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

Marginal note:One share, one vote

67 Where voting rights are attached to a share of a company, the voting rights may confer only one vote in respect of that share.

Marginal note:Shares non-assessable

68 Shares issued by a company after the coming into force of this section are non-assessable and the shareholders are not liable to the company or to its creditors in respect thereof.

Marginal note:Consideration for share

• 69 (1) No share of any class of shares of a company shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.

• Marginal note:Transitional

  (2) Where any share of a company is not fully paid for on the day this Part comes into force, the provisions of the Canadian and British Insurance Companies Act that applied to the company immediately prior to that day and that relate to

  • (a) the liability of holders of shares of a company that are not fully paid for and the enforcement of that liability,

  • (b) the forfeiture of the share, and

  • (c) the forfeiture of the right to vote the share

  continue to apply in respect of that share.

• Marginal note:Other currencies

  (3) When issuing shares, a company may provide that any aspect of the shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.

Marginal note:Stated capital account

• 70 (1) A company shall maintain a separate stated capital account for each class and series of shares it issues.

• Marginal note:Addition to stated capital account

  (2) A company shall record in the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.

• Marginal note:Exception

  (2.1) Despite subsection (2), a company may, subject to subsection (2.2), record in the stated capital account maintained for the shares of a class or series any part of the consideration it receives in an exchange if it issues shares

  • (a) in exchange for

    • (i) property of a person who immediately before the exchange did not deal with the company at arm’s length within the meaning of that expression in the Income Tax Act,

    • (ii) shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the company at arm’s length within the meaning of that expression in the Income Tax Act, or

    • (iii) property of a person who immediately before the exchange dealt with the company at arm’s length within the meaning of that expression in the Income Tax Act if the person, the company and all of the holders of shares in the class or series of shares so issued consent to the exchange;

  • (b) under an agreement referred to in subsection 246(1); or

  • (c) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated company.

• Marginal note:Limit on addition to a stated capital account

  (2.2) On the issuance of a share, a company shall not add to the stated capital account in respect of the share an amount greater than the amount of the consideration it receives for the share.

• Marginal note:Constraint on addition to a stated capital account

  (2.3) Where a company that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the company as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 81(4).

• Marginal note:Stated capital of former-Act company

  (3) On the coming into force of this Part, a former-Act company shall record in the stated capital account maintained for each class and series of shares then outstanding an amount that is equal to the aggregate of

  • (a) the aggregate amount paid up on the shares of each class and series of shares immediately before the coming into force of this Part, and

  • (b) the amount of the contributed surplus of the company that is attributable to those shares.

• Marginal note:Contributed surplus entry

  (4) The amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (3)(b) shall be deducted from the contributed surplus account of the company.

• Marginal note:Share issued before coming into force

  (5) Any amount unpaid in respect of a share issued by a former-Act company before the coming into force of this Part and paid after the coming into force of this Part shall be recorded in the stated capital account maintained by the company for the shares of that class or series.

Marginal note:Stated capital of continued company

• 71 (1) Where a body corporate is continued as a company under this Act, the company shall record in the stated capital account maintained for each class and series of shares then outstanding an amount that is equal to the aggregate of

  • (a) the aggregate amount paid up on the shares of each class and series of shares immediately before the body corporate was so continued, and

  • (b) the amount of the contributed surplus of the company that is attributable to those shares.

• Marginal note:Contributed surplus entry

  (2) The amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (1)(b) shall be deducted from the contributed surplus account of the company.

• Marginal note:Shares issued before continuance

  (3) Any amount unpaid in respect of a share issued by a body corporate before it was continued as a company under this Act and paid after it was so continued shall be recorded in the stated capital account maintained by the company for the shares of that class or series.

Marginal note:Pre-emptive right

• 72 (1) Where the by-laws of a company so provide, no shares of any class shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.

• Marginal note:Exception

  (2) Notwithstanding the existence of a pre-emptive right, a shareholder of a company has no pre-emptive right in respect of shares of a class to be issued

  • (a) for a consideration other than money;

  • (b) as a share dividend; or

  • (c) pursuant to the exercise of conversion privileges, options or rights previously granted by the company.

• Marginal note:Idem

  (3) Notwithstanding the existence of a pre-emptive right, a shareholder of a company has no pre-emptive right in respect of shares to be issued

  • (a) where the issue of shares to the shareholder is prohibited by this Act; or

  • (b) where, to the knowledge of the directors of the company, the offer of shares to a shareholder whose recorded address is in a country other than Canada ought not to be made unless the appropriate authority in that country is provided with information in addition to that submitted to the shareholders at the last annual meeting.

Marginal note:Conversion privileges

• 73 (1) A company may issue conversion privileges, options or rights to acquire securities of the 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 a 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 a company has granted privileges to convert any securities issued by the 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 company shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.

Marginal note:Holding of own shares

74 Except as provided in sections 75 to 78, or unless permitted by the regulations, a company shall not

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

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

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

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

Marginal note:Purchase and redemption of shares

• 75 (1) Subject to subsection (2) and to its by-laws, a 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) A company shall not make any payment to purchase or redeem any shares issued by it if there are reasonable grounds for believing that the company is, or the payment would cause the company to be, in contravention of subsection 515(1), any regulation made under subsection 515(2) or any order made under subsection 515(3).

• Marginal note:Donated shares

  (3) A company may accept from any shareholder a share of the 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 79.

Marginal note:Holding as personal representative

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

• Marginal note:Security interest

  (2) A company may, and may permit its subsidiaries to, by way of a security interest

  • (a) hold shares of the company or of any body corporate that controls the company, or

  • (b) hold any ownership interests of any entity that controls the company,

  where the security interest is nominal or immaterial when measured by criteria established by the company that have been approved in writing by the Superintendent.

• Marginal note:Saving

  (3) Nothing in subsection (2) precludes a former-Act company or any of its subsidiaries from holding any security interest held immediately prior to the coming into force of this Part.

Marginal note:Exception — conditions before acquisition

• 76.01 (1) A company may permit any of its subsidiaries to acquire shares of the company through the issuance of those shares by the 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 a company permits any of its subsidiaries to acquire shares of the 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 16 and subsection 70(2), the company must comply with the prescribed requirements.

Marginal note:Holding in market-indexed segregated fund

76.1 A company may hold shares of the company or shares or ownership interests of an entity that controls the company, if

• (a) the shares or ownership interests are assets of a fund maintained by the company as required by paragraph 451(b); and

• (b) the assets of the fund reflect the securities upon which a generally recognized market index is based and the weighting of those securities in that index.

Marginal note:Mutual fund entity’s or closed-end fund’s holding in company

76.2 If a mutual fund entity, as defined in subsection 490(1), or a closed-end fund, as defined in that subsection, becomes a subsidiary of a company by reason of the company investing, in the entity or fund, assets of a fund maintained by the company as required by paragraph 451(b), the company may permit the entity or fund to hold shares of the company, or shares or ownership interests of an entity that controls the company, as long as the assets of the mutual fund entity or closed-end fund reflect the securities upon which a generally recognized market index is based and the weighting of those securities in that index.

Marginal note:Cancellation of shares

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

• Marginal note:Requirement to sell

  (2) Where a company or any of its subsidiaries, through the realization of security, acquires any shares of the company or of any body corporate that controls the company or any ownership interests in an unincorporated entity that controls the company, the company shall, or shall cause its subsidiaries to, as the case may be, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.

Marginal note:Subsidiary holding shares

78 Subject to the regulations, a former-Act company shall cause any subsidiary of the company that holds shares of the company, or of any body corporate that controls the company, or any ownership interests of any unincorporated entity that controls the company to sell or otherwise dispose of those shares or ownership interests within six months after the day this section comes into force.

Marginal note:Reduction of capital

• 79 (1) The stated capital of a company may be reduced by special resolution.

• Marginal note:Limitation

  (2) A company shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the company is, or the reduction would cause the company to be, in contravention of subsection 515(1), any regulation made under subsection 515(2) or any order made under subsection 515(3).

• Marginal note:Contents of special resolution

  (3) A special resolution to reduce the stated capital of a 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 a 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 or policyholders as a result of the reduction.

• Marginal note:Conditions for approval

  (5) No approval to reduce the stated capital of a 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 a company and of the publication thereof, statements showing

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

  • (b) the results of the voting by policyholders and by class of shares of the company,

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

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

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