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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 IIIFundamental Changes (continued)

Mutualization (continued)

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
 
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