Government of Canada / Gouvernement du Canada
Symbol of the Government of Canada

Search

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

Act current to 2023-05-17 and last amended on 2023-01-01. Previous Versions

PART XVIIInsurance Holding Companies (continued)

DIVISION 6Corporate Governance (continued)

SUBDIVISION 3Directors and Officers (continued)

Marginal note:Duty of care

  •  (1) Every director and officer of an insurance holding 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 insurance holding 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 an insurance holding company shall comply with this Act, the regulations, the insurance holding company’s incorporating instrument and the by-laws of the insurance holding company.

  • Marginal note:No exculpation

    (3) No provision in any contract, in any resolution or in the by-laws of an insurance holding company relieves any director, officer or employee of the insurance holding 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.

  • 2001, c. 9, s. 465
Qualification and Number — Directors

Marginal note:Minimum number of directors

  •  (1) An insurance holding company shall have at least seven directors.

  • Marginal note:Residency requirement

    (2) At least one half of the directors of an insurance holding company that is a subsidiary of a foreign institution and a majority of the directors of any other insurance holding company must be, at the time of each director’s election or appointment, resident Canadians.

  • 2001, c. 9, s. 465
  • 2007, c. 6, s. 319

Marginal note:Disqualified persons

 The following persons are disqualified from being directors of an insurance holding 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 793(7) or section 945 or 955 from exercising voting rights attached to shares of the insurance holding company;

  • (f) a person who is an officer, director or full-time employee of an entity that is prohibited by subsection 793(7) or section 945 or 955 from exercising voting rights attached to shares of the insurance holding company;

  • (f.1) a person who is an officer, director, employee or agent of — or any other person acting on behalf of — an eligible agent within the meaning of section 406.1;

  • (g) [Repealed, 2013, c. 40, s. 165]

  • (h) a minister of Her Majesty in right of Canada or in right of a province; and

  • (i) a person who is an agent or employee of the government of a foreign country or any political subdivision thereof.

  • 2001, c. 9, s. 465
  • 2012, c. 19, s. 344, c. 31, s. 141
  • 2013, c. 40, s. 165

Marginal note:No requirement to hold shares

 A director of an insurance holding company is not required to hold shares of the insurance holding company.

  • 2001, c. 9, s. 465

Marginal note:Limit on directors

 No more than 15 per cent of the directors of an insurance holding company may, at each director’s election or appointment, be employees of the insurance holding company or a subsidiary of the insurance holding company, except that up to four persons who are employees of the insurance holding company or a subsidiary of the insurance holding company may be directors of the insurance holding company if those directors constitute not more than one half of the directors of the insurance holding company.

  • 2001, c. 9, s. 465
Election and Tenure — Directors

Marginal note:Number of directors

  •  (1) Subject to subsection 796(1) and sections 803 and 851, the directors of an insurance holding company shall, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.

  • Marginal note:Election at annual meeting

    (2) A by-law made pursuant to subsection (1) that provides for a minimum and maximum number of directors may provide that the number of directors to be elected at any annual meeting of the shareholders be such number as is fixed by the directors prior to the annual meeting.

  • 2001, c. 9, s. 465

Marginal note:Election or appointment as director

 The election or appointment of a person as a director is subject to the following:

  • (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.

  • 2005, c. 54, s. 327

Marginal note:Term of directors

  •  (1) Except where this Part or the by-laws of an insurance holding company provide for cumulative voting, the insurance holding company may, by by-law, provide that the directors be elected for terms of one, two or three years.

  • Marginal note:Term of one, two or three years

    (2) 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, as the case may be, following the election of the director.

  • Marginal note:No stated term

    (3) 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 following the election of the director.

  • Marginal note:Tenure of office

    (4) It is not necessary that all directors elected at a meeting of shareholders hold office for the same term.

  • Marginal note:Tenure of office

    (5) If a by-law of an insurance holding 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

    (6) Where a director of an insurance holding company is elected or appointed for a term of more than one year, the insurance holding company shall comply with subsection 796(2) and section 799 at each annual meeting of shareholders during the director’s term of office as if that director were elected or appointed on that date.

  • 2001, c. 9, s. 465

Marginal note:Determining election of directors

  •  (1) Except where this Part or the by-laws of an insurance holding 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 an insurance holding company shall be the directors thereof.

  • Marginal note:Equal number of votes

    (2) 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.

  • 2001, c. 9, s. 465

Marginal note:Cumulative voting

  •  (1) Where this Part 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;

    • (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 following the director’s election;

    • (g) a director 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 and the number of votes cast against the motion; and

    • (h) the number of directors required by the by-laws 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 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 an insurance holding company, the directors shall be elected by cumulative voting.

  • Marginal note:Exception

    (3) Subsection (2) does not apply if all the voting shares of the insurance holding company that are outstanding 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

    (4) Subsection (2) does not apply to an insurance holding company in respect of which subsection 927(4) applies.

  • Marginal note:Transitional election

    (5) Where this Part or the by-laws of an insurance holding company provide for cumulative voting, the shareholders of the insurance holding company shall

    • (a) at the first annual meeting of shareholders 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 following their election.

  • Marginal note:Class or series of shares

    (6) Nothing in this Part precludes the holders of any class or series of shares of an insurance holding company from having an exclusive right to elect one or more directors.

  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 328

Marginal note:Re-election of directors

 A director who has completed a term of office is, if otherwise qualified, eligible for re-election.

  • 2001, c. 9, s. 465
Incomplete Elections and Director Vacancies

Marginal note:Void election or appointment

  •  (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 796(2) or section 799, 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) If, at the close of a meeting of shareholders of an insurance holding company, the shareholders have failed to elect the number or minimum number of directors required by this Part or the by-laws of an insurance holding 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.

  • 2001, c. 9, s. 465

Marginal note:Directors where elections incomplete or void

  •  (1) Despite subsections 801(2) and (3) and paragraphs 803(1)(f) and 807(1)(a), where subsection 805(1) or (2) applies at the close of any meeting of shareholders of an insurance holding company, the board of directors shall, until their successors are elected or appointed, consist solely of

    • (a) where paragraph 805(2)(a) applies, the directors referred to in that paragraph; or

    • (b) where subsection 805(1) or paragraph 805(2)(b) applies, those persons who were the incumbent directors immediately before the meeting.

  • Marginal note:Where there is no approved rectification plan

    (2) Despite subsections 801(2) and (3) and paragraphs 803(1)(f) and 807(1)(a), where a plan to rectify the non-compliance referred to in subsection 805(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 to fill the vacancies, where paragraph 805(2)(a) applies, or elect a new board of directors, where subsection 805(1) or paragraph 805(2)(b) applies.

  • Marginal note:Shareholder 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.

  • 2001, c. 9, s. 465

Marginal note:Ceasing to hold office

  •  (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 797 or ineligible to hold office pursuant to subsection 837(2);

    • (d) when the director is removed under section 808; or

    • (e) when the director is removed from office under section 1006 or 1007.

  • Marginal note:Date of resignation

    (2) The resignation of a director of an insurance holding company becomes effective at the time a written resignation is sent to the insurance holding company by the director or at the time specified in the resignation, whichever is later.

  • 2001, c. 9, s. 465
 
Date modified: