PART VICorporate Governance (continued)
Marginal note:Duty of intermediary
156.07 (1) Shares of a bank that are registered in the name of an intermediary or an intermediary’s nominee and not beneficially owned by the intermediary may not be voted unless the intermediary sends to the beneficial owner
(a) a copy of the notice of the meeting, annual statement, management proxy circular and dissident’s proxy circular and any other documents, other than the form of proxy, that were sent to shareholders by or on behalf of any person for use in connection with the meeting; and
(b) a written request for voting instructions except if the intermediary has already received written voting instructions from the beneficial owner.
Marginal note:When documents to be sent
(2) The intermediary shall send the documents referred to in subsection (1) without delay after they receive the documents referred to in paragraph (1)(a).
Marginal note:Restriction on voting
(3) An intermediary or a proxyholder appointed by them may not vote shares that the intermediary does not beneficially own and that are registered in the name of the intermediary or their nominee unless the intermediary or proxyholder, as the case may be, receives written voting instructions from the beneficial owner.
(4) A person by or on behalf of whom a solicitation is made shall on request and without delay provide the intermediary, at the person’s expense, with the necessary number of copies of the documents referred to in paragraph (1)(a).
Marginal note:Instructions to intermediary
(5) The intermediary shall vote or appoint a proxyholder to vote in accordance with any written voting instructions received from the beneficial owner.
Marginal note:Beneficial owner as proxyholder
(6) If a beneficial owner so requests and provides an intermediary with the appropriate documentation, the intermediary shall appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.
Marginal note:Effect of intermediary’s failure to comply
(7) The failure of an intermediary to comply with any of subsections (1) to (6) does not render void any meeting of shareholders or any action taken at the meeting.
Marginal note:Intermediary may not vote
(8) Nothing in this Part gives an intermediary the right to vote shares that they are otherwise prohibited from voting.
- 1997, c. 15, s. 10
- 2005, c. 54, s. 31
156.071 The Governor in Council may make regulations
(a) respecting the powers that may be granted by a shareholder in a form of proxy;
(b) respecting proxy circulars and forms of proxy, including the form and content of those documents; and
(c) respecting the conditions under which a bank is exempt from any of the requirements of sections 156.02 to 156.07.
- 2005, c. 54, s. 31
- 2019, c. 29, s. 90
Marginal note:Restraining order
156.08 (1) If a form of proxy, management proxy circular or dissident’s proxy circular contains an untrue statement of a material fact or omits to state a material fact that is required to be contained in it or that is necessary to make a statement contained in it not misleading in light of the circumstances in which the statement is made, an interested person or the Superintendent may apply to a court and the court may make any order it thinks fit, including
(a) an order restraining the solicitation or the holding of the meeting, or restraining any person from implementing or acting on a resolution passed at the meeting, to which the form of proxy, management proxy circular or dissident’s proxy circular relates;
(b) an order requiring correction of any form of proxy or proxy circular and a further solicitation; and
(c) an order adjourning the meeting.
Marginal note:Notice of application
(2) Where a person other than the Superintendent is an applicant under subsection (1), the applicant shall give notice of the application to the Superintendent and the Superintendent is entitled to appear and to be heard in person or by counsel.
- 1997, c. 15, s. 10
Restrictions on Voting
Meaning of eligible votes
156.09 (1) In this section, eligible votes means the total number of votes that may be cast by or on behalf of shareholders on a vote of shareholders or a vote of holders of a class or series of shares, as the case may be, in respect of any particular matter, calculated without regard to subsection (2).
(2) At a meeting of shareholders of a bank with equity of twelve billion dollars or more, no person and no entity controlled by any person may, in respect of any vote of shareholders or holders of any class or series of shares of the bank, cast votes in respect of any shares beneficially owned by the person or the entity that are, in aggregate, more than 20 per cent of the eligible votes that may be cast in respect of that vote.
Marginal note:Exception — federal credit union
(2.1) Subsection (2) does not apply in respect of a meeting of shareholders or members of a federal credit union.
(3) No person who is a proxyholder for a person or for an entity controlled by a person may cast votes to which the proxy relates that the person or entity may not cast by reason of subsection (2).
(4) If a person is, with respect to a bank, a person referred to in subsection 375(1), subsections (2) and (3) do not apply with respect to votes cast by or on behalf of the person during any period that the person is entitled under section 375 to remain a major shareholder of the bank.
(5) Subsections (2) and (3) do not apply in respect of votes cast by or on behalf of any entity that controls the bank or any entity that is controlled by an entity that controls the bank.
(6) Subsection (2) does not apply in respect of a vote held under section 218.
Marginal note:Validity of vote
(7) A vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).
Marginal note:Disposition of shareholdings
(8) If, with respect to any bank, a person contravenes subsection (2) or (3), the Minister may, by order, direct the shareholder of the shares to which the contravention relates or any person controlled by that shareholder to dispose of any number of shares of the bank beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the shareholder and the persons controlled by that shareholder that is specified in the order.
Marginal note:Restriction on voting rights
(9) If the Minister makes an order under subsection (8), the person to whom the order relates may not, in person or by proxy, exercise any voting rights that are attached to shares of the bank beneficially owned by the person.
Marginal note:Subsection (9) ceases to apply
(10) Subsection (9) ceases to apply in respect of a person when the shares to which the order relates have been disposed of.
Marginal note:Reliance on number in notice
(11) For the purpose of this section, a person is entitled to rely on the number of eligible votes set out in a notice of a meeting under subsection 138(1.1).
Marginal note:Designation of persons
(12) For the purpose of this section, the Minister may, with respect to a particular bank, designate two or more persons who are parties to an agreement, commitment or understanding referred to in section 9 to be a single person.
- 2001, c. 9, s. 67
- 2007, c. 6, s. 132
- 2010, c. 12, s. 1966
- 2012, c. 5, s. 6
Directors and Officers
Marginal note:Duty to manage
157 (1) Subject to this Act, the directors of a bank shall manage or supervise the management of the business and affairs of the bank.
Marginal note:Specific duties
(2) Without limiting the generality of subsection (1), the directors of a bank shall
(a) establish an audit committee to perform the duties referred to in subsections 194(3) and (4);
(b) establish a conduct review committee to perform the duties referred to in subsection 195(3);
(c) establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;
(d) designate a committee of the board of directors to monitor the procedures referred to in paragraph (c);
(e) establish procedures to provide disclosure of information to customers of the bank that is required to be disclosed by this Act and for dealing with complaints as required by subsection 455(1);
(f) designate a committee of the board of directors to monitor the procedures referred to in paragraph (e) and satisfy itself that they are being adhered to by the bank; and
(g) establish investment and lending policies, standards and procedures in accordance with section 465.
(3) Paragraphs (2)(a) and (b) do not apply to the directors of a bank if
(a) all the voting shares of the bank are beneficially owned by a Canadian financial institution described in any of paragraphs (a) to (d) of the definition financial institution in section 2; and
(b) the audit committee or conduct review committee of the financial institution performs for and on behalf of the bank all the functions that would otherwise be required to be performed by the audit committee or conduct review committee of the bank under this Act.
- 1991, c. 46, s. 157
- 1997, c. 15, s. 11
- 2001, c. 9, s. 68(F)
Marginal note:Duty of care
158 (1) Every director and officer of a bank 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 bank; 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 bank shall comply with this Act, the regulations, the bank’s incorporating instrument and the by-laws of the bank.
Marginal note:No exculpation
(3) No provision in any contract, in any resolution or in the by-laws of a bank relieves any director, officer or employee of the bank 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
159 (1) A bank shall have at least seven directors.
Marginal note:Residency requirement
(2) At least one half of the directors of a bank that is a subsidiary of a foreign bank and a majority of the directors of any other bank must be, at the time of each director’s election or appointment, resident Canadians.
- 1991, c. 46, s. 159
- 2001, c. 9, s. 69
- 2007, c. 6, s. 12
Marginal note:Directors as members
159.1 Not less than two thirds of the directors of a federal credit union, or any greater proportion that is provided for by the by-laws, must be members of the federal credit union or representatives of members of the federal credit union.
- 2010, c. 12, s. 1967
Marginal note:Disqualified persons
160 The following persons are disqualified from being directors of a bank:
(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 section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;
(f) a person who is an officer, director or full time employee of an entity that is prohibited by section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;
(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 subsection 370(1);
(g) [Repealed, 2013, c. 40, s. 161]
(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) if the bank is a federal credit union, a person who fails to meet any of the qualification requirements set out in its by-laws.
- 1991, c. 46, s. 160
- 1994, c. 47, s. 15
- 1997, c. 15, s. 12
- 2001, c. 9, s. 70
- 2010, c. 12, s. 1968
- 2012, c. 19, s. 330, c. 31, s. 109
- 2013, c. 40, s. 161
160.1 [Repealed, 2013, c. 40, s. 162]
Marginal note:No shareholder requirement
161 A director of a bank is not required to hold shares of the bank.
Marginal note:Affiliated person
162 The Governor in Council may make regulations specifying the circumstances under which a natural person is affiliated with a bank for the purposes of this Act.
Marginal note:Affiliated director determination
162.1 (1) Notwithstanding section 162, the Superintendent may determine that a particular director is affiliated with a bank 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 bank or with an affiliate of the bank 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 persons who are entitled to elect directors unless a notice in writing by the Superintendent revoking the determination is received by the bank prior to that day; and
(b) ceases to be in effect on the day of the next annual meeting of those persons after a notice in writing by the Superintendent revoking the determination is received by the bank.
- 1996, c. 6, s. 5
- 2010, c. 12, s. 1969
Marginal note:Unaffiliated directors
163 (1) At the election of directors at each annual meeting of a bank 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 bank.
(2) Subsection (1) does not apply where all the voting shares of a bank, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.
Marginal note:Determination of affiliation
(3) For the purposes of subsection (1), whether or not a person is affiliated with a bank is to be determined as at the day the notice of the annual meeting is sent under section 138 and that determination becomes effective on the day of that meeting, and a person is deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders or members, as the case may be.
(4) Subsection (1) does not apply in respect of a bank that was in existence immediately prior to the day that subsection comes into force until the day that is three years after the day that subsection comes into force.
- 1991, c. 46, s. 163
- 2010, c. 12, s. 1970
- Date modified: