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

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)