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

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.