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

Short Title

Marginal note:Short title

1 This Act may be cited as the Insurance Companies Act.

PART IInterpretation and Application

Definitions

Marginal note:Definitions

• 2 (1) In this Act,

  actuary

  actuary means a Fellow of the Canadian Institute of Actuaries; (actuaire)

  adjustable policy

  adjustable policy means an adjustable policy as defined in the regulations; (police ajustable)

  affairs

  affairs, with respect to a company, means the relationships among the company and its affiliates and the shareholders, policyholders, directors and officers of the company and its affiliates, but does not include the business of the company or any of its affiliates; (affaires internes)

  affiliate

  affiliate means an entity that is affiliated with another entity within the meaning of section 6; (groupe)

  Agency

  Agency means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act; (Agence)

  annual return

  annual return means a return prepared in accordance with subsection 665(1) or (2); (état annuel)

  annual statement

  annual statement, in relation to a company, means the annual financial statement of the company within the meaning of paragraph 331(1)(a) and, in relation to an insurance holding company, means the annual financial statement of the insurance holding company within the meaning of paragraph 887(1)(a); (rapport annuel)

  assets in Canada

  assets in Canada means the assets that have been vested in trust for a foreign company under Part XIII; (actif au Canada)

  auditor

  auditor includes a firm of accountants; (vérificateur)

  bank holding company

  bank holding company means a body corporate that is incorporated or formed under Part XV of the Bank Act; (société de portefeuille bancaire)

  bearer

  bearer, in relation to a security, means the person in possession of a security payable to bearer or endorsed in blank; (porteur)

  bearer form

  bearer form, in respect of a security, means a security in bearer form as determined in accordance with subsection 87(2); (titre au porteur)

  beneficial ownership

  beneficial ownership includes ownership through one or more trustees, legal representatives, agents or other intermediaries; (véritable propriétaire et propriété effective)

  body corporate

  body corporate means an incorporated body wherever or however incorporated; (personne morale)

  Canadian financial institution

  Canadian financial institution means a financial institution that is incorporated or formed by or under an Act of Parliament or of the legislature of a province; (institution financière canadienne)

  central securities register

  central securities register or securities register, in relation to a company or an insurance holding company, means the register referred to in section 271; (registre central des valeurs mobilières ou registre des valeurs mobilières)

  class

  class, in respect of insurance or an insurance policy, means a class determined in accordance with section 12; (branche)

  Commissioner

  Commissioner means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act; (commissaire)

  common-law partner

  common-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year; (conjoint de fait)

  company

  company means a body corporate referred to in subsection 13(1); (société)

  complainant

  complainant, in relation to a company or any matter concerning a company, means

  • (a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of the company or any of its affiliates,

  • (a.1) a policyholder entitled to vote at a meeting of policyholders or shareholders and policyholders of the company,

  • (b) a director or an officer, or a former director or officer, of the company or any of its affiliates, or

  • (c) any other person who, in the discretion of a court, is a proper person to make an application under section 371, 375 or 1031; (plaignant)

  consumer provision

  consumer provision means a provision referred to in paragraph (c) or (c.1) of the definition consumer provision in section 2 of the Financial Consumer Agency of Canada Act; (disposition visant les consommateurs)

  converted company

  converted company means a mutual company that has been converted under this Act into a company with common shares; (société transformée)

  court

  court means

  • (a) in the Province of Ontario, the Superior Court of Justice,

  • (b) in the Province of Quebec, the Superior Court of the Province,

  • (c) in the Provinces of Nova Scotia, British Columbia and Prince Edward Island, the Supreme Court of the Province,

  • (d) in the Provinces of New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench for the Province,

  • (e) in the Province of Newfoundland and Labrador, the Trial Division of the Supreme Court of the Province, and

  • (f) in Yukon and the Northwest Territories, the Supreme Court, and in Nunavut, the Nunavut Court of Justice; (tribunal)

  court of appeal

  court of appeal means the court to which an appeal lies from a decision or order of a court; (cour d’appel)

  debt obligation

  debt obligation means a bond, debenture, note or other evidence of indebtedness of an entity, whether secured or unsecured; (titre de créance)

  director

  director means a natural person occupying the position of director, by whatever name called, of a body corporate, and board of directors or directors refers to the directors of a body corporate as a body and, in the case of a society, refers to the supreme governing body of the society; (administrateur, conseil d’administration ou conseil)

  equity

  equity, in respect of a company or an insurance holding company, means its equity as determined in accordance with the regulations; (capitaux propres)

  entity

  entity means a body corporate, trust, partnership, fund, an unincorporated association or organization, Her Majesty in right of Canada or of a province, an agency of Her Majesty in either of such rights and the government of a foreign country or any political subdivision thereof and any agency thereof; (entité)

  federal credit union

  federal credit union has the same meaning as in section 2 of the Bank Act; (coopérative de crédit fédérale)

  federal financial institution

  federal financial institution means

  • (a) a company or a society,

  • (b) a bank,

  • (c) a body corporate to which the Trust and Loan Companies Act applies, or

  • (d) an association to which the Cooperative Credit Associations Act applies; (institution financière fédérale)

  fiduciary

  fiduciary means any person acting in a fiduciary capacity and includes a personal representative of a deceased person; (représentant)

  financial institution

  financial institution means

  • (a) a company or a society,

  • (b) a bank or an authorized foreign bank within the meaning of section 2 of the Bank Act,

  • (c) a body corporate to which the Trust and Loan Companies Act applies,

  • (d) an association to which the Cooperative Credit Associations Act applies,

  • (e) a trust, loan or insurance corporation incorporated by or under an Act of the legislature of a province,

  • (f) a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,

  • (g) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities, including portfolio management and investment counselling, and

  • (h) a foreign institution; (institution financière)

  financial year

  financial year, in respect of a foreign company, means a calendar year; (exercice)

  foreign company

  foreign company means an entity that is the subject of an order made under subsection 574(1); (société étrangère)

  foreign institution

  foreign institution means an entity that is

  • (a) engaged in the business of banking, the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities or is otherwise engaged primarily in the business of providing financial services, and

  • (b) incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province; (institution étrangère)

  former-Act company

  former-Act company means a body corporate referred to in paragraph 13(1)(b); (société antérieure)

  former-Act society

  former-Act society means a body corporate referred to in paragraph 13(2)(b); (société de secours antérieure)

  form of proxy

  form of proxy means a written or printed form that, when completed and executed by or on behalf of a shareholder or a policyholder, or, in the case of a fraternal benefit society, a member, constitutes a proxy; (formulaire de procuration)

  fraternal benefit society

  fraternal benefit society means a body corporate

  • (a) that is without share capital,

  • (b) that has a representative form of government, and

  • (c) that was incorporated for fraternal, benevolent or religious purposes, including the provision of insurance benefits solely to its members or the spouses, common-law partners or children of its members; (société de secours mutuel)

  going-private transaction

  going-private transaction means a going-private transaction as defined in the regulations; (transaction de fermeture)

  guarantee

  guarantee includes a letter of credit; (garantie)

  head office

  head office means

  • (a) in relation to a company, the office required to be maintained by the company under section 260,

  • (b) in relation to a society, the office required to be maintained by the society under section 544, and

  • (c) in relation to an insurance holding company, the office required to be maintained by the insurance holding company under section 868; (siège)

  holder

  holder means

  • (a) in respect of a security certificate, the person in possession of the certificate issued or endorsed to that person or to bearer or in blank, and

  • (b) in respect of the ownership of a share, the shareholder of the share within the meaning of section 7; (détenteur)

  holding body corporate

  holding body corporate means a holding body corporate within the meaning of section 4; (société mère)

  incorporated

  incorporated, when used with reference to a body corporate that is incorporated by or under an Act of Parliament or of the legislature of a province, also refers to a body corporate that is continued by or under any such Act; (constitué en personne morale)

  incorporating instrument

  incorporating instrument means the special Act, letters patent, instrument of continuance or other constating instrument by which a body corporate was incorporated or continued and includes any amendment to or restatement of the constating instrument; (acte constitutif)

  incorporator

  incorporator, in relation to a company or an insurance holding company, means a person who applied for letters patent to incorporate the company or insurance holding company, as the case may be; (fondateur)

  infrastructure asset

  infrastructure asset means a physical asset, including a long-lived physical asset that supports the delivery of public services, prescribed by regulation; (infrastructure)

  insurance holding company

  insurance holding company means a body corporate that is incorporated or formed under Part XVII; (société de portefeuille d’assurances)

  issuer

  issuer, in respect of a security, means the entity that issues or issued the security; (émetteur)

  letters patent

  letters patent, in respect of an instrument authorized to be issued under this Act, means letters patent in a form approved by the Superintendent; (lettres patentes)

  life company

  life company means a company or a provincial company that is permitted to insure risks falling within the class of life insurance, other than a company or a provincial company that is also permitted to insure risks falling within any other class of insurance other than accident and sickness insurance, credit protection insurance and other approved products insurance; (société d’assurance-vie)

  marine company

  marine company means a company that is incorporated for the sole purpose of insuring risks within the class of marine insurance; (société d’assurance maritime)

  Minister

  Minister means the Minister of Finance; (ministre)

  minor

  minor has the same meaning as in the applicable provincial law and in the absence of any such law has the same meaning as the word “child” in the United Nations Convention on the Rights of the Child adopted in the United Nations General Assembly on November 20, 1989; (mineur)

  mutual company

  mutual company means

  • (a) a company that is incorporated or continued as a mutual company under this Act,

  • (b) a former-Act company that, on the coming into force of this paragraph, has no issued and outstanding shares, or

  • (c) a company that is converted into a mutual company under sections 226 to 236,

  and that is not converted into a company with common shares under this Act; (société mutuelle)

  non-WTO Member foreign institution

  non-WTO Member foreign institution means a foreign institution that is not controlled by a WTO Member resident; (institution étrangère d’un non-membre de l’OMC)

  officer

  officer means

  • (a) in relation to a body corporate, a chief executive officer, president, vice-president, secretary, controller, treasurer and any other natural person designated as an officer of the body corporate by by-law or by resolution of the directors of the body corporate, and

  • (b) in relation to any other entity, any natural person designated as an officer of the entity by by-law, by resolution of the members thereof or otherwise; (dirigeant)

  order form

  order form, in respect of a security, means a security in order form as determined in accordance with subsection 87(3); (titre à ordre)

  ordinary resolution

  ordinary resolution means a resolution passed by a majority of the votes cast by or on behalf of the shareholders or policyholders who voted in respect of that resolution; (résolution ordinaire)

  participating policy

  participating policy means a policy issued by a company that entitles its holder to participate in the profits of the company; (police à participation)

  participating policyholder

  participating policyholder means the holder of a participating policy; (souscripteur avec participation)

  permitted infrastructure entity

  permitted infrastructure entity means an entity that, in accordance with prescribed conditions, only makes investments in infrastructure assets or engages in any other activity prescribed by regulation; (entité d’infrastructure admissible)

  person

  person means a natural person, an entity or a personal representative; (personne)

  personal representative

  personal representative means a person who stands in place of and represents another person and, without limiting the generality of the foregoing, includes, as the circumstances require, a trustee, an executor, an administrator, a committee, a guardian, a tutor, a curator, an assignee, a receiver, an agent or an attorney of any person; (représentant personnel)

  policy

  policy means any written contract of insurance or reinsurance whether contained in one or more documents and, in the case of insurance in a fraternal benefit society, any contract of insurance whether evidenced by a written document or not and any certificate of membership relating in any way to insurance, and includes any annuity contract and any endowment insurance contract; (police)

  policy in Canada

  policy in Canada[Repealed, 2007, c. 6, s. 186]

  policyholder in Canada

  policyholder in Canada[Repealed, 2007, c. 6, s. 186]

  prescribed

  prescribed means prescribed by regulation; (Version anglaise seulement)

  property and casualty company

  property and casualty company means a company or a provincial company that is not a life company or a marine company; (société d’assurances multirisques)

  provincial company

  provincial company means, subject to subsection (1.1),

  • (a) [Repealed, 2001, c. 9, s. 345]

  • (b) Antigonish Farmers’ Mutual Fire Insurance Company,

  • (c) Clare Mutual Insurance Company,

  • (d) The Halifax Insurance Company, or

  • (e) Pictou County Farmers’ Mutual Fire Insurance Company,

  or, if the name of such company is changed, includes the successor company by its new name; (société provinciale)

  proxy

  proxy means a completed and executed form of proxy by means of which a shareholder or policyholder or, in the case of a society, a member, appoints a proxyholder to attend and act on behalf of the shareholder, policyholder or member at a meeting of shareholders, policyholders or members; (procuration)

  proxyholder

  proxyholder means the person appointed by proxy to attend and act on behalf of a shareholder or a policyholder or, in the case of a society, a member at a meeting of shareholders, policyholders or members; (fondé de pouvoir)

  real property

  real property includes a leasehold interest in real property; (biens immeubles)

  recorded address

  recorded address means

  • (a) in relation to a person who is a shareholder of a company or an insurance holding company, the latest postal address of the person according to the central securities register of the company or the insurance holding company, as the case may be, and

  • (b) in relation to a person in any other respect, the latest postal address of the person according to the records of the company or insurance holding company; (adresse enregistrée)

  registered form

  registered form, in respect of a security, means a security in registered form as determined in accordance with subsection 87(4); (titre nominatif)

  regulated foreign entity

  regulated foreign entity means an entity that is

  • (a) incorporated or formed otherwise in a country or territory, other than Canada, in which a trade agreement listed in Schedule IV of the Bank Act is applicable; and

  • (b) subject to financial services regulation in that country or territory; (entité étrangère réglementée)

  regulatory capital

  regulatory capital, in respect of a company, a society, a provincial company or an insurance holding company, has the meaning given that expression by the regulations; (capital réglementaire)

  resident Canadian

  resident Canadian means a natural person who is

  • (a) a Canadian citizen ordinarily resident in Canada,

  • (b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or

  • (c) a permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which the individual first became eligible to apply for Canadian citizenship; (résident canadien)

  residential property

  residential property means real property consisting of buildings that are used, or are to be used, to the extent of at least one half of the floor space thereof, as one or more private dwellings; (immeuble résidentiel)

  securities underwriter

  securities underwriter means a person who, as principal, agrees to purchase securities with a view to the distribution of the securities or who, as agent for a body corporate or other person, offers for sale or sells securities in connection with a distribution of the securities, and includes a person who participates, directly or indirectly, in a distribution of securities, other than a person whose interest in the distribution of securities is limited to receiving a distributor’s or seller’s commission payable by a securities underwriter; (souscripteur à forfait)

  security

  security means

  • (a) in relation to a body corporate, a share of any class of shares of the body corporate or a debt obligation of the body corporate, and includes a warrant of the body corporate, but does not include a deposit with a financial institution or any instrument evidencing such a deposit, and

  • (b) in relation to any other entity, any ownership interest in or debt obligation of the entity,

  but does not include a policy; (titre ou valeur mobilière)

  security interest

  security interest means an interest in or charge on property by way of mortgage, lien, pledge or otherwise taken by a creditor or guarantor to secure the payment or performance of an obligation; (sûreté)

  send

  send includes deliver; (envoyer)

  series

  series, in respect of shares, means a division of a class of shares; (série)

  significant interest

  significant interest means a significant interest determined in accordance with section 8; (intérêt substantiel)

  society

  society means a body corporate referred to in subsection 13(2) that is a fraternal benefit society; (société de secours)

  special resolution

  special resolution means a resolution passed by a majority of not less than two thirds of the votes cast by or on behalf of the shareholders and policyholders and, in the case of a fraternal benefit society, the members, who voted in respect of that resolution or signed by all the shareholders, policyholders and members entitled to vote on that resolution; (résolution extraordinaire)

  squeeze-out transaction

  squeeze-out transaction means a transaction by a company that is not a distributing company, or an insurance holding company that is not a distributing insurance holding company, that requires an amendment to a by-law referred to in subsection 238(1) or 851(1), as the case may be, and that would directly or indirectly result in the interest of a holder of shares of a class of shares being terminated without their consent and without substituting an interest of equivalent value in shares that are issued by the following persons and have rights and privileges equal to or greater than those of the shares of the affected class:

  • (a) in the case of a company, the company, and

  • (b) in the case of an insurance holding company, the insurance holding company; (transaction d’éviction)

  subordinated indebtedness

  subordinated indebtedness means an instrument evidencing an indebtedness of a company that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the company, be subordinate in right of payment to all policy liabilities of the company and all other liabilities of the company except those other liabilities that, by their terms, rank equally with or are subordinate to such indebtedness; (titre secondaire)

  subsidiary

  subsidiary means an entity that is a subsidiary of another entity within the meaning of section 5; (filiale)

  substantial investment

  substantial investment means a substantial investment determined in accordance with section 10; (intérêt de groupe financier)

  Superintendent

  Superintendent means the Superintendent of Financial Institutions appointed pursuant to the Office of the Superintendent of Financial Institutions Act; (surintendant)

  total assets

  total assets, in respect of a company, society, provincial company or insurance holding company, has the meaning given that expression by the regulations; (actif total)

  trade

  trade, in respect of securities, means any sale or disposition of securities for valuable consideration; (opération)

  transfer

  transfer, in respect of securities, includes a transmission by operation of law; (transfert)

  voting share

  voting share means a share of any class of shares of a body corporate carrying voting rights under all circumstances or by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled; (action avec droit de vote)

  WTO Member resident

  WTO Member resident means a WTO Member resident within the meaning of section 11.1. (résident d’un membre de l’OMC)

• Marginal note:Provincial company status

  (1.1) A company referred to in the definition provincial company in subsection (1) ceases to be a provincial company for the purposes of this Act if the order made by the Superintendent under subsection 657(1) approving the commencement and carrying on of business by the company is revoked.

• Marginal note:Policy loans

  (2) For greater certainty, any reference in this Act to a loan does not include, unless otherwise provided, a reference to an advance on the security or against the cash surrender value of a policy.

• Marginal note:Major shareholder

  (3) For the purposes of this Act, a person is a major shareholder of a body corporate if

  • (a) the aggregate of the shares of any class of voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the body corporate; or

  • (b) the aggregate of the shares of any class of non-voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the body corporate.

• Marginal note:Widely held

  (4) For the purposes of this Act, a body corporate is widely held if it has no major shareholder.

Interpretation

Marginal note:Regulations — distributing company or insurance holding company

• 2.1 (1) The Governor in Council may make regulations respecting the determination of what constitutes a distributing company or distributing insurance holding company for the purposes of this Act.

• Marginal note:Exemption — company or insurance holding company

  (2) On the application of a company or insurance holding company, the Superintendent may determine that it is not or was not a distributing company or distributing insurance holding company, as the case may be, if the Superintendent is satisfied that the determination would not prejudice any security holder of that company or insurance holding company.

• Marginal note:Exemption — class of companies or insurance holding companies

  (3) The Superintendent may determine that members of a class of companies or insurance holding companies are not or were not distributing companies or distributing insurance holding companies, as the case may be, if the Superintendent is satisfied that the determination would not prejudice any security holder of a member of the class.

Marginal note:Regulations — permitted infrastructure entities

2.2 The Governor in Council may make regulations prescribing

• (a) physical assets for the purposes of the definition infrastructure asset;

• (b) activities in which a permitted infrastructure entity is permitted to engage; and

• (c) conditions applicable to investments made and other activities carried out by permitted infrastructure entities.

Marginal note:Control

• 3 (1) For the purposes of this Act,

  • (a) a person controls a body corporate if securities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate;

  • (b) a person controls an unincorporated entity, other than a limited partnership, if more than 50 per cent of the ownership interests, however designated, into which the entity is divided are beneficially owned by that person and the person is able to direct the business and affairs of the entity;

  • (c) the general partner of a limited partnership controls the limited partnership; and

  • (d) a person controls an entity if the person has any direct or indirect influence that, if exercised, would result in control in fact of the entity.

• Marginal note:Deemed control

  (2) A person who controls an entity is deemed to control any entity that is controlled, or deemed to be controlled, by the entity.

• Marginal note:Deemed control

  (3) A person is deemed to control, within the meaning of paragraph (1)(a) or (b), an entity if the aggregate of

  • (a) any securities of the entity that are beneficially owned by that person, and

  • (b) any securities of the entity that are beneficially owned by any entity controlled by that person

  is such that, if that person and all of the entities referred to in paragraph (b) that beneficially own securities of the entity were one person, that person would control the entity.

• Marginal note:Guidelines

  (4) The Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(d), make guidelines respecting what constitutes such control, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(d) in that provision shall be interpreted in accordance with the guidelines.

Marginal note:Holding body corporate

4 A body corporate is the holding body corporate of any entity that is its subsidiary.

Marginal note:Subsidiary

5 An entity is a subsidiary of another entity if it is controlled by the other entity.

Marginal note:Affiliated entities

• 6 (1) One entity is affiliated with another entity if one of them is controlled by the other or both are controlled by the same person.

• Marginal note:Affiliated entities

  (2) Despite subsection (1), for the purposes of Divisions VIII and X of Part VI and Subdivisions 8 and 10 of Division 6 of Part XVII, one entity is affiliated with another entity if one of them is controlled, determined without regard to paragraph 3(1)(d), by the other or both are controlled, determined without regard to paragraph 3(1)(d), by the same person.

Marginal note:Shareholder

• 7 (1) For the purposes of this Act, a person is a shareholder of a body corporate when, according to the securities register of the body corporate, the person is the owner of one or more shares of the body corporate or is entitled to be entered in the securities register or like record of the body corporate as the owner of the share or shares.

• Marginal note:Holder of a share

  (2) A reference in this Act to the holding of a share by or in the name of any person is a reference to the fact that the person is registered or is entitled to be registered in the securities register or like record of the body corporate as the holder of that share.

Marginal note:Significant interest

• 8 (1) A person has a significant interest in a class of shares of a company or an insurance holding company if the aggregate of

  • (a) any shares of that class beneficially owned by the person, and

  • (b) any shares of that class beneficially owned by entities controlled by the person

  exceeds 10 per cent of all of the outstanding shares of that class of shares of the company or insurance holding company, as the case may be.

• Marginal note:Increasing significant interest

  (2) A person who has a significant interest in a class of shares of a company or insurance holding company increases that significant interest in the class of shares if the person or any entity controlled by the person

  • (a) acquires beneficial ownership of additional shares of that class, or

  • (b) acquires control of any entity that beneficially owns shares of that class,

  in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.

Marginal note:Acting in concert

• 9 (1) For the purposes of Part VII and Division 7 of Part XVII, if two or more persons have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of

  • (a) shares of a company or of an insurance holding company that they beneficially own,

  • (b) shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a company or of an insurance holding company, or

  • (c) shares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of a company or insurance holding company,

  those persons are deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the company or insurance holding company or shares or ownership interests of the entity that are beneficially owned by them.

• Marginal note:Acting in concert

  (2) Without limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of a company or insurance holding company or shares or ownership interests of any entity referred to in paragraph (1)(b) or (c),

  • (a) whereby any of them or their nominees may veto any proposal put before the board of directors of the company or insurance holding company, as the case may be, or

  • (b) under which no proposal put before the board of directors of the company or insurance holding company, as the case may be, may be approved except with the consent of any of them or their nominees,

  is deemed to be an agreement, commitment or understanding referred to in subsection (1).

• Marginal note:Exceptions

  (3) For the purposes of this section, persons shall be presumed not to have agreed to act jointly or in concert solely by reason of the fact that

  • (a) one is the proxyholder of one or more of the others in respect of shares or ownership interests referred to in subsection (1); or

  • (b) they vote the voting rights attached to shares or ownership interests referred to in subsection (1) in the same manner.

• Marginal note:Designation

  (4) Where in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsections (1) and (2) exists by or among two or more persons, the Superintendent may designate those persons as persons who have agreed to act jointly or in concert.

• Marginal note:Contravention

  (5) A person contravenes a provision of Part VII or Division 7 of Part XVII if the person agrees to act jointly or in concert with one or more other persons in such a manner that a deemed single person contravenes the provision.

Marginal note:Substantial investment in body corporate

• 10 (1) A person has a substantial investment in a body corporate where

  • (a) the voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate; or

  • (b) the aggregate of any shares of the body corporate beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25 per cent of the shareholders’ equity of the body corporate.

• Marginal note:Increasing substantial investment in body corporate

  (2) A person who has a substantial investment in a body corporate pursuant to paragraph (1)(a) increases that substantial investment when the person or any entity controlled by the person

  • (a) acquires beneficial ownership of additional voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person; or

  • (b) acquires control of any entity that beneficially owns any voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person.

• Marginal note:Idem

  (3) A person who has a substantial investment in a body corporate pursuant to paragraph (1)(b) increases that substantial investment when the person or any entity controlled by the person

  • (a) acquires beneficial ownership of additional shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person; or

  • (b) acquires control of any entity that beneficially owns any shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person.

• Marginal note:New substantial investment

  (4) For greater certainty,

  • (a) where a person has a substantial investment in a body corporate pursuant to paragraph (1)(a) and the person, or any entity controlled by the person,

    • (i) purchases or otherwise acquires beneficial ownership of shares of the body corporate, or

    • (ii) acquires control of any entity that beneficially owns shares of the body corporate,

    in such number as to cause the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person to exceed 25 per cent of the shareholders’ equity of the body corporate, or

  • (b) where a person has a substantial investment in a body corporate pursuant to paragraph (1)(b) and the person or any entity controlled by the person

    • (i) purchases or otherwise acquires beneficial ownership of voting shares of the body corporate, or

    • (ii) acquires control of any entity that beneficially owns voting shares of the body corporate,

    in such number as to cause the voting rights attached to the aggregate of the voting shares beneficially owned by the person and by any entities controlled by the person to exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the company,

  the acquisition is deemed to cause the person to increase a substantial investment in the body corporate.

• Marginal note:Substantial investment in unincorporated entity

  (5) A person has a substantial investment in an unincorporated entity where the aggregate of any ownership interests, however designated, into which the entity is divided, beneficially owned by the person and by any entities controlled by the person exceeds 25 per cent of all of the ownership interests into which the entity is divided.

• Marginal note:Increasing substantial investment in unincorporated entities

  (6) A person who has a substantial investment in an unincorporated entity increases that substantial investment when the person or any entity controlled by the person

  • (a) acquires beneficial ownership of additional ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests in the unincorporated entity beneficially owned by the person and by any entities controlled by the person; or

  • (b) acquires control of any entity that beneficially owns ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests beneficially owned by the person and by any entities controlled by the person.

11 [Repealed, 2005, c. 54, s. 216]

Marginal note:WTO Member resident

• 11.1 (1) For the purposes of this Act, a WTO Member resident is

  • (a) a natural person who is ordinarily resident in a country or territory that is a WTO Member as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada;

  • (b) a body corporate, association, partnership or other organization that is incorporated, formed or otherwise organized in a country or territory that is a WTO Member, as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada, and that is controlled,

    • (i) directly or indirectly, by one or more persons referred to in paragraph (a), or

    • (ii) by a government of a WTO Member, whether federal, state or local, or an agency of one of those governments;

  • (c) a trust established by one or more persons referred to in paragraph (a) or (b) or a trust in which one or more of those persons have more than 50 per cent of the beneficial interest; or

  • (d) a body corporate, association, partnership or other organization that is controlled, directly or indirectly, by a trust referred to in paragraph (c).

• Marginal note:Interpretation

  (2) For the purposes of subsection (1),

  • (a) a body corporate is controlled by one or more persons if

    • (i) securities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person or persons, and

    • (ii) the votes attached to those securities are sufficient to elect a majority of the directors of the body corporate;

  • (b) an association, partnership or other organization is controlled by one or more persons if

    • (i) more than 50 per cent of the ownership interests, however designated, into which the association, partnership or other organization is divided are beneficially owned by the person or persons, and

    • (ii) the person or persons are able to direct the business and affairs of the association, partnership or other organization;

  • (c) a body corporate, association, partnership or other organization is controlled by one or more persons if the person or persons have, directly or indirectly, control in fact of the body corporate, association, partnership or other organization; and

  • (d) a body corporate, association, partnership or other organization that controls another body corporate, association, partnership or other organization is deemed to control any body corporate, association, partnership or other organization that is controlled or deemed to be controlled by the other body corporate, association, partnership or other organization.

Marginal note:Class of insurance

• 12 (1) A class of insurance is a class set out in the schedule.

• Marginal note:Reference to particular class

  (2) A reference in this Act to a particular class of insurance is a reference to the insurance of risks falling within that particular class determined in accordance with subsections (3) to (6) and the schedule.

• Marginal note:Property

  (3) A class of insurance that includes insurance against the loss of, or damage to, property includes insurance against loss of use, occupancy, rents and profits resulting from that loss or damage.

• Marginal note:Personal injuries and death

  (4) Unless specifically mentioned in the schedule, no class of insurance includes insurance against liability arising out of bodily injury to, or the death of, a natural person or the loss of, or damage to, property.

• Marginal note:Idem

  (5) A class of insurance that includes insurance against liability arising out of bodily injury to, or the death of, a natural person or the loss of, or damage to, property includes insurance against loss, damage or expenses incident to a claim giving rise to that liability.

• Marginal note:Endowments

  (6) The class of life insurance includes the issuance of endowment insurance the funds of which are to be paid at a fixed or determinable future time if the person whose life is insured is then alive or at the person’s death if the person dies before that time.

• Marginal note:Amendment

  (7) The Governor in Council may, by order, amend subsections (3) to (5) and the schedule.

Application

Marginal note:Application of Act

• 13 (1) This Act applies to every body corporate

  • (a) that is incorporated or continued as a company under this Act, or

  • (b) to which any of the provisions of Parts I, II, III and VII and either or both of Parts IV and VI of the Canadian and British Insurance Companies Act applied immediately before the coming into force of this section

  and that is not discontinued under this Act.

• Marginal note:Application of certain provisions

  (2) This Part, Parts II to IV, sections 224, 225, 245 to 258 and 489 and Parts X, XII, XV, XVI and XVIII to XX apply to every body corporate that is not discontinued under this Act and

  • (a) that is incorporated or continued as a society under this Act; or

  • (b) to which any of the provisions of Parts I and II, Part III, except section 77, Part IV, except sections 123 to 130 and 153 to 158, and Parts V and VII of the Canadian and British Insurance Companies Act applied before June 1, 1992.

Marginal note:Conflicting provisions

14 Where there is a conflict or inconsistency between a provision of this Act and a provision of the incorporating instrument of a former-Act company or former-Act society, the provision of this Act prevails.

PART IIStatus and Powers

Marginal note:Corporate powers

• 15 (1) A company or society has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.

• Marginal note:Powers restricted

  (2) Neither a company nor a society shall carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.

• Marginal note:Business in Canada

  (3) A company or society may carry on business throughout Canada.

• Marginal note:Powers outside Canada

  (4) Subject to this Act, a company or society has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.

Marginal note:Policies and procedures — integrity or security

15.1 A company or society shall establish and adhere to policies and procedures to protect itself against threats to its integrity or security, including foreign interference.

Marginal note:No invalidity

16 No act of a company or society, including any transfer of property to or by a company or society, is invalid by reason only that the act or transfer is contrary to the company’s or society’s incorporating instrument or this Act.

Marginal note:By-law not necessary

17 It is not necessary for a company to pass a by-law in order to confer any particular power on the company or its directors.

Marginal note:No personal liability

• 18 (1) The shareholders and participating policyholders of a company are not, as shareholders or policyholders, liable for any liability, act or default of the company except as otherwise provided by this Act.

• Marginal note:Idem

  (2) The members of a society are not, as members, liable for any liability, act or default of the society except as otherwise provided by this Act.

Marginal note:No constructive notice

19 No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a company or society by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at an office of the company or society.

Marginal note:Authority of directors and officers

• 20 (1) No company or society and no guarantor of an obligation of a company or society may assert against a person dealing with the company or society or against a person who has acquired rights from the company or society that

  • (a) the company’s or society’s incorporating instrument or any by-laws of the company or society have not been complied with;

  • (b) the persons named as directors of the company or society in the most recent return sent to the Superintendent under section 549 or 668 are not the directors of the company or society;

  • (c) the place named in the incorporating instrument or by-laws of the company or society is not the place where the head office of the company or society is situated;

  • (d) a person held out by the company or society as a director, officer or representative of the company or society has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the company or society or usual for a director, officer or representative; or

  • (e) a document issued by any director, officer or representative of the company or society with actual or usual authority to issue the document is not valid or not genuine.

• Marginal note:Exception — knowledge

  (2) Subsection (1) does not apply in respect of a person who has or ought to have knowledge of a situation described in that subsection by virtue of their relationship to the company or society.

Marginal note:Sunset provision

• 21 (1) Subject to subsections (2) and (4), companies and societies shall not carry on business, and foreign companies shall not carry on business in Canada, after June 30, 2026.

• Marginal note:Extension

  (2) The Governor in Council may, by order, extend by up to six months the time during which companies and societies may continue to carry on business and foreign companies may continue to carry on business in Canada. No more than one order may be made under this subsection.

• Marginal note:Order not a regulation

  (3) The order is not a regulation for the purposes of the Statutory Instruments Act. However, it shall be published in Part II of the Canada Gazette.

• Marginal note:Exception — dissolution

  (4) If Parliament dissolves on the day set out in subsection (1) or on any day within the six-month period before that day or on any day within an extension ordered under subsection (2), companies and societies may continue to carry on business, and foreign companies may continue to carry on business in Canada, until the end of the 180th day after the first day of the first session of the next Parliament.

PART IIIIncorporation, Continuance and Discontinuance

Formalities of Incorporation

Marginal note:Incorporation of company or society

22 On the application of one or more persons made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating a company or society.

Marginal note:Restrictions on incorporation

• 23 (1) Letters patent incorporating a company or society may not be issued if the application therefor is made by or on behalf of

  • (a) Her Majesty in right of Canada or in right of a province, an agency of Her Majesty in either of those rights, or an entity controlled by Her Majesty in either of those rights;

  • (b) the government of a foreign country or any political subdivision thereof;

  • (c) an agency of the government of a foreign country or any political subdivision thereof; or

  • (d) an entity, other than a foreign institution or any subsidiary of a foreign institution, that is controlled by the government of a foreign country or any political subdivision thereof.

• Marginal note:Societies

  (2) Letters patent incorporating a society may not be issued if the society is to operate for profit or as a commercial enterprise or its property is not to be under the control of persons periodically elected by members of the society.

Marginal note:National treatment

• 24 (1) If a proposed company would be a subsidiary of a foreign institution that is engaged in the insurance business, letters patent to incorporate the company may not be issued unless the Minister is satisfied that, if the application is made by a non-WTO Member foreign institution, 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

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

Marginal note:Application for incorporation

• 25 (1) An application for letters patent to incorporate a company or society setting out the names of the first directors of the company or society shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.

• Marginal note:Publishing notice of intent

  (2) Before filing an application referred to in subsection (1), the applicant or one of the applicants, as the case may be, shall, at least once a week for a period of four consecutive weeks, publish, in a form satisfactory to the Superintendent, a notice of intention to make the application in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the company or society is to be situated.

Marginal note:Objections to incorporation

• 26 (1) Any person who objects to the proposed incorporation of a company or society may, within thirty days after the date of the last publication under subsection 25(2) in respect of the proposed company or society, submit the objection in writing to the Superintendent.

• Marginal note:Minister to be informed

  (2) On receipt of an objection under subsection (1), the Superintendent shall inform the Minister of the objection.

• Marginal note:Inquiry into objection and report

  (3) On receipt of an objection under subsection (1), and if the application for the issuance of the letters patent to which the objection relates has been received, the Superintendent shall, if satisfied that it is necessary and in the public interest to do so, hold or cause to be held a public inquiry into the objection as it relates to the application and, on completion of the inquiry, the Superintendent shall report the findings of the inquiry to the Minister.

• Marginal note:Report to be made available

  (4) Within thirty days after receiving a report under subsection (3), the Minister shall make the report available to the public.

• Marginal note:Rules governing proceedings

  (5) Subject to the approval of the Governor in Council, the Superintendent may make rules governing the proceedings at public inquiries held under this section.

Marginal note:Matters for consideration

27 Before issuing letters patent to incorporate a company or society, the Minister 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 or society;

• (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 or society;

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

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

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

Marginal note:Contents of letters patent

• 28 (1) There shall be set out in the letters patent incorporating a company or society

  • (a) the name of the company or society;

  • (b) the province in which the head office of the company or society is to be situated;

  • (c) the date that the company or society came, or is to come, into existence; and

  • (d) in the case of letters patent incorporating a company, whether the company is to be a mutual company.

• Marginal note:Fraternal benefit societies

  (2) In addition to the information required to be included under subsection (1), there shall be set out in the letters patent of a society

  • (a) the criteria for membership in the society;

  • (b) the manner in which the capital of the society is to be acquired; and

  • (c) the disposition to be made of the property of the society on liquidation.

• Marginal note:Provisions in letters patent

  (3) The Minister may set out in the letters patent incorporating a company or society any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed company or society.

• Marginal note:Terms and conditions

  (4) The Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating a company or society as the Minister considers necessary or appropriate.

Marginal note:Letters patent of incorporation on application of converted companies

• 28.1 (1) If the Minister, under section 22, issues letters patent incorporating a company on the application of a converted company in respect of which subsection 407(4) or (11) applies or applied at any time, the Minister may include in the letters patent of incorporation of the company a provision deeming shares of the company to be issued, on a share for share basis, to all shareholders of the converted company in exchange for all the issued and outstanding shares of the converted company.

• Marginal note:Effect of provision

  (2) Shares of a company deemed to be issued under subsection (1) are subject to the same designation, rights, privileges and restrictions or conditions and, subject to any agreement to the contrary, to the same charges, encumbrances and other restrictions as the shares of the converted company for which they are exchanged and the shares of the converted company, on the issuance of the letters patent, become the property of the company free and clear of any charge, encumbrance or other restriction.

• Marginal note:Effect of provision

  (3) An exchange of shares of a converted company referred to in subsection (1) under a provision included in the letters patent incorporating a company does not deprive a person who was a holder of shares of the converted company immediately before the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect of the shares, but that right or privilege must be exercised in accordance with this Act.

• Marginal note:Transfer and voting of company shares

  (4) Despite subsection (3), no share of a company that is deemed to be issued under a provision included in the letters patent incorporating a company may subsequently be transferred or voted contrary to this Act.

• Marginal note:Shareholder and policyholder approval

  (5) No provision described in subsection (1) may be included in letters patent issued under section 22 unless the application for the letters patent is accompanied by evidence that the request for the provision was approved by a special resolution of the shareholders and policyholders of the converted company who are entitled to vote at a meeting of shareholders and policyholders called to consider the application.

• Marginal note:Exchange of share certificates

  (6) If, under a provision included in the letters patent incorporating a company, a share exchange is deemed to have taken place, the company shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the company and for the exchange of those certificates for share certificates representing the shares of the converted company that were outstanding on the day the letters patent were issued.

Marginal note:Proposal involving fundamental change

• 28.2 (1) On application, made in accordance with the regulations, by a converted company in respect of which subsection 407(4) or (11) applies or applied at any time to give effect to a proposal to incorporate a company as the holding body corporate of the converted company, to continue a body corporate as a company that is the holding body corporate of the converted company or to amalgamate two or more bodies corporate and continue those bodies corporate as a company that is the holding body corporate of the converted company — and to make any other fundamental change to the converted company, including an exchange of any or all of the shares of the converted company for shares of the company —, the Minister may, to give effect to the proposal,

  • (a) include in the letters patent of the company issued under section 22, 34 or 251 any provision the Minister considers necessary; or

  • (b) despite any provision of the Act specified in regulations made under paragraph (2)(e), give any approval that the Minister considers necessary.

• Marginal note:Regulations

  (2) The Governor in Council may make regulations

  • (a) respecting applications referred to in subsection (1), including their form and the information to be contained in them, and authorizing the Superintendent to require additional information in respect of such applications;

  • (b) respecting proposals to which subsection (1) applies, including the information to be contained in the proposals and the times within which the transactions involved in them must occur;

  • (c) respecting the procedures to be followed by a converted company that makes an application under subsection (1);

  • (d) respecting the approval, confirmation or authorization, if any, of all or any portion of proposals to which subsection (1) applies, including the approval of shareholders and policyholders and including the terms and conditions of those approvals, confirmations or authorizations and their effect; and

  • (e) specifying provisions of the Act for the purpose of paragraph (1)(b).

Marginal note:Notice of issue of letters patent

29 The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent incorporating a company or society.

Marginal note:First directors

30 The first directors of a company or society are the directors named in the application for letters patent to incorporate the company or society.

Marginal note:Effect of letters patent

31 A company or society comes into existence on the date provided therefor in its letters patent.

Continuance

Marginal note:Federal corporations

• 32 (1) A body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament, including an insurance holding company but not including a federal credit union, may apply to the Minister for letters patent continuing the body corporate as a company under this Act.

• Marginal note:Other corporations

  (2) A body corporate incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the body corporate as a company under this Act.

• Marginal note:Fraternal benefit societies

  (3) A fraternal benefit society incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the fraternal benefit society as a society.

Marginal note:Application for continuance

• 33 (1) Where a body corporate applies for letters patent under subsection 32(1), (2) or (3), sections 23 to 27 apply in respect of the application, with such modifications as the circumstances require.

• Marginal note:Special resolution approval

  (2) Where a body corporate applies for letters patent under subsection 32(1), (2) or (3), the application must be duly authorized by a special resolution.

• Marginal note:Copy of special resolution

  (3) A copy of the special resolution referred to in subsection (2) shall be filed with the application.

Marginal note:Power to issue letters patent

• 34 (1) On the application of a body corporate under subsection 32(1) or (2), the Minister may, subject to this Part, issue letters patent continuing the body corporate as a company under this Act.

• Marginal note:Power to issue letters patent to fraternal benefit society

  (2) On the application of a fraternal benefit society under subsection 32(3), the Minister may, subject to this Part, issue letters patent continuing the fraternal benefit society as a society.

• Marginal note:Issue of letters patent

  (3) Section 28 applies in respect of the issue of letters patent under subsection (1) or (2), with such modifications as the circumstances require.

Marginal note:Effect of letters patent

• 35 (1) On the day set out in the letters patent continuing a body corporate as a company under subsection 34(1),

  • (a) the body corporate becomes a company as if it had been incorporated under this Act; and

  • (b) the letters patent are deemed to be the incorporating instrument of the continued company.

• Marginal note:Effect of letters patent — society

  (2) On the day set out in the letters patent continuing a fraternal benefit society as a society under subsection 34(2),

  • (a) the fraternal benefit society becomes a society as if it had been incorporated under this Act; and

  • (b) the letters patent are deemed to be the incorporating instrument of the continued society.

Marginal note:Copy of letters patent

• 36 (1) Where a body corporate is continued as a company or society under this Part, the Superintendent shall without delay send a copy of the letters patent to the appropriate official or public body in the jurisdiction in which the body corporate was authorized to apply to be continued under this Act.

• Marginal note:Notice of issuance of letters patent

  (2) The Superintendent shall publish in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as a company or society under this Act.

Marginal note:Effects of continuance

37 Where a body corporate is continued as a company or society under this Part,

• (a) the property of the body corporate continues to be the property of the company or society;

• (b) the company or society continues to be liable for the obligations of the body corporate;

• (c) an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;

• (d) a civil, criminal or administrative action or proceeding pending by or against the body corporate may continue to be prosecuted by or against the company or society;

• (e) a conviction against, or any ruling, order or judgment in favour of or against the body corporate may be enforced by or against the company or society;

• (f) a person who, on the day the body corporate becomes a company or society, is the holder of a security issued by the body corporate is not deprived of any right or privilege available to the person at that time in respect of the security or relieved of any liability in respect of it, but any such right or privilege may be exercised only in accordance with this Act; and

• (g) the by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the company or society.

Marginal note:Transitional

• 38 (1) Notwithstanding any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to a company or society in respect of which letters patent were issued under subsection 34(1) or (2) permission to

  • (a) engage in a business activity specified in the order that the company or society would not otherwise be permitted by this Act to engage in and that the body corporate continued as the company or society was engaging in at the time the application for the letters patent was made;

  • (b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;

  • (c) [Repealed, 1994, c. 47, s. 119]

  • (d) hold assets that the company or society would not otherwise be permitted by this Act to hold, if the assets were held by the body corporate continued as the company or society at the time the application for the letters patent was made;

  • (e) acquire and hold assets that the company or society would not otherwise be permitted by this Act to acquire or hold, if the body corporate continued as the company or society was obliged, at the time the application for the letters patent was made, to acquire those assets; and

  • (f) maintain outside Canada any records or registers required by this Act to be maintained in Canada.

• Marginal note:Duration

  (2) The permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceeding

  • (a) with respect to any activity described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;

  • (b) with respect to any matter described in paragraph (1)(b), ten years; and

  • (c) with respect to any matter described in any of paragraphs (1)(d) to (f), two years.

• Marginal note:Renewal

  (3) Subject to subsection (4), the Minister may, on the recommendation of the Superintendent, by order, renew a permission granted by order under subsection (1) with respect to any matter described in paragraphs (1)(b) to (e) for such further period or periods as the Minister considers necessary.

• Marginal note:Limitation

  (4) The Minister shall not grant to a company or society any permission

  • (a) with respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the company or society to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the company or society that the company or society will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and

  • (b) with respect to matters described in paragraphs (1)(d) and (e), that purports to be effective more than ten years after the date of the approval for the company or society to commence and carry on business.

Discontinuance

Marginal note:Transferring to other federal Acts

• 39 (1) A company or society may

  • (a) apply, under the Bank Act, for letters patent continuing the company or society as a bank or a bank holding company under that Act, or amalgamating and continuing the company or society as a bank or a bank holding company under that Act;

  • (b) apply, with the approval in writing of the Minister, under the Canada Business Corporations Act for a certificate of continuance as a corporation under that Act;

  • (c) apply, with the approval in writing of the Minister, under the Canada Cooperatives Act for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, as a cooperative under that Act;

  • (d) apply, under the Cooperative Credit Associations Act, for letters patent continuing the company or society as an association under that Act, or amalgamating and continuing the company or society as an association under that Act; or

  • (e) apply, under the Trust and Loan Companies Act, for letters patent continuing the company or society as a company under that Act, or amalgamating and continuing the company or society as a company under of that Act.

• Marginal note:Continuance under the Canada Not-for-profit Corporations Act

  (2) A society may also, with the approval in writing of the Minister, apply under the Canada Not-for-profit Corporations Act, for a certificate of continuance under that Act.

• Marginal note:Conditions for approval

  (3) The approval referred to in paragraph (1)(b) or (c) or subsection (2) may be given only if the Minister is satisfied that

  • (a) the company or society has published, once a week for four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the company or society is situated, a notice of its intention to apply for the approval;

  • (b) the company or society has discharged, or provided for the discharge of, all its policy liabilities;

  • (c) the company or society will not, unless it is an entity referred to in paragraph 47(2)(b) or (c), use the word “assurance”, “assurances” or “insurance” in its name after the certificate or letters patent are issued in respect of the company or society; and

  • (d) the application has been authorized by a special resolution.

• Marginal note:Withdrawing application

  (4) If a special resolution authorizing the application for the certificate or letters patent so states, the directors of a company or society may, without further approval of the shareholders, policyholders entitled to vote or members, withdraw the application before it is acted on.

• Marginal note:Restriction on other transfers

  (5) A company or society may not apply to be continued, or to be amalgamated and continued, as the case may be, as a body corporate other than one referred to in subsection (1) or (2).

Marginal note:Act ceases to apply

40 If a company or society applies for a certificate or letters patent referred to in section 39 in accordance with that section and the certificate is given or the letters patent are issued, this Act ceases to apply to the company or society as of the day the certificate or the letters patent take effect.

41 [Repealed, 2001, c. 9, s. 358]

Corporate Name

Marginal note:Prohibited names

• 42 (1) A company or society may not be incorporated under this Act with a name

  • (a) that is prohibited by an Act of Parliament;

  • (b) that is, in the opinion of the Superintendent, deceptively misdescriptive;

  • (c) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existing

    • (i) trademark or trade name, or

    • (ii) corporate name of a body corporate,

    except where the trademark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name and consent to the use of the trademark, trade name or corporate name is signified to the Superintendent in such manner as the Superintendent may require;

  • (d) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any entity carries on business or is identified; or

  • (e) that is reserved under section 45 for another company or society or a proposed company or society or under section 734 for an insurance holding company or a proposed insurance holding company.

• Marginal note:Exception

  (2) Paragraph (1)(a) does not apply with respect to any former-Act company or former-Act society incorporated by or under an Act of Parliament that expressly authorizes the use of any name that would otherwise be prohibited.

Marginal note:Affiliated company or society

43 Despite section 42, a company or society that is affiliated with another entity may, with the consent of that entity, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.

Marginal note:French or English form of name

• 44 (1) The name of a company or society may be set out in its letters patent in an English form, a French form, an English form and a French form or in a combined English and French form, and the company or society may use and be legally designated by any such form.

• Marginal note:Alternate name

  (2) A company or society may identify itself outside Canada by its name in any language and the company or society may use and be legally designated by any such form of its name outside Canada.

• Marginal note:Other name

  (3) Subject to subsection (4) and section 278, a company or society may carry on business under or identify itself by a name other than its corporate name.

• Marginal note:Directions

  (4) Where a company or society is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the company or society not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 42(1)(a) to (e).

Marginal note:Reserved name

45 The Superintendent may, on request, reserve for ninety days a name for a proposed company or society or for a company or society that intends to change its name.

Marginal note:Directing change of name

• 46 (1) If through inadvertence or otherwise a company or society

  • (a) comes into existence or is continued with a name, or

  • (b) on an application to change its name, is granted a name

  that is prohibited by section 42, the Superintendent may, by order, direct the company or society to change its name and the company or society shall comply with that direction.

• Marginal note:Revoking name

  (2) If a company or society has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Act, the Superintendent may revoke the name of the company or society and assign to it a name and, until changed in accordance with section 224, 238 or 544.1, the name of the company or society is thereafter the name so assigned.

Marginal note:Restriction on use of name

• 47 (1) No entity incorporated or formed by or under an Act of Parliament shall use the word “assurance”, “assurances”, “insurance” or “lifeco” or any word or words of import equivalent to any of those words in its name.

• Marginal note:Exceptions

  (2) Subsection (1) does not apply to

  • (a) a company or society;

  • (a.1) an insurance holding company;

  • (b) an entity the business of which is not financial activities;

  • (c) an entity that is primarily engaged in insurance brokerage or insurance agency services; or

  • (d) an entity that was, on the day immediately preceding the day on which that subsection comes into force, using the word “assurance”, “assurances”, “insurance” or “lifeco” or any word or words of import equivalent to any of those words in its name.

Marginal note:Subsidiaries

48 Despite subsection 47(1), a subsidiary of a company or society may use the company’s or society’s name in its name.

Definition of reserved name

• 48.1 (1) In this section, reserved name means a name that includes as part thereof the word “assurance”, “assurances”, “insurance”, “lifeco”, “fiduciaire”, “fiduciary”, “fiducie”, “trust”, “trustco”, “loan”, “loanco” or “prêt” or any word or words of import equivalent to any of those words.

• Marginal note:Termination of control required in certain cases

  (2) No person, other than a financial institution, who

  • (a) is carrying on business in Canada under a reserved name, and

  • (b) has control or acquires control of a company,

  shall control the company on the later of

  • (c) one year after this section comes into force, and

  • (d) one year after the date of acquisition of the control.

• Marginal note:Prohibition

  (3) No person, other than a financial institution, who

  • (a) controls an entity that is not a financial institution that carries on business in Canada under a reserved name, and

  • (b) has control or acquires control of a company,

  shall control the company on the later of

  • (c) one year after this section comes into force, and

  • (d) one year after the date of the acquisition of the control.

• Marginal note:Continuing control prohibited

  (4) Notwithstanding subsection (3), where a financial institution controls an entity that

  • (a) is not a financial institution,

  • (b) carries on business in Canada under a reserved name, and

  • (c) has control or acquires control of a company,

  the entity shall not control the company on the later of

  • (d) one year after this section comes into force, and

  • (e) one year after the date on which the entity acquires control of the company.

• Marginal note:Exceptions

  (5) Subsections (2) to (4) do not apply with respect to a person or entity that was carrying on business in Canada under a reserved name on the day immediately preceding the day on which those subsections come into force.

PART IVOrganization and Commencement

Organization Meetings

Marginal note:First directors’ meeting

• 49 (1) After letters patent incorporating a company or society are issued, a meeting of the directors of the company or society shall be held at which the directors shall appoint an actuary to be the actuary of the company or society and may, subject to this Part,

  • (a) make by-laws;

  • (b) adopt forms of share certificates and corporate records;

  • (c) authorize the issue of shares of the company;

  • (d) appoint officers;

  • (e) appoint an auditor to hold office until the meeting called pursuant to subsection 50(1), (2) or (3);

  • (f) make banking arrangements; and

  • (g) deal with any other matters necessary to organize the company or society.

• Marginal note:Calling directors’ meeting

  (2) An incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 190(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the company or society.

Marginal note:Calling shareholders’ meeting

• 50 (1) If at least five million dollars, or any greater amount that the Minister may specify, has been received by a company, other than a mutual company, in respect of which letters patent were issued under section 22 from the issue of its shares, the directors of the company shall without delay call a meeting of the shareholders of the company.

• Marginal note:Calling incorporators’ meeting

  (2) Where such amount as the Minister may specify has been received by a mutual company in respect of which letters patent were issued pursuant to section 22 from its incorporators, the directors of the mutual company shall forthwith call a meeting of the incorporators of the mutual company.

• Marginal note:Calling meeting of supreme governing body

  (3) Where such amount as the Minister may specify has been received by a society in respect of which letters patent were issued pursuant to section 22 from its incorporators, the directors of the society shall forthwith call a meeting of the supreme governing body of the society.

• Marginal note:Meeting of shareholders or incorporators

  (4) The shareholders or incorporators of a company or the supreme governing body of a society shall, by resolution at the meeting of shareholders or incorporators called pursuant to subsection (1), (2) or (3),

  • (a) approve, amend or reject any by-law made by the directors of the company or society;

  • (b) subject to section 176, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders and policyholders or members following the election; and

  • (c) appoint an auditor to hold office until the close of the first annual meeting of shareholders and policyholders or, in the case of a society, until the close of the first general meeting of members.

Marginal note:Term of first directors

51 A director named in the application for letters patent to incorporate a company or society holds office until the election of directors at the meeting of shareholders or incorporators or of the supreme governing body called pursuant to subsection 50(1), (2) or (3).

Commencement and Carrying on of Business

Marginal note:Order to commence and carry on business

• 52 (1) Subject to subsection (6), a company or society shall not carry on any business until the Superintendent has, by order, approved the commencement and carrying on of business by the company or society.

• Marginal note:Former-Act companies and societies

  (2) A certificate of registry issued to a company or society under Part III of the Canadian and British Insurance Companies Act, or any other authorization, that is in effect immediately before the coming into force of this Part is deemed to be an order of the Superintendent of indeterminate duration under subsection 53(1) and the company or society remains subject to any and all other restrictions and conditions in the certificate.

• Marginal note:Continued company or society

  (3) Except in respect of a body corporate that is continued as a company or society under this Act for the purposes of amalgamating without delay with one or more bodies corporate and continuing as a company or society under this Act, where letters patent continuing a body corporate as a company or society under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the company or society.

• Marginal note:Amalgamated company or society

  (4) Where letters patent amalgamating and continuing two or more bodies corporate as a company or society under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the company or society.

• Marginal note:Subsection 53(2) and section 57 do not apply

  (5) For greater certainty, subsection 53(2) and section 57 do not apply in respect of a company or society referred to in subsections (3) and (4).

• Marginal note:Marine insurance

  (6) A company that is not a marine company may insure risks in the class of marine insurance without an order under subsection (1).

• Marginal note:Transitional

  (7) Every former-Act company and former-Act society that deposited securities with the Receiver General pursuant to section 76 or 82 of the Canadian and British Insurance Companies Act shall apply for the return of those securities within such period following the coming into force of this section as may be fixed by order of the Governor in Council.

Marginal note:Authority to make order

• 53 (1) On application by a company or society, the Superintendent may make an order approving the commencement and carrying on of business by the company or society.

• Marginal note:Statement of payments

  (2) An application by a company or society for an order under subsection (1) must contain a statement setting out the amounts paid or to be paid by the company or society in connection with its incorporation and organization.

Marginal note:No payments before order

54 Until an order approving the commencement and carrying on of business is made in respect of a company or society, the company or society shall not make any payment on account of incorporation or organization expenses out of moneys received from the paid-in capital of the company or society and interest on those moneys, except reasonable sums

• (a) for the remuneration of not more than two officers;

• (b) for the payment of costs related to the issue of shares; and

• (c) for the payment of clerical assistance, legal services, accounting services, office accommodation at one location, office expenses, advertising, stationery, postage and travel expenses.

Marginal note:Expenses charged to paid-in capital

55 All incorporation and organization expenses of a company or society shall be charged to the paid-in capital of the company or society and shall not in any way be charged directly or indirectly to policyholders.

Marginal note:Deposits and investments before order

• 56 (1) Subject to subsection (2), where a company or society comes into existence but no order approving the commencement and carrying on of business is made for the company or society, the company or society may only

  • (a) deposit, in Canada, paid-in capital of the company or society in a deposit-taking Canadian financial institution; or

  • (b) invest paid-in capital of the company or society in unencumbered securities of the Government of Canada or the government of any province.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of any company incorporated for the sole purpose of insuring risks in the class of marine insurance.

Marginal note:Conditions for order

• 57 (1) The Superintendent shall not make an order approving the commencement and carrying on of business by a company or society until

  • (a) it has been shown to the satisfaction of the Superintendent that

    • (i) the meeting of shareholders, incorporators or supreme governing body of the company or society referred to in subsection 50(1), (2) or (3) has been duly held,

    • (ii) the company or society has paid-in capital of

      • (A) such amount as is specified by the Minister under subsection 50(2) or (3), in the case of a mutual company or a society, or

      • (B) at least five million dollars or any greater amount that is specified by the Minister under subsection 50(1), in the case of a company other than a mutual company,

    • (iii) the expenses of incorporation and organization to be borne by the company or society are reasonable, and

    • (iv) all other relevant requirements of this Act have been complied with; and

  • (b) in the case of a society, the society has filed with the Superintendent

    • (i) a report of an actuary appointed by the society, in such form as the Superintendent may require, on the results of an actuarial valuation of each of the benefit funds maintained by the society, having regard to the prospective liabilities of and contributions to each fund,

    • (ii) the opinion of the actuary that the assets of the society applicable to each fund, together with the contributions to be received thereafter from the members, are sufficient to provide for the payment at maturity of all of the obligations of the fund without deduction or abatement, and

    • (iii) a statement of its condition and affairs in such detail as the Superintendent may require, as at the date of the valuation referred to in subparagraph (i).

• Marginal note:Restrictions re societies

  (2) No order approving the commencement and carrying on of business of a society shall be made if the society operates for profit or as a commercial or business enterprise or the property or funds of the society are under the control of persons not periodically elected by members of the society.

• Marginal note:Time limit

  (3) The Superintendent shall not make an order approving the commencement and carrying on of business by a company or society more than one year after the day on which the company or society comes into existence.

Marginal note:Order to specify classes of insurance

• 58 (1) An order approving the commencement and carrying on of business by a company shall specify the classes of insurance risks that the company is permitted to insure pursuant to section 443.

• Marginal note:Conditions of order

  (2) An order approving the commencement and carrying on of business by a company or society may contain such conditions or limitations that are consistent with this Act and relate to the business of the company or society as the Superintendent deems expedient and necessary.

Marginal note:Variations

• 59 (1) In respect of the order approving the commencement and carrying on of business by a company or society, the Superintendent may at any time, by further order,

  • (a) specify additional classes of insurance risks that the company is permitted to insure pursuant to section 443,

  • (b) make the order subject to such conditions or limitations that are consistent with this Act and that relate to the business of the company or society as the Superintendent deems expedient and necessary, or

  • (c) amend or revoke any authorization contained in the order or any condition or limitation to which the order is subject,

  but before making any such further order the Superintendent shall provide the company or society with an opportunity to make representations regarding that further order.

• (2) to (6) [Repealed, 1996, c. 6, s. 71]

Marginal note:Limit on assets

• 59.1 (1) The Minister may, by order, require a company that 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 not to have average total assets in any three month period ending on the last day of a month subsequent to the month specified in the order 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 if the Minister is of the opinion that it is in the best interests of the financial system in Canada to do so, after having considered the Superintendent’s opinion on

  • (a) the nature and extent of the financial services activities carried out by entities affiliated with the company; and

  • (b) the impact that the nature and degree of supervision and regulation of those financial services activities have on the supervision and regulation of the company.

• Marginal note:Revocation of order

  (2) If the Minister is of the opinion that the circumstances giving rise to the order have ceased to exist or have changed substantially, the Minister may, by further order, revoke the order.

• Marginal note:Average total assets

  (3) 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.

Marginal note:Public notice

• 60 (1) On the making of an order approving the commencement and carrying on of business by a company or society, the company or society shall publish a notice of the making of the order in a newspaper in general circulation at or near the place where the head office of the company or society is located.

• Marginal note:Notice in Canada Gazette

  (2) The Superintendent shall cause to be published in the Canada Gazette a notice of the making of an order approving the commencement and carrying on of business by a company or society.

• Marginal note:Non-application to former-Act company or society

  (3) For greater certainty, this section does not apply to a company or society referred to in subsection 52(2).

Marginal note:Cessation of existence

• 61 (1) Subject to subsection (2), except for the sole purpose of winding up the company’s or society’s affairs, a company or society ceases to exist one year after the day on which its incorporating instrument became effective if it does not obtain an order approving the commencement and carrying on of business within that year.

• Marginal note:Marine insurance

  (2) A company that was incorporated for the sole purpose of insuring risks in the class of marine insurance ceases to exist one year after the day on which its incorporating instrument became effective if, in the opinion of the Superintendent, the company is not, by that date, actively engaged in insuring those risks.

Marginal note:Allowed disbursements

• 62 (1) Where

  • (a) an order approving the commencement and carrying on of business is not made for a company or society, or

  • (b) the Superintendent is of the opinion that a company referred to in subsection 61(2) is not actively engaged in insuring risks in the class of marine insurance,

  no part of the moneys of the company or society shall be used for the payment of incorporation and organization expenses, other than remuneration and costs referred to in section 54, unless the payment has been approved by a special resolution.

• Marginal note:Application to court to settle disbursements

  (2) If the amount allowed by a special resolution for the payment of any incorporation and organization expenses referred to in subsection (1) is considered insufficient by the directors or if no special resolution for the payment of such expenses is passed, the directors may apply to any court having jurisdiction in the place where the head office of the company or society is situated to settle and determine the amounts to be paid out of any moneys of the company or society before distribution of the balance to the shareholders or, where there are no shareholders, to the incorporators.

• Marginal note:Notice of application to court

  (3) The directors shall, at least twenty-one days prior to the date fixed for the hearing of the application referred to in subsection (2), send to the shareholders or incorporators, as the case may be, a notice of the application, which notice shall contain a statement of the amounts that are proposed to be settled and determined by the court.

• Marginal note:Ratio payable

  (4) In order that the amounts paid and payable under this section may be equitably borne by the shareholders or incorporators, as the case may be, the directors shall, after the amounts of the payments have been approved by special resolution or settled and determined by a court, fix the proportionate part thereof chargeable to each shareholder or incorporator as the ratio of the amount paid in by the shareholder or incorporator to the aggregate of all the amounts paid in by the shareholders or incorporators.

• Marginal note:Return of excess

  (5) After the amounts referred to in this section have been paid, the directors shall pay, with any interest earned thereon, to the shareholders or incorporators, the respective balances of the moneys paid in by them, less the amount chargeable to each shareholder or incorporator under subsection (4).

PART VCapital Structure

Share Capital

Marginal note:Power to issue shares

• 63 (1) Subject to this Act and the by-laws of the company, shares of a company may be issued at such times and to such persons and for such consideration as the directors of the company may determine.

• (2) and (3) [Repealed, 1997, c. 15, s. 180]

• Marginal note:Shares

  (4) Shares of a company shall be in registered form and shall be without nominal or par value.

• Marginal note:Shares of former-Act company

  (5) Shares with nominal or par value of a former-Act company are deemed to be shares without nominal or par value.

• Marginal note:Shares of continued company

  (6) Where a body corporate is continued as a company under this Act, shares with nominal or par value issued by the body corporate before it was so continued are deemed to be shares without nominal or par value.

• Marginal note:Deemed share conditions

  (7) Where any right of a holder of a share with nominal or par value of a former-Act company or a body corporate continued as a company under this Act, other than a voting right, was stated or expressed in terms of the nominal or par value of the share immediately before the coming into force of this Part or the continuance under this Act, as the case may be, that right is thereafter deemed to be the same right stated or expressed without reference to the nominal or par value of the share.

Marginal note:Common shares

• 64 (1) A company, other than a mutual company, shall have one class of shares, to be designated as “common shares”, which are non-redeemable and in which the rights of the holders thereof are equal in all respects, and those rights include

  • (a) the right to vote at all meetings of shareholders except where only holders of a specified class of shares, or policyholders, are entitled to vote;

  • (b) the right to receive dividends declared on those shares; and

  • (c) the right to receive the remaining property of the company on dissolution that pertains to shareholders.

• Marginal note:Designations of shares

  (2) No company shall designate more than one class of its shares as “common shares” or any variation of that term.

• (3) [Repealed, 2012, c. 5, s. 124]

• Marginal note:Continued company

  (4) A body corporate continued as a company under this Act that is not in compliance with subsection (2) on the date letters patent continuing it as a company are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.

Marginal note:Classes of shares

• 65 (1) The by-laws of a company may provide for one or more classes of shares and, if they so provide, shall set out

  • (a) the rights, privileges, restrictions and conditions attaching to the shares of each class; and

  • (b) the maximum number, if any, of shares of any class that the company is authorized to issue.

• Marginal note:Shareholder approval

  (2) Where a by-law referred to in subsection (1) is made, the directors of the company shall submit the by-law to the shareholders and policyholders at the next meeting of shareholders and policyholders.

• Marginal note:Effective date

  (3) A by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders and policyholders at the meeting referred to in subsection (2).

Marginal note:Shares issued in series

• 66 (1) The by-laws of a company may, subject to any limitations set out in them, authorize the issue of any class of shares in one or more series and may

  • (a) fix the maximum number of shares in each series and determine the designation, rights, privileges, restrictions and conditions attaching to them; and

  • (b) authorize the directors to do anything referred to in paragraph (a).

• Marginal note:Series participation

  (2) If any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.

• Marginal note:Voting rights

  (3) Where voting rights are attached to any series of a class of shares, the shares of every other series of that class shall have the same voting rights.

• Marginal note:Restriction on series

  (4) No rights, privileges, restrictions or conditions attached to a series of shares authorized under this section confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.

• Marginal note:Material to Superintendent

  (5) If the directors exercise their authority under paragraph (1)(b), the directors shall, before the issue of shares of the series, send to the Superintendent particulars of the series of shares and a copy of the by-law that granted the authority to the directors.

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.

Marginal note:Recovery by action

• 80 (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 79, a creditor of the 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 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 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 216.

Marginal note:Adjustment of stated capital account

• 81 (1) On a purchase, redemption or other acquisition by a company of shares or fractions thereof issued by it, other than shares acquired pursuant to section 76 or acquired through the realization of security and sold pursuant to subsection 77(2), the 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:Idem

  (2) A company shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 79.

• Marginal note:Shares converted to another class

  (3) On a conversion of outstanding shares of a company into shares of another class or series, or on a change of outstanding shares of the company into shares of another class or series, the 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 company’s by-laws, where a 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 a company and converted into shares of another class or series, or changed under subsection 238(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.

Marginal note:Addition to stated capital account

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

• (a) deduct from the liabilities of the 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.

Marginal note:Declaration of dividend

• 83 (1) The directors of a company may declare and a company may pay a dividend by issuing fully paid shares of the company or options or rights to acquire fully paid shares of the company and, subject to subsection (4), the directors of a company may declare and a company may pay a dividend in money or property, and, if 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 a 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 a company are issued in payment of a dividend, the 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 a company shall not declare and a company shall not pay a dividend 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).

• (5) [Repealed, 2007, c. 6, s. 199]

• (6) to (8) [Repealed, 1997, c. 15, s. 184]

Restrictions Specific to Shares of Mutual Companies

Marginal note:Definitions

83.01 The definitions in this section apply in this section and in sections 83.02 to 83.11.

participating share

participating share means a share issued by a mutual company that confers on the holder of the share the right to receive remaining property of the company on the dissolution of the company. (action participante)

participating shareholder

participating shareholder means the holder of a participating share. (actionnaire participant)

participating shareholder account

participating shareholder account means an account that a mutual company is required by section 83.04 to maintain. (compte des actionnaires participants)

Marginal note:Voting rights

• 83.02 (1) Except as provided in subsections (2) and (3), a mutual company shall not issue any share that confers on its holder the right to vote at meetings of the shareholders and policyholders of the company.

• Marginal note:Exception — specified events or conditions

  (2) A share may confer on its holder the right to vote where an event has occurred and is continuing or a condition is fulfilled.

• Marginal note:Exception — election of directors

  (3) Subject to subsection 173(4.1), participating shares may confer on their holders the right to elect the number of directors indicated in the company’s by-laws.

Marginal note:Participating shares

83.03 A mutual company shall not issue participating shares unless the by-laws of the company authorize it to issue participating shares.

Marginal note:Participating shareholder accounts

83.04 A mutual company that issues participating shares shall maintain separate accounts, in the form and manner determined by the Superintendent, in respect of those shares.

Marginal note:Allocation of income

83.05 There shall be credited to, or debited from, a participating shareholder account that portion of the income or losses of the company for a financial year, including accrued capital gains or losses, whether or not realized, that is determined in accordance with a method that is

• (a) in the written opinion of the actuary of the company, fair and equitable to the participating policyholders of the company;

• (b) approved by resolution of the directors, after considering the written opinion of the actuary; and

• (c) not disallowed by the Superintendent, on the ground that it is not fair and equitable to the participating policyholders, within sixty days after receiving the resolution.

Marginal note:Allocation of expenses

83.06 There shall be debited from a participating shareholder account that portion of the expenses, including taxes, of the company for a financial year that is determined in accordance with a method that is

• (a) in the written opinion of the actuary of the company, fair and equitable to the participating policyholders of the company;

• (b) approved by resolution of the directors, after considering the written opinion of the actuary; and

• (c) not disallowed by the Superintendent, on the ground that it is not fair and equitable to the participating policyholders, within sixty days after receiving the resolution.

Marginal note:Filing of allocation method

83.07 A mutual company the directors of which by resolution approve a method of allocating its income and losses and expenses to a participating shareholder account shall, within thirty days after the making of the resolution, file a copy of it with the Superintendent, together with a copy of the written opinion of the actuary of the company and any other information relevant to the allocation method that the Superintendent requests.

Marginal note:Review of allocation method

83.08 The actuary of a company shall annually report in writing to the directors on the fairness and equitableness of the method used by the company for allocating its income and losses and expenses to a participating shareholder account.

Marginal note:Payment of dividends

83.09 A mutual company that pays a dividend under section 83 on participating shares shall debit from the participating shareholder account in respect of those shares

• (a) in the case of a dividend paid by issuing fully paid shares, the amount recorded as stated capital in respect of the dividend as required by subsection 83(3); and

• (b) in any other case, the amount or value of the dividend.

Marginal note:Participating share redemptions, etc.

• 83.1 (1) On a purchase, redemption or other acquisition by a company of participating shares issued by it or fractions of participating shares issued by it, other than participating shares held under section 76 or acquired through the realization of security and sold as required by subsection 77(2), there shall be debited from the participating shareholder account for the class or series of shares so purchased, redeemed or otherwise acquired the amount determined by the formula

  A × B/C

  where

  A

  is the balance of the participating shareholder account for the shares of that class or series immediately before the purchase, redemption or other acquisition;

  B

  is the number of shares of that class or series so purchased, redeemed or otherwise acquired; and

  C

  is the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.

• Marginal note:Shares converted to another class

  (2) On a conversion of outstanding participating shares of a company into shares of another class or series, or on a change of outstanding participating shares of the company into shares of another class or series

  • (a) there shall be deducted from the participating shareholder account maintained for the class or series of participating shares converted or changed the amount determined by the formula

    A × B/C

    where

    A

    is the balance of the participating shareholder account for the shares of that class or series immediately before the conversion or change,

    B

    is the number of shares of that class or series converted or changed, and

    C

    is the number of shares of that class or series outstanding immediately before the conversion or change; and

  • (b) if the shares of that other class or series are participating shares, the amount determined under the formula in paragraph (a) shall be credited to the participating shareholder account for those participating shares.

• Marginal note:Participating shareholder account for convertible participating shares

  (3) For the purposes of subsection (2) and subject to the company’s by-laws, where a company issues two classes of participating 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 in a participating shareholder account attributable to a share in either class is the amount determined by the formula

  A/B

  where

  A

  is the total of the balances of the participating shareholder accounts of both classes; and

  B

  is the number of outstanding shares of both classes immediately before the conversion.

Marginal note:Remaining property on dissolution

83.11 The remaining property of a company that a participating shareholder of the company is entitled to receive on the dissolution of the company shall not exceed the sum of all amounts each of which is the amount in respect of a class or series of participating shares of the company determined by the formula

Subordinated Indebtedness

Marginal note:Restriction on subordinated indebtedness

• 84 (1) A 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 a company refer to the subordinated indebtedness otherwise than as subordinated indebtedness.

• Marginal note:Other currencies

  (3) When issuing subordinated indebtedness, a 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.

Security Certificates and Transfers

Marginal note:Definitions

85 In this section and sections 86 to 139,

adverse claim

adverse claim includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in a security; (opposition)

bona fide purchaser

bona fide purchaser means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or order form or of a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank; (acheteur de bonne foi)

clearing agency

clearing agency means a person designated as a recognized clearing agency by the Superintendent; (agence de compensation et de dépôt)

delivery

delivery means voluntary transfer of possession; (livraison ou remise)

fungible

fungible, in respect of securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit; (fongibles)

genuine

genuine means free of forgery or counterfeit; (authentique)

good faith

good faith means honesty in fact in the conduct of the transaction concerned; (bonne foi)

over-issue

over-issue means the issue of securities in excess of any maximum number of securities that the issuer is authorized to issue; (émission excédentaire)

purchaser

purchaser means a person who takes an interest in a security by sale, mortgage, pledge, issue, reissue, gift or any other voluntary transaction; (acquéreur)

securities broker

securities broker means a person who is engaged for all or part of the person’s time in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to, a customer; (courtier)

security

security or security certificate means an instrument issued by a company that is

• (a) in bearer, order or registered form,

• (b) of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,

• (c) one of a class or series or by its terms divisible into a class or series of instruments, and

• (d) evidence of a share, participation or other interest in or obligation of a company,

but does not include a policy; (valeur mobilière ou certificat de valeur mobilière)

trust indenture

trust indenture has the meaning given that expression by section 317; (acte de fiducie)

unauthorized

unauthorized, in relation to a signature or an endorsement, means a signature or an endorsement made without actual, implied or apparent authority, and includes a forgery; (non autorisé)

uncertificated security

uncertificated security means a security, not evidenced by a security certificate, the issue and any transfer of which is registered and recorded in records maintained for that purpose by or on behalf of a company; (valeur mobilière sans certificat)

valid

valid means issued in accordance with the applicable law or validated under section 101. (valide)

Marginal note:Provisions governing transfers of securities

86 The transfer of a security is governed by sections 87 to 139.

Marginal note:Security a negotiable instrument

• 87 (1) A security is a negotiable instrument but, in the case of any inconsistency between the provisions of the Bills of Exchange Act and this Act, this Act prevails to the extent of the inconsistency.

• Marginal note:Bearer form

  (2) A security is in bearer form if it is payable to bearer according to its terms and not by reason of any endorsement.

• Marginal note:Order form

  (3) A security is in order form where the security is not a share and, by its terms, it is payable to the order or assigns of any person therein specified with reasonable certainty or to the person or the person’s order.

• Marginal note:Registered form

  (4) A security is in registered form if

  • (a) it specifies a person entitled to the security or to the rights it evidences, and its transfer is capable of being recorded in a securities register; or

  • (b) it bears a statement that it is in registered form.

Marginal note:Status of guarantor

88 A guarantor for an issuer of a security is deemed to be an issuer to the extent of the guarantee, whether or not the guarantor’s obligation is noted on the security.

Marginal note:Rights of holder

• 89 (1) Subject to Part VII, every security holder is entitled at the holder’s option to a security certificate that complies with this Act or to a non-transferable written acknowledgement of the holder’s right to obtain a security certificate that complies with this Act from a company in respect of the securities of that company held by the security holder.

• Marginal note:Fee for security certificate

  (2) A company may charge a fee, not exceeding a prescribed amount, for a security certificate issued in respect of a transfer.

• Marginal note:Joint holders

  (3) A company is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery of a security certificate to one of several joint holders is sufficient delivery to all joint holders of the security.

Marginal note:Signatures

• 90 (1) A security certificate shall be signed by or bear the printed or otherwise mechanically reproduced signature of at least one of the following:

  • (a) a director or officer of the company;

  • (b) a registrar or transfer agent of the company or a branch transfer agent or a natural person on their behalf; or

  • (c) a trustee who certifies it in accordance with a trust indenture.

• Marginal note:Continuation of validity of signature

  (2) If a security certificate contains a person’s printed or mechanically reproduced signature, the company may issue the security certificate even if the person has ceased to be a director or officer of the company. The security certificate is as valid as if the person were a director or officer at the date of its issue.

Marginal note:Contents of share certificate

91 There shall be stated on the face of each share certificate issued by a company after the coming into force of this section

• (a) the name of the company;

• (b) a statement that the company is subject to the Insurance Companies Act;

• (c) the name of the person to whom the share certificate is issued; and

• (d) the number and class of shares and the designation of any series that the certificate represents.

Marginal note:Restrictions and charges

• 92 (1) No charge in favour of a company and no restriction on transfer, other than a constraint under Part VII other than section 427, is effective against a transferee of a security issued by the company if the transferee has no actual knowledge of the charge or restriction unless it or a reference to it is noted conspicuously on the security certificate.

• Marginal note:No restriction

  (2) If any of the issued shares of a distributing company remain outstanding and are held by more than one person, the company may not restrict the transfer or ownership of its shares except by way of a constraint under Part VII.

• Marginal note:Continuance

  (3) If a body corporate that is continued as a company under this Act has outstanding security certificates and the words “private company” or “private corporation” appear on the certificates, those words are deemed to be a notice of a charge or restriction for the purposes of subsection (1).

Marginal note:Particulars of class

• 93 (1) There shall be stated legibly on a share certificate issued after the coming into force of this section by a company that is authorized to issue shares of more than one class or series

  • (a) the rights, privileges, restrictions and conditions attached to the shares of each class and series existing when the share certificate is issued; or

  • (b) that the class or series of shares that the certificate represents has rights, privileges, restrictions or conditions attached thereto and that the company will furnish a shareholder, on demand and without charge, with a full copy of

    • (i) the text of the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as those rights, privileges, restrictions and conditions have been fixed by the directors, and

    • (ii) the text of the authority of the directors, if the directors are so authorized, to fix the rights, privileges, restrictions and conditions of subsequent series of shares.

• Marginal note:Duty

  (2) Where a share certificate issued by a company contains the statement mentioned in paragraph (1)(b), the company shall provide a shareholder, on demand and without charge, with a full copy of the texts referred to in subparagraphs (1)(b)(i) and (ii).

Marginal note:Fractional share

94 A company may issue a certificate for a fractional share or may issue in place thereof a scrip certificate in bearer form that entitles the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share.

Marginal note:Scrip certificates

95 The directors of a company may attach conditions to any scrip certificate issued by the company, including conditions that

• (a) the scrip certificate becomes void if not exchanged for a share certificate representing a full share before a specified date; and

• (b) any shares for which the scrip certificate is exchangeable may, notwithstanding any pre-emptive right, be issued by the company to any person and the proceeds thereof may be distributed rateably to the holders of all the scrip certificates.

Marginal note:Holders of fractional shares

• 96 (1) A holder of a fractional share issued by a company is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share.

• Marginal note:Holders of scrip certificates

  (2) A holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.

Marginal note:Dealings with registered holder

• 97 (1) A company or a trustee within the meaning of section 317 may, subject to sections 142 to 145 and 149, treat the registered owner of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payment in respect of the security and to exercise all of the rights and powers of an owner of the security.

• Marginal note:Constructive registered holder

  (2) Notwithstanding subsection (1), a company may treat a person as a registered security holder entitled to exercise all of the rights of the security holder that the person represents, if that person provides the company with evidence as described in subsection 131(4) that the person is

  • (a) the heir or personal representative of a deceased security holder or the personal representative of the heirs of the deceased security holder;

  • (b) the personal representative of a registered security holder who is a minor, an incompetent person or a missing person; or

  • (c) a liquidator of, or a trustee in bankruptcy for, a registered security holder.

• Marginal note:Permissible registered holder

  (3) If a person on whom the ownership of a security of a company devolves by operation of law, other than a person described in subsection (2), provides proof of that person’s authority to exercise rights or privileges in respect of a security of the company that is not registered in the person’s name, the company shall, subject to this Act, treat that person as entitled to exercise those rights or privileges.

• Marginal note:Immunity of company

  (4) A company is not required to inquire into the existence of, or see to the performance or observance of, any duty owed to a third person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this Part, as the owner or registered holder thereof.

Marginal note:Minors

98 If a minor exercises any rights of ownership in the securities of a company, no subsequent repudiation or avoidance is effective against the company.

Marginal note:Joint shareholders

99 A company may treat as owners of a security the survivors of persons to whom the security was issued as joint holders, if the company receives proof satisfactory to it of the death of any of the joint holders.

Marginal note:Transmission of securities

• 100 (1) Subject to the provisions of Part VII and any applicable law relating to the collection of taxes, a person referred to in paragraph 97(2)(a) is entitled to become registered as the owner of a security, or to designate another person to be registered as the owner of a security, if the person referred to in paragraph 97(2)(a) delivers to the company or its transfer agent

  • (a) the original grant of probate or of letters of administration, or a copy thereof certified to be a true copy by

    • (i) the court that granted the probate or letters of administration,

    • (ii) a trust company incorporated under the Trust and Loan Companies Act or under the laws of a province, or

    • (iii) a lawyer or notary acting on behalf of the person referred to in paragraph 97(2)(a), or

  • (b) in the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province,

  together with

  • (c) an affidavit or declaration of transmission made by the person referred to in paragraph 97(2)(a) that states the particulars of the transmission, and

  • (d) the security certificate that was owned by the deceased holder

    • (i) in the case of a transfer to the person referred to in paragraph 97(2)(a), with or without the endorsement of that person, and

    • (ii) in the case of a transfer to any other person, endorsed in accordance with section 115,

  and accompanied by any assurance the company may require under section 131.

• Marginal note:Excepted transmissions

  (2) Notwithstanding subsection (1), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to Part VII and any applicable law relating to the collection of taxes, to become registered as the owner or to designate a person to be registered as the owner, if the personal representative delivers to the company or its transfer agent the following documents, namely,

  • (a) the security certificate that was owned by the deceased holder; and

  • (b) reasonable proof of the governing laws, of the deceased holder’s interest in the security and of the right of the personal representative or the designated person to become the registered shareholder.

• Marginal note:Right of company to treat as owner

  (3) Subject to Part VII, delivery of the documents referred to in this section empowers a company or its transfer agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in paragraph 97(2)(a) or to such person as the person referred to in that paragraph may designate and, thereafter, to treat the person who becomes so registered as the owner of that security.

Marginal note:Over-issue

• 101 (1) The provisions of this Part that validate a security or compel its issue or reissue do not apply to the extent that a validation, issue or reissue would result in over-issue, but

  • (a) if a valid security similar in all respects to the security involved in the over-issue is reasonably available for purchase, the person entitled to the validation or issue may compel the issuer to purchase and deliver such a security to that person against surrender of the security that the person holds; or

  • (b) if a valid security similar in all respects to the security involved in the over-issue is not reasonably available for purchase, the person entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.

• Marginal note:Retroactive validation

  (2) Where an issuer is subsequently authorized to issue securities of a number equal to or exceeding the number of securities previously authorized plus the amount of the securities over-issued, the securities so over-issued are valid from the date of their issue.

• Marginal note:Payment not a purchase or redemption

  (3) A purchase or payment by an issuer under subsection (1) is not a purchase or payment in respect of which section 75 or 81 applies.

Marginal note:Burden of proof

102 In any action on a security,

• (a) unless specifically denied in the pleadings, each signature on the security or in a necessary endorsement is admitted;

• (b) a signature on the security is presumed to be genuine and authorized but, if the effectiveness of the signature is put in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;

• (c) if a signature is admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defence or a defect going to the validity of the security; and

• (d) if the defendant establishes that a defence or defect exists, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or any person under whom the plaintiff claims.

Marginal note:Securities fungible

103 Unless otherwise agreed, and subject to any applicable law, regulation or stock exchange rule, a person required to deliver securities may deliver any security of the specified issue in bearer form or registered in the name of the transferee or endorsed to the transferee or in blank.

Marginal note:Notice of defect

• 104 (1) Even against a purchaser for value and without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated therein by reference to another instrument, statute, rule, regulation or order to the extent that the terms so referred to do not conflict with the stated terms, but such a reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, notwithstanding that the security expressly states that a person accepting it admits the notice.

• Marginal note:Purchaser for value

  (2) A security is valid in the hands of a purchaser for value without notice of any defect going to its validity.

• Marginal note:Lack of genuineness

  (3) Except as provided in section 105, the fact that a security is not genuine is a complete defence even against a purchaser for value and without notice.

• Marginal note:Ineffective defences

  (4) All defences of an issuer, including non-delivery and conditional delivery of a security but not including lack of genuineness, are ineffective against a purchaser for value without notice of the particular defence.

• Marginal note:Staleness as defect notice

  (5) After an event that creates a right to immediate performance of the principal obligation evidenced by a security, or that sets a date on or after which a security is to be presented or surrendered for redemption or exchange, a purchaser is deemed to have notice of any defect in its issue or of any defence of the issuer

  • (a) if the event requires the payment of money or the delivery of securities, or both, on presentation or surrender of the security, and the funds or securities are available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or

  • (b) if the purchaser takes the security more than two years after the date set for presentation or surrender or the date on which the performance became due.

Marginal note:Unauthorized signature

105 An unauthorized signature on a security before or in the course of issue is ineffective, except that the signature is effective in favour of a purchaser for value and without notice of the lack of authority, if the signing has been done by

• (a) an authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, or of similar securities, or their immediate preparation for signing; or

• (b) an employee of the issuer or of a person referred to in paragraph (a) who, in the ordinary course of the employee’s duties, handles the security.

Marginal note:Completion or alteration

• 106 (1) Where a security contains the signatures necessary to its issue or transfer but is incomplete in any other respect,

  • (a) any person may complete it by filling in the blanks in accordance with the person’s authority; and

  • (b) notwithstanding that the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.

• Marginal note:Enforceability

  (2) A completed security that has been improperly altered, even if fraudulently altered, remains enforceable, but only according to its original terms.

Marginal note:Warranties of agents

• 107 (1) A person signing a security, as authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, warrants to a purchaser for value without notice that

  • (a) the security is genuine;

  • (b) the person’s acts in connection with the issue of the security are within the person’s authority; and

  • (c) the person has reasonable grounds for believing that the security is in the form and within the amount the issuer is authorized to issue.

• Marginal note:Limitation of liability

  (2) Unless otherwise agreed, a person referred to in subsection (1) does not assume any further liability for the validity of a security.

Marginal note:Title of purchaser

• 108 (1) Subject to Part VII, on delivery of a security the purchaser acquires the rights in the security that the purchaser’s transferor had or had authority to convey, except that the position of a purchaser who has been a party to any fraud or illegality affecting the security or who as a prior holder had notice of an adverse claim is not improved by taking from a later bona fide purchaser.

• Marginal note:Title of bona fide purchaser

  (2) A bona fide purchaser, in addition to acquiring the rights of a purchaser, also acquires the security free from any adverse claim.

• Marginal note:Limited interest purchaser

  (3) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.

Marginal note:Deemed notice of adverse claim

109 A purchaser of a security, or any securities broker for a seller or purchaser, is deemed to have notice of an adverse claim if

• (a) the security, whether in bearer form or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; or

• (b) the security is in bearer form and has on it a statement that it is the property of a person other than the transferor, except that the mere writing of a name on a security is not such a statement.

Marginal note:Notice of fiduciary duty

110 Notwithstanding that a purchaser, or any securities broker for a seller or purchaser, has notice that a security is held for a third person by, or is registered in the name of or endorsed by, a fiduciary, neither the purchaser nor the securities broker has any duty to inquire into the rightfulness of the transfer or any notice of an adverse claim, except that if the purchaser or securities broker for the seller or purchaser knows that the consideration is to be used for, or that the transaction is for, the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty, the purchaser or securities broker is deemed to have notice of an adverse claim.

Marginal note:Staleness as notice

111 An event that creates a right to immediate performance of the principal obligation evidenced by a security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange is not of itself notice of an adverse claim, except in the case of a purchase

• (a) made more than one year after any date set for such a presentation or surrender; or

• (b) made more than six months after any date set for payment of money against such a presentation or surrender if funds are available for payment on that date.

Marginal note:Warranties to issuer

• 112 (1) A person who presents a security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment or exchange, except that a purchaser for value without notice of an adverse claim who receives a new, reissued or re-registered security on registration of transfer warrants only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.

• Marginal note:Warranties to purchaser

  (2) A person by transferring a security to a purchaser for value warrants only that

  • (a) the transfer is effective and rightful;

  • (b) the security is genuine and has not been materially altered; and

  • (c) the person knows of nothing that might impair the validity of the security.

• Marginal note:Warranties of intermediary

  (3) Where a security is delivered by an intermediary known by the purchaser to be entrusted with delivery of the security on behalf of another or with collection of a draft or other claim to be collected against that delivery, the intermediary by that delivery warrants only the intermediary’s own good faith and authority even if the intermediary has purchased or made advances against the draft or other claim to be collected against the delivery.

• Marginal note:Warranties of pledgee

  (4) A pledgee or other holder for purposes of security who redelivers a security received, or after payment and on order of the debtor delivers that security to a third person, gives only the warranties of an intermediary under subsection (3).

• Marginal note:Warranties of securities broker

  (5) A securities broker gives to the broker’s customer, to the issuer and to a purchaser, as the case may be, the warranties provided in subsections (1) to (4) and has the rights and privileges of a purchaser under those subsections, and those warranties of and in favour of the broker acting as an agent are in addition to warranties given by the broker’s customer and warranties given in favour of the broker’s customer.

Marginal note:Right to compel endorsement

113 Where a security in registered form is delivered to a purchaser without a necessary endorsement, the purchaser may become a bona fide purchaser only as of the time the endorsement is supplied, but against the transferor the transfer is complete on delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.

Definition of appropriate person

• 114 (1) In this section, section 115, subsections 122(1), 125(4) and 130(1) and section 134, appropriate person means

  • (a) the person specified by the security or by special endorsement to be entitled to the security;

  • (b) if a person described in paragraph (a) is described as a fiduciary but is no longer serving in the described capacity, either that person or that person’s successor;

  • (c) if the security or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons are no longer serving in the described capacity, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed;

  • (d) if a person described in paragraph (a) is a natural person and is without capacity to act by reason of death, incompetence, minority or other reason, the person’s fiduciary;

  • (e) if the security or endorsement mentioned in paragraph (a) specifies more than one person with right of survivorship and by reason of death not all of the persons can sign, the survivor or survivors;

  • (f) a person having power to sign under any applicable law or a power of attorney; or

  • (g) to the extent that a person described in any of paragraphs (a) to (f) may act through an agent, the person’s authorized agent.

• Determining an appropriate person

  (2) Whether the person signing is an appropriate person is determined as of the time of signing, and an endorsement by such a person does not become unauthorized for the purposes of this Part by reason of any subsequent change of circumstances.

Marginal note:Endorsement

• 115 (1) An endorsement of a security in registered form is made when an appropriate person signs, either on the security or on a separate document, an assignment or transfer of the security or a power to assign or transfer it, or when the signature of an appropriate person is written without more on the back of the security.

• Marginal note:Special or blank

  (2) An endorsement may be special or in blank.

• Marginal note:Blank endorsement

  (3) An endorsement in blank includes an endorsement to bearer.

• Marginal note:Special endorsement

  (4) A special endorsement specifies the person to whom the security is to be transferred, or who has power to transfer it.

• Marginal note:Right of holder

  (5) A holder may convert an endorsement in blank into a special endorsement.

Marginal note:Immunity of endorser

116 Unless otherwise agreed, the endorser by the endorsement assumes no obligation that the security will be honoured by the issuer.

Marginal note:Partial endorsement

117 An endorsement purporting to be an endorsement of only part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.

Marginal note:Effect of failure by fiduciary to comply

118 Failure of a fiduciary to comply with a controlling instrument or with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of a transfer, does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.

Marginal note:Effect of endorsement without delivery

119 An endorsement of a security, whether special or in blank, does not constitute a transfer until delivery of the security on which it appears or, if the endorsement is on a separate document, until delivery of both the security and that document.

Marginal note:Endorsement in bearer form

120 An endorsement of a security in bearer form may give notice of an adverse claim under section 109 but does not otherwise affect any of the holder’s rights.

Marginal note:Effect of unauthorized endorsement

• 121 (1) The owner of a security may assert the ineffectiveness of an endorsement against the issuer or any purchaser, other than a purchaser for value and without notice of an adverse claim, who has in good faith received a new, reissued or re-registered security on registration of transfer, unless the owner

  • (a) has ratified an unauthorized endorsement of the security; or

  • (b) is otherwise precluded from impugning the effectiveness of an unauthorized endorsement.

• Marginal note:Liability of issuer

  (2) An issuer who registers the transfer of a security on an unauthorized endorsement is liable for improper registration.

Marginal note:Warranties of guarantor of signature

• 122 (1) A person who guarantees the signature of an endorser of a security warrants that, at the time of signing,

  • (a) the signature was genuine;

  • (b) the signer was an appropriate person to endorse; and

  • (c) the signer had legal capacity to sign.

• Marginal note:Limitation of liability

  (2) A person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.

• Marginal note:Warranties of guarantor of endorsement

  (3) A person who guarantees the endorsement of a security warrants both the signature and the rightfulness, in all respects, of the transfer to which the signature relates, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.

• Marginal note:Extent of warrantor’s liability

  (4) The warranties referred to in subsections (1) to (3) are made to any person who, relying on the guarantee, takes or deals with the security, and the guarantor is liable to such a person for any loss resulting from breach of warranty.

Marginal note:Constructive delivery of a security

123 Delivery to a purchaser occurs when

• (a) the purchaser or a person designated by the purchaser acquires possession of a security;

• (b) the purchaser’s securities broker acquires possession of a security specially endorsed to or issued in the name of the purchaser;

• (c) the purchaser’s securities broker sends the purchaser confirmation of the purchase and the broker in the broker’s records identifies a specific security as belonging to the purchaser; or

• (d) in respect of an identified security to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.

Marginal note:Constructive ownership of security

• 124 (1) A purchaser is the owner of a security held for the purchaser by a securities broker, but a purchaser is not a holder except in the cases referred to in paragraphs 123(b) and (c).

• Marginal note:Ownership of part of fungible bulk

  (2) If a security is part of a fungible bulk, a purchaser of the security is the owner of the proportionate interest in the fungible bulk.

• Marginal note:Notice to securities broker of adverse claim

  (3) Notice of an adverse claim received by a securities broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent security in respect of which no notice of an adverse claim has been received.

Marginal note:Delivery of security

• 125 (1) Unless otherwise agreed, if a sale of a security is made on a stock exchange or otherwise through securities brokers,

  • (a) the selling customer fulfils the customer’s duty to deliver when the customer delivers the security to the selling securities broker or to a person designated by the selling securities broker or causes an acknowledgement to be made to the selling securities broker that it is held for the selling securities broker; and

  • (b) the selling securities broker, including a correspondent broker, acting for a selling customer fulfils the securities broker’s duty to deliver by delivering the security or a like security to the buying securities broker or to a person designated by the buying securities broker or by effecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.

• Marginal note:Duty to deliver

  (2) Except as otherwise provided in this section and unless otherwise agreed, a transferor’s duty to deliver a security under a contract of purchase is not fulfilled until the transferor delivers the security in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the security is held for the purchaser.

• Marginal note:Delivery to securities broker

  (3) A sale to a securities broker purchasing for the securities broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.

• Marginal note:Transfer through clearing agency

  (4) If a security shown in the records of a clearing agency is evidenced by

  • (a) a security certificate in the custody of the clearing agency or a custodian, or a nominee of either, subject to the instructions of the clearing agency, and is in bearer form or endorsed in blank by an appropriate person or registered in the name of the clearing agency or a custodian, or of a nominee of either, or

  • (b) an uncertificated security registered or recorded in records maintained by or on behalf of the company in the name of the clearing agency or a custodian, or of a nominee of either, subject to the instructions of the clearing agency,

  then, in addition to other methods, a transfer or pledge of the security or any interest therein may be effected by the making of an appropriate entry in the records of the clearing agency.

• Marginal note:Interest in fungible bulk

  (5) Under subsections (4) to (10), entries may be in respect of like securities or interests therein as part of a fungible bulk and may refer merely to a quantity of a particular security without reference to the name of the registered owner, certificate or bond number or the like and, in appropriate cases, may be on a net basis taking into account other transfers or pledges of the same security.

• Marginal note:Constructive endorsement and delivery

  (6) A transfer or pledge under subsections (4) to (10) has the effect of a delivery of a security in bearer form or duly endorsed in blank representing the amount of the obligation or the number of shares or rights transferred or pledged.

• Marginal note:Idem

  (7) If a pledge or the creation of a security interest is intended, the making of entries has the effect of a taking of delivery by the pledgee or a secured party and the pledgee or secured party shall be deemed to have taken possession for all purposes.

• Marginal note:Holder

  (8) A person depositing a security certificate or an uncertificated security with a clearing agency, or a transferee or pledgee of a security under subsections (4) to (10), is a holder of the security and shall be deemed to have possession of the security so deposited, transferred or pledged, as the case may be, for all purposes.

• Marginal note:Not registration

  (9) A transfer or pledge under subsections (4) to (10) does not constitute a registration of transfer under sections 130 to 137.

• Marginal note:Error in records

  (10) That entries made in the records of the clearing agency as provided in subsection (4) are not appropriate does not affect the validity or effect of the entries nor the liabilities or obligations of the clearing agency to any person adversely affected thereby.

Marginal note:Right to reclaim possession

• 126 (1) A person against whom the transfer of a security is wrongful for any reason, including the person’s incapacity, may, against anyone except a bona fide purchaser,

  • (a) reclaim possession of the security or obtain possession of any new security evidencing all or part of the same rights; or

  • (b) claim damages.

• Marginal note:Recovery where unauthorized endorsement

  (2) If the transfer of a security is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the security or a new security even from a bona fide purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 121.

• Marginal note:Remedies

  (3) The right to reclaim possession of a security may be specially enforced, its transfer may be restrained and the security may be impounded pending litigation.

Marginal note:Right to requisites for registration

• 127 (1) Unless otherwise agreed, a transferor shall, on demand, supply a purchaser with proof of the transferor’s authority to transfer a security or with any other requisite that is necessary to obtain registration of the transfer of a security, but if the transfer is not for value, it is not necessary for a transferor to prove authority to transfer unless the purchaser pays the reasonable and necessary costs of the proof and transfer.

• Marginal note:Rescission of transfer

  (2) If a transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.

Marginal note:Seizure of security

128 No seizure of a security or other interest evidenced thereby is effective until the person making the seizure obtains possession of the security.

Marginal note:No conversion if good faith delivery

129 An agent or bailee who in good faith, including observance of reasonable commercial standards if the agent or bailee is in the business of buying, selling or otherwise dealing with securities of a company, has received securities and sold, pledged or delivered them according to the instructions of the agent’s or bailee’s principal is not liable for conversion or for participation in breach of fiduciary duty even though the principal has no right to dispose of the securities.

Marginal note:Duty to register transfer

• 130 (1) Subject to Part VII, where a security in registered form is presented for transfer, the issuer shall register the transfer if

  • (a) the security is endorsed by an appropriate person;

  • (b) reasonable assurance is given that the endorsement is genuine and effective;

  • (c) the issuer has no duty to inquire into adverse claims or has discharged any such duty;

  • (d) all applicable laws relating to the collection of taxes have been complied with;

  • (e) the transfer is rightful or is to a bona fide purchaser; and

  • (f) the fee, if any, referred to in subsection 89(2) has been paid.

• Marginal note:Liability for delay

  (2) Where an issuer has a duty to register a transfer of a security, the issuer is liable to the person presenting it for registration for any loss resulting from any unreasonable delay in registration or from the failure or refusal to register the transfer.

Marginal note:Assurance of endorsements

• 131 (1) An issuer may require an assurance that each necessary endorsement on a security is genuine and effective by requiring a guarantee of the signature of the person endorsing the security and by requiring

  • (a) if the endorsement is by an agent, reasonable assurance of authority to sign;

  • (b) if the endorsement is by a fiduciary, evidence of appointment or incumbency;

  • (c) if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

  • (d) in any other case, assurance that corresponds as closely as practicable to the foregoing.

• Definition of guarantee of the signature

  (2) For the purposes of subsection (1), guarantee of the signature means a guarantee signed by or on behalf of a person whom the issuer believes, on reasonable grounds, to be a responsible person.

• Marginal note:Standards

  (3) An issuer may adopt reasonable standards to determine responsible persons for the purposes of subsection (2).

• Definition of evidence of appointment or incumbency

  (4) For the purposes of paragraph (1)(b), evidence of appointment or incumbency means

  • (a) in the case of a fiduciary appointed by a court and referred to in subsection 100(1), a copy of the certified court order referred to in subsection 100(1) and dated not earlier than sixty days before the day a security is presented for transfer; or

  • (b) in the case of any other fiduciary, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.

• Marginal note:Standards

  (5) An issuer may adopt reasonable standards with respect to evidence referred to in paragraph (4)(b).

• Marginal note:No notice to issuer

  (6) An issuer is deemed not to have notice of the contents of any document referred to in subsection (4) that is obtained by the issuer except to the extent that the contents relate directly to appointment or incumbency.

Marginal note:Notice from additional documentation

132 If an issuer, in relation to a transfer, demands assurance other than an assurance specified in subsection 131(1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the issuer is deemed to have notice of all matters contained therein affecting the transfer.

Marginal note:Limited duty of inquiry

• 133 (1) An issuer to whom a security is presented for registration has a duty to inquire into adverse claims if

  • (a) the issuer receives written notice of an adverse claim at a time and in a manner that provides the issuer with a reasonable opportunity to act on it before the issue of a new, reissued or re-registered security and the notice discloses the name and address of the claimant, the registered owner and the issue of which the security is a part; or

  • (b) the issuer is deemed to have notice of an adverse claim from a document that it obtained under section 132.

• Marginal note:Discharge of duty

  (2) An issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address provided by the adverse claimant or, if no such address has been provided, to the adverse claimant’s residence or regular place of business, that a security has been presented for registration of transfer by a named person and that the transfer will be registered unless, within thirty days after the date of mailing of the notice, either

  • (a) the issuer is served with a restraining order or other order of a court, or

  • (b) the issuer is provided with an indemnity bond sufficient in the issuer’s judgment to protect the issuer and any registrar, transfer agent or other agent of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.

Marginal note:Inquiry into adverse claims

134 Unless an issuer is deemed to have notice of an adverse claim from a document that it obtained under section 132 or has received notice of an adverse claim under subsection 133(1), if a security presented for registration is endorsed by the appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,

• (a) an issuer registering a security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and thereafter the issuer may assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular security;

• (b) an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; and

• (c) an issuer is deemed not to have notice of the contents of any court record or any registered document even if the record or document is in the issuer’s possession and even if the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.

Marginal note:Duration of notice of adverse claim

135 A written notice of adverse claim received by an issuer is effective for twelve months after the day it was received unless the notice is renewed in writing.

Marginal note:Limitation on issuer’s liability

• 136 (1) Except as otherwise provided in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a security if

  • (a) the necessary endorsements were on or with the security; and

  • (b) the issuer had no duty to inquire into adverse claims or had discharged any such duty.

• Marginal note:Duty of issuer on default

  (2) If an issuer has registered a transfer of a security to a person not entitled to it, the issuer shall on demand deliver a like security to the owner unless

  • (a) the issuer is not liable by virtue of subsection (1);

  • (b) the owner is precluded by subsection 137(1) from asserting any claim; or

  • (c) the delivery would result in over-issue in respect of which section 101 applies.

Marginal note:Lost or stolen security

• 137 (1) Where a security has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the issuer of that fact by giving the issuer written notice of the owner’s adverse claim within a reasonable time after the owner knows of the loss, destruction or taking, then, if the issuer has registered a transfer of the security before receiving the notice, the owner is precluded from asserting against the issuer any claim to a new security.

• Marginal note:Duty to issue new security

  (2) Where the owner of a security claims that the security has been lost, destroyed or wrongfully taken, the issuer shall issue a new security in place of the original security if the owner

  • (a) so requests before the issuer has notice that the security has been acquired by a bona fide purchaser;

  • (b) provides the issuer with a sufficient indemnity bond; and

  • (c) satisfies any other reasonable requirements imposed by the issuer.

• Marginal note:Duty to register transfer

  (3) If, after the issue of a new security under subsection (2), a bona fide purchaser of the original security presents the original security for registration of transfer, the issuer shall register the transfer unless registration would result in over-issue in respect of which section 101 applies.

• Marginal note:Right of issuer to recover

  (4) In addition to the rights that an issuer has by reason of an indemnity bond, the issuer may recover the new security issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a bona fide purchaser.

Marginal note:Authenticating agent’s duty

138 An authenticating trustee, registrar, transfer agent or other agent of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,

• (a) a duty to the issuer to exercise good faith and reasonable diligence; and

• (b) the same obligations to the holder or owner of a security and the same rights, privileges and immunities as the issuer.

Marginal note:Notice to agent

139 Notice to an authenticating trustee, registrar, transfer agent or other agent of an issuer is notice to the issuer in respect of the functions performed by the agent.

PART VICorporate Governance

DIVISION IShareholders and Policyholders

Place of Meetings

Marginal note:Place of meetings

• 140 (1) Meetings of shareholders or policyholders of a company shall be held at the place within Canada provided for in the by-laws of the company or, in the absence of any such provision, at the place within Canada that the directors determine.

• Marginal note:Participation by electronic means

  (2) Unless the by-laws provide otherwise, any person who is entitled to attend a meeting of shareholders or policyholders may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting if the company makes one available. A person who is participating in a meeting by one of those means is deemed for the purposes of this Act to be present at the meeting.

• Marginal note:Regulations

  (3) The Governor in Council may make regulations respecting the manner of and conditions for participating in a meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting.

Calling Meetings

Marginal note:Calling meetings

• 141 (1) The directors of a company

  • (a) shall, after the meeting called pursuant to subsection 50(1) or (2), call the first annual meeting of shareholders and policyholders of the company, which meeting must be held not later than six months after the end of the first financial year of the company;

  • (b) shall subsequently call an annual meeting of shareholders and policyholders, which meeting must be held not later than six months after the end of each financial year; and

  • (c) may at any time call a special meeting of shareholders or policyholders.

• Marginal note:Order to delay calling annual meeting

  (2) Despite subsection (1), the company may apply to the court for an order extending the time for calling an annual meeting.

• Marginal note:Obligation to notify Superintendent

  (3) The company shall give notice of the application to the Superintendent before any hearing concerning the application and shall provide the Superintendent with a copy of any order that is issued.

• Marginal note:Superintendent’s right to appear

  (4) The Superintendent is entitled to appear and be heard in person or by counsel at any hearing concerning the application.

Record Dates

Marginal note:Authority to fix record date

• 142 (1) The directors may in advance fix a record date, that is within the prescribed period, for the determination of

  • (a) shareholders who are entitled to receive payment of a dividend;

  • (b) shareholders or policyholders who are entitled to participate in a liquidation distribution;

  • (c) shareholders

    • (i) who are entitled to receive notice of a meeting of shareholders or a meeting of shareholders and policyholders,

    • (ii) who are entitled to vote at a meeting of shareholders or at a meeting of shareholders and policyholders, or

    • (iii) for any other purpose;

  • (d) policyholders who are entitled to

    • (i) receive notice of a meeting of policyholders or a meeting of shareholders and policyholders, or

    • (ii) vote at a meeting of policyholders or at a meeting of shareholders and policyholders; or

  • (e) policyholders for any other purpose except

    • (i) the right to receive payment of a policy dividend or bonus,

    • (ii) any purpose where the determination of policyholders is governed by contract, and

    • (iii) the right to receive benefits in respect of the conversion of a mutual company into a company with common shares.

• Marginal note:Determination of record date — shareholders

  (2) If no record date is fixed,

  • (a) the record date for the determination of shareholders who are entitled to receive notice of a meeting of shareholders or a meeting of shareholders and policyholders is

    • (i) at the close of business on the day immediately preceding the day on which the notice is given, or

    • (ii) if no notice is given, the day on which the meeting is held; and

  • (b) the record date for the determination of shareholders for any other purpose, other than to establish a shareholder’s right to vote, is at the close of business on the day on which the directors pass a resolution in respect of that purpose.

• Marginal note:Determination of record date — policyholders

  (3) If no record date is fixed,

  • (a) the record date for the determination of policyholders who are entitled to receive notice of a meeting of policyholders or a meeting of shareholders and policyholders is

    • (i) at the close of business on the day immediately preceding the day on which the notice is given, or

    • (ii) if no notice is given, the day on which the meeting is held;

  • (b) the record date for the determination of policyholders entitled to vote at a meeting is the day on which the meeting is held; and

  • (c) the record date for the determination of policyholders for any other purpose is at the close of business on the day on which the directors pass a resolution in respect of that purpose.

• Marginal note:Notice of record date — shareholders

  (4) If a record date is fixed and unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the securities register at the close of business on the day on which the directors fix the record date, notice of the record date shall be given within the prescribed period by

  • (a) advertisement in a newspaper in general circulation in the place where the company’s head office is situated and in each place in Canada where the company has a transfer agent or where a transfer of its shares may be recorded; and

  • (b) written notice to each stock exchange in Canada on which the company’s shares are listed for trading.

Notices of Meetings

Marginal note:Notice of meeting

• 143 (1) Notice of the time and place of a meeting of a company’s shareholders or policyholders shall be sent within the prescribed period to

  • (a) each shareholder entitled to vote at the meeting;

  • (b) each policyholder who is determined under subsection (1.4) or (1.6) to be entitled to notice if no business referred to in subparagraphs (c)(i) to (iii) is to be dealt with;

  • (c) each policyholder entitled to vote at the meeting if any of the following business is to be dealt with:

    • (i) authorizing the company to apply to the Minister for approval of a mutualization proposal or amalgamation agreement,

    • (ii) confirming a by-law changing the rights of policyholders to vote at meetings or the province in which the head office of the company is situated, or

    • (iii) approving an agreement setting out the terms and means of effecting the transfer of all or substantially all of the company’s policies or the reinsurance of all or substantially all of the company’s policies;

  • (d) each director;

  • (e) the auditor of the company;

  • (f) the actuary of the company; and

  • (g) the Superintendent.

• Marginal note:Exception

  (1.001) In the case of a company that is not a distributing company and does not have any policyholders entitled to vote, notice may be sent within any shorter period specified in its by-laws.

• Marginal note:Number of eligible votes

  (1.01) A converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 164.08(1), that may be cast at the meeting as of the record date for determining the shareholders or policyholders entitled to receive the notice of meeting or, if there are to be separate votes of shareholders or policyholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.

• Marginal note:Waiver of notice

  (1.1) A company is not required under subsection (1) to send to a person notice of a meeting if the person waives notice of the meeting. That waiver may be in any manner.

• Marginal note:Attendance constitutes waiver

  (1.2) A person who attends a meeting of shareholders or policyholders is deemed to have waived notice of the meeting, except where the person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

• Marginal note:Practices of policyholder notification

  (1.3) A company shall adopt and follow either of the two practices set out in subsections (1.4) and (1.5) for the notification of policyholders under paragraph (1)(b).

• Marginal note:First practice

  (1.4) One practice requires the company to send the notice to each policyholder entitled to vote at the meeting. If that practice is adopted, each of those policyholders is entitled to notice under paragraph (1)(b).

• Marginal note:Second practice

  (1.5) The other practice requires the company, at the time of the application for or issuance of a policy that gives the policyholder the right to vote at meetings of the shareholders and policyholders of the company, and after that time at least once every three years,

  • (a) to advise the policyholder of the policyholder’s right to attend and to vote in person or by proxy at those meetings; and

  • (b) to provide the policyholder with a form on which the policyholder may indicate whether the policyholder wants to receive notices of those meetings.

• Marginal note:Notice under second practice

  (1.6) If a company chooses the practice under subsection (1.5), each policyholder entitled to vote at a meeting is entitled to notice under paragraph (1)(b) if, within three years before the record date fixed under subparagraph 142(1)(d)(i) or determined under paragraph 142(3)(a), they complete and return to the company the form referred to in paragraph (1.5)(b) indicating that they want to receive notice or they indicate to the satisfaction of the company that they want to receive notice.

• Marginal note:Exemption

  (2) The Minister may exempt a company from the application of paragraph (1)(c) with respect to business consisting of the approval of an amalgamation agreement, having regard to the size of the company and of the companies or bodies corporate with which it proposes to amalgamate.

• Marginal note:Publication in newspaper

  (3) In addition to the notice required under subsection (1),

  • (a) where any class of shares of a company is publicly traded on a recognized stock exchange in Canada, notice of the time and place of the meeting of shareholders shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in the place where the head office of the company is situated and in each place in Canada where the company has a transfer agent or where a transfer of the company’s shares may be recorded; or

  • (b) notice of the time and place of the meeting of policyholders of the company and, where a company follows the practice under subsection (1.5), information on the means by which any policyholder can receive the notice required under subsection (1), shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in the place where the head office of the company is situated and in each region of Canada in which more than one per cent of the total number of policyholders entitled to vote at the meeting reside.

• Marginal note:Notice not required — shareholders

  (4) Notice of a meeting is not required to be sent to shareholders who are not registered on the records of the company or the company’s transfer agent on the record date fixed under subparagraph 142(1)(c)(i) or determined under paragraph 142(2)(a).

• Marginal note:Notice not required — policyholders

  (5) Notice of a meeting at which business referred to in paragraph (1)(c) is to be dealt with is not required to be sent to policyholders who become policyholders after the record date fixed under subparagraph 142(1)(d)(i) or determined under paragraph 142(3)(a).

• Marginal note:Effect of default

  (6) Failure to receive a notice of a meeting of shareholders or policyholders does not deprive a shareholder or policyholder of the right to vote at the meeting.

Marginal note:Notice of adjourned meeting

• 144 (1) If a meeting of shareholders or policyholders is adjourned for less than thirty days, it is not necessary, unless the by-laws otherwise provide, to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned.

• Marginal note:Notice after longer adjournment

  (2) If a meeting of shareholders or policyholders is adjourned by one or more adjournments for a total of thirty days or more, notice of the continuation of the meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than ninety days, subsection 164.03(1) does not apply.

Marginal note:Special business

• 145 (1) All matters dealt with at a special meeting of shareholders or policyholders or at an annual meeting of shareholders and policyholders are deemed to be special business, except that special business does not include consideration of

  • (a) the financial statements;

  • (b) the auditor’s report;

  • (c) the actuary’s report;

  • (d) the election of directors;

  • (e) the remuneration of directors and reappointment of the incumbent auditor; or

  • (f) the description of the roles of the actuary and the auditor in the preparation and audit of the financial statements.

• Marginal note:Notice of special business

  (2) Notice of a meeting of shareholders or policyholders at which special business is to be transacted must

  • (a) state the nature of the special business in sufficient detail to permit a shareholder or policyholder to form a reasoned judgment thereon;

  • (b) contain the text of any special resolution to be submitted to the meeting; and

  • (c) state, where a management proxy circular is sent to shareholders concurrently with the notice, that a policyholder is entitled on request to receive a copy of the management proxy circular.

• Marginal note:Exemption

  (3) The Superintendent may exempt a company from the application of paragraph (2)(b) in relation to policyholders, on condition that, instead of sending the policyholders the text of a special resolution to be submitted to a meeting, the company send the policyholders a summary of the text.

146 [Repealed, 1997, c. 15, s. 190]

Shareholder and Policyholder Proposals

Marginal note:Proposal

• 147 (1) Subject to subsections (1.1) and (1.2), a registered holder or beneficial owner of shares that may be voted — or a policyholder entitled to vote — at an annual meeting of shareholders and policyholders may

  • (a) submit to the company notice of any matter that they propose to raise at the meeting (in this section and section 148 referred to as a “proposal”); and

  • (b) discuss at the meeting any matter in respect of which they would have been entitled to submit a proposal.

• Marginal note:Eligibility to submit proposal

  (1.1) To be eligible to submit a proposal a person shall

  • (a) for at least the prescribed period be the registered holder or beneficial owner of at least the prescribed number of the company’s outstanding shares;

  • (b) have the support of persons who, in the aggregate and including or not including the person who submits the proposal, have for at least the prescribed period been the registered holders or beneficial owners of at least the prescribed number of the company’s outstanding shares; or

  • (c) be a policyholder entitled to vote at an annual meeting of the company’s shareholders and policyholders.

• Marginal note:Information to be provided

  (1.2) A proposal submitted by a registered holder or beneficial owner is to be accompanied by the following information:

  • (a) the name and address of the person submitting the proposal and the names and addresses of their supporters, if any; and

  • (b) the number of shares held or owned by the person and their supporters, if any, and the date that the shares were acquired.

• Marginal note:Information not part of proposal

  (1.3) The information provided under subsection (1.2) does not form part of a proposal or of the supporting statement referred to in subsection (3) and is not to be included for the purpose of the prescribed maximum number of words referred to in subsection (3).

• Marginal note:Proof may be required

  (1.4) If the company requests within the prescribed period that a person provide proof that they are eligible to submit a proposal, the person shall within the prescribed period provide proof that they meet the requirements of subsection (1.1).

• Marginal note:Circulation of proposal

  (2) A company shall attach any proposal of a shareholder or policyholder submitted for consideration at a meeting of shareholders and policyholders to the notice of the meeting.

• Marginal note:Supporting statement

  (3) At the request of the person who submits a proposal, the company shall attach to the notice of the meeting the person’s statement in support of the proposal and their name and address. The statement and proposal together are not to exceed the prescribed maximum number of words.

• Marginal note:Nomination of directors

  (4) A proposal may include nominations for the election of directors if it is signed by

  • (a) in the case of nominations for the directors to be elected by shareholders, one or more registered holders or beneficial owners of shares representing in the aggregate not less than 5% of the shares of the company or 5% of the shares of a class of its shares entitled to vote at the meeting at which the proposal is to be presented; and

  • (b) in the case of nominations for the directors to be elected by policyholders, the lesser of 250 policyholders and 1% of the policyholders who are entitled to vote at the meeting.

• Marginal note:Conditions precedent for proposals

  (5) A company is not required to comply with subsections (2) and (3) if

  • (a) the proposal is not submitted to the company at least the prescribed number of days before the anniversary date of the notice of meeting that was sent to shareholders and policyholders in respect of the previous annual meeting of shareholders and policyholders;

  • (b) it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal griev­ance against the company or its directors, officers or security holders;

  • (b.1) it clearly appears that the proposal does not relate in a significant way to the business or affairs of the company;

  • (c) the person submitting the proposal failed within the prescribed period before the company receives their proposal to present, in person or by proxy, at a meeting of shareholders or policyholders a proposal that at their request had been attached to a notice of meeting;

  • (d) substantially the same proposal was set out in or attached to a dissident’s proxy circular or attached to a notice of meeting relating to, and was presented to shareholders or policyholders at, a meeting of shareholders or policyholders held within the prescribed period before the receipt of the proposal and did not receive the prescribed minimum amount of support at the meeting;

  • (e) the rights conferred by subsections (1) to (4) are being abused to secure publicity;

  • (f) in the case of a proposal submitted by a policyholder that relates to business that is referred to in paragraph 143(1)(c), the proposal is not signed by at least five hundred policyholders entitled to vote at the meeting to which the proposal is to be presented, or one per cent of the total number of those policyholders, whichever is lesser;

  • (g) in the case of any other proposal submitted by a policyholder, the proposal is not signed by at least one hundred policyholders entitled to vote at the meeting to which the proposal is to be presented;

  • (h) in the case of a proposal submitted by a policyholder, the proposal

    • (i) relates to the management of the ordinary business and affairs of the company, or

    • (ii) would, if implemented, result in a change in the character or direction of the company that would have a material adverse effect on the ability of the company to meet the reasonable expectations of the company’s participating policyholders as to the net cost of their insurance; or

    • (iii) [Repealed, 1996, c. 6, s. 72]

  • (i) in the case of a proposal submitted by a policyholder or a shareholder of a mutual company, the proposal would result in the mutual company being converted into a company with common shares.

• Marginal note:Company may refuse to include proposal

  (5.1) If a person who submits a proposal fails to continue to hold or own shares in accordance with paragraph (1.1)(a) or, as the case may be, does not continue to have the support of persons who are in the aggregate the registered holders or beneficial owners of the prescribed number of shares in accordance with paragraph (1.1)(b) until the end of the meeting, the company is not required to attach any proposal submitted by that person to a notice of meeting for any meeting held within the prescribed period after the day of the meeting.

• Marginal note:Immunity for proposal and statement

  (6) No company or person acting on behalf of a company incurs any liability by reason only of circulating a proposal or statement in compliance with subsections (2) and (3).

Marginal note:Notice of refusal

• 148 (1) If a company refuses to attach a proposal to a notice of a meeting, it shall in writing notify the person submitting the proposal of its intention not to attach the proposal to the notice of the meeting and of the reasons for the refusal. It shall notify the person within the prescribed period after either the day on which it receives the proposal or, if it has requested proof under subsection 147(1.4), the day on which it receives the proof.

• Marginal note:Application to court

  (2) On the application of a person submitting a proposal who claims to be aggrieved by a company’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order that it thinks fit.

• Marginal note:Idem

  (3) A company or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the company not to attach the proposal to the notice of the meeting, and the court, if it is satisfied that subsection 147(5) applies, may make such order as it thinks fit.

• Marginal note:Notice to Superintendent

  (4) An applicant under subsection (2) or (3) shall give the Superintendent written notice of the application and the Superintendent may appear and be heard at the hearing of the application in person or by counsel.

Shareholder and Policyholder Lists

Marginal note:Lists of shareholders and policyholders

• 149 (1) A company shall prepare an alphabetical list

  • (a) of shareholders entitled to receive notice of a meeting showing the number of shares held by each shareholder

    • (i) if a record date is fixed under subparagraph 142(1)(c)(i), no later than 10 days after that date, and

    • (ii) if no record date is fixed, on the record date determined under paragraph 142(2)(a); and

  • (b) of policyholders entitled to vote at a meeting

    • (i) if a record date is fixed under subparagraph 142(1)(d)(ii), no later than the day on which the meeting is held, and

    • (ii) if no record date is fixed, on the record date determined under paragraph 142(3)(b).

• Marginal note:Shareholder voting list

  (1.1) The company shall prepare an alphabetical list of shareholders entitled to vote as of the record date showing the number of shares held by each shareholder

  • (a) if a record date is fixed under subparagraph 142(1)(c)(ii), no later than 10 days after that date; and

  • (b) if no record date is fixed under subparagraph 142(1)(c)(ii), no later than 10 days after a record date is fixed under subparagraph 142(1)(c)(i) or no later than the record date determined under paragraph 142(2)(a), as the case may be.

• (1.2) [Repealed, 2005, c. 54, s. 234]

• Marginal note:Entitlement to vote — shareholders

  (2) Subject to section 164.08, a shareholder whose name appears on a list prepared under subsection (1.1) is entitled to vote the shares shown opposite their name.

• Marginal note:Entitlement to vote — policyholders

  (3) A policyholder whose name appears on a list prepared under paragraph (1)(b) is entitled to vote at the meeting to which the list relates.

• Marginal note:Examination of shareholder list

  (4) A shareholder or policyholder may examine the list of shareholders

  • (a) during usual business hours at the head office of the company or at the place where its central securities register is maintained; and

  • (b) at the meeting of shareholders for which the list was prepared.

• Marginal note:Verification of right of policyholder to vote

  (5) A shareholder or policyholder of a company may, at the meeting of policyholders for which the list referred to in subsection (1) was prepared, require the company to verify from that list whether a person identified both by name and by some other distinguishing feature is entitled to vote at that meeting.

Quorum

Marginal note:Shareholders

• 150 (1) Unless the by-laws otherwise provide, a quorum of shareholders is present at a meeting of shareholders if the holders of a majority of the shares who are entitled to vote at the meeting are present in person or represented by proxyholders.

• Marginal note:Policyholders

  (2) Unless the by-laws otherwise provide, a quorum of policyholders is present at a meeting of policyholders if at least five hundred policyholders who are entitled to vote at the meeting, or one per cent of the total number of those policyholders, whichever is lesser, are present in person or represented by proxyholders.

• Marginal note:Shareholders and policyholders

  (3) Unless the by-laws otherwise provide, a quorum of shareholders and policyholders is present at a meeting of shareholders and policyholders if the holders of a majority of the shares and at least five hundred policyholders, or one per cent of the total number of policyholders, whichever is lesser, who are entitled to vote at the meeting are present in person or represented by proxyholders.

• Marginal note:Quorum at opening

  (4) If a quorum is present at the opening of a meeting of shareholders or policyholders, the shareholders or policyholders present may, unless the by-laws otherwise provide, proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting.

• Marginal note:No quorum at opening

  (5) If a quorum is not present at the opening of a meeting of shareholders or policyholders, the shareholders or policyholders present may adjourn the meeting to a fixed time and place but may not transact any other business.

Marginal note:One shareholder meeting

151 If a company has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or represented by a proxyholder constitutes a meeting of shareholders or a meeting of shareholders of that class or series.

Voting

Marginal note:One share — one vote

152 Subject to section 164.08, if a share of a company entitles the holder of the share to vote at a meeting of shareholders or shareholders and policyholders, that share entitles the shareholder to one vote at the meeting.

Marginal note:One vote for each participating policyholder

• 153 (1) Subject to subsection 149(3), the holder of one or more participating policies issued by a company is entitled to attend a meeting of policyholders or shareholders and policyholders of the company and is entitled to one vote at that meeting.

• Marginal note:Exception

  (2) Notwithstanding subsection (1) but subject to subsection 149(3), the holder of a participating policy that was issued by a former-Act company before June 1, 1992 is entitled to more than one vote, or to a fraction of a vote, at a meeting of policyholders or shareholders and policyholders of the company in accordance with the terms of the policy or the provisions of the incorporating instrument or the by-laws of the company that had not been repealed and had not otherwise ceased to have effect before that date.

Marginal note:Other policyholders entitled to vote

• 154 (1) Subject to subsection 149(3), the holder of one or more policies, other than participating policies, issued by a company is entitled to attend a meeting of policyholders or shareholders and policyholders of the company, and is entitled to one vote at that meeting, where

  • (a) the terms of one or more of those policies entitle the policyholder to vote at the meeting; or

  • (b) the by-laws of the company entitle the policyholder to vote at the meeting.

• Marginal note:Exception

  (2) Notwithstanding subsection (1) but subject to subsection 149(3), the holder of a policy, other than a participating policy, that was issued by a former-Act company before June 1, 1992 is entitled to more than one vote, or to a fraction of a vote, at a meeting of policyholders or shareholders and policyholders of the company in accordance with the terms of the policy or the provisions of the incorporating instrument or the by-laws of the company that had not been repealed and had not otherwise ceased to have effect before that date.

• Marginal note:One policyholder — one vote

  (3) Subject to subsection 149(3), the holder of one or more participating policies issued by a company and one or more policies, other than participating policies, referred to in subsection (1)

  • (a) is entitled to one vote as the holder of one or more participating policies and to another vote as the holder of one or more policies, other than participating policies, referred to in that subsection where this Act provides for participating policyholders to vote separately from other policyholders who are entitled to vote, or for those other policyholders to vote separately from participating policyholders;

  • (b) is not otherwise entitled to more than one vote at a meeting of policyholders; and

  • (c) is not otherwise entitled to more than one vote at a meeting of shareholders and policyholders, unless the holder is also a shareholder, in which case the holder is entitled to one vote as a policyholder and is also entitled to vote his or her shares.

Marginal note:Representative shareholder or policyholder

• 155 (1) If an entity is a shareholder or policyholder of a company, the company shall recognize any natural person authorized by a resolution of the directors or governing body or similar authority of the entity to represent it at meetings of shareholders or policyholders of the company.

• Marginal note:Idem

  (2) A natural person authorized under subsection (1) to represent an entity may exercise on behalf of the entity all the powers the entity could exercise if the entity were a natural person who was a shareholder or policyholder.

Marginal note:Joint shareholders or policyholders

156 Unless the by-laws otherwise provide, if two or more persons hold shares or policies jointly, one of those holders present at a meeting of shareholders or policyholders may in the absence of the others vote the shares or policies, but if two or more of those persons who are present in person or represented by proxyholder vote, they shall vote as one on the shares or policies jointly held by them.

Marginal note:Voting by hands or ballot

• 157 (1) Unless the by-laws otherwise provide, voting at a meeting of shareholders or policyholders shall take place by show of hands except when a ballot is demanded by a shareholder, policyholder or proxyholder entitled to vote at the meeting.

• Marginal note:Ballot

  (2) A shareholder, policyholder or proxyholder may demand a ballot either before or after any vote by show of hands.

• Marginal note:Electronic voting

  (3) Despite subsection (1) and unless the by-laws provide otherwise, any vote referred to in that subsection may be held entirely by means of a telephonic, electronic or other communication facility if the company makes one available.

• Marginal note:Voting while participating electronically

  (4) Unless the by-laws provide otherwise, any person who is participating in a meeting of shareholders or policyholders under subsection 140(2) and entitled to vote at that meeting may vote by means of the telephonic, electronic or other communication facility that the company has made available for that purpose.

• Marginal note:Regulations

  (5) The Governor in Council may make regulations respecting the manner of and conditions for voting at a meeting of shareholders or policyholders by means of a telephonic, electronic or other communication facility.

Resolution in lieu of Meeting

Marginal note:Resolution in lieu of meeting

• 158 (1) Except where a written statement is submitted by a director under section 182 or by an auditor under subsection 344(1),

  • (a) a resolution in writing signed by all the shareholders and policyholders entitled to vote on that resolution at a meeting of shareholders or policyholders is as valid as if it had been passed at a meeting of the shareholders or policyholders; and

  • (b) a resolution in writing dealing with all matters required by this Act to be dealt with at a meeting of shareholders or policyholders, and signed by all the shareholders and policyholders entitled to vote at that meeting, satisfies all the requirements of this Act relating to meetings of shareholders or policyholders.

• Marginal note:Filing resolution

  (2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings of shareholders or policyholders.

• Marginal note:Evidence

  (3) Unless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.

Requisitioned Meetings

Marginal note:Requisitioned meeting

• 159 (1) Shareholders who together hold not less than 5 per cent of the issued and outstanding shares of a company that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders or shareholders and policyholders for the purposes stated in the requisition.

• Marginal note:Idem

  (2) At least five hundred policyholders entitled to vote at a meeting sought to be held, or one per cent of the total number of those policyholders, whichever is greater, may requisition the directors to call a meeting of policyholders or shareholders and policyholders for the purposes stated in the requisition.

• Marginal note:Form

  (3) A requisition referred to in subsection (1) or (2)

  • (a) must state the business to be transacted at the meeting and must be sent to each director and to the head office of the company; and

  • (b) may consist of several documents of like form, each signed by one or more shareholders or policyholders.

• Marginal note:Directors calling meeting

  (4) On receipt of a requisition referred to in subsection (1) or (2), the directors shall call a meeting of shareholders or policyholders to transact the business stated in the requisition, unless

  • (a) a record date has been fixed under subparagraph 142(1)(c)(i) or (d)(i) and notice of it has been given under subsection 142(4);

  • (b) the directors have called a meeting of shareholders or policyholders and have given notice thereof under section 143; or

  • (c) the business of the meeting as stated in the requisition includes matters described in paragraphs 147(5)(b) to (e), (h) and (i).

• Marginal note:Shareholders’ and policyholders’ power

  (5) If the directors do not call a meeting within twenty-one days after receiving a requisition referred to in subsection (1) or (2), any shareholder or policyholder who signed the requisition may call the meeting.

• Marginal note:Procedure

  (6) A meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called pursuant to the by-laws and this Act.

• Marginal note:Reimbursement

  (7) Unless the shareholders or policyholders otherwise resolve at a meeting called under subsection (5), the company shall reimburse the shareholders or policyholders for any expenses reasonably incurred by them in requisitioning, calling and holding the meeting.

Powers of the Court

Marginal note:Court may order meeting to be called

• 160 (1) A court may, on the application of a director, a shareholder or policyholder who is entitled to vote or the Superintendent, order a meeting to be called, held or conducted in the manner that the court directs if

  • (a) it is impracticable to call the meeting within the time or in the manner in which it is to be called;

  • (b) it is impracticable to conduct the meeting in the manner required by this Act or the by-laws; or

  • (c) the court thinks that the meeting ought to be called, held or conducted within the time or in the manner that it directs for any other reason.

• (1.1) [Repealed, 2005, c. 54, s. 238]

• Marginal note:Varying quorum

  (2) Without restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Act be varied or dispensed with at a meeting called, held and conducted pursuant to this section.

• Marginal note:Valid meeting

  (3) A meeting called, held and conducted pursuant to this section is for all purposes a meeting of shareholders or policyholders of the company duly called, held and conducted.

Marginal note:Court review of election

• 161 (1) A company or a shareholder, policyholder or director of a company may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the company.

• Marginal note:Powers of court

  (2) On an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;

  • (b) an order declaring the result of the disputed election or appointment;

  • (c) an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the company until a new election is held or the new appointment is made; and

  • (d) an order determining the voting rights of shareholders, persons claiming to own shares, policyholders and persons claiming to be policyholders.

Marginal note:Notice to Superintendent

• 162 (1) A person who makes an application under subsection 160(1) or 161(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.

• Marginal note:Superintendent representation

  (2) The Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).

Pooling Agreements

Marginal note:Pooling agreement

163 A written agreement between two or more shareholders or policyholders may provide that in exercising voting rights the shares or policies held by them will be voted as provided in the agreement.

DIVISION I.1Proxies

Marginal note:Definitions

164 The definitions in this section apply in this Division.

intermediary

intermediary means a person who holds a security on behalf of another person who is not the registered holder of the security, and includes

• (a) a securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction;

• (b) a securities depositary;

• (c) a financial institution;

• (d) in relation to a clearing agency, a securities dealer, trust company, association within the meaning of section 2 of the Cooperative Credit Associations Act, bank or other person, including another clearing agency, on whose behalf the clearing agency or its nominee holds securities of an issuer;

• (e) a trustee or administrator of a self-administered retirement savings plan, retirement income fund or education savings plan or another similar self-administered savings or investment plan registered under the Income Tax Act;

• (f) a nominee of a person referred to in any of paragraphs (a) to (e); and

• (g) a person who performs functions similar to those performed by a person referred to in any of paragraphs (a) to (e) and holds a security registered in their name, or in the name of their nominee, on behalf of another person who is not the registered holder of the security. (intermédiaire)

registrant

registrant[Repealed, 2005, c. 54, s. 239]

solicitation

solicitation

• (a) includes

  • (i) a request for a proxy whether or not accompanied by or included in a form of proxy,

  • (ii) a request to execute or not to execute or, in Quebec, to sign or not to sign a form of proxy or to revoke a proxy,

  • (iii) the sending of a form of proxy or other communication to a shareholder or policyholder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, and

  • (iv) the sending of a form of proxy to a shareholder or policyholder under section 164.03; but

• (b) does not include

  • (i) the sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder or policyholder,

  • (ii) the performance of administrative acts or professional services on behalf of a person soliciting a proxy,

  • (iii) the sending by an intermediary of the documents referred to in subsection 164.06(1),

  • (iv) a solicitation by a person in respect of shares of which they are the beneficial owner,

  • (v) a prescribed public announcement by a shareholder or policyholder of how they intend to vote and the reasons for that decision,

  • (vi) a communication for the purposes of obtaining the support of persons in accord­ance with paragraph 147(1.1)(b), or

  • (vii) a communication, other than a solic­itation by or on behalf of the management of a company, that is made to shareholders or policyholders in the prescribed circumstances. (sollicitation)

solicitation by or on behalf of the management of a company

solicitation by or on behalf of the management of a company means a solicitation by any person pursuant to a resolution or instruction of, or with the acquiescence of, the directors or a committee of the directors of the company. (sollicitation effectuée par la direction d’une société ou pour son compte)

Marginal note:Appointing proxyholder

• 164.01 (1) A shareholder or policyholder who is entitled to vote at a meeting of shareholders or policyholders may, by executing a form of proxy, appoint a proxyholder or one or more alternate proxyholders, who are not required to be shareholders or policyholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.

• Marginal note:Execution of proxy

  (2) A form of proxy shall be executed by a shareholder or policyholder or by a shareholder’s or policyholder’s attorney authorized in writing to do so.

• Marginal note:Limit on authority

  (3) No appointment of a proxyholder provides authority for the proxyholder to act in respect of the appointment of an auditor or the election of a director unless a nominee proposed in good faith for the appointment or election is named in the form of proxy, a management proxy circular, a dissident’s proxy circular or a proposal under subsection 147(1).

• Marginal note:Required information

  (4) A form of proxy must indicate, in bold-face type, that the shareholder or policyholder by whom or on whose behalf it is executed may appoint a proxyholder, other than a person designated in the form of proxy, to attend and act on the shareholder’s or policyholder’s behalf at a meeting to which the proxy relates, and must contain instructions as to the manner in which the shareholder or policyholder may do so.

• Marginal note:Validity of proxy

  (5) A proxy is valid only at the meeting in respect of which it is given or at a continuation of the meeting after an adjournment.

• Marginal note:Revocation of proxy

  (6) A shareholder or policyholder may revoke a proxy

  • (a) by depositing an instrument in writing executed by the shareholder or policyholder or by the shareholder’s or policyholder’s attorney authorized in writing to do so

    • (i) at the head office of the company at any time up to and including the last business day before the day of a meeting, or a continuation of a meeting after an adjournment, at which the proxy is to be used, or

    • (ii) with the chairperson of the meeting on the day of the meeting or a continuation of the meeting after an adjournment; or

  • (b) in any other manner permitted by law.

Marginal note:Deposit of proxies

• 164.02 (1) The directors may specify, in a notice calling a meeting of shareholders or policyholders or a continuation of a meeting of shareholders or policyholders after an adjournment, a time before which executed forms of proxy to be used at the meeting or the continued meeting must be deposited with the company or its transfer agent.

• Marginal note:Time for deposit of proxies

  (2) The time specified for the deposit of forms of proxy may not precede the meeting or the continued meeting by more than

  • (a) forty-eight hours, excluding Saturdays and holidays, in the case of forms of proxy executed by shareholders; and

  • (b) ten days, in the case of forms of proxy executed by policyholders.

Marginal note:Mandatory solicitation

• 164.03 (1) Subject to subsections (2) and 144(2), the management of a company shall, concurrently with sending notice of a meeting of shareholders and policyholders, send a form of proxy that is in accordance with the regulations to each shareholder entitled to receive notice of the meeting and to each policyholder entitled to receive notice of the meeting under section 143.

• Marginal note:Exception

  (2) The management of a company is not required to send a form of proxy to shareholders under subsection (1) if the company

  • (a) is not a distributing company; and

  • (b) has 50 or fewer shareholders who are entitled to vote at a meeting, two or more joint holders of a share being counted as one shareholder.

• Marginal note:Optional solicitation

  (3) The management of a company may send forms of proxy referred to in subsection (1) to policyholders who are entitled to vote at the meeting but not entitled to receive notice of the meeting under section 143, if the management

  • (a) sends forms of proxy referred to in that subsection to all policyholders who are entitled to vote at the meeting but not entitled to receive notice of the meeting under that section; and

  • (b) at the same time sends to each of the policyholders referred to in paragraph (a) a notice of the meeting as if those policyholders were persons entitled under that subsection to notice of the meeting.

• Marginal note:Deeming rule for other provisions

  (4) For the purposes of this Act other than this section, if notices of a meeting are sent to policyholders under paragraph (3)(b), those policyholders are deemed to have been entitled under paragraph 143(1)(b) to receive notice of the meeting.

Marginal note:Soliciting proxies

• 164.04 (1) A person shall not solicit proxies unless a proxy circular that is in accordance with the regulations is sent to the auditor of the company, to each shareholder or policyholder whose proxy is solicited and, in the case set out in paragraph (b), to the company as follows:

  • (a) in the case of solicitation by or on behalf of the management of a company, a management proxy circular, either as an appendix to or as a separate document accompanying the notice of the meeting; and

  • (b) in the case of any other solicitation, a dissident’s proxy circular stating the purposes of the solicitation.

• Marginal note:Exception — limited solicitation

  (1.1) Despite subsection (1), a person may solicit proxies, other than by or on behalf of the management of the company, without sending a dissident’s proxy circular, if the total number of shareholders and policyholders whose proxies are solicited is 15 or fewer, with two or more joint holders being counted as one shareholder.

• Marginal note:Exception — solicitation by public broadcast

  (1.2) Despite subsection (1), a person may solicit proxies, other than by or on behalf of the management of the company, without sending a dissident’s proxy circular if the solicitation is, in the prescribed circumstances, conveyed by public broadcast, speech or publication.

• Marginal note:Copy to Superintendent

  (2) A person who sends a management proxy circular or dissident’s proxy circular shall concurrently send to the Superintendent a copy of it together with the form of proxy, any other documents for use in connection with the meeting and, in the case of a management proxy circular, a copy of the notice of meeting.

• Marginal note:Exemption by Superintendent

  (3) On the application of an interested person, the Superintendent may, on any terms that the Superintendent thinks fit, exempt the person from any of the requirements of subsection (1) and section 164.03, and the exemption may be given retroactive effect.

• Marginal note:Reporting exemptions

  (4) The Superintendent shall publish in a publication generally available to the public, a notice of a decision made by the Superintendent granting an exemption under subsection (3).

Marginal note:Attendance at meeting

• 164.05 (1) A person who solicits a proxy and is appointed proxyholder shall attend in person or cause an alternate proxyholder to attend every meeting in respect of which the proxy is valid, and the proxyholder or alternate proxyholder shall comply with the directions of the shareholder or policyholder who executed the form of proxy.

• Marginal note:Rights of proxyholder

  (2) A proxyholder or an alternate proxyholder has the same rights as the appointing shareholder or policyholder to speak at a meeting of shareholders or policyholders in respect of any matter, to vote by way of ballot at the meeting and, except where a proxyholder or an alternate proxyholder has conflicting instructions from more than one shareholder or policyholder, to vote at the meeting in respect of any matter by way of a show of hands.

• Marginal note:Vote by show of hands

  (3) Despite subsections (1) and (2) and unless a shareholder, policyholder or proxyholder demands a ballot, if the chairperson of a meeting of shareholders or policyholders declares to the meeting that, if a ballot were conducted, the total number of votes represented at the meeting by proxy required to be voted against what, to the knowledge of the chairperson, would be the decision of the meeting on a matter or group of matters is less than 5% of all the votes that might be cast by shareholders or policyholders, in person or by proxy,

  • (a) the chairperson may conduct the vote in respect of that matter or group of matters by way of a show of hands; and

  • (b) a proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by way of a show of hands.

Marginal note:Duty of intermediary

• 164.06 (1) Shares of a company that are registered in the name of an intermediary or an intermediary’s nominee and not beneficially owned by the intermediary may not be voted unless the intermediary sends to the beneficial owner

  • (a) a copy of the notice of the meeting, annual statement, management proxy circular and dissident’s proxy circular and any other documents, other than the form of proxy, that were sent to shareholders by or on behalf of any person for use in connection with the meeting; and

  • (b) a written request for voting instructions except if the intermediary has already received written voting instructions from the beneficial owner.

• Marginal note:When documents to be sent

  (2) The intermediary shall send the documents referred to in subsection (1) without delay after they receive the documents referred to in paragraph (1)(a).

• Marginal note:Restriction on voting

  (3) An intermediary or a proxyholder appointed by them may not vote shares that the intermediary does not beneficially own and that are registered in the name of the intermediary or their nominee unless the intermediary or proxyholder, as the case may be, receives written voting instructions from the beneficial owner.

• Marginal note:Copies

  (4) A person by or on behalf of whom a solicitation is made shall on request and without delay provide the intermediary, at the person’s expense, with the necessary number of copies of the documents referred to in paragraph (1)(a).

• Marginal note:Instructions to intermediary

  (5) The intermediary shall vote or appoint a proxyholder to vote in accordance with any written voting instructions received from the beneficial owner.

• Marginal note:Beneficial owner as proxyholder

  (6) If a beneficial owner so requests and provides an intermediary with appropriate documentation, the intermediary shall appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.

• Marginal note:Effect of intermediary’s failure to comply

  (7) The failure of an intermediary to comply with any of subsections (1) to (6) does not render void any meeting of shareholders or policyholders or any action taken at the meeting.

• Marginal note:Intermediary may not vote

  (8) Nothing in this Division gives an intermediary the right to vote shares that they are otherwise prohibited from voting.

Marginal note:Regulations

164.061 The Governor in Council may make regulations

• (a) respecting the powers that may be granted by a shareholder or a policyholder in a form of proxy;

• (b) respecting proxy circulars and forms of proxy, including the form and content of those documents; and

• (c) respecting the conditions under which a company is exempt from any of the requirements of sections 164.01 to 164.06.

Marginal note:Restraining order

• 164.07 (1) If a form of proxy, management proxy circular or dissident’s proxy circular contains an untrue statement of a material fact or omits to state a material fact that is required to be contained in it or that is necessary to make a statement contained in it not misleading in light of the circumstances in which the statement is made, an interested person or the Superintendent may apply to a court and the court may make any order it thinks fit including

  • (a) an order restraining the solicitation or the holding of the meeting, or restraining any person from implementing or acting on a resolution passed at the meeting, to which the form of proxy, management proxy circular or dissident’s proxy circular relates;

  • (b) an order requiring correction of any form of proxy or proxy circular and a further solicitation; and

  • (c) an order adjourning the meeting.

• Marginal note:Notice of application

  (2) Where a person other than the Superintendent is an applicant under subsection (1), the applicant shall give to the Superintendent notice of the application and the Superintendent is entitled to appear and to be heard in person or by counsel.

DIVISION I.2Restrictions on Voting

Meaning of eligible votes

• 164.08 (1) In this section, eligible votes means the total number of votes that may be cast by or on behalf of shareholders and policyholders on a vote of shareholders or shareholders and policyholders or a vote of holders of a class or series of shares, as the case may be, in respect of any particular matter, calculated without regard to subsection (2).

• Marginal note:Restriction

  (2) At a meeting of shareholders and policyholders of a company in respect of which subsection 407(4) applies or of a company to which subsection 407(5) applies, no person and no entity controlled by any person may, in respect of any vote of shareholders or shareholders and policyholders or holders of any class or series of shares of the company, cast votes in respect of any shares beneficially owned by the person or the entity that are, in aggregate, more than 20 per cent of the eligible votes that may be cast in respect of that vote.

• Marginal note:Proxyholders

  (3) No person who is a proxyholder for a person or for an entity controlled by a person may cast votes to which the proxy relates that the person or entity may not cast by reason of subsection (2).

• Marginal note:Exception

  (4) Subsections (2) and (3) do not apply in respect of votes cast by or on behalf of

  • (a) a company to which subsection 407(5) applies, or an insurance holding company to which subsection 407(6) applies, that controls the company; or

  • (b) any entity that is controlled by a company or an insurance holding company referred to in paragraph (a).

• Marginal note:Exception

  (5) Subsections (2) and (3) do not apply in respect of a vote held under section 239.

• Marginal note:Validity of vote

  (6) A vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).

• Marginal note:Disposition of shareholdings

  (7) If, with respect to any company, a person contravenes subsection (2) or (3), the Minister may, by order, direct the shareholder of the shares to which the contravention relates or any person controlled by that shareholder to dispose of any number of shares of the company beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the shareholder and the persons controlled by that shareholder that is specified in the order.

• Marginal note:Restriction on voting rights

  (8) If the Minister makes an order under subsection (7), the person to whom the order relates may not, in person or by proxy, exercise any voting rights that are attached to shares of the company beneficially owned by the person.

• Marginal note:Subsection (8) ceases to apply

  (9) Subsection (8) ceases to apply in respect of a person when the shares to which the order relates have been disposed of.

• Marginal note:Reliance on number in notice

  (10) For the purpose of this section, a person is entitled to rely on the number of eligible votes set out in a notice of a meeting under subsection 143(1.01).

• Marginal note:Designation of persons

  (11) For the purpose of this section, the Minister may, with respect to a particular company, designate two or more persons who are parties to an agreement, commitment or understanding referred to in section 9 to be a single person.

DIVISION IIDirectors and Officers

Duties

Marginal note:Duty to manage

• 165 (1) Subject to this Act, the directors of a company shall manage or supervise the management of the business and affairs of the company.

• 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 203(3) and (4);

  • (b) establish a conduct review committee to perform the duties referred to in subsection 204(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) in the case of a company that issues participating policies, establish, before issuing any participating policies or, in the case of a former-Act company, within six months after the coming into force of this Part, a policy for determining the dividends and bonuses to be paid to the participating policyholders;

  • (e.1) establish a policy respecting the management of each of the participating accounts maintained under section 456,

    • (i) if the company has participating policyholders on the day on which this paragraph comes into force, within six months after that day, and

    • (ii) in any other case, before issuing a participating policy;

  • (e.2) establish criteria for changes made by the company to the premium or charge for insurance, amount of insurance or surrender value in respect of its adjustable policies,

    • (i) if the company has adjustable policyholders on the day on which this paragraph comes into force, within six months after that day, and

    • (ii) in any other case, before issuing an adjustable policy;

  • (f) 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 section 486;

  • (g) designate a committee of the board of directors to monitor the procedures referred to in paragraph (f) and satisfy itself that they are being adhered to by the company;

  • (h) establish investment and lending policies, standards and procedures in accordance with section 492; and

  • (i) in the case of a former-Act company, appoint the actuary of the company forthwith after the coming into force of this Part.

• Marginal note:Exception

  (3) Paragraphs (2)(a) and (b) do not apply to the directors of a company where

  • (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 subsection 2(1);

  • (b) there are no policyholders who are entitled to vote; and

  • (c) the audit committee or the conduct review committee of the Canadian financial institution referred to in paragraph (a) 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.

• Marginal note:Report of actuary — par. (2)(e)

  (3.1) The company’s actuary shall report to the directors in writing on the fairness to participating policyholders of any policy to be established or amended under paragraph (2)(e) and report at least once during each financial year on its continuing fairness. In the case of a policy established before the day on which this subsection comes into force, the actuary shall within six months after that day report on its fairness to participating policyholders and report at least once during each financial year on its continuing fairness.

• Marginal note:Report of actuary — par. (2)(e.1)

  (3.2) The company’s actuary shall report to the directors in writing on the fairness to participating policyholders of any policy to be established or amended under paragraph (2)(e.1) and report at least once during each financial year on its continuing fairness.

• Marginal note:Report of actuary — par. (2)(e.2)

  (3.3) The company’s actuary shall report to the directors in writing on the fairness to adjustable policyholders of the criteria to be established or amended under paragraph (2)(e.2) and report at least once during each financial year on their continuing fairness.

• Marginal note:Consideration of reports

  (3.4) The directors shall consider the report prepared under subsection (3.1), (3.2) or (3.3) before establishing or amending a policy under paragraph (2)(e) or (e.1) or the criteria under paragraph (2)(e.2), as the case may be.

• Marginal note:Generally accepted actuarial practice

  (3.5) The report of the actuary referred to in subsections (3.1) to (3.3) shall be prepared in accordance with generally accepted actuarial practice with such changes as may be determined by the Superintendent and any additional directions that may be made by the Superintendent.

• Marginal note:Copy to Superintendent

  (4) The company shall, within 30 days after a policy is established or amended under paragraph (2)(e) or (e.1) or criteria are established or amended under paragraph (2)(e.2), send a copy to the Superintendent.

• Marginal note:Access to policies

  (4.1) The company shall on request and free of charge send a copy of a policy established or amended under paragraph (2)(e) or (e.1) to a shareholder or participating policyholder and on payment of a reasonable fee to any other person.

• Marginal note:Access to criteria

  (4.2) The company shall on request and free of charge send a copy of the criteria referred to in paragraph (2)(e.2) to an adjustable policyholder and on payment of a reasonable fee to any other person.

• Marginal note:Regulations

  (5) The Governor in Council may make regulations respecting the content of the policies established under paragraphs (2)(e) and (e.1) and of the criteria established under paragraph (2)(e.2).

Marginal note:Duty of care

• 166 (1) Every director and officer of a company in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shall

  • (a) act honestly and in good faith with a view to the best interests of the company; and

  • (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

• 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

• 167 (1) A company shall have at least seven 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.

Marginal note:Disqualified persons

• 168 (1) 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 subsection 164.08(8) or section 418 or 430 from exercising voting rights attached to shares of the company or whose voting rights attached to the shares are suspended under section 432.1 or subsection 1016.3(4);

  • (f) a person who is an officer, director or full time employee of an entity that is prohibited by subsection 164.08(8) or section 418 or 430 from exercising voting rights attached to shares of the company or whose voting rights attached to the shares are suspended under section 432.1 or subsection 1016.3(4);

  • (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 406.1;

  • (g) [Repealed, 2013, c. 40, s. 164]

  • (h) a minister of Her Majesty in right of Canada or in right of a province;

  • (i) a person who is an agent or employee of the government of a foreign country or any political subdivision thereof; and

  • (j) a person who is an insurance agent or broker of the company.

• Marginal note:Shareholders disqualified

  (2) A shareholder of a company is disqualified from being a policyholders’ director of the company.

• (3) [Repealed, 2013, c. 40, s. 164]

Marginal note:No requirement to hold shares or policies

169 A director of a company is not required to hold shares of or a policy issued by the company.

Marginal note:Affiliated person

170 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

• 170.1 (1) Notwithstanding section 170, 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 and policyholders 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 and policyholders after a notice in writing by the Superintendent revoking the determination is received by the company.

Marginal note:Unaffiliated directors

• 171 (1) At the election of directors at each annual meeting of the shareholders and policyholders 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.

• Marginal note:Exception

  (2) Subsection (1) does not apply where

  • (a) 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; and

  • (b) there are no policyholders who are entitled to vote.

• 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 of the day the notice of the annual meeting is sent to shareholders and policyholders pursuant to section 143 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 shareholders and policyholders.

Marginal note:Limit on directors

172 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

• 173 (1) Subject to subsection 167(1) and sections 176 and 238, 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:Shareholders’ and policyholders’ directors

  (2) Subject to subsection 167(1) and sections 176 and 238, the directors of a company that has common shares and policyholders who are entitled to vote at an annual meeting of shareholders and policyholders shall by by-law determine the number of directors, or the minimum and maximum number of directors, who are to be elected by the shareholders and the number, or the minimum and maximum number, who are to be elected by the policyholders.

• Marginal note:Election at annual meeting

  (3) 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, shareholders’ directors or policyholders’ directors to be elected at any annual meeting of the shareholders and policyholders be such number as is fixed by the directors prior to the annual meeting.

• Marginal note:Minimum

  (4) If a company has common shares and policyholders who are entitled to vote at an annual meeting of shareholders and policyholders, the number of shareholders’ directors and the number of policyholders’ directors, whether determined by by-law or fixed by the directors, must each be at least one third of the total number of directors.

• Marginal note:Mutual company

  (4.1) Where the shareholders of a mutual company are entitled to elect one or more directors of the company, not more than one third of the directors may be elected by the shareholders.

• Marginal note:Shareholders’ and policyholders’ directors

  (5) In making by-laws for the purposes of subsection (2), the directors shall designate every member of the board as being either a shareholders’ director or a policyholders’ director.

Marginal note:Election or appointment as director

173.1 The election or appointment of a person as a director is subject to the following conditions:

• (a) the person was present at the meeting when the election or appointment took place and did not refuse to hold office as a director; or

• (b) the person was not present at the meeting when the election or appointment took place but

  • (i) consented in writing to hold office as a director before the election or appointment or within 10 days after it, or

  • (ii) acted as a director after the election or appointment.

Marginal note:Term of directors

• 174 (1) Except where this Act or the by-laws of a company provide for cumulative voting, the company may, by by-law, provide that the directors be elected for terms of one, two or three years.

• Marginal note:Idem

  (2) Where this Act or the by-laws of a company provide for cumulative voting to elect the shareholders’ directors, the company may, by by-law, provide that the policyholders’ directors be elected for terms of one, two or three years.

• Marginal note:Term of one, two or three years

  (3) A director elected for a term of one, two or three years holds office until the close of the first, second or third annual meeting of shareholders and policyholders, as the case may be, following the election of the director.

• Marginal note:No stated term

  (4) A director who is not elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting of shareholders and policyholders following the election of the director.

• Marginal note:Tenure of office

  (5) It is not necessary that all directors elected at a meeting of shareholders or policyholders hold office for the same term.

• Marginal note:Idem

  (6) If a by-law of a company provides that the directors be elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.

• Marginal note:Composition requirements

  (7) Where a director of a company is elected or appointed for a term of more than one year, the company shall comply with subsections 167(2) and 171(1), section 172 and subsection 173(4) at each annual meeting of shareholders and policyholders during the director’s term of office as if that director were elected or appointed on that date.

• Marginal note:Transitional

  (8) Subsection (7) does not apply in respect of a former-Act company until the day of the third annual meeting of shareholders and policyholders after the coming into force of this section.

Marginal note:Determining election of directors

• 175 (1) Except where this Act or the by-laws of a company provide for cumulative voting, the persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of a company shall be the directors thereof.

• Marginal note:No right to vote

  (2) A shareholder of a company that has common shares and policyholders who are entitled to vote at an annual meeting of shareholders and policyholders

  • (a) is not entitled to vote for the policyholders’ directors if the shareholder is not a policyholder; and

  • (b) is not entitled to vote any shares for the policyholders’ directors.

• Marginal note:Idem

  (3) The holder of a policy issued by a company that has common shares and policyholders who are entitled to vote at an annual meeting of shareholders and policyholders

  • (a) is not entitled to vote for the shareholders’ directors if the policyholder is not a shareholder; and

  • (b) is not entitled to vote as a policyholder for the shareholders’ directors.

• Marginal note:Equal number of votes

  (4) If, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors, determine which of the persons so receiving an equal number of votes are to be elected.

Marginal note:Cumulative voting

• 176 (1) Where this Act or the by-laws provide for cumulative voting,

  • (a) there shall be a stated number determined by by-law, and not a minimum and maximum number, of directors, in the case of a company that has no policyholders who are entitled to vote at an annual meeting of shareholders and policyholders, or of shareholders’ directors, in the case of a company that has such policyholders;

  • (b) each shareholder entitled to vote at an election of directors to be elected by cumulative voting has the right to cast a number of votes equal to the number of votes attached to the shares held by the shareholder multiplied by the number of directors to be elected by cumulative voting, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;

  • (c) a separate vote shall be taken with respect to each candidate nominated for a position that is to be filled by cumulative voting unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;

  • (d) if a shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the shareholder is deemed to have distributed the votes equally among the candidates for whom the shareholder voted;

  • (e) if the number of candidates nominated exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled;

  • (f) each director elected by cumulative voting ceases to hold office at the close of the next annual meeting of shareholders and policyholders following the director’s election;

  • (g) a director elected by cumulative voting may be removed from office only if the number of votes cast in favour of a motion to remove the director is greater than the product of the number of directors required by the by-laws to be elected by cumulative voting and the number of votes cast against the motion; and

  • (h) the number of directors required by the by-laws to be elected by cumulative voting may be decreased only if the number of votes cast in favour of a motion to decrease the number of directors is greater than the product of the number of directors required by the by-laws to be elected by cumulative voting and the number of votes cast against the motion.

• Marginal note:Mandatory cumulative voting

  (2) Where the aggregate of the voting shares beneficially owned by a person and any entities controlled by the person carries more than 10 per cent of the voting rights attached to all the outstanding voting shares of a company, the directors to be elected by shareholders shall be elected by cumulative voting.

• Marginal note:Exception

  (3) Subsection (2) does not apply where all the voting shares of the company that are outstanding, other than directors’ qualifying shares, if any, are beneficially owned by

  • (a) one person;

  • (b) one person and one or more entities controlled by that person; or

  • (c) one or more entities controlled by the same person.

• Marginal note:Exception

  (3.1) Subsection (2) does not apply to a converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies.

• Marginal note:Transitional election

  (4) Where this Act or the by-laws of a company provide for cumulative voting, the shareholders of the company shall,

  • (a) at the first annual meeting of shareholders and policyholders held not earlier than ninety days following the date that cumulative voting is required under subsection (2) or provided for in the by-laws, and

  • (b) at each succeeding annual meeting,

  elect the stated number of directors to hold office until the close of the next annual meeting of shareholders and policyholders following their election.

• Marginal note:Class or series of shares

  (5) Nothing in this Act precludes the holders of any class or series of shares of a company from having an exclusive right to elect one or more directors.

Marginal note:Re-election of directors

177 A director who has completed a term of office is, if otherwise qualified, eligible for re-election.

Incomplete Elections and Director Vacancies

Marginal note:Void election or appointment

• 178 (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 167(2) or 171(1), section 172 or subsection 173(4) or (4.1), the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.

• Marginal note:Failure to elect minimum

  (2) Where, at the close of a meeting of shareholders or policyholders of a company, the shareholders or policyholders have failed to elect the number or minimum number of directors required by this Act or the by-laws of a company, the purported election of directors at the meeting

  • (a) is valid if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; or

  • (b) is void if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.

• (3) and (4) [Repealed, 1997, c. 15, s. 204]

Marginal note:Directors where elections incomplete or void

• 179 (1) Notwithstanding subsections 174(3) and (4) and paragraphs 176(1)(f) and 180(1)(a), where subsection 178(1) or (2) applies at the close of any meeting of shareholders or policyholders of a company, the board of directors shall, until their successors are elected or appointed, consist solely of

  • (a) where paragraph 178(2)(a) applies, the directors referred to in that paragraph; or

  • (b) where subsection 178(1) or paragraph 178(2)(b) applies, those persons who were the incumbent directors immediately before the meeting.

• Marginal note:Where there is no approved rectification plan

  (2) Notwithstanding subsections 174(3) and (4) and paragraphs 176(1)(f) and 180(1)(a), where a plan to rectify the non-compliance referred to in subsection 178(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.

• Marginal note:Directors to call meeting

  (3) Where subsection (1) or (2) applies, the board of directors referred to in that subsection shall without delay call a special meeting of shareholders or policyholders to fill the vacancies, where paragraph 178(2)(a) applies, or elect a new board of directors, where subsection 178(1) or paragraph 178(2)(b) applies.

• Marginal note:Shareholder or policyholder may call meeting

  (4) Where the directors fail to call a special meeting required by subsection (3), the meeting may be called by any shareholder or policyholder entitled to vote.

Marginal note:Ceasing to hold office

• 180 (1) A director ceases to hold office

  • (a) at the close of the annual meeting at which the director’s term of office expires;

  • (b) when the director dies or resigns;

  • (c) when the director becomes disqualified under section 168 or ineligible to hold office pursuant to subsection 212(2);

  • (d) when the director is removed under section 181; or

  • (e) when the director is removed from office under section 678.1 or 678.2.

• Marginal note:Date of resignation

  (2) The resignation of a director of a company becomes effective at the time a written resignation is sent to the company by the director or at the time specified in the resignation, whichever is later.

Marginal note:Removal of director

• 181 (1) Subject to paragraph 176(1)(g) and this section, the shareholders or policyholders of a company may by resolution at a special meeting remove any director or all the directors from office.

• Marginal note:Exception

  (2) A shareholders’ director may be removed only by a resolution of the shareholders at a meeting of shareholders or shareholders and policyholders.

• Marginal note:Idem

  (3) A policyholders’ director may be removed only by a resolution of the policyholders at a meeting of policyholders or shareholders and policyholders.

• Marginal note:Idem

  (4) Where the holders of any class or series of shares of a company have the exclusive right to elect one or more directors, a director so elected may be removed only by a resolution at a meeting of the shareholders of that class or series.

• Marginal note:Vacancy by removal

  (5) Subject to paragraphs 176(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders or policyholders at which the director is removed or, if not so filled, may be filled under section 185 or 187.

Marginal note:Statement of director

• 182 (1) A director who

  • (a) resigns,

  • (b) receives a notice or otherwise learns of a meeting of shareholders or policyholders called for the purpose of removing the director from office, or

  • (c) receives a notice or otherwise learns of a meeting of directors or shareholders or policyholders at which another person is to be appointed or elected to fill the office of director, whether because of the director’s resignation or removal or because the director’s term of office has expired or is about to expire,

  is entitled to submit to the company a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.

• Marginal note:Statement to Superintendent

  (2) Where a director resigns as a result of a disagreement with the other directors or the officers of a company, the director shall submit to the company and the Superintendent a written statement setting out the nature of the disagreement.

Marginal note:Circulation of statement

• 183 (1) A company shall forthwith on receipt of a director’s statement referred to in subsection 182(1) relating to a matter referred to in paragraph 182(1)(b) or (c), or a director’s statement referred to in subsection 182(2), send a copy thereof to each shareholder and policyholder entitled to receive a notice of meetings under paragraph 143(1)(a) or (b) and to the Superintendent, unless the statement is attached to a notice of a meeting.

• Marginal note:Immunity for statement

  (2) No company or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (1).

Marginal note:Shareholders or policyholders filling vacancy

184 The by-laws of a company may provide that a vacancy among the directors is to be filled only by vote of

• (a) the shareholders or policyholders;

• (b) the shareholders, if the vacancy occurs among the shareholders’ directors;

• (c) the policyholders, if the vacancy occurs among the policyholders’ directors; or

• (d) the holders of any class or series of shares having an exclusive right to elect one or more directors if the vacancy occurs among the directors elected by the holders of that class or series.

Marginal note:Directors filling vacancy

• 185 (1) Despite section 192 but subject to subsection (2) and sections 184, 186 and 187, a quorum of directors may fill a vacancy among the directors except a vacancy resulting from a change in the by-laws by which the number or the minimum or maximum number of directors is increased or from a failure to elect the number or minimum number of directors provided for in the by-laws.

• Marginal note:Where composition fails

  (2) Notwithstanding sections 184 and 192, where by reason of a vacancy the number of directors or the composition of the board of directors fails to meet any of the requirements of section 167, subsection 171(1), section 172 and subsection 173(4), the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.

Marginal note:Vacancy among shareholders’ or policyholders’ directors

186 Notwithstanding section 192 but subject to sections 184 and 187, where a company has shareholders’ directors and policyholders’ directors and a vacancy occurs among those directors,

• (a) the remaining shareholders’ directors or policyholders’ directors, as the case may be, may fill the vacancy except one resulting from an increase in the number or the minimum or maximum number — or from a failure to elect the number or minimum number — of shareholders’ directors or policyholders’ directors provided for in the by-laws;

• (b) if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 167, subsection 171(1), section 172 and subsection 173(4), the other directors may fill that vacancy; and

• (c) if there are no such remaining directors and paragraph (b) does not apply, any shareholder or policyholder entitled to vote may call a meeting of shareholders or policyholders for the purpose of filling the vacancy.

Marginal note:Class vacancy

187 Notwithstanding section 192 but subject to section 184, where the holders of any class or series of shares of a company have an exclusive right to elect one or more directors and a vacancy occurs among those directors,

• (a) the remaining directors elected by the holders of that class or series of shares may fill the vacancy except one resulting from an increase in the number or the minimum or maximum number of directors for that class or series or from a failure to elect the number or minimum number of directors provided for in the by-laws for that class or series;

• (b) if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 167, subsection 171(1), section 172 and subsection 173(4), the other directors may fill that vacancy; and

• (c) if there are no such remaining directors and paragraph (b) does not apply, any holder of shares of that class or series may call a meeting of the holders thereof for the purpose of filling the vacancy.

Marginal note:Unexpired term

• 188 (1) Unless the by-laws otherwise provide, a director elected or appointed to fill a vacancy holds office for the unexpired term of the director’s predecessor in office.

• Marginal note:Affiliation

  (2) Notwithstanding subsection 171(3), the affiliation of a person to be elected or appointed to fill a vacancy shall be determined as at the date of the person’s election or appointment and that person shall be deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders and policyholders.

Marginal note:Additional directors

• 188.1 (1) Shareholders’ directors may appoint one or more additional directors as shareholders’ directors, and policyholders’ directors may appoint one or more additional directors as policyholders’ directors, where the by-laws of the company allow them to do so and the by-laws determine the minimum and maximum numbers of shareholders’ directors and policyholders’ directors.

• Marginal note:Term of office

  (2) A director appointed under subsection (1) holds office for a term expiring not later than the close of the next annual meeting of shareholders or policyholders of the company.

• Marginal note:Limit on number appointed

  (3) The total number of directors appointed under subsection (1) may not exceed one third of the number of directors elected at the previous annual meeting of shareholders or policyholders of the company.

Meetings of the Board

Marginal note:Meetings required

• 189 (1) The directors shall meet at least four times during each financial year.

• Marginal note:Place for meetings

  (2) The directors may meet at any place unless the by-laws provide otherwise.

• Marginal note:Notice for meetings

  (3) The notice for the meetings must be given as required by the by-laws.

Marginal note:Notice of meeting

• 190 (1) A notice of a meeting of directors shall specify each matter referred to in section 207 that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not otherwise specify the purpose of or the business to be transacted at the meeting.

• Marginal note:Waiver of notice

  (2) A director may in any manner waive notice of a meeting of directors and the attendance of a director at a meeting of directors is a waiver of notice of that meeting except where the director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

• Marginal note:Adjourned meeting

  (3) Notice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting was announced at the original meeting.

Marginal note:Quorum

• 191 (1) Subject to section 192, the number of directors referred to in subsection (2) constitutes a quorum at any meeting of directors or a committee of directors and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

• Marginal note:Idem

  (2) The number of directors constituting a quorum at any meeting of directors or a committee of directors shall be

  • (a) a majority of the minimum number of directors required by this Act for the board of directors or a committee of directors; or

  • (b) such greater number of directors than the number calculated pursuant to paragraph (a) as may be established by the by-laws of the company.

• Marginal note:Director continues to be present

  (3) A director who is present at a meeting of directors or of a committee of directors but is not, in accordance with subsection 212(1), present at any particular time during the meeting is considered to be present for the purposes of this section.

Marginal note:Resident Canadian majority

• 192 (1) The directors of a company shall not transact business at a meeting of directors unless

  • (a) in the case of a company that is the subsidiary of a foreign institution, at least one half of the directors present are resident Canadians; and

  • (b) in the case of any other company, a majority of the directors present are resident Canadians.

• Marginal note:Exception

  (2) Despite subsection (1), the directors of a company may transact business at a meeting of directors without the required proportion of directors who are resident Canadians if

  • (a) a director who is a resident Canadian unable to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting; and

  • (b) there would have been present the required proportion of directors who are resident Canadians had that director been present at the meeting.

Marginal note:Presence of unaffiliated director

• 192.1 (1) The directors of a company shall not transact business at a meeting of directors unless at least one of the directors who is not affiliated with the company is present.

• Marginal note:Exception

  (2) Despite subsection (1), the directors of a company may transact business at a meeting of directors if a director who is not affiliated with the company and who is not able to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting.

• Marginal note:Exception

  (3) Subsection (1) does not apply if all the voting shares of the 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:Electronic meeting

• 193 (1) Subject to the by-laws of a company, a meeting of directors or of a committee of directors may be held by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other during the meeting.

• Marginal note:Deemed present

  (2) A director participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Act to be present at that meeting.

Marginal note:Resolution outside board meeting

• 193.1 (1) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors.

• Marginal note:Filing directors’ resolution

  (2) A copy of the resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors.

• Marginal note:Resolution outside committee meeting

  (3) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of a committee of directors, other than a resolution of the audit committee in carrying out its duties under subsection 203(3) or a resolution of the conduct review committee in carrying out its duties under subsection 204(3), is as valid as if it had been passed at a meeting of that committee.

• Marginal note:Filing committee resolution

  (4) A copy of the resolution referred to in subsection (3) shall be kept with the minutes of the proceedings of that committee.

• Marginal note:Evidence

  (5) Unless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.

Marginal note:Dissent of director

• 194 (1) A director of a company who is present at a meeting of directors or a committee of directors is deemed to have consented to any resolution passed or action taken at that meeting unless

  • (a) the director requests that the director’s dissent be entered or the director’s dissent is entered in the minutes of the meeting;

  • (b) the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; or

  • (c) the director sends the director’s dissent by registered mail or delivers it to the head office of the company immediately after the meeting is adjourned.

• Marginal note:Loss of right to dissent

  (2) A director of a company who votes for or consents to a resolution is not entitled to dissent under subsection (1).

• Marginal note:Dissent of absent director

  (3) A director of a company who is not present at a meeting at which a resolution is passed or action taken is deemed to have consented thereto unless, within seven days after the director becomes aware of the resolution, the director

  • (a) causes the director’s dissent to be placed with the minutes of the meeting; or

  • (b) sends the director’s dissent by registered mail or delivers it to the head office of the company.

Marginal note:Record of attendance

• 195 (1) A company shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.

• Marginal note:Statement to shareholders and policyholders

  (2) A company shall attach to the notice of each annual meeting it sends to its shareholders and policyholders a statement showing, in respect of the financial year immediately preceding the meeting, the total number of directors’ meetings and directors’ committee meetings held during the financial year and the number of those meetings attended by each director.

Marginal note:Meeting required by Superintendent

• 196 (1) Where in the opinion of the Superintendent it is necessary, the Superintendent may, by notice in writing, require a company to hold a meeting of directors of the company to consider the matters set out in the notice.

• Marginal note:Attendance of Superintendent

  (2) The Superintendent may attend and be heard at a meeting referred to in subsection (1).

By-laws

Marginal note:By-laws

• 197 (1) Unless this Act otherwise provides, the directors of a company may by resolution make, amend or repeal any by-law that regulates the business or affairs of the company.

• Marginal note:Shareholder and policyholder approval

  (2) The directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders and policyholders at the next meeting of shareholders and policyholders, and the shareholders and policyholders may, by resolution, confirm or amend the by-law, amendment or repeal.

• Marginal note:Separate vote

  (2.1) If a by-law made, amended or repealed under subsection (1) deals with the quorum of policyholders at a meeting of shareholders and policyholders, the policyholders who are entitled to vote on a resolution to confirm or amend the by-law, amendment or repeal are entitled to vote on it separately from the shareholders.

• Marginal note:Effective date of by-law

  (3) Unless this Act otherwise provides, a by-law, or an amendment to or a repeal of a by-law, is effective from the date of the resolution of the directors under subsection (1) until it is confirmed, confirmed as amended or rejected by the shareholders and policyholders under subsection (2) or (2.1) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed, or confirmed as amended, it continues in effect in the form in which it was so confirmed.

• Marginal note:Effect where no shareholder or policyholder approval

  (4) If a by-law, or an amendment to or a repeal of a by-law, is rejected by the shareholders and policyholders, or is not submitted to the shareholders and policyholders by the directors as required under subsection (2), the by-law, amendment or repeal ceases to be effective from the date of its rejection or the date of the next meeting of shareholders and policyholders, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the shareholders and policyholders.

Marginal note:Shareholder or policyholder proposal of by-law

198 A shareholder or policyholder entitled to vote at an annual meeting of shareholders and policyholders may, in accordance with sections 147 and 148, make a proposal to make, amend or repeal a by-law.

Marginal note:By-laws of former-Act company

• 199 (1) Subject to section 200, where a by-law of a former-Act company is in effect on the coming into force of this section, the by-law continues in effect until amended or repealed, unless it is contrary to a provision of this Act.

• Marginal note:Unconfirmed by-laws

  (2) A by-law made by the directors of a company under section 23 of the Canadian and British Insurance Companies Act, as that section read immediately before the coming into force of this section, and not confirmed at a general or annual meeting of the company in accordance with section 24 of that Act on or before the coming into force of this section, continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders and policyholders following the coming into force of this section.

• Marginal note:Shareholder and policyholder approval

  (3) A by-law referred to in subsection (2) shall be submitted to the shareholders and policyholders at the first meeting of the shareholders and policyholders following the coming into force of this section.

• Marginal note:Application of ss. 197(3) and (4) and 198

  (4) Subsections 197(3) and (4) and section 198 apply in respect of a by-law referred to in this section as if it were a by-law made under section 197.

Marginal note:Resolutions re remuneration

• 200 (1) Where the remuneration of directors of a former-Act company was, immediately prior to the coming into force of this section, fixed by a resolution of the shareholders or policyholders of the company that was passed pursuant to subsection 135(1) of the Canadian and British Insurance Companies Act, that resolution continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders and policyholders following the coming into force of this section.

• Marginal note:Existing resolutions

  (2) Where the remuneration of directors of a former-Act company was, immediately prior to the coming into force of this section, fixed by a resolution of the directors, that resolution continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders and policyholders following the coming into force of this section.

Marginal note:Deemed by-laws

• 201 (1) Any matter provided for in the incorporating instrument of a former-Act company on the coming into force of this section, or of a body corporate continued as a company under this Act at the time of continuance that, under this Act, would be provided for in the by-laws of a company is deemed to be provided for in the by-laws of the company.

• Marginal note:By-law prevails

  (2) Where a by-law of the company made in accordance with sections 197 and 198 amends or repeals any matter referred to in subsection (1), the by-law prevails.

Committees of the Board

Marginal note:Committees

202 The directors of a company may appoint from their number, in addition to the committees referred to in subsection 165(2), such other committees as they deem necessary and, subject to section 207, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.

Marginal note:Audit committee

• 203 (1) The audit committee of a company shall consist of at least three directors.

• Marginal note:Membership

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

• Marginal note:Duties of audit committee

  (3) The audit committee of a company shall

  • (a) review the annual statement of the company before the annual statement is approved by the directors;

  • (b) review such returns of the company as the Superintendent may specify;

  • (c) require the management of the company to implement and maintain appropriate internal control procedures;

  • (c.1) review, evaluate and approve those procedures;

  • (d) review such investments and transactions that could adversely affect the well-being of the company as the auditor or any officer of the company may bring to the attention of the committee;

  • (e) meet with the auditor to discuss the annual statement and the returns and transactions referred to in this subsection;

  • (f) meet with the actuary of the company to discuss the parts of the annual statement and the annual return filed under section 665 prepared by the actuary; and

  • (g) meet with the chief internal auditor of the company, or the officer or employee of the company acting in a similar capacity, and with management of the company, to discuss the effectiveness of the internal control procedures established for the company.

• Marginal note:Report

  (4) In the case of the annual statement and returns of a company that under this Act must be approved by the directors of the company, the audit committee of the company shall report thereon to the directors before the approval is given.

• Marginal note:Required meeting of directors

  (5) The audit committee of a company may call a meeting of the directors of the company to consider any matter of concern to the committee.