

    • (c) such other information as may be prescribed in such form as may be prescribed.

  • Marginal note:Accounting principles

    (4) The financial statements referred to in subsection (1), paragraph (3)(b) and subsection 333(1) shall, except as otherwise specified by the Superintendent, be prepared in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Chartered Professional Accountants of Canada. A reference in any provision of this Act to the accounting principles referred to in this subsection shall be construed as a reference to those generally accepted accounting principles with any specifications so made.

  • (5) [Repealed, 2005, c. 54, s. 284]

  • Marginal note:Regulations

    (6) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(b).

  • 1991, c. 47, s. 331
  • 1997, c. 15, s. 233
  • 2001, c. 9, s. 398
  • 2005, c. 54, s. 284
  • 2017, c. 26, s. 62

Marginal note:Annual statement — approval

  •  (1) The directors of a company shall approve the annual statement and their approval shall be evidenced by the signature or a printed or otherwise mechanically reproduced facsimile of the signature of

    • (a) the chief executive officer or, in the event of that officer’s absence or inability to act, any other officer of the company authorized by the directors to sign in the stead of the chief executive officer; and

    • (b) one director, if the signature required by paragraph (a) is that of a director, or two directors if the signature required by that paragraph is that of an officer who is not a director.

  • Marginal note:Condition precedent to publication

    (2) A company shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).

  • 1991, c. 47, s. 332
  • 2005, c. 54, s. 285

Marginal note:Statements — subsidiaries

  •  (1) A company shall keep at its head office a copy of the current financial statements of each subsidiary of the company.

  • Marginal note:Examination

    (2) Subject to this section, the shareholders of a company, the policyholders of a company who are entitled to vote and their personal representatives may, on request therefor, examine the statements referred to in subsection (1) during the usual business hours of the company and may take extracts therefrom free of charge.

  • Marginal note:Barring examination

    (3) A company may refuse to permit an examination under subsection (2) by any person.

  • Marginal note:Application for order

    (4) Within fifteen days after a refusal under subsection (3), the company shall apply to a court for an order barring the right of the person concerned to make an examination under subsection (2) and the court shall either order the company to permit the examination or, if it is satisfied that the examination would be detrimental to the company or to any other body corporate the financial statements of which would be subject to examination, bar the right and make any further order it thinks fit.

  • Marginal note:Notice to Superintendent

    (5) A company shall give the Superintendent and the person seeking to examine the statements referred to in subsection (1) notice of an application to a court under subsection (4), and the Superintendent and the person may appear and be heard in person or by counsel at the hearing of the application.

Marginal note:Annual statement — distribution

  •  (1) A company shall, no later than 21 days before the date of each annual meeting or before the signing of a resolution under paragraph 158(1)(b) in lieu of the annual meeting and unless that time period is waived by the shareholder or policyholder, send

    • (a) to each shareholder a copy of the documents referred to in paragraphs 331(1)(a) and (b) to (e) and subsection 331(3) and, on request, the document referred to in paragraph 331(1)(a.1); and

    • (b) to each policyholder who is entitled under paragraph 143(1)(b) to receive notice of the meeting a copy of the documents referred to in subsections 331(1) and (3).

  • Marginal note:Exception

    (2) A company is not required to comply with subsection (1) with respect to shareholders or policyholders who have informed the company, in writing, that they do not wish to receive the annual statement.

  • Marginal note:Effect of default

    (3) Where a company is required to comply with subsection (1) and the company does not comply with that subsection, the annual meeting at which the annual statement is to be considered shall be adjourned until that subsection has been complied with.

  • 1991, c. 47, s. 334
  • 1997, c. 15, s. 234
  • 2005, c. 54, s. 286

Marginal note:Copy to Superintendent

  •  (1) Subject to subsection (2), a company shall send to the Superintendent a copy of the documents referred to in subsections 331(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders and policyholders of the company.

  • Marginal note:Later filing

    (2) If a company’s shareholders and policyholders sign a resolution under paragraph 158(1)(b) in lieu of an annual meeting, the company shall send a copy of the documents referred to in subsections 331(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.

  • 1991, c. 47, s. 335
  • 1997, c. 15, s. 235
  • 2001, c. 9, s. 399

DIVISION XIIIAuditors

Interpretation

Marginal note:Definitions

 In this Division,

firm of accountants

firm of accountants means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting; (cabinet de comptables)

member

member, in relation to a firm of accountants, means

  • (a) an accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting, or

  • (b) an accountant who is an employee of a firm of accountants. (membre)

Appointment

Marginal note:Appointment of auditor

  •  (1) The shareholders and policyholders of a company shall, by ordinary resolution at the first meeting of shareholders and policyholders and at each succeeding annual meeting, appoint an auditor to hold office until the close of the next annual meeting.

  • Marginal note:Remuneration of auditor

    (2) The remuneration of an auditor may be fixed by ordinary resolution of the shareholders and policyholders but, if not so fixed, shall be fixed by the directors.

Qualifications

Marginal note:Qualification of auditor

  •  (1) A natural person or firm of accountants is qualified to be an auditor of a company if

    • (a) in the case of a natural person, the person is an accountant who

      • (i) is a member in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,

      • (ii) has at least five years experience at a senior level in performing audits of a financial institution,

      • (iii) is ordinarily resident in Canada, and

      • (iv) is independent of the company; and

    • (b) in the case of a firm of accountants, the member of the firm jointly designated by the firm and the company to conduct the audit of the company on behalf of the firm is qualified in accordance with paragraph (a).

  • Marginal note:Independence

    (2) For the purposes of subsection (1),

    • (a) independence is a question of fact; and

    • (b) a person is deemed not to be independent of a company if that person, a business partner of that person or a firm of accountants of which that person is a member

      • (i) is a business partner, director, officer or employee of the company or of any affiliate of the company or is a business partner of any director, officer or employee of the company or of any affiliate of the company,

      • (ii) beneficially owns or controls, directly or indirectly, a material interest in the shares of the company or of any affiliate of the company, or

      • (iii) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the company within the two years immediately preceding the person’s proposed appointment as auditor of the company, other than an affiliate that is a subsidiary of the company acquired pursuant to section 499 or through a realization of security pursuant to section 500.

  • Marginal note:Business partners

    (2.1) For the purposes of subsection (2),

    • (a) in the case of the appointment of a natural person as the auditor of a company, a business partner of the person includes a shareholder of the business partner; and

    • (b) in the case of the appointment of a firm of accountants as the auditor of a company, a business partner of a member of the firm includes another member of the firm and a shareholder of the firm or of a business partner of the member.

  • Marginal note:Notice of designation

    (3) Within fifteen days after the appointment of a firm of accountants as auditor of a company, the company and the firm of accountants shall jointly designate a member of the firm who meets the qualifications described in subsection (1) to conduct the audit of the company on behalf of the firm and the company shall forthwith notify the Superintendent in writing of the designation.

  • Marginal note:New designation

    (4) Where for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the company, the company and the firm of accountants may jointly designate another member of the same firm of accountants who meets the qualifications described in subsection (1) to conduct the audit of the company and the company shall forthwith notify the Superintendent in writing of the designation.

  • Marginal note:Deemed vacancy

    (5) In any case where subsection (4) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit of the company, there shall be deemed to be a vacancy in the office of auditor of the company.

  • 1991, c. 47, s. 338
  • 2001, c. 9, s. 400
  • 2005, c. 54, s. 287

Marginal note:Duty to resign

  •  (1) An auditor who ceases to be qualified under section 338 shall resign forthwith after the auditor, where the auditor is a natural person, or any member of the firm of accountants, where the auditor is a firm of accountants, becomes aware that the auditor or the firm has ceased to be so qualified.

  • Marginal note:Disqualification order

    (2) Any interested person may apply to a court for an order declaring that an auditor of a company has ceased to be qualified under section 338 and declaring the office of auditor to be vacant.

Vacancies

Marginal note:Revocation of appointment

  •  (1) The shareholders and policyholders of a company may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.

  • Marginal note:Idem

    (2) The Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 337(1) or section 342 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the company addressed to the usual place of business of the auditor and the company.

  • Marginal note:Filling vacancy

    (3) A vacancy created by the revocation of the appointment of an auditor under subsection (1) may be filled at the meeting at which the appointment was revoked and, if not so filled, shall be filled by the directors under section 342.

Marginal note:Ceasing to hold office

  •  (1) An auditor of a company ceases to hold office when

    • (a) the auditor resigns;

    • (b) the auditor, where the auditor is a natural person, dies; or

    • (c) the appointment of the auditor is revoked by the shareholders and policyholders or the Superintendent.

  • Marginal note:Effective date of resignation

    (2) The resignation of an auditor becomes effective at the time a written resignation is sent to the company or at the time specified in the resignation, whichever is later.

Marginal note:Filling vacancy

  •  (1) Subject to subsection 340(3), where a vacancy occurs in the office of auditor of a company, the directors shall forthwith fill the vacancy, and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.

  • Marginal note:Where Superintendent may fill vacancy

    (2) Where the directors fail to fill a vacancy in accordance with subsection (1), the Superintendent may fill the vacancy and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.

  • Marginal note:Designation of member of firm

    (3) Where the Superintendent has, pursuant to subsection (2), appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit of the company on behalf of the firm.

Marginal note:Right to attend meetings

  •  (1) The auditor of a company is entitled to receive notice of every meeting of shareholders or policyholders and, at the expense of the company, to attend and be heard at those meetings on matters relating to the duties of the auditor.

  • Marginal note:Duty to attend meeting

    (2) If a director, a shareholder of a company, whether or not the shareholder is entitled to vote at the meeting, or a policyholder who is entitled to vote at the meeting gives written notice, not less than ten days before a meeting of shareholders or policyholders, to an auditor or former auditor of the company that the director, shareholder or policyholder wishes the auditor’s attendance at the meeting, the auditor or former auditor shall attend the meeting at the expense of the company and answer questions relating to the auditor’s or former auditor’s duties as auditor.

  • Marginal note:Notice to company

    (3) A director, shareholder or policyholder who gives notice under subsection (2) shall send concurrently a copy of the notice to the company and the company shall forthwith send a copy thereof to the Superintendent.

  • Marginal note:Superintendent may attend

    (4) The Superintendent may attend and be heard at any meeting referred to in subsection (2).

Marginal note:Statement of auditor

  •  (1) An auditor of a company who

    • (a) resigns,

    • (b) receives a notice or otherwise learns of a meeting of shareholders and policyholders called for the purpose of revoking the appointment of the auditor, or

    • (c) receives a notice or otherwise learns of a meeting of directors or shareholders and policyholders at which another person is to be appointed in the auditor’s stead, whether because of the auditor’s resignation or revocation of appointment or because the auditor’s term of office has expired or is about to expire,

    shall submit to the company and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.

  • Marginal note:Other statements

    (1.1) In the case of a proposed replacement of an auditor whether because of removal or the expiry of their term, the company shall make a statement of the reasons for the proposed replacement and the proposed replacement auditor may make a statement in which they comment on those reasons.

  • Marginal note:Statements to be sent

    (2) The company shall send a copy of the statements referred to in subsections (1) and (1.1) without delay to every shareholder entitled to vote at the annual meeting of shareholders and policyholders, to every policyholder entitled under paragraph 143(1)(b) to receive notice of an annual meeting of shareholders and policyholders and to the Superintendent.

  • 1991, c. 47, s. 344
  • 2005, c. 54, s. 288

Marginal note:Duty of replacement auditor

  •  (1) Where an auditor of a company has resigned or the appointment of an auditor has been revoked, no person or firm shall accept an appointment or consent to be appointed as auditor of the company until the person or firm has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.

  • Marginal note:Exception

    (2) Notwithstanding subsection (1), a person or firm may accept an appointment or consent to be appointed as auditor of a company if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.

  • Marginal note:Effect of non-compliance

    (3) Unless subsection (2) applies, an appointment as auditor of a company is void if subsection (1) has not been complied with.

Examinations and Reports

Marginal note:Auditor’s examination

  •  (1) The auditor of a company shall make such examination as the auditor considers necessary to enable the auditor to report on the annual statement and on other financial statements required by this Act to be placed before the shareholders and policyholders, except such annual statements or parts thereof as relate to the period referred to in subparagraph 331(1)(a)(ii).

  • Marginal note:Auditing standards

    (2) The auditor’s examination referred to in subsection (1) shall, except as otherwise specified by the Superintendent, be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Chartered Professional Accountants of Canada.

  • Marginal note:Reliance on actuary

    (3) An auditor of a company may, in conducting the examination referred to in subsection (1), use the valuation by the actuary of the company, or by any other actuary, of

    • (a) the actuarial and other policy liabilities of the company as at the end of a financial year; and

    • (b) the increase in the actuarial liabilities of the company for a financial year.

  • Marginal note:Actuarial practices

    (4) A valuation by an actuary other than the actuary of the company may be used only if it was done in accordance with generally accepted actuarial practice and with any changes that may have been determined by the Superintendent and by following any additional directions that may have been made by the Superintendent.

  • 1991, c. 47, s. 346
  • 2007, c. 6, s. 214
  • 2017, c. 26, s. 62

Marginal note:Right to information

  •  (1) On the request of the auditor of a company, the present or former directors, officers, employees or representatives of the company shall, to the extent that they are reasonably able to do so,

    • (a) permit access to such records, assets and security held by the company or any entity in which the company has a substantial investment, and

    • (b) provide such information and explanations

    as are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of auditor of the company.

  • Marginal note:Directors to provide information

    (2) On the request of the auditor of a company, the directors of the company shall, to the extent that they are reasonably able to do so,

    • (a) obtain from the present or former directors, officers, employees and representatives of any entity in which the company has a substantial investment the information and explanations that such persons are reasonably able to provide and that are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of auditor of the company; and

    • (b) provide the auditor with the information and explanations so obtained.

  • Marginal note:No civil liability

    (3) A person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.

Marginal note:Auditor’s report and extended examination

  •  (1) The Superintendent may, in writing, require that the auditor of a company report to the Superintendent on the extent of the auditor’s procedures in the examination of the annual statement and may, in writing, require that the auditor enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.

  • Marginal note:Special examination

    (2) The Superintendent may, in writing, require that the auditor of a company make a particular examination relating to the adequacy of the procedures adopted by the company for the safety of its creditors, shareholders and policyholders, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent thereon.

  • Marginal note:Idem

    (3) The Superintendent may direct that a special audit of a company be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose an accountant or a firm of accountants qualified pursuant to subsection 338(1) to be an auditor of the company.

  • Marginal note:Expenses payable by company

    (4) The expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the company on being approved in writing by the Superintendent.

  • 1991, c. 47, s. 348
  • 1999, c. 31, s. 142(F)

Marginal note:Auditor’s report

  •  (1) The auditor shall, not less than twenty-one days before the date of the annual meeting of the shareholders and policyholders of the company, make a report in writing to them on the annual statement.

  • Marginal note:Audit for shareholders and policyholders

    (2) In each report required under subsection (1), the auditor shall state whether, in the auditor’s opinion, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 331(4), the financial position of the company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the company for that financial year.

  • Marginal note:Auditor’s remarks

    (3) In each report referred to in subsection (2), the auditor shall include such remarks as the auditor considers necessary when

    • (a) the examination has not been made in accordance with the auditing standards referred to in subsection 346(2);

    • (b) the annual statement has not been prepared on a basis consistent with that of the preceding financial year; or

    • (c) the annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 331(4), the financial position of the company as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the company for that financial year.

Marginal note:Report on directors’ statement

  •  (1) The auditor of a company shall, if required by the shareholders and policyholders, audit and report to them on any financial statement submitted to them by the directors, and the report shall state whether, in the auditor’s opinion, the financial statement presents fairly the information required by the shareholders and policyholders.

  • Marginal note:Making of report

    (2) A report of the auditor made under subsection (1) shall be attached to the financial statement to which it relates and a copy of the statement and report shall be sent by the directors to every shareholder, to every policyholder who is entitled pursuant to paragraph 143(1)(b) to receive notice of an annual meeting of shareholders and policyholders and to the Superintendent.

Marginal note:Report to officers

  •  (1) It is the duty of the auditor of a company to report in writing to the chief executive officer and chief financial officer of the company any transactions or conditions that have come to the auditor’s attention affecting the well-being of the company that in the auditor’s opinion are not satisfactory and require rectification and, without restricting the generality of the foregoing, the auditor shall, as occasion requires, make a report to those officers in respect of

    • (a) transactions of the company that have come to the auditor’s attention and that in the auditor’s opinion have not been within the powers of the company, and

    • (b) in the case of a life company, loans owing to the company by any person the aggregate amount of which exceeds 0.5 per cent of the regulatory capital of the company and in respect of which, in the auditor’s opinion, loss to the company is likely to occur,

    but when a report required under paragraph (b) has been made in respect of loans to any person, it is not necessary to report again in respect of loans to that person unless, in the opinion of the auditor, the amount of the loss likely to occur has increased.

  • Marginal note:Transmission of report

    (2) Where the auditor of a company makes a report under subsection (1),

    • (a) the auditor shall transmit the report, in writing, to the chief executive officer, chief financial officer and the actuary of the company;

    • (b) the report shall be presented to the first meeting of the directors following its receipt;

    • (c) the report shall be incorporated in the minutes of that meeting; and

    • (d) the auditor shall, at the time of transmitting the report to the chief executive officer and chief financial officer, provide the audit committee of the company and the Superintendent with a copy.

  • 1991, c. 47, s. 351
  • 2005, c. 54, s. 289

Marginal note:Auditor of subsidiaries

  •  (1) A company shall take all necessary steps to ensure that its auditor is duly appointed as the auditor of each of its subsidiaries.

  • Marginal note:Subsidiary outside Canada

    (2) Subsection (1) applies in the case of a subsidiary that carries on its operations in a country other than Canada unless the laws of that country do not permit the appointment of the auditor of the company as the auditor of that subsidiary.

  • Marginal note:Exception

    (3) Subsection (1) does not apply in respect of any particular subsidiary where the company, after having consulted its auditor, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the company.

Marginal note:Auditor’s attendance

  •  (1) The auditor of a company is entitled to receive notice of every meeting of the audit committee and the conduct review committee of the company and, at the expense of the company, to attend and be heard at that meeting.

  • Marginal note:Attendance

    (2) If so requested by a member of the audit committee, the auditor shall attend every meeting of the audit committee held during the member’s term of office.

  • 1991, c. 47, s. 353
  • 1994, c. 26, s. 40(F)

Marginal note:Calling meeting

  •  (1) The auditor of a company or a member of the audit committee may call a meeting of the audit committee.

  • Marginal note:Right to interview

    (2) The chief internal auditor of a company or any officer or employee of the company acting in a similar capacity shall, at the request of the auditor of the company and on receipt of reasonable notice, meet with the auditor.

Marginal note:Notice of errors

  •  (1) A director or an officer of a company shall forthwith notify the audit committee and the auditor of the company of any error or misstatement of which the director or officer becomes aware in an annual statement or other financial statement on which the auditor or any former auditor has reported.

  • Marginal note:Error noted by auditor

    (2) If the auditor or a former auditor of a company is notified or becomes aware of an error or misstatement in an annual statement or other financial statement on which the auditor reported and in the auditor’s opinion the error or misstatement is material, the auditor or former auditor shall inform each director of the company accordingly.

  • Marginal note:Duty of directors

    (3) Where under subsection (2) the auditor or a former auditor of a company informs the directors of an error or misstatement in an annual statement or other financial statement, the directors shall

    • (a) prepare and issue a revised annual statement or financial statement; or

    • (b) otherwise inform the shareholders and policyholders referred to in subsection 334(1) and the Superintendent of the error or misstatement.

Qualified Privilege

Marginal note:Qualified privilege for statements

 Any oral or written statement or report made under this Act by the auditor or a former auditor of a company has qualified privilege.

DIVISION XIVActuaries

Appointment

Marginal note:Notice of appointment

 A company shall, forthwith after the appointment of the actuary of the company, notify the Superintendent in writing of the appointment.

 [Repealed, 1997, c. 15, s. 236]

Marginal note:Officer precluded

  •  (1) The chief executive officer or chief operating officer or a person performing like functions may not be appointed or hold the position of actuary of a company unless authorized in writing by the Superintendent.

  • Marginal note:Duration of authorization

    (2) An authorization under subsection (1) ceases to be in effect on the day specified therein but not later than the day that is six months after it is issued, and a person appointed or holding the position of actuary pursuant to the authorization shall not hold that position after that day.

  • 1996, c. 6, s. 76

Marginal note:Chief financial officer

  •  (1) The chief financial officer or a person performing like functions may not be appointed as or hold the position of actuary of a company unless

    • (a) the audit committee of the company has provided the Superintendent with a written statement indicating that it is satisfied that the duties of both positions in the company will be adequately performed and that the actuarial duties will be performed in an independent manner; and

    • (b) the appointment or holding of the position is authorized by the Superintendent.

  • Marginal note:Authorization

    (2) An authorization under paragraph (1)(b) may contain limitations and conditions, including a limitation on the time during which the person referred to in the authorization may hold the position of actuary of the company.

  • Marginal note:Termination of holding of position

    (3) A person holding the position of actuary pursuant to an authorization under paragraph (1)(b) shall not hold that position after the time limit referred to in subsection (2).

  • 1996, c. 6, s. 76

Vacancies

Marginal note:Revocation of appointment

  •  (1) The directors of a company may revoke the appointment of the actuary of the company.

  • Marginal note:Notice of revocation

    (2) A company shall, forthwith after the revocation of the appointment of the actuary of the company, notify the Superintendent in writing of the revocation.

Marginal note:Ceasing to hold office

  •  (1) A person ceases to hold office as the actuary of a company when

    • (a) the person resigns as actuary of the company;

    • (b) the person ceases to be an actuary;

    • (c) the person dies; or

    • (d) the appointment of the person as actuary of the company is revoked by the directors of the company.

  • Marginal note:Effective date of resignation

    (2) The resignation of an actuary becomes effective at the time a written resignation is sent to the company or at the time specified in the resignation, whichever is later.

  • 1991, c. 47, s. 361
  • 1997, c. 15, s. 237

Marginal note:Filling vacancy

 Where a vacancy occurs in the office of actuary of a company, the directors shall forthwith notify the Superintendent of and fill the vacancy.

Marginal note:Statement of actuary

 An actuary of a company who resigns or whose appointment is revoked shall submit to the directors of the company and the Superintendent a written statement of the circumstances and reasons why the actuary resigned or why, in the actuary’s opinion, the actuary’s appointment was revoked.

Marginal note:Duty of replacement actuary

  •  (1) Where an actuary of a company resigns or the appointment of an actuary of a company is revoked, no person shall accept an appointment or consent to be appointed as actuary of the company before requesting and receiving from the other actuary the written statement referred to in section 363.

  • Marginal note:Exception

    (2) A person may accept an appointment or consent to be appointed as actuary of a company if no reply is received from the other actuary within fifteen days after a request under subsection (1) is made.

  • Marginal note:Effect of non-compliance

    (3) Unless subsection (2) applies, an appointment as actuary of a company is void if subsection (1) is not complied with.

Valuations and Reports

Marginal note:Actuary’s valuation

  •  (1) The actuary of a company shall value

    • (a) the actuarial and other policy liabilities of the company as at the end of a financial year; and

    • (b) any other matter specified in any direction that may be made by the Superintendent.

  • Marginal note:Actuarial practices

    (2) The actuary’s valuation shall be in accordance with generally accepted actuarial practice with such changes as may be determined by the Superintendent and any additional directions that may be made by the Superintendent.

Marginal note:Superintendent may appoint actuary

  •  (1) The Superintendent may appoint an actuary to value the matters referred to in paragraph 365(1)(a) or (b) in relation to a company if the Superintendent is of the opinion that the appointment is necessary. That actuary may not be an actuary of the company.

  • Marginal note:Expenses payable by company

    (2) The expenses incurred in carrying out a valuation under subsection (1) are payable by the company on being approved in writing by the Superintendent.

  • 1996, c. 6, s. 77
  • 1997, c. 15, s. 238

Marginal note:Right to information

  •  (1) On the request of the actuary of a company, the present or former directors, officers, employees or representatives of the company shall, to the extent that they are reasonably able to do so,

    • (a) permit access to such records held by the company, and

    • (b) provide such information and explanations

    as are, in the opinion of the actuary, necessary to enable the actuary to perform the duties of actuary of the company.

  • Marginal note:No civil liability

    (2) A person who in good faith makes an oral or written communication under subsection (1) shall not be liable in any civil action arising from having made the communication.

Marginal note:Actuary’s report

  •  (1) The actuary of a company shall, not less than twenty-one days before the date of the annual meeting of the shareholders and policyholders of the company, make a report in the prescribed form to them on the valuation made under section 365 and on any other matter that is prescribed.

  • Marginal note:Idem

    (2) In each report required under subsection (1), the actuary shall state whether, in the actuary’s opinion, the annual statement presents fairly the results of the valuation made under section 365.

Marginal note:Report to directors

 The actuary of a company shall meet either with the directors of the company or, where the directors so choose, with the audit committee of the company at least once during each financial year in order to report, in accordance with generally accepted actuarial practice and any direction that may be made by the Superintendent, on the financial position of the company and, where so specified in such a direction, the expected future financial condition of the company.

Marginal note:Report to officers

  •  (1) The actuary of a company shall report in writing to the chief executive officer and chief financial officer of the company any matters that have come to the actuary’s attention in the course of carrying out the actuary’s duties and that in the actuary’s opinion have material adverse effects on the financial condition of the company and require rectification.

  • Marginal note:Transmission of report

    (2) An actuary of a company who makes a report under subsection (1) shall forthwith provide a copy of it to the directors of the company.

  • Marginal note:Failure to take action

    (3) Where, in the opinion of the actuary of the company, suitable action is not being taken to rectify the matters referred to in subsection (1), the actuary shall forthwith send a copy of the report to the Superintendent and advise the directors that the actuary has done so.

Qualified Privilege

Marginal note:Qualified privilege for statements

  •  (1) Any oral or written statement or report made under this Act by the actuary or former actuary of a company has qualified privilege.

  • Marginal note:No civil liability

    (2) The actuary or former actuary of a company who in good faith makes an oral or written statement or report under section 363 or 369 shall not be liable in any civil action seeking indemnification for damages attributable to the actuary or former actuary having made the statement or report.

DIVISION XVRemedial Actions

Marginal note:Derivative action

  •  (1) Subject to subsection (2), a complainant or the Superintendent may apply to a court for leave to bring an action under this Act in the name and on behalf of a company or any of its subsidiaries, or to intervene in an action under this Act to which the company or a subsidiary of the company is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the company or the subsidiary.

  • Marginal note:Conditions precedent

    (2) No action may be brought and no intervention in an action may be made under subsection (1) by a complainant unless the court is satisfied that

    • (a) the complainant has, not less than 14 days before bringing the application or as otherwise ordered by the court, given notice to the directors of the company or the company’s subsidiary of the complainant’s intention to apply to the court under subsection (1) if the directors of the company or the company’s subsidiary do not bring, diligently prosecute or defend or discontinue the action;

    • (b) the complainant is acting in good faith; and

    • (c) it appears to be in the interests of the company or the subsidiary that the action be brought, prosecuted, defended or discontinued.

  • Marginal note:Notice to Superintendent

    (3) A complainant under subsection (1) shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.

  • 1991, c. 47, s. 371
  • 2005, c. 54, s. 290

Marginal note:Powers of court

  •  (1) In connection with an action brought or intervened in under subsection 371(1), the court may at any time make any order it thinks fit including, without limiting the generality of the foregoing,

    • (a) an order authorizing the Superintendent, the complainant or any other person to control the conduct of the action;

    • (b) an order giving directions for the conduct of the action;

    • (c) an order directing that any amount adjudged payable by a defendant in the action be paid, in whole or in part, directly to former and present security holders or policyholders of the company who are entitled to participate in its profits or of the subsidiary instead of to the company or to the subsidiary; and

    • (d) an order requiring the company or the subsidiary to pay reasonable legal fees incurred by the Superintendent or the complainant in connection with the action.

  • Marginal note:Jurisdiction

    (2) Notwithstanding subsection (1), the court may not make any order in relation to any matter that would, under this Act, require the approval of the Minister or the Superintendent.

Marginal note:Status of shareholder approval

  •  (1) An application made or an action brought or intervened in under this Division need not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or duty owed to the company or its subsidiary has been or might be approved by the shareholders or policyholders of the company or subsidiary or both, but evidence of approval by the shareholders or policyholders may be taken into account by the court in making an order under section 372.

  • Marginal note:Court approval to discontinue

    (2) An application made or an action brought or intervened in under this Division shall not be stayed, discontinued, settled or dismissed for want of prosecution without the approval of the court given on such terms as the court thinks fit and, if the court determines that the interests of any complainant might be substantially affected by any stay, discontinuance, settlement or dismissal, the court may order any party to the application or action to give notice to the complainant.

Marginal note:No security for costs

  •  (1) A complainant is not required to give security for costs in any application made or any action brought or intervened in under subsection 371(1) or section 375.

  • Marginal note:Interim costs

    (2) In an application made or an action brought or intervened in under this Division, the court may at any time order the company or its subsidiary to pay to the complainant interim costs, including legal fees and disbursements, but the complainant may be held accountable by the court for those interim costs on final disposition of the application or action.

  • 1991, c. 47, s. 374
  • 2005, c. 54, s. 291(F)

Marginal note:Application to rectify records

  •  (1) If the name of a person is alleged to be or to have been wrongly entered or retained in, or wrongly deleted or omitted from, the securities register or any other record of a company, the company, a security holder of the company or any aggrieved person may apply to a court for an order that the securities register or record be rectified.

  • Marginal note:Notice to Superintendent

    (2) An applicant under this section shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.

  • Marginal note:Powers of court

    (3) In connection with an application under this section, the court may make any order it thinks fit including, without limiting the generality of the foregoing,

    • (a) an order requiring the securities register or other record of the company to be rectified;

    • (b) an order restraining a company from calling or holding a meeting of shareholders or policyholders or paying a dividend to shareholders before the rectification;

    • (c) an order determining the right of a party to the proceedings to have the party’s name entered or retained in, or deleted or omitted from, the securities register or records of the company, whether the issue arises between two or more security holders or alleged security holders, or between the company and any security holder or alleged security holder; and

    • (d) an order compensating a party who has incurred a loss.

DIVISION XVILiquidation and Dissolution

Interpretation

Definition of court

 In this Division, court means a court having jurisdiction in the place where the company has its head office.

Application

Marginal note:Application of Division

  •  (1) This Division does not apply to a company that is insolvent within the meaning of the Winding-up and Restructuring Act.

  • Marginal note:Staying proceedings on insolvency

    (2) Any proceedings taken under this Division to dissolve or to liquidate and dissolve a company shall be stayed if the company is at any time found to be insolvent within the meaning of the Winding-up and Restructuring Act.

  • 1991, c. 47, s. 377
  • 1996, c. 6, s. 167

Marginal note:Mutual companies, etc.

 This Division does not apply to companies that

  • (a) are mutual companies; or

  • (b) have participating policyholders or policyholders who are entitled to vote at annual meetings of shareholders and policyholders.

Marginal note:Returns to Superintendent

 A liquidator appointed under this Part to wind up the business of a company shall provide the Superintendent with such information relating to the business and affairs of the company in such form as the Superintendent requires.

Simple Liquidation

Marginal note:No property and no liabilities

  •  (1) A company that has no property and no liabilities may, if authorized by a special resolution of the shareholders or, if there are no shareholders, by a resolution of all the directors, apply to the Minister for letters patent dissolving the company.

  • Marginal note:Dissolution by letters patent

    (2) Where the Minister has received an application under subsection (1) and is satisfied that all the circumstances so warrant, the Minister may issue letters patent dissolving the company.

  • Marginal note:Effect of letters patent

    (3) A company in respect of which letters patent are issued under subsection (2) ceases to exist on the day stated in the letters patent.

Marginal note:Proposing liquidation

  •  (1) The voluntary liquidation and dissolution of a company, other than a company referred to in subsection 380(1),

    • (a) may be proposed by its directors; or

    • (b) may be initiated by way of a proposal made by a shareholder who is entitled to vote at an annual meeting of shareholders in accordance with sections 147 and 148.

  • Marginal note:Terms must be set out

    (2) A notice of any meeting of shareholders at which the voluntary liquidation and dissolution of a company is to be proposed shall set out the terms of the proposal.

Marginal note:Shareholders’ resolution

 Where the voluntary liquidation and dissolution of a company is proposed, the company may apply to the Minister for letters patent dissolving the company if authorized by a special resolution of the shareholders or, where the company has issued more than one class of shares, by special resolution of each class of shareholders whether or not those shareholders are otherwise entitled to vote.

Marginal note:Approval of Minister required

  •  (1) No action directed toward the voluntary liquidation and dissolution of a company shall be taken by a company, other than as provided in sections 381 and 382, until an application made by the company pursuant to section 382 has been approved by the Minister.

  • Marginal note:Conditional approval

    (2) If the Minister is satisfied on the basis of an application made under section 382 that the circumstances warrant the voluntary liquidation and dissolution of a company, the Minister may, by order, approve the application.

  • Marginal note:Effect of approval

    (3) Where the Minister has approved an application made pursuant to section 382 with respect to a company, the company shall not carry on business except to the extent necessary to complete its voluntary liquidation.

  • Marginal note:Liquidation process

    (4) Where the Minister has approved an application made pursuant to section 382 with respect to a company, the company shall

    • (a) cause notice of the approval to be sent to each known claimant, except policyholders, against and creditor of the company;

    • (b) publish notice of the approval once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the company transacted any business within the preceding twelve months;

    • (c) proceed to collect its property, dispose of property that is not to be distributed in kind to its shareholders, discharge or provide for all its obligations and do all other acts required to liquidate its business; and

    • (d) [Repealed, 1997, c. 15, s. 239]

    • (e) after giving the notice required under paragraphs (a) and (b) and adequately providing for the payment or discharge of all its obligations, distribute its remaining property, either in money or in kind, among its shareholders according to their respective rights.

  • 1991, c. 47, s. 383
  • 1997, c. 15, s. 239
  • 2012, c. 5, s. 126

Marginal note:Dissolution instrument

  •  (1) Unless a court has made an order in accordance with subsection 385(1), the Minister may, if satisfied that the company has complied with subsection 383(4) and that all the circumstances so warrant, issue letters patent dissolving the company.

  • Marginal note:Company dissolved

    (2) A company in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the day stated in the letters patent.

Court-supervised Liquidation

Marginal note:Application for court supervision

  •  (1) The Superintendent or any interested person may, at any time during the liquidation of a company, apply to a court for an order for the continuance of the voluntary liquidation under the supervision of the court in accordance with this section and sections 386 to 398 and on such application the court may so order and make any further order it thinks fit.

  • Marginal note:Idem

    (2) An application under subsection (1) to a court to supervise a voluntary liquidation shall state the reasons, verified by an affidavit of the applicant, why the court should supervise the liquidation.

  • Marginal note:Notice to Superintendent

    (3) Where a person, other than the Superintendent, makes an application under subsection (1), the person shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.

Marginal note:Court supervision thereafter

  •  (1) When a court makes an order under subsection 385(1), the liquidation of the company shall continue under the supervision of the court.

  • Marginal note:Commencement of liquidation

    (2) The supervision of the liquidation of a company by the court pursuant to an order made under subsection 385(1) commences on the day the order is made.

Marginal note:Powers of court

 In connection with the liquidation and dissolution of a company, the court may, where it is satisfied that the company is able to pay or adequately provide for the discharge of all its obligations and to make satisfactory arrangements for the protection of its policyholders, make any order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order to liquidate;

  • (b) an order appointing a liquidator, with or without security, fixing a liquidator’s remuneration and replacing a liquidator;

  • (c) an order appointing inspectors or referees, specifying their powers, fixing their remuneration and replacing inspectors or referees;

  • (d) an order determining the notice to be given to any interested person, or dispensing with notice to any person;

  • (e) an order determining the validity of any claims made against the company;

  • (f) an order, at any stage of the proceedings, restraining the directors and officers of the company from

    • (i) exercising any of their powers, or

    • (ii) collecting or receiving any debt or other property of the company, and from paying out or transferring any property of the company, except as permitted by the court;

  • (g) an order determining and enforcing the duty or liability of any present or former director, officer, shareholder or policyholder

    • (i) to the company, or

    • (ii) for an obligation of the company;

  • (h) an order approving the payment, satisfaction or compromise of claims against the company and the retention of assets for that purpose, and determining the adequacy of provisions for the payment, discharge or transfer of any obligation of the company, whether liquidated, unliquidated, future or contingent;

  • (i) with the concurrence of the Superintendent, an order providing for the disposal or destruction of the documents, records or registers of the company;

  • (j) on the application of a creditor, an inspector or the liquidator, an order giving directions on any matter arising in the liquidation;

  • (k) after notice has been given to all interested parties, an order relieving the liquidator from any omission or default on such terms as the court thinks fit and confirming any act of the liquidator;

  • (l) subject to sections 394 to 396, an order approving any proposed, interim or final distribution to shareholders, if any, or incorporators, in money or in property;

  • (m) an order disposing of any property belonging to creditors, shareholders, policyholders, and incorporators who cannot be found;

  • (n) on the application of any director, officer, shareholder, policyholder, incorporator, creditor or the liquidator;

    • (i) an order staying the liquidation proceedings on such terms and conditions as the court thinks fit,

    • (ii) an order continuing or discontinuing the liquidation proceedings, or

    • (iii) an order to the liquidator to restore to the company all of its remaining property; and

  • (o) after the liquidator has rendered the liquidator’s final account to the court, an order directing the company to apply to the Minister for letters patent dissolving the company.

  • 1991, c. 47, s. 387
  • 2005, c. 54, s. 292(F)

Marginal note:Cessation of business and powers

  •  (1) Where a court makes an order for the liquidation of a company,

    • (a) the company continues in existence but shall cease to carry on business, except the business that is, in the opinion of the liquidator, required for an orderly liquidation; and

    • (b) the powers of the directors and shareholders, if any, are vested in the liquidator and cease to be vested in the directors or shareholders, except as specifically authorized by the court.

  • Marginal note:Delegation by liquidator

    (2) A liquidator may delegate any of the powers vested by paragraph (1)(b) to the directors or shareholders, if any.

Marginal note:Appointment of liquidator

 When making an order for the liquidation of a company or at any time thereafter, the court may appoint any person, including a director, an officer or a shareholder of the company or any other company, as liquidator of the company.

Marginal note:Vacancy in liquidator’s office

 Where an order for the liquidation of a company has been made and the office of liquidator is or becomes vacant, the property of the company is under the control of the court until the office of liquidator is filled.

Marginal note:Duties of liquidator

  •  (1) A liquidator shall

    • (a) forthwith after appointment give notice thereof to the Superintendent and to each claimant and creditor of the company known to the liquidator;

    • (b) forthwith after appointment publish notice thereof once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the company has transacted any business within the preceding twelve months, requiring

      • (i) any person indebted to the company to render an account and pay to the liquidator at the time and place specified in the notice any amount owing,

      • (ii) any person possessing property of the company to deliver it to the liquidator at the time and place specified in the notice, and

      • (iii) any person having a claim against the company, whether liquidated, unliquidated, future or contingent, other than a policyholder having an unliquidated claim, to present particulars thereof in writing to the liquidator not later than sixty days after the first publication of the notice;

    • (c) take into custody and control the property of the company;

    • (d) [Repealed, 1997, c. 15, s. 240]

    • (e) open and maintain a trust account for the moneys received by the liquidator in the course of the liquidation of the company;

    • (f) keep accounts of the moneys received and paid out by the liquidator in the course of the liquidation of the company;

    • (g) maintain separate lists of each class of creditors, shareholders, policyholders and other persons having claims against the company;

    • (h) if at any time the liquidator determines that the company is unable to pay or adequately provide for the discharge of its obligations, apply to the court for directions;

    • (i) deliver to the court and to the Superintendent, at least once in every twelve month period after the liquidator’s appointment or more often as the court requires, the annual statement of the company prepared in accordance with subsection 331(1) or prepared in such manner as the liquidator thinks proper or as the court requires; and

    • (j) after the final accounts are approved by the court, distribute any remaining property of the company among the shareholders, if any, or incorporators, according to their respective rights.

  • Marginal note:Powers of liquidator

    (2) A liquidator may

    • (a) retain actuaries, lawyers, notaries, accountants, appraisers and other professional advisers;

    • (b) bring, defend or take part in any civil, criminal or administrative action or proceeding in the name and on behalf of the company;

    • (c) carry on the business of the company as required for an orderly liquidation;

    • (d) sell by public auction or private sale any property of the company;

    • (e) do all acts and execute documents in the name and on behalf of the company;

    • (f) borrow money on the security of the property of the company;

    • (g) settle or compromise any claims by or against the company; and

    • (h) do all other things necessary for the liquidation of the company and distribution of its property.

  • 1991, c. 47, s. 391
  • 1997, c. 15, s. 240

Marginal note:Due diligence

 A liquidator is not liable 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 company represented to the liquidator by an officer of the company or in a written report of the auditor of the company fairly to reflect the financial condition of the company; or

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

  • 1991, c. 47, s. 392
  • 2005, c. 54, s. 293

Marginal note:Examination of others

  •  (1) Where a liquidator has reason to believe that any property of the company is in the possession or under the control of a person or that a person has concealed, withheld or misappropriated any such property, the liquidator may apply to the court for an order requiring that person to appear before the court at the time and place designated in the order and to be examined.

  • Marginal note:Restoration and compensation

    (2) Where an examination conducted pursuant to subsection (1) discloses that a person has concealed, withheld or misappropriated any property of the company, the court may order that person to restore the property or pay compensation to the liquidator.

Marginal note:Costs of liquidation

 A liquidator shall pay the costs of liquidation out of the property of the company and shall pay or make adequate provision for all claims against the company.

Marginal note:Final accounts

  •  (1) Within one year after the appointment of a liquidator and after paying or making adequate provision for all claims against the company, the liquidator shall apply to the court

    • (a) for approval of the final accounts of the liquidator and for an order permitting the distribution, in money or in kind, of the remaining property of the company to its shareholders, if any, or to the incorporators, according to their respective rights; or

    • (b) for an extension of time, setting out the reasons therefor.

  • Marginal note:Shareholder application

    (2) If a liquidator fails to make the application required by subsection (1), a shareholder of the company or, if there are no shareholders of the company, an incorporator may apply to the court for an order for the liquidator to show cause why a final accounting and distribution should not be made.

  • Marginal note:Notification of final accounts

    (3) A liquidator shall give notice of the liquidator’s intention to make an application under subsection (1) to the Superintendent, to each inspector appointed under section 387, to each shareholder of the company or, if there are no shareholders, to each incorporator and to any person who provided a security or fidelity bond for the liquidation.

  • Marginal note:Publication

    (4) The liquidator shall publish the notice required under subsection (3) in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the company has transacted any business within the preceding twelve months or as otherwise directed by the court.

Marginal note:Final order

  •  (1) If the court approves the final accounts rendered by a liquidator, the court shall make an order

    • (a) directing the company to apply to the Minister for letters patent dissolving the company;

    • (b) directing the custody or disposal of the documents, records and registers of the company; and

    • (c) discharging the liquidator except in respect of the duty of a liquidator under subsection (2).

  • Marginal note:Delivery of order

    (2) The liquidator shall forthwith send a certified copy of the order referred to in subsection (1) to the Superintendent.

Marginal note:Right to distribution of money

  •  (1) If in the course of the liquidation of a company the shareholders resolve to, or the liquidator proposes to,

    • (a) exchange all or substantially all of the remaining property of the company for securities of another entity that are to be distributed to the shareholders or to the incorporators, or

    • (b) distribute all or part of the remaining property of the company to the shareholders or to the incorporators in kind,

    a shareholder or incorporator may apply to the court for an order requiring the distribution of the remaining property of the company to be in money.

  • Marginal note:Powers of court

    (2) On an application under subsection (1), the court may order

    • (a) all of the remaining property of the company to be converted into and distributed in money; or

    • (b) the claim of any shareholder or incorporator applying under this section to be satisfied by a distribution in money.

  • Marginal note:Order by court

    (3) Where an order is made by a court under paragraph (2)(b), the court

    • (a) shall fix a fair value on the share of the property of the company attributable to the shareholder or incorporator;

    • (b) may in its discretion appoint one or more appraisers to assist the court in fixing a fair value in accordance with paragraph (a); and

    • (c) shall render a final order against the company in favour of the shareholder or incorporator for the amount of the share of the property of the company attributable to the shareholder or incorporator.

Marginal note:Dissolution by letters patent

  •  (1) On an application made pursuant to an order under paragraph 396(1)(a), the Minister may issue letters patent dissolving the company.

  • Marginal note:Company dissolved

    (2) A company in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the date of the issuance of the letters patent.

General

Definition of shareholder and incorporator

 In sections 401 and 402, shareholder and incorporator include the heirs and personal representatives of a shareholder or incorporator.

Marginal note:Continuation of actions

  •  (1) Notwithstanding the dissolution of a company under this Part,

    • (a) a civil, criminal or administrative action or proceeding commenced by or against the company before its dissolution may be continued as if the company had not been dissolved;

    • (b) a civil, criminal or administrative action or proceeding may be brought against the company within two years after its dissolution as if the company had not been dissolved; and

    • (c) any property that would have been available to satisfy any judgment or order if the company had not been dissolved remains available for that purpose.

  • Marginal note:Service on company

    (2) Service of a document on a company after its dissolution may be effected by serving the document on a person shown as a director in the incorporating instrument of the company or, if applicable, in the latest return sent to the Superintendent under section 668.

Marginal note:Limitations on liability

  •  (1) Notwithstanding the dissolution of a company, a shareholder or incorporator to whom any of its property has been distributed is liable to any person claiming under subsection 400(1) to the extent of the amount received by that shareholder or incorporator on the distribution.

  • Marginal note:Limitation

    (2) An action to enforce liability under subsection (1) may not be commenced except within two years after the date of the dissolution of the company.

  • Marginal note:Action against class

    (3) A court may order an action referred to in subsections (1) and (2) to be brought against the persons who were shareholders or incorporators as a class, subject to such conditions as the court thinks fit.

  • Marginal note:Reference

    (4) If the plaintiff establishes a claim in an action under subsection (3), the court may refer the proceedings to a referee or other officer of the court who may

    • (a) add as a party to the proceedings each person found by the plaintiff to have been a shareholder or incorporator;

    • (b) determine, subject to subsection (1), the amount that each person who was a shareholder or incorporator must contribute towards satisfaction of the plaintiff’s claim; and

    • (c) direct payment of the amounts so determined.

Marginal note:Where creditor cannot be found

 Where a creditor, shareholder or incorporator to whom property is to be distributed on the dissolution of a company cannot be found, the portion of the property to be distributed to that creditor, shareholder or incorporator shall be converted into money and paid in accordance with section 404.

Marginal note:Vesting in Crown

 Subject to subsection 400(1) and sections 404 and 405, property of a company that has not been disposed of at the date of the dissolution of the company vests in Her Majesty in right of Canada.

Marginal note:Unclaimed money on winding-up

  •  (1) Where the business of a company is being wound up under this Division, the liquidator or the company shall pay to the Minister on demand and in any event before the final winding-up of that business any amount that is payable by the liquidator or the company to a creditor, shareholder or incorporator of the company to whom payment thereof has not, for any reason, been made.

  • Marginal note:Records

    (2) Where a liquidator or a company makes a payment to the Minister under subsection (1) with respect to a creditor, shareholder or incorporator, the liquidator or company shall concurrently forward to the Minister all documents, records and registers in the possession of the liquidator or company that relate to the entitlement of the creditor, shareholder or incorporator.

  • Marginal note:Payment to Receiver General

    (3) The Minister shall pay to the Receiver General all amounts paid to the Minister under subsection (1).

  • Marginal note:Liquidator and company discharged

    (4) Payment by a liquidator or a company to the Minister under subsection (1) discharges the liquidator and the company in respect of which the payment is made from all liability for the amount so paid, and payment by the Minister to the Receiver General under subsection (3) discharges the Minister from all liability for the amount so paid.

Marginal note:Recovery

 If at any time a person establishes an entitlement to any moneys paid to the Receiver General under this Division, the Receiver General shall pay an equivalent amount to that person out of the Consolidated Revenue Fund.

Marginal note:Custody of records after dissolution

 A person who has been granted custody of the documents, records and registers of a dissolved company shall keep them available for production for six years following the date of the dissolution of the company or until the expiration of such shorter period as may be ordered by the court when it orders the dissolution.

PART VIIOwnership

DIVISION IInterpretation

Marginal note:Definitions

 The following definitions apply in this Part.

agent

agent means

  • (a) in relation to Her Majesty in right of Canada or of a province, any agent of Her Majesty in either of those rights, and includes a municipal or public body empowered to perform a function of government in Canada or any entity empowered to perform a function or duty on behalf of Her Majesty in either of those rights but does not include

    • (i) an official or entity performing a function or duty in connection with the administration or management of the estate or property of a natural person,

    • (ii) an official or entity performing a function or duty in connection with the administration, management or investment of a fund established to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons, or moneys derived from such a fund, or

    • (iii) the trustee of any trust for the administration of a fund to which Her Majesty in either of those rights contributes and of which an official or entity that is an agent of Her Majesty in either of those rights is a trustee; and

  • (b) in relation to the government of a foreign country or any political subdivision thereof, a person empowered to perform a function or duty on behalf of the government of the foreign country or political subdivision, other than a function or duty in connection with the administration or management of the estate or property of a natural person. (mandataire)

eligible agent

eligible agent means an agent or agency of Her Majesty in right of Canada or of a province or an agent or agency of a government of a foreign country or any political subdivision of a foreign country

  • (a) whose mandate is publicly available;

  • (b) that controls the assets of an investment fund in a manner intended to maximize long-term risk-adjusted returns and that fund is

    • (i) one to which, as the case may be, Her Majesty in right of Canada or of a province or the government of a foreign country or political subdivision contributes, or

    • (ii) established to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons; and

  • (c) whose decisions with respect to the assets of the fund referred to in paragraph (b) are not influenced in any significant way by, as the case may be, Her Majesty in right of Canada or of the province or the government of the foreign country or the political subdivision. (mandataire admissible)

  • 1994, c. 47, s. 122
  • 2012, c. 19, s. 340

Marginal note:Associates

  •  (1) For the purpose of determining ownership of a company by an eligible agent, where two persons, at least one of whom is an eligible agent, are associated with each other, those persons are deemed to be a single eligible agent who beneficially owns the aggregate number of shares of the company beneficially owned by them.

  • Marginal note:Associates

    (2) For the purposes of subsection (1), a person is associated with another person if

    • (a) each person is an agent or agency of Her Majesty in right of Canada;

    • (b) each person is an agent or agency of Her Majesty in right of the same province;

    • (c) each person is an agent or agency of a government of the same foreign country or a political subdivision of the same foreign country;

    • (d) one person is Her Majesty in right of Canada and the other person is an agent or agency of Her Majesty in that right;

    • (e) one person is Her Majesty in right of a province and the other person is an agent or agency of Her Majesty in right of that province; or

    • (f) one person is a government of a foreign country or any political subdivision of a foreign country and the other person is its agent or agency.

  • 2012, c. 19, s. 340

DIVISION IIConstraints on Ownership

Marginal note:Constraining acquisition

  •  (1) No person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of a company or purchase or otherwise acquire control of any entity that holds any share of a company if

    • (a) the acquisition would cause the person to have a significant interest in any class of shares of the company; or

    • (b) where the person has a significant interest in a class of shares of the company, the acquisition would increase the significant interest of the person in that class of shares.

  • Marginal note:Amalgamation, etc., constitutes acquisition

    (2) If the entity that would result from an amalgamation, a merger or a reorganization would have a significant interest in a class of shares of a company, the entity is deemed to be acquiring a significant interest in that class of shares of the company through an acquisition for which the approval of the Minister is required under subsection (1).

  • Marginal note:Exemption

    (3) On application by a company, other than a converted company in respect of which subsection (4) or (11) applies or a company to which subsection (5) or (12) applies, the Superintendent may exempt from the application of subsection (1) and section 408 any class of non-voting shares of the company if

    • (a) the aggregate book value of the shares of the class is not more than 30 per cent of the aggregate book value of all the outstanding shares of the company; or

    • (b) in the case of a mutual company, the aggregate book value of the shares of the class is not more than 30 per cent of the aggregate book value of all the outstanding shares of the company and the surplus of the company.

  • Marginal note:Limitations on share holdings

    (4) Despite subsection (1), no person may be a major shareholder of a converted company having an aggregate of surplus and minority interests of five billion dollars or more according to its last annual statement dated before the effective date of the letters patent of conversion of the converted company.

  • Marginal note:Exception

    (5) Subsection (4) does not apply to a widely held company that controls, within the meaning of paragraph 3(1)(d), a converted company if it

    • (a) controlled the converted company on the day on which the letters patent of conversion that gave effect to the conversion of the converted company became effective and it has continued to control, within the meaning of that paragraph, the converted company since that day; or

    • (b) acquired control, within the meaning of that paragraph, of the converted company under section 28.1 or 28.2 and it has continued to control, within the meaning of that paragraph, the converted company since the day it acquired control.

  • Marginal note:Exception — widely held insurance holding company

    (6) Subsection (4) does not apply to a widely held insurance holding company that controls, within the meaning of paragraph 3(1)(d), the converted company if

    • (a) the insurance holding company acquired control, within the meaning of that paragraph, of the converted company or of the company to which subsection (5) applies, as the case may be, under section 714 or 715 and the insurance holding company has continued to control, within the meaning of that paragraph, the converted company since the day the insurance holding company acquired control; or

    • (b) the converted company was a subsidiary of the company to which subsection (5) applies that was continued under section 721 as the insurance holding company and the insurance holding company has continued to control, within the meaning of paragraph 3(1)(d), the converted company since the day it came into existence as an insurance holding company.

  • Marginal note:Exception — other entities

    (7) Subsection (4) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the converted company if the entity is controlled, within the meaning of paragraph 3(1)(d), by a company to which subsection (5) applies, or by an insurance holding company to which subsection (6) applies, that is permitted under that subsection to be a major shareholder of the converted company.

  • Marginal note:Exception

    (8) The Minister may, at any time after the day that is two years after December 31, 1999, by order, determine that subsection (4) no longer applies in respect of any particular company.

  • Marginal note:Limitation on share holdings

    (9) Despite subsection (1), no person may be a major shareholder of a company to which subsection (5) applies.

  • Marginal note:Exception

    (10) Subsection (9) does not apply to a widely held insurance holding company that controls, within the meaning of paragraph 3(1)(d), a company to which subsection (5) applies if the insurance holding company acquired control, within the meaning of that paragraph, of the company under section 714 or 715 and the insurance holding company has continued to control, within the meaning of that paragraph, the company since the day the insurance holding company acquired control.

  • Marginal note:Limitations on share holdings

    (11) Despite subsection (1), until a day that is two years after December 31, 1999, no person may have a significant interest in any class of shares of a converted company having an aggregate of surplus and minority interests in an amount that is one billion dollars or more but less than five billion dollars, according to its last annual statement dated before the effective date of the letters patent of conversion of the converted company.

  • Marginal note:Exception

    (12) Subsection (11) does not apply to a company if no person has a significant interest in any class of shares of the company and the company controls, within the meaning of paragraph 3(1)(d), the converted company if it

    • (a) controlled the converted company on the day on which the letters patent of conversion that gave effect to the conversion of the converted company became effective and it has continued to control, within the meaning of that paragraph, the converted company since that day; or

    • (b) acquired control, within the meaning of that paragraph, of the converted company under section 28.1 or 28.2 and it has continued to control, within the meaning of that paragraph, the converted company since the day it acquired control.

  • Marginal note:Exception — insurance holding company

    (13) Subsection (11) does not apply to an insurance holding company if no person has a significant interest in any class of shares of the insurance holding company and the insurance holding company controls, within the meaning of paragraph 3(1)(d), the converted company if

    • (a) the insurance holding company acquired control, within the meaning of that paragraph, of the converted company or of the company to which subsection (12) applies, as the case may be, under section 714 or 715 and the insurance holding company has continued to control, within the meaning of that paragraph, the converted company since the day the insurance holding company acquired control; or

    • (b) the converted company was a subsidiary of the company to which subsection (12) applies that was continued under section 721 as the insurance holding company and the insurance holding company has continued to control, within the meaning of that paragraph, the converted company since the day it came into existence as an insurance holding company.

  • Marginal note:Exception — other entities

    (14) Subsection (11) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the converted company if the entity is controlled, within the meaning of that paragraph, by a company to which subsection (12) applies, or by an insurance holding company to which subsection (13) applies, that is permitted under that subsection to have a significant interest in any class of shares of the converted company.

  • Marginal note:Limitation on share holdings

    (15) Despite subsection (1), no person may have a significant interest in any class of shares of a company to which subsection (12) applies.

  • Marginal note:Exception

    (16) Subsection (15) does not apply to an insurance holding company that controls, within the meaning of paragraph 3(1)(d), a company to which subsection (12) applies if

    • (a) no person has a significant interest in any class of shares of the insurance holding company; and

    • (b) the insurance holding company acquired control, within the meaning of that paragraph, under section 714 or 715 of the company to which subsection (12) applies and the insurance holding company has continued to control, within the meaning of that paragraph, the company since the day the insurance holding company acquired control.

  • Marginal note:Deeming

    (17) For the purposes of this Act, if the Minister makes an order under subsection (8) to the effect that subsection (4) no longer applies in respect of a particular company,

    • (a) the particular company is deemed, as of the effective date of the order, to no longer be a company in respect of which subsection (4) applies;

    • (b) a widely held company that controls, within the meaning of paragraph 3(1)(d), the particular company in the circumstances referred to in subsection (5) is deemed, as of the effective date of the order, to no longer be a company to which subsection (5) applies; and

    • (c) a widely held insurance holding company that controls, within the meaning of paragraph 3(1)(d), the particular company in the circumstances referred to in subsection (6) is deemed, as of the effective date of the order, to no longer be an insurance holding company to which subsection (6) applies.

  • Marginal note:Deeming

    (18) For the purposes of this Act, after the day that is two years after December 31, 1999,

    • (a) a converted company having an aggregate of surplus and minority interests in an amount that is one billion dollars or more but less than five billion dollars, according to its last annual statement dated before the effective date of the letters patent of conversion of the converted company is deemed to no longer be a company in respect of which subsection (11) applies;

    • (b) a company that controls, within the meaning of paragraph 3(1)(d), a converted company referred to in paragraph (a) in the circumstances referred to in subsection (12) is deemed to no longer be a company to which subsection (12) applies; and

    • (c) an insurance holding company that controls, within the meaning of paragraph 3(1)(d), a converted company referred to in paragraph (a) in the circumstances referred to in subsection (13) is deemed to no longer be an insurance holding company to which subsection (13) applies.

  • 1991, c. 47, s. 407
  • 1993, c. 34, s. 79
  • 1997, c. 15, s. 241
  • 1999, c. 1, s. 7
  • 2001, c. 9, s. 401
  • 2007, c. 6, s. 215

Marginal note:Life companies — major shareholder

  •  (1) If a converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies controls a life company and a person becomes a major shareholder of the life company or of any entity that also controls the life company, the converted company or company, as the case may be, must do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the life company or entity that controls the life company,

    • (a) the converted company or the company no longer controls the life company; or

    • (b) the life company or the entity that controls the life company does not have any major shareholder other than the converted company or the company, as the case may be, or any entity that the converted company or the company controls.

  • Marginal note:Exemption

    (2) Subsection (1) does not apply in respect of a life company with equity of less than two hundred and fifty million dollars, or any other amount that may be prescribed.

  • Marginal note:Extension

    (3) If general market conditions so warrant and the Minister is satisfied that the converted company or the company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

  • 2001, c. 9, s. 402

Marginal note:Life companies — major shareholder

  •  (1) Despite subsection 407.01(1), if a converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies controls a life company in respect of which subsection 407.01(1) does not apply by reason of subsection 407.01(2) and the equity of the life company reaches two hundred and fifty million dollars or more or any other amount that is prescribed and on the day the equity of the life company reaches two hundred and fifty million dollars or more, or the prescribed amount, as the case may be, a person is a major shareholder of the life company or of any entity that also controls the life company, the converted company or company must do all things necessary to ensure that, on the day that is three years after that day,

    • (a) the converted company or company no longer controls the life company; or

    • (b) the life company or the entity that controls the life company does not have any major shareholder other than the converted company or the company or any entity that the converted company or company controls.

  • Marginal note:Extension

    (2) If general market conditions so warrant and the Minister is satisfied that the converted company or the company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

  • 2001, c. 9, s. 402

Marginal note:Life companies — significant interest

  •  (1) If a converted company in respect of which subsection 407(11) applies or a company to which subsection 407(12) applies controls a life company and a person acquires a significant interest in any class of shares of the life company or of any entity that also controls the life company, the converted company or company, as the case may be, must do all things necessary to ensure that, on the day that is one year after the person acquired the significant interest in the class of shares of the life company or entity that controls the life company,

    • (a) the converted company or the company no longer controls the life company; or

    • (b) no person has a significant interest in any class of shares of the life company or the entity that controls the life company, other than the converted company or the company, as the case may be, or any entity that the converted company or the company controls.

  • Marginal note:Exemption

    (2) Subsection (1) does not apply in respect of a life company with equity of less than two hundred and fifty million dollars, or any other amount that may be prescribed.

  • Marginal note:Extension

    (3) If general market conditions so warrant and the Minister is satisfied that the converted company or the company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

  • 2001, c. 9, s. 402

Marginal note:Prohibition against significant interest

  •  (1) No person who has a significant interest in any class of shares of a widely held converted company in respect of which subsection 407(4) applies or of a widely held company to which subsection 407(5) applies may have a significant interest in any class of shares of a subsidiary of the converted company or company, as the case may be, that is a life company or an insurance holding company.

  • Marginal note:Prohibition against significant interest

    (2) No person who has a significant interest in any class of shares of a life company may have a significant interest in any class of shares of

    • (a) a widely held converted company in respect of which subsection 407(4) applies that controls the life company;

    • (b) a widely held company to which subsection 407(5) applies that controls the life company; or

    • (c) a widely held insurance holding company to which subsection 407(6) applies that controls the life company.

  • 2001, c. 9, s. 402

Marginal note:No acquisition of control without approval

  •  (1) No person shall acquire control, within the meaning of paragraph 3(1)(d), of a company without the approval of the Minister.

  • Marginal note:Amalgamation, etc., constitutes acquisition

    (2) If the entity that would result from an amalgamation, a merger or a reorganization would control, within the meaning of paragraph 3(1)(d), a company, the entity is deemed to be acquiring control, within the meaning of that paragraph, of the company through an acquisition for which the approval of the Minister is required under subsection (1).

  • 1997, c. 15, s. 242
  • 2007, c. 6, s. 216

Marginal note:Prohibition against control

  •  (1) Despite section 407.1, no person shall control, within the meaning of paragraph 3(1)(d), a converted company in respect of which subsection 407(4) or (11) applies or a company to which subsection 407(5) or (12) applies.

  • Marginal note:Exception

    (2) Subsection (1) does not apply to a company to which subsection 407(5) or (12) applies or to an insurance holding company to which subsection 407(6) or (13) applies that is permitted to control, within the meaning of paragraph 3(1)(d), under those subsections, the converted company.

  • Marginal note:Exception

    (2.1) Subsection (1) does not apply to an insurance holding company to which subsection 407(10) or (16) applies that is permitted to control, within the meaning of paragraph 3(1)(d), under those subsections, the company.

  • Marginal note:Exception — other entities

    (3) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the converted company or company, as the case may be, if the entity is controlled, within the meaning of that paragraph, by a company to which subsection 407(5) or (12) applies, or an insurance holding company to which subsection 407(6) or (13) applies, that is permitted to be a major shareholder of the converted company or company, as the case may be, or to have a significant interest in any class of shares of the converted company or company, as the case may be.

  • Marginal note:Loss of control

    (4) Despite subsections (1) and 407(4), if the converted company referred to in subsection (1) is a converted company in respect of which subsection 407(4) applies, a company to which subsection 407(5) applies or an insurance holding company to which subsection 407(6) applies may be a major shareholder of the converted company and cease to control, within the meaning of paragraph 3(1)(d), the converted company if the company or the insurance holding company, as the case may be, has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the converted company on the expiration of the day specified in the agreement.

  • Marginal note:Exception

    (4.1) Despite subsections (1) and 407(9), if the company referred to in subsection (1) is a company to which subsection 407(5) applies, an insurance holding company to which subsection 407(6) applies may be a major shareholder of the company and cease to control, within the meaning of paragraph 3(1)(d), the company if the insurance holding company has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the company on the expiration of the day specified in the agreement.

  • Marginal note:Extension

    (5) If general market conditions so warrant and the Minister is satisfied that the company or the insurance holding company, as the case may be, has used its best efforts to be in compliance with subsection (4) or (4.1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

  • Marginal note:Loss of control

    (6) Despite subsections (1) and 407(11), if the converted company referred to in subsection (1) is a converted company in respect of which subsection 407(11) applies, a company to which subsection 407(12) applies or an insurance holding company to which subsection 407(13) applies may have a significant interest in a class of shares of the converted company and cease to control, within the meaning of paragraph 3(1)(d), the converted company if the company or the insurance holding company, as the case may be, has entered into an agreement with the Minister to do all things necessary to ensure that it does not have a significant interest in any class of shares of the converted company on the expiration of the day specified in the agreement.

  • Marginal note:Exception

    (6.1) Despite subsections (1) and 407(15), if the company referred to in subsection (1) is a company to which subsection 407(12) applies, an insurance holding company to which subsection 407(13) applies may have a significant interest in a class of shares of the company and cease to control, within the meaning of paragraph 3(1)(d), the company if the insurance holding company has entered into an agreement with the Minister to do all things necessary to ensure that it does not have a significant interest in any class of shares of the company on the expiration of the day specified in the agreement.

  • Marginal note:Extension

    (7) If general market conditions so warrant and the Minister is satisfied that the company or the insurance holding company, as the case may be, has used its best efforts to be in compliance with subsection (6) or (6.1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

  • 2001, c. 9, s. 403

Marginal note:Constraining registration

  •   No company shall, unless the acquisition of the share has been approved by the Minister, record in its securities register a transfer or issue of any share of the company to any person or to any entity controlled by a person if

    • (a) the transfer or issue of the share would cause the person to have a significant interest in any class of shares of the company; or

    • (b) where the person has a significant interest in a class of shares of the company, the transfer or issue of the share would increase the significant interest of the person in that class of shares of the company.

  • (2) and (3) [Repealed, 1997, c. 15, s. 243]

  • 1991, c. 47, s. 408
  • 1997, c. 15, s. 243

Marginal note:Exception — small holdings

 Despite section 408, if, as a result of a transfer or issue of shares of a class of shares of a company to a person, other than an eligible agent, the total number of shares of that class registered in the securities register of the company in the name of that person would not exceed 5,000 and would not exceed 0.1% of the outstanding shares of that class, the company is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the company as a result of that issue or transfer of shares.

  • 1994, c. 47, s. 123
  • 2012, c. 31, s. 132

Marginal note:Where approval not required

  •  (1) Despite subsections 407(1) and (2) and section 408, the approval of the Minister is not required in respect of a company, other than a converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies, if a person with a significant interest in a class of shares of the company or an entity controlled by a person with a significant interest in a class of shares of the company purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the company to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.

  • Marginal note:Percentage

    (2) Subject to subsection (3), for the purposes of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the company on the later of June 1, 1992 and the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the company, or of control of an entity that held shares of that class of shares of the company, for which approval was given by the Minister.

  • Marginal note:When approval not required

    (3) If a person has a significant interest in a class of shares of a company and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the company, or of control of an entity that held shares of that class of shares of the company, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of

    • (a) 5 percentage points in excess of the significant interest of the person in that class of shares of the company on the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the company, or of control of an entity that held shares of that class of shares of the company, for which approval was given by the Minister, and

    • (b) 10 percentage points in excess of the lowest significant interest of the person in that class of shares of the company at any time after the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the company, or of control of an entity that held shares of that class of shares of the company, for which approval was given by the Minister.

  • Marginal note:Exception — eligible agent

    (3.1) If the person referred to in subsection (1) is an eligible agent or an entity controlled by an eligible agent, then the Minister may reduce the percentage referred to in subsection (2) or (3).

  • Marginal note:Exception

    (4) Subsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection would

    • (a) result in the acquisition of control of the company by the person referred to in that subsection;

    • (b) where the person controls the company but the voting rights attached to the aggregate of any voting shares of the company beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the company, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the company;

    • (c) result in the acquisition of a significant interest in a class of shares of the company by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; or

    • (d) result in an increase in a significant interest in a class of shares of the company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable, and the increase is not exempted by the regulations.

  • Marginal note:Regulations

    (5) The Governor in Council may make regulations

    • (a) exempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the company by an entity controlled by the person; and

    • (b) exempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.

  • 1991, c. 47, s. 409
  • 1997, c. 15, s. 244
  • 2001, c. 9, s. 404
  • 2012, c. 31, s. 133