PART VICorporate Governance (continued)
Directors and Officers
Marginal note:Duty to manage
Marginal note:Specific duties
(2) Without limiting the generality of subsection (1), the directors of a company shall
(a) establish an audit committee to perform the duties referred to in subsections 198(3) and (4);
(b) establish a conduct review committee to perform the duties referred to in subsection 199(3);
(c) establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;
(d) designate a committee of the board of directors to monitor the procedures referred to in paragraph (c);
(e) establish procedures to provide disclosure of information to customers of the company that is required to be disclosed by this Act and for dealing with complaints as required by subsection 441(1);
(f) designate a committee of the board of directors to monitor the procedures referred to in paragraph (e) and satisfy itself that they are being adhered to by the company; and
(g) establish investment and lending policies, standards and procedures in accordance with section 450.
(3) Paragraphs (2)(a) and (b) do not apply to the directors of a company if
(a) all the voting shares of the company, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution described by any of paragraphs (a) to (d) of the definition “financial institution” in section 2; and
(b) the audit committee or the conduct review committee of the Canadian financial institution performs for and on behalf of the company all the functions that would otherwise be required to be performed by the audit committee or conduct review committee of the company under this Act.
- 1991, c. 45, s. 161
- 1997, c. 15, s. 349
- 2001, c. 9, s. 497(F)
Marginal note:Duty of care
Marginal note:Duty to comply
(2) Every director, officer and employee of a company shall comply with this Act, the regulations, the company’s incorporating instrument and the by-laws of the company.
Marginal note:No exculpation
(3) No provision in any contract, in any resolution or in the by-laws of a company relieves any director, officer or employee of the 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
Marginal note:Residency requirement
(2) At least one half of the directors of a company that is a subsidiary of a foreign institution or of a prescribed holding body corporate of a foreign institution and a majority of the directors of any other company must be, at the time of each director’s election or appointment, resident Canadians.
- 1991, c. 45, s. 163
- 2001, c. 9, s. 498
- 2007, c. 6, s. 346
Marginal note:Disqualified persons
164 The following persons are disqualified from being directors of a 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 section 386 or 399 from exercising voting rights attached to shares of the company;
(f) a person who is an officer, director or full time employee of an entity that is prohibited by section 386 or 399 from exercising voting rights attached to shares of the 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 section 374.1;
(g) [Repealed, 2013, c. 40, s. 160]
(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.
- 1991, c. 45, s. 164
- 1994, c. 47, s. 203
- 1997, c. 15, s. 350
- 2012, c. 19, s. 326, c. 31, s. 99
- 2013, c. 40, s. 160
Marginal note:No shareholder requirement
165 A director of a company is not required to hold shares of the company.
Marginal note:Affiliated person
166 The Governor in Council may make regulations specifying the circumstances under which a natural person is affiliated with a company for the purposes of this Act.
Marginal note:Affiliated director determination
166.1 (1) Notwithstanding section 166, the Superintendent may determine that a particular director is affiliated with a company for the purposes of this Act if, in the opinion of the Superintendent, the director has a significant or sufficient commercial, business or financial relationship with the company or with an affiliate of the company to the extent that the relationship can be construed as being material to the director and can reasonably be expected to affect the exercise of the director’s best judgment.
Marginal note:Notification by Superintendent
(2) A determination by the Superintendent under subsection (1)
(a) becomes effective on the day of the next annual meeting of the shareholders unless a notice in writing by the Superintendent revoking the determination is received by the company prior to that day; and
(b) ceases to be in effect on the day of the next annual meeting of the shareholders after a notice in writing by the Superintendent revoking the determination is received by the company.
- 1996, c. 6, s. 117
Marginal note:Unaffiliated directors
167 (1) At the election of directors at each annual meeting of a company and at all times until the day of the next annual meeting, no more than two thirds of the directors may be persons affiliated with the company.
(2) Subsection (1) does not apply where all the voting shares of a company, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.
Marginal note:Determination of affiliation
(3) For the purposes of subsection (1), whether or not a person is affiliated with a company shall be determined as at the day the notice of the annual meeting is sent to shareholders pursuant to section 141 and that determination becomes effective on the day of that meeting, and a person shall be deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders.
Marginal note:Limit on directors
168 No more than 15 per cent of the directors of a company may, at each director’s election or appointment, be employees of the company or a subsidiary of the company, except that up to four persons who are employees of the company or a subsidiary of the company may be directors of the company if those directors constitute not more than one half of the directors of the company.
Election and Tenure — Directors
Marginal note:Number of directors
169 (1) Subject to subsection 163(1) and sections 172 and 222, the directors of a 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.
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