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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

PART XVIIInsurance Holding Companies (continued)

DIVISION 6Corporate Governance (continued)

SUBDIVISION 3Directors and Officers (continued)

Marginal note:Right to attend meetings

 A director of an insurance holding company is entitled to attend and to be heard at every meeting of shareholders.

  • 2001, c. 9, s. 465
Conflicts of Interest

Marginal note:Disclosure of interest

  •  (1) A director or officer of an insurance holding company shall disclose to the insurance holding 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 insurance holding 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 required by subsection (1) 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 insurance holding company’s business would not require approval by the directors or shareholders, the director or officer shall disclose to the insurance holding 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.

  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 334

Marginal note:Director to abstain

  •  (1) A director who is required to make a disclosure under subsection 836(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 insurance holding company, an entity controlled by the insurance holding company or an entity in which the insurance holding company has a substantial investment;

    • (b) is for indemnity under section 846 or insurance under section 847; or

    • (c) is with an affiliate of the insurance holding company.

  • Marginal note:Ineligibility

    (2) A 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 insurance holding company, any bank holding company or 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 an insurance holding 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.

  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 335

Marginal note:General notice

  •  (1) For the purposes of subsection 836(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 836(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) The shareholders of the insurance holding company may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 836(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the insurance holding company.

  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 336

Marginal note:Avoidance standards

  •  (1) A contract or transaction for which disclosure is required under subsection 836(1) is not invalid and a director or officer is not accountable to the insurance holding company or its shareholders 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 836 and subsection 838(1);

    • (b) the directors approved the contract or transaction; and

    • (c) the contract or transaction was reasonable and fair to the insurance holding company at the time that it was approved.

  • Marginal note:Confirmation by shareholders

    (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 insurance holding company or its shareholders 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;

    • (b) disclosure of the interest was made to the shareholders 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 insurance holding company at the time that it was approved or confirmed.

  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 336

Marginal note:Court may set aside or require accounting

 If a director or officer of an insurance holding company fails to comply with any of sections 836 to 839, a court, on application of the insurance holding company or any of 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 insurance holding company for any profit or gain realized on it.

  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 336
Liability, Exculpation and Indemnification

Marginal note:Director liability

  •  (1) Directors of an insurance holding company who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 748(1) or the issue of subordinated indebtedness contrary to section 762 for a consideration other than money are jointly and severally, or solidarily, liable to the insurance holding company to make good any amount by which the consideration received is less than the fair equivalent of the money that the insurance holding 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 an insurance holding 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 insurance holding company any amounts so distributed or paid and not otherwise recovered by the insurance holding company and any amounts in relation to any loss suffered by the insurance holding company:

    • (a) a redemption or purchase of shares contrary to section 754;

    • (b) a reduction of capital contrary to section 757;

    • (c) a payment of a dividend contrary to section 761; or

    • (d) a payment of an indemnity contrary to section 846.

  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 337(E)
 
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