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

Act current to 2022-05-02 and last amended on 2021-06-30. Previous Versions

PART XVIIInsurance Holding Companies (continued)

DIVISION 6Corporate Governance (continued)

SUBDIVISION 3Directors and Officers (continued)

Marginal note:Contribution

  •  (1) A director who has satisfied a judgment in relation to the director’s liability under section 841 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 841 is entitled to apply to a court for an order compelling a shareholder or other person to pay or deliver to the director any money or property that was paid or distributed to the shareholder or other person contrary to section 754, 757, 761 or 846.

  • 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 754, 757, 761 or 846;

    • (b) order an insurance holding company to return or issue shares to a person from whom the insurance holding company has purchased, redeemed or otherwise acquired shares; or

    • (c) make any further order it thinks fit.

  • 2001, c. 9, s. 465

Marginal note:Limitation

 An action to enforce a liability imposed by section 841 may not be commenced after two years from the date of the resolution authorizing the action complained of.

  • 2001, c. 9, s. 465

Marginal note:Directors liable for wages

  •  (1) Subject to subsections (2) and (3), the directors of an insurance holding company are jointly and severally, or solidarily, liable to each employee of the insurance holding company for all debts not exceeding six months wages payable to the employee for services performed for the insurance holding company while they are directors.

  • Marginal note:Conditions precedent

    (2) A director is not liable under subsection (1) unless

    • (a) the insurance holding 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 insurance holding 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) the insurance holding company has made an assignment or a bankruptcy order has been made against it under the Bankruptcy and Insolvency Act and a claim for the debt has been proven within six months after the date of the assignment or bankruptcy 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 an insurance holding company pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or bankruptcy 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 an insurance holding company who has satisfied a claim under this section is entitled to a contribution from the other directors of the insurance holding company who are liable for the claim.

  • 2001, c. 9, s. 465
  • 2004, c. 25, s. 203
  • 2005, c. 54, s. 338(E)

Marginal note:Defence — due diligence

  •  (1) A director, officer or employee of an insurance holding company is not liable under section 841 or 844 and has fulfilled their duty under subsection 795(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 insurance holding company that were represented to them by an officer of the insurance holding company or in a written report of the auditor of the insurance holding company fairly to reflect the financial condition of the insurance holding 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 an insurance holding company has fulfilled their duty under subsection 795(1) if they relied in good faith on

    • (a) financial statements of the insurance holding company that were represented to them by an officer of the insurance holding company or in a written report of the auditor of the insurance holding company fairly to reflect the financial condition of the insurance holding company; or

    • (b) a report of a person whose profession lends credibility to a statement made by them.

  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 339

Marginal note:Indemnification

  •  (1) An insurance holding company may indemnify a director or officer of the insurance holding company, a former director or officer of the insurance holding company or another person who acts or acted, at the insurance holding 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 insurance holding company or other entity.

  • Marginal note:Advances

    (2) An insurance holding 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) An insurance holding 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 insurance holding company, or the other entity for which they acted at the insurance holding 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) An insurance holding 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 insurance holding 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 insurance holding 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 insurance holding 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 insurance holding 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) An insurance holding 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 insurance holding company may indemnify under those subsections.

  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 339

Marginal note:Directors’ and officers’ insurance

 An insurance holding company may purchase and maintain insurance for the benefit of any person referred to in section 846 against any liability incurred by the person

  • (a) in the capacity of a director or an officer of the insurance holding 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 insurance holding 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 insurance holding 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.

  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 340

Marginal note:Application to court for indemnification

  •  (1) An insurance holding company or a person referred to in section 846 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.

  • 2001, c. 9, s. 465

SUBDIVISION 4Fundamental Changes

Amendments — Letters Patent

Marginal note:Incorporating instrument

 On the application of an insurance holding company duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Part to be set out in the incorporating instrument of the insurance holding company.

  • 2001, c. 9, s. 465

Marginal note:Letters patent to amend

  •  (1) On receipt of an application referred to in section 849, 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.

  • 2001, c. 9, s. 465
Amendments — By-laws

Marginal note:By-laws

  •  (1) The directors of an insurance holding company may make, amend or repeal any by-laws, in the manner set out in subsections (2) and (3) and sections 852 to 856, to

    • (a) change the maximum number, if any, of shares of any class that the insurance holding company is authorized to issue;

    • (b) create new classes of shares;

    • (c) change the designation of any or all of the insurance holding 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 insurance holding 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) increase or decrease the number of directors, subject to subsection 796(1) and section 803;

    • (j) change the name of the insurance holding company; or

    • (k) change the place in Canada where the head office of the insurance holding company is to be situated.

  • Marginal note:Shareholder 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 entitled to vote, and the shareholders may, by special resolution, confirm, amend or reject the by-law, amendment or repeal.

  • 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 under subsection (2) and, in the case of by-laws referred to in paragraph (1)(j), approved by the Superintendent in writing.

  • 2001, c. 9, s. 465

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 insurance holding 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.

  • 2001, c. 9, s. 465
 
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