Mutual Property and Casualty Insurance Company Having Only Mutual Policyholders Conversion Regulations (SOR/2015-167)

Marginal note:Notice to policyholders

7 Within 30 days after the approval of a conversion proposal by the eligible policyholders, the directors of a converting company must send a notice to all of its policyholders informing them of the approval and indicating the company’s intention to make an application under section 8.

Ministerial Approval

Marginal note:Application to Minister

8 Within three months after the approval of a conversion proposal by the eligible policyholders, the directors of a converting company must make an application referred to in subsection 237(1) of the Act.

Marginal note:Contents of application

• 9 (1) An application referred to in subsection 237(1) of the Act must be submitted to the Superintendent and must include

  • (a) the conversion proposal;

  • (b) the documents referred to in paragraphs 5(2)(b) to (j), (m) and (n), other than those that are subject to an exemption under section 12;

  • (c) the notice referred to in paragraph 237(1.2)(a) of the Act and the documents sent with that notice;

  • (d) the proposed letters patent of conversion and any by-laws, amendments to by-laws or repeals of by-laws that are necessary to implement the conversion proposal; and

  • (e) the special resolutions of the eligible policyholders referred to in subsection 237(1.5) of the Act, accompanied by a certificate issued by the converting company indicating the results of the votes held in respect of those resolutions.

• Marginal note:Information and documents already submitted

  (2) The converting company is not required to resubmit to the Superintendent any information or document referred to in subsection (1) that is unchanged from that submitted to the Superintendent under subsection 5(2).

• Marginal note:Additional information

  (3) The Superintendent may request any additional information that he or she considers necessary to make a recommendation to the Minister for the purpose of subsection 237(1) of the Act.

Amendment of Conversion Proposal or Termination of Conversion Process

Marginal note:Amendment

10 The directors of a converting company may amend a conversion proposal at any time before the vote of eligible policyholders is held at the special meeting, if measures approved by the Superintendent are taken by the converting company in respect of the amendment.

Marginal note:Termination by resolution

• 11 (1) The directors of a converting company may pass a resolution terminating the conversion process at any time before the letters patent of conversion are issued.

• Marginal note:Termination for failure to meet deadlines

  (2) The conversion process is terminated if the required documents are not submitted to the Superintendent within the time limit set out in subsection 5(5) or if no notice referred to in paragraph 237(1.2)(a) of the Act is sent within one year after the day on which the Superintendent authorizes its sending.

Exemption by Superintendent

Marginal note:Exemption

12 The Superintendent may exempt a converting company from any of the requirements of paragraphs 5(2)(c) to (h), subsection 5(5) and paragraphs 6(g), (l) and (r), on such terms and conditions as he or she considers appropriate.

Restrictions

Marginal note:Compensation to directors, officers or employees

• 13 (1) A converting company or converted company must not pay any fee, compensation or other consideration in relation to the conversion of the company to any director, officer or employee of the company, other than

  • (a) the regular compensation provided to the person in that person’s capacity as a director, officer or employee of the company; and

  • (b) any benefits provided to eligible policyholders or the persons or classes of persons referred to in paragraph 4(1)(d) as a result of a conversion.

• Marginal note:Contracts for services

  (2) A converting company or converted company must not pay any fee, compensation or other consideration under a contract for services in relation to the conversion of the company to an entity with which a director, officer or employee of the company is associated in any way unless the terms and conditions of that contract are at least as favourable to the company as market terms and conditions, as defined in subsection 534(2) of the Act.

Marginal note:Issuance of shares

14 A converted company must not, prior to the listing of its shares on a recognized stock exchange in Canada and for a period of one year after that listing, issue or provide shares, share options or rights to acquire shares to the following persons, other than shares issued to eligible policyholders or the persons or classes of persons referred to in paragraph 4(1)(d) as a result of a conversion:

• (a) any director, officer or employee of the company; or

• (b) any person who was a director, officer or employee of the converted company during the year preceding the day on which the conversion takes effect.

Marginal note:Acquisition

• 15 (1) During a company’s first four years as a converted company, the Minister may only give an approval under subsection 407(1) of the Act in respect of the company if

  • (a) the proposed acquisition would not result in the converted company having a major shareholder; or

  • (b) the Minister is of the opinion that the converted company is, or is about to be, in financial difficulty and that the proposed acquisition would facilitate an improvement in its financial condition.

• Marginal note:Restriction

  (2) A body corporate that holds all of the voting shares of a converted company and makes an application under paragraph 39(1)(b) of the Act must, for the duration of the four-year period, include in that body corporate’s incorporating instrument a provision that restricts the issue, transfer or ownership of that body corporate’s shares, of any class or series, so as to prevent that body corporate from having a major shareholder.

• Marginal note:Removal of provision

  (3) Despite subsection (2), the body corporate may amend its incorporating instrument to remove the provision included in it under that subsection, if the Minister has given an approval under paragraph (1)(b).

Coming into Force

Marginal note:Publication

Footnote ^*16 These Regulations come into force on the day on which they are published in the Canada Gazette, Part II.

• Return to footnote ^*[Note: Regulations in force July 1, 2015.]