Mutual Company (Life Insurance) Conversion Regulations (SOR/99-128)

Authorization of Superintendent

• 6 (1) Prior to sending a notice of a special meeting, a converting company shall obtain from the Superintendent an authorization to send the notice.

• (2) In considering whether to grant an authorization under subsection (1), the Superintendent may consider any other information, including an opinion or report on any aspect of the conversion proposal.

• (3) As a condition of granting an authorization under subsection (1), the Superintendent may require that the notice of the special meeting or the management proxy circular contain such additional information as the Superintendent considers appropriate.

Information to Policyholders

• 7 (1) Subject to subsection (2) and section 11, the notice of a special meeting referred to in paragraph 237(1.2)(a) of the Act shall include

  • (a) a description of the advantages and disadvantages of the proposed conversion to the company and to the policyholders of the company;

  • (b) a description of the alternatives to the conversion of the company that the directors of the converting company have considered, and the reasons why, in their opinion, the conversion is in the best interests of the company and its policyholders as a whole;

  • (c) a description of the form, amount and estimated market value or range of market values of the benefits to be provided as a result of the conversion to the eligible policyholder to whom the notice is sent in exchange for the policyholder’s rights with respect to, and interests in, the converting company as a mutual company;

  • (d) a description of any right of policyholders to vote after the conversion, as policyholders or shareholders of the converted company;

  • (e) for each jurisdiction in which at least one per cent of all eligible policyholders reside, a description of the income tax treatment accorded the benefits referred to in paragraph (c) in that jurisdiction;

  • (f) the conversion proposal referred to in subsection 4(1);

  • (g) summaries of

    • (i) the opinions referred to in paragraphs 5(1)(a) to (d), other than any opinions not required to be submitted under those paragraphs by virtue of an exemption under section 11, and

    • (ii) the documents referred to in paragraph 5(1)(p);

  • (h) the financial statements referred to in paragraphs 5(1)(e) to (g), other than any financial statements not required to be submitted under those paragraphs by virtue of an exemption under section 11;

  • (i) the documents referred to in paragraphs 5(1)(h) and (i), other than any documents not required to be submitted under those paragraphs by virtue of an exemption under section 11;

  • (j) a brief description of the business carried on by the converting company and its subsidiaries, and the general development of that business, during the three years preceding a day that is not more than 120 days before the day on which the notice of the meeting is sent to policyholders, and any future business foreseen as of that day;

  • (k) a brief description of any substantial variations in the operating results of the converting company during the three most recently completed financial years preceding the notice of the meeting and, where the notice of the meeting is sent more than 120 days after the end of the most recently completed financial year of the converting company, during the portion of the current financial year ending on a day that is not more than 120 days before the day on which the notice is sent;

  • (l) the identity of all persons who, on the day on which the notice of the meeting is sent, have a significant interest in the converting company or who, as a result of the conversion, will have a significant interest in the converted company, and a description of the type and number of shares held or to be held by those persons;

  • (m) the name and address of the auditor of the converted company;

  • (n) the names and addresses of the proposed transfer agents and registrars;

  • (o) the proposed location for the securities registers for the initial issuance of common shares of the converted company;

  • (p) a description of any sales by the converting company, within the 12 months preceding a day that is not more than 120 days before the day on which the notice of the meeting is sent to the policyholders, of securities of the same type as those to be provided as benefits to eligible policyholders under the conversion proposal;

  • (q) where 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, a copy of that prospectus;

  • (r) a description of the restrictions set out in sections 12 and 13 and of any plans that the converting company may have for the establishment of stock-option or stock-incentive plans for directors, officers or employees of the converted company after the period referred to in section 13;

  • (s) a description of any measures, including the establishment of toll-free lines and internet sites, the holding of information sessions, and the placement of advertisements in widely circulated publications, that the converting company has taken or will take before holding a special meeting, to provide eligible policyholders with information about the proposed conversion and an opportunity to raise questions or concerns about the proposed conversion;

  • (t) a description of the measures that the converting company has taken or will take to encourage eligible policyholders to vote on the conversion proposal, in person or by proxy, at the special meeting; and

  • (u) any other information that the Superintendent has required the notice of a special meeting to contain under subsection 6(3).

• (2) The information described in subsection (1) may be included in the notice of a special meeting or in the management proxy circular sent with it.

• (3) The Superintendent may, to assist eligible policyholders in forming a reasoned judgment on a conversion proposal of a converting company,

  • (a) direct the company to hold one or more information sessions for eligible policyholders prior to the holding of a special meeting and set the rules under which those sessions must be held; and

  • (b) direct the company to take such others measures, prior to the holding of a special meeting, as the Superintendent considers appropriate.

Ministerial Approval

8 Within three months after the approval of a conversion proposal by the eligible policyholders, the directors of a converting company shall, unless the conversion proposal is withdrawn, apply to the Minister for

• (a) approval of the conversion proposal pursuant to paragraph 237(1)(a) of the Act; and

• (b) issuance of letters patent of conversion pursuant to paragraph 237(1)(b) of the Act.

• 9 (1) An application made by a converting company to the Minister pursuant to subsection 237(1) of the Act shall include

  • (a) the conversion proposal referred to in subsection 4(1);

  • (b) the documents referred to in paragraphs 5(1)(a) to (i), (k), (m) and (p), other than any documents not required to be submitted under those paragraphs by virtue of an exemption under section 11;

  • (c) the notice of the special meeting at which the conversion proposal was considered and the documentation 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 of the company indicating the results of the votes held in respect of those resolutions.

• (2) On receipt of an application referred to in subsection (1), the Minister shall refer it to the Superintendent for a recommendation, whereupon the Superintendent may request any additional information that the Superintendent considers necessary to evaluate the application.

Amendment or Withdrawal of Conversion Proposal

• 10 (1) The directors of a converting company may amend a conversion proposal of the company 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.

• (2) The directors of a converting company may withdraw a conversion proposal of the company at any time before the issuance of letters patent of conversion.

Exemption by Superintendent

11 The Superintendent may exempt a converting company from any of the requirements of paragraphs 5(1)(c) to (h) and 7(1)(e), (k) and (q), on such terms and conditions as the Superintendent considers appropriate.

Restrictions on Benefits

• 12 (1) Subject to subsection (2), a converting company shall not provide any director, officer or employee of the company with a fee, compensation or any other consideration in relation to the conversion 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 the person as an eligible policyholder.

• (2) A converting company may provide fees, compensation or any other consideration to an entity with which a director, officer or employee of the company is associated pursuant to a contract for services in respect of the conversion that was entered into by the company with the entity on terms and conditions that are at least as favourable to the company as market terms and conditions, as defined in subsection 534(2) of the Act.

13 A converted company shall not, prior to the listing of its shares on a recognized stock exchange in Canada and for a period of one year after such a listing, issue or provide shares, share options or rights to acquire shares of the converted company to

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

• (b) any person who was a director, officer or employee of the company during the year preceding the effective date of conversion of the company and who ceased to be a director, officer or employee of the company,

other than shares issued to that person as an eligible policyholder.

Repeal

14 [Repeal]

Coming into Force

15 These Regulations come into force on the day on which they are registered.