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

Act current to 2022-11-16 and last amended on 2022-06-23. Previous Versions

PART XVIIInsurance Holding Companies (continued)

DIVISION 5Capital Structure (continued)

Share Capital (continued)

Marginal note:Conversion privileges

  •  (1) An insurance holding company may issue conversion privileges, options or rights to acquire securities of the insurance holding company, and shall set out the conditions thereof

    • (a) in the documents that evidence the conversion privileges, options or rights; or

    • (b) in the securities to which the conversion privileges, options or rights are attached.

  • Marginal note:Transferable rights

    (2) Conversion privileges, options and rights to acquire securities of an insurance holding company may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.

  • Marginal note:Reserved shares

    (3) Where an insurance holding company has granted privileges to convert any securities issued by the insurance holding company into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the insurance holding company shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.

  • 1991, c. 47, s. 752
  • 2001, c. 9, s. 465

Marginal note:Holding of own shares

 Except as provided in sections 754 to 756, or unless permitted by the regulations, an insurance holding company shall not

  • (a) hold shares of the insurance holding company or of any body corporate that controls the insurance holding company;

  • (b) hold any ownership interests of any unincorporated entity that controls the insurance holding company;

  • (c) permit any of its subsidiaries to hold any shares of the insurance holding company or of any body corporate that controls the insurance holding company; or

  • (d) permit any of its subsidiaries to hold any ownership interests of any unincorporated entity that controls the insurance holding company.

  • 1991, c. 47, s. 753
  • 2001, c. 9, s. 465

Marginal note:Purchase and redemption of shares

  •  (1) Subject to subsection (2) and to its by-laws, an insurance holding company may, with the consent of the Superintendent, purchase, for the purpose of cancellation, any shares issued by it, or redeem any redeemable shares issued by it at prices not exceeding the redemption price thereof calculated according to a formula stated in its by-laws or the conditions attaching to the shares.

  • Marginal note:Restrictions on purchase and redemption

    (2) An insurance holding company shall not make any payment to purchase or redeem any shares issued by it if there are reasonable grounds for believing that it is, or the payment would cause it to be, in contravention of subsection 992(1), any regulation made under subsection 992(2) or any order made under subsection 992(3).

  • Marginal note:Donated shares

    (3) An insurance holding company may accept from any shareholder a share of the insurance holding company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 757.

  • 1991, c. 47, s. 754
  • 2001, c. 9, s. 465
  • 2007, c. 6, s. 315

Marginal note:Holding as personal representative

  •  (1) An insurance holding company may permit its subsidiaries to hold, in the capacity of a personal representative, shares of the insurance holding company or of any body corporate that controls the insurance holding company or ownership interests in any unincorporated entity that controls the insurance holding company, but only if the subsidiary does not have a beneficial interest in the shares or ownership interests.

  • Marginal note:Security interest

    (2) An insurance holding company may permit its subsidiaries to hold, by way of a security interest, shares of the insurance holding company or of any body corporate that controls the insurance holding company or any ownership interests of any entity that controls the insurance holding company if the security interest is nominal or immaterial when measured by criteria established by the insurance holding company that have been approved in writing by the Superintendent.

  • 1991, c. 47, s. 755
  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 309(F)

Marginal note:Exception — conditions before acquisition

  •  (1) An insurance holding company may permit any of its subsidiaries to acquire shares of the insurance holding company through the issuance of those shares by the insurance holding company to the subsidiary if the conditions prescribed for the purposes of this subsection are met before the subsidiary acquires the shares.

  • Marginal note:Conditions after acquisition

    (2) After a subsidiary has acquired shares under the purported authority of subsection (1), the conditions prescribed for the purposes of this subsection must be met.

  • Marginal note:Non-compliance with conditions

    (3) If an insurance holding company permits any of its subsidiaries to acquire shares of the insurance holding company under the purported authority of subsection (1) and one or more of the conditions prescribed for the purposes of subsections (1) and (2) were not met, are not met or cease to be met, as the case may be, then, despite section 702 and subsection 749(2), the insurance holding company must comply with the prescribed requirements.

  • 2007, c. 6, s. 316

Marginal note:Cancellation of shares

  •  (1) Subject to subsection (2), where an insurance holding company purchases shares of the insurance holding company or fractions thereof or redeems or otherwise acquires shares of the insurance holding company, the insurance holding company shall cancel those shares.

  • Marginal note:Requirement to sell

    (2) If a subsidiary of an insurance holding company, through the realization of security, acquires any shares of the insurance holding company or of any body corporate that controls the insurance holding company or any ownership interests in an unincorporated entity that controls the insurance holding company, the insurance holding company shall cause its subsidiary to, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.

  • 1991, c. 47, s. 756
  • 2001, c. 9, s. 465

Marginal note:Reduction of capital

  •  (1) The stated capital of an insurance holding company may be reduced by special resolution.

  • Marginal note:Limitation

    (2) An insurance holding company shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the insurance holding company is, or the reduction would cause the insurance holding company to be, in contravention of subsection 992(1), any regulation made under subsection 992(2) or any order made under subsection 992(3).

  • Marginal note:Contents of special resolution

    (3) A special resolution to reduce the stated capital of an insurance holding company shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.

  • Marginal note:Approval by Superintendent

    (4) A special resolution to reduce the stated capital of an insurance holding company has no effect until it is approved in writing by the Superintendent.

  • Marginal note:Exception

    (4.1) Subsection (4) does not apply if

    • (a) the reduction in the stated capital is made solely as a result of changes made to the accounting principles referred to in subsection 331(4); and

    • (b) there is to be no return of capital to shareholders as a result of the reduction.

  • Marginal note:Conditions for approval

    (5) No approval to reduce the stated capital of an insurance holding company may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.

  • Marginal note:Statements to be submitted

    (6) In addition to evidence of the passing of a special resolution to reduce the stated capital of an insurance holding company and of the publication thereof, statements showing

    • (a) the number of the insurance holding company’s shares issued and outstanding,

    • (b) the results of the voting by class of shares of the insurance holding company,

    • (c) the insurance holding company’s assets and liabilities, and

    • (d) the reason why the insurance holding company seeks the reduction of capital

    shall be submitted to the Superintendent at the time of the application for approval of the special resolution.

  • 1991, c. 47, s. 757
  • 2001, c. 9, s. 465
  • 2007, c. 6, s. 317

Marginal note:Recovery by action

  •  (1) Where any money or property was paid or distributed to a shareholder or other person as a consequence of a reduction of capital made contrary to section 757, a creditor of the insurance holding company may apply to a court for an order compelling the shareholder or other person to pay the money or deliver the property to the insurance holding company.

  • Marginal note:Shares held by personal representative

    (2) No person holding shares in the capacity of a personal representative and registered on the records of the insurance holding company as a shareholder and therein described as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.

  • Marginal note:Limitation

    (3) An action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.

  • Marginal note:Remedy preserved

    (4) This section does not affect any liability that arises under section 841.

  • 1991, c. 47, s. 758
  • 2001, c. 9, s. 465

Marginal note:Adjustment of stated capital account

  •  (1) On a purchase, redemption or other acquisition by an insurance holding company of shares or fractions thereof issued by it, the insurance holding company shall deduct from the stated capital account maintained for the class or series of shares so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series by the number of shares of that class or series so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.

  • Marginal note:Adjustment of stated capital account

    (2) An insurance holding company shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 757.

  • Marginal note:Shares converted to another class

    (3) On a conversion of outstanding shares of an insurance holding company into shares of another class or series, or on a change of outstanding shares of the insurance holding company into shares of another class or series, the insurance holding company shall

    • (a) deduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; and

    • (b) record the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.

  • Marginal note:Stated capital of convertible shares

    (4) For the purposes of subsection (3) and subject to the insurance holding company’s by-laws, where an insurance holding company issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.

  • Marginal note:Conversion or change of shares

    (5) Shares issued by an insurance holding company and converted into shares of another class or series, or changed under subsection 851(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.

  • 1991, c. 47, s. 759
  • 2001, c. 9, s. 465

Marginal note:Addition to stated capital account

 On a conversion of any debt obligation of an insurance holding company into shares of a class or series of shares, the insurance holding company shall

  • (a) deduct from the liabilities of the insurance holding company the nominal value of the debt obligation being converted; and

  • (b) record the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the class or series of shares into which the debt obligation has been converted.

  • 1991, c. 47, s. 760
  • 2001, c. 9, s. 465

Marginal note:Declaration of dividend

  •  (1) The directors of an insurance holding company may declare and an insurance holding company may pay a dividend by issuing fully paid shares of the insurance holding company or options or rights to acquire fully paid shares of the insurance holding company and, subject to subsection (4), the directors of an insurance holding company may declare and an insurance holding company may pay a dividend in money or property, and, where a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.

  • Marginal note:Notice to Superintendent

    (2) The directors of an insurance holding company shall notify the Superintendent of the declaration of a dividend at least 15 days before the day fixed for its payment.

  • Marginal note:Share dividend

    (3) If shares of an insurance holding company are issued in payment of a dividend, the insurance holding company shall record in the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend the declared amount of the dividend stated as an amount of money.

  • Marginal note:When dividend not to be declared

    (4) The directors of an insurance holding company shall not declare and an insurance holding company shall not pay a dividend if there are reasonable grounds for believing that the insurance holding company is, or the payment would cause the insurance holding company to be, in contravention of subsection 992(1), any regulation made under subsection 992(2) or any order made under subsection 992(3).

  • 1991, c. 47, s. 761
  • 2001, c. 9, s. 465
  • 2007, c. 6, s. 318

Subordinated Indebtedness

Marginal note:Restriction on subordinated indebtedness

  •  (1) An insurance holding company shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.

  • Marginal note:References to subordinated indebtedness

    (2) A person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by an insurance holding company refer to the subordinated indebtedness otherwise than as subordinated indebtedness.

  • Marginal note:Other currencies

    (3) When issuing subordinated indebtedness, an insurance holding company may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.

  • 1991, c. 47, s. 762
  • 2001, c. 9, s. 465
 
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