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

Act current to 2022-09-22 and last amended on 2022-06-23. Previous Versions

PART VICorporate Governance (continued)

Directors and Officers (continued)

Committees of the Board (continued)

Marginal note:Conduct review committee

  •  (1) The conduct review committee of a company shall consist of at least three directors.

  • Marginal note:Membership

    (2) A majority of the members of the conduct review committee of a company must consist of directors who are not persons affiliated with the company and none of the members of the conduct review committee may be officers or employees of the company or a subsidiary of the company.

  • Marginal note:Duties of conduct review committee

    (3) The conduct review committee of a company shall

    • (a) require the management of the company to establish procedures for complying with Part XI;

    • (b) review those procedures and their effectiveness in ensuring that the company is complying with Part XI;

    • (b.1) if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of the company,

      • (i) establish policies for entering into transactions referred to in subsection 483.1(1), and

      • (ii) review transactions referred to in subsection 483.3(1); and

    • (c) review the practices of the company to ensure that any transactions with related parties of the company that may have a material effect on the stability or solvency of the company are identified.

  • Marginal note:Company report to Superintendent

    (4) A company shall report to the Superintendent on the mandate and responsibilities of the conduct review committee and the procedures referred to in paragraph (3)(a).

  • Marginal note:Committee report to directors

    (5) After each meeting of the conduct review committee of a company, the committee shall report to the directors of the company on matters reviewed by the committee.

  • Marginal note:Directors’ report to Superintendent

    (6) Within ninety days after the end of each financial year, the directors of a company shall report to the Superintendent on what the conduct review committee did during the year in carrying out its responsibilities under subsection (3).

  • 1991, c. 45, s. 199
  • 1997, c. 15, s. 361
  • 2001, c. 9, s. 502

Directors and Officers — Authority

Marginal note:Chief executive officer

  •  (1) The directors of a company shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 202, may delegate to that officer any of the powers of the directors.

  • Marginal note:Exception

    (2) Subsection (1) does not apply 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:Appointment of officers

  •  (1) The directors of a company may, subject to the by-laws, designate the offices of the company, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 202, to manage the business and affairs of the company.

  • Marginal note:Directors as officers

    (2) Subject to section 168, a director of a company may be appointed to any office of the company.

  • Marginal note:Two or more offices

    (3) Two or more offices of a company may be held by the same person.

Marginal note:Limits on power to delegate

 The directors of a company may not delegate any of the following powers, namely, the power to

  • (a) submit to the shareholders a question or matter requiring the approval of the shareholders;

  • (b) fill a vacancy among the directors, on a committee of directors or in the office of auditor, or appoint additional directors;

  • (c) issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 65, except in accordance with any authorization made by the directors;

  • (d) declare a dividend;

  • (e) authorize the redemption or other acquisition by the company pursuant to section 74 of shares issued by the company;

  • (f) authorize the payment of a commission on a share issue;

  • (g) approve a management proxy circular;

  • (h) except as provided in this Act, approve the annual statement of the company and any other financial statements issued by the company; or

  • (i) adopt, amend or repeal by-laws.

  • 1991, c. 45, s. 202
  • 1997, c. 15, s. 362
  • 2005, c. 54, s. 403

Marginal note:Exercise of trustee powers

  •  (1) Where authorized to do so by a special resolution, the directors of a company that is a trust company pursuant to subsection 57(2) may delegate, with or without the power of sub-delegation, to the chief executive officer of the company, the exercise of all or any of the powers or authorities of the company, whether discretionary or otherwise, arising out of any will, trust, deed, contract or other instrument creating a trust.

  • Marginal note:Performance by company

    (2) The exercise of any power or authority referred to in subsection (1) by the chief executive officer or that officer’s delegate, if any, constitutes an exercise of the power or authority by the company.

Marginal note:Remuneration of directors, officers and employees

  •  (1) Subject to this section and the by-laws, the directors of a company may fix the remuneration of the directors, officers and employees of the company.

  • Marginal note:By-law required

    (2) No remuneration shall be paid to a director as director until a by-law fixing the aggregate of all amounts that may be paid to all directors in respect of directors’ remuneration during a fixed period of time has been confirmed by special resolution.

  • 1991, c. 45, s. 204
  • 1994, c. 26, s. 74

Marginal note:Validity of acts

  •  (1) An act of a director or an officer of a company is valid notwithstanding a defect in the director’s qualification or an irregularity in the director’s election or in the appointment of the director or officer.

  • Marginal note:Idem

    (2) An act of the board of directors of a company is valid notwithstanding a defect in the composition of the board or an irregularity in the election of the board or in the appointment of a member of the board.

Marginal note:Right to attend meetings

 A director of a company is entitled to attend and to be heard at every meeting of shareholders.

Conflicts of Interest

Marginal note:Disclosure of interest

  •  (1) A director or officer of a company shall disclose to the company, in writing or by requesting to have it entered in the minutes of a meeting of directors or a meeting of a committee of directors, the nature and extent of any interest they have in a material contract or material transaction with the company, whether entered into or proposed, if they

    • (a) are a party to the contract or transaction;

    • (b) are a director or officer of a party to the contract or transaction or a person acting in a similar capacity; or

    • (c) have a material interest in a party to the contract or transaction.

  • Marginal note:Time of disclosure — director

    (2) The disclosure shall be made in the case of a director

    • (a) at the meeting of directors, or of a committee of directors, at which the proposed contract or transaction is first considered;

    • (b) if at the time of the meeting referred to in paragraph (a) the director was not interested in the proposed contract or transaction, at the first one after they become interested in it;

    • (c) if the director becomes interested after a contract or transaction is entered into, at the first one after they become interested; or

    • (d) if a person who is interested in a contract or transaction becomes a director, at the first one after they become a director.

  • Marginal note:Time of disclosure — officer

    (3) The disclosure shall be made in the case of an officer who is not a director

    • (a) immediately after they become aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors or of a committee of directors;

    • (b) if they become interested after the contract or transaction is entered into, immediately after they become interested; or

    • (c) if a person who is interested in a contract or transaction becomes an officer, immediately after they become an officer.

  • Marginal note:Time of disclosure — contract not requiring approval

    (4) If the material contract or material transaction, whether entered into or proposed, is one that in the ordinary course of the company’s business would not require approval by the directors or shareholders, the director or officer shall disclose to the company, in writing or by requesting to have it entered in the minutes of a meeting of directors or of a committee of directors, the nature and extent of their interest immediately after they become aware of the contract or transaction.

  • 1991, c. 45, s. 207
  • 2005, c. 54, s. 404

Marginal note:Director to abstain

  •  (1) A director who is required to make a disclosure under subsection 207(1) shall not be present at any meeting of directors, or of a committee of directors, while the contract or transaction is being considered or vote on any resolution to approve it unless the contract or transaction

    • (a) relates primarily to their remuneration as a director, officer, employee or agent of the company, an entity controlled by the company or an entity in which the company has a substantial investment;

    • (b) is for indemnity under section 217 or insurance under section 218; or

    • (c) is with an affiliate of the company.

  • Marginal note:Ineligibility

    (2) Any director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any financial institution that is incorporated or formed by or under an Act of Parliament.

  • Marginal note:Validity of acts

    (3) An act of the board of directors of a company or of a committee of the board of directors is not invalid because a person acting as a director had ceased under subsection (2) to hold office as a director.

  • 1991, c. 45, s. 208
  • 1997, c. 15, s. 363
  • 2005, c. 54, s. 405

Marginal note:General notice

  •  (1) For the purposes of subsection 207(1), a general notice to the directors declaring that a director or officer is to be regarded as interested for any of the following reasons in a contract or transaction entered into with a party is a sufficient declaration of interest in relation to any contract or transaction with that party:

    • (a) the director or officer is a director or officer of a party referred to in paragraph 207(1)(b) or (c) or a person acting in a similar capacity;

    • (b) the director or officer has a material interest in the party; or

    • (c) there has been a material change in the nature of the director’s or officer’s interest in the party.

  • Marginal note:Access to disclosures

    (2) The shareholders of the company may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 207(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the company.

  • 1991, c. 45, s. 209
  • 2005, c. 54, s. 406

Marginal note:Avoidance standards

  •  (1) A contract or transaction for which disclosure is required under subsection 207(1) is not invalid and a director or officer is not accountable to the company or its shareholders for any profit realized from it by reason only of the director’s or officer’s interest in the contract or transaction or the fact that the director was present or was counted to determine whether a quorum existed at the meeting of directors, or of a committee of directors, that considered it if

    • (a) the director or officer disclosed their interest in accordance with section 207 and subsection 209(1);

    • (b) the directors approved the contract or transaction; and

    • (c) the contract or transaction was reasonable and fair to the company at the time that it was approved.

  • Marginal note:Confirmation by shareholders

    (2) Even if the conditions set out in subsection (1) are not met, a director or officer acting honestly and in good faith is not accountable to the company or its shareholders for any profit realized from a contract or transaction for which disclosure was required and the contract or transaction is not invalid by reason only of the director’s or officer’s interest in it if

    • (a) the contract or transaction is approved or confirmed by special resolution at a meeting of shareholders;

    • (b) disclosure of the interest was made to the shareholders in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; and

    • (c) the contract or transaction was reasonable and fair to the company at the time that it was approved or confirmed.

  • 1991, c. 45, s. 210
  • 2005, c. 54, s. 406

Marginal note:Court may set aside or require accounting

 If a director or officer of a company fails to comply with any of sections 207 to 210, a court, on application of the company or any of its shareholders, may set aside the contract or transaction on any terms that the court thinks fit and may require the director or officer to account to the company for any profit or gain realized on it.

  • 1991, c. 45, s. 211
  • 2005, c. 54, s. 406

Liability, Exculpation and Indemnification

Marginal note:Director liability

  •  (1) Directors of a company who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 68(1) or the issue of subordinated indebtedness contrary to section 83 for a consideration other than money are jointly and severally, or solidarily, liable to the company to make good any amount by which the consideration received is less than the fair equivalent of the money that the company would have received if the share or subordinated indebtedness had been issued for money on the date of the resolution.

  • Marginal note:Further liability

    (2) Directors of a company who vote for or consent to a resolution of the directors authorizing any of the following are jointly and severally, or solidarily, liable to restore to the company any amounts so distributed or paid and not otherwise recovered by the company and any amounts in relation to any loss suffered by the company:

    • (a) a redemption or purchase of shares contrary to section 74;

    • (b) a reduction of capital contrary to section 78;

    • (c) a payment of a dividend contrary to section 82;

    • (d) a payment of an indemnity contrary to section 217; or

    • (e) any transaction contrary to Part XI.

  • 1991, c. 45, s. 212
  • 2005, c. 54, s. 407(E)
 
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