Bank Act (S.C. 1991, c. 46)

Marginal note:Duty of care

• 748 (1) Every director and officer of a bank holding company 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 holding company; 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 holding company shall comply with this Act, the regulations, the bank holding company’s incorporating instrument and the by-laws of the bank holding company.

• Marginal note:No exculpation

  (3) No provision in any contract, in any resolution or in the by-laws of a bank holding company relieves any director, officer or employee of the bank holding company 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

• 749 (1) A bank holding company shall have at least seven directors.

• Marginal note:Residency requirement

  (2) At least one half of the directors of a bank holding company that is a subsidiary of a foreign bank and a majority of the directors of any other bank holding company must be, at the time of each director’s election or appointment, resident Canadians.

Marginal note:Disqualified persons

750 The following persons are disqualified from being directors of a bank holding company:

• (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 subsection 156.09(9) or section 901 or 914 from exercising voting rights attached to shares of the bank holding company;

• (f) a person who is an officer, director or full time employee of an entity that is prohibited by subsection 156.09(9) or section 901 or 914 from exercising voting rights attached to shares of the bank holding company;

• (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• (g) [Repealed, 2013, c. 40, s. 163]

• (h) a minister of Her Majesty in right of Canada or in right of a province; and

• (i) a person who is an agent or employee of the government of a foreign country or any political subdivision thereof.

Marginal note:No shareholder requirement

751 A director of a bank holding company is not required to hold shares of the bank holding company.

Marginal note:Limit on directors

752 No more than 15 per cent of the directors of a bank holding company may, at each director’s election or appointment, be employees of the bank holding company or a subsidiary of the bank holding company, except that up to four persons who are employees of the bank holding company or a subsidiary of the bank holding company may be directors of the bank holding company if those directors constitute not more than one half of the directors of the bank holding company.

Election and Tenure — Directors

Marginal note:Number of directors

• 753 (1) Subject to section 217, subsection 749(1) and section 756, the directors of a bank holding company shall, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.

• Marginal note:Election at annual meeting

  (2) A by-law made pursuant to subsection (1) that provides for a minimum and maximum number of directors may provide that the number of directors to be elected at any annual meeting of the shareholders be such number as is fixed by the directors prior to the annual meeting.

Marginal note:Election or appointment as director

753.1 The election or appointment of a person as a director is subject to the following:

• (a) the person was present at the meeting when the election or appointment took place and did not refuse to hold office as a director; or

• (b) the person was not present at the meeting when the election or appointment took place but

  • (i) consented in writing to hold office as a director before the election or appointment or within 10 days after it, or

  • (ii) acted as a director after the election or appointment.

Marginal note:Term of directors

• 754 (1) Except where this Part or the by-laws of a bank holding company provide for cumulative voting, a bank holding company may, by by-law, provide that the directors be elected for terms of one, two or three years.

• Marginal note:Term of one, two or three years

  (2) A director elected for a term of one, two or three years holds office until the close of the first, second or third annual meeting of shareholders, as the case may be, following the election of the director.

• Marginal note:No stated term

  (3) A director who is not elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting of shareholders following the election of the director.

• Marginal note:Tenure of office

  (4) It is not necessary that all directors elected at a meeting of shareholders hold office for the same term.

• Marginal note:Tenure of office

  (5) If a by-law of a bank holding company provides that the directors be elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.

• Marginal note:Composition requirements

  (6) If a director of a bank holding company is elected or appointed for a term of more than one year, the bank holding company shall comply with subsection 749(2) and section 752 at each annual meeting of shareholders during the director’s term of office as if that director were elected or appointed on that date.

Marginal note:Determining election of directors

• 755 (1) Except where this Part or the by-laws of a bank holding company provide for cumulative voting, the persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of a bank holding company shall be the directors thereof.

• Marginal note:Determining election of directors

  (2) If, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors, determine which of the persons so receiving an equal number of votes are to be elected.

Marginal note:Cumulative voting

• 756 (1) Where this Part or the by-laws provide for cumulative voting,

  • (a) there shall be a stated number of directors fixed by by-law and not a minimum and maximum number of directors;

  • (b) each shareholder entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the shareholder multiplied by the number of directors to be elected, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;

  • (c) a separate vote of shareholders shall be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;

  • (d) if a shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the shareholder is deemed to have distributed the votes equally among the candidates for whom the shareholder voted;

  • (e) if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled;

  • (f) each director ceases to hold office at the close of the next annual meeting of shareholders following the director’s election;

  • (g) a director may be removed from office only if the number of votes cast in favour of a motion to remove the director is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion; and

  • (h) the number of directors required by the by-laws may be decreased only if the number of votes cast in favour of a motion to decrease the number of directors is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion.

• Marginal note:Mandatory cumulative voting

  (2) Where the aggregate of the voting shares beneficially owned by a person and any entities controlled by the person carries more than 10 per cent of the voting rights attached to all the outstanding voting shares of a bank holding company, the directors shall be elected by cumulative voting.

• Marginal note:Exception

  (3) Subsection (2) does not apply if all the voting shares of the bank holding company that are outstanding are beneficially owned by

  • (a) one person;

  • (b) one person and one or more entities controlled by that person; or

  • (c) one or more entities controlled by the same person.

• Marginal note:Exception

  (4) Subsection (2) does not apply to a widely held bank holding company with equity of twelve billion dollars or more or to a widely held bank holding company that controls a bank to which subsection 378(1) applies.

• Marginal note:Transitional election

  (5) Where this Part or the by-laws of a bank holding company provide for cumulative voting, the shareholders of the bank holding company shall

  • (a) at the first annual meeting of shareholders held not earlier than ninety days following the date that cumulative voting is required under subsection (2) or provided for in the by-laws, and

  • (b) at each succeeding annual meeting,

  elect the stated number of directors to hold office until the close of the next annual meeting of shareholders following their election.

• Marginal note:Exception

  (6) Nothing in this Part precludes the holders of any class or series of shares of a bank holding company from having an exclusive right to elect one or more directors.

Marginal note:Re-election of directors

757 A director who has completed a term of office is, if otherwise qualified, eligible for re-election.

Incomplete Elections and Director Vacancies

Marginal note:Void election or appointment

• 758 (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 749(2) or section 752, the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.

• Marginal note:Failure to elect minimum

  (2) Where, at the close of a meeting of shareholders of a bank holding company, the shareholders have failed to elect the number or minimum number of directors required by this Part or the by-laws of a bank holding company, the purported election of directors at the meeting

  • (a) is valid if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; or

  • (b) is void if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.

Marginal note:Directors where elections incomplete or void

• 759 (1) Notwithstanding subsections 754(2) and (3) and paragraphs 756(1)(f) and 760(1)(a), where subsection 758(1) or (2) applies at the close of any meeting of shareholders of a bank holding company, the board of directors shall, until their successors are elected or appointed, consist solely of

  • (a) where paragraph 758(2)(a) applies, the directors referred to in that paragraph; or

  • (b) where subsection 758(1) or paragraph 758(2)(b) applies, the persons who were the incumbent directors immediately before the meeting.

• Marginal note:Where there is no approved rectification plan

  (2) Notwithstanding subsections 754(2) and (3) and paragraphs 756(1)(f) and 760(1)(a), where a plan to rectify the non-compliance referred to in subsection 758(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.

• Marginal note:Directors to call meeting

  (3) Where subsection (1) or (2) applies, the board of directors referred to in that subsection shall without delay call a special meeting of shareholders to fill the vacancies, where paragraph 758(2)(a) applies, or elect a new board of directors, where subsection 758(1) or paragraph 758(2)(b) applies.

• Marginal note:Shareholder may call meeting

  (4) Where the directors fail to call a special meeting required by subsection (3), the meeting may be called by any shareholder.

Marginal note:Ceasing to hold office

• 760 (1) A director ceases to hold office

  • (a) at the close of the annual meeting at which the director’s term of office expires;

  • (b) when the director dies or resigns;

  • (c) when the director becomes disqualified under section 750 or ineligible to hold office pursuant to subsection 790(2);

  • (d) when the director is removed under section 761; or

  • (e) when the director is removed from office under section 963 or 964.

• Marginal note:Date of resignation

  (2) The resignation of a director of a bank holding company becomes effective at the time a written resignation is sent to the bank holding company by the director or at the time specified in the resignation, whichever is later.