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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 VICorporate Governance (continued)

DIVISION IIDirectors and Officers (continued)

Duties (continued)

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
 
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