Bank Act (S.C. 1991, c. 46)

Marginal note:Conduct review committee

• 195 (1) The conduct review committee of a bank shall consist of at least three directors.

• Marginal note:Membership

  (2) A majority of the members of the conduct review committee of a bank must consist of directors who are not persons affiliated with the bank and none of the members of the conduct review committee may be officers or employees of the bank or a subsidiary of the bank.

• Marginal note:Duties of conduct review committee

  (3) The conduct review committee of a bank shall

  • (a) require the management of the bank to establish procedures for complying with Part XI;

  • (b) review those procedures and their effectiveness in ensuring that the bank is complying with Part XI;

  • (b.1) if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of the bank,

    • (i) establish policies for entering into transactions referred to in subsection 495.1(1), and

    • (ii) review transactions referred to in subsection 495.3(1); and

  • (c) review the practices of the bank to ensure that any transactions with related parties of the bank that may have a material effect on the stability or solvency of the bank are identified.

• Marginal note:Bank report to Superintendent

  (4) A bank shall report to the Superintendent on the mandate and responsibilities of the conduct review committee and the procedures referred to in paragraph (3)(a).

• Marginal note:Committee report to directors

  (5) After each meeting of the conduct review committee of the bank, the committee shall report to the directors of the bank on matters reviewed by the committee.

• Marginal note:Directors’ report to Superintendent

  (6) Within ninety days after the end of each financial year, the directors of a bank shall report to the Superintendent on what the conduct review committee did during the year in carrying out its responsibilities under subsection (3).

• (7) [Repealed, 1997, c. 15, s. 23]

Marginal note:Committee

• 195.1 (1) The committee designated under paragraph 157(2)(e) shall consist of at least three directors.

• Marginal note:Membership

  (2) A majority of the members of the committee shall consist of directors who are not persons affiliated with the bank, and none of the members of the committee may be officers or employees of the bank or a subsidiary of the bank.

• Marginal note:Duties of committee

  (3) The committee shall

  • (a) require the management of the bank to establish procedures for complying with the consumer provisions;

  • (b) review those procedures to determine whether they are appropriate to ensure that the bank is complying with the consumer provisions; and

  • (c) require the management of the bank to report at least annually to the committee on the implementation of the procedures and on any other activities that the bank carries out in relation to the protection of its customers.

• Marginal note:Bank’s report to Commissioner

  (4) A bank shall report to the Commissioner on the mandate and responsibilities of the committee and the procedures referred to in paragraph (3)(a).

• Marginal note:Committee’s report to directors

  (5) After each meeting of the committee, the committee shall report to the directors of the bank on matters reviewed by the committee.

• Marginal note:Directors’ report to Commissioner

  (6) Within 90 days after the end of each financial year, the directors of a bank shall report to the Commissioner on what the committee did during the year in performing its duties under subsection (3).

Directors and Officers — Authority

Marginal note:Chief executive officer

• 196 (1) The directors of a bank shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 198, may delegate to that officer any of the powers of the directors.

• (2) [Repealed, 1997, c. 15, s. 24]

Marginal note:Appointment of officers

• 197 (1) The directors of a bank may, subject to the by-laws, designate the offices of the bank, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 198, to manage the business and affairs of the bank.

• Marginal note:Directors as officers

  (2) Subject to section 164, a director of a bank may be appointed to any office of the bank.

• Marginal note:Two or more offices

  (3) Two or more offices of a bank may be held by the same person.

Marginal note:Limits on power to delegate

198 The directors of a bank that is not a federal credit union may not delegate the power to

• (a) submit to the shareholders a question or matter requiring the approval of the shareholders;

• (b) fill a vacancy among the directors, on a committee of directors or in the office of auditor, or appoint additional directors;

• (c) issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 62, except in accordance with any authorization made by the directors;

• (d) declare a dividend;

• (e) authorize the redemption or other acquisition by the bank pursuant to section 71 of shares issued by the bank;

• (f) authorize the payment of a commission on a share issue;

• (g) approve a management proxy circular;

• (h) except as provided in this Act, approve the annual statement of the bank and any other financial statements issued by the bank; or

• (i) adopt, amend or repeal by-laws.

Marginal note:Limits on power to delegate

198.1 The directors of a federal credit union may not delegate the power to

• (a) submit to the members or shareholders a question or matter requiring their approval;

• (b) admit members, except in accordance with any authorization made by the members;

• (c) fill a vacancy among the directors, on a committee of directors or in the office of auditor;

• (d) issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 62, except in accordance with any authorization made by the directors;

• (e) declare a dividend on membership shares or shares or allocate an amount as a patronage allocation;

• (f) authorize the redemption or other acquisition by the federal credit union under section 71 of membership shares, or shares, issued by the federal credit union;

• (g) authorize the payment of a commission on a share issue;

• (h) approve a management proxy circular;

• (i) except as provided in this Act, approve the annual statement of the federal credit union and any other financial statements it issued;

• (j) expel members; or

• (k) adopt or amend by-laws.

Marginal note:Remuneration of directors, officers and employees

• 199 (1) Subject to this section and the by-laws, the directors of a bank may fix the remuneration of the directors, officers and employees of the bank.

• Marginal note:By-law required

  (2) No remuneration shall be paid to a director as director until a by-law fixing the aggregate of all amounts that may be paid to all directors in respect of directors’ remuneration during a fixed period of time has been confirmed by special resolution.

Marginal note:Validity of acts

• 200 (1) An act of a director or an officer of a bank is valid notwithstanding a defect in the director’s qualification or an irregularity in the director’s election or in the appointment of the director or officer.

• Marginal note:Idem

  (2) An act of the board of directors of a bank is valid notwithstanding a defect in the composition of the board or an irregularity in the election of the board or in the appointment of a member of the board.

Marginal note:Right to attend meetings

201 A director of a bank is entitled to attend and to be heard at every meeting of shareholders or members.

Conflicts of Interest

Marginal note:Disclosure of interest

• 202 (1) A director or officer of a bank shall disclose to the bank, in writing or by requesting to have it entered in the minutes of a meeting of directors or a meeting of a committee of directors, the nature and extent of any interest they have in a material contract or material transaction with the bank, whether entered into or proposed, if they

  • (a) are a party to the contract or transaction;

  • (b) are a director or officer of a party to the contract or transaction or a person acting in a similar capacity; or

  • (c) have a material interest in a party to the contract or transaction.

• Marginal note:Time of disclosure — director

  (2) The disclosure shall be made in the case of a director

  • (a) at the meeting of directors, or of a committee of directors, at which the proposed contract or transaction is first considered;

  • (b) if at the time of the meeting referred to in paragraph (a) the director was not interested in the proposed contract or transaction, at the first one after they become interested in it;

  • (c) if the director becomes interested after a contract or transaction is entered into, at the first one after they become interested; or

  • (d) if a person who is interested in a contract or transaction becomes a director, at the first one after they become a director.

• Marginal note:Time of disclosure — officer

  (3) The disclosure shall be made in the case of an officer who is not a director

  • (a) immediately after they become aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors or of a committee of directors;

  • (b) if they become interested after the contract or transaction is entered into, immediately after they become interested; or

  • (c) if a person who is interested in a contract or transaction becomes an officer, immediately after they become an officer.

• Marginal note:Time of disclosure — contract not requiring approval

  (4) If the material contract or material transaction, whether entered into or proposed, is one that in the ordinary course of the bank’s business would not require approval by the directors, shareholders or members, as the case may be, the director or officer must disclose to the bank, in writing or by requesting to have it entered in the minutes of a meeting of directors or of a committee of directors, the nature and extent of their interest immediately after they become aware of the contract or transaction.

Marginal note:Director to abstain

• 203 (1) A director who is required to make a disclosure under subsection 202(1) shall not be present at any meeting of directors, or of a committee of directors, while the contract or transaction is being considered or vote on any resolution to approve it unless the contract or transaction

  • (a) relates primarily to their remuneration as a director, officer, employee or agent of the bank, an entity controlled by the bank or an entity in which the bank has a substantial investment;

  • (b) is for indemnity under section 212 or insurance under section 213; or

  • (c) is with an affiliate of the bank.

• Marginal note:Ineligibility

  (2) Any director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any financial institution that is incorporated or formed by or under an Act of Parliament.

• Marginal note:Validity of acts

  (3) An act of the board of directors of a bank, or of a committee of the board of directors, is not invalid because a person acting as a director had ceased under subsection (2) to hold office as a director.

Marginal note:General notice

• 204 (1) For the purposes of subsection 202(1), a general notice to the directors declaring that a director or officer is to be regarded as interested for any of the following reasons in a contract or transaction entered into with a party is a sufficient declaration of interest in relation to any contract or transaction with that party:

  • (a) the director or officer is a director or officer of a party referred to in paragraph 202(1)(b) or (c) or a person acting in a similar capacity;

  • (b) the director or officer has a material interest in the party; or

  • (c) there has been a material change in the nature of the director’s or officer’s interest in the party.

• Marginal note:Access to disclosures

  (2) The shareholders and members of the bank may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 202(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the bank.

Marginal note:Avoidance standards

• 205 (1) A contract or transaction for which disclosure is required under subsection 202(1) is not invalid and a director or officer is not accountable to the bank or its shareholders or members for any profit realized from it by reason only of the director’s or officer’s interest in the contract or transaction or the fact that the director was present or was counted to determine whether a quorum existed at the meeting of directors, or of a committee of directors, that considered it if

  • (a) the director or officer disclosed their interest in accordance with section 202 and subsection 204(1);

  • (b) the directors approved the contract or transaction; and

  • (c) the contract or transaction was reasonable and fair to the bank at the time that it was approved.

• Marginal note:Confirmation

  (2) Even if the conditions set out in subsection (1) are not met, a director or officer acting honestly and in good faith is not accountable to the bank or its shareholders or members for any profit realized from a contract or transaction for which disclosure was required and the contract or transaction is not invalid by reason only of the director’s or officer’s interest in it if

  • (a) the contract or transaction is approved or confirmed by special resolution at

    • (i) in the case of a bank that is not a federal credit union, a meeting of shareholders, or

    • (ii) in the case of a federal credit union, at a meeting of its members and, if it has shareholders, at a meeting of its shareholders;

  • (b) disclosure of the interest was made to the shareholders or, in the case of a federal credit union, to the members and shareholders, if any, in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; and

  • (c) the contract or transaction was reasonable and fair to the bank at the time that it was approved or confirmed.