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

Act current to 2022-09-22 and last amended on 2022-06-23. Previous Versions

PART VIIOwnership (continued)

DIVISION IIConstraints on Ownership (continued)

Marginal note:When approval not required

  •  (1) Despite subsections 407(1) and (2) and section 408, the approval of the Minister is not required if

    • (a) the Superintendent has, by order, directed the company to increase its capital and shares of the company are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or

    • (b) a person, other than an eligible agent, who controls, within the meaning of paragraph 3(1)(a), the company acquires additional shares of the company.

  • Marginal note:Exception

    (1.1) Paragraph (1)(a) does not apply in respect of a converted company in respect of which subsection 407(4) or (11) applies or a company to which subsection 407(5) or (12) applies.

  • Marginal note:Pre-approval

    (2) For the purposes of subsections 407(1) and (2) and section 408, the Minister may approve

    • (a) the purchase or other acquisition of such number or percentage of shares of a company as may be required in a particular transaction or series of transactions; or

    • (b) the purchase or other acquisition of up to a specified number or percentage of shares of a company within a specified period.

  • 1991, c. 47, s. 410
  • 2001, c. 9, s. 405
  • 2012, c. 31, s. 134

Marginal note:Public holding requirement

  •  (1) Every company shall, from and after the day determined under this section in respect of that company, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the company and that are

    • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

    • (b) shares none of which is beneficially owned by a person who is a major shareholder of the company in respect of the voting shares of the company or by any entity that is controlled by a person who is a major shareholder of the company in respect of such shares.

  • Marginal note:Determination of day

    (2) If the company has equity of two billion dollars or more on the day it comes into existence, the day referred to in subsection (1) is the day that is three years after that day and, in the case of any other company, the day referred to in subsection (1) is the day that is three years after the day of the first annual meeting of the shareholders and policyholders of the company held after the equity of the company first reaches two billion dollars.

  • Marginal note:Extension

    (3) If general market conditions so warrant and the Minister is satisfied that a company has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the company must comply with subsection (1).

  • 1991, c. 47, s. 411
  • 2001, c. 9, s. 406
  • 2007, c. 6, s. 335

Marginal note:Limit on assets

  •  (1) Unless an exemption order with respect to the company is granted under section 414, if a company fails to comply with section 411 in any month, the Minister may, by order, require the company not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the company’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.

  • Marginal note:Average total assets

    (2) For the purposes of subsection (1), the average total assets of a company in a three month period shall be computed by adding the total assets of the company as calculated for the month end of each of the three months in the period and by dividing the sum by three.

  • 1991, c. 47, s. 412
  • 2001, c. 9, s. 407

Marginal note:Increase of capital

  •  (1) Where the Superintendent has, by order, directed a company to increase its capital and shares of the company are issued and acquired in accordance with such terms and conditions as may be specified in the order, section 411 shall not apply in respect of the company until such time as the Superintendent may, by order, specify.

  • (2) [Repealed, 1997, c. 15, s. 245]

  • 1991, c. 47, s. 413
  • 1997, c. 15, s. 245

Marginal note:Exemption by Minister

  •  (1) On application by a company and subject to any terms and conditions that the Minister considers appropriate, the Minister may by order exempt the company from the requirements of section 411 if the Minister considers it appropriate to do so.

  • Marginal note:Compliance with section 411

    (2) The company shall comply with section 411 as of the day on which the exemption order expires.

  • Marginal note:Limit on assets

    (3) If a company fails to comply with section 411 on the day referred to in subsection (2), it shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding its average total assets in the three month period ending on the last day of the month immediately preceding the day referred to in subsection (2) or on any later day that the Minister may specify by order.

  • Marginal note:Application of s. 412(2)

    (4) Subsection 412(2) applies for the purposes of subsection (3).

  • 1991, c. 47, ss. 414, 758
  • 2001, c. 9, s. 408
  • 2005, c. 54, s. 294

Marginal note:Continuation of exemption

  •  (1) Despite subsection 414(2), if an exemption order that was granted in respect of a company under subsection 414(3) as it read before the day on which this section comes into force provides that it expires if the holding body corporate ceases to comply with section 411, the company is not required to comply with that section until six months after the day on which the holding body corporate ceased to comply with that section if the failure to comply is as a result of

    • (a) a distribution to the public of voting shares of the holding body corporate;

    • (b) a redemption or purchase of voting shares of the holding body corporate;

    • (c) the exercise of any option to acquire voting shares of the holding body corporate; or

    • (d) the conversion of any convertible securities into voting shares of the holding body corporate.

  • Marginal note:Shares acquiring voting rights

    (2) Despite subsection 414(2), if as a result of an event that has occurred and is continuing shares of a holding body corporate referred to in subsection (1) acquire voting rights in such number as to cause the holding body corporate to no longer be in compliance with section 411, the company is not required to comply with that section until six months after the day on which the holding body corporate ceased to comply with that section or any later day that the Minister may by order specify.

  • 2005, c. 54, s. 294

Marginal note:Exception

  •  (1) Where a company fails to comply with section 411 as the result of

    • (a) a distribution to the public of voting shares of the company,

    • (b) a redemption or purchase of voting shares of the company,

    • (c) the exercise of any option to acquire voting shares of the company, or

    • (d) the conversion of any convertible securities into voting shares of the company,

    section 412 shall not apply in respect of that company until the expiration of six months after the day the company failed to comply with section 411.

  • Marginal note:Shares acquiring voting rights

    (2) Where, as the result of an event that has occurred and is continuing, shares of a company acquire voting rights in such number as to cause the company to no longer be in compliance with section 411, section 412 shall not apply in respect of that company until the expiration of six months after the day the company ceased to be in compliance with section 411 or such later day as the Minister may, by order, specify.

  • (3) and (4) [Repealed, 2005, c. 54, s. 295]

  • Marginal note:Mutualization

    (5) Where the Minister approves a proposal to convert a company into a mutual company under section 226, section 412 does not apply in respect of the company until the expiration of the period that the Minister may fix.

  • 1991, c. 47, s. 415
  • 2005, c. 54, s. 295

Marginal note:Acquisition of control permitted

  •  (1) Subject to subsection (2) and sections 408 and 417, section 411 does not apply in respect of a company if a person acquires control of a company with equity of two billion dollars or more through the purchase or other acquisition of all or any number of the shares of the company by the person or by any entity controlled by the person.

  • Marginal note:Undertaking required

    (2) Subsection (1) applies only if the person provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the company has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the company and that are

    • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

    • (b) shares none of which is beneficially owned by a person who is a major shareholder of the company in respect of the voting shares of the company or by any entity that is controlled by a person who is a major shareholder of the company in respect of such shares.

  • 1991, c. 47, s. 416
  • 2001, c. 9, s. 409
  • 2007, c. 6, s. 335

Marginal note:Application of section 411

 At the expiration of the period for compliance with an undertaking referred to in subsection 416(2), section 411 shall apply in respect of the company.

Marginal note:Restriction on voting rights

  •  (1) If, with respect to any company, a particular person contravenes subsection 407(1), (4), (9), (11) or (15) or section 407.03, 407.1 or 407.2 or fails to comply with an undertaking referred to in subsection 416(2) or with any term or condition imposed under section 421, no person, and no entity controlled by the particular person, shall, in person or by proxy, exercise any voting rights

    • (a) that are attached to shares of the company beneficially owned by the particular person or any entity controlled by the particular person; or

    • (b) that are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.

  • Marginal note:Subsection (1) ceases to apply

    (2) Subsection (1) ceases to apply in respect of a person when, as the case may be,

    • (a) the shares to which the contravention relates have been disposed of;

    • (b) the person ceases to control the company within the meaning of paragraph 3(1)(d);

    • (c) if the person failed to comply with an undertaking referred to in subsection 416(2), the company complies with section 411; or

    • (d) if the person failed to comply with a term or condition imposed under section 421, the person complies with the term or condition.

  • Marginal note:Saving

    (3) Despite subsection (1), if a person contravenes subsection 407(4) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the converted company beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the converted company, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the converted company beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.

  • Marginal note:Saving

    (4) Despite subsection (1), if a person contravenes subsection 407(9) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the company beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the company, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the company beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.

  • 1991, c. 47, s. 418
  • 1997, c. 15, s. 246
  • 2001, c. 9, s. 410

Approval Process

Marginal note:Application for approval

  •  (1) An application for an approval of the Minister required under this Part must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.

  • Marginal note:Applicant

    (2) If, with respect to any particular transaction, this Part applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.

  • 1991, c. 47, s. 419
  • 2001, c. 9, s. 411

Marginal note:Matters for consideration

  •  (1) Subject to subsection (1.1), if an application for an approval under section 407 is made, the Minister, in determining whether or not to approve the transaction, 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 company;

    • (b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the company;

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

    • (f) if the company is a converted company in respect of which the Minister has issued an order under subsection 407(8) or a converted company in respect of which subsection 407(11) applied at any time, or a company that controls, within the meaning of paragraph 3(1)(d), such a converted company, the opinion of the Superintendent regarding the extent to which the corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the company, having regard to

      • (i) the nature and extent of the proposed financial services activities to be carried out by the company and its affiliates, and

      • (ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the company;

    • (g) the impact of any integration of the businesses and operations of the applicant or applicants with those of the company on the conduct of those businesses and operations; and

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

  • Marginal note:Exception

    (1.1) Except for an application by an eligible agent for an approval under section 407, and subject to subsection 407.2(1), the Minister shall take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holding

    • (a) more than 10 per cent but no more than 20 per cent of any class of the outstanding voting shares of a converted company in respect of which subsection 407(4) applies or of a company to which subsection 407(5) applies; or

    • (b) more than 10 per cent but no more than 30 per cent of any class of the outstanding non-voting shares of such a converted company or company.

  • Marginal note:National treatment

    (2) Where a transaction in respect of which subsection 407(1) or (2) applies would cause a company to become a subsidiary of a foreign institution that is engaged in the insurance business, that does not have any other company as its subsidiary and that is a non-WTO Member foreign institution, the Minister shall not approve the transaction unless the Minister is satisfied that treatment as favourable for companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign institution principally carries on business, either directly or through a subsidiary.

  • Marginal note:Part XII of the Bank Act

    (3) Nothing in subsection (1) or (2) affects the operation of Part XII of the Bank Act.

  • 1991, c. 47, s. 420
  • 1999, c. 28, s. 121
  • 2001, c. 9, s. 412
  • 2012, c. 31, s. 135
 
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