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Mutual Property and Casualty Insurance Company with Non-mutual Policyholders Conversion Regulations (SOR/2015-168)

Regulations are current to 2020-12-28 and last amended on 2015-07-01. Previous Versions

Negotiations Between Classes of Policyholders (continued)

Marginal note:Application by counsel

  •  (1) A member in good standing of the bar — or of the Chambre des notaires du Québec — of the province in which the application for the initial order is made may apply to the court, in the time and manner set out in the initial order, to be appointed as counsel for either the eligible mutual policyholders or the eligible non-mutual policyholders of a converting company in respect of the negotiations referred to in section 12.

  • Marginal note:Restrictions

    (2) Counsel must not have any interest that is in conflict with that of the class of policyholders they seek to represent and must not be an officer, employee or related party of the converting company.

  • Marginal note:Service

    (3) Counsel who submit an application under subsection (1) must serve a copy of it on the converting company.

  • Marginal note:Publication

    (4) The converting company must publish on its website the names of all counsel who have submitted applications under subsection (1) for each class of policyholders, as well as the content of their applications or a summary of their experience.

  • Marginal note:Objections

    (5) Eligible policyholders may file, in the time and manner set out by the court in the initial order, an objection to the candidacy of any counsel who has submitted an application.

  • Marginal note:Appointment

    (6) The court must appoint counsel for each of the two classes of policyholders and must notify the converting company of its decision following a hearing at which the court assesses the ability of each applicant to fairly and adequately represent the interests of the class of policyholders in question, including by taking into account their experience in financial law, corporate law, securities law or mediation and arbitration and by having regard to any objections filed under subsection (5).

  • Marginal note:Publication

    (7) The converting company must publish on its website the name and contact information of the selected counsel for each class of policyholders.

  • Marginal note:Communication

    (8) All communication with the policyholder committees is to be made through counsel for the class of policyholders that the committee represents.

  • Marginal note:Duration of appointment

    (9) Counsel’s appointment ends on the day on which the notice referred to in subsection 14(1) is sent or the day on which the conversion process is terminated, whichever is earlier.

Marginal note:Committee membership

  •  (1) Any eligible policyholder may submit to counsel for the class of policyholders to which they belong, in the time and manner set out in the initial order, an application for membership on the policyholder committee for that class.

  • Marginal note:Restrictions

    (2) Applicants must not have any interest that is in conflict with that of the eligible policyholders they seek to represent and must not be an officer, employee or related party of the converting company.

  • Marginal note:Filing and service

    (3) Counsel must file with the court all applications received under subsection (1) and must serve on counsel for the other class of policyholders and on the converting company the names of the applicants from the class of policyholders they represent.

  • Marginal note:Publication

    (4) The converting company must publish on its website the names of all applicants for membership on each policyholder committee.

  • Marginal note:Objections

    (5) Any eligible policyholder or counsel for a class of policyholders may file, in the time and manner set out by the court in the initial order, an objection to the candidacy of a policyholder who has submitted an application for membership on a policyholder committee.

  • Marginal note:Appointment

    (6) The court must appoint at least three and not more than nine eligible policyholders to be members of each policyholder committee and must notify the converting company and counsel for the class of policyholders represented by that committee of its decision following a hearing at which the court assesses the ability of each applicant to fairly and adequately represent the interests of the class of policyholders in question, including by taking into account their experience in negotiations and business and financial affairs and by having regard to any objections filed under subsection (5).

  • Marginal note:Publication

    (7) The converting company must publish on its website the names of the members of each policyholder committee.

  • Marginal note:Obligations of company in respect of policyholder committee members

    (8) In any legal proceeding, the converting company is bound to take up the interest for and assume the defence of any member of the policyholder committees for anything done or omitted to be done in good faith in the performance of their functions and, if applicable, indemnify that member.

  • Marginal note:Duration of representation

    (9) The policyholder committees are disbanded on the day on which the notice referred to in subsection 14(1) is sent or the day on which the conversion process is terminated, whichever is earlier.

Marginal note:Provision of information

  •  (1) A converting company must, subject to the Supervisory Information (Insurance Companies) Regulations and the Supervisory Information (Insurance Holding Companies) Regulations, provide to counsel for each class of policyholders whatever information or documents they reasonably require to facilitate the negotiations referred to in section 12.

  • Marginal note:Access to information and documents

    (2) Any information or document that the converting company provides to counsel for one class of policyholders must be provided to counsel for the other class.

  • Marginal note:Confidentiality

    (3) The court may make orders respecting the confidentiality of information provided by the converting company and determine under what circumstances the information can be used or disclosed.

Marginal note:Costs payable by converting company

  •  (1) The court must determine, having regard to their reasonableness, the amounts payable by a converting company in relation to the negotiations referred to in section 12, including the costs of counsel and any experts consulted by the policyholder committees, remuneration for policyholder committee members and reimbursement of their expenses for travel, accommodation and meals in respect of attendance at policyholder committee meetings.

  • Marginal note:Payment

    (2) All amounts determined by the court must be paid by the converting company no later than the day on which it seeks the Superintendent’s authorization to send the notice referred to in paragraph 237(1.2)(a) of the Act or the day on which the conversion process is terminated under section 21, whichever comes first, or on any other day that the court may set.

Method and Benefits

Marginal note:Purpose of negotiations

  •  (1) The policyholder committees, with the assistance of the counsel appointed by the court, must enter into negotiations to establish the method of allocating the value of the converting company and to determine whether any benefits will be provided to any persons or classes of persons — other than eligible policyholders — as a result of the conversion.

  • Marginal note:Method of allocating value of converting company

    (2) The method of allocating the value of the converting company among eligible policyholders and, as the case may be, any persons or classes of persons — other than eligible policyholders — must be described in detail and set out

    • (a) the basis on which any variable amount of benefits will be calculated;

    • (b) any fixed, minimum or maximum amount of benefits to be provided to each of them;

    • (c) the rationale for choosing the method of determining and allocating the benefits; and

    • (d) the aggregate value of the benefits.

  • Marginal note:Calculation of variable amount

    (3) The variable amount of benefits referred to in paragraph (2)(a) must, in respect of each eligible policyholder, be calculated having regard to at least the following factors:

    • (a) their obligations, rights and benefits;

    • (b) the premiums paid by them;

    • (c) the length of time they have held a policy with the company; and

    • (d) the historical growth of the company’s surplus account.

  • Marginal note:Persons or classes of persons other than eligible policyholders

    (4) If benefits will be provided to any persons or classes of persons — other than eligible policyholders — as a result of the conversion, the policyholder committees must establish a list of those persons or classes of persons to whom benefits will be provided including, any persons or classes of persons suggested by the converting company and approved by the policyholder committees.

  • Marginal note:Approval by policyholder committees

    (5) The method of allocating the value of the converting company and, if any, the list of persons or classes of persons — other than eligible policyholders — are considered approved by the two policyholder committees once at least two thirds of the members of each committee approve them.

 
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