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Trust and Loan Companies Act (S.C. 1991, c. 45)

Act current to 2022-11-16 and last amended on 2022-06-23. Previous Versions

PART VICorporate Governance (continued)

Directors and Officers (continued)

Election and Tenure — Directors (continued)

Marginal note:Term of directors

  •  (1) Except where this Act or the by-laws of a company provide for cumulative voting, a 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:Idem

    (5) 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

    (6) Where a director of a company is elected or appointed for a term of more than one year, the company shall comply with subsections 163(2) and 167(1) and section 168 at each annual meeting of shareholders during the director’s term of office as if that director were elected or appointed on that date.

  • Marginal note:Transitional

    (7) Subsection (6) does not apply in respect of a former-Act company until the day of the third annual meeting of shareholders after the coming into force of this section.

Marginal note:Determining election of directors

  •  (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:Idem

    (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.

Marginal note:Cumulative voting

  •  (1) Where this Act or the by-laws provide for cumulative voting,

    • (a) there shall be a stated number of directors fixed by by-law and not a minimum and maximum number of directors;

    • (b) each shareholder entitled to vote at an election of directors 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, 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 of shareholders shall be taken with respect to each candidate nominated for director 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 for director 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 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 a company, the directors shall be elected by cumulative voting.

  • Marginal note:Exception

    (3) Subsection (2) does not apply

    • (a) where all the voting shares of the company that are outstanding, other than directors’ qualifying shares, if any, are beneficially owned by

      • (i) one person,

      • (ii) one person and one or more entities controlled by that person,

      • (iii) one or more entities controlled by the same person; or

    • (b) in respect of a former-Act company whose shareholders are confined to entities incorporated or formed by or under an Act of Parliament or of the legislature of a province that are, in the opinion of the directors, operating as credit unions or cooperative associations.

  • 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 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:Exception

    (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.

  • 1991, c. 45, s. 172
  • 1997, c. 15, s. 352
  • 2005, c. 54, s. 398

Marginal note:Re-election of directors

 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

  •  (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 163(2) or 167(1) or section 168, 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 of a company, the shareholders 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. 353]

  • 1991, c. 45, s. 174
  • 1997, c. 15, s. 353

Marginal note:Directors where elections incomplete or void

  •  (1) Notwithstanding subsections 170(2) and (3) and paragraphs 172(1)(f) and 176(1)(a), where subsection 174(1) or (2) applies at the close of any meeting of shareholders of a company, the board of directors shall, until their successors are elected or appointed, consist solely of

    • (a) where paragraph 174(2)(a) applies, the directors referred to in that paragraph; or

    • (b) where subsection 174(1) or paragraph 174(2)(b) applies, the persons who were the incumbent directors immediately before the meeting.

  • Marginal note:Where there is no approved rectification plan

    (2) Notwithstanding subsections 170(2) and (3) and paragraphs 172(1)(f) and 176(1)(a), where a plan to rectify the non-compliance referred to in subsection 174(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 174(2)(a) applies, or elect a new board of directors, where subsection 174(1) or paragraph 174(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.

  • 1991, c. 45, s. 175
  • 1997, c. 15, s. 354

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 164 or ineligible to hold office pursuant to subsection 208(2);

    • (d) when the director is removed under section 177; or

    • (e) when the director is removed from office under section 509.1 or 509.2.

  • 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.

  • 1991, c. 45, s. 176
  • 2001, c. 9, s. 500

Marginal note:Removal of director

  •  (1) Subject to paragraph 172(1)(g), the shareholders of a company may by resolution at a special meeting remove any director or all the directors from office.

  • Marginal note:Exception

    (2) 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

    (3) Subject to paragraphs 172(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders at which the director is removed or, if not so filled, may be filled under section 181 or 182.

Marginal note:Statement of director

  •  (1) A director who

    • (a) resigns,

    • (b) receives a notice or otherwise learns of a meeting of shareholders 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 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 re disagreement

    (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

  •  (1) A company shall without delay on receipt of a director’s statement referred to in subsection 178(1) relating to a matter referred to in paragraph 178(1)(b) or (c), or a director’s statement referred to in subsection 178(2), send a copy of it to each shareholder entitled to receive a notice of meetings and to the Superintendent, unless the statement is included in or attached to a management proxy circular required by subsection 160.05(1).

  • 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).

  • 1991, c. 45, s. 179
  • 1997, c. 15, s. 355

Marginal note:Shareholders filling vacancy

 The by-laws of a company may provide that a vacancy among the directors is to be filled only

  • (a) by a vote of the shareholders; or

  • (b) by a vote of 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

  •  (1) Despite section 187 but subject to subsection (2) and sections 180 and 182, 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 180 and 187, 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 163, subsection 167(1) and section 168, the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.

  • 1991, c. 45, s. 181
  • 2005, c. 54, s. 399

Marginal note:Class vacancy

 Notwithstanding section 187, 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, then, subject to section 180,

  • (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 163, subsection 167(1) and section 168, 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.

  • 1991, c. 45, s. 182
  • 2005, c. 54, s. 400
 
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