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

Act current to 2022-07-13 and last amended on 2022-06-23. Previous Versions

PART VICorporate Governance (continued)

Financial Statements and Auditors (continued)

Auditor (continued)

Marginal note:Auditor’s report and extended examination

  •  (1) The Superintendent may, in writing, require that the auditor of a company report to the Superintendent on the extent of the auditor’s procedures in the examination of the annual statement and may, in writing, require that the auditor enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.

  • Marginal note:Special examination

    (2) The Superintendent may, in writing, require that the auditor of a company make a particular examination relating to the adequacy of the procedures adopted by the company for the safety of its creditors and shareholders, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent thereon.

  • Marginal note:Idem

    (3) The Superintendent may direct that a special audit of a company be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose an accountant or a firm of accountants qualified pursuant to subsection 320(1) to be an auditor of the company.

  • Marginal note:Expenses payable by company

    (4) The expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the company on being approved in writing by the Superintendent.

  • 1991, c. 45, s. 330
  • 1999, c. 31, s. 217(F)

Marginal note:Auditor’s report

  •  (1) The auditor shall, not less than twenty-one days before the date of the annual meeting of the shareholders of the company, make a report in writing to the shareholders on the annual statement referred to in subsection 313(1).

  • Marginal note:Audit for shareholders

    (2) In each report required under subsection (1), the auditor shall state whether, in the auditor’s opinion, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 313(4), the financial position of the company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the company for that financial year.

  • Marginal note:Auditor’s remarks

    (3) In each report referred to in subsection (2), the auditor shall include such remarks as the auditor considers necessary when

    • (a) the examination has not been made in accordance with the auditing standards referred to in subsection 328(2);

    • (b) the annual statement has not been prepared on a basis consistent with that of the preceding financial year; or

    • (c) the annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 313(4), the financial position of the company as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the company for that financial year.

Marginal note:Report on directors’ statement

  •  (1) The auditor of a company shall, if required by the shareholders, audit and report to the shareholders on any financial statement submitted by the directors to the shareholders, and the report shall state whether, in the auditor’s opinion, the financial statement presents fairly the information required by the shareholders.

  • Marginal note:Making of report

    (2) A report of the auditor made under subsection (1) shall be attached to the financial statement to which it relates and a copy of the statement and report shall be sent by the directors to every shareholder and to the Superintendent.

Marginal note:Report to officers

  •  (1) It is the duty of the auditor of a company to report in writing to the chief executive officer and chief financial officer of the company any transactions or conditions that have come to the auditor’s attention affecting the well-being of the company that in the auditor’s opinion are not satisfactory and require rectification and, without restricting the generality of the foregoing, the auditor shall, as occasion requires, make a report to those officers in respect of

    • (a) transactions of the company that have come to the auditor’s attention and that in the auditor’s opinion have not been within the powers of the company, and

    • (b) loans owing to the company by any person the aggregate amount of which exceeds one half of one per cent of the regulatory capital of the company and in respect of which, in the auditor’s opinion, loss to the company is likely to occur,

    but when a report required under paragraph (b) has been made in respect of loans to any person, it is not necessary to report again in respect of loans to that person unless, in the opinion of the auditor, the amount of the loss likely to occur has increased.

  • Marginal note:Transmission of report

    (2) Where the auditor of a company makes a report under subsection (1),

    • (a) the auditor shall transmit the report, in writing, to the chief executive officer and chief financial officer of the company;

    • (b) the report shall be presented to the first meeting of the directors following its receipt;

    • (c) the report shall be incorporated in the minutes of that meeting; and

    • (d) the auditor shall, at the time of transmitting the report to the chief executive officer and chief financial officer, provide the audit committee of the company and the Superintendent with a copy.

  • 1991, c. 45, s. 333
  • 2005, c. 54, s. 439

Marginal note:Auditor of subsidiaries

  •  (1) A company shall take all necessary steps to ensure that its auditor is duly appointed as the auditor of each of its subsidiaries.

  • Marginal note:Subsidiary outside Canada

    (2) Subsection (1) applies in the case of a subsidiary that carries on its operations in a country other than Canada unless the laws of that country do not permit the appointment of the auditor of the company as the auditor of that subsidiary.

  • Marginal note:Exception

    (3) Subsection (1) does not apply in respect of any particular subsidiary where the company, after having consulted its auditor, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the company.

Marginal note:Auditor’s attendance

  •  (1) The auditor of a company is entitled to receive notice of every meeting of the audit committee and the conduct review committee of the company and, at the expense of the company, to attend and be heard at that meeting.

  • Marginal note:Attendance

    (2) If so requested by a member of the audit committee, the auditor shall attend every meeting of the audit committee held during the member’s term of office.

  • 1991, c. 45, s. 335
  • 1993, c. 34, s. 125(F)

Marginal note:Calling meeting

  •  (1) The auditor of a company or a member of the audit committee may call a meeting of the audit committee.

  • Marginal note:Right to interview

    (2) The chief internal auditor of a company or any officer or employee of the company acting in a similar capacity shall, at the request of the auditor of the company and on receipt of reasonable notice, meet with the auditor.

Marginal note:Notice of errors

  •  (1) A director or an officer of a company shall forthwith notify the audit committee and the auditor of the company of any error or misstatement of which the director or officer becomes aware in an annual statement or other financial statement on which the auditor or any former auditor has reported.

  • Marginal note:Error noted by auditor

    (2) If the auditor or a former auditor of a company is notified or becomes aware of an error or misstatement in an annual statement or other financial statement on which the auditor reported and in the auditor’s opinion the error or misstatement is material, the auditor or former auditor shall inform each director of the company accordingly.

  • Marginal note:Duty of directors

    (3) When under subsection (2) the auditor or a former auditor of a company informs the directors of an error or misstatement in an annual statement or other financial statement, the directors shall

    • (a) prepare and issue a revised annual statement or financial statement; or

    • (b) otherwise inform the shareholders and the Superintendent of the error or misstatement.

Marginal note:Qualified privilege for statements

 Any oral or written statement or report made under this Act by the auditor or a former auditor of a company has qualified privilege.

Remedial Actions

Marginal note:Derivative action

  •  (1) Subject to subsection (2), a complainant or the Superintendent may apply to a court for leave to bring an action under this Act in the name and on behalf of a company or any of its subsidiaries, or to intervene in an action under this Act to which the company or a subsidiary of the company is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the company or the subsidiary.

  • Marginal note:Conditions precedent

    (2) No action may be brought and no intervention in an action may be made under subsection (1) by a complainant unless the court is satisfied that

    • (a) the complainant has, not less than 14 days before bringing the application or as otherwise ordered by the court, given notice to the directors of the company or the company’s subsidiary of the complainant’s intention to apply to the court under subsection (1) if the directors of the company or the company’s subsidiary do not bring, diligently prosecute or defend or discontinue the action;

    • (b) the complainant is acting in good faith; and

    • (c) it appears to be in the interests of the company or the subsidiary that the action be brought, prosecuted, defended or discontinued.

  • Marginal note:Notice to Superintendent

    (3) A complainant under subsection (1) shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.

  • 1991, c. 45, s. 339
  • 2005, c. 54, s. 440

Marginal note:Powers of court

  •  (1) In connection with an action brought or intervened in under subsection 339(1), the court may at any time make any order it thinks fit including, without limiting the generality of the foregoing,

    • (a) an order authorizing the Superintendent, the complainant or any other person to control the conduct of the action;

    • (b) an order giving directions for the conduct of the action;

    • (c) an order directing that any amount adjudged payable by a defendant in the action be paid, in whole or in part, directly to former and present security holders of the company or of the subsidiary instead of to the company or to the subsidiary; and

    • (d) an order requiring the company or the subsidiary to pay reasonable legal fees incurred by the Superintendent or the complainant in connection with the action.

  • Marginal note:Jurisdiction

    (2) Notwithstanding subsection (1), the court may not make any order in relation to any matter that would, under this Act, require the approval of the Minister or the Superintendent.

Marginal note:Status of shareholder approval

  •  (1) An application made or an action brought or intervened in under subsection 339(1) or section 343 need not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or duty owed to the company or its subsidiary has been or might be approved by the shareholders of the company or subsidiary or both, but evidence of approval by the shareholders may be taken into account by the court in making an order under section 340.

  • Marginal note:Court approval to discontinue

    (2) An application made or an action brought or intervened in under subsection 339(1) or section 343 shall not be stayed, discontinued, settled or dismissed for want of prosecution without the approval of the court given on such terms as the court thinks fit and, if the court determines that the interests of any complainant might be substantially affected by any stay, discontinuance, settlement or dismissal, the court may order any party to the application or action to give notice to the complainant.

Marginal note:No security for costs

  •  (1) A complainant is not required to give security for costs in any application made or any action brought or intervened in under subsection 339(1) or section 343.

  • Marginal note:Interim costs

    (2) In an application made or an action brought or intervened in under subsection 339(1) or section 343, the court may at any time order the company or its subsidiary to pay to the complainant interim costs, including legal fees and disbursements, but the complainant may be held accountable by the court for those interim costs on final disposition of the application or action.

  • 1991, c. 45, s. 342
  • 2005, c. 54, s. 441(F)

Marginal note:Application to rectify records

  •  (1) If the name of a person is alleged to be or to have been wrongly entered or retained in, or wrongly deleted or omitted from, the securities register or any other record of a company, the company, a security holder of the company or any aggrieved person may apply to a court for an order that the securities register or record be rectified.

  • Marginal note:Notice to Superintendent

    (2) An applicant under this section shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.

  • Marginal note:Powers of court

    (3) In connection with an application under this section, the court may make any order it thinks fit including, without limiting the generality of the foregoing,

    • (a) an order requiring the securities register or other record of the company to be rectified;

    • (b) an order restraining a company from calling or holding a meeting of shareholders or paying a dividend before the rectification;

    • (c) an order determining the right of a party to the proceedings to have the party’s name entered or retained in, or deleted or omitted from, the securities register or records of the company, whether the issue arises between two or more security holders or alleged security holders, or between the company and any security holder or alleged security holder; and

    • (d) an order compensating a party who has incurred a loss.

Liquidation and Dissolution

Marginal note:Definition of “court”

 For the purposes of subsections 351(1) and 352(1) and (2), sections 353 to 357, subsection 358(1), sections 360 and 362 to 364, subsections 368(3) and (4) and section 373, court means a court having jurisdiction in the place where the company has its head office.

Marginal note:Application of subsection (2) and sections 346 to 373

  •  (1) Subsection (2) and sections 346 to 373 do not apply to a company that is insolvent within the meaning of the Winding-up and Restructuring Act.

  • Marginal note:Staying proceedings on insolvency

    (2) Any proceedings taken under this Part to dissolve or to liquidate and dissolve a company shall be stayed if the company is at any time found to be insolvent within the meaning of the Winding-up and Restructuring Act.

  • 1991, c. 45, s. 345
  • 1996, c. 6, s. 167

Marginal note:Returns to Superintendent

 A liquidator appointed under this Part to wind up the business of a company shall provide the Superintendent with such information relating to the business and affairs of the company in such form as the Superintendent requires.

 
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