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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

Conversion Proposal

Marginal note:Contents of conversion proposal

  •  (1) A converting company must develop a conversion proposal that includes

    • (a) a report setting out the value of the converting company as estimated by the company and a description of the method used and any assumptions made in estimating that value;

    • (b) the eligibility date;

    • (c) the list of persons or classes of persons — other than eligible policyholders — approved under subsection 12(5), if any;

    • (d) a detailed description of the benefits to be provided to eligible policyholders and the persons or classes of persons referred to in paragraph (c);

    • (e) the detailed description of the method approved under subsection 12(5);

    • (f) a description of the mechanisms proposed to effect an initial issuance of common shares or any other class of shares, including a copy of the proposed by-law authorizing the issuance of those shares;

    • (g) if shares in the converted company are to be issued to a holding corporation, a description of the proposed activities of the holding corporation;

    • (h) if shares have been issued and remain outstanding immediately prior to the effective date of the conversion, a statement describing how those shares will be converted into common shares following conversion;

    • (i) if the benefits referred to in paragraph (d) include shares, a description of the measures to be taken by the converted company, in the two years following the effective date of the conversion, to assist the eligible policyholders and the persons or classes of persons referred to in paragraph (c) who receive the shares to sell those shares on a public market and to address any potential imbalances that may arise between the volume of shares offered for sale by them and the volume of shares sought for purchase by public market participants;

    • (j) a description of how the measures referred to in paragraph (i) would be affected if the converted company were to issue additional shares in the two years following the effective date of the conversion; and

    • (k) a statement that the directors of the converting company may terminate the conversion process at any time before letters patent of conversion are issued.

  • Marginal note:Valuation day

    (2) The Superintendent is authorized to specify the day at which the value of a converting company must be estimated by the converting company.

Special Meeting of Eligible Mutual Policyholders

Marginal note:Superintendent’s authorization

  •  (1) Once the conversion proposal is completed, a converting company must obtain the Superintendent’s authorization to send to the eligible mutual policyholders a notice of a special meeting at which the eligible mutual policyholders may vote by special resolution on whether to amend the company’s by-laws to permit all eligible non-mutual policyholders to vote on the conversion proposal and on the authorization referred to in paragraph 237(1.1)(c) of the Act.

  • Marginal note:Information and documents to Superintendent

    (2) To obtain the Superintendent’s authorization, the converting company must submit to the Superintendent

    • (a) the conversion proposal, as well as the description of the conversion proposal that is to be included in the notice sent to eligible policyholders under paragraph 237(1.2)(a) of the Act;

    • (b) an opinion prepared by the actuary of the converting company and an opinion prepared by an independent actuary stating

      • (i) that the benefits referred to in paragraph 13(1)(d) and the method referred to in paragraph 13(1)(e) are fair and equitable to the eligible policyholders, and

      • (ii) that the financial strength and vitality of the converting company and the security of its policyholders with respect to the continuation of their policies will not be materially adversely affected by the conversion;

    • (c) an opinion prepared by an independent valuation expert stating that the method and assumptions referred to in paragraph 13(1)(a) that were employed to estimate the value of the converting company are appropriate and that the estimated value reasonably reflects prevailing market conditions as of the day the value was estimated;

    • (d) if other benefits are to be provided in lieu of shares, an opinion prepared by an independent actuary or an independent valuation expert stating that the alternative benefits are appropriate substitutes for the shares as of the day the value of the converting company was estimated;

    • (e) an opinion prepared by an independent financial market expert stating that the measures referred to in paragraph 13(1)(i) are likely to assist the eligible policyholders and the persons or classes of persons referred to in paragraph 13(1)(c) who receive the shares to sell those shares on a public market and to address any potential imbalances that may arise between the volume of shares offered for sale by them and the volume of shares sought for purchase by public market participants;

    • (f) the annual statement for the most recently completed financial year of the converting company, in addition to the reports required by the Act for that year, prepared by the converting company’s auditor and actuary;

    • (g) if the notice of the special meeting is to be sent to the eligible mutual policyholders more than 120 days after the end of the most recently completed financial year of the converting company, financial statements for the portion of the current financial year ending prior to a day that is not more than 120 days before the day on which the notice is sent, and the converting company’s auditor’s comfort letter in respect of those statements;

    • (h) pro forma financial statements of the future converted company showing the effect of the conversion and any other significant transactions contemplated in relation to the conversion, including any proposed initial public offering of common shares, based on

      • (i) the annual statement for the most recently completed financial year, or

      • (ii) in the circumstances referred to in paragraph (g), the financial statements for the portion of the current financial year referred to in that paragraph;

    • (i) the compilation report of the converting company’s auditor, and a statement of reconciliation, in respect of the financial statements referred to in paragraph (h);

    • (j) a detailed description of any significant transaction contemplated in relation to the conversion;

    • (k) if the converted company is required under the laws of any jurisdiction in which it carries on business to file a prospectus in respect of its issuance of shares to eligible policyholders or the persons or classes of persons referred to in paragraph 13(1)(c), a copy of that prospectus;

    • (l) the proposed resolution to amend the company’s by-laws to permit all eligible non-mutual policyholders to vote on the conversion proposal;

    • (m) the special resolutions referred to in subsection 237(1.5) of the Act to be proposed subsequently at a special meeting of eligible policyholders;

    • (n) if shares in the converted company are to be issued to a holding corporation, a copy of the holding corporation’s existing or proposed incorporating instrument and by-laws;

    • (o) the summaries referred to in paragraph 15(h); and

    • (p) the notice of the special meeting, as well as the information and documents referred to in section 15 and the form of proxy and any management proxy circular to be sent with the notice.

  • Marginal note:Financial statement requirements

    (3) The financial statements referred to in paragraphs (2)(g) and (h) must be

    • (a) prepared in accordance with the accounting principles referred to in subsection 331(4) of the Act; and

    • (b) accompanied by a report of the chief financial officer of the converting company stating that the financial statements have not been audited but have been prepared in accordance with the accounting principles referred to in subsection 331(4) of the Act.

  • Marginal note:Decision to authorize

    (4) In deciding whether to authorize the sending of the notice, the Superintendent must consider the information and documents submitted under subsection (2) and may consider any additional information or documents relating to the converting company or any aspect of the conversion proposal.

  • Marginal note:Deadline

    (5) The conversion proposal and the opinions referred to in paragraph (2)(b) must be submitted no later than one year after the day on which the court appoints the members of the policyholder committees.

  • Marginal note:Conditions of authorization

    (6) As a condition of authorizing the sending of the notice, the Superintendent may require

    • (a) that any information that the Superintendent considers appropriate, in addition to that required under section 15, be sent with the notice; and

    • (b) that the converting company

      • (i) hold one or more information sessions for the eligible mutual policyholders prior to the holding of the special meeting, for which the rules may be set by the Superintendent, and

      • (ii) take any other measures that the Superintendent considers appropriate to assist the eligible mutual policyholders in forming a reasoned judgment on the special resolution.

 
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