Bank Act (S.C. 1991, c. 46)

PART XVBank Holding Companies

Purpose

Marginal note:Purpose

662 The purpose of this Part is to provide for the incorporation, formation and regulation of bank holding companies.

DIVISION 1Interpretation

Marginal note:Definitions

• 663 (1) The following definitions apply in this Part.

  complainant

  complainant, in relation to a bank holding company or any matter concerning a bank holding company, means

  • (a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a bank holding company or any of its affiliates;

  • (b) a director or an officer, or a former director or officer, of a bank holding company or any of its affiliates; or

  • (c) any other person who, in the discretion of a court, is a proper person to make an application under section 334, 338 or 989. (plaignant)

  subordinated indebtedness

  subordinated indebtedness means an instrument evidencing an indebtedness of a bank holding company that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the bank holding company, be subordinate in right of payment to all liabilities of the bank holding company except those that, by their terms, rank equally with or are subordinate to such indebtedness. (titre secondaire)

• Marginal note:Provisions in other Parts

  (2) A reference in a provision of this Part to a provision in any other Part is deemed to be a reference to that provision as it has been made applicable by this Part in respect of bank holding companies.

• Marginal note:References in other Parts

  (3) A reference in a provision of another Part to a provision that has been made applicable in respect of bank holding companies by this Part is to be read as including a reference to that provision as it has been made applicable in respect of bank holding companies.

DIVISION 2Status and Powers

Marginal note:Corporate powers

• 664 (1) A bank holding company has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.

• Marginal note:Powers restricted

  (2) A bank holding company shall not carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.

• Marginal note:Business in Canada

  (3) A bank holding company may carry on business throughout Canada.

• Marginal note:Powers outside Canada

  (4) Subject to this Act, a bank holding company has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.

Marginal note:Policies and procedures — integrity or security

664.1 A bank holding company shall establish and adhere to policies and procedures to protect itself against threats to its integrity or security, including foreign interference.

Marginal note:No invalidity

665 No act of a bank holding company, including any transfer of property to or by a bank holding company, is invalid by reason only that the act or transfer is contrary to the bank holding company’s incorporating instrument or this Act.

Marginal note:By-law not necessary

666 It is not necessary for a bank holding company to pass a by-law in order to confer any particular power on the bank holding company or its directors.

Marginal note:No personal liability

667 The shareholders of a bank holding company are not, as shareholders, liable for any liability, act or default of the bank holding company except as otherwise provided by this Act.

Marginal note:No constructive notice

668 No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a bank holding company by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at an office of the bank holding company.

Marginal note:Authority of directors, officers and representatives

• 669 (1) No bank holding company and no guarantor of an obligation of a bank holding company may assert against a person dealing with the bank holding company or against a person who has acquired rights from the bank holding company that

  • (a) the bank holding company’s incorporating instrument or any by-laws of the bank holding company have not been complied with;

  • (b) the persons named as directors of the bank holding company in the most recent return sent to the Superintendent under section 951 are not the directors of the bank holding company;

  • (c) the place named in the incorporating instrument or by-laws of the bank holding company is not the place where the head office of the bank holding company is situated;

  • (d) a person held out by the bank holding company as a director, officer or representative of the bank holding company has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the bank holding company or usual for a director, officer or representative; or

  • (e) a document issued by any director, officer or representative of the bank holding company with actual or usual authority to issue the document is not valid or not genuine.

• Marginal note:Exception — knowledge

  (2) Subsection (1) does not apply in respect of a person who has or ought to have knowledge of a situation described in that subsection by virtue of their relationship to the bank holding company.

Marginal note:Sunset provision

• 670 (1) Subject to subsections (2) and (4), bank holding companies shall not carry on business after June 30, 2026.

• Marginal note:Extension

  (2) The Governor in Council may, by order, extend by up to six months the time during which bank holding companies may continue to carry on business. No more than one order may be made under this subsection.

• Marginal note:Order not a regulation

  (3) The order is not a regulation for the purposes of the Statutory Instruments Act. However, it shall be published in Part II of the Canada Gazette.

• Marginal note:Exception — dissolution

  (4) If Parliament dissolves on the day set out in subsection (1) or on any day within the six-month period before that day or on any day within an extension ordered under subsection (2), bank holding companies may continue to carry on business until the end of the 180th day after the first day of the first session of the next Parliament.

DIVISION 3Incorporation and Continuance

Formalities of Incorporation

Marginal note:Incorporation of bank holding company

671 On the application of one or more persons made in accordance with this Part, the Minister may, subject to this Division, issue letters patent incorporating a bank holding company.

Marginal note:Restrictions on incorporation

672 Letters patent incorporating a bank holding company may not be issued if the application therefor is made by or on behalf of

• (a) Her Majesty in right of Canada or in right of a province, an agency of Her Majesty in either of those rights, or an entity controlled by Her Majesty in either of those rights;

• (b) the government of a foreign country or any political subdivision thereof;

• (c) an agency of the government of a foreign country or any political subdivision thereof; or

• (d) an entity, other than a foreign institution or any subsidiary of a foreign institution, that is controlled by the government of a foreign country or any political subdivision thereof.

Marginal note:National treatment

673 If a proposed bank holding company would be a subsidiary of a foreign bank, within the meaning of any of paragraphs (a) to (f) of the definition foreign bank in section 2, letters patent to incorporate the bank holding company may not be issued unless the Minister is satisfied that, if the application is made by a non-WTO Member foreign bank, treatment as favourable for bank holding companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.

Marginal note:Application for incorporation

674 An application for letters patent to incorporate a bank holding company setting out the names of the first directors of the bank holding company shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.

Marginal note:Matters for consideration

675 Before issuing letters patent to incorporate a bank holding company, the Minister shall take into account all matters that the Minister considers relevant to the application, including

• (a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank that is proposed to be its subsidiary;

• (b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank that is proposed to be its subsidiary;

• (c) the business record and experience of the applicant or applicants;

• (d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

• (e) whether the bank holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

• (f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank holding company and its affiliates on the conduct of those businesses and operations; and

• (g) the best interests of the financial system in Canada.

Marginal note:Contents of letters patent

• 676 (1) There shall be set out in the letters patent incorporating a bank holding company

  • (a) the name of the bank holding company;

  • (b) the province in which the head office of the bank holding company is to be situated; and

  • (c) the date that the bank holding company came, or is to come, into existence.

• Marginal note:Provisions in letters patent

  (2) The Minister may set out in the letters patent incorporating a bank holding company any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed bank holding company.

• Marginal note:Terms and conditions

  (3) The Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating a bank holding company as the Minister considers necessary or appropriate.

Marginal note:Letters patent of incorporation on application of banks

• 677 (1) If, under section 671, the Minister issues letters patent incorporating a bank holding company on the application of a bank, there may, on the request of the bank, and with the approval of the Minister, be included in the letters patent of incorporation of the bank holding company a provision deeming shares of the bank holding company to be issued, on a share for share basis, to all shareholders of the bank in exchange for all the issued and outstanding shares of the bank.

• Marginal note:Effect of provision

  (2) Shares of a bank holding company deemed to be issued under subsection (1) are subject to the same designation, rights, privileges and restrictions or conditions and, subject to any agreement to the contrary, to the same charges, encumbrances and other restrictions as the shares of the bank for which they are exchanged and the shares of the bank, on the issuance of the letters patent, become the property of the bank holding company free and clear of any charge, encumbrance or other restriction.

• Marginal note:Effect of provision

  (3) An exchange of shares of a bank referred to in subsection (1) under a provision included in the letters patent incorporating a bank holding company does not deprive a person who was a holder of shares of the bank immediately before the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect of the shares, but that right or privilege must be exercised in accordance with this Act.

• Marginal note:Transfer and voting of shares

  (4) Despite subsection (3), no share of a bank holding company that is deemed to be issued under a provision included in the letters patent incorporating a bank holding company may subsequently be transferred or voted contrary to this Act.

• Marginal note:Shareholder approval

  (5) No provision described in subsection (1) may be included in letters patent issued under section 671 unless the application for the letters patent is accompanied by evidence that the request for the provision was approved by a special resolution of the shareholders of the bank at a shareholders’ meeting called to consider the application.

• Marginal note:Exchange of share certificates

  (6) If, under a provision included in the letters patent incorporating a bank holding company, a share exchange is deemed to have taken place, the bank holding company shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the bank holding company and for the exchange of those certificates for share certificates representing the shares of the bank that were outstanding on the effective date of the letters patent.