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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 XISelf-dealing (continued)

Interpretation and Application (continued)

Meaning of transaction

  •  (1) For the purposes of this Part, entering into a transaction with a related party of a company includes

    • (a) making a guarantee on behalf of the related party;

    • (b) making an investment in any securities of the related party;

    • (c) taking an assignment of or otherwise acquiring a loan made by a third party to the related party;

    • (d) taking a security interest in the securities of the related party; and

    • (e) causing the company to be reinsured by the related party against any risk undertaken by the company under its policies.

  • Marginal note:Interpretation

    (2) For the purposes of this Part, the fulfilment of an obligation under the terms of any transaction, including the payment of interest on a loan or deposit and the making of a payment or an advance under a policy, is part of the transaction, and not a separate transaction.

  • Meaning of loan

    (3) For the purposes of this Part, loan includes a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit, but does not include investments in securities or the making of an acceptance, endorsement or other guarantee.

  • Marginal note:Security of a related party

    (4) For the purposes of this Part, security of a related party includes an option, transferable by delivery, to demand delivery of a specified number or amount of shares of the related party at a fixed price within a specified time.

  • 1991, c. 47, s. 520
  • 2007, c. 6, s. 242

Prohibited Related Party Transactions

Marginal note:Prohibited transactions

  •  (1) Except as provided in this Part, a company shall not, directly or indirectly, enter into any transaction with a related party of the company.

  • Marginal note:Transaction of entity

    (2) Without limiting the generality of subsection (1), a company is deemed to have indirectly entered into a transaction in respect of which this Part applies where the transaction is entered into by an entity that is controlled by the company.

  • Marginal note:Exception

    (3) Subsection (2) does not apply where an entity that is controlled by a company is a financial institution incorporated or formed under the laws of a province and is subject to regulation and supervision, satisfactory to the Minister, regarding transactions with related parties of the company.

  • Marginal note:Idem

    (4) Subsection (2) does not apply in respect of transactions entered into by an entity that is controlled by a company if the transaction is a prescribed transaction or is one of a class of prescribed transactions.

Permitted Related Party Transactions

Marginal note:Nominal value transactions

 Notwithstanding anything in this Part, a company may enter into a transaction with a related party of the company if the value of the transaction is nominal or immaterial to the company when measured by criteria that have been established by the conduct review committee of the company and approved in writing by the Superintendent.

Marginal note:Reinsurance

  •  (1) A company may, subject to subsection (2) and to Division III of Part VI, cause itself to be reinsured by a related party of the company against any risk undertaken by the company under its policies.

  • Marginal note:Restriction re related parties

    (2) Except with the approval of the Superintendent, a company may cause itself to be reinsured in respect of risks undertaken under its policies by a related party of the company only if the related party is

    • (a) a company; or

    • (b) a foreign company that, in Canada, reinsures those risks.

  • Marginal note:Exception

    (3) The approval of the Superintendent under subsection (2) is not required if the reinsurance transaction was approved by the Minister or the Superintendent under subsection 254(2) or (2.01).

  • 1991, c. 47, s. 523
  • 2007, c. 6, s. 243

Marginal note:Risks of related party

 A company may, subject to Division III of Part VI, reinsure any risks undertaken by a related party of the company.

  • 1991, c. 47, s. 524
  • 2007, c. 6, s. 244(F)

Marginal note:Secured loans

 A company may make a loan to or a guarantee on behalf of a related party of the company or take an assignment of or otherwise acquire a loan to a related party of the company if

  • (a) the loan or guarantee is fully secured by securities of or guaranteed by the Government of Canada or the government of a province; or

  • (b) the loan is a loan permitted by section 469 made to a related party who is a natural person on the security of a mortgage of the principal residence of that related party.

Marginal note:Borrowing, etc., from related party

  •  (1) A company may borrow money from or issue debt obligations to a related party of the company.

  • Marginal note:Segregated funds

    (2) A company may issue policies to a related party of the company or accept or retain on the direction of a policyholder or beneficiary who is a related party amounts that are payable as

    • (a) policy dividends or bonuses, or

    • (b) policy proceeds on the surrender or maturity of the policy or on the death of the person whose life is insured

    where the liabilities of the company in respect of the policies or the amounts accepted or retained vary in amount depending on the market value of a specified group of assets.

Marginal note:Acquisition of assets

  •  (1) A company may purchase or otherwise acquire from a related party of the company

    • (a) securities of or guaranteed by the Government of Canada or the government of a province;

    • (b) assets fully secured by securities of or guaranteed by the Government of Canada or the government of a province; or

    • (c) goods for use in the ordinary course of business.

  • Marginal note:Sale of assets

    (2) Subject to section 512, a company may sell any assets of the company to a related party of the company if

    • (a) the consideration for the assets is fully paid in money; and

    • (b) there is an active market for those assets.

  • Marginal note:Asset transactions with financial institutions

    (3) Notwithstanding any of the provisions of subsections (1) and (2), a company may, in the normal course of business and pursuant to arrangements that have been approved by the Superintendent in writing, acquire or dispose of any assets, other than real property, from or to a related party of the company that is a financial institution.

  • Marginal note:Asset transactions in restructuring

    (4) Notwithstanding any of the provisions of subsections (1) and (2), a company may acquire any assets from, or dispose of any assets to, a related party of the company as part of, or in the course of, a restructuring, if the acquisition or disposition has been approved in writing by the Superintendent.

  • Marginal note:Idem

    (5) A company may lease assets

    • (a) from a related party of the company for use in the ordinary course of business of the company, or

    • (b) to a related party of the company,

    if the lease payments are made in money.

  • Marginal note:Approval under subsection 254(2) or (2.01)

    (6) A company or society may acquire any assets from, or dispose of any assets to, a related party of the company under a transaction that is approved by the Minister or the Superintendent under subsection 254(2) or (2.01).

  • 1991, c. 47, s. 527
  • 2007, c. 6, s. 245

Marginal note:Services

  •  (1) A company may enter into a transaction with a related party of the company if the transaction

    • (a) subject to subsection (2), consists of a written contract for the purchase by the company of services used in the ordinary course of business;

    • (b) subject to subsection (4), involves the provision of services normally offered to the public by the company in the ordinary course of business;

    • (c) consists of a written contract with a financial institution or an entity in which the company is permitted to have a substantial investment pursuant to section 495 that is a related party of the company

      • (i) for the networking of any services provided by the company or the financial institution or entity, or

      • (ii) for the referral of any person by the company to the financial institution or entity, or for the referral of any person by the financial institution or entity to the company;

    • (d) consists of a written contract for such pension or benefit plans or their management or administration as are incidental to directorships or to the employment of officers or employees of the company or its subsidiaries; or

    • (e) involves the provision by the company of management, advisory, accounting, information processing or other services in relation to any business of the related party.

  • Marginal note:Restriction

    (2) Where a company has entered into a contract pursuant to paragraph (1)(a) and the contract, when taken together with all other such contracts entered into by the company, results in all or substantially all of the management functions of the company being exercised by persons who are not employees of the company, the Superintendent may, by order, if the Superintendent considers that result to be inappropriate, require the company, within such time as may be specified in the order, to take all steps necessary to ensure that management functions that are integral to the carrying on of business by the company are exercised by employees of the company to the extent specified in the order.

  • Marginal note:Exception

    (3) Despite subsection 521(2), a company is deemed not to have indirectly entered into a transaction in respect of which this Part applies if the transaction is entered into by an entity that is controlled by the company and the business of which is limited to the activity referred to in paragraph 495(2)(c) and the transaction is on terms and conditions at least as favourable to the company as market terms and conditions, as defined in subsection 534(2).

  • Marginal note:Services

    (4) The provision of services, for the purposes of paragraph (1)(b), does not include the making of loans or guarantees.

  • 1991, c. 47, s. 528
  • 1997, c. 15, s. 279
  • 2007, c. 6, s. 246
 
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