Bank Act
S.C. 1991, c. 46
Assented to 1991-12-13
An Act respecting banks and banking
Preamble
Whereas a strong and efficient banking sector is essential to economic growth and prosperity;
Whereas a legislative framework that enables banks to compete effectively and be resilient in a rapidly evolving marketplace, taking into account the rights and interests of depositors and other consumers of banking services, contributes to stability and public confidence in the financial system and is important to the strength and security of the national economy;
And whereas it is desirable and is in the national interest to provide for clear, comprehensive, exclusive, national standards applicable to banking products and banking services offered by banks;
Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
- 2012, c. 19, s. 525.
Short Title
Marginal note:Short title
1 This Act may be cited as the Bank Act.
PART IInterpretation and Application
Definitions
Marginal note:Definitions
2 In this Act,
affairs
affaires internes
affairs, with respect to a bank, an authorized foreign bank or a bank holding company, means the relationships among the bank, authorized foreign bank or bank holding company and its affiliates and the shareholders, directors and officers of the bank, authorized foreign bank or bank holding company and its affiliates, but does not include the business of the bank, authorized foreign bank or bank holding company or any of its affiliates; (affaires internes)
affiliate
groupe
affiliate means an entity that is affiliated with another entity within the meaning of section 6; (groupe)
Agency
Agence
Agency means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act; (Agence)
annual return
état annuel
annual return means a return prepared in accordance with section 601; (état annuel)
annual statement
rapport annuel
annual statement, in relation to a bank, means the annual financial statement of the bank within the meaning of paragraph 308(1)(a) and, in relation to a bank holding company, means the annual financial statement of the bank holding company within the meaning of paragraph 840(1)(a); (rapport annuel)
authorized foreign bank
banque étrangère autorisée
authorized foreign bank means a foreign bank that is the subject of an order under subsection 524(1); (banque étrangère autorisée)
bank
banque
bank means a bank listed in Schedule I or II; (banque)
bank holding company
société de portefeuille bancaire
bank holding company means a body corporate that is incorporated or formed under Part XV; (société de portefeuille bancaire)
bearer
porteur
bearer, in relation to a security, means the person in possession of a security payable to bearer or endorsed in blank; (porteur)
bearer form
titre au porteur
bearer form, in respect of a security, means a security in bearer form as determined in accordance with subsection 83(2); (titre au porteur)
beneficial ownership
véritable propriétaire et propriété effective
beneficial ownership includes ownership through one or more trustees, legal representatives, agents or other intermediaries; (véritable propriétaire et propriété effective)
body corporate
personne morale
body corporate means an incorporated body wherever or however incorporated; (personne morale)
branch
succursale
branch
(a) in respect of a bank, means an agency, the head office or any other office of the bank, and
(b) in respect of an authorized foreign bank, means an agency, the principal office or any other office of the authorized foreign bank in Canada at which is carried on the business in Canada of the authorized foreign bank; (succursale)
Canadian entity
entité canadienne
Canadian entity means an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province, or otherwise formed in Canada, and that carries on business in Canada; (entité canadienne)
Canadian financial institution
institution financière canadienne
Canadian financial institution means a financial institution that is incorporated or formed by or under an Act of Parliament or of the legislature of a province; (institution financière canadienne)
central cooperative credit society
société coopérative de crédit centrale
central cooperative credit society means a body corporate organized on cooperative principles by or under an Act of the legislature of a province, one of whose principal purposes is to receive deposits from and provide liquidity support to local cooperative credit societies, and
(a) whose membership consists solely or primarily of local cooperative credit societies, or
(b) whose directors are wholly or primarily persons elected or appointed by local cooperative credit societies; (société coopérative de crédit centrale)
central securities register or securities register
registre central des valeurs mobilières ou registre des valeurs mobilières
central securities register or securities register, in relation to a bank, means the register referred to in section 248 and, in relation to a bank holding company, means the register referred to in section 825; (registre central des valeurs mobilières ou registre des valeurs mobilières)
Commissioner
commissaire
Commissioner means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act; (commissaire)
common-law partner
conjoint de fait
common-law partner, in relation to an individual, means a person who is cohabiting with the individual in a conjugal relationship, having so cohabited for a period of at least one year; (conjoint de fait)
complainant
plaignant
complainant, in relation to a bank or any matter concerning a bank, means
(a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a bank or any of its affiliates,
(b) a director or an officer, or a former director or officer, of a bank or any of its affiliates, or
(c) any other person who, in the discretion of a court, is a proper person to make an application under section 334, 338 or 989; (plaignant)
consumer provision
disposition visant les consommateurs
consumer provision means a provision referred to in paragraph (a) or (a.1) of the definition consumer provision in section 2 of the Financial Consumer Agency of Canada Act; (disposition visant les consommateurs)
court
tribunal
court means
(a) in the Province of Ontario, the Superior Court of Justice,
(b) in the Province of Quebec, the Superior Court of the Province,
(c) in the Provinces of Nova Scotia and British Columbia, the Supreme Court of the Province,
(d) in the Provinces of New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench for the Province,
(e) in the Provinces of Prince Edward Island and Newfoundland, the trial division of the Supreme Court of the Province, and
(f) the Supreme Court of Yukon, the Supreme Court of the Northwest Territories and the Nunavut Court of Justice; (tribunal)
court of appeal
cour d’appel
court of appeal means the court to which an appeal lies from a decision or order of a court; (cour d’appel)
debt obligation
titre de créance
debt obligation means a bond, debenture, note or other evidence of indebtedness of an entity, whether secured or unsecured; (titre de créance)
director, board of directors or directors
administrateur, conseil d’administration ou conseil
director means a natural person occupying the position of director, by whatever name called, of a body corporate, and board of directors or directors refers to the directors of a body corporate as a body; (administrateur, conseil d’administration ou conseil)
entity
entité
entity means a body corporate, trust, partnership, fund, an unincorporated association or organization, Her Majesty in right of Canada or of a province, an agency of Her Majesty in either of such rights and the government of a foreign country or any political subdivision thereof and any agency thereof; (entité)
equity
capitaux propres
equity, in respect of a bank or a bank holding company, means its equity as determined in accordance with the regulations; (capitaux propres)
federal financial institution
institution financière fédérale
federal financial institution means
(a) a bank,
(b) a body corporate to which the Trust and Loan Companies Act applies,
(c) an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act, or
(d) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act; (institution financière fédérale)
federation of cooperative credit societies
fédération de sociétés coopératives de crédit
federation of cooperative credit societies means an association under the Cooperative Credit Associations Act or a federation, league or corporation incorporated or organized by or under an Act of the legislature of a province, the membership or the shareholders of which include two or more central cooperative credit societies; (fédération de sociétés coopératives de crédit)
fiduciary
représentant
fiduciary means any person acting in a fiduciary capacity and includes a personal representative of a deceased person; (représentant)
financial institution
institution financière
financial institution means
(a) a bank or an authorized foreign bank,
(b) a body corporate to which the Trust and Loan Companies Act applies,
(c) an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act,
(d) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act,
(e) a trust, loan or insurance corporation incorporated by or under an Act of the legislature of a province,
(f) a cooperative credit society incorporated and regulated by or under an Act of the legislature of a province,
(g) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities, including portfolio management and investment counselling, and
(h) a foreign institution; (institution financière)
foreign bank
banque étrangère
foreign bank, subject to section 12, means an entity incorporated or formed by or under the laws of a country other than Canada that
(a) is a bank according to the laws of any foreign country where it carries on business,
(b) carries on a business in any foreign country that, if carried on in Canada, would be, wholly or to a significant extent, the business of banking,
(c) engages, directly or indirectly, in the business of providing financial services and employs, to identify or describe its business, a name that includes the word “bank”, “banque”, “banking” or “bancaire”, either alone or in combination with other words, or any word or words in any language other than English or French corresponding generally thereto,
(d) engages in the business of lending money and accepting deposit liabilities transferable by cheque or other instrument,
(e) engages, directly or indirectly, in the business of providing financial services and is affiliated with another foreign bank,
(f) controls another foreign bank, or
(g) is a foreign institution, other than a foreign bank within the meaning of any of paragraphs (a) to (f), that controls a bank incorporated or formed under this Act,
but does not include a subsidiary of a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, unless the Minister has specified that subsection 378(1) no longer applies to the bank; (banque étrangère)
- foreign bank subsidiary
foreign bank subsidiary[Repealed, 2001, c. 9, s. 35]
foreign institution
institution étrangère
foreign institution means an entity that is
(a) engaged in the business of banking, the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities or is otherwise engaged primarily in the business of providing financial services, and
(b) incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province; (institution étrangère)
form of proxy
formulaire de procuration
form of proxy means a written or printed form that, when completed and executed by or on behalf of a shareholder, constitutes a proxy; (formulaire de procuration)
going-private transaction
transaction de fermeture
going-private transaction means a going-private transaction as defined in the regulations; (transaction de fermeture)
guarantee
garantie
guarantee includes a letter of credit; (garantie)
head office
siège
head office, in relation to a bank, means the office required to be maintained under section 237 and, in relation to a bank holding company, means the office required to be maintained under section 814; (siège)
holder
détenteur
holder means
(a) in respect of a security certificate, the person in possession of the certificate issued or endorsed to that person or to bearer or in blank, and
(b) in respect of the ownership of a share, the shareholder of the share within the meaning of section 7; (détenteur)
holding body corporate
société mère
holding body corporate means a holding body corporate within the meaning of section 4; (société mère)
incorporated
constitué en personne morale
incorporated, when used with reference to a body corporate that is incorporated by or under an Act of Parliament or of the legislature of a province, also refers to a body corporate that is continued by or under any such Act; (constitué en personne morale)
incorporating instrument
acte constitutif
incorporating instrument means the special Act, letters patent, instrument of continuance or other constating instrument by which a body corporate was incorporated or continued and includes any amendment to or restatement of the constating instrument; (acte constitutif)
incorporator
fondateur
incorporator, in relation to a bank or a bank holding company, means a person who applied for letters patent to incorporate the bank or bank holding company, as the case may be; (fondateur)
insurance holding company
société de portefeuille d’assurances
insurance holding company means a body corporate that is incorporated or formed under Part XVII of the Insurance Companies Act; (société de portefeuille d’assurances)
issuer
émetteur
issuer, in respect of a security, means the entity that issues or issued the security; (émetteur)
letters patent
lettres patentes
letters patent, in respect of an instrument authorized to be issued under this Act, means letters patent in a form approved by the Superintendent; (lettres patentes)
local cooperative credit society
société coopérative de crédit locale
local cooperative credit society means a body corporate organized on cooperative principles incorporated by or under an Act of the legislature of a province
(a) whose members or shareholders consist substantially of natural persons, and
(b) whose principal purpose is to receive deposits from and make loans to its members and shareholders; (société coopérative de crédit locale)
Minister
ministre
Minister means the Minister of Finance; (ministre)
minor
mineur
minor has the same meaning as in the applicable provincial law and in the absence of any such law has the same meaning as the word “child” in the United Nations Convention on the Rights of the Child adopted in the United Nations General Assembly on November 20, 1989; (mineur)
- NAFTA country resident
NAFTA country resident[Repealed, 1999, c. 28, s. 1]
non-WTO Member foreign bank
banque étrangère d’un non-membre de l’OMC
non-WTO Member foreign bank means a foreign bank that is not controlled by a WTO Member resident; (banque étrangère d’un non-membre de l’OMC)
officer
dirigeant
officer means
(a) in relation to a body corporate, a chief executive officer, president, vice-president, secretary, controller, treasurer and any other natural person designated as an officer of the body corporate by by-law or by resolution of the directors of the body corporate, and
(b) in relation to any other entity, any natural person designated as an officer of the entity by by-law, by resolution of the members thereof or otherwise; (dirigeant)
order form
titre à ordre
order form, in respect of a security, means a security in order form as determined in accordance with subsection 83(3); (titre à ordre)
ordinary resolution
résolution ordinaire
ordinary resolution means a resolution passed by a majority of the votes cast by or on behalf of the shareholders who voted in respect of that resolution; (résolution ordinaire)
person
personne
person means a natural person, an entity or a personal representative; (personne)
personal representative
représentant personnel
personal representative means a person who stands in place of and represents another person and, without limiting the generality of the foregoing, includes, as the circumstances require, a trustee, an executor, an administrator, a committee, a guardian, a tutor, a curator, an assignee, a receiver, an agent or an attorney of any person; (représentant personnel)
prescribed
Version anglaise seulementprescribed means prescribed by regulation; (Version anglaise seulement)
principal office
bureau principal
principal office means, in relation to an authorized foreign bank, the office required to be maintained under section 535; (bureau principal)
principal officer
dirigeant principal
principal officer in relation to an authorized foreign bank means the person appointed under section 536; (dirigeant principal)
proxy
procuration
proxy means a completed and executed form of proxy by means of which a shareholder appoints a proxyholder to attend and act on the shareholder’s behalf at a meeting of shareholders; (procuration)
proxyholder
fondé de pouvoir
proxyholder means the person appointed by proxy to attend and act on behalf of a shareholder at a meeting of shareholders; (fondé de pouvoir)
real property
biens immeubles
real property includes a leasehold interest in real property; (biens immeubles)
recorded address
adresse enregistrée
recorded address means
(a) in relation to a person who is a shareholder of a bank or a bank holding company, the latest postal address of the person according to its central securities register, and
(b) in relation to a person in any other respect in relation to a bank, the latest postal address of the person according to the records of the branch concerned; (adresse enregistrée)
registered form
titre nominatif
registered form, in respect of a security, means a security in registered form as determined in accordance with subsection 83(4); (titre nominatif)
regulatory capital
capital réglementaire
regulatory capital, in respect of a bank or a bank holding company, has the meaning given that expression by the regulations; (capital réglementaire)
resident Canadian
résident canadien
resident Canadian means a natural person who is
(a) a Canadian citizen ordinarily resident in Canada,
(b) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or
(c) a permanent resident within the meaning of subsection 2(1) of the Immigration and Refugee Protection Act and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which the individual first became eligible to apply for Canadian citizenship; (résident canadien)
residential property
immeuble résidentiel
residential property means real property consisting of buildings that are used, or are to be used, to the extent of at least one half of the floor space thereof, as one or more private dwellings; (immeuble résidentiel)
securities underwriter
souscripteur à forfait
securities underwriter means a person who, as principal, agrees to purchase securities with a view to the distribution of the securities or who, as agent for a body corporate or other person, offers for sale or sells securities in connection with a distribution of the securities, and includes a person who participates, directly or indirectly, in a distribution of securities, other than a person whose interest in the distribution of securities is limited to receiving a distributor’s or seller’s commission payable by a securities underwriter; (souscripteur à forfait)
security
titre ou valeur mobilière
security means
(a) in relation to a body corporate, a share of any class of shares of the body corporate or a debt obligation of the body corporate, and includes a warrant of the body corporate, but does not include a deposit with a financial institution or any instrument evidencing such a deposit, and
(b) in relation to any other entity, any ownership interest in or debt obligation of the entity; (titre ou valeur mobilière)
security interest
sûreté
security interest means an interest in or charge on property by way of mortgage, lien, pledge or otherwise taken by a creditor or guarantor to secure the payment or performance of an obligation; (sûreté)
send
envoyer
send includes deliver; (envoyer)
series
série
series, in respect of shares, means a division of a class of shares; (série)
significant interest
intérêt substantiel
significant interest means a significant interest determined in accordance with section 8; (intérêt substantiel)
special resolution
résolution extraordinaire
special resolution means a resolution passed by a majority of not less than two thirds of the votes cast by or on behalf of the shareholders who voted in respect of that resolution or signed by all the shareholders entitled to vote on that resolution; (résolution extraordinaire)
squeeze-out transaction
transaction d’éviction
squeeze-out transaction means a transaction by a bank that is not a distributing bank, or a bank holding company that is not a distributing bank holding company, that requires an amendment to a by-law referred to in subsection 217(1) and that would directly or indirectly result in the interest of a holder of shares of a class of shares being terminated without their consent and without substituting an interest of equivalent value in shares that are issued by the following persons and have rights and privileges equal to or greater than those of the shares of the affected class:
(a) in the case of a bank, the bank, and
(b) in the case of a bank holding company, the bank holding company; (transaction d’éviction)
subordinated indebtedness
titre secondaire
subordinated indebtedness means an instrument evidencing an indebtedness of a bank that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the bank, be subordinate in right of payment to all deposit liabilities of the bank and all other liabilities of the bank except those that, by their terms, rank equally with or are subordinate to such indebtedness; (titre secondaire)
subsidiary
filiale
subsidiary means an entity that is a subsidiary of another entity as defined in section 5; (filiale)
substantial investment
intérêt de groupe financier
substantial investment means a substantial investment determined in accordance with section 10; (intérêt de groupe financier)
Superintendent
surintendant
Superintendent means the Superintendent of Financial Institutions appointed pursuant to the Office of the Superintendent of Financial Institutions Act; (surintendant)
trade
opération
trade, in respect of securities, means any sale or disposition of securities for valuable consideration; (opération)
transfer
transfert
transfer, in respect of securities, includes a transmission by operation of law; (transfert)
voting share
action avec droit de vote
voting share means a share of any class of shares of a body corporate carrying voting rights under all circumstances or by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled; (action avec droit de vote)
WTO Member resident
résident d’un membre de l’OMC
WTO Member resident means a WTO Member resident within the meaning of section 11.1. (résident d’un membre de l’OMC)
- 1991, c. 46, ss. 2, 572, c. 47, s. 756, c. 48, s. 494
- 1992, c. 51, s. 29
- 1993, c. 34, s. 5(F), c. 44, s. 22
- 1998, c. 30, ss. 13(F), 15(E)
- 1999, c. 3, s. 14, c. 28, s. 1
- 2000, c. 12, s. 3
- 2001, c. 9, s. 35, c. 27, s. 206
- 2002, c. 7, s. 81(E)
- 2005, c. 54, s. 1
- 2007, c. 6, s. 1
- 2012, c. 5, s. 2
Interpretation
Marginal note:References to “authorized foreign bank”
2.1 References in this Act to the carrying on of business in Canada by an authorized foreign bank and to the business in Canada of an authorized foreign bank are deemed, respectively, to be references to the carrying on of business in Canada, or to business in Canada, under Part XII.1.
- 1999, c. 28, s. 2
Marginal note:Major shareholder
2.2 For the purposes of this Act, a person is a major shareholder of a body corporate if
(a) the aggregate of the shares of any class of voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the body corporate; or
(b) the aggregate of the shares of any class of non-voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the body corporate.
- 2001, c. 9, s. 36
Marginal note:Widely held
2.3 For the purposes of this Act, an entity is widely held if it is
(a) a body corporate that has no major shareholder;
(b) an insurance company incorporated or formed under a mutual plan;
(c) an association to which the Cooperative Credit Associations Act applies; or
(d) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province.
- 2001, c. 9, s. 36
Marginal note:Regulations — distributing bank or bank holding company
2.4 (1) The Governor in Council may make regulations respecting the determination of what constitutes a distributing bank or distributing bank holding company for the purposes of this Act.
Marginal note:Exemption — bank or bank holding company
(2) On the application of a bank or bank holding company, the Superintendent may determine that it is not or was not a distributing bank or distributing bank holding company, as the case may be, if the Superintendent is satisfied that the determination would not prejudice any security holder of that bank or bank holding company.
Marginal note:Exemption — class of banks or bank holding companies
(3) The Superintendent may determine that members of a class of banks or bank holding companies are not or were not distributing banks or distributing bank holding companies, as the case may be, if the Superintendent is satisfied that the determination would not prejudice any security holder of a member of the class.
- 2005, c. 54, s. 2
Marginal note:Control
3 (1) For the purposes of this Act,
(a) a person controls a body corporate if securities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the body corporate;
(b) a person controls an unincorporated entity, other than a limited partnership, if more than 50 per cent of the ownership interests, however designated, into which the entity is divided are beneficially owned by that person and the person is able to direct the business and affairs of the entity;
(c) the general partner of a limited partnership controls the limited partnership; and
(d) a person controls an entity if the person has any direct or indirect influence that, if exercised, would result in control in fact of the entity.
Marginal note:Deemed control
(2) A person who controls an entity is deemed to control any entity that is controlled, or deemed to be controlled, by the entity.
Marginal note:Deemed control
(3) A person is deemed to control, within the meaning of paragraph (1)(a) or (b), an entity if the aggregate of
(a) any securities of the entity that are beneficially owned by that person, and
(b) any securities of the entity that are beneficially owned by any entity controlled by that person
is such that, if that person and all of the entities referred to in paragraph (b) that beneficially own securities of the entity were one person, that person would control the entity.
Marginal note:Guidelines
(4) The Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(d), make guidelines respecting what constitutes such control, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(d) in that provision shall be interpreted in accordance with the guidelines.
- 1991, c. 46, s. 3
- 2001, c. 9, s. 37
Marginal note:Holding body corporate
4 A body corporate is the holding body corporate of any entity that is its subsidiary.
- 1991, c. 46, s. 4
- 2001, c. 9, s. 38
Marginal note:Subsidiary
5 An entity is a subsidiary of another entity if it is controlled by the other entity.
- 1991, c. 46, s. 5
- 2001, c. 9, s. 38
Marginal note:Affiliated entities
6 (1) One entity is affiliated with another entity if one of them is controlled by the other or both are controlled by the same person.
Marginal note:Affiliated entities
(2) Despite subsection (1), for the purposes of subsections 265(1) and 283(1), one entity is affiliated with another entity if one of them is controlled, determined without regard to paragraph 3(1)(d), by the other or both are controlled, determined without regard to paragraph 3(1)(d), by the same person.
- 1991, c. 46, s. 6
- 2001, c. 9, s. 39
Marginal note:Shareholder
7 (1) For the purposes of this Act, a person is a shareholder of a body corporate when, according to the securities register of the body corporate, the person is the owner of one or more shares of the body corporate or is entitled to be entered in the securities register or like record of the body corporate as the owner of the share or shares.
Marginal note:Holder of a share
(2) A reference in this Act to the holding of a share by or in the name of any person is a reference to the fact that the person is registered or is entitled to be registered in the securities register or like record of the body corporate as the holder of that share.
Marginal note:Significant interest
8 (1) A person has a significant interest in a class of shares of a bank or a bank holding company if the aggregate of
(a) any shares of that class beneficially owned by the person, and
(b) any shares of that class beneficially owned by entities controlled by the person
exceeds 10 per cent of all of the outstanding shares of that class of shares of the bank or bank holding company.
Marginal note:Increasing significant interest
(2) A person who has a significant interest in a class of shares of a bank or bank holding company increases that significant interest in the class of shares if the person or any entity controlled by the person
(a) acquires beneficial ownership of additional shares of that class, or
(b) acquires control of any entity that beneficially owns shares of that class,
in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.
- 1991, c. 46, s. 8
- 2001, c. 9, s. 40
Marginal note:Acting in concert
9 (1) For the purposes of Part VII and Division 7 of Part XV, if two or more persons have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of
(a) shares of a bank or of a bank holding company that they beneficially own,
(b) shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a bank or of a bank holding company, or
(c) shares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of a bank or bank holding company,
those persons are deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the bank or bank holding company or shares or ownership interests of the entity that are beneficially owned by them.
Marginal note:Acting in concert
(2) Without limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of a bank or bank holding company or shares or ownership interests of any entity referred to in paragraph (1)(b) or (c),
(a) whereby any of them or their nominees may veto any proposal put before the board of directors of the bank or bank holding company, or
(b) under which no proposal put before the board of directors of the bank or bank holding company may be approved except with the consent of any of them or their nominees,
is deemed to be an agreement, commitment or understanding referred to in subsection (1).
Marginal note:Exceptions
(3) For the purposes of this section, persons shall be presumed not to have agreed to act jointly or in concert solely by reason of the fact that
(a) one is the proxyholder of one or more of the others in respect of shares or ownership interests referred to in subsection (1); or
(b) they vote the voting rights attached to shares or ownership interests referred to in subsection (1) in the same manner.
Marginal note:Designation
(4) Where in the opinion of the Superintendent it is reasonable to conclude that an agreement, commitment or understanding referred to in subsections (1) and (2) exists by or among two or more persons, the Superintendent may designate those persons as persons who have agreed to act jointly or in concert.
Marginal note:Contravention
(5) A person contravenes a provision of Part VII or Division 7 of Part XV if the person agrees to act jointly or in concert with one or more other persons in such a manner that a deemed single person contravenes the provision.
- 1991, c. 46, s. 9
- 2001, c. 9, s. 41
- 2007, c. 6, s. 2
Marginal note:Substantial investment in body corporate
10 (1) A person has a substantial investment in a body corporate where
(a) the voting rights attached to the aggregate of any voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate; or
(b) the aggregate of any shares of the body corporate beneficially owned by the person and by any entities controlled by the person represents ownership of greater than 25 per cent of the shareholders’ equity of the body corporate.
Marginal note:Increasing substantial investment in body corporate
(2) A person who has a substantial investment in a body corporate pursuant to paragraph (1)(a) increases that substantial investment when the person or any entity controlled by the person
(a) acquires beneficial ownership of additional voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person; or
(b) acquires control of any entity that beneficially owns any voting shares of the body corporate in such number as to increase the percentage of voting rights attached to the aggregate of the voting shares of the body corporate beneficially owned by the person and by any entities controlled by the person.
Marginal note:Idem
(3) A person who has a substantial investment in a body corporate pursuant to paragraph (1)(b) increases that substantial investment when the person or any entity controlled by the person
(a) acquires beneficial ownership of additional shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person; or
(b) acquires control of any entity that beneficially owns any shares of the body corporate in such number as to increase the percentage of the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person.
Marginal note:New substantial investment
(4) For greater certainty,
(a) where a person has a substantial investment in a body corporate pursuant to paragraph (1)(a) and the person, or any entity controlled by the person,
(i) purchases or otherwise acquires beneficial ownership of shares of the body corporate, or
(ii) acquires control of any entity that beneficially owns shares of the body corporate,
in such number as to cause the shareholders’ equity of the body corporate represented by the aggregate of the shares of the body corporate beneficially owned by the person and by any entities controlled by the person to exceed 25 per cent of the shareholders’ equity of the body corporate, or
(b) where a person has a substantial investment in a body corporate pursuant to paragraph (1)(b) and the person or any entity controlled by the person
(i) purchases or otherwise acquires beneficial ownership of voting shares of the body corporate, or
(ii) acquires control of any entity that beneficially owns voting shares of the body corporate,
in such number as to cause the voting rights attached to the aggregate of the voting shares beneficially owned by the person and by any entities controlled by the person to exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the body corporate,
the acquisition is deemed to cause the person to increase a substantial investment in the body corporate.
Marginal note:Substantial investment in unincorporated entity
(5) A person has a substantial investment in an unincorporated entity where the aggregate of any ownership interests, however designated, into which the entity is divided, beneficially owned by the person and by any entities controlled by the person exceeds 25 per cent of all of the ownership interests into which the entity is divided.
Marginal note:Increasing substantial investment in unincorporated entities
(6) A person who has a substantial investment in an unincorporated entity increases that substantial investment when the person or any entity controlled by the person
(a) acquires beneficial ownership of additional ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests in the unincorporated entity beneficially owned by the person and by any entities controlled by the person; or
(b) acquires control of any entity that beneficially owns ownership interests in the unincorporated entity in such number as to increase the percentage of ownership interests beneficially owned by the person and by any entities controlled by the person.
11 [Repealed, 2005, c. 54, s. 3]
Marginal note:WTO Member resident
11.1 (1) For the purposes of this Act, a WTO Member resident is
(a) a natural person who is ordinarily resident in a country or territory that is a WTO Member, as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada;
(b) a body corporate, association, partnership or other organization that is incorporated, formed or otherwise organized in a country or territory that is a WTO Member, as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act, other than Canada, and that is controlled
(i) directly or indirectly, by one or more persons referred to in paragraph (a), or
(ii) by a government of a WTO Member, whether federal, state or local, or an agency of one of those governments;
(c) a trust established by one or more persons referred to in paragraph (a) or (b) or a trust in which one or more of those persons have more than 50 per cent of the beneficial interest; or
(d) a body corporate, association, partnership or other organization that is controlled, directly or indirectly, by a trust referred to in paragraph (c).
Marginal note:Interpretation
(2) For the purposes of subsection (1),
(a) a body corporate is controlled by one or more persons if
(i) securities of the body corporate to which are attached more than 50 per cent of the votes that may be cast to elect directors of the body corporate are beneficially owned by the person or persons, and
(ii) the votes attached to those securities are sufficient to elect a majority of the directors of the body corporate;
(b) an association, partnership or other organization is controlled by one or more persons if
(i) more than 50 per cent of the ownership interests, however designated, into which the association, partnership or other organization is divided are beneficially owned by the person or persons, and
(ii) the person or persons are able to direct the business and affairs of the association, partnership or other organization;
(c) a body corporate, association, partnership or other organization is controlled by one or more persons if the person or persons have, directly or indirectly, control in fact of the body corporate, association, partnership or other organization; and
(d) a body corporate, association, partnership or other organization that controls another body corporate, association, partnership or other organization is deemed to control any body corporate, association, partnership or other organization that is controlled or deemed to be controlled by the other body corporate, association, partnership or other organization.
- 1993, c. 44, s. 23
- 1999, c. 28, s. 3
Marginal note:Exemption from foreign bank status
12 (1) The Minister may, by order, and subject to such terms and conditions as the Minister considers appropriate, exempt for the purposes of any provision of this Act any entity from being a foreign bank that, but for that order, would be a foreign bank.
Marginal note:Revocation of order
(2) The Minister may, by further order, revoke or vary any order made under subsection (1), and any such revocation or variation shall come into force three months after the date the further order is made, unless the Minister and the entity to which the order relates agree that the revocation or variation should come into force at some other time agreed by them.
Marginal note:Notice
(3) Before filing an application for an order referred to in subsection (1), an applicant shall publish a notice of intention to make the application in the Canada Gazette.
- 1991, c. 46, s. 12
- 2001, c. 9, s. 42.1
Application
Marginal note:Application of Act
13 This Act is the charter of and applies to each bank.
- 1991, c. 46, s. 13
- 1999, c. 28, s. 4
- 2001, c. 9, s. 43
Marginal note:Schedule I and Schedule II banks
14 (1) Subject to this Act,
(a) there shall be set out in Schedule I
(i) the name of every bank named in Schedules I and II as those Schedules read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force that was not a subsidiary of a foreign bank,
(ii) the name of every bank incorporated or formed under this Act that is not a subsidiary of a foreign bank, and
(iii) the province in which the head office of the bank is situated; and
(b) there shall be set out in Schedule II
(i) the name of every bank named in Schedule II as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force that was a subsidiary of a foreign bank,
(ii) the name of every bank incorporated or formed under this Act that is a subsidiary of a foreign bank, and
(iii) the province in which the head office of the bank is situated.
Marginal note:Amending the schedules
(2) Where
(a) a bank is incorporated,
(b) a body corporate is continued as a bank,
(c) one or more bodies corporate are amalgamated as a bank,
(d) the name of a bank is changed,
(e) the head office of a bank is changed,
(f) a bank becomes, or ceases to be, a subsidiary of a foreign bank,
(g) a bank is dissolved, or
(h) a bank is continued, or amalgamated and continued, as a body corporate to which another Act of Parliament applies,
Schedules I and II shall be amended accordingly.
Marginal note:Notice of amendments
(3) If in any year either Schedule I or II is amended, the Superintendent shall, within sixty days after the end of the year, cause a notice to be published in the Canada Gazette showing Schedule I or II in its complete amended form as at the end of the year.
- 1991, c. 46, s. 14
- 2001, c. 9, s. 43
- 2005, c. 54, s. 4
- 2007, c. 6, s. 3
Marginal note:Schedule III authorized foreign banks
14.1 (1) There shall be set out in Schedule III
(a) the name of every authorized foreign bank and, where applicable, any other name under which it is permitted to carry on business in Canada;
(b) the province in which the principal office of the authorized foreign bank is situated; and
(c) whether the authorized foreign bank is subject to the restrictions and requirements referred to in subsection 524(2).
Marginal note:Amending Schedule III
(2) Schedule III shall be amended accordingly where
(a) an order made under subsection 524(1) is revoked;
(b) any of the information referred to in paragraph (1)(a) or (b) changes; or
(c) the restrictions and requirements referred to in subsection 524(2) to which an authorized foreign bank is subject are added or removed.
Marginal note:Notice of amendments
(3) Where in any year Schedule III is amended, the Superintendent shall, within sixty days after the end of the year, cause a notice to be published in the Canada Gazette showing Schedule III in its complete amended form as at the end of the year.
- 1999, c. 28, s. 5
- 2005, c. 54, s. 5
Marginal note:Exemption of foreign banks
14.2 The Governor in Council may make regulations exempting any class of foreign banks from the application of any provision of this Act.
- 2001, c. 9, s. 43.1
PART IIStatus and Powers
Marginal note:Corporate powers
15 (1) A bank has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.
Marginal note:Powers restricted
(2) A bank shall not carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.
Marginal note:Business in Canada
(3) A bank may carry on business throughout Canada.
Marginal note:Powers outside Canada
(4) Subject to this Act, a bank has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.
Marginal note:No invalidity
16 No act of a bank or authorized foreign bank, including any transfer of property to or by a bank or authorized foreign bank, is invalid by reason only that the act or transfer is contrary to
(a) in the case of a bank, the bank’s incorporating instrument or this Act; or
(b) in the case of an authorized foreign bank, this Act.
- 1991, c. 46, s. 16
- 1999, c. 28, s. 6
Marginal note:By-law not necessary
17 It is not necessary for a bank to pass a by-law in order to confer any particular power on the bank or its directors.
Marginal note:No personal liability
18 The shareholders of a bank are not, as shareholders, liable for any liability, act or default of the bank except as otherwise provided by this Act.
Marginal note:No constructive notice
19 No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a bank or authorized foreign bank by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at a branch of the bank or authorized foreign bank.
- 1991, c. 46, s. 19
- 1993, c. 34, s. 6(F)
- 1999, c. 28, s. 7
Marginal note:Authority of directors and officers
20 (1) No bank and no guarantor of an obligation of a bank may assert against a person dealing with the bank or against a person who has acquired rights from the bank that
(a) the bank’s incorporating instrument or any by-laws of the bank have not been complied with;
(b) the persons named as directors of the bank in the most recent return sent to the Superintendent under section 632 are not the directors of the bank;
(c) the place named in the incorporating instrument or by-laws of the bank is not the place where the head office of the bank is situated;
(d) a person held out by the bank as a director, officer or representative of the bank has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the bank or usual for a director, officer or representative; or
(e) a document issued by any director, officer or representative of the bank with actual or usual authority to issue the document is not valid or not genuine.
Marginal note:Exception — knowledge
(2) Subsection (1) does not apply in respect of a person who has or ought to have knowledge of a situation described in that subsection by virtue of their relationship to the bank.
- 1991, c. 46, s. 20
- 1999, c. 28, s. 8
- 2005, c. 54, s. 6
Marginal note:Sunset provision
21 (1) Subject to subsections (2) and (4), banks shall not carry on business, and authorized foreign banks shall not carry on business in Canada, after the day that is the fifth anniversary of the day on which this section comes into force.
Marginal note:Extension
(2) The Governor in Council may, by order, extend by up to six months the time during which banks may continue to carry on business and authorized foreign banks may continue to carry on business in Canada. No more than one order may be made under this subsection.
Marginal note:Order not a regulation
(3) The order is not a regulation for the purposes of the Statutory Instruments Act. However, it shall be published in Part II of the Canada Gazette.
Marginal note:Exception
(4) If Parliament dissolves on the fifth anniversary of the day on which this section comes into force, on any day within the six-month period before that anniversary or on any day within an extension under subsection (2), banks may continue to carry on business, and authorized foreign banks may continue to carry on business in Canada, until the end of 180 days after the first day of the first session of the next Parliament.
- 1991, c. 46, s. 21
- 1997, c. 15, s. 2
- 1999, c. 28, s. 9
- 2001, c. 9, s. 44
- 2006, c. 4, s. 199
- 2007, c. 6, s. 4
- 2012, c. 5, s. 3
PART IIIIncorporation and Continuance
Formalities of Incorporation
Marginal note:Incorporation of bank
22 On the application of one or more persons made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating a bank.
Marginal note:Restrictions on incorporation
23 Letters patent incorporating a bank may not be issued if the application therefor is made by or on behalf of
(a) Her Majesty in right of Canada or in right of a province, an agency of Her Majesty in either of those rights, or an entity controlled by Her Majesty in either of those rights;
(b) the government of a foreign country or any political subdivision thereof;
(c) an agency of the government of a foreign country or any political subdivision thereof; or
(d) an entity that is controlled by the government of a foreign country or any political subdivision thereof, other than an entity that is a foreign bank, a foreign institution or a subsidiary of a foreign bank or foreign institution.
- 1991, c. 46, s. 23
- 2001, c. 9, s. 45
Marginal note:Subsidiary of foreign bank
24 If a proposed bank would be a subsidiary of a foreign bank, within the meaning of paragraphs (a) to (f) of the definition foreign bank in section 2, and the application for letters patent to incorporate the bank is made by a non-WTO Member foreign bank, letters patent to incorporate the bank may not be issued unless the Minister is satisfied that treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.
- 1991, c. 46, s. 24
- 1999, c. 28, s. 10
- 2001, c. 9, s. 46
Marginal note:Application for incorporation
25 (1) An application for letters patent to incorporate a bank setting out the names of the first directors of the bank shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.
Marginal note:Publishing notice of intent
(2) Before filing an application referred to in subsection (1), the applicant or one of the applicants, as the case may be, shall, at least once a week for a period of four consecutive weeks, publish, in a form satisfactory to the Superintendent, a notice of intention to make the application in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the bank is to be situated.
Marginal note:Objections to incorporation
26 (1) Any person who objects to the proposed incorporation of a bank may, within thirty days after the date of the last publication under subsection 25(2) in respect of the proposed bank, submit the objection in writing to the Superintendent.
Marginal note:Minister to be informed
(2) On receipt of an objection under subsection (1), the Superintendent shall inform the Minister of the objection.
Marginal note:Inquiry into objection and report
(3) On receipt of an objection under subsection (1), and if the application for the issuance of the letters patent to which the objection relates has been received, the Superintendent shall, if satisfied that it is necessary and in the public interest to do so, hold or cause to be held a public inquiry into the objection as it relates to the application and, on completion of the inquiry, the Superintendent shall report the findings of the inquiry to the Minister.
Marginal note:Report to be made available
(4) Within thirty days after receiving a report under subsection (3), the Minister shall make the report available to the public.
Marginal note:Rules governing proceedings
(5) Subject to the approval of the Governor in Council, the Superintendent may make rules governing the proceedings at public inquiries held under this section.
Marginal note:Matters for consideration
27 Before issuing letters patent to incorporate a bank, the Minister shall take into account all matters that the Minister considers relevant to the application, including
(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;
(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;
(c) the business record and experience of the applicant or applicants;
(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;
(e) whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;
(f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;
(g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard to
(i) the nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, and
(ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank; and
(h) the best interests of the financial system in Canada.
- 1991, c. 46, s. 27
- 2001, c. 9, s. 47
Marginal note:Contents of letters patent
28 (1) There shall be set out in the letters patent incorporating a bank
(a) the name of the bank;
(b) the province in which the head office of the bank is to be situated; and
(c) the date that the bank came, or is to come, into existence.
Marginal note:Provisions in letters patent
(2) The Minister may set out in the letters patent incorporating a bank any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed bank.
Marginal note:Terms and conditions
(3) The Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating a bank as the Minister considers necessary or appropriate.
- 1991, c. 46, s. 28
- 2005, c. 54, s. 7
Marginal note:Letters patent of incorporation on application of certain companies
29 (1) If the Minister issues letters patent, under section 22, incorporating a bank on the application of a company to which the Trust and Loan Companies Act or the Insurance Companies Act applies and the paid-in capital of the bank immediately following its incorporation will be not less than five million dollars or any greater amount that the Minister may specify under subsection 46(1), there may, on the request of the company and with the approval of the Minister, be included in the letters patent a provision deeming shares of the bank to be issued, on a share for share basis, to all shareholders of the company in exchange for all the issued and outstanding shares of the company.
Marginal note:Effect of provision
(2) Shares of a bank deemed to be issued pursuant to subsection (1) are subject to the same designation, rights, privileges and restrictions or conditions and, subject to any agreement to the contrary, to the same charges, encumbrances and other restrictions as the shares of the company for which they are exchanged and the shares of the company, on the issuance of the letters patent, become the property of the bank free and clear of any charge, encumbrance or other restriction.
Marginal note:Idem
(3) An exchange of shares of a company referred to in subsection (1) pursuant to a provision included in the letters patent incorporating a bank does not deprive a person who was a holder of shares of the company immediately prior to the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect thereof, but any such right or privilege shall be exercised in accordance with this Act.
Marginal note:Transfer and voting of bank shares
(4) Notwithstanding subsection (3), no share of a bank that is deemed to be issued pursuant to a provision included in the letters patent incorporating a bank may subsequently be transferred or voted contrary to this Act, but any shareholder of a bank who acquired shares of the bank by means of an exchange of shares of a company referred to in subsection (1) pursuant to that provision may, for a period of ten years from the date of issuance of the letters patent, exercise the voting rights attached to the shares without regard to any provisions of this Act, other than subsection (7), that would otherwise prohibit the shareholder from voting the shares.
Marginal note:Shareholder approval
(5) No provision described in subsection (1) may be included in letters patent issued pursuant to section 22 unless the application therefor is accompanied by evidence that the request for such a provision was approved by a vote of at least two thirds of those shareholders of the applicant company entitled to vote thereon, present or represented by proxy and voting at a shareholders’ meeting called to consider the application.
Marginal note:Exchange of share certificates
(6) Where, pursuant to a provision included in the letters patent incorporating a bank, a share exchange is deemed to have taken place, the bank shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the bank and for the exchange of those certificates for share certificates representing the shares of the company that were outstanding on the day the letters patent were issued.
Marginal note:Shares of bank may continue to be held
(7) Notwithstanding any other provision of this Act, where letters patent incorporating a bank include a provision described in subsection (1) and, on the date of issuance of the letters patent, another bank and any entities controlled by that other bank held, in the aggregate, more than ten per cent of any class of shares of the applicant company, that other bank may have a significant interest in any class of shares of the bank deemed to be issued pursuant to subsection (1) in exchange for the shares of the company for a period of two years from the date of issuance of the letters patent.
Marginal note:Extension of period
(8) On application of a bank authorized by subsection (7) to hold, directly or through a subsidiary, shares of another bank, the Minister may, by order, extend the period referred to in subsection (7), but the aggregate of such extensions from time to time granted to a bank and of the period referred to in subsection (7) may not, in any case, exceed ten years.
(9) [Repealed, 2001, c. 9, s. 48]
- 1991, c. 46, ss. 29, 573, c. 47, s. 756
- 2001, c. 9, s. 48
Marginal note:Notice of issue of letters patent
30 The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent incorporating a bank.
Marginal note:First directors
31 The first directors of a bank are the directors named in the application for letters patent to incorporate the bank.
Marginal note:Effect of letters patent
32 A bank comes into existence on the date provided therefor in its letters patent.
Continuance
Marginal note:Federal corporations
33 (1) A body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament, including a bank holding company, may apply to the Minister for letters patent continuing the body corporate as a bank under this Act.
Marginal note:Other corporations
(2) A body corporate incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the body corporate as a bank under this Act.
- 1991, c. 46, s. 33
- 1994, c. 24, s. 34(F)
- 2001, c. 9, s. 49
Marginal note:Application for continuance
34 (1) Where a body corporate applies for letters patent under subsection 33(1) or (2), sections 23 to 27 apply in respect of the application, with such modifications as the circumstances require.
Marginal note:Special resolution approval
(2) Where a body corporate applies for letters patent under subsection 33(1) or (2), the application must be duly authorized by a special resolution.
Marginal note:Copy of special resolution
(3) A copy of the special resolution referred to in subsection (2) shall be filed with the application.
Marginal note:Power to issue letters patent
35 (1) On the application of a body corporate under subsection 33(1) or (2), the Minister may, subject to this Part, issue letters patent continuing the body corporate as a bank under this Act.
Marginal note:Issue of letters patent
(2) Where letters patent are issued to a body corporate under subsection (1), section 28 applies in respect of the issue of letters patent, with such modifications as the circumstances require.
Marginal note:Effect of letters patent
36 On the day set out in the letters patent continuing a body corporate as a bank under subsection 35(1),
(a) the body corporate becomes a bank as if it had been incorporated under this Act; and
(b) the letters patent are deemed to be the incorporating instrument of the continued bank.
Marginal note:Copy of letters patent
37 (1) Where a body corporate is continued as a bank under this Part, the Superintendent shall forthwith send a copy of the letters patent to the appropriate official or public body in the jurisdiction in which the body corporate was authorized to apply to be continued under this Act.
Marginal note:Notice of issuance of letters patent
(2) The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as a bank under this Act.
Marginal note:Effects of continuance
38 Where a body corporate is continued as a bank under this Part,
(a) the property of the body corporate continues to be the property of the bank;
(b) the bank continues to be liable for the obligations of the body corporate;
(c) an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;
(d) a civil, criminal or administrative action or proceeding pending by or against the body corporate may continue to be prosecuted by or against the bank;
(e) a conviction against, or any ruling, order or judgment in favour of or against the body corporate may be enforced by or against the bank;
(f) a person who, on the day the body corporate becomes a bank, was the holder of a security issued by the body corporate is not deprived of any right or privilege available to the person at that time in respect of the security or relieved of any liability in respect thereof, but any such right or privilege may be exercised only in accordance with this Act; and
(g) the by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the bank.
Marginal note:Transitional
39 (1) Notwithstanding any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to a bank in respect of which letters patent were issued under subsection 35(1) permission to
(a) engage in a business activity specified in the order that a bank is not otherwise permitted by this Act to engage in and that the body corporate continued as the bank was engaging in at the time the application for the letters patent was made;
(b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;
(c) [Repealed, 1994, c. 47, s. 14]
(d) hold assets that a bank is not otherwise permitted by this Act to hold if the assets were held by the body corporate continued as the bank at the time the application for the letters patent was made;
(e) acquire and hold assets that a bank is not otherwise permitted by this Act to acquire or hold if the body corporate continued as the bank was obliged, at the time the application for the letters patent was made, to acquire those assets; and
(f) maintain outside Canada any records or registers required by this Act to be maintained in Canada.
Marginal note:Duration
(2) The permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceeding
(a) with respect to any activity described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;
(b) with respect to any matter described in paragraph (1)(b), ten years; and
(c) with respect to any matter described in any of paragraphs (1)(d) to (f), two years.
Marginal note:Renewal
(3) Subject to subsection (4), the Minister may, on the recommendation of the Superintendent, by order, renew a permission granted by order under subsection (1) with respect to any matter described in paragraphs (1)(b) to (e) for such further period or periods as the Minister considers necessary.
Marginal note:Limitation
(4) The Minister shall not grant to a bank any permission
(a) with respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the bank to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank that the bank will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and
(b) with respect to matters described in paragraphs (1)(d) and (e), that purports to be effective more than ten years after the date of the approval for the bank to commence and carry on business.
- 1991, c. 46, s. 39
- 1994, c. 47, s. 14
- 1997, c. 15, s. 3
- 2007, c. 6, s. 5
Discontinuance
Marginal note:Transferring to other federal Acts
39.1 (1) A bank may
(a) apply, with the approval in writing of the Minister, under the Canada Business Corporations Act for a certificate of continuance as a corporation under that Act;
(b) apply, with the approval in writing of the Minister, under the Canada Cooperatives Act for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, as a cooperative under that Act;
(c) apply, under the Cooperative Credit Associations Act, for letters patent continuing the bank as an association under that Act, or amalgamating and continuing the bank as an association under that Act;
(d) apply, under the Insurance Companies Act, for letters patent continuing the bank as a company (other than a mutual company) or an insurance holding company under that Act, or amalgamating and continuing the bank as a company (other than a mutual company) or an insurance holding company under that Act; or
(e) apply, under the Trust and Loan Companies Act, for letters patent continuing the bank as a company under that Act, or amalgamating and continuing the bank as a company under that Act.
Marginal note:Conditions for approval
(2) The approval referred to in paragraph (1)(a) or (b) may be given only if the Minister is satisfied that
(a) the bank has published, once a week for four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the bank is situated, a notice of its intention to apply for the approval;
(b) the application has been authorized by a special resolution; and
(c) the bank does not hold deposits, other than deposits that are made by a person who controls the bank or by a person who has a significant interest in a class of shares of the bank and that are not insured by the Canada Deposit Insurance Corporation.
Marginal note:Withdrawing application
(3) If a special resolution authorizing the application for the certificate or letters patent so states, the directors of the bank may, without further approval of the shareholders, withdraw the application before it is acted on.
Marginal note:Restriction on other transfers
(4) A bank may not apply to be continued, or to be amalgamated and continued, as the case may be, as a body corporate other than one referred to in subsection (1).
- 1991, c. 46, s. 574
- 1997, c. 15, s. 4
- 1999, c. 28, s. 11
- 2001, c. 9, s. 50
- 2007, c. 6, s. 6
Marginal note:Act ceases to apply
39.2 If a bank applies for a certificate or letters patent referred to in section 39.1 in accordance with that section and the certificate is given or the letters patent are issued, this Act ceases to apply to the bank as of the day the certificate or the letters patent take effect.
- 1997, c. 15, s. 4
- 2001, c. 9, s. 50
- 2007, c. 6, s. 6
Corporate Name
Marginal note:Prohibited names
40 A bank may not be incorporated under this Act with a name
(a) that is prohibited by an Act of Parliament;
(b) that is, in the opinion of the Superintendent, deceptively misdescriptive;
(c) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existing
(i) trade-mark or trade name, or
(ii) corporate name of a body corporate,
except where the trade-mark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name and consent to the use of the trade-mark, trade name or corporate name is signified to the Superintendent in such manner as the Superintendent may require;
(d) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any entity carries on business or is identified; or
(e) that is reserved under section 43 for another bank or an authorized foreign bank or a proposed bank or a proposed authorized foreign bank or under section 697 for a bank holding company or a proposed bank holding company.
- 1991, c. 46, s. 40
- 1996, c. 6, s. 1
- 1997, c. 15, s. 5
- 1999, c. 28, s. 12
- 2001, c. 9, s. 51
Marginal note:Affiliated bank
41 Despite section 40, a bank that is affiliated with another entity may, with the consent of that entity, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.
- 1991, c. 46, s. 41
- 1996, c. 6, s. 1
- 2001, c. 9, s. 52
- 2007, c. 6, s. 7
Marginal note:French or English form of name
42 (1) The name of a bank may be set out in its letters patent in an English form, a French form, an English form and a French form or in a combined English and French form, and the bank may use and be legally designated by any such form.
Marginal note:Alternate name
(2) A bank may identify itself outside Canada by its name in any language and the bank may use and be legally designated by any such form of its name outside Canada.
Marginal note:Other name
(3) Subject to subsection (4) and section 255, a bank may carry on business under or identify itself by a name other than its corporate name.
Marginal note:Directions
(4) Where a bank is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the bank not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 40(a) to (e).
- 1991, c. 46, s. 42
- 1996, c. 6, s. 2
Marginal note:Reserved name
43 The Superintendent may, on request, reserve for ninety days a name for a proposed bank or proposed authorized foreign bank or for a bank or authorized foreign bank that intends to change its name.
- 1991, c. 46, s. 43
- 1999, c. 28, s. 13
Marginal note:Directing change of name
44 (1) If through inadvertence or otherwise a bank
(a) comes into existence or is continued with a name, or
(b) on an application to change its name, is granted a name
that is prohibited by section 40, the Superintendent may, by order, direct the bank to change its name and the bank shall comply with that direction.
Marginal note:Revoking name
(2) If a bank has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Act, the Superintendent may revoke the name of the bank and assign to it a name and, until changed in accordance with section 215 or 217, the name of the bank is thereafter the name so assigned.
- 1991, c. 46, s. 44
- 1996, c. 6, s. 3
- 2001, c. 9, s. 53
PART IVOrganization and Commencement
Organization Meetings
Marginal note:First directors’ meeting
45 (1) After letters patent incorporating a bank are issued, a meeting of the directors of the bank shall be held at which the directors may, subject to this Part,
(a) make by-laws;
(b) adopt forms of share certificates and corporate records;
(c) authorize the issue of shares of the bank;
(d) appoint officers;
(e) appoint, pursuant to subsection 314(1), an auditor or auditors to hold office until the first meeting of shareholders;
(f) make banking arrangements; and
(g) deal with any other matters necessary to organize the bank.
Marginal note:Calling directors’ meeting
(2) An incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 181(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the bank.
Marginal note:Calling shareholders’ meeting
46 (1) If at least five million dollars, or any greater amount that the Minister may specify, has been received by a bank in respect of which letters patent were issued under section 22 from the issue of its shares, the directors of the bank shall without delay call a meeting of the shareholders of the bank.
Marginal note:Meeting of shareholders
(2) The shareholders of a bank shall, by resolution at the meeting of shareholders called pursuant to subsection (1),
(a) approve, amend or reject any by-law made by the directors of the bank;
(b) subject to section 168, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election; and
(c) appoint an auditor or auditors to hold office until the close of the first annual meeting of shareholders.
- 1991, c. 46, s. 46
- 2001, c. 9, s. 54
Marginal note:Term of first directors
47 A director named in the application for letters patent to incorporate a bank holds office until the election of directors at the meeting of shareholders called pursuant to subsection 46(1).
Commencement and Carrying on of Business
Marginal note:Order to commence and carry on business
48 (1) A bank shall not carry on any business until the Superintendent has, by order, approved the commencement and carrying on of business by the bank.
Marginal note:Deeming
(2) If, on the day this subsection comes into force, an order approving the commencement and carrying on of business by a bank named in Schedule I or II as those Schedules read immediately before that day, has not been made, such an order is deemed to have been made in respect of the bank on that day.
Marginal note:Continued bank
(3) Except in respect of a body corporate that is continued as a bank under this Act for the purposes of forthwith amalgamating with one or more bodies corporate and continuing as a bank under this Act, where letters patent continuing a body corporate as a bank under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the bank.
Marginal note:Amalgamated bank
(4) Where letters patent amalgamating and continuing two or more bodies corporate as a bank under this Act are issued, the Superintendent shall make an order approving the commencement and carrying on of business by the bank.
Marginal note:Subsection 49(2) and section 52 do not apply
(5) For greater certainty, subsection 49(2) and section 52 do not apply in respect of a bank referred to in subsections (3) and (4).
- 1991, c. 46, s. 48
- 2001, c. 9, s. 55
Marginal note:Authority to make order
49 (1) On application by a bank, the Superintendent may make an order approving the commencement and carrying on of business by the bank.
Marginal note:Statement of payments
(2) An application by a bank for an order under subsection (1) must contain a statement setting out the amounts paid or to be paid by the bank in connection with its incorporation and organization.
Marginal note:No payments before order
50 Until an order approving the commencement and carrying on of business is made for a bank, the bank shall not make any payment on account of incorporation or organization expenses out of moneys received from the issue of the shares of the bank and interest thereon, except reasonable sums
(a) for the remuneration of not more than two officers;
(b) for the payment of costs related to the issue of shares of the bank; and
(c) for the payment of clerical assistance, legal services, accounting services, office accommodation at one location, office expenses, advertising, stationery, postage and travel expenses.
Marginal note:Deposits and investments before order
51 Where a bank comes into existence but no order approving the commencement and carrying on of business is made for the bank, the bank may only
(a) deposit, in Canada, paid-in capital of the bank in another deposit-taking Canadian financial institution; or
(b) invest paid-in capital of the bank in unencumbered securities of the Government of Canada or the government of any province.
Marginal note:Conditions for order
52 (1) The Superintendent shall not make an order approving the commencement and carrying on of business by a bank until it has been shown to the satisfaction of the Superintendent that
(a) the meeting of shareholders of the bank referred to in subsection 46(1) has been duly held;
(b) the bank has paid-in capital of at least five million dollars or any greater amount that is specified by the Minister under subsection 46(1);
(c) the expenses of incorporation and organization to be borne by the bank are reasonable; and
(d) all other relevant requirements of this Act have been complied with.
Marginal note:Time limit
(2) The Superintendent shall not make an order approving the commencement and carrying on of business by a bank more than one year after the day on which the bank comes into existence.
- 1991, c. 46, s. 52
- 2001, c. 9, s. 56
Marginal note:Conditions of order
53 An order approving the commencement and carrying on of business by a bank may contain such conditions or limitations that are consistent with this Act and relate to the business of the bank as the Superintendent deems expedient and necessary.
Marginal note:Variations
54 (1) In respect of the order approving the commencement and carrying on of business by a bank, the Superintendent may at any time, by further order,
(a) make the order subject to such conditions or limitations that are consistent with this Act and that relate to the business of the bank as the Superintendent deems expedient and necessary, or
(b) amend or revoke any authorization contained in the order or any condition or limitation to which the order is subject,
but before making any such further order the Superintendent shall provide the bank with an opportunity to make representations regarding that further order.
(2) to (6) [Repealed, 1996, c. 6, s. 4]
- 1991, c. 46, s. 54
- 1996, c. 6, s. 4
Marginal note:Limit on assets
54.1 (1) The Minister may, by order, require a bank not to have average total assets in any three month period ending on the last day of a month subsequent to the month specified in the order exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order if the Minister is of the opinion that it is in the best interests of the financial system in Canada to do so, after having considered the Superintendent’s opinion on
(a) the nature and extent of the financial services activities carried out by entities affiliated with the bank; and
(b) the impact that the nature and degree of supervision and regulation of those financial services activities have on the supervision and regulation of the bank.
Marginal note:Revocation of order
(2) If the Minister is of the opinion that the circumstances giving rise to the order have ceased to exist or have changed substantially, the Minister may, by further order, revoke the order.
Marginal note:Average total assets
(3) For the purposes of subsection (1), the average total assets of a bank in a three month period shall be computed by adding the total assets of the bank as calculated for the month end of each of the three months in the period and by dividing the sum by three.
Definition of total assets
(4) For the purposes of subsections (1) and (3), total assets, in respect of a bank, has the meaning given that expression by the regulations.
- 2001, c. 9, s. 57
Marginal note:Permission to subsidiary of foreign bank
55 (1) On the recommendation of the Superintendent, the Minister may, at the same time that an order is made approving the commencement and carrying on of business by a bank that is the subsidiary of a foreign bank, by further order, grant the subsidiary permission to
(a) hold assets that banks are not otherwise permitted by this Act to hold if those assets consist of shares of a body corporate incorporated by or under an Act of Parliament or of the legislature of a province that, at the time application for letters patent incorporating the subsidiary was made, were held by the eligible foreign institution, as defined in subsection 370(1), that is the holding body corporate of the subsidiary or any affiliate of that eligible foreign institution; and
(b) hold assets that banks are not otherwise permitted by this Act to hold if, at the time application for letters patent incorporating the subsidiary was made, the assets were held by an affiliate of the eligible foreign institution, as defined in subsection 370(1), that is the holding body corporate of the subsidiary.
Despite any other provision of this Act or the regulations, the subsidiary may act in accordance with that permission.
Marginal note:Extension of permission
(2) Permission granted to a bank by order of the Minister under subsection (1) is only for the period specified in the order. That period may not be more than two years, except that the Minister may extend the period by further order on application by the bank. The total of the period and any extensions of it may not, in any case, exceed ten years.
- 1991, c. 46, s. 55
- 1997, c. 15, s. 6
- 1999, c. 31, s. 9
- 2001, c. 9, s. 58
Marginal note:Public notice
56 (1) On the making of an order approving the commencement and carrying on of business by a bank, the bank shall publish a notice of the making of the order in a newspaper in general circulation at or near the place where the head office of the bank is located.
Marginal note:Notice in Canada Gazette
(2) The Superintendent shall cause to be published in the Canada Gazette a notice of the making of an order approving the commencement and carrying on of business by a bank.
Marginal note:Non-application to existing bank
(3) For greater certainty, this section does not apply to a bank referred to in subsection 48(2).
Marginal note:Cessation of existence
57 Except for the sole purpose of winding up the bank’s affairs, a bank ceases to exist one year after the day on which its incorporating instrument became effective if it does not obtain an order approving the commencement and carrying on of business within that year.
Marginal note:Allowed disbursements
58 (1) Where an order approving the commencement and carrying on of business is not made for a bank, no part of the moneys of the bank shall be used for the payment of incorporation and organization expenses, other than remuneration and costs referred to in section 50, unless the payment has been approved by a special resolution.
Marginal note:Application to court to settle disbursements
(2) If the amount allowed by a special resolution for the payment of any incorporation and organization expenses referred to in subsection (1) is considered insufficient by the directors or if no special resolution for the payment of such expenses is passed, the directors may apply to any court having jurisdiction in the place where the head office of the bank is situated to settle and determine the amounts to be paid out of any moneys of the bank before distribution of the balance to the shareholders or, where there are no shareholders, to the incorporators.
Marginal note:Notice of application to court
(3) The directors shall, at least twenty-one days prior to the date fixed for the hearing of the application referred to in subsection (2), send to the shareholders or incorporators, as the case may be, a notice of the application, which notice shall contain a statement of the amounts that are proposed to be settled and determined by the court.
Marginal note:Ratio payable
(4) In order that the amounts paid and payable under this section may be equitably borne by the shareholders or incorporators, as the case may be, the directors shall, after the amounts of the payments have been approved by special resolution or settled and determined by a court, fix the proportionate part thereof chargeable to each shareholder or incorporator as the ratio of the amount paid in by the shareholder or incorporator to the aggregate of all the amounts paid in by the shareholders or incorporators.
Marginal note:Return of excess
(5) After the amounts referred to in this section have been paid, the directors shall pay, with any interest earned thereon, to the shareholders or incorporators, the respective balances of the moneys paid in by them, less the amount chargeable to each shareholder or incorporator under subsection (4).
PART VCapital Structure
Share Capital
Marginal note:Power to issue shares
59 (1) Subject to this Act and the by-laws of the bank, shares of a bank may be issued at such times and to such persons and for such consideration as the directors of the bank may determine.
Marginal note:Shares
(2) Shares of a bank shall be in registered form and shall be without nominal or par value.
Marginal note:Shares of existing bank
(3) Shares with nominal or par value of a bank that was in existence immediately prior to the day this Part comes into force are deemed to be shares without nominal or par value.
Marginal note:Shares of continued bank
(4) Where a body corporate is continued as a bank under this Act, shares with nominal or par value issued by the body corporate before it was so continued are deemed to be shares without nominal or par value.
Marginal note:Deemed share conditions
(5) If a right, other than a voting right, of a holder of a share with nominal or par value of a bank referred to in subsection (3) or a body corporate continued as a bank under this Act was stated or expressed in terms of the nominal or par value of the share immediately before the coming into force of this subsection or the continuance under this Act, as the case may be, that right is deemed, after the coming into force of this Part or the continuance, as the case may be, to be the same right stated or expressed without reference to the nominal or par value of the share.
- 1991, c. 46, s. 59
- 2001, c. 9, s. 59
Marginal note:Common shares
60 (1) A bank shall have one class of shares, to be designated as “common shares”, which are non-redeemable and in which the rights of the holders thereof are equal in all respects, and those rights include
(a) the right to vote at all meetings of shareholders except where only holders of a specified class of shares are entitled to vote;
(b) the right to receive dividends declared on those shares; and
(c) the right to receive the remaining property of the bank on dissolution.
Marginal note:Designations of shares
(2) No bank shall designate more than one class of its shares as “common shares” or any variation of that term.
(3) [Repealed, 2012, c. 5, s. 4]
Marginal note:Continued bank
(4) A body corporate continued as a bank under this Act that is not in compliance with subsection (2) on the date letters patent continuing it as a bank are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.
- 1991, c. 46, s. 60
- 2012, c. 5, s. 4
Marginal note:Classes of shares
61 (1) The by-laws of a bank may provide for more than one class of shares and, if they so provide, shall set out
(a) the rights, privileges, restrictions and conditions attaching to the shares of each class; and
(b) the maximum number, if any, of shares of any class that the bank is authorized to issue.
Marginal note:Shareholder approval
(2) Where a by-law referred to in subsection (1) is made, the directors of the bank shall submit the by-law to the shareholders at the next meeting of shareholders.
Marginal note:Effective date
(3) A by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders at the meeting referred to in subsection (2).
- 1991, c. 46, s. 61
- 2001, c. 9, s. 60
Marginal note:Shares issued in series
62 (1) The by-laws of a bank may, subject to any limitations set out in them, authorize the issue of any class of shares in one or more series and may
(a) fix the maximum number of shares in each series and determine the designation, rights, privileges, restrictions and conditions attaching to them; and
(b) authorize the directors to do anything referred to in paragraph (a).
Marginal note:Series participation
(2) If any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.
Marginal note:Voting rights
(3) Where voting rights are attached to any series of a class of shares, the shares of every other series of that class shall have the same voting rights.
Marginal note:Restriction on series
(4) No rights, privileges, restrictions or conditions attached to a series of shares authorized under this section confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.
Marginal note:Material to Superintendent
(5) If the directors exercise their authority under paragraph (1)(b), the directors shall, before the issue of shares of the series, send to the Superintendent particulars of the series of shares and a copy of the by-law that granted the authority to the directors.
- 1991, c. 46, s. 62
- 2005, c. 54, s. 8
- 2007, c. 6, s. 8(E)
Marginal note:One share, one vote
63 Where voting rights are attached to a share of a bank, the voting rights may confer only one vote in respect of that share.
Marginal note:Shares non-assessable
64 Shares issued by a bank after the coming into force of this section are non-assessable and the shareholders are not liable to the bank or to its creditors in respect thereof.
Marginal note:Consideration for share
65 (1) No share of any class of shares of a bank shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.
Marginal note:Other currencies
(2) When issuing shares, a bank may provide that any aspect of the shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.
Marginal note:Stated capital account
66 (1) A bank shall maintain a separate stated capital account for each class and series of shares it issues.
Marginal note:Addition to stated capital account
(2) A bank shall record in the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.
Marginal note:Exception
(3) Despite subsection (2), a bank may, subject to subsection (4), record in the stated capital account maintained for the shares of a class or series any part of the consideration it receives in an exchange if it issues shares
(a) in exchange for
(i) property of a person who immediately before the exchange did not deal with the bank at arm’s length within the meaning of that expression in the Income Tax Act,
(ii) shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the bank at arm’s length within the meaning of that expression in the Income Tax Act, or
(iii) property of a person who immediately before the exchange dealt with the bank at arm’s length within the meaning of that expression in the Income Tax Act if the person, the bank and all of the holders of shares in the class or series of shares so issued consent to the exchange;
(b) under an agreement referred to in subsection 224(1); or
(c) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated bank.
Marginal note:Limit on addition to a stated capital account
(4) On the issuance of a share, a bank shall not add to the stated capital account in respect of the share an amount greater than the amount of the consideration it receives for the share.
Marginal note:Constraint on addition to a stated capital account
(5) Where a bank that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the bank as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 77(4).
- 1991, c. 46, s. 66
- 1997, c. 15, s. 7
- 2005, c. 54, s. 9
Marginal note:Stated capital of continued bank
67 (1) Where a body corporate is continued as a bank under this Act, the bank shall record in the stated capital account maintained for each class and series of shares then outstanding an amount that is equal to the aggregate of
(a) the aggregate amount paid up on the shares of each class and series of shares immediately before the body corporate was so continued, and
(b) the amount of the contributed surplus of the bank that is attributable to those shares.
Marginal note:Contributed surplus entry
(2) The amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (1)(b) shall be deducted from the contributed surplus account of the bank.
Marginal note:Shares issued before continuance
(3) Any amount unpaid in respect of a share issued by a body corporate before it was continued as a bank under this Act and paid after it was so continued shall be recorded in the stated capital account maintained by the bank for the shares of that class or series.
Marginal note:Pre-emptive right
68 (1) Where the by-laws of a bank so provide, no shares of any class shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.
Marginal note:Exception
(2) Notwithstanding the existence of a pre-emptive right, a shareholder of a bank has no pre-emptive right in respect of shares of a class to be issued
(a) for a consideration other than money;
(b) as a share dividend; or
(c) pursuant to the exercise of conversion privileges, options or rights previously granted by the bank.
Marginal note:Idem
(3) Notwithstanding the existence of a pre-emptive right, a shareholder of a bank has no pre-emptive right in respect of shares to be issued
(a) where the issue of shares to the shareholder is prohibited by this Act; or
(b) where, to the knowledge of the directors of the bank, the offer of shares to a shareholder whose recorded address is in a country other than Canada ought not to be made unless the appropriate authority in that country is provided with information in addition to that submitted to the shareholders at the last annual meeting.
Marginal note:Conversion privileges
69 (1) A bank may issue conversion privileges, options or rights to acquire securities of the bank, and shall set out the conditions thereof
(a) in the documents that evidence the conversion privileges, options or rights; or
(b) in the securities to which the conversion privileges, options or rights are attached.
Marginal note:Transferable rights
(2) Conversion privileges, options and rights to acquire securities of a bank may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.
Marginal note:Reserved shares
(3) Where a bank has granted privileges to convert any securities issued by the bank into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the bank shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.
Marginal note:Holding of own shares
70 Except as provided in sections 71 to 74, or unless permitted by the regulations, a bank shall not
(a) hold shares of the bank or of any body corporate that controls the bank;
(b) hold any ownership interests of any unincorporated entity that controls the bank;
(c) permit any of its subsidiaries to hold any shares of the bank or of any body corporate that controls the bank; or
(d) permit any of its subsidiaries to hold any ownership interests of any unincorporated entity that controls the bank.
Marginal note:Purchase and redemption of shares
71 (1) Subject to subsection (2) and to its by-laws, a bank may, with the consent of the Superintendent, purchase, for the purpose of cancellation, any shares issued by it, or redeem any redeemable shares issued by it at prices not exceeding the redemption price thereof calculated according to a formula stated in its by-laws or the conditions attaching to the shares.
Marginal note:Restrictions on purchase and redemption
(2) A bank shall not make any payment to purchase or redeem any shares issued by it if there are reasonable grounds for believing that the bank is, or the payment would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made pursuant to subsection 485(3).
Marginal note:Donated shares
(3) A bank may accept from any shareholder a share of the bank surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 75.
Marginal note:Holding as personal representative
72 (1) A bank may, and may permit its subsidiaries to, hold, in the capacity of a personal representative, shares of the bank or of any body corporate that controls the bank or ownership interests in any unincorporated entity that controls the bank, but only where the bank or the subsidiary does not have a beneficial interest in the shares or ownership interests.
Marginal note:Security interest
(2) A bank may, and may permit its subsidiaries to, by way of a security interest
(a) hold shares of the bank or of any body corporate that controls the bank, or
(b) hold any ownership interests of any entity that controls the bank,
where the security interest is nominal or immaterial when measured by criteria established by the bank that have been approved in writing by the Superintendent.
Marginal note:Saving
(3) Nothing in subsection (2) precludes a bank that was in existence immediately prior to the day this Part comes into force, or any of its subsidiaries, from holding any security interest held immediately prior to the coming into force of this Part.
- 1991, c. 46, s. 72
- 2005, c. 54, s. 10(F)
Marginal note:Exception — conditions before acquisition
72.1 (1) A bank may permit any of its subsidiaries to acquire shares of the bank through the issuance of those shares by the bank to the subsidiary if the conditions prescribed for the purposes of this subsection are met before the subsidiary acquires the shares.
Marginal note:Conditions after acquisition
(2) After a subsidiary has acquired shares under the purported authority of subsection (1), the conditions prescribed for the purposes of this subsection must be met.
Marginal note:Non-compliance with conditions
(3) If a bank permits any of its subsidiaries to acquire shares of the bank under the purported authority of subsection (1) and one or more of the conditions prescribed for the purposes of subsections (1) and (2) were not met, are not met or cease to be met, as the case may be, then, despite section 16 and subsection 66(2), the bank must comply with the prescribed requirements.
- 2007, c. 6, s. 9
Marginal note:Cancellation of shares
73 (1) Subject to subsection (2), where a bank purchases shares of the bank or fractions thereof or redeems or otherwise acquires shares of the bank, the bank shall cancel those shares.
Marginal note:Requirement to sell
(2) Where a bank or any of its subsidiaries, through the realization of security, acquires any shares of the bank or of any body corporate that controls the bank or any ownership interests in an unincorporated entity that controls the bank, the bank shall, or shall cause its subsidiaries to, as the case may be, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.
Marginal note:Subsidiary holding shares
74 Subject to the regulations, a bank that was in existence immediately prior to the day this Part comes into force shall cause any subsidiary of the bank that holds shares of the bank, or of any body corporate that controls the bank, or any ownership interests of any unincorporated entity that controls the bank to sell or otherwise dispose of those shares or ownership interests within six months after the day this section comes into force.
Marginal note:Reduction of capital
75 (1) The stated capital of a bank may be reduced by special resolution.
Marginal note:Limitation
(2) A bank shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the bank is, or the reduction would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made pursuant to subsection 485(3).
Marginal note:Contents of special resolution
(3) A special resolution to reduce the stated capital of a bank shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.
Marginal note:Approval by Superintendent
(4) A special resolution to reduce the stated capital of a bank has no effect until it is approved in writing by the Superintendent.
Marginal note:Exception
(4.1) Subsection (4) does not apply if
(a) the reduction in the stated capital is made solely as a result of changes made to the accounting principles referred to in subsection 308(4); and
(b) there is to be no return of capital to shareholders as a result of the reduction.
Marginal note:Conditions for approval
(5) No approval to reduce the stated capital of a bank may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.
Marginal note:Statements to be submitted
(6) In addition to evidence of the passing of a special resolution to reduce the stated capital of a bank and of the publication thereof, statements showing
(a) the number of the bank’s shares issued and outstanding,
(b) the results of the voting by class of shares of the bank,
(c) the bank’s assets and liabilities, and
(d) the reason why the bank seeks the reduction of capital
shall be submitted to the Superintendent at the time of the application for approval of the special resolution.
- 1991, c. 46, s. 75
- 2007, c. 6, s. 10
Marginal note:Recovery by action
76 (1) Where any money or property was paid or distributed to a shareholder or other person as a consequence of a reduction of capital made contrary to section 75, a creditor of the bank may apply to a court for an order compelling the shareholder or other person to pay the money or deliver the property to the bank.
Marginal note:Shares held by personal representative
(2) No person holding shares in the capacity of a personal representative and registered on the records of the bank as a shareholder and therein described as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.
Marginal note:Limitation
(3) An action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.
Marginal note:Remedy preserved
(4) This section does not affect any liability that arises under section 207.
Marginal note:Adjustment of stated capital account
77 (1) On a purchase, redemption or other acquisition by a bank of shares or fractions thereof issued by it, other than shares acquired pursuant to section 72 or acquired through the realization of security and sold pursuant to subsection 73(2), the bank shall deduct from the stated capital account maintained for the class or series of shares so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series by the number of shares of that class or series so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.
Marginal note:Idem
(2) A bank shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 75.
Marginal note:Shares converted to another class
(3) On a conversion of outstanding shares of a bank into shares of another class or series, or on a change of outstanding shares of the bank into shares of another class or series, the bank shall
(a) deduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; and
(b) record the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.
Marginal note:Stated capital of convertible shares
(4) For the purposes of subsection (3) and subject to the bank’s by-laws, where a bank issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.
Marginal note:Conversion or change of shares
(5) Shares issued by a bank and converted into shares of another class or series, or changed under subsection 217(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.
Marginal note:Addition to stated capital account
78 On a conversion of any debt obligation of a bank into shares of a class or series of shares, the bank shall
(a) deduct from the liabilities of the bank the nominal value of the debt obligation being converted; and
(b) record the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the class or series of shares into which the debt obligation has been converted.
Marginal note:Declaration of dividend
79 (1) The directors of a bank may declare and a bank may pay a dividend by issuing fully paid shares of the bank or options or rights to acquire fully paid shares of the bank and, subject to subsection (4), the directors of a bank may declare and a bank may pay a dividend in money or property, and if a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.
Marginal note:Notice to Superintendent
(2) The directors of a bank shall notify the Superintendent of the declaration of a dividend at least 15 days before the day fixed for its payment.
Marginal note:Share dividend
(3) If shares of a bank are issued in payment of a dividend, the bank shall record in the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend the declared amount of the dividend stated as an amount of money.
Marginal note:When dividend not to be declared
(4) The directors of a bank shall not declare and a bank shall not pay a dividend if there are reasonable grounds for believing that the bank is, or the payment would cause the bank to be, in contravention of any regulation referred to in subsection 485(1) or (2) or any direction made pursuant to subsection 485(3).
(5) [Repealed, 2007, c. 6, s. 11]
- 1991, c. 46, s. 79
- 2001, c. 9, s. 61
- 2007, c. 6, s. 11
Subordinated Indebtedness
Marginal note:Restriction on subordinated indebtedness
80 (1) A bank shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.
Marginal note:References to subordinated indebtedness
(2) A person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by a bank refer to the subordinated indebtedness otherwise than as subordinated indebtedness.
Marginal note:Deemed not to be a deposit
(3) Subordinated indebtedness issued by a bank is deemed not to be a deposit.
Marginal note:Other currencies
(4) When issuing subordinated indebtedness, a bank may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.
Security Certificates and Transfers
Marginal note:Definitions
81 In this section and sections 82 to 135,
adverse claim
opposition
adverse claim includes a claim that a transfer was or would be wrongful or that a particular adverse person is the owner of or has an interest in a security; (opposition)
bona fide purchaser
acheteur de bonne foi
bona fide purchaser means a purchaser for value in good faith and without notice of any adverse claim who takes delivery of a security in bearer form or order form or of a security in registered form issued to the purchaser or endorsed to the purchaser or endorsed in blank; (acheteur de bonne foi)
clearing agency
agence de compensation et de dépôt
clearing agency means a person designated as a recognized clearing agency by the Superintendent; (agence de compensation et de dépôt)
delivery
livraison ou remise
delivery means voluntary transfer of possession; (livraison ou remise)
fungible
fongibles
fungible, in respect of securities, means securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit; (fongibles)
genuine
authentique
genuine means free of forgery or counterfeit; (authentique)
good faith
bonne foi
good faith means honesty in fact in the conduct of the transaction concerned; (bonne foi)
over-issue
émission excédentaire
over-issue means the issue of securities in excess of any maximum number of securities that the issuer is authorized to issue; (émission excédentaire)
purchaser
acquéreur
purchaser means a person who takes an interest in a security by sale, mortgage, pledge, issue, reissue, gift or any other voluntary transaction; (acquéreur)
security or security certificate
valeur mobilière ou certificat de valeur mobilière
security or security certificate means an instrument issued by a bank that is
(a) in bearer, order or registered form,
(b) of a type commonly dealt in on securities exchanges or markets or commonly recognized in any area in which it is issued or dealt in as a medium for investment,
(c) one of a class or series or by its terms divisible into a class or series of instruments, and
(d) evidence of a share, participation or other interest in or obligation of a bank,
but does not include an instrument evidencing a deposit; (valeur mobilière ou certificat de valeur mobilière)
securities broker
courtier
securities broker means a person who is engaged for all or part of the person’s time in the business of buying and selling securities and who, in the transaction concerned, acts for, or buys a security from, or sells a security to, a customer; (courtier)
trust indenture
acte de fiducie
trust indenture has the meaning given that expression by section 294; (acte de fiducie)
unauthorized
non autorisé
unauthorized, in relation to a signature or an endorsement, means a signature or an endorsement made without actual, implied or apparent authority, and includes a forgery; (non autorisé)
uncertificated security
valeur mobilière sans certificat
uncertificated security means a security, not evidenced by a security certificate, the issue and any transfer of which is registered or recorded in records maintained for that purpose by or on behalf of a bank; (valeur mobilière sans certificat)
valid
valide
valid means issued in accordance with the applicable law or validated under section 97. (valide)
Marginal note:Provisions governing transfers of securities
82 The transfer of a security is governed by sections 83 to 135.
Marginal note:Security a negotiable instrument
83 (1) A security is a negotiable instrument but, in the case of any inconsistency between the provisions of the Bills of Exchange Act and this Act, this Act prevails to the extent of the inconsistency.
Marginal note:Bearer form
(2) A security is in bearer form if it is payable to bearer according to its terms and not by reason of any endorsement.
Marginal note:Order form
(3) A security is in order form where the security is not a share and, by its terms, it is payable to the order or assigns of any person therein specified with reasonable certainty or to the person or the person’s order.
Marginal note:Registered form
(4) A security is in registered form if
(a) it specifies a person entitled to the security or to the rights it evidences, and its transfer is capable of being recorded in a securities register; or
(b) it bears a statement that it is in registered form.
Marginal note:Status of guarantor
84 A guarantor for an issuer of a security is deemed to be an issuer to the extent of the guarantee, whether or not the guarantor’s obligation is noted on the security.
Marginal note:Rights of holder
85 (1) Subject to Part VII, every security holder is entitled at the holder’s option to a security certificate that complies with this Act or to a non-transferable written acknowledgement of the holder’s right to obtain a security certificate that complies with this Act from a bank in respect of the securities of that bank held by the security holder.
Marginal note:Fee for security certificate
(2) A bank may charge a fee, not exceeding a prescribed amount, for a security certificate issued in respect of a transfer.
Marginal note:Joint holders
(3) A bank is not required to issue more than one security certificate in respect of securities held jointly by several persons, and delivery of a security certificate to one of several joint holders is sufficient delivery to all joint holders of the security.
- 1991, c. 46, s. 85
- 1999, c. 31, s. 10
Marginal note:Signatures
86 (1) A security certificate shall be signed by or bear the printed or otherwise mechanically reproduced signature of at least one of the following:
(a) a director or officer of the bank;
(b) a registrar or transfer agent of the bank or a branch transfer agent or a natural person on their behalf; or
(c) a trustee who certifies it in accordance with a trust indenture.
Marginal note:Continuation of validity of signature
(2) If a security certificate contains a person’s printed or mechanically reproduced signature, the bank may issue the security certificate even if the person has ceased to be a director or officer of the bank. The security certificate is as valid as if the person were a director or officer at the date of its issue.
- 1991, c. 46, s. 86
- 2005, c. 54, s. 12
Marginal note:Contents of share certificate
87 There shall be stated on the face of each share certificate issued by a bank after the coming into force of this section
(a) the name of the bank;
(b) a statement that the bank is subject to the Bank Act;
(c) the name of the person to whom the share certificate is issued; and
(d) the number and class of shares and the designation of any series that the certificate represents.
Marginal note:Restrictions and charges
88 (1) No charge in favour of a bank and no restriction on transfer other than a constraint under Part VII is effective against a transferee of a security issued by the bank if the transferee has no actual knowledge of the charge or restriction unless it or a reference to it is noted conspicuously on the security certificate.
Marginal note:No restriction
(2) If any of the issued shares of a distributing bank remain outstanding and are held by more than one person, the bank may not restrict the transfer or ownership of its shares except by way of a constraint under Part VII.
Marginal note:Continuance
(3) If a body corporate that is continued as a bank under this Act has outstanding security certificates and the words “private company” or “private corporation” appear on the certificates, those words are deemed to be a notice of a charge or restriction for the purposes of subsection (1).
- 1991, c. 46, s. 88
- 2005, c. 54, s. 13
Marginal note:Particulars of class
89 (1) There shall be stated legibly on a share certificate issued after the coming into force of this section by a bank that is authorized to issue shares of more than one class or series
(a) the rights, privileges, restrictions and conditions attached to the shares of each class and series existing when the share certificate is issued; or
(b) that the class or series of shares that the certificate represents has rights, privileges, restrictions or conditions attached thereto and that the bank will furnish a shareholder, on demand and without charge, with a full copy of
(i) the text of the rights, privileges, restrictions and conditions attached to each class authorized to be issued and to each series in so far as those rights, privileges, restrictions and conditions have been fixed by the directors, and
(ii) the text of the authority of the directors, if the directors are so authorized, to fix the rights, privileges, restrictions and conditions of subsequent series of shares.
Marginal note:Duty
(2) Where a share certificate issued by a bank contains the statement mentioned in paragraph (1)(b), the bank shall provide a shareholder, on demand and without charge, with a full copy of the texts referred to in subparagraphs (1)(b)(i) and (ii).
Marginal note:Fractional share
90 A bank may issue a certificate for a fractional share or may issue in place thereof a scrip certificate in bearer form that entitles the holder to receive a certificate for a full share by exchanging scrip certificates aggregating a full share.
Marginal note:Scrip certificates
91 The directors of a bank may attach conditions to any scrip certificate issued by the bank, including conditions that
(a) the scrip certificate becomes void if not exchanged for a share certificate representing a full share before a specified date; and
(b) any shares for which the scrip certificate is exchangeable may, notwithstanding any pre-emptive right, be issued by the bank to any person and the proceeds thereof may be distributed rateably to the holders of all the scrip certificates.
Marginal note:Holders of fractional shares
92 (1) A holder of a fractional share issued by a bank is not entitled to exercise voting rights or to receive a dividend in respect of the fractional share.
Marginal note:Holders of scrip certificates
(2) A holder of a scrip certificate is not entitled to exercise voting rights or to receive a dividend in respect of the scrip certificate.
Marginal note:Dealings with registered owner
93 (1) A bank or a trustee within the meaning of section 294 may, subject to subsections 137(5) to (7) and sections 138 to 141 and 145, treat the registered owner of a security as the person exclusively entitled to vote, to receive notices, to receive any interest, dividend or other payment in respect of the security and to exercise all of the rights and powers of an owner of the security.
Marginal note:Constructive registered holder
(2) Notwithstanding subsection (1), a bank may treat a person as a registered security holder entitled to exercise all of the rights of the security holder that the person represents, if that person provides the bank with evidence as described in subsection 127(4) that the person is
(a) the heir or personal representative of a deceased security holder or the personal representative of the heirs of the deceased security holder;
(b) the personal representative of a registered security holder who is a minor, an incompetent person or a missing person; or
(c) a liquidator of, or a trustee in bankruptcy for, a registered security holder.
Marginal note:Permissible registered holder
(3) If a person on whom the ownership of a security of a bank devolves by operation of law, other than a person described in subsection (2), provides proof of that person’s authority to exercise rights or privileges in respect of a security of the bank that is not registered in the person’s name, the bank shall, subject to this Act, treat that person as entitled to exercise those rights or privileges.
Marginal note:Immunity of bank
(4) A bank is not required to inquire into the existence of, or see to the performance or observance of, any duty owed to a third person by a registered holder of any of its securities or by anyone whom it treats, as permitted or required by this Part, as the owner or registered holder thereof.
- 1991, c. 46, s. 93
- 2001, c. 9, s. 62(F)
- 2005, c. 54, s. 14
Marginal note:Minors
94 If a minor exercises any rights of ownership in the securities of a bank, no subsequent repudiation or avoidance is effective against the bank.
- 1991, c. 46, s. 94
- 2005, c. 54, s. 15(E)
Marginal note:Joint shareholders
95 A bank may treat as owners of a security the survivors of persons to whom the security was issued as joint holders, if the bank receives proof satisfactory to it of the death of any of the joint holders.
Marginal note:Transmission of securities
96 (1) Subject to the provisions of Part VII and any applicable law relating to the collection of taxes, a person referred to in paragraph 93(2)(a) is entitled to become registered as the owner of a security, or to designate another person to be registered as the owner of a security, if the person referred to in paragraph 93(2)(a) delivers to the bank or its transfer agent
(a) the original grant of probate or of letters of administration, or a copy thereof certified to be a true copy by
(i) the court that granted the probate or letters of administration,
(ii) a trust company incorporated under the Trust and Loan Companies Act or under the laws of a province, or
(iii) a lawyer or notary acting on behalf of the person referred to in paragraph 93(2)(a), or
(b) in the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province,
together with
(c) an affidavit or declaration of transmission made by the person referred to in paragraph 93(2)(a) that states the particulars of the transmission, and
(d) the security certificate that was owned by the deceased holder
(i) in the case of a transfer to the person referred to in paragraph 93(2)(a), with or without the endorsement of that person, and
(ii) in the case of a transfer to any other person, endorsed in accordance with section 111,
and accompanied by any assurance the bank may require under section 127.
Marginal note:Excepted transmissions
(2) Notwithstanding subsection (1), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to Part VII and any applicable law relating to the collection of taxes, to become registered as the owner or to designate a person to be registered as the owner, if the personal representative delivers to the bank or its transfer agent the following documents, namely,
(a) the security certificate that was owned by the deceased holder; and
(b) reasonable proof of the governing laws, of the deceased holder’s interest in the security and of the right of the personal representative or the designated person to become the registered shareholder.
Marginal note:Right of bank to treat as owner
(3) Subject to Part VII, delivery of the documents referred to in this section empowers a bank or its transfer agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in paragraph 93(2)(a) or to such person as the person referred to in that paragraph may designate and, thereafter, to treat the person who becomes so registered as the owner of that security.
- 1991, c. 46, ss. 96, 575
Marginal note:Over-issue
97 (1) The provisions of this Part that validate a security or compel its issue or reissue do not apply to the extent that a validation, issue or reissue would result in over-issue, but
(a) if a valid security similar in all respects to the security involved in the over-issue is reasonably available for purchase, the person entitled to the validation or issue may compel the issuer to purchase and deliver such a security to that person against surrender of the security that the person holds; or
(b) if a valid security similar in all respects to the security involved in the over-issue is not reasonably available for purchase, the person entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.
Marginal note:Retroactive validation
(2) Where an issuer is subsequently authorized to issue securities of a number equal to or exceeding the number of securities previously authorized plus the amount of the securities over-issued, the securities so over-issued are valid from the date of their issue.
Marginal note:Payment not a purchase or redemption
(3) A purchase or payment by an issuer under subsection (1) is not a purchase or payment in respect of which section 71 or 77 applies.
Marginal note:Burden of proof
98 In any action on a security,
(a) unless specifically denied in the pleadings, each signature on the security or in a necessary endorsement is admitted;
(b) a signature on the security is presumed to be genuine and authorized but, if the effectiveness of the signature is put in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;
(c) if a signature is admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defence or a defect going to the validity of the security; and
(d) if the defendant establishes that a defence or defect exists, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or any person under whom the plaintiff claims.
Marginal note:Securities fungible
99 Unless otherwise agreed, and subject to any applicable law, regulation or stock exchange rule, a person required to deliver securities may deliver any security of the specified issue in bearer form or registered in the name of the transferee or endorsed to the transferee or in blank.
Marginal note:Notice of defect
100 (1) Even against a purchaser for value and without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated therein by reference to another instrument, statute, rule, regulation or order to the extent that the terms so referred to do not conflict with the stated terms, but such a reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, notwithstanding that the security expressly states that a person accepting it admits the notice.
Marginal note:Purchaser for value
(2) A security is valid in the hands of a purchaser for value without notice of any defect going to its validity.
Marginal note:Lack of genuineness
(3) Except as provided in section 101, the fact that a security is not genuine is a complete defence even against a purchaser for value and without notice.
Marginal note:Ineffective defences
(4) All defences of an issuer, including non-delivery and conditional delivery of a security but not including lack of genuineness, are ineffective against a purchaser for value without notice of the particular defence.
Marginal note:Staleness as defect notice
(5) After an event that creates a right to immediate performance of the principal obligation evidenced by a security, or that sets a date on or after which a security is to be presented or surrendered for redemption or exchange, a purchaser is deemed to have notice of any defect in its issue or of any defence of the issuer
(a) if the event requires the payment of money or the delivery of securities, or both, on presentation or surrender of the security, and the funds or securities are available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or
(b) if the purchaser takes the security more than two years after the date set for presentation or surrender or the date on which the performance became due.
Marginal note:Unauthorized signature
101 An unauthorized signature on a security before or in the course of issue is ineffective, except that the signature is effective in favour of a purchaser for value and without notice of the lack of authority, if the signing has been done by
(a) an authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, or of similar securities, or their immediate preparation for signing; or
(b) an employee of the issuer or of a person referred to in paragraph (a) who, in the ordinary course of the employee’s duties, handles the security.
Marginal note:Completion or alteration
102 (1) Where a security contains the signatures necessary to its issue or transfer but is incomplete in any other respect,
(a) any person may complete it by filling in the blanks in accordance with the person’s authority; and
(b) notwithstanding that the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.
Marginal note:Enforceability
(2) A completed security that has been improperly altered, even if fraudulently altered, remains enforceable, but only according to its original terms.
Marginal note:Warranties of agents
103 (1) A person signing a security, as authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, warrants to a purchaser for value without notice that
(a) the security is genuine;
(b) the person’s acts in connection with the issue of the security are within the person’s authority; and
(c) the person has reasonable grounds for believing that the security is in the form and within the amount the issuer is authorized to issue.
Marginal note:Limitation of liability
(2) Unless otherwise agreed, a person referred to in subsection (1) does not assume any further liability for the validity of a security.
Marginal note:Title of purchaser
104 (1) Subject to Part VII, on delivery of a security the purchaser acquires the rights in the security that the purchaser’s transferor had or had authority to convey, except that the position of a purchaser who has been a party to any fraud or illegality affecting the security or who as a prior holder had notice of an adverse claim is not improved by taking from a later bona fide purchaser.
Marginal note:Title of bona fide purchaser
(2) A bona fide purchaser, in addition to acquiring the rights of a purchaser, also acquires the security free from any adverse claim.
Marginal note:Limited interest purchaser
(3) A purchaser of a limited interest acquires rights only to the extent of the interest purchased.
Marginal note:Deemed notice of adverse claim
105 A purchaser of a security, or any securities broker for a seller or purchaser, is deemed to have notice of an adverse claim if
(a) the security, whether in bearer form or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; or
(b) the security is in bearer form and has on it a statement that it is the property of a person other than the transferor, except that the mere writing of a name on a security is not such a statement.
Marginal note:Notice of fiduciary duty
106 Notwithstanding that a purchaser, or any securities broker for a seller or purchaser, has notice that a security is held for a third person by, or is registered in the name of or endorsed by, a fiduciary, neither the purchaser nor the securities broker has any duty to inquire into the rightfulness of the transfer or any notice of an adverse claim, except that if the purchaser or securities broker for the seller or purchaser knows that the consideration is to be used for, or that the transaction is for, the personal benefit of the fiduciary or is otherwise in breach of the fiduciary’s duty, the purchaser or securities broker is deemed to have notice of an adverse claim.
Marginal note:Staleness as notice
107 An event that creates a right to immediate performance of the principal obligation evidenced by a security or that sets a date on or after which the security is to be presented or surrendered for redemption or exchange is not of itself notice of an adverse claim, except in the case of a purchase
(a) made more than one year after any date set for such a presentation or surrender; or
(b) made more than six months after any date set for payment of money against such a presentation or surrender if funds are available for payment on that date.
Marginal note:Warranties to issuer
108 (1) A person who presents a security for registration of transfer or for payment or exchange warrants to the issuer that the person is entitled to the registration, payment or exchange, except that a purchaser for value without notice of an adverse claim who receives a new, reissued or re-registered security on registration of transfer warrants only that the purchaser has no knowledge of any unauthorized signature in a necessary endorsement.
Marginal note:Warranties to purchaser
(2) A person by transferring a security to a purchaser for value warrants only that
(a) the transfer is effective and rightful;
(b) the security is genuine and has not been materially altered; and
(c) the person knows of nothing that might impair the validity of the security.
Marginal note:Warranties of intermediary
(3) Where a security is delivered by an intermediary known by the purchaser to be entrusted with delivery of the security on behalf of another or with collection of a draft or other claim to be collected against that delivery, the intermediary by that delivery warrants only the intermediary’s own good faith and authority even if the intermediary has purchased or made advances against the draft or other claim to be collected against the delivery.
Marginal note:Warranties of pledgee
(4) A pledgee or other holder for purposes of security who redelivers a security received, or after payment and on order of the debtor delivers that security to a third person, gives only the warranties of an intermediary under subsection (3).
Marginal note:Warranties of securities broker
(5) A securities broker gives to the broker’s customer, to the issuer and to a purchaser, as the case may be, the warranties provided in subsections (1) to (4) and has the rights and privileges of a purchaser under those subsections, and those warranties of and in favour of the broker acting as an agent are in addition to warranties given by the broker’s customer and warranties given in favour of the broker’s customer.
Marginal note:Right to compel endorsement
109 Where a security in registered form is delivered to a purchaser without a necessary endorsement, the purchaser may become a bona fide purchaser only as of the time the endorsement is supplied, but against the transferor the transfer is complete on delivery and the purchaser has a specifically enforceable right to have any necessary endorsement supplied.
Definition of appropriate person
110 (1) In this section, section 111, subsections 118(1), 121(4) and 126(1) and section 130, appropriate person means
(a) the person specified by the security or by special endorsement to be entitled to the security;
(b) if a person described in paragraph (a) is described as a fiduciary but is no longer serving in the described capacity, either that person or that person’s successor;
(c) if the security or endorsement mentioned in paragraph (a) specifies more than one person as fiduciaries and one or more of those persons are no longer serving in the described capacity, the remaining fiduciary or fiduciaries, whether or not a successor has been appointed;
(d) if a person described in paragraph (a) is a natural person and is without capacity to act by reason of death, incompetence, minority or other reason, the person’s fiduciary;
(e) if the security or endorsement mentioned in paragraph (a) specifies more than one person with right of survivorship and by reason of death not all of the persons can sign, the survivor or survivors;
(f) a person having power to sign under any applicable law or a power of attorney; or
(g) to the extent that a person described in any of paragraphs (a) to (f) may act through an agent, the person’s authorized agent.
Marginal note:Determining an “appropriate person”
(2) Whether the person signing is an appropriate person is determined as of the time of signing, and an endorsement by such a person does not become unauthorized for the purposes of this Part by reason of any subsequent change of circumstances.
Marginal note:Endorsement
111 (1) An endorsement of a security in registered form is made when an appropriate person signs, either on the security or on a separate document, an assignment or transfer of the security or a power to assign or transfer it, or when the signature of an appropriate person is written without more on the back of the security.
Marginal note:Special or blank
(2) An endorsement may be special or in blank.
Marginal note:Blank endorsement
(3) An endorsement in blank includes an endorsement to bearer.
Marginal note:Special endorsement
(4) A special endorsement specifies the person to whom the security is to be transferred, or who has power to transfer it.
Marginal note:Right of holder
(5) A holder may convert an endorsement in blank into a special endorsement.
Marginal note:Immunity of endorser
112 Unless otherwise agreed, the endorser by the endorsement assumes no obligation that the security will be honoured by the issuer.
Marginal note:Partial endorsement
113 An endorsement purporting to be an endorsement of only part of a security representing units intended by the issuer to be separately transferable is effective to the extent of the endorsement.
Marginal note:Effect of failure by fiduciary to comply
114 Failure of a fiduciary to comply with a controlling instrument or with the law of the jurisdiction governing the fiduciary relationship, including any law requiring the fiduciary to obtain court approval of a transfer, does not render the fiduciary’s endorsement unauthorized for the purposes of this Part.
Marginal note:Effect of endorsement without delivery
115 An endorsement of a security, whether special or in blank, does not constitute a transfer until delivery of the security on which it appears or, if the endorsement is on a separate document, until delivery of both the security and that document.
Marginal note:Endorsement in bearer form
116 An endorsement of a security in bearer form may give notice of an adverse claim under section 105 but does not otherwise affect any of the holder’s rights.
Marginal note:Effect of unauthorized endorsement
117 (1) The owner of a security may assert the ineffectiveness of an endorsement against the issuer or any purchaser, other than a purchaser for value and without notice of an adverse claim, who has in good faith received a new, reissued or re-registered security on registration of transfer, unless the owner
(a) has ratified an unauthorized endorsement of the security; or
(b) is otherwise precluded from impugning the effectiveness of an unauthorized endorsement.
Marginal note:Liability of issuer
(2) An issuer who registers the transfer of a security on an unauthorized endorsement is liable for improper registration.
Marginal note:Warranties of guarantor of signature
118 (1) A person who guarantees the signature of an endorser of a security warrants that, at the time of signing,
(a) the signature was genuine;
(b) the signer was an appropriate person to endorse; and
(c) the signer had legal capacity to sign.
Marginal note:Limitation of liability
(2) A person who guarantees the signature of an endorser does not otherwise warrant the rightfulness of the transfer to which the signature relates.
Marginal note:Warranties of guarantor of endorsement
(3) A person who guarantees the endorsement of a security warrants both the signature and the rightfulness, in all respects, of the transfer to which the signature relates, but an issuer may not require a guarantee of endorsement as a condition to registration of transfer.
Marginal note:Extent of warrantor’s liability
(4) The warranties referred to in subsections (1) to (3) are made to any person who, relying on the guarantee, takes or deals with the security, and the guarantor is liable to such a person for any loss resulting from breach of warranty.
Marginal note:Constructive delivery of a security
119 Delivery to a purchaser occurs when
(a) the purchaser or a person designated by the purchaser acquires possession of a security;
(b) the purchaser’s securities broker acquires possession of a security specially endorsed to or issued in the name of the purchaser;
(c) the purchaser’s securities broker sends the purchaser confirmation of the purchase and the broker in the broker’s records identifies a specific security as belonging to the purchaser; or
(d) in respect of an identified security to be delivered while still in the possession of a third person, that person acknowledges that it is held for the purchaser.
Marginal note:Constructive ownership of security
120 (1) A purchaser is the owner of a security held for the purchaser by a securities broker, but a purchaser is not a holder except in the cases referred to in paragraphs 119(b) and (c).
Marginal note:Ownership of part of fungible bulk
(2) If a security is part of a fungible bulk, a purchaser of the security is the owner of the proportionate interest in the fungible bulk.
Marginal note:Notice to securities broker of adverse claim
(3) Notice of an adverse claim received by a securities broker or by a purchaser after the broker takes delivery as a holder for value is not effective against the broker or the purchaser, except that, as between the broker and the purchaser, the purchaser may demand delivery of an equivalent security in respect of which no notice of an adverse claim has been received.
Marginal note:Delivery of security
121 (1) Unless otherwise agreed, if a sale of a security is made on a stock exchange or otherwise through securities brokers,
(a) the selling customer fulfils the customer’s duty to deliver when the customer delivers the security to the selling securities broker or to a person designated by the selling securities broker or causes an acknowledgement to be made to the selling securities broker that it is held for the selling securities broker; and
(b) the selling securities broker, including a correspondent broker, acting for a selling customer fulfils the securities broker’s duty to deliver by delivering the security or a like security to the buying securities broker or to a person designated by the buying securities broker or by effecting clearance of the sale in accordance with the rules of the exchange on which the transaction took place.
Marginal note:Duty to deliver
(2) Except as otherwise provided in this section and unless otherwise agreed, a transferor’s duty to deliver a security under a contract of purchase is not fulfilled until the transferor delivers the security in negotiable form to the purchaser or to a person designated by the purchaser, or causes an acknowledgement to be made to the purchaser that the security is held for the purchaser.
Marginal note:Delivery to securities broker
(3) A sale to a securities broker purchasing for the securities broker’s own account is subject to subsection (2) and not subsection (1), unless the sale is made on a stock exchange.
Marginal note:Transfer through clearing agency
(4) If a security shown in the records of a clearing agency is evidenced by
(a) a security certificate in the custody of the clearing agency or a custodian, or a nominee of either, subject to the instructions of the clearing agency, and is in bearer form or endorsed in blank by an appropriate person or registered in the name of the clearing agency or a custodian, or of a nominee of either, or
(b) an uncertificated security registered or recorded in records maintained by or on behalf of the bank in the name of the clearing agency or a custodian, or of a nominee of either, subject to the instructions of the clearing agency,
then, in addition to other methods, a transfer or pledge of the security or any interest therein may be effected by the making of an appropriate entry in the records of the clearing agency.
Marginal note:Interest in fungible bulk
(5) Under subsections (4) to (10), entries may be in respect of like securities or interests therein as part of a fungible bulk and may refer merely to a quantity of a particular security without reference to the name of the registered owner, certificate or bond number or the like and, in appropriate cases, may be on a net basis taking into account other transfers or pledges of the same security.
Marginal note:Constructive endorsement and delivery
(6) A transfer or pledge under subsections (4) to (10) has the effect of a delivery of a security in bearer form or duly endorsed in blank representing the amount of the obligation or the number of shares or rights transferred or pledged.
Marginal note:Idem
(7) If a pledge or the creation of a security interest is intended, the making of entries has the effect of a taking of delivery by the pledgee or a secured party and the pledgee or secured party shall be deemed to have taken possession for all purposes.
Marginal note:Holder
(8) A person depositing a security certificate or an uncertificated security with a clearing agency, or a transferee or pledgee of a security under subsections (4) to (10), is a holder of the security and shall be deemed to have possession of the security so deposited, transferred or pledged, as the case may be, for all purposes.
Marginal note:Not registration
(9) A transfer or pledge under subsections (4) to (10) does not constitute a registration of transfer under sections 126 to 133.
Marginal note:Error in records
(10) That entries made in the records of the clearing agency as provided in subsection (4) are not appropriate does not affect the validity or effect of the entries nor the liabilities or obligations of the clearing agency to any person adversely affected thereby.
Marginal note:Right to reclaim possession
122 (1) A person against whom the transfer of a security is wrongful for any reason, including the person’s incapacity, may, against anyone except abona fide purchaser,
(a) reclaim possession of the security or obtain possession of any new security evidencing all or part of the same rights; or
(b) claim damages.
Marginal note:Recovery where unauthorized endorsement
(2) If the transfer of a security is wrongful by reason of an unauthorized endorsement, the owner may reclaim possession of the security or a new security even from a bona fide purchaser if the ineffectiveness of the purported endorsement is asserted against the purchaser under section 117.
Marginal note:Remedies
(3) The right to reclaim possession of a security may be specially enforced, its transfer may be restrained and the security may be impounded pending litigation.
Marginal note:Right to requisites for registration
123 (1) Unless otherwise agreed, a transferor shall, on demand, supply a purchaser with proof of the transferor’s authority to transfer a security or with any other requisite that is necessary to obtain registration of the transfer of a security, but if the transfer is not for value, it is not necessary for a transferor to prove authority to transfer unless the purchaser pays the reasonable and necessary costs of the proof and transfer.
Marginal note:Rescission of transfer
(2) If a transferor fails to comply with a demand under subsection (1) within a reasonable time, the purchaser may reject or rescind the transfer.
Marginal note:Seizure of security
124 No seizure of a security or other interest evidenced thereby is effective until the person making the seizure obtains possession of the security.
Marginal note:No conversion if good faith delivery
125 An agent or bailee who in good faith, including observance of reasonable commercial standards if the agent or bailee is in the business of buying, selling or otherwise dealing with securities of a bank, has received securities and sold, pledged or delivered them according to the instructions of the agent’s or bailee’s principal is not liable for conversion or for participation in breach of fiduciary duty even though the principal has no right to dispose of the securities.
Marginal note:Duty to register transfer
126 (1) Subject to Part VII, where a security in registered form is presented for transfer, the issuer shall register the transfer if
(a) the security is endorsed by an appropriate person;
(b) reasonable assurance is given that the endorsement is genuine and effective;
(c) the issuer has no duty to inquire into adverse claims or has discharged any such duty;
(d) all applicable laws relating to the collection of taxes have been complied with;
(e) the transfer is rightful or is to a bona fide purchaser; and
(f) the fee, if any, referred to in subsection 85(2) has been paid.
Marginal note:Liability for delay
(2) Where an issuer has a duty to register a transfer of a security, the issuer is liable to the person presenting it for registration for any loss resulting from any unreasonable delay in registration or from the failure or refusal to register the transfer.
Marginal note:Assurance of endorsements
127 (1) An issuer may require an assurance that each necessary endorsement on a security is genuine and effective by requiring a guarantee of the signature of the person endorsing the security and by requiring
(a) if the endorsement is by an agent, reasonable assurance of authority to sign;
(b) if the endorsement is by a fiduciary, evidence of appointment or incumbency;
(c) if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and
(d) in any other case, assurance that corresponds as closely as practicable to the foregoing.
Definition of guarantee of the signature
(2) For the purposes of subsection (1), guarantee of the signature means a guarantee signed by or on behalf of a person whom the issuer believes, on reasonable grounds, to be a responsible person.
Marginal note:Standards
(3) An issuer may adopt reasonable standards to determine responsible persons for the purposes of subsection (2).
Definition of evidence of appointment or incumbency
(4) For the purposes of paragraph (1)(b), evidence of appointment or incumbency means
(a) in the case of a fiduciary appointed by a court and referred to in subsection 96(1), a copy of the certified court order referred to in subsection 96(1) and dated not earlier than sixty days before the day a security is presented for transfer; or
(b) in the case of any other fiduciary, a copy of a document showing the appointment or other evidence believed by the issuer to be appropriate.
Marginal note:Standards
(5) An issuer may adopt reasonable standards with respect to evidence referred to in paragraph (4)(b).
Marginal note:No notice to issuer
(6) An issuer is deemed not to have notice of the contents of any document referred to in subsection (4) that is obtained by the issuer except to the extent that the contents relate directly to appointment or incumbency.
Marginal note:Notice from additional documentation
128 If an issuer, in relation to a transfer, demands assurance other than an assurance specified in subsection 127(1) and obtains a copy of a will, trust or partnership agreement or a by-law or similar document, the issuer is deemed to have notice of all matters contained therein affecting the transfer.
Marginal note:Limited duty of inquiry
129 (1) An issuer to whom a security is presented for registration has a duty to inquire into adverse claims if
(a) the issuer receives written notice of an adverse claim at a time and in a manner that provides the issuer with a reasonable opportunity to act on it before the issue of a new, reissued or re-registered security and the notice discloses the name and address of the claimant, the registered owner and the issue of which the security is a part; or
(b) the issuer is deemed to have notice of an adverse claim from a document that it obtained under section 128.
Marginal note:Discharge of duty
(2) An issuer may discharge a duty of inquiry by any reasonable means, including notifying an adverse claimant by registered mail sent to the address provided by the adverse claimant or, if no such address has been provided, to the adverse claimant’s residence or regular place of business, that a security has been presented for registration of transfer by a named person and that the transfer will be registered unless, within thirty days after the date of mailing of the notice, either
(a) the issuer is served with a restraining order or other order of a court, or
(b) the issuer is provided with an indemnity bond sufficient in the issuer’s judgment to protect the issuer and any registrar, transfer agent or other agent of the issuer from any loss that may be incurred by any of them as a result of complying with the adverse claim.
Marginal note:Inquiry into adverse claims
130 Unless an issuer is deemed to have notice of an adverse claim from a document that it obtained under section 128 or has received notice of an adverse claim under subsection 129(1), if a security presented for registration is endorsed by the appropriate person, the issuer has no duty to inquire into adverse claims and, in particular,
(a) an issuer registering a security in the name of a person who is a fiduciary or who is described as a fiduciary is not bound to inquire into the existence, extent or correct description of the fiduciary relationship and thereafter the issuer may assume without inquiry that the newly registered owner continues to be the fiduciary until the issuer receives written notice that the fiduciary is no longer acting as such with respect to the particular security;
(b) an issuer registering a transfer on an endorsement by a fiduciary has no duty to inquire into whether the transfer is made in compliance with the document or with the law of the jurisdiction governing the fiduciary relationship; and
(c) an issuer is deemed not to have notice of the contents of any court record or any registered document even if the record or document is in the issuer’s possession and even if the transfer is made on the endorsement of a fiduciary to the fiduciary specifically or to the fiduciary’s nominee.
Marginal note:Duration of notice of adverse claim
131 A written notice of adverse claim received by an issuer is effective for twelve months after the day it was received unless the notice is renewed in writing.
Marginal note:Limitation on issuer’s liability
132 (1) Except as otherwise provided in any applicable law relating to the collection of taxes, an issuer is not liable to the owner or any other person who incurs a loss as a result of the registration of a transfer of a security if
(a) the necessary endorsements were on or with the security; and
(b) the issuer had no duty to inquire into adverse claims or had discharged any such duty.
Marginal note:Duty of issuer on default
(2) If an issuer has registered a transfer of a security to a person not entitled to it, the issuer shall on demand deliver a like security to the owner unless
(a) the issuer is not liable by virtue of subsection (1);
(b) the owner is precluded by subsection 133(1) from asserting any claim; or
(c) the delivery would result in over-issue in respect of which section 97 applies.
Marginal note:Lost or stolen security
133 (1) Where a security has been lost, apparently destroyed or wrongfully taken, and the owner fails to notify the issuer of that fact by giving the issuer written notice of the owner’s adverse claim within a reasonable time after the owner knows of the loss, destruction or taking, then, if the issuer has registered a transfer of the security before receiving the notice, the owner is precluded from asserting against the issuer any claim to a new security.
Marginal note:Duty to issue new security
(2) Where the owner of a security claims that the security has been lost, destroyed or wrongfully taken, the issuer shall issue a new security in place of the original security if the owner
(a) so requests before the issuer has notice that the security has been acquired by a bona fide purchaser;
(b) provides the issuer with a sufficient indemnity bond; and
(c) satisfies any other reasonable requirements imposed by the issuer.
Marginal note:Duty to register transfer
(3) If, after the issue of a new security under subsection (2), a bona fide purchaser of the original security presents the original security for registration of transfer, the issuer shall register the transfer unless registration would result in over-issue in respect of which section 97 applies.
Marginal note:Right of issuer to recover
(4) In addition to the rights that an issuer has by reason of an indemnity bond, the issuer may recover the new security issued under subsection (2) from the person to whom it was issued or any person taking under that person other than a bona fide purchaser.
Marginal note:Authenticating agent’s duty
134 An authenticating trustee, registrar, transfer agent or other agent of an issuer has, in respect of the issue, registration of transfer and cancellation of a security of the issuer,
(a) a duty to the issuer to exercise good faith and reasonable diligence; and
(b) the same obligations to the holder or owner of a security and the same rights, privileges and immunities as the issuer.
Marginal note:Notice to agent
135 Notice to an authenticating trustee, registrar, transfer agent or other agent of an issuer is notice to the issuer in respect of the functions performed by the agent.
PART VICorporate Governance
Shareholders
Marginal note:Place of meetings
136 (1) Meetings of shareholders of a bank shall be held at the place within Canada provided for in the by-laws of the bank or, in the absence of any such provision, at the place within Canada that the directors determine.
Marginal note:Participation by electronic means
(2) Unless the by-laws provide otherwise, any person who is entitled to attend a meeting of shareholders may participate in the meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting if the bank makes one available. A person who is participating in a meeting by one of those means is deemed for the purposes of this Act to be present at the meeting.
Marginal note:Regulations
(3) The Governor in Council may make regulations respecting the manner of and conditions for participating in a meeting by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting.
- 1991, c. 46, s. 136
- 2005, c. 54, s. 16
Marginal note:Calling meetings
137 (1) The directors of a bank
(a) shall, after the meeting called pursuant to subsection 46(1), call the first annual meeting of shareholders of the bank, which meeting must be held not later than six months after the end of the first financial year of the bank, and subsequently call an annual meeting of shareholders, which meeting must be held not later than six months after the end of each financial year; and
(b) may at any time call a special meeting of shareholders.
Marginal note:Order to delay calling annual meeting
(2) Despite subsection (1), the bank may apply to the court for an order extending the time for calling an annual meeting.
Marginal note:Obligation to notify Superintendent
(3) The bank shall give notice of the application to the Superintendent before any hearing concerning the application and shall provide the Superintendent with a copy of any order that is issued.
Marginal note:Superintendent’s right to appear
(4) The Superintendent is entitled to appear and be heard in person or by counsel at any hearing concerning the application.
Marginal note:Authority to fix record date
(5) The directors may in advance fix a record date, that is within the prescribed period, for the determination of shareholders for any purpose, including for a determination of which shareholders are entitled to
(a) receive payment of a dividend;
(b) participate in a liquidation distribution;
(c) receive notice of a meeting of shareholders; or
(d) vote at a meeting of shareholders.
Marginal note:Determination of record date
(6) If no record date is fixed,
(a) the record date for the determination of shareholders who are entitled to receive notice of a meeting of shareholders is
(i) at the close of business on the day immediately preceding the day on which the notice is given, or
(ii) if no notice is given, the day on which the meeting is held; and
(b) the record date for the determination of shareholders for any other purpose, other than to establish a shareholder’s right to vote, is at the close of business on the day on which the directors pass a resolution in respect of that purpose.
Marginal note:Notice of record date
(7) If a record date is fixed and unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the securities register at the close of business on the day on which the directors fix the record date, notice of the record date shall be given within the prescribed period by
(a) advertisement in a newspaper in general circulation in the place where the bank’s head office is situated and in each place in Canada where the bank has a transfer agent or where a transfer of its shares may be recorded; and
(b) written notice to each stock exchange in Canada on which the bank’s shares are listed for trading.
- 1991, c. 46, s. 137
- 2005, c. 54, s. 17
Marginal note:Notice of meeting
138 (1) Notice of the time and place of a meeting of shareholders of a bank shall be sent within the prescribed period to
(a) each shareholder entitled to vote at the meeting;
(b) each director;
(c) the auditor or auditors of the bank; and
(d) the Superintendent.
Marginal note:Exception
(1.01) In the case of a bank that is not a distributing bank, notice may be sent within any shorter period specified in its by-laws.
Marginal note:Number of eligible votes
(1.1) A bank with equity of twelve billion dollars or more shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 156.09(1), that may be cast at the meeting as of the record date for determining those shareholders entitled to receive the notice of meeting or, if there are to be separate votes of shareholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.
Marginal note:Publication in newspaper
(2) In addition to the notice required under subsection (1), where any class of shares of a bank is publicly traded on a recognized stock exchange in Canada, notice of the time and place of a meeting of shareholders shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in general circulation in the place where the head office of the bank is situated and in each place in Canada where the bank has a transfer agent or where a transfer of the bank’s shares may be recorded.
- 1991, c. 46, s. 138
- 2001, c. 9, s. 63
- 2005, c. 54, s. 18
- 2007, c. 6, s. 132
- 2012, c. 5, s. 5
Marginal note:Notice not required
139 (1) A notice of a meeting is not required to be sent to shareholders who are not registered on the records of the bank or the bank’s transfer agent on the record date fixed under paragraph 137(5)(c) or determined under paragraph 137(6)(a).
Marginal note:Effect of default
(2) Failure to receive a notice of a meeting of shareholders does not deprive a shareholder of the right to vote at the meeting.
- 1991, c. 46, s. 139
- 2005, c. 54, s. 19
Marginal note:Notice of adjourned meeting
140 (1) If a meeting of shareholders is adjourned for less than thirty days, it is not necessary, unless the by-laws otherwise provide, to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned.
Marginal note:Notice where adjournment is longer
(2) If a meeting of shareholders is adjourned by one or more adjournments for a total of thirty days or more, notice of the continuation of the meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than ninety days, subsection 156.04(1) does not apply.
- 1991, c. 46, s. 140
- 1997, c. 15, s. 8
Marginal note:Special business
141 (1) All matters dealt with at a special meeting of shareholders and all matters dealt with at an annual meeting of shareholders, except consideration of the financial statements, report of the auditor or auditors, election of directors, remuneration of directors and reappointment of the incumbent auditor or auditors, are deemed to be special business.
Marginal note:Notice of special business
(2) Notice of a meeting of shareholders at which special business is to be transacted must
(a) state the nature of the special business in sufficient detail to permit a shareholder to form a reasoned judgment thereon; and
(b) contain the text of any special resolution to be submitted to the meeting.
Marginal note:Waiver of notice
142 (1) A shareholder and any other person entitled to attend a meeting of shareholders may in any manner waive notice of a meeting of shareholders.
Marginal note:Idem
(2) Attendance at a meeting of shareholders is a waiver of notice of the meeting, except when a person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
- 1991, c. 46, s. 142
- 2001, c. 9, s. 64(F)
Marginal note:Proposals
143 (1) Subject to subsections (1.1) and (1.2), a registered holder or beneficial owner of shares that may be voted at an annual meeting of shareholders may
(a) submit to the bank notice of any matter that they propose to raise at the meeting (in this section and section 144 referred to as a “proposal”); and
(b) discuss at the meeting any matter in respect of which they would have been entitled to submit a proposal.
Marginal note:Eligibility to submit proposal
(1.1) To be eligible to submit a proposal a person shall
(a) for at least the prescribed period be the registered holder or beneficial owner of at least the prescribed number of the bank’s outstanding shares; or
(b) have the support of persons who, in the aggregate and including or not including the person who submits the proposal, have for at least the prescribed period been the registered holders or beneficial owners of at least the prescribed number of the bank’s outstanding shares.
Marginal note:Information to be provided
(1.2) A proposal is to be accompanied by the following information:
(a) the name and address of the person submitting the proposal and the names and addresses of their supporters, if any; and
(b) the number of shares held or owned by the person and their supporters, if any, and the date that the shares were acquired.
Marginal note:Information not part of proposal
(1.3) The information provided under subsection (1.2) does not form part of a proposal or of the supporting statement referred to in subsection (3) and is not to be included for the purpose of the prescribed maximum number of words referred to in subsection (3).
Marginal note:Proof may be required
(1.4) If the bank requests within the prescribed period that a person provide proof that they are eligible to submit a proposal, the person shall within the prescribed period provide proof that they meet the requirements of subsection (1.1).
Marginal note:Management proxy
(2) A bank that solicits proxies shall, in the management proxy circular required by subsection 156.05(1), set out any proposal of a shareholder submitted for consideration at a meeting of shareholders or attach the proposal to the management proxy circular.
Marginal note:Supporting statement
(3) At the request of the person who submits a proposal, the bank shall set out in the management proxy circular or attach to it the person’s statement in support of the proposal and their name and address. The statement and proposal together are not to exceed the prescribed maximum number of words.
Marginal note:Nomination of directors
(4) A proposal may include nominations for the election of directors if it is signed by one or more registered holders or beneficial owners of shares representing in the aggregate not less than 5% of the shares of the bank or 5% of the shares of a class of its shares entitled to vote at the meeting at which the proposal is to be presented.
Marginal note:Exemption
(5) A bank is not required to comply with subsections (2) and (3) if
(a) the proposal is not submitted to the bank at least the prescribed number of days before the anniversary date of the notice of meeting that was sent to shareholders in respect of the previous annual meeting of shareholders;
(b) it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal grievance against the bank or its directors, officers or security holders;
(b.1) it clearly appears that the proposal does not relate in a significant way to the business or affairs of the bank;
(c) the person submitting the proposal failed within the prescribed period before the bank receives their proposal to present, in person or by proxy, at a meeting of shareholders a proposal that at their request had been set out in or attached to a management proxy circular;
(d) substantially the same proposal was set out in or attached to a management proxy circular or dissident’s proxy circular relating to, and presented to shareholders at, a meeting of shareholders held within the prescribed period before the receipt of the proposal and did not receive the prescribed minimum amount of support at the meeting; or
(e) the rights conferred by subsections (1) to (4) are being abused to secure publicity.
Marginal note:Bank may refuse to include proposal
(5.1) If a person who submits a proposal fails to continue to hold or own shares in accordance with paragraph (1.1)(a) or, as the case may be, does not continue to have the support of persons who are in the aggregate the registered holders or beneficial owners of the prescribed number of shares in accordance with paragraph (1.1)(b) until the end of the meeting, the bank is not required to set out any proposal submitted by that person in or attach it to a management proxy circular for any meeting held within the prescribed period after the day of the meeting.
Marginal note:Immunity for proposal and statement
(6) No bank or person acting on behalf of a bank incurs any liability by reason only of circulating a proposal or statement in compliance with subsections (2) and (3).
- 1991, c. 46, s. 143
- 1997, c. 15, s. 9
- 2005, c. 54, s. 20
Marginal note:Notice of refusal
144 (1) If a bank refuses to include a proposal in a management proxy circular, it shall in writing notify the person submitting the proposal of its intention to omit the proposal from the management proxy circular and of the reasons for the refusal. It shall notify the person within the prescribed period after either the day on which it receives the proposal or, if it has requested proof under subsection 143(1.4), the day on which it receives the proof.
Marginal note:Application to court
(2) On the application of a person submitting a proposal who claims to be aggrieved by a bank’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order that it thinks fit.
Marginal note:Idem
(3) A bank or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the bank to omit the proposal from the management proxy circular, and the court, if it is satisfied that subsection 143(5) applies, may make such order as it thinks fit.
Marginal note:Notice to Superintendent
(4) An applicant under subsection (2) or (3) shall give the Superintendent written notice of the application and the Superintendent may appear and be heard at the hearing of the application in person or by counsel.
- 1991, c. 46, s. 144
- 2005, c. 54, s. 21
Marginal note:List of shareholders entitled to notice
145 (1) A bank shall prepare an alphabetical list of shareholders entitled to receive notice of a meeting showing the number of shares held by each shareholder
(a) if a record date is fixed under paragraph 137(5)(c), no later than 10 days after that date; and
(b) if no record date is fixed, on the record date determined under paragraph 137(6)(a).
Marginal note:Voting list
(2) The bank shall prepare an alphabetical list of shareholders entitled to vote as of the record date showing the number of shares held by each shareholder
(a) if a record date is fixed under paragraph 137(5)(d), no later than 10 days after that date; and
(b) if no record date is fixed under paragraph 137(5)(d), no later than 10 days after a record date is fixed under paragraph 137(5)(c) or no later than the record date determined under paragraph 137(6)(a), as the case may be.
Marginal note:Entitlement to vote
(3) Subject to section 156.09, a shareholder whose name appears on a list prepared under subsection (2) is entitled to vote the shares shown opposite their name.
Marginal note:Examination of list
(4) A shareholder may examine the list of shareholders
(a) during usual business hours at the head office of the bank or at the place where its central securities register is maintained; and
(b) at the meeting of shareholders for which the list was prepared.
- 1991, c. 46, s. 145
- 2001, c. 9, s. 65
- 2005, c. 54, s. 22
Marginal note:Quorum
146 (1) Unless the by-laws otherwise provide, a quorum of shareholders is present at a meeting of shareholders if the holders of a majority of the shares who are entitled to vote at the meeting are present in person or represented by proxyholders.
Marginal note:Idem
(2) If a quorum is present at the opening of a meeting of shareholders, the shareholders present may, unless the by-laws otherwise provide, proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting.
Marginal note:Idem
(3) If a quorum is not present at the opening of a meeting of shareholders, the shareholders present may adjourn the meeting to a fixed time and place but may not transact any other business.
Marginal note:One shareholder meeting
147 If a bank has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or represented by a proxyholder constitutes a meeting of shareholders or a meeting of shareholders of that class or series.
Marginal note:One share — one vote
148 Subject to section 156.09, if a share of a bank entitles the holder of the share to vote at a meeting of shareholders, that share entitles the shareholder to one vote at the meeting.
- 1991, c. 46, s. 148
- 2001, c. 9, s. 66
Marginal note:Representative shareholder
149 (1) If an entity is a shareholder of a bank, the bank shall recognize any natural person authorized by a resolution of the directors or governing body or similar authority of the entity to represent it at meetings of shareholders of the bank.
Marginal note:Idem
(2) A natural person authorized under subsection (1) to represent an entity may exercise on behalf of the entity all the powers the entity could exercise if it were a natural person as well as a shareholder.
Marginal note:Joint shareholders
150 Unless the by-laws otherwise provide, if two or more persons hold shares jointly, one of those holders present at a meeting of shareholders may in the absence of the others vote the shares, but if two or more of those persons who are present in person or represented by proxyholder vote, they shall vote as one on the shares jointly held by them.
Marginal note:Voting by hands or ballot
151 (1) Unless the by-laws otherwise provide, voting at a meeting of shareholders shall take place by show of hands except when a ballot is demanded by either a shareholder or proxyholder entitled to vote at the meeting.
Marginal note:Ballot
(2) A shareholder or proxyholder may demand a ballot either before or after any vote by show of hands.
Marginal note:Electronic voting
(3) Despite subsection (1) and unless the by-laws provide otherwise, any vote referred to in that subsection may be held entirely by means of a telephonic, electronic or other communication facility if the bank makes one available.
Marginal note:Voting while participating electronically
(4) Unless the by-laws provide otherwise, any person who is participating in a meeting of shareholders under subsection 136(2) and entitled to vote at that meeting may vote by means of the telephonic, electronic or other communication facility that the bank has made available for that purpose.
Marginal note:Regulations
(5) The Governor in Council may make regulations respecting the manner of and conditions for voting at a meeting of shareholders by means of a telephonic, electronic or other communication facility.
- 1991, c. 46, s. 151
- 2005, c. 54, s. 23
Marginal note:Resolution in lieu of meeting
152 (1) Except where a written statement is submitted by a director under section 174 or by an auditor under subsection 321(1),
(a) a resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders; and
(b) a resolution in writing dealing with all matters required by this Act to be dealt with at a meeting of shareholders, and signed by all the shareholders entitled to vote at that meeting, satisfies all the requirements of this Act relating to meetings of shareholders.
Marginal note:Filing resolution
(2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings of shareholders.
Marginal note:Evidence
(3) Unless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.
- 1991, c. 46, s. 152
- 2005, c. 54, s. 24
Marginal note:Requisitioned meeting
153 (1) Shareholders who together hold not less than 5 per cent of the issued and outstanding shares of a bank that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition.
Marginal note:Form
(2) A requisition referred to in subsection (1)
(a) must state the business to be transacted at the meeting and must be sent to each director and to the head office of the bank; and
(b) may consist of several documents of like form, each signed by one or more shareholders.
Marginal note:Directors calling meeting
(3) On receipt of a requisition referred to in subsection (1), the directors shall call a meeting of shareholders to transact the business stated in the requisition, unless
(a) a record date has been fixed under paragraph 137(5)(c) and notice of it has been given under subsection 137(7);
(b) the directors have called a meeting of shareholders and have given notice thereof under section 138; or
(c) the business of the meeting as stated in the requisition includes matters described in paragraphs 143(5)(b) to (e).
Marginal note:Shareholders’ power
(4) If the directors do not call a meeting within twenty-one days after receiving the requisition referred to in subsection (1), any shareholder who signed the requisition may call the meeting.
Marginal note:Procedure
(5) A meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called pursuant to the by-laws and this Act.
Marginal note:Reimbursement
(6) Unless the shareholders otherwise resolve at a meeting called under subsection (4), the bank shall reimburse the shareholders for any expenses reasonably incurred by them in requisitioning, calling and holding the meeting.
- 1991, c. 46, s. 153
- 2005, c. 54, s. 25
Marginal note:Court may order meeting to be called
154 (1) A court may, on the application of a director, a shareholder who is entitled to vote at a meeting of shareholders or the Superintendent, order a meeting to be called, held or conducted in the manner that the court directs if
(a) it is impracticable to call the meeting within the time or in the manner in which it is to be called;
(b) it is impracticable to conduct the meeting in the manner required by this Act or the by-laws; or
(c) the court thinks that the meeting ought to be called, held or conducted within the time or in the manner that it directs for any other reason.
Marginal note:Varying quorum
(2) Without restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Act be varied or dispensed with at a meeting called, held and conducted pursuant to this section.
Marginal note:Valid meeting
(3) A meeting called, held and conducted pursuant to this section is for all purposes a meeting of shareholders of the bank duly called, held and conducted.
- 1991, c. 46, s. 154
- 2005, c. 54, s. 26
Marginal note:Court review of election
155 (1) A bank or a shareholder or director of a bank may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the bank.
Marginal note:Powers of court
(2) On an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,
(a) an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;
(b) an order declaring the result of the disputed election or appointment;
(c) an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the bank until a new election is held or the new appointment is made; and
(d) an order determining the voting rights of shareholders and of persons claiming to own shares.
Marginal note:Notice to Superintendent
156 (1) A person who makes an application under subsection 154(1) or 155(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.
Marginal note:Superintendent representation
(2) The Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).
Proxies
Marginal note:Definitions
156.01 The definitions in this section apply in this section and sections 156.02 to 156.08.
- intermediary
intermediary means a person who holds a security on behalf of another person who is not the registered holder of the security, and includes
(a) a securities broker or dealer required to be registered to trade or deal in securities under the laws of any jurisdiction;
(b) a securities depositary;
(c) a financial institution;
(d) in respect of a clearing agency, a securities dealer, trust company, association within the meaning of section 2 of the Cooperative Credit Associations Act, bank or other person, including another clearing agency, on whose behalf the clearing agency or its nominee holds securities of an issuer;
(e) a trustee or administrator of a self-administered retirement savings plan, retirement income fund or education savings plan or another similar self-administered savings or investment plan that is registered under the Income Tax Act;
(f) a nominee of a person referred to in any of paragraphs (a) to (e); and
(g) a person who performs functions similar to those performed by a person referred to in any of paragraphs (a) to (e) and holds a security registered in their name, or in the name of their nominee, on behalf of another person who is not the registered holder of the security. (intermédiaire)
- registrant
registrant[Repealed, 2005, c. 54, s. 27]
- solicit
solicit or solicitation includes
(a) a request for a proxy, whether or not accompanied by or included in a form of proxy,
(b) a request to execute or not to execute a form of proxy or to revoke a proxy,
(c) the sending of a form of proxy or other communication to a shareholder under circumstances reasonably calculated to result in the procurement, withholding or revocation of a proxy, and
(d) the sending of a form of proxy to a shareholder under section 156.04,
but does not include
(e) the sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder,
(f) the performance of administrative acts or professional services on behalf of a person soliciting a proxy,
(g) the sending by a registrant of the documents referred to in section 156.07, or
(h) a solicitation by a person in respect of shares of which that person is the beneficial owner. (sollicitation)
- solicitation by or on behalf of the management of a bank
solicitation by or on behalf of the management of a bank means a solicitation by any person pursuant to a resolution or instruction of, or with the acquiescence of, the directors or a committee of the directors of the bank. (sollicitation effectuée par la direction d’une banque ou pour son compte)
- 1997, c. 15, s. 10
- 2005, c. 54, s. 27
Marginal note:Appointing proxyholder
156.02 (1) A shareholder who is entitled to vote at a meeting of shareholders may, by executing a form of proxy, appoint a proxyholder or one or more alternate proxyholders, who are not required to be shareholders, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.
Marginal note:Execution of proxy
(2) A form of proxy shall be executed by a shareholder or by a shareholder’s attorney authorized in writing to do so.
Marginal note:Limit on authority
(3) No appointment of a proxyholder provides authority for the proxyholder to act in respect of the appointment of an auditor or the election of a director unless a nominee proposed in good faith for the appointment or election is named in the form of proxy, a management proxy circular, a dissident’s proxy circular or a proposal under subsection 143(1).
Marginal note:Required information
(4) A form of proxy must indicate, in bold-face type, that the shareholder by whom or on whose behalf it is executed may appoint a proxyholder, other than a person designated in the form of proxy, to attend and act on the shareholder’s behalf at a meeting to which the proxy relates, and must contain instructions as to the manner in which the shareholder may do so.
Marginal note:Validity of proxy
(5) A proxy is valid only at the meeting in respect of which it is given or at a continuation of the meeting after an adjournment.
Marginal note:Revocation of proxy
(6) A shareholder may revoke a proxy
(a) by depositing an instrument in writing executed by the shareholder or by the shareholder’s attorney authorized in writing to do so
(i) at the head office of the bank at any time up to and including the last business day before the day of a meeting, or a continuation of the meeting after an adjournment, at which the proxy is to be used, or
(ii) with the chairperson of the meeting on the day of the meeting or a continuation of the meeting after an adjournment; or
(b) in any other manner permitted by law.
- 1997, c. 15, s. 10
Marginal note:Deposit of proxies
156.03 The directors may specify, in a notice calling a meeting of shareholders or a continuation of a meeting of shareholders after an adjournment, a time before which executed forms of proxy to be used at the meeting or the continued meeting must be deposited with the bank or its transfer agent. The time specified may not be more than forty-eight hours, excluding Saturdays and holidays, before the meeting or the continued meeting.
- 1997, c. 15, s. 10
Marginal note:Mandatory solicitation
156.04 (1) Subject to subsection 140(2) and subsection (2), the management of a bank shall, concurrently with giving notice of a meeting of shareholders, send a form of proxy in prescribed form to each shareholder entitled to receive notice of the meeting.
Marginal note:Exception
(2) The management of a bank is not required to send a form of proxy under subsection (1) if the bank
(a) is not a distributing bank; and
(b) has 50 or fewer shareholders who are entitled to vote at a meeting, two or more joint holders of a share being counted as one shareholder.
- 1997, c. 15, s. 10
- 2005, c. 54, s. 28
Marginal note:Soliciting proxies
156.05 (1) A person shall not solicit proxies unless
(a) in the case of solicitation by or on behalf of the management of a bank, a management proxy circular in prescribed form, either as an appendix to, or as a separate document accompanying, the notice of the meeting, is sent to the auditor or auditors of the bank and to each shareholder whose proxy is solicited; and
(b) in the case of any other solicitation, a dissident’s proxy circular in prescribed form stating the purposes of the solicitation is sent to the auditor or auditors of the bank, to each shareholder whose proxy is solicited and to the bank.
Marginal note:Copy to Superintendent
(2) A person who sends a management proxy circular or dissident’s proxy circular shall at the same time file with the Superintendent
(a) in the case of a management proxy circular, a copy of it together with a copy of the notice of meeting, form of proxy and any other documents for use in connection with the meeting; and
(b) in the case of a dissident’s proxy circular, a copy of it together with a copy of the form of proxy and any other documents for use in connection with the meeting.
Marginal note:Exemption by Superintendent
(3) On the application of an interested person, the Superintendent may, on any terms that the Superintendent thinks fit, exempt the person from any of the requirements of subsection (1) and section 156.04, and the exemption may be given retroactive effect.
Marginal note:Reporting exemptions
(4) The Superintendent shall set out in a periodical available to the public the particulars of each exemption granted under subsection (3) together with the reasons for the exemption.
- 1997, c. 15, s. 10
Marginal note:Attendance at meeting
156.06 (1) A person who solicits a proxy and is appointed proxyholder shall attend in person or cause an alternate proxyholder to attend the meeting in respect of which the proxy is valid, and the proxyholder or alternate proxyholder shall comply with the directions of the shareholder who executed the form of proxy.
Marginal note:Rights of proxyholder
(2) A proxyholder or an alternate proxyholder has the same rights as the appointing shareholder to speak at a meeting of shareholders in respect of any matter, to vote by way of ballot at the meeting and, except where a proxyholder or an alternate proxyholder has conflicting instructions from more than one shareholder, to vote at the meeting in respect of any matter by way of a show of hands.
Marginal note:Vote by show of hands
(3) Despite subsections (1) and (2) and unless a shareholder or proxyholder demands a ballot, if the chairperson of a meeting of shareholders declares to the meeting that, if a ballot were conducted, the total number of votes attached to shares represented at the meeting by proxy required to be voted against what, to the knowledge of the chairperson, would be the decision of the meeting on a matter or group of matters is less than 5% of all the votes that might be cast by shareholders in person or by proxy,
(a) the chairperson may conduct the vote in respect of that matter or group of matters by way of a show of hands; and
(b) a proxyholder or alternate proxyholder may vote in respect of that matter or group of matters by way of a show of hands.
- 1997, c. 15, s. 10
- 2005, c. 54, s. 30
Marginal note:Duty of intermediary
156.07 (1) Shares of a bank that are registered in the name of an intermediary or an intermediary’s nominee and not beneficially owned by the intermediary may not be voted unless the intermediary sends to the beneficial owner
(a) a copy of the notice of the meeting, annual statement, management proxy circular and dissident’s proxy circular and any other documents, other than the form of proxy, that were sent to shareholders by or on behalf of any person for use in connection with the meeting; and
(b) a written request for voting instructions except if the intermediary has already received written voting instructions from the beneficial owner.
Marginal note:When documents to be sent
(2) The intermediary shall send the documents referred to in subsection (1) without delay after they receive the documents referred to in paragraph (1)(a).
Marginal note:Restriction on voting
(3) An intermediary or a proxyholder appointed by them may not vote shares that the intermediary does not beneficially own and that are registered in the name of the intermediary or their nominee unless the intermediary or proxyholder, as the case may be, receives written voting instructions from the beneficial owner.
Marginal note:Copies
(4) A person by or on behalf of whom a solicitation is made shall on request and without delay provide the intermediary, at the person’s expense, with the necessary number of copies of the documents referred to in paragraph (1)(a).
Marginal note:Instructions to intermediary
(5) The intermediary shall vote or appoint a proxyholder to vote in accordance with any written voting instructions received from the beneficial owner.
Marginal note:Beneficial owner as proxyholder
(6) If a beneficial owner so requests and provides an intermediary with the appropriate documentation, the intermediary shall appoint the beneficial owner or a nominee of the beneficial owner as proxyholder.
Marginal note:Effect of intermediary’s failure to comply
(7) The failure of an intermediary to comply with any of subsections (1) to (6) does not render void any meeting of shareholders or any action taken at the meeting.
Marginal note:Intermediary may not vote
(8) Nothing in this Part gives an intermediary the right to vote shares that they are otherwise prohibited from voting.
- 1997, c. 15, s. 10
- 2005, c. 54, s. 31
Marginal note:Exemption
156.071 The Governor in Council may make regulations respecting the conditions under which a bank is exempt from any of the requirements of sections 156.02 to 156.07.
- 2005, c. 54, s. 31
Marginal note:Restraining order
156.08 (1) If a form of proxy, management proxy circular or dissident’s proxy circular contains an untrue statement of a material fact or omits to state a material fact that is required to be contained in it or that is necessary to make a statement contained in it not misleading in light of the circumstances in which the statement is made, an interested person or the Superintendent may apply to a court and the court may make any order it thinks fit, including
(a) an order restraining the solicitation or the holding of the meeting, or restraining any person from implementing or acting on a resolution passed at the meeting, to which the form of proxy, management proxy circular or dissident’s proxy circular relates;
(b) an order requiring correction of any form of proxy or proxy circular and a further solicitation; and
(c) an order adjourning the meeting.
Marginal note:Notice of application
(2) Where a person other than the Superintendent is an applicant under subsection (1), the applicant shall give notice of the application to the Superintendent and the Superintendent is entitled to appear and to be heard in person or by counsel.
- 1997, c. 15, s. 10
Restrictions on Voting
Meaning of eligible votes
156.09 (1) In this section, eligible votes means the total number of votes that may be cast by or on behalf of shareholders on a vote of shareholders or a vote of holders of a class or series of shares, as the case may be, in respect of any particular matter, calculated without regard to subsection (2).
Marginal note:Restriction
(2) At a meeting of shareholders of a bank with equity of twelve billion dollars or more, no person and no entity controlled by any person may, in respect of any vote of shareholders or holders of any class or series of shares of the bank, cast votes in respect of any shares beneficially owned by the person or the entity that are, in aggregate, more than 20 per cent of the eligible votes that may be cast in respect of that vote.
Marginal note:Proxyholders
(3) No person who is a proxyholder for a person or for an entity controlled by a person may cast votes to which the proxy relates that the person or entity may not cast by reason of subsection (2).
Marginal note:Exception
(4) If a person is, with respect to a bank, a person referred to in subsection 375(1), subsections (2) and (3) do not apply with respect to votes cast by or on behalf of the person during any period that the person is entitled under section 375 to remain a major shareholder of the bank.
Marginal note:Exception
(5) Subsections (2) and (3) do not apply in respect of votes cast by or on behalf of any entity that controls the bank or any entity that is controlled by an entity that controls the bank.
Marginal note:Exception
(6) Subsection (2) does not apply in respect of a vote held under section 218.
Marginal note:Validity of vote
(7) A vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).
Marginal note:Disposition of shareholdings
(8) If, with respect to any bank, a person contravenes subsection (2) or (3), the Minister may, by order, direct the shareholder of the shares to which the contravention relates or any person controlled by that shareholder to dispose of any number of shares of the bank beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the shareholder and the persons controlled by that shareholder that is specified in the order.
Marginal note:Restriction on voting rights
(9) If the Minister makes an order under subsection (8), the person to whom the order relates may not, in person or by proxy, exercise any voting rights that are attached to shares of the bank beneficially owned by the person.
Marginal note:Subsection (9) ceases to apply
(10) Subsection (9) ceases to apply in respect of a person when the shares to which the order relates have been disposed of.
Marginal note:Reliance on number in notice
(11) For the purpose of this section, a person is entitled to rely on the number of eligible votes set out in a notice of a meeting under subsection 138(1.1).
Marginal note:Designation of persons
(12) For the purpose of this section, the Minister may, with respect to a particular bank, designate two or more persons who are parties to an agreement, commitment or understanding referred to in section 9 to be a single person.
- 2001, c. 9, s. 67
- 2007, c. 6, s. 132
- 2012, c. 5, s. 6
Directors and Officers
Duties
Marginal note:Duty to manage
157 (1) Subject to this Act, the directors of a bank shall manage or supervise the management of the business and affairs of the bank.
Marginal note:Specific duties
(2) Without limiting the generality of subsection (1), the directors of a bank shall
(a) establish an audit committee to perform the duties referred to in subsections 194(3) and (4);
(b) establish a conduct review committee to perform the duties referred to in subsection 195(3);
(c) establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;
(d) designate a committee of the board of directors to monitor the procedures referred to in paragraph (c);
(e) establish procedures to provide disclosure of information to customers of the bank that is required to be disclosed by this Act and for dealing with complaints as required by subsection 455(1);
(f) designate a committee of the board of directors to monitor the procedures referred to in paragraph (e) and satisfy itself that they are being adhered to by the bank; and
(g) establish investment and lending policies, standards and procedures in accordance with section 465.
Marginal note:Exception
(3) Paragraphs (2)(a) and (b) do not apply to the directors of a bank if
(a) all the voting shares of the bank are beneficially owned by a Canadian financial institution described in any of paragraphs (a) to (d) of the definition financial institution in section 2; and
(b) the audit committee or conduct review committee of the financial institution performs for and on behalf of the bank all the functions that would otherwise be required to be performed by the audit committee or conduct review committee of the bank under this Act.
- 1991, c. 46, s. 157
- 1997, c. 15, s. 11
- 2001, c. 9, s. 68(F)
Marginal note:Duty of care
158 (1) Every director and officer of a bank in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shall
(a) act honestly and in good faith with a view to the best interests of the bank; and
(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
Marginal note:Duty to comply
(2) Every director, officer and employee of a bank shall comply with this Act, the regulations, the bank’s incorporating instrument and the by-laws of the bank.
Marginal note:No exculpation
(3) No provision in any contract, in any resolution or in the by-laws of a bank relieves any director, officer or employee of the bank from the duty to act in accordance with this Act and the regulations or relieves a director, officer or employee from liability for a breach thereof.
Qualification and Number — Directors
Marginal note:Minimum number of directors
159 (1) A bank shall have at least seven directors.
Marginal note:Residency requirement
(2) At least one half of the directors of a bank that is a subsidiary of a foreign bank and a majority of the directors of any other bank must be, at the time of each director’s election or appointment, resident Canadians.
- 1991, c. 46, s. 159
- 2001, c. 9, s. 69
- 2007, c. 6, s. 12
Marginal note:Disqualified persons
160 The following persons are disqualified from being directors of a bank:
(a) a person who is less than eighteen years of age;
(b) a person who is of unsound mind and has been so found by a court in Canada or elsewhere;
(c) a person who has the status of a bankrupt;
(d) a person who is not a natural person;
(e) a person who is prohibited by section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;
(f) a person who is an officer, director or full time employee of an entity that is prohibited by section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;
(f.1) a person who is an officer, director, employee or agent of — or any other person acting on behalf of — an eligible agent within the meaning of subsection 370(1);
(g) a person who is an agent or employee of Her Majesty in right of Canada or in right of a province;
(h) a minister of Her Majesty in right of Canada or in right of a province; and
(i) a person who is an agent or employee of the government of a foreign country or any political subdivision thereof.
- 1991, c. 46, s. 160
- 1994, c. 47, s. 15
- 1997, c. 15, s. 12
- 2001, c. 9, s. 70
- 2012, c. 19, s. 330, c. 31, s. 109
Marginal note:Exception
160.1 Paragraph 160(g) does not apply to a person if
(a) the person is employed in a department or agency of the Government of Canada that is not involved in the regulation or supervision of financial institutions;
(b) the person’s duties do not involve financial institutions; and
(c) the bank is controlled by a local cooperative credit society, as defined in section 2 of the Cooperative Credit Associations Act, in which the following persons, in aggregate, hold more than 50 per cent or, if a percentage has been prescribed for the purpose of this paragraph, the prescribed percentage, of the ownership interests in the local cooperative credit society, namely,
(i) employees of Her Majesty in right of Canada or of a province,
(ii) former employees of Her Majesty in right of Canada or of a province,
(iii) the spouse or common-law partner of a person referred to in subparagraph (i) or (ii), and
(iv) a child who is less than eighteen years of age of a person referred to in subparagraph (i) or (ii).
- 2001, c. 9, s. 71
Marginal note:No shareholder requirement
161 A director of a bank is not required to hold shares of the bank.
Marginal note:Affiliated person
162 The Governor in Council may make regulations specifying the circumstances under which a natural person is affiliated with a bank for the purposes of this Act.
Marginal note:Affiliated director determination
162.1 (1) Notwithstanding section 162, the Superintendent may determine that a particular director is affiliated with a bank for the purposes of this Act if, in the opinion of the Superintendent, the director has a significant or sufficient commercial, business or financial relationship with the bank or with an affiliate of the bank to the extent that the relationship can be construed as being material to the director and can reasonably be expected to affect the exercise of the director’s best judgment.
Marginal note:Notification by Superintendent
(2) A determination by the Superintendent under subsection (1)
(a) becomes effective on the day of the next annual meeting of the shareholders unless a notice in writing by the Superintendent revoking the determination is received by the bank prior to that day; and
(b) ceases to be in effect on the day of the next annual meeting of the shareholders after a notice in writing by the Superintendent revoking the determination is received by the bank.
- 1996, c. 6, s. 5
Marginal note:Unaffiliated directors
163 (1) At the election of directors at each annual meeting of a bank and at all times until the day of the next annual meeting, no more than two thirds of the directors may be persons affiliated with the bank.
Marginal note:Exception
(2) Subsection (1) does not apply where all the voting shares of a bank, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.
Marginal note:Determination of affiliation
(3) For the purposes of subsection (1), whether or not a person is affiliated with a bank shall be determined as at the day the notice of the annual meeting is sent to shareholders pursuant to section 138 and that determination becomes effective on the day of that meeting, and a person shall be deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders.
Marginal note:Transitional
(4) Subsection (1) does not apply in respect of a bank that was in existence immediately prior to the day that subsection comes into force until the day that is three years after the day that subsection comes into force.
Marginal note:Limit on directors
164 No more than 15 per cent of the directors of a bank may, at each director’s election or appointment, be employees of the bank or a subsidiary of the bank, except that up to four persons who are employees of the bank or a subsidiary of the bank may be directors of the bank if those directors constitute not more than one half of the directors of the bank.
Election and Tenure — Directors
Marginal note:Number of directors
165 (1) Subject to subsection 159(1) and sections 168 and 217, the directors of a bank shall, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.
Marginal note:Election at annual meeting
(2) A by-law made pursuant to subsection (1) that provides for a minimum and maximum number of directors may provide that the number of directors to be elected at any annual meeting of the shareholders be such number as is fixed by the directors prior to the annual meeting.
Marginal note:Election or appointment as director
165.1 The election or appointment of a person as a director is subject to the following:
(a) the person was present at the meeting when the election or appointment took place and did not refuse to hold office as a director; or
(b) the person was not present at the meeting when the election or appointment took place but
(i) consented in writing to hold office as a director before the election or appointment or within 10 days after it, or
(ii) acted as a director after the election or appointment.
- 2005, c. 54, s. 32
Marginal note:Term of directors
166 (1) Except where this Act or the by-laws of a bank provide for cumulative voting, a bank may, by by-law, provide that the directors be elected for terms of one, two or three years.
Marginal note:Term of one, two or three years
(2) A director elected for a term of one, two or three years holds office until the close of the first, second or third annual meeting of shareholders, as the case may be, following the election of the director.
Marginal note:No stated term
(3) A director who is not elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting of shareholders following the election of the director.
Marginal note:Tenure of office
(4) It is not necessary that all directors elected at a meeting of shareholders hold office for the same term.
Marginal note:Idem
(5) If a by-law of a bank provides that the directors be elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.
Marginal note:Composition requirements
(6) Subject to subsection 163(4), where a director of a bank is elected or appointed for a term of more than one year, the bank shall comply with subsections 159(2) and 163(1) and section 164 at each annual meeting of shareholders during the director’s term of office as if that director were elected or appointed on that date.
Marginal note:Determining election of directors
167 (1) Except where this Act or the by-laws of a bank provide for cumulative voting, the persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of a bank shall be the directors thereof.
Marginal note:Idem
(2) If, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors, determine which of the persons so receiving an equal number of votes are to be elected.
Marginal note:Cumulative voting
168 (1) Where this Act or the by-laws provide for cumulative voting,
(a) there shall be a stated number of directors fixed by by-law and not a minimum and maximum number of directors;
(b) each shareholder entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the shareholder multiplied by the number of directors to be elected, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;
(c) a separate vote of shareholders shall be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;
(d) if a shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the shareholder is deemed to have distributed the votes equally among the candidates for whom the shareholder voted;
(e) if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled;
(f) each director ceases to hold office at the close of the next annual meeting of shareholders following the director’s election;
(g) a director may be removed from office only if the number of votes cast in favour of a motion to remove the director is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion; and
(h) the number of directors required by the by-laws may be decreased only if the number of votes cast in favour of a motion to decrease the number of directors is greater than the product of the number of directors required by the by-laws and the number of votes cast against the motion.
Marginal note:Mandatory cumulative voting
(2) Where the aggregate of the voting shares beneficially owned by a person and any entities controlled by the person carries more than 10 per cent of the voting rights attached to all the outstanding voting shares of a bank, the directors shall be elected by cumulative voting.
Marginal note:Exception
(3) Subsection (2) does not apply
(a) where all the voting shares of the bank that are outstanding are beneficially owned by
(i) one person,
(ii) one person and one or more entities controlled by that person, or
(iii) one or more entities controlled by the same person;
(b) in respect of a bank that was in existence immediately prior to the day that subsection comes into force whose shareholders are confined to entities incorporated or formed by or under an Act of Parliament or of the legislature of a province that are, in the opinion of the directors, operating as credit unions or cooperative associations.
Marginal note:Exception
(3.1) Subsection (2) does not apply to a widely held bank with equity of twelve billion dollars or more or to a bank in respect of which subsection 378(1) applies.
Marginal note:Transitional election
(4) Where this Act or the by-laws of a bank provide for cumulative voting, the shareholders of the bank shall,
(a) at the first annual meeting of shareholders held not earlier than ninety days following the date that cumulative voting is required under subsection (2) or provided for in the by-laws, and
(b) at each succeeding annual meeting,
elect the stated number of directors to hold office until the close of the next annual meeting of shareholders following their election.
Marginal note:Exception
(5) Nothing in this Act precludes the holders of any class or series of shares of a bank from having an exclusive right to elect one or more directors.
- 1991, c. 46, s. 168
- 1997, c. 15, s. 14
- 2001, c. 9, s. 73
- 2005, c. 54, s. 33
- 2007, c. 6, s. 132
- 2012, c. 5, s. 7
Marginal note:Re-election of directors
169 A director who has completed a term of office is, if otherwise qualified, eligible for re-election.
Incomplete Elections and Director Vacancies
Marginal note:Void election or appointment
170 (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 159(2) or 163(1) or section 164, the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.
Marginal note:Failure to elect minimum
(2) Where, at the close of a meeting of shareholders of a bank, the shareholders have failed to elect the number or minimum number of directors required by this Act or the by-laws of a bank, the purported election of directors at the meeting
(a) is valid if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; or
(b) is void if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.
(3) and (4) [Repealed, 1997, c. 15, s. 15]
- 1991, c. 46, s. 170
- 1997, c. 15, s. 15
Marginal note:Directors where elections incomplete or void
171 (1) Notwithstanding subsections 166(2) and (3) and paragraphs 168(1)(f) and 172(1)(a), where subsection 170(1) or (2) applies at the close of any meeting of shareholders of a bank, the board of directors shall, until their successors are elected or appointed, consist solely of
(a) where paragraph 170(2)(a) applies, the directors referred to in that paragraph; or
(b) where subsection 170(1) or paragraph 170(2)(b) applies, the persons who were the incumbent directors immediately before the meeting.
Marginal note:Where there is no approved rectification plan
(2) Notwithstanding subsections 166(2) and (3) and paragraphs 168(1)(f) and 172(1)(a), where a plan to rectify the non-compliance referred to in subsection 170(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.
Marginal note:Directors to call meeting
(3) Where subsection (1) or (2) applies, the board of directors referred to in that subsection shall without delay call a special meeting of shareholders to fill the vacancies, where paragraph 170(2)(a) applies, or elect a new board of directors, where subsection 170(1) or paragraph 170(2)(b) applies.
Marginal note:Shareholder may call meeting
(4) Where the directors fail to call a special meeting required by subsection (3), the meeting may be called by any shareholder.
- 1991, c. 46, s. 171
- 1997, c. 15, s. 16
Marginal note:Ceasing to hold office
172 (1) A director ceases to hold office
(a) at the close of the annual meeting at which the director’s term of office expires;
(b) when the director dies or resigns;
(c) when the director becomes disqualified under section 160 or ineligible to hold office pursuant to subsection 203(2);
(d) when the director is removed under section 173; or
(e) when the director is removed from office under section 647 or 647.1.
Marginal note:Date of resignation
(2) The resignation of a director of a bank becomes effective at the time a written resignation is sent to the bank by the director or at the time specified in the resignation, whichever is later.
- 1991, c. 46, s. 172
- 2001, c. 9, s. 74
Marginal note:Removal of director
173 (1) Subject to paragraph 168(1)(g), the shareholders of a bank may by resolution at a special meeting remove any director or all the directors from office.
Marginal note:Exception
(2) Where the holders of any class or series of shares of a bank have the exclusive right to elect one or more directors, a director so elected may be removed only by a resolution at a meeting of the shareholders of that class or series.
Marginal note:Vacancy by removal
(3) Subject to paragraphs 168(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders at which the director is removed or, if not so filled, may be filled under section 177 or 178.
Marginal note:Statement of director
174 (1) A director who
(a) resigns,
(b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of removing the director from office, or
(c) receives a notice or otherwise learns of a meeting of directors or shareholders at which another person is to be appointed or elected to fill the office of director, whether because of the director’s resignation or removal or because the director’s term of office has expired or is about to expire,
is entitled to submit to the bank a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.
Marginal note:Statement re disagreement
(2) Where a director resigns as a result of a disagreement with the other directors or the officers of a bank, the director shall submit to the bank and the Superintendent a written statement setting out the nature of the disagreement.
Marginal note:Circulation of statement
175 (1) A bank shall without delay on receipt of a director’s statement referred to in subsection 174(1) relating to a matter referred to in paragraph 174(1)(b) or (c), or a director’s statement referred to in subsection 174(2), send a copy of it to each shareholder entitled to receive a notice of meetings and to the Superintendent, unless the statement is included in or attached to a management proxy circular required by subsection 156.05(1).
Marginal note:Immunity for statement
(2) No bank or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (1).
- 1991, c. 46, s. 175
- 1997, c. 15, s. 17
Marginal note:Shareholders filling vacancy
176 The by-laws of a bank may provide that a vacancy among the directors is to be filled only
(a) by a vote of the shareholders; or
(b) by a vote of the holders of any class or series of shares having an exclusive right to elect one or more directors if the vacancy occurs among the directors elected by the holders of that class or series.
Marginal note:Directors filling vacancy
177 (1) Despite section 183 but subject to subsection (2) and sections 176 and 178, a quorum of directors may fill a vacancy among the directors except a vacancy resulting from a change in the by-laws by which the number or the minimum or maximum number of directors is increased or from a failure to elect the number or minimum number of directors provided for in the by-laws.
Marginal note:Where composition fails
(2) Notwithstanding sections 176 and 183, where by reason of a vacancy the number of directors or the composition of the board of directors fails to meet any of the requirements of section 159, subsection 163(1) and section 164, the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.
- 1991, c. 46, s. 177
- 2005, c. 54, s. 34
Marginal note:Class vacancy
178 Notwithstanding section 183, where the holders of any class or series of shares of a bank have an exclusive right to elect one or more directors and a vacancy occurs among those directors, then, subject to section 176,
(a) the remaining directors elected by the holders of that class or series of shares may fill the vacancy except one resulting from an increase in the number or the minimum or maximum number of directors for that class or series or from a failure to elect the number or minimum number of directors provided for in the by-laws for that class or series;
(b) if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 159, subsection 163(1) and section 164, the other directors may fill that vacancy; and
(c) if there are no such remaining directors and paragraph (b) does not apply, any holder of shares of that class or series may call a meeting of the holders thereof for the purpose of filling the vacancy.
- 1991, c. 46, s. 178
- 2005, c. 54, s. 35
Marginal note:Unexpired term
179 (1) Unless the by-laws otherwise provide, a director elected or appointed to fill a vacancy holds office for the unexpired term of the director’s predecessor in office.
Marginal note:Affiliation
(2) Notwithstanding subsection 163(3), the affiliation of a person to be elected or appointed to fill a vacancy shall be determined as at the date of the person’s election or appointment and that person shall be deemed to continue to be affiliated or unaffiliated, as the case may be, until the next annual meeting of the shareholders.
Marginal note:Additional directors
179.1 (1) The directors of a bank may appoint one or more additional directors where the by-laws of the bank allow them to do so and the by-laws determine the minimum and maximum numbers of directors.
Marginal note:Term of office
(2) A director appointed under subsection (1) holds office for a term expiring not later than the close of the next annual meeting of shareholders of the bank.
Marginal note:Limit on number appointed
(3) The total number of directors appointed under subsection (1) may not exceed one third of the number of directors elected at the previous annual meeting of shareholders of the bank.
- 1997, c. 15, s. 18
Meetings of the Board
Marginal note:Meetings required
180 (1) The directors shall meet at least four times during each financial year.
Marginal note:Place for meetings
(2) The directors may meet at any place unless the by-laws provide otherwise.
Marginal note:Notice for meetings
(3) The notice for the meetings must be given as required by the by-laws.
- 1991, c. 46, s. 180
- 1997, c. 15, s. 19
Marginal note:Notice of meeting
181 (1) A notice of a meeting of directors shall specify each matter referred to in section 198 that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not otherwise specify the purpose of or the business to be transacted at the meeting.
Marginal note:Waiver of notice
(2) A director may in any manner waive notice of a meeting of directors and the attendance of a director at a meeting of directors is a waiver of notice of that meeting except where the director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
Marginal note:Adjourned meeting
(3) Notice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting was announced at the original meeting.
Marginal note:Quorum
182 (1) Subject to section 183, the number of directors referred to in subsection (2) constitutes a quorum at any meeting of directors or a committee of directors and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.
Marginal note:Idem
(2) The number of directors constituting a quorum at any meeting of directors or a committee of directors shall be
(a) a majority of the minimum number of directors required by this Act for the board of directors or a committee of directors; or
(b) such greater number of directors than the number calculated pursuant to paragraph (a) as may be established by the by-laws of the bank.
Marginal note:Director continues to be present
(3) A director who is present at a meeting of directors or of a committee of directors but is not, in accordance with subsection 203(1), present at any particular time during the meeting is considered to be present for the purposes of this section.
- 1991, c. 46, s. 182
- 2005, c. 54, s. 36
Marginal note:Resident Canadian majority
183 (1) The directors of a bank shall not transact business at a meeting of directors or of a committee of directors unless
(a) in the case of a bank that is a subsidiary of a foreign bank, at least one half of the directors present are resident Canadians; or
(b) in any other case, a majority of the directors present are resident Canadians.
Marginal note:Exception
(2) Notwithstanding subsection (1), the directors of a bank may transact business at a meeting of directors or of a committee of directors without the required proportion of directors present who are resident Canadians if
(a) a director who is a resident Canadian unable to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting; and
(b) there would have been present the required proportion of directors who are resident Canadians had that director been present at the meeting.
- 1991, c. 46, s. 183
- 2001, c. 9, s. 75
Marginal note:Presence of unaffiliated director
183.1 (1) The directors of a bank shall not transact business at a meeting of directors unless at least one of the directors who is not affiliated with the bank is present.
Marginal note:Exception
(2) Despite subsection (1), the directors of a bank may transact business at a meeting of directors if a director who is not affiliated with the bank and who is not able to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting.
Marginal note:Exception
(3) Subsection (1) does not apply if all the voting shares of the bank, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.
- 2001, c. 9, s. 76
Marginal note:Electronic meeting
184 (1) Subject to the by-laws of a bank, a meeting of directors or of a committee of directors may be held by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other during the meeting.
Marginal note:Deemed present
(2) A director participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Act to be present at that meeting.
Marginal note:Resolution outside board meeting
184.1 (1) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors.
Marginal note:Filing directors’ resolution
(2) A copy of the resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors.
Marginal note:Resolution outside committee meeting
(3) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of a committee of directors, other than a resolution of the audit committee in carrying out its duties under subsection 194(3) or a resolution of the conduct review committee in carrying out its duties under subsection 195(3), is as valid as if it had been passed at a meeting of that committee.
Marginal note:Filing committee resolution
(4) A copy of the resolution referred to in subsection (3) shall be kept with the minutes of the proceedings of that committee.
Marginal note:Evidence
(5) Unless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.
- 1997, c. 15, s. 20
- 2005, c. 54, s. 37
Marginal note:Dissent of director
185 (1) A director of a bank who is present at a meeting of directors or a committee of directors is deemed to have consented to any resolution passed or action taken at that meeting unless
(a) the director requests that the director’s dissent be entered or the director’s dissent is entered in the minutes of the meeting;
(b) the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; or
(c) the director sends the director’s dissent by registered mail or delivers it to the head office of the bank immediately after the meeting is adjourned.
Marginal note:Loss of right to dissent
(2) A director of a bank who votes for or consents to a resolution is not entitled to dissent under subsection (1).
Marginal note:Dissent of absent director
(3) A director of a bank who is not present at a meeting at which a resolution is passed or action taken is deemed to have consented thereto unless, within seven days after the director becomes aware of the resolution, the director
(a) causes the director’s dissent to be placed with the minutes of the meeting; or
(b) sends the director’s dissent by registered mail or delivers it to the head office of the bank.
Marginal note:Record of attendance
186 (1) A bank shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.
Marginal note:Statement to shareholders
(2) A bank shall attach to the notice of each annual meeting it sends to its shareholders a statement showing, in respect of the financial year immediately preceding the meeting, the total number of directors’ meetings and directors’ committee meetings held during the financial year and the number of those meetings attended by each director.
- 1991, c. 46, s. 186
- 1997, c. 15, s. 21
Marginal note:Meeting required by Superintendent
187 (1) Where in the opinion of the Superintendent it is necessary, the Superintendent may, by notice in writing, require a bank to hold a meeting of directors of the bank to consider the matters set out in the notice.
Marginal note:Attendance of Superintendent
(2) The Superintendent may attend and be heard at a meeting referred to in subsection (1).
By-laws
Marginal note:By-laws
188 (1) Unless this Act otherwise provides, the directors of a bank may by resolution make, amend or repeal any by-law that regulates the business or affairs of the bank.
Marginal note:Shareholder approval
(2) The directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders at the next meeting of shareholders, and the shareholders may, by resolution, confirm or amend the by-law, amendment or repeal.
Marginal note:Effective date of by-law
(3) Unless this Act otherwise provides, a by-law, or an amendment to or a repeal of a by-law, is effective from the date of the resolution of the directors under subsection (1) until it is confirmed, confirmed as amended or rejected by the shareholders under subsection (2) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed, or confirmed as amended, it continues in effect in the form in which it was so confirmed.
Marginal note:Effect where no shareholder approval
(4) If a by-law, or an amendment to or a repeal of a by-law, is rejected by the shareholders, or is not submitted to the shareholders by the directors as required under subsection (2), the by-law, amendment or repeal ceases to be effective from the date of its rejection or the date of the next meeting of shareholders, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the shareholders.
Marginal note:Shareholder proposal of by-law
189 A shareholder entitled to vote at an annual meeting of shareholders may, in accordance with sections 143 and 144, make a proposal to make, amend or repeal a by-law.
Marginal note:By-laws of existing bank
190 Subject to section 191, where a by-law of a bank that was in existence immediately prior to the day this section comes into force was in effect immediately prior to that day, the by-law continues in effect until amended or repealed, unless it is contrary to a provision of this Act.
Marginal note:By-laws re remuneration
191 (1) A by-law of a bank respecting the remuneration of the directors of the bank, as directors, that is in effect on the coming into force of this section ceases to have effect on the day on which the first annual meeting is held following the coming into force of this section.
Marginal note:Existing by-laws
(2) A by-law made by the directors of a bank under section 45 of the Bank Act, being chapter B-1 of the Revised Statutes of Canada, 1985, as that section read immediately prior to the day this section comes into force, and not confirmed by the shareholders of the bank in accordance with that section on or before the day this section comes into force, continues to have effect, unless it is contrary to the provisions of this Act, until the first meeting of the shareholders following the day this section comes into force.
Marginal note:Shareholder approval
(3) A by-law referred to in subsection (2) shall be submitted to the shareholders at the first meeting of shareholders following the coming into force of this section.
Marginal note:Application of ss. 188(3) and (4) and 189
(4) Subsections 188(3) and (4) and section 189 apply in respect of a by-law referred to in this section as if it were a by-law made under section 188.
Marginal note:Deemed by-laws
192 (1) Any matter that,
(a) immediately prior to the day this section comes into force, was provided for in the incorporating instrument of a bank that was in existence immediately prior to that day, or
(b) immediately prior to the day a body corporate is continued as a bank under this Act, was provided for in the incorporating instrument of the body corporate,
and that, under this Act, would be provided for in the by-laws of a bank, is deemed to be provided for in the by-laws of the bank.
Marginal note:By-law prevails
(2) Where a by-law of the bank made in accordance with sections 188 and 189 amends or repeals any matter referred to in subsection (1), the by-law prevails.
Committees of the Board
Marginal note:Committees
193 The directors of a bank may appoint from their number, in addition to the committees referred to in subsection 157(2), such other committees as they deem necessary and, subject to section 198, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.
Marginal note:Audit committee
194 (1) The audit committee of a bank shall consist of at least three directors.
Marginal note:Membership
(2) A majority of the members of the audit committee must consist of directors who are not persons affiliated with the bank and none of the members of the audit committee may be officers or employees of the bank or a subsidiary of the bank.
Marginal note:Duties of audit committee
(3) The audit committee of a bank shall
(a) review the annual statement of the bank before the annual statement is approved by the directors;
(b) review such returns of the bank as the Superintendent may specify;
(c) require the management of the bank to implement and maintain appropriate internal control procedures;
(c.1) review, evaluate and approve those procedures;
(d) review such investments and transactions that could adversely affect the well-being of the bank as the auditor or auditors or any officer of the bank may bring to the attention of the committee;
(e) meet with the auditor or auditors to discuss the annual statement and the returns and transactions referred to in this subsection; and
(f) meet with the chief internal auditor of the bank, or the officer or employee of the bank acting in a similar capacity, and with management of the bank, to discuss the effectiveness of the internal control procedures established for the bank.
Marginal note:Report
(4) In the case of the annual statement and returns of a bank that under this Act must be approved by the directors of the bank, the audit committee of the bank shall report thereon to the directors before the approval is given.
Marginal note:Required meeting of directors
(5) The audit committee of a bank may call a meeting of the directors of the bank to consider any matter of concern to the committee.
Marginal note:Transitional
(6) Subsection (2), in so far as it relates to the affiliation of directors with the bank, does not apply in respect of a bank that was in existence immediately prior to the day that subsection comes into force until the day that is three years after the day that subsection comes into force.
- 1991, c. 46, s. 194
- 1997, c. 15, s. 22
Marginal note:Conduct review committee
195 (1) The conduct review committee of a bank shall consist of at least three directors.
Marginal note:Membership
(2) A majority of the members of the conduct review committee of a bank must consist of directors who are not persons affiliated with the bank and none of the members of the conduct review committee may be officers or employees of the bank or a subsidiary of the bank.
Marginal note:Duties of conduct review committee
(3) The conduct review committee of a bank shall
(a) require the management of the bank to establish procedures for complying with Part XI;
(b) review those procedures and their effectiveness in ensuring that the bank is complying with Part XI;
(b.1) if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of the bank,
(i) establish policies for entering into transactions referred to in subsection 495.1(1), and
(ii) review transactions referred to in subsection 495.3(1); and
(c) review the practices of the bank to ensure that any transactions with related parties of the bank that may have a material effect on the stability or solvency of the bank are identified.
Marginal note:Bank report to Superintendent
(4) A bank shall report to the Superintendent on the mandate and responsibilities of the conduct review committee and the procedures referred to in paragraph (3)(a).
Marginal note:Committee report to directors
(5) After each meeting of the conduct review committee of the bank, the committee shall report to the directors of the bank on matters reviewed by the committee.
Marginal note:Directors’ report to Superintendent
(6) Within ninety days after the end of each financial year, the directors of a bank shall report to the Superintendent on what the conduct review committee did during the year in carrying out its responsibilities under subsection (3).
(7) [Repealed, 1997, c. 15, s. 23]
- 1991, c. 46, s. 195
- 1997, c. 15, s. 23
- 2001, c. 9, s. 77
Directors and Officers — Authority
Marginal note:Chief executive officer
196 (1) The directors of a bank shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 198, may delegate to that officer any of the powers of the directors.
(2) [Repealed, 1997, c. 15, s. 24]
- 1991, c. 46, s. 196
- 1997, c. 15, s. 24
Marginal note:Appointment of officers
197 (1) The directors of a bank may, subject to the by-laws, designate the offices of the bank, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 198, to manage the business and affairs of the bank.
Marginal note:Directors as officers
(2) Subject to section 164, a director of a bank may be appointed to any office of the bank.
Marginal note:Two or more offices
(3) Two or more offices of a bank may be held by the same person.
Marginal note:Limits on power to delegate
198 The directors of a bank may not delegate any of the following powers, namely, the power to
(a) submit to the shareholders a question or matter requiring the approval of the shareholders;
(b) fill a vacancy among the directors, on a committee of directors or in the office of auditor, or appoint additional directors;
(c) issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 62, except in accordance with any authorization made by the directors;
(d) declare a dividend;
(e) authorize the redemption or other acquisition by the bank pursuant to section 71 of shares issued by the bank;
(f) authorize the payment of a commission on a share issue;
(g) approve a management proxy circular;
(h) except as provided in this Act, approve the annual statement of the bank and any other financial statements issued by the bank; or
(i) adopt, amend or repeal by-laws.
- 1991, c. 46, s. 198
- 1997, c. 15, s. 25
- 2005, c. 54, s. 38
Marginal note:Remuneration of directors, officers and employees
199 (1) Subject to this section and the by-laws, the directors of a bank may fix the remuneration of the directors, officers and employees of the bank.
Marginal note:By-law required
(2) No remuneration shall be paid to a director as director until a by-law fixing the aggregate of all amounts that may be paid to all directors in respect of directors’ remuneration during a fixed period of time has been confirmed by special resolution.
- 1991, c. 46, s. 199
- 1994, c. 26, s. 4
Marginal note:Validity of acts
200 (1) An act of a director or an officer of a bank is valid notwithstanding a defect in the director’s qualification or an irregularity in the director’s election or in the appointment of the director or officer.
Marginal note:Idem
(2) An act of the board of directors of a bank is valid notwithstanding a defect in the composition of the board or an irregularity in the election of the board or in the appointment of a member of the board.
Marginal note:Right to attend meetings
201 A director of a bank is entitled to attend and to be heard at every meeting of shareholders.
Conflicts of Interest
Marginal note:Disclosure of interest
202 (1) A director or officer of a bank shall disclose to the bank, in writing or by requesting to have it entered in the minutes of a meeting of directors or a meeting of a committee of directors, the nature and extent of any interest they have in a material contract or material transaction with the bank, whether entered into or proposed, if they
(a) are a party to the contract or transaction;
(b) are a director or officer of a party to the contract or transaction or a person acting in a similar capacity; or
(c) have a material interest in a party to the contract or transaction.
Marginal note:Time of disclosure — director
(2) The disclosure shall be made in the case of a director
(a) at the meeting of directors, or of a committee of directors, at which the proposed contract or transaction is first considered;
(b) if at the time of the meeting referred to in paragraph (a) the director was not interested in the proposed contract or transaction, at the first one after they become interested in it;
(c) if the director becomes interested after a contract or transaction is entered into, at the first one after they become interested; or
(d) if a person who is interested in a contract or transaction becomes a director, at the first one after they become a director.
Marginal note:Time of disclosure — officer
(3) The disclosure shall be made in the case of an officer who is not a director
(a) immediately after they become aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors or of a committee of directors;
(b) if they become interested after the contract or transaction is entered into, immediately after they become interested; or
(c) if a person who is interested in a contract or transaction becomes an officer, immediately after they become an officer.
Marginal note:Time of disclosure — contract not requiring approval
(4) If the material contract or material transaction, whether entered into or proposed, is one that in the ordinary course of the bank’s business would not require approval by the directors or shareholders, the director or officer shall disclose to the bank, in writing or by requesting to have it entered in the minutes of a meeting of directors or of a committee of directors, the nature and extent of their interest immediately after they become aware of the contract or transaction.
- 1991, c. 46, s. 202
- 2005, c. 54, s. 39
Marginal note:Director to abstain
203 (1) A director who is required to make a disclosure under subsection 202(1) shall not be present at any meeting of directors, or of a committee of directors, while the contract or transaction is being considered or vote on any resolution to approve it unless the contract or transaction
(a) relates primarily to their remuneration as a director, officer, employee or agent of the bank, an entity controlled by the bank or an entity in which the bank has a substantial investment;
(b) is for indemnity under section 212 or insurance under section 213; or
(c) is with an affiliate of the bank.
Marginal note:Ineligibility
(2) Any director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any financial institution that is incorporated or formed by or under an Act of Parliament.
Marginal note:Validity of acts
(3) An act of the board of directors of a bank, or of a committee of the board of directors, is not invalid because a person acting as a director had ceased under subsection (2) to hold office as a director.
- 1991, c. 46, s. 203
- 1997, c. 15, s. 26
- 2005, c. 54, s. 40
Marginal note:General notice
204 (1) For the purposes of subsection 202(1), a general notice to the directors declaring that a director or officer is to be regarded as interested for any of the following reasons in a contract or transaction entered into with a party is a sufficient declaration of interest in relation to any contract or transaction with that party:
(a) the director or officer is a director or officer of a party referred to in paragraph 202(1)(b) or (c) or a person acting in a similar capacity;
(b) the director or officer has a material interest in the party; or
(c) there has been a material change in the nature of the director’s or officer’s interest in the party.
Marginal note:Access to disclosures
(2) The shareholders of the bank may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 202(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the bank.
- 1991, c. 46, s. 204
- 2001, c. 9, s. 77.1(F)
- 2005, c. 54, s. 41
Marginal note:Avoidance standards
205 (1) A contract or transaction for which disclosure is required under subsection 202(1) is not invalid and a director or officer is not accountable to the bank or its shareholders for any profit realized from it by reason only of the director’s or officer’s interest in the contract or transaction or the fact that the director was present or was counted to determine whether a quorum existed at the meeting of directors, or of a committee of directors, that considered it if
(a) the director or officer disclosed their interest in accordance with section 202 and subsection 204(1);
(b) the directors approved the contract or transaction; and
(c) the contract or transaction was reasonable and fair to the bank at the time that it was approved.
Marginal note:Confirmation by shareholders
(2) Even if the conditions set out in subsection (1) are not met, a director or officer acting honestly and in good faith is not accountable to the bank or its shareholders for any profit realized from a contract or transaction for which disclosure was required and the contract or transaction is not invalid by reason only of the director’s or officer’s interest in it if
(a) the contract or transaction is approved or confirmed by special resolution at a meeting of shareholders;
(b) disclosure of the interest was made to the shareholders in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; and
(c) the contract or transaction was reasonable and fair to the bank at the time that it was approved or confirmed.
- 1991, c. 46, s. 205
- 2005, c. 54, s. 41
Marginal note:Court may set aside or require accounting
206 If a director or officer of a bank fails to comply with any of sections 202 to 205, a court, on application of the bank or any of its shareholders, may set aside the contract or transaction on any terms that the court thinks fit and may require the director or officer to account to the bank for any profit or gain realized on it.
- 1991, c. 46, s. 206
- 2005, c. 54, s. 41
Liability, Exculpation and Indemnification
Marginal note:Director liability
207 (1) Directors of a bank who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 65(1) or the issue of subordinated indebtedness contrary to section 80 for a consideration other than money are jointly and severally, or solidarily, liable to the bank to make good any amount by which the consideration received is less than the fair equivalent of the money that the bank would have received if the share or subordinated indebtedness had been issued for money on the date of the resolution.
Marginal note:Further liability
(2) Directors of a bank who vote for or consent to a resolution of the directors authorizing any of the following are jointly and severally, or solidarily, liable to restore to the bank any amounts so distributed or paid and not otherwise recovered by the bank and any amounts in relation to any loss suffered by the bank:
(a) a redemption or purchase of shares contrary to section 71;
(b) a reduction of capital contrary to section 75;
(c) a payment of a dividend contrary to section 79;
(d) a payment of an indemnity contrary to section 212; or
(e) any transaction contrary to Part XI.
- 1991, c. 46, s. 207
- 2005, c. 54, s. 42(E)
Marginal note:Contribution
208 (1) A director who has satisfied a judgment in relation to the director’s liability under section 207 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.
Marginal note:Recovery
(2) A director who is liable under section 207 is entitled to apply to a court for an order compelling a shareholder or other person to pay or deliver to the director
(a) any money or property that was paid or distributed to the shareholder or other person contrary to section 71, 75, 79 or 212; or
(b) an amount equal to the value of the loss suffered by the bank as a result of any transaction contrary to Part XI.
Marginal note:Court order
(3) Where an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so,
(a) order a shareholder or other person to pay or deliver to a director any money or property that was paid or distributed to the shareholder or other person contrary to section 71, 75, 79 or 212 or any amount referred to in paragraph (2)(b);
(b) order a bank to return or issue shares to a person from whom the bank has purchased, redeemed or otherwise acquired shares; or
(c) make any further order it thinks fit.
Marginal note:Limitation
209 An action to enforce a liability imposed by section 207 may not be commenced after two years from the date of the resolution authorizing the action complained of.
Marginal note:Directors liable for wages
210 (1) Subject to subsections (2) and (3), the directors of a bank are jointly and severally, or solidarily, liable to each employee of the bank for all debts not exceeding six months wages payable to the employee for services performed for the bank while they are directors.
Marginal note:Conditions precedent
(2) A director is not liable under subsection (1) unless
(a) the bank has been sued for the debt within six months after it has become due and execution has been returned unsatisfied in whole or in part;
(b) the bank has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proven within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; or
(c) a winding-up order has been issued in respect of the bank under the Winding-up and Restructuring Act and a claim for the debt has been allowed or proven within six months after the issue of the winding-up order.
Marginal note:Limitations
(3) A director is not liable under subsection (1) unless the director is sued for a debt referred to in that subsection while a director or within two years after the director has ceased to be a director.
Marginal note:Amount due after execution
(4) Where execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.
Marginal note:Subrogation of director
(5) Where a director of a bank pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or winding-up proceedings, the director is entitled to any preference that the employee would have been entitled to and, where a judgment has been obtained, the director is entitled to an assignment of the judgment.
Marginal note:Contribution entitlement
(6) A director of a bank who has satisfied a claim under this section is entitled to a contribution from the other directors of the bank who are liable for the claim.
- 1991, c. 46, s. 210
- 1996, c. 6, s. 167
- 2005, c. 54, s. 43(E)
Marginal note:Defence — due diligence
211 (1) A director, officer or employee of a bank is not liable under section 207 or 210 or subsection 506(1) and has fulfilled their duty under subsection 158(2) if they exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on
(a) financial statements of the bank that were represented to them by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; or
(b) a report of a person whose profession lends credibility to a statement made by them.
Marginal note:Defence — good faith
(2) A director or officer of a bank has fulfilled their duty under subsection 158(1) if they relied in good faith on
(a) financial statements of the bank that were represented to them by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; or
(b) a report of a person whose profession lends credibility to a statement made by them.
- 1991, c. 46, s. 211
- 2001, c. 9, s. 78
- 2005, c. 54, s. 44
Marginal note:Indemnification
212 (1) A bank may indemnify a director or officer of the bank, a former director or officer of the bank or another person who acts or acted, at the bank’s request, as a director or officer of or in a similar capacity for another entity against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by them in respect of any civil, criminal, administrative, investigative or other proceeding in which they are involved because of that association with the bank or other entity.
Marginal note:Advances
(2) A bank may advance amounts to the director, officer or other person for the costs, charges and expenses of a proceeding referred to in subsection (1). They shall repay the amounts if they do not fulfil the conditions set out in subsection (3).
Marginal note:No indemnification
(3) A bank may not indemnify a person under subsection (1) unless
(a) the person acted honestly and in good faith with a view to the best interests of, as the case may be, the bank or the other entity for which they acted at the bank’s request as a director or officer or in a similar capacity; and
(b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the person had reasonable grounds for believing that their conduct was lawful.
Marginal note:Indemnification — derivative actions
(4) A bank may with the approval of a court indemnify a person referred to in subsection (1) or advance amounts to them under subsection (2) — in respect of an action by or on behalf of the bank or other entity to procure a judgment in its favour to which the person is made a party because of the association referred to in subsection (1) with the bank or other entity — against all costs, charges and expenses reasonably incurred by them in connection with that action if they fulfil the conditions set out in subsection (3).
Marginal note:Right to indemnity
(5) Despite subsection (1), a person referred to in that subsection is entitled to be indemnified by the bank in respect of all costs, charges and expenses reasonably incurred by them in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the person is subject because of the association referred to in subsection (1) with the bank or other entity described in that subsection if the person
(a) was not judged by the court or other competent authority to have committed any fault or omitted to do anything that they ought to have done; and
(b) fulfils the conditions set out in subsection (3).
Marginal note:Heirs and personal representatives
(6) A bank may, to the extent referred to in subsections (1) to (5) in respect of the person, indemnify the heirs or personal representatives of any person whom the bank may indemnify under those subsections.
- 1991, c. 46, s. 212
- 2001, c. 9, s. 79(F)
- 2005, c. 54, s. 44
Marginal note:Directors’ and officers’ insurance
213 A bank may purchase and maintain insurance for the benefit of any person referred to in section 212 against any liability incurred by the person
(a) in the capacity of a director or an officer of the bank, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the bank; or
(b) in the capacity of a director or officer of another entity or while acting in a similar capacity for another entity, if they act or acted in that capacity at the bank’s request, except if the liability relates to a failure to act honestly and in good faith with a view to the best interests of the entity.
- 1991, c. 46, s. 213
- 2005, c. 54, s. 45
Marginal note:Application to court for indemnification
214 (1) A bank or a person referred to in section 212 may apply to a court for an order approving an indemnity under that section and the court may so order and make any further order it thinks fit.
Marginal note:Notice to Superintendent
(2) An applicant under subsection (1) shall give the Superintendent written notice of the application and the Superintendent is entitled to appear and to be heard at the hearing of the application in person or by counsel.
Marginal note:Other notice
(3) On an application under subsection (1), the court may order notice to be given to any interested person and that person is entitled to appear and to be heard in person or by counsel at the hearing of the application.
Fundamental Changes
Amendments
Marginal note:Incorporating instrument
215 On the application of a bank duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the bank’s incorporating instrument.
- 1991, c. 46, s. 215
- 2001, c. 9, s. 80
Marginal note:Letters patent to amend
216 (1) On receipt of an application referred to in section 215, the Minister may issue letters patent to effect the proposal.
Marginal note:Effect of letters patent
(2) Letters patent issued pursuant to subsection (1) become effective on the day stated in the letters patent.
- 1991, c. 46, s. 216
- 2001, c. 9, s. 81
Marginal note:By-laws
217 (1) The directors of a bank may make, amend or repeal any by-laws, in the manner set out in subsections (2) and (3) and sections 218 to 222, to
(a) change the maximum number, if any, of shares of any class that the bank is authorized to issue;
(b) create new classes of shares;
(c) change the designation of any or all of the bank’s shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of any or all of the bank’s shares, whether issued or unissued;
(d) change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series;
(e) divide a class of shares, whether issued or unissued, into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;
(f) authorize the directors to divide any class of unissued shares into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;
(g) authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series;
(h) revoke, diminish or enlarge any authority conferred under paragraphs (f) and (g);
(i) increase or decrease the number of directors or the minimum or maximum number of directors, subject to subsection 159(1) and section 168;
(i.1) change the name of the bank; or
(j) change the province in which the head office of the bank is situated.
Marginal note:Shareholder approval
(2) The directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders, and the shareholders may, by special resolution, confirm, amend or reject the by-law, amendment or repeal.
Marginal note:Effective date of by-law
(3) A by-law, or an amendment to or a repeal of a by-law, made under subsection (1) is not effective until it is confirmed or confirmed as amended by the shareholders under subsection (2) and, in the case of a by-law respecting a change to the name of the bank, approved by the Superintendent.
Marginal note:Letters patent
(4) If the name of a bank or the province in Canada in which the head office of the bank is situated is changed under this section, the Superintendent may issue letters patent to amend the bank’s incorporating instrument accordingly.
Marginal note:Effect of letters patent
(5) Letters patent issued under subsection (4) become effective on the day stated in the letters patent.
- 1991, c. 46, s. 217
- 2001, c. 9, s. 82
- 2005, c. 54, s. 46
- 2007, c. 6, s. 13
Marginal note:Class vote
218 (1) The holders of shares of a class or, subject to subsection (2), of a series are, unless the by-laws otherwise provide in the case of an amendment to the by-laws referred to in paragraph (a), (b) or (e), entitled to vote separately as a class or series on a proposal to amend the by-laws to
(a) increase or decrease any maximum number of authorized shares of that class, or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the shares of that class;
(b) effect an exchange, reclassification or cancellation of all or part of the shares of that class;
(c) add, change or remove the rights, privileges, restrictions or conditions attached to the shares of that class and, without limiting the generality of the foregoing,
(i) remove or change prejudicially rights to accrued dividends or rights to cumulative dividends,
(ii) add, remove or change prejudicially redemption rights,
(iii) reduce or remove a dividend preference or a liquidation preference, or
(iv) add, remove or change prejudicially conversion privileges, options, voting, transfer or pre-emptive rights, or rights to acquire securities of the bank, or sinking fund provisions;
(d) increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of that class;
(e) create a new class of shares equal or superior to the shares of that class;
(f) make any class of shares having rights or privileges inferior to the shares of that class equal or superior to the shares of that class; or
(g) effect an exchange or create a right of exchange of all or part of the shares of another class into the shares of that class.
Marginal note:Right limited
(2) The holders of a series of shares of a class are entitled to vote separately as a series under subsection (1) if that series is affected by an addition or amendment to the by-laws in a manner different from other shares of the same class.
Marginal note:Right to vote
(3) Subsections (1) and (2) apply whether or not the shares of a class otherwise carry the right to vote.
Marginal note:Separate resolutions
219 A proposed addition or amendment to the by-laws referred to in subsection 218(1) is adopted when the holders of the shares of each class or series entitled to vote separately thereon as a class or series have approved the addition or amendment by a special resolution.
Marginal note:Revoking resolution
220 Where a special resolution referred to in subsection 217(2) so states, the directors may, without further approval of the shareholders, revoke the special resolution.
Marginal note:Proposal to amend
221 (1) Subject to subsection (2), a director or a shareholder who is entitled to vote at an annual meeting of shareholders of a bank may, in accordance with sections 143 and 144, make a proposal to make an application referred to in section 215 or to make, amend or repeal the by-laws referred to in subsection 217(1) of the bank.
Marginal note:Notice of amendment
(2) Notice of a meeting of shareholders at which a proposal to amend the incorporating instrument or to make, amend or repeal the by-laws of a bank is to be considered must set out the proposal.
- 1991, c. 46, s. 221
- 2001, c. 9, s. 83
Marginal note:Rights preserved
222 No amendment to the incorporating instrument or by-laws of a bank affects an existing cause of action or claim or liability to prosecution in favour of or against the bank or its directors or officers, or any civil, criminal or administrative action or proceeding to which the bank or any of its directors or officers are a party.
Amalgamation
Marginal note:Application to amalgamate
223 (1) On the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including banks and bank holding companies, the Minister may issue letters patent amalgamating and continuing the applicants as one bank.
Marginal note:Restriction
(2) Despite subsection (1), if one of the applicants is a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies, the Minister shall not issue letters patent referred to in subsection (1) unless
(a) the amalgamated bank would be a widely held bank; or
(b) the amalgamated bank would be controlled by a widely held bank holding company that, at the time the application was made, controlled
(i) the applicant, or
(ii) any other applicant that is a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies.
Marginal note:Restriction
(3) Despite subsection (1), if the amalgamated bank would be a bank with equity of twelve billion dollars or more, the Minister shall not issue letters patent referred to in that subsection unless the amalgamated bank is
(a) widely held;
(b) controlled, within the meaning of paragraphs 3(1)(a) and (d), by a widely held bank, or by a widely held bank holding company, that controlled one of the applicants at the time the application was made; or
(c) controlled, within the meaning of paragraph 3(1)(d), by a widely held insurance holding company, or by an eligible Canadian financial institution, as defined in subsection 370(1), other than a bank, or by an eligible foreign institution, as defined in subsection 370(1), that controlled one of the applicants at the time the application was made.
- 1991, c. 46, s. 223
- 2001, c. 9, s. 84
- 2007, c. 6, s. 132
- 2012, c. 5, s. 8
Marginal note:Amalgamation agreement
224 (1) Each applicant proposing to amalgamate shall enter into an amalgamation agreement.
Marginal note:Contents of agreement
(2) Every amalgamation agreement shall set out the terms and means of effecting the amalgamation and, in particular,
(a) the name of the amalgamated bank and the province in which its head office is to be situated;
(b) the name and place of ordinary residence of each proposed director of the amalgamated bank;
(c) the manner in which the shares of each applicant are to be converted into shares or other securities of the amalgamated bank;
(d) if any shares of an applicant are not to be converted into shares or other securities of the amalgamated bank, the amount of money or securities that the holders of those shares are to receive in addition to or in lieu of shares or other securities of the amalgamated bank;
(e) the manner of payment of money in lieu of the issue of fractional shares of the amalgamated bank or of any other body corporate that are to be issued in the amalgamation;
(f) the proposed by-laws of the amalgamated bank;
(g) details of any other matter necessary to perfect the amalgamation and to provide for the subsequent management and operation of the amalgamated bank; and
(h) the proposed effective date of the amalgamation.
Marginal note:Cross ownership of shares
(3) If shares of one of the applicants are held by or on behalf of another of the applicants, other than shares held in the capacity of a personal representative or by way of security, the amalgamation agreement must provide for the cancellation of those shares when the amalgamation becomes effective without any repayment of capital in respect thereof, and no provision shall be made in the agreement for the conversion of those shares into shares of the amalgamated bank.
- 1991, c. 46, s. 224
- 2005, c. 54, s. 47
Marginal note:Approval of agreement by Superintendent
225 An amalgamation agreement must be submitted to the Superintendent for approval and any approval of the agreement under subsection 226(4) by the holders of any class or series of shares of an applicant is invalid unless, before the date of the approval, the Superintendent has approved the agreement in writing.
- 1991, c. 46, s. 225
- 2007, c. 6, s. 14
Marginal note:Shareholder approval
226 (1) The directors of each applicant shall submit an amalgamation agreement for approval to a meeting of the holders of shares of the applicant bank or body corporate of which they are directors and, subject to subsection (3), to the holders of each class or series of such shares.
Marginal note:Right to vote
(2) Each share of an applicant carries the right to vote in respect of an amalgamation agreement whether or not it otherwise carries the right to vote.
Marginal note:Separate vote for class or series
(3) The holders of shares of a class or series of shares of each applicant are entitled to vote separately as a class or series in respect of an amalgamation agreement if the agreement contains a provision that, if it were contained in a proposed amendment to the by-laws or incorporating instrument of the applicant, would entitle those holders to vote separately as a class or series.
Marginal note:Special resolution
(4) Subject to subsection (3), an amalgamation agreement is approved when the shareholders of each applicant bank or body corporate have approved the amalgamation by special resolution.
Marginal note:Termination
(5) An amalgamation agreement may provide that, at any time before the issue of letters patent of amalgamation, the agreement may be terminated by the directors of an applicant notwithstanding that the agreement has been approved by the shareholders of all or any of the applicant banks or bodies corporate.
- 1991, c. 46, s. 226
- 2005, c. 54, s. 48
Marginal note:Vertical short-form amalgamation
227 (1) A bank may, without complying with sections 224 to 226, amalgamate with one or more bodies corporate that are incorporated by or under an Act of Parliament if the body or bodies corporate, as the case may be, are wholly-owned subsidiaries of the bank and
(a) the amalgamation is approved by a resolution of the directors of the bank and of each amalgamating subsidiary; and
(b) the resolutions provide that
(i) the shares of each amalgamating subsidiary will be cancelled without any repayment of capital in respect thereof,
(ii) the letters patent of amalgamation and the by-laws of the amalgamated bank will be the same as the incorporating instrument and the by-laws of the amalgamating bank that is the holding body corporate, and
(iii) no securities will be issued by the amalgamated bank in connection with the amalgamation.
Marginal note:Horizontal short-form amalgamation
(2) Two or more bodies corporate incorporated by or under an Act of Parliament may amalgamate and continue as one bank without complying with sections 224 to 226 if
(a) at least one of the applicants is a bank;
(b) the applicants are all wholly-owned subsidiaries of the same holding body corporate;
(c) the amalgamation is approved by a resolution of the directors of each of the applicants; and
(d) the resolutions provide that
(i) the shares of all applicants, except those of one of the applicants that is a bank, will be cancelled without any repayment of capital in respect thereof,
(ii) the letters patent of amalgamation and the by-laws of the amalgamated bank will be the same as the incorporating instrument and the by-laws of the amalgamating bank whose shares are not cancelled, and
(iii) the stated capital of the amalgamating banks and bodies corporate whose shares are cancelled will be added to the stated capital of the amalgamating bank whose shares are not cancelled.
Marginal note:Joint application to Minister
228 (1) Subject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 226(5), the applicants shall, within three months after the approval of the agreement in accordance with subsection 226(4) or the approval of the directors in accordance with subsection 227(1) or (2), jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one bank.
Marginal note:Conditions precedent to application
(2) No application for the issue of letters patent under subsection (1) may be made unless
(a) notice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of each applicant is situated; and
(b) the application is supported by satisfactory evidence that the applicants have complied with the requirements of this Part relating to amalgamations.
Marginal note:Application of sections 23 to 26
(3) If two or more bodies corporate, none of which is a bank, apply for letters patent under subsection (1), sections 23 to 26 apply in respect of the application with any modifications that the circumstances require.
Marginal note:Matters for consideration
(4) Before issuing letters patent of amalgamation continuing the applicants as one bank, the Minister shall take into account all matters that the Minister considers relevant to the application, including
(a) the sources of continuing financial support for the amalgamated bank;
(b) the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of the amalgamated bank;
(c) the business record and experience of the applicants;
(d) the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;
(e) whether the amalgamated bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;
(f) the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;
(g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated bank and its affiliates may affect the supervision and regulation of the amalgamated bank, having regard to
(i) the nature and extent of the proposed financial services activities to be carried out by the amalgamated bank and its affiliates, and
(ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the amalgamated bank; and
(h) the best interests of the financial system in Canada.
- 1991, c. 46, s. 228
- 2001, c. 9, s. 85
Marginal note:Issue of letters patent
229 (1) Where an application has been made to the Minister in accordance with section 228, the Minister may issue letters patent of amalgamation continuing the applicants as one bank.
Marginal note:Letters patent
(2) Where letters patent are issued pursuant to this section, section 28 applies with such modifications as the circumstances require in respect of the issue of the letters patent.
Marginal note:Publication of notice
(3) The Superintendent shall cause to be published in the Canada Gazette notice of the issuance of letters patent pursuant to subsection (1).
Marginal note:Court enforcement
229.1 (1) If a bank or any director, officer, employee or agent of a bank is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the bank or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.
Marginal note:Appeal
(2) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.
- 2001, c. 9, s. 86
Marginal note:Effect of letters patent
230 (1) On the day provided for in the letters patent issued under section 229
(a) the amalgamation of the applicants and their continuance as one bank becomes effective;
(b) the property of each applicant continues to be the property of the amalgamated bank;
(c) the amalgamated bank continues to be liable for the obligations of each applicant;
(d) any existing cause of action, claim or liability to prosecution is unaffected;
(e) any civil, criminal or administrative action or proceeding pending by or against an applicant may be continued to be prosecuted by or against the amalgamated bank;
(f) any conviction against, or ruling, order or judgment in favour of or against, an applicant may be enforced by or against the amalgamated bank;
(g) if any director or officer of an applicant continues as a director or officer of the amalgamated bank, any disclosure by that director or officer of a material interest in any contract made to the applicant shall be deemed to be disclosure to the amalgamated bank; and
(h) [Repealed, 2001, c. 9, s. 87]
(i) the letters patent of amalgamation are the incorporating instrument of the amalgamated bank.
Marginal note:Minutes
(2) Any deemed disclosure under paragraph (1)(g) shall be recorded in the minutes of the first meeting of directors of the amalgamated bank.
- 1991, c. 46, ss. 230, 576
- 1997, c. 15, s. 27
- 1999, c. 28, s. 14
- 2001, c. 9, s. 87
Marginal note:Transitional
231 (1) Notwithstanding any other provision of this Act or the regulations, the Minister may, by order, on the recommendation of the Superintendent, grant to a bank in respect of which letters patent were issued under subsection 229(1) permission to
(a) engage in a business activity specified in the order that a bank is not otherwise permitted by this Act to engage in and that one or more of the amalgamating bodies corporate was engaging in at the time application for the letters patent was made;
(b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;
(c) [Repealed, 1994, c. 47, s. 16]
(d) hold assets that a bank is not otherwise permitted by this Act to hold if the assets were held by one or more of the amalgamating bodies corporate at the time the application for the letters patent was made;
(e) acquire and hold assets that a bank is not otherwise permitted by this Act to acquire or hold if one or more of the amalgamating bodies corporate were obliged, at the time the application for the letters patent was made, to acquire those assets; and
(f) maintain outside Canada any records or registers required by this Act to be maintained in Canada.
Marginal note:Duration of exceptions
(2) The permission granted under any of paragraphs (1)(a) to (f) shall be expressed to be granted for a period specified in the order not exceeding
(a) with respect to any matter described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;
(b) with respect to any matter described in paragraph (1)(b), ten years; and
(c) with respect to any matter described in any of paragraphs (1)(d) to (f), two years.
Marginal note:Renewal
(3) Subject to subsection (4), the Minister may, by order on the recommendation of the Superintendent, renew a permission granted by order under subsection (1) with respect to any matter described in any of paragraphs (1)(b) to (e) for any further period or periods that the Minister considers necessary.
Marginal note:Limitation
(4) The Minister shall not grant to a bank any permission
(a) with respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the bank to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank that the bank will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and
(b) with respect to matters described in paragraphs (1)(d) and (e), that purports to be effective more than ten years after the date of issue of the letters patent.
- 1991, c. 46, s. 231
- 1994, c. 47, s. 16
- 1997, c. 15, s. 28
- 2007, c. 6, s. 15
Transfer of Business
Marginal note:Sale by bank
232 (1) A bank may sell all or substantially all of its assets to a financial institution incorporated by or under an Act of Parliament or to an authorized foreign bank in respect of its business in Canada if the purchasing financial institution or authorized foreign bank assumes all or substantially all of the liabilities of the bank.
Marginal note:Sale agreement
(2) An agreement of purchase and sale (in subsection (3), section 233, subsections 234(1) and (4) and section 236 referred to as a “sale agreement”) shall set out the terms of, and means of effecting, the sale of assets referred to in subsection (1).
Marginal note:Consideration
(3) Notwithstanding anything in this Act, the consideration for a sale referred to in subsection (1) may be cash or fully paid securities of the purchasing financial institution or authorized foreign bank or in part cash and in part fully paid securities of the purchasing financial institution or authorized foreign bank or any other consideration that is provided for in the sale agreement.
- 1991, c. 46, s. 232
- 1999, c. 28, s. 15
Marginal note:Agreement to Superintendent
233 A sale agreement must be sent to the Superintendent before it is submitted to shareholders of the selling bank under subsection 234(1).
- 1991, c. 46, s. 233
- 2007, c. 6, s. 16
Marginal note:Shareholder approval
234 (1) The directors of a selling bank shall submit a sale agreement for approval to a meeting of the holders of shares of the bank and, subject to subsection (3), to the holders of each class or series of shares of the bank.
Marginal note:Right to vote
(2) Each share of a selling bank carries the right to vote in respect of a sale referred to in subsection 232(1) whether or not the share otherwise carries the right to vote.
Marginal note:Class vote
(3) The holders of shares of a class or series of shares of a selling bank are entitled to vote separately as a class or series in respect of a sale referred to in subsection 232(1) only if the shares of the class or series are affected by the sale in a manner different from the shares of another class or series.
Marginal note:Special resolution
(4) A sale agreement is approved when the shareholders, and the holders of each class or series of shares entitled to vote separately as a class or series pursuant to subsection (3), of the selling bank have approved the sale by special resolution.
Marginal note:Abandoning sale
235 Where a special resolution approving a sale under subsection 234(4) so states, the directors of a selling bank may, subject to the rights of third parties, abandon the sale without further approval of the shareholders.
Marginal note:Application to Minister
236 (1) Subject to subsection (2), unless a sale agreement is abandoned in accordance with section 235, the selling bank shall, within three months after the approval of the sale agreement in accordance with subsection 234(4), apply to the Minister for approval of the sale agreement.
Marginal note:Conditions precedent to application
(2) No application for approval under subsection (1) may be made unless
(a) notice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the selling bank is situated; and
(b) the application is supported by satisfactory evidence that the selling bank has complied with the requirements of sections 232 to 235 and this section.
Marginal note:Approval by Minister
(3) A sale agreement has no force or effect until it has been approved by the Minister.
Marginal note:Idem
(4) Where an application has been made to the Minister in accordance with subsections (1) and (2), the Minister may approve the sale agreement to which the application relates.
Corporate Records
Head Office and Corporate Records
Marginal note:Head office
237 (1) A bank shall at all times have a head office in the province specified in its incorporating instrument or by-laws.
Marginal note:Change of head office
(2) The directors of a bank may change the address of the head office within the province specified in the incorporating instrument or by-laws.
Marginal note:Notice of change of address
(3) A bank shall send to the Superintendent, within fifteen days after any change of address of its head office, a notice of the change of address.
- 1991, c. 46, s. 237
- 2005, c. 54, s. 49
Marginal note:Bank records
238 (1) A bank shall prepare and maintain records containing
(a) its incorporating instrument and the by-laws of the bank and all amendments thereto;
(b) minutes of meetings and resolutions of shareholders;
(c) the information referred to in paragraphs 632(1)(a), (c) and (e) to (h) contained in all returns provided to the Superintendent pursuant to section 632;
(d) particulars of any authorizations, conditions and limitations established by the Superintendent pursuant to section 53 or subsection 54(1) that are from time to time applicable to the bank;
(e) particulars of exceptions granted under section 39, 55 or 231 that are from time to time applicable to the bank; and
(f) particulars from Schedule I or II that are applicable to the bank as they are from time to time amended and published in the Canada Gazette.
Marginal note:Additional records
(2) In addition to the records described in subsection (1), a bank shall prepare and maintain adequate
(a) corporate accounting records;
(b) records containing minutes of meetings and resolutions of the directors and any committee thereof; and
(c) records showing, for each customer of the bank, on a daily basis, particulars of the transactions between the bank and that customer and the balance owing to or by the bank in respect of that customer.
Marginal note:Continued banks
(3) For the purposes of paragraph (1)(b) and subsection (2),
(a) in the case of a body corporate continued as a bank under this Act, records includes similar records required by law to be maintained by the body corporate before it was so continued; and
(b) in the case of a body corporate amalgamated and continued as a bank under this Act, records includes similar records required by law to be maintained by the body corporate before it was so amalgamated.
- 1991, c. 46, s. 238
- 1997, c. 15, s. 29(E)
- 1999, c. 28, s. 16
Marginal note:Place of records
239 (1) The records described in section 238 shall be kept at the head office of the bank or at such other place in Canada as the directors think fit.
Marginal note:Notice of place of records
(2) Where any of the records described in section 238 are not kept at the head office of a bank, the bank shall notify the Superintendent of the place where the records are kept.
Marginal note:Exception
(3) Subsection (1) does not apply in respect of records of a branch of the bank outside Canada or in respect of customers of such a branch.
Marginal note:Inspection
(4) The records described in section 238, other than those described in paragraph 238(2)(c), shall at all reasonable times be open to inspection by the directors.
Marginal note:Access to bank records
(5) Shareholders and creditors of a bank and their personal representatives may examine the records referred to in subsection 238(1) during the usual business hours of the bank and may take extracts from them free of charge or have copies of them made on payment of a reasonable fee. If the bank is a distributing bank, any other person may on payment of a reasonable fee examine those records during the usual business hours of the bank and take extracts from them or have copies of them made.
Marginal note:Electronic access
(5.1) A bank may make the information contained in records referred to in subsection 238(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.
Marginal note:Copies of by-laws
(6) Every shareholder of a bank is entitled, on request made not more frequently than once in each calendar year, to receive, free of charge, one copy of the by-laws of the bank.
- 1991, c. 46, s. 239
- 2001, c. 9, s. 88
- 2005, c. 54, s. 50
Marginal note:Shareholder lists
240 (1) A person who is entitled to a basic list of shareholders of a bank (in this section referred to as the “applicant”) may request the bank to furnish the applicant with a basic list within ten days after receipt by the bank of the affidavit referred to in subsection (2) and, on payment of a reasonable fee by the applicant, the bank shall comply with the request.
Marginal note:Affidavit and contents
(2) A request under subsection (1) must be accompanied by an affidavit containing
(a) the name and address of the applicant,
(b) the name and address for service of the entity, if the applicant is an entity, and
(c) an undertaking that the basic list and any supplemental lists obtained pursuant to subsections (5) and (6) will not be used except as permitted under section 242,
and, if the applicant is an entity, the affidavit shall be made by a director or an officer of the entity, or any person acting in a similar capacity.
Marginal note:Entitlement to list
(3) A shareholder or creditor of a bank or their personal representative — or if the bank is a distributing bank, any person — is entitled to a basic list of shareholders of the bank.
Marginal note:Basic list
(4) A basic list of shareholders of a bank consists of a list of shareholders that is made up to a date not more than ten days before the receipt of the affidavit referred to in subsection (2) and that sets out
(a) the names of the shareholders of the bank;
(b) the number of shares owned by each shareholder; and
(c) the address of each shareholder as shown in the records of the bank.
Marginal note:Supplemental lists
(5) A person requiring a bank to supply a basic list of shareholders may, if the person states in the accompanying affidavit that supplemental lists are required, request the bank or its agent, on payment of a reasonable fee, to provide supplemental lists of shareholders setting out any changes from the basic list in the names and addresses of the shareholders and the number of shares owned by each shareholder for each business day following the date to which the basic list is made up.
Marginal note:When supplemental lists to be furnished
(6) A bank or its agent shall provide a supplemental list of shareholders required under subsection (5)
(a) within ten days following the date the basic list is provided, where the information relates to changes that took place prior to that date; and
(b) within ten days following the day to which the supplemental list relates, where the information relates to changes that took place on or after the date the basic list was provided.
- 1991, c. 46, s. 240
- 2005, c. 54, s. 51
Marginal note:Option holders
241 A person requiring a bank to supply a basic list or a supplemental list of shareholders may also require the bank to include in that list the name and address of any known holder of an option or right to acquire shares of the bank.
Marginal note:Use of shareholder list
242 A list of shareholders obtained under section 240 shall not be used by any person except in connection with
(a) an effort to influence the voting of shareholders of the bank;
(b) an offer to acquire shares of the bank; or
(c) any other matter relating to the affairs of the bank.
Marginal note:Form of records
243 (1) A register or other record required or authorized by this Act to be prepared and maintained by a bank
(a) may be in a bound or loose-leaf form or in a photographic film form; or
(b) may be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.
Marginal note:Conversion of records
(2) Registers and records maintained in one form may be converted to any other form.
Marginal note:Destruction of converted records
(3) Notwithstanding section 246, a bank may destroy any register or other record referred to in subsection (1) at any time after the register or other record has been converted to another form.
Marginal note:Protection of records
244 A bank and its agents shall take reasonable precautions to
(a) prevent loss or destruction of,
(b) prevent falsification of entries in,
(c) facilitate detection and correction of inaccuracies in, and
(d) ensure that unauthorized persons do not have access to or use of information in
the registers and records required or authorized by this Act to be prepared and maintained.
Marginal note:Requirement to maintain copies and process information in Canada
245 (1) If the Superintendent is of the opinion that it is incompatible with the fulfilment of the Superintendent’s responsibilities under this Act for a bank to maintain, in another country, copies of records referred to in section 238 or of its central securities register or for a bank to process, in another country, information or data relating to the preparation and maintenance of those records or of its central securities register — or if the Superintendent is advised by the Minister that, in the opinion of the Minister, it is not in the national interest for a bank to do any of those activities in another country — the Superintendent shall direct the bank to not maintain those copies, or to not process the information or data, as the case may be, in that other country or to maintain those copies or to process the information or data only in Canada.
Marginal note:Bank to comply
(2) A bank shall without delay comply with any direction issued under subsection (1).
- 1991, c. 46, s. 245
- 2001, c. 9, s. 89
- 2005, c. 54, s. 52
- 2007, c. 6, s. 17
Marginal note:Retention of records
246 (1) A bank shall retain
(a) the records of the bank referred to in subsection 238(1);
(b) any record of the bank referred to in paragraph 238(2)(a) or (b); and
(c) the central securities register referred to in subsection 248(1).
Marginal note:Idem
(2) A bank shall retain all signature cards and signing authorities or copies thereof relating to any deposit or instrument in respect of which the bank has paid an amount to the Bank of Canada pursuant to section 438 until the Bank of Canada notifies the bank that they need no longer be retained.
Marginal note:Evidence
(3) Copies of the signature cards and signing authorities referred to in subsection (2) may be kept in any manner or form referred to in paragraphs 243(1)(a) and (b) and any such copies, or prints therefrom, are admissible in evidence in the same manner and to the same extent as the original signature cards and signing authorities.
Marginal note:Relief
(4) Nothing in this section affects the operation of any statute of limitation or prescription or relieves the bank from any obligation to the Bank of Canada in respect of any deposit or instrument in respect of which section 438 applies.
Marginal note:Regulations
247 The Governor in Council may make regulations respecting the records, papers and documents to be retained by a bank and the length of time those records, papers and documents are to be retained.
Securities Registers
Marginal note:Central securities register
248 (1) A bank shall maintain a central securities register in which it shall record the securities, within the meaning of section 81, issued by it in registered form, showing in respect of each class or series of securities
(a) the names, alphabetically arranged, and latest known addresses of the persons who are security holders, and the names and latest known addresses of the persons who have been security holders;
(b) the number of securities held by each security holder; and
(c) the date and particulars of the issue and transfer of each security.
Marginal note:Existing and continued banks
(2) For the purposes of subsection (1), “central securities register” includes similar registers required by law to be maintained by a bank that was in existence immediately prior to the day that subsection comes into force or by a body corporate continued, or amalgamated and continued, as a bank under this Act before the continuance, amalgamation or coming into force of that subsection, as the case may be.
Marginal note:Access to central securities register
(3) Shareholders and creditors of a bank and their personal representatives may examine the central securities register during the usual business hours of the bank and may take extracts from it free of charge or have copies of it made on payment of a reasonable fee. If the bank is a distributing bank, any other person may on payment of a reasonable fee examine the central securities register during the usual business hours of the bank and take extracts from it or have copies of it made.
Marginal note:Electronic access
(4) The bank may make the information contained in the central securities register available by any mechanical or electronic data processing system or other information storage device that is capable of reproducing it in intelligible written form within a reasonable time.
Marginal note:Affidavit and undertaking
(5) A person who wishes to examine the central securities register, take extracts from it or have copies of it made shall provide the bank with an affidavit containing their name and address — or if they are an entity, the name and address for service of the entity — and with an undertaking that the information contained in the register will not be used except in the same way as a list of shareholders may be used under section 242. In the case of an entity, the affidavit is to be sworn by a director or officer of the entity or a person acting in a similar capacity.
Marginal note:Supplemental information
(6) A person who wishes to examine a central securities register, take extracts from it or have copies of it made may on payment of a reasonable fee, if they state in the accompanying affidavit that supplementary information is required, request the bank or its agent to provide supplementary information setting out any changes made to the register.
Marginal note:When supplementary information to be provided
(7) A bank or its agent shall provide the supplementary information within
(a) 10 days after the day on which the central securities register is examined if the changes take place before that day; and
(b) 10 days after the day to which the supplementary information relates if the changes take place on or after the day on which the central securities register is examined.
- 1991, c. 46, s. 248
- 2001, c. 9, s. 90
- 2005, c. 54, s. 53
Marginal note:Branch registers
249 A bank may establish as many branch securities registers as it considers necessary.
Marginal note:Agents
250 A bank may appoint an agent to maintain its central securities register and each of its branch securities registers.
Marginal note:Location of central securities register
251 (1) The central securities register of a bank shall be maintained by the bank at its head office or at any other place in Canada designated by the directors of the bank.
Marginal note:Location of branch securities register
(2) A branch securities register of a bank may be kept at any place in or outside Canada designated by the directors of the bank.
Marginal note:Effect of registration
252 Registration of the issue or transfer of a security in the central securities register or in a branch securities register is complete and valid registration for all purposes.
Marginal note:Particulars in branch register
253 (1) A branch securities register shall only contain particulars of the securities issued or transferred at the branch for which that register is established.
Marginal note:Particulars in central register
(2) Particulars of each issue or transfer of a security registered in a branch securities register of a bank shall also be kept in the central securities register of the bank.
Marginal note:Destruction of certificates
254 A bank, its agent or a trustee within the meaning of section 294 is not required to produce
(a) a cancelled security certificate in registered form or an instrument referred to in subsection 69(1) that is cancelled or a like cancelled instrument in registered form after six years from the date of its cancellation;
(b) a cancelled security certificate in bearer form or an instrument referred to in subsection 69(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; or
(c) an instrument referred to in subsection 69(1) or a like instrument, irrespective of its form, after the date of its expiration.
Corporate Name and Seal
Marginal note:Publication of name
255 A bank shall set out its name in legible characters in all contracts, invoices, negotiable instruments and other documents evidencing rights or obligations with respect to other parties that are issued or made by or on behalf of the bank.
Marginal note:Corporate seal
256 (1) A bank may adopt a corporate seal and change one that it adopted.
Marginal note:Validity of unsealed documents
(2) A document executed on behalf of a bank is not invalid merely because a corporate seal is not affixed to it.
- 1991, c. 46, s. 256
- 2005, c. 54, s. 54
257 to 264 [Repealed, 1997, c. 15, s. 30]
Insiders
Marginal note:Definitions
265 (1) In this section and sections 266 to 272,
affiliate
groupe
affiliate means a body corporate that is affiliated with another body corporate within the meaning of subsection 6(2); (groupe)
business combination
regroupement d’entreprises
business combination means an acquisition of all or substantially all of the assets of one body corporate by another, an amalgamation of two or more bodies corporate or any similar reorganization between two or more bodies corporate; (regroupement d’entreprises)
call
option d’achat
call means an option, transferable by delivery, to demand delivery of a specified number or amount of shares at a fixed price within a specified time but does not include an option or right to acquire shares of the body corporate that granted the option or right to acquire; (option d’achat)
- distributing bank
distributing bank[Repealed, 2005, c. 54, s. 55]
- insider
insider[Repealed, 2005, c. 54, s. 55]
officer
dirigeant d’une banque
officer, in relation to a bank, means
(a) an officer as defined in paragraph (a) of the definition officer in section 2, or
(b) any natural person who performs functions for the bank similar to those performed by a person referred to in paragraph (a) of the definition officer in section 2; (dirigeant d’une banque)
put
option de vente
put means an option, transferable by delivery, to deliver a specified number or amount of shares at a fixed price within a specified time; (option de vente)
share
action
share means a voting share and includes
(a) a security currently convertible into a voting share, and
(b) a currently exercisable option or a right to acquire a voting share or a security referred to in paragraph (a). (action)
Marginal note:Control
(2) For the purposes of this section and sections 266 to 272, a person controls a body corporate when the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(d).
(3) and (4) [Repealed, 2005, c. 54, s. 55]
- 1991, c. 46, s. 265
- 2005, c. 54, s. 55
Insider Reporting
Marginal note:Insider report
266 An insider shall submit an insider report in accordance with the regulations.
- 1991, c. 46, s. 266
- 1997, c. 15, s. 31
- 2005, c. 54, s. 56
Marginal note:Exemption by Superintendent
267 On application by an insider, the Superintendent may in writing and on any terms that the Superintendent thinks fit exempt the insider from any of the requirements of section 266. The exemption may be given retroactive effect and the Superintendent shall publish the particulars of the exemption and the reasons for it in a periodical available to the public.
- 1991, c. 46, s. 267
- 2005, c. 54, s. 56
267.1 [Repealed, 2005, c. 54, s. 56]
Marginal note:Regulations
268 The Governor in Council may make regulations for carrying out the purposes of sections 266 and 267, including
(a) defining insider for the purposes of sections 266 and 267;
(b) respecting the form and content of an insider report; and
(c) respecting the submission or publication of an insider report.
- 1991, c. 46, s. 268
- 2005, c. 54, s. 56
269 [Repealed, 2005, c. 54, s. 56]
Insider Trading
Meaning of insider
270 (1) In this section, insider means with respect to a distributing bank
(a) a director or officer of the bank;
(b) a director or officer of a subsidiary of the bank;
(c) a director or officer of a body corporate that enters into a business combination with the bank; or
(d) a person employed or retained by the bank.
Marginal note:Prohibition — short sale
(2) No insider may knowingly sell, directly or indirectly, a security of a distributing bank or of any of the distributing bank’s affiliates if the insider does not own or has not fully paid for the security.
Marginal note:Exception
(3) Despite subsection (2), an insider may sell a security that they do not own if they own another security that is convertible into the security that was sold or they own an option or right to acquire the security that was sold, and if within 10 days after the sale they
(a) exercise the conversion privilege, option or right and deliver the security so acquired to the purchaser; or
(b) transfer the convertible security, option or right to the purchaser.
Marginal note:Prohibition — calls and puts
(4) No insider may knowingly, directly or indirectly, buy or sell a call or put in respect of a security of a bank or of any of the bank’s affiliates.
- 1991, c. 46, s. 270
- 2005, c. 54, s. 57
Civil remedies
Extended meaning of insider
271 (1) In this section and sections 271.1 and 272, insider with respect to a bank means
(a) the bank;
(b) an affiliate of the bank;
(c) a director or officer of the bank or of any person described in paragraph (b), (d) or (f);
(d) a person who beneficially owns directly or indirectly, or who exercises control or direction over or has a combination of ownership, control and direction in respect of, shares of the bank carrying more than the prescribed percentage of the voting rights attached to all of the bank’s outstanding shares not including shares held by the person as underwriter while those shares are in the course of a distribution to the public;
(e) a person, other than a person described in paragraph (f), who is employed or retained by the bank or by a person described in paragraph (f);
(f) a person who engages in or proposes to engage in any business or professional activity with or on behalf of the bank;
(g) a person who received material confidential information concerning the bank while they were a person described in any of paragraphs (a) to (f);
(h) a person who receives material confidential information from a person who is and who they know or ought reasonably to have known is a person described in this subsection, including in this paragraph, or subsection (3) or (4); or
(i) a prescribed person.
Extended meaning of security
(2) For the purposes of this section, each of the following is deemed to be a security of a bank:
(a) a put, call, option or other right or obligation to purchase or sell a security of the bank; and
(b) a security of another entity, the market price of which varies materially with the market price of the securities of the bank.
Marginal note:Deemed insider — take-over bid or business combination
(3) For the purposes of this section and subsection 271.1(1), a person who proposes to make a take-over bid as defined in the regulations for securities of a bank or to enter into a business combination with a bank is an insider of the bank with respect to material confidential information obtained from the bank.
Marginal note:Deemed insider — affiliate or associate
(4) An insider of a person referred to in subsection (3), or the person’s affiliate or associate, is an insider of the bank referred to in that subsection. Paragraphs (1)(b) to (i) apply in making this determination except that references to “bank” are to be read as references to “person described in subsection (3)”.
Meaning of associate
(5) In subsection (4), associate means with respect to a person
(a) a body corporate that the person directly or indirectly controls, determined without regard to paragraph 3(1)(d), or of which they beneficially own shares or securities currently convertible into shares carrying more than 10% of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing or a currently exercisable option or right to purchase the shares or convertible securities;
(b) a partner of the person acting on behalf of the partnership of which they are partners;
(c) a trust or estate in which the person has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity;
(d) a spouse or common-law partner of the person;
(e) a child of the person or of their spouse or common-law partner; or
(f) if that relative has the same residence as the person, a relative of the person or of their spouse or common-law partner.
Marginal note:Insider trading — compensation to sellers and purchasers
(6) An insider of a bank who purchases or sells a security of the bank with knowledge of confidential information that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the bank is liable to compensate the seller or purchaser of the security, as the case may be, for any loss suffered by them as a result of the purchase or sale unless the insider establishes that
(a) the insider reasonably believed that the information had been generally disclosed;
(b) the information was known or ought reasonably to have been known by the seller or purchaser; or
(c) the purchase or sale of the security took place in the prescribed circumstances.
Marginal note:Insider trading — compensation to bank
(7) The insider is accountable to the bank for any benefit or advantage received or receivable by the insider as a result of a purchase or sale described in subsection (6) unless they establish the circumstances described in paragraph (6)(a).
- 1991, c. 46, s. 271
- 2005, c. 54, s. 57
Marginal note:Tipping — compensation to sellers and purchasers
271.1 (1) An insider of a bank who discloses confidential information with respect to the bank that has not been generally disclosed and that if it were generally known might reasonably be expected to materially affect the value of any of the securities of the bank is liable to compensate any person who subsequently sells securities of the bank to or purchases them from any person who received the information unless the insider establishes that
(a) the insider reasonably believed that the information had been generally disclosed;
(b) the information was known or ought reasonably to have been known by the person who alleges that they suffered the loss;
(c) if the insider is not a person described in subsection 271(3) or (4), the disclosure of the information was necessary in the course of their business; or
(d) if the insider is a person described in subsection 271(3) or (4), the disclosure of the information was necessary to effect the take-over bid or business combination.
Marginal note:Tipping — compensation to bank
(2) The insider is accountable to the bank for any benefit or advantage received or receivable by them as a result of a disclosure of information as described in subsection (1) unless they establish the circumstances described in paragraph (1)(a), (c) or (d).
- 2005, c. 54, s. 57
Marginal note:Measure of damages
272 (1) The court may assess damages under subsection 271(6) or 271.1(1) in accordance with any measure of damages that it considers relevant in the circumstances. However, in assessing damages in respect of a security of a distributing bank, the court shall consider the following:
(a) if the plaintiff is a purchaser, the price that they paid for the security less the average market price of the security over the 20 trading days immediately following general disclosure of the information; and
(b) if the plaintiff is a seller, the average market price of the security over the 20 trading days immediately following general disclosure of the information, less the price that they received for the security.
Marginal note:Liability — more than one insider
(2) If more than one insider is liable under subsection 271(6) or 271.1(1) with respect to the same transaction or series of transactions, their liability is joint and several, or solidary.
Marginal note:Limitation
(3) An action to enforce a right created by subsection 271(6) or (7) or section 271.1 may be commenced only within two years after discovery of the facts that gave rise to the cause of action.
- 1991, c. 46, s. 272
- 2005, c. 54, s. 57
Prospectus
Marginal note:Distribution
273 (1) No person, including a bank, shall distribute securities of a bank except in accordance with the regulations made under subsection (2).
Marginal note:Regulations
(2) The Governor in Council may make regulations respecting the distribution of securities of a bank, including
(a) respecting the information that is to be disclosed by a bank before the distribution of any of its securities, including the information that is to be included in a prospectus;
(b) respecting the manner of disclosure and the form of the information that is to be disclosed; and
(c) exempting any class of distribution of securities from the application of subsection (1).
- 1991, c. 46, s. 273
- 2005, c. 54, s. 57
Marginal note:Order of exemption
274 (1) On application by a bank or any person proposing to make a distribution, the Superintendent may, by order, exempt that distribution from the application of any regulations made under subsection 273(2) if the Superintendent is satisfied that the bank has disclosed or is about to disclose, in compliance with the laws of the relevant jurisdiction, information relating to the distribution that in form and content substantially complies with the requirements of those regulations.
Marginal note:Conditions
(2) An order under subsection (1) may contain any conditions or limitations that the Superintendent deems appropriate.
- 1991, c. 46, s. 274
- 2005, c. 54, s. 57
Going-private Transactions and Squeeze-out Transactions
Marginal note:Going-private transactions
275 A bank may carry out a going-private transaction if it complies with any applicable provincial securities laws.
- 1991, c. 46, s. 275
- 1994, c. 26, s. 5(F)
- 1999, c. 31, s. 11
- 2005, c. 54, s. 57
Marginal note:Squeeze-out transactions
276 No bank may carry out a squeeze-out transaction unless, in addition to any approval by holders of shares required by or under this Act or the bank’s by-laws, the transaction is approved by ordinary resolution of the holders of each class of shares affected by the transaction, voting separately, whether or not the shares otherwise carry the right to vote. However, the following do not have the right to vote on the resolution:
(a) affiliates of the bank; and
(b) holders of shares that following the squeeze-out transaction would be entitled to consideration of greater value or to superior rights or privileges than those available to other holders of shares of the same class.
- 1991, c. 46, s. 276
- 1999, c. 31, s. 12
- 2005, c. 54, s. 57
Marginal note:Right to dissent
277 (1) A holder of shares of a bank may dissent if the bank resolves to carry out a going-private transaction or squeeze-out transaction that affects those shares.
Marginal note:Payment for shares
(2) In addition to any other right that the shareholder may have, but subject to subsection (25), a shareholder who complies with this section is, when the action approved by the resolution from which the shareholder dissents becomes effective, entitled to be paid by the bank the fair value of the shares in respect of which the shareholder dissents, determined as of the close of business on the day before the resolution was adopted by the shareholders.
Marginal note:No partial dissent
(3) A dissenting shareholder may claim under this section only with respect to all of the shares of a class held on behalf of any one beneficial owner and registered in the name of the dissenting shareholder.
Marginal note:Objection
(4) A dissenting shareholder shall send to the bank, at or before any meeting of shareholders at which a resolution referred to in subsection (2) is to be voted on by the shareholders, a written objection to the resolution unless the bank did not give notice to the shareholder of the purpose of the meeting and their right to dissent.
Marginal note:Notice that resolution was adopted
(5) The bank shall within 10 days after the day on which the shareholders adopt the resolution send to each shareholder who sent an objection under subsection (4) notice that the resolution was adopted. If it is necessary for the Minister or Superintendent to approve the transaction within the meaning of subsection 973(1) before it becomes effective, the bank shall send notice within 10 days after the approval. Notice is not required to be sent to a shareholder who voted for the resolution or one who has withdrawn their objection.
Marginal note:Demand for payment
(6) A dissenting shareholder shall within 20 days after receiving the notice referred to in subsection (5) — or, if they do not receive it, within 20 days after learning that the resolution was adopted by the shareholders — send to the bank a written notice containing
(a) their name and address;
(b) the number and class of shares in respect of which they dissent; and
(c) a demand for payment of the fair value of those shares.
Marginal note:Share certificates
(7) A dissenting shareholder shall within 30 days after sending a notice under subsection (6) send the certificates representing the shares in respect of which they dissent to the bank or its transfer agent.
Marginal note:Forfeiture
(8) A dissenting shareholder who fails to comply with subsection (7) has no right to make a claim under this section.
Marginal note:Endorsing certificate
(9) A bank or its transfer agent shall endorse on any share certificate received in accordance with subsection (7) a notice that the holder is a dissenting shareholder under this section and shall without delay return the share certificates to the dissenting shareholder.
Marginal note:Suspension of rights
(10) On sending a notice under subsection (6), a dissenting shareholder ceases to have any rights as a shareholder other than to be paid the fair value of their shares as determined under this section. However, the shareholder’s rights are reinstated as of the date the notice was sent if
(a) the shareholder withdraws the notice before the bank makes an offer under subsection (11);
(b) the bank fails to make an offer in accordance with subsection (11) and the shareholder withdraws the notice; or
(c) the directors revoke under section 220 the special resolution that was made in respect of the going-private transaction or squeeze-out transaction.
Marginal note:Offer to pay
(11) A bank shall, no later than seven days after the later of the day on which the action approved by the resolution from which the shareholder dissents becomes effective and the day on which the bank received the notice referred to in subsection (6), send to each dissenting shareholder who sent a notice
(a) a written offer to pay for their shares in an amount considered by the directors of the bank to be the fair value, accompanied by a statement showing how the fair value was determined; or
(b) if subsection (25) applies, a notice that it is unable to lawfully pay dissenting shareholders for their shares.
Marginal note:Same terms
(12) Every offer made under subsection (11) for shares of the same class or series is to be on the same terms.
Marginal note:Payment
(13) Subject to subsection (25), a bank shall pay for the shares of a dissenting shareholder within 10 days after the day on which an offer made under subsection (11) is accepted, but the offer lapses if the bank does not receive an acceptance within 30 days after the day on which the offer is made.
Marginal note:Court may fix fair value
(14) If a bank fails to make an offer under subsection (11) or if a dissenting shareholder fails to accept an offer, the bank may, within 50 days after the day on which the action approved by the resolution from which the shareholder dissents becomes effective or within any further period that a court may allow, apply to the court to fix a fair value for the shares of any dissenting shareholder.
Marginal note:Shareholder application
(15) If a bank fails to apply to a court under subsection (14), a dissenting shareholder may apply to a court for the same purpose within a further period of 20 days or within any further period that the court may allow.
Marginal note:Venue
(16) An application under subsection (14) or (15) is to be made to a court having jurisdiction where the bank’s head office is situated or, if the bank carries on business in the province in which the dissenting shareholder resides, in that province.
Marginal note:No security for costs
(17) A dissenting shareholder is not required to give security for costs in an application made under subsection (14) or (15).
Marginal note:Parties and Superintendent
(18) On an application to a court under subsection (14) or (15),
(a) all dissenting shareholders whose shares have not been purchased by the bank are to be joined as parties and are bound by the decision of the court;
(b) the bank shall notify each of them of the date, place and consequences of the application and their right to appear and be heard in person or by counsel; and
(c) the bank shall notify the Superintendent of the date and place of the application and the Superintendent may appear and be heard in person or by counsel.
Marginal note:Powers of court
(19) On an application to a court under subsection (14) or (15), the court may determine whether any other person is a dissenting shareholder and is to be joined as a party and the court shall then fix a fair value for the shares of all dissenting shareholders.
Marginal note:Appraisers
(20) The court may appoint one or more appraisers to assist the court to fix a fair value for the shares of the dissenting shareholders.
Marginal note:Final order
(21) The final order of the court is to be rendered against the bank in favour of each dissenting shareholder for the value of the shares as fixed by the court.
Marginal note:Interest
(22) The court may allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date the action approved by the resolution from which the shareholder dissents becomes effective until the date of payment.
Marginal note:Notice that s. (25) applies
(23) If subsection (25) applies, the bank shall within 10 days after an order is made under subsection (21) notify each dissenting shareholder that it is unable to lawfully pay dissenting shareholders for their shares.
Marginal note:Effect of s. (25)
(24) If subsection (25) applies, a dissenting shareholder may by written notice delivered to the bank within 30 days after receiving notice under subsection (23)
(a) withdraw their notice of dissent, in which case the bank is deemed to consent to the withdrawal and the shareholder is reinstated to their full rights as a shareholder; or
(b) retain their status as a claimant against the bank, to be paid as soon as the bank is able to lawfully pay them or, in a liquidation, to be ranked subordinate to the rights of the bank’s creditors but in priority to its shareholders.
Marginal note:Limitation
(25) A bank may not make a payment to a dissenting shareholder under this section if there are reasonable grounds for believing that the bank is or the payment would cause the bank to be in contravention of a regulation referred to in subsection 485(1) or (2) or of an order made under subsection 485(3).
- 1991, c. 46, s. 277
- 2005, c. 54, s. 57
278 [Repealed, 2005, c. 54, s. 57]
279 [Repealed, 2005, c. 54, s. 57]
280 [Repealed, 2005, c. 54, s. 57]
281 [Repealed, 2005, c. 54, s. 57]
282 [Repealed, 2005, c. 54, s. 57]
Compulsory Acquisitions
Marginal note:Definitions
283 (1) In this section and sections 284 to 293,
- affiliate
affiliate means a body corporate that is affiliated with another body corporate within the meaning of subsection 6(2); (groupe)
- associate of the offeror
associate of the offeror means
(a) a body corporate that an offeror, directly or indirectly, controls, determined without regard to paragraph 3(1)(d), or of which an offeror beneficially owns shares or securities currently convertible into shares carrying more than 10 per cent of the voting rights under all circumstances or by reason of the occurrence of an event that has occurred and is continuing, or a currently exercisable option or right to purchase the shares or the convertible securities,
(b) a partner of the offeror acting on behalf of the partnership of which they are partners,
(c) a trust or estate in which the offeror has a substantial beneficial interest or in respect of which they serve as a trustee or a liquidator of the succession or in a similar capacity,
(d) a spouse or common-law partner of the offeror,
(e) a child of the offeror or of the offeror’s spouse or common-law partner, or
(f) a relative of the offeror or of the offeror’s spouse or common-law partner, if that relative has the same residence as the offeror; (associé du pollicitant)
- dissenting offeree
dissenting offeree means a holder of a share who does not accept a take-over bid or a subsequent holder of the share who acquires it from the first-mentioned holder; (pollicité opposant)
- exempt offer
exempt offer[Repealed, 2005, c. 54, s. 58]
- offeree
offeree means a person to whom a take-over bid is made; (pollicité)
- offeree bank
offeree bank means a bank the shares of which are the object of a take-over bid; (banque pollicitée)
- offeror
offeror means a person, other than an agent, who makes a take-over bid, and includes two or more persons who, directly or indirectly,
(a) make take-over bids jointly or in concert, or
(b) intend to exercise jointly or in concert voting rights attached to shares for which a take-over bid is made; (pollicitant)
- share
share means a share with or without voting rights and includes
(a) a security that is currently convertible into a share, and
(b) a currently exercisable option or right to acquire a share or a security referred to in paragraph (a); (action)
- take-over bid
take-over bid means an offer made by an offeror at approximately the same time to all of the shareholders of a distributing bank to acquire all of the shares of a class of issued shares, and includes an offer by a distributing bank to repurchase all of the shares of a class. (offre d’achat visant à la mainmise)
Marginal note:Control
(2) For the purposes of this section and sections 284 to 293, a person controls a body corporate when the person controls the body corporate within the meaning of section 3, determined without regard to paragraph 3(1)(d).
Marginal note:Date of bid
(3) A take-over bid is deemed to be dated as of the date on which it is sent.
- 1991, c. 46, s. 283
- 2000, c. 12, s. 4
- 2005, c. 54, s. 58
Marginal note:Right to acquire shares
284 If, within one hundred and twenty days after the date of a take-over bid, the bid is accepted by the holders of not less than 90 per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, the offeror is entitled, on complying with sections 285 to 290, subsections 291(1) and (2) and section 292, to acquire the shares held by the dissenting offerees.
- 1991, c. 46, s. 284
- 2005, c. 54, s. 59(F)
Marginal note:Offeror’s notice to dissenters
285 (1) An offeror may acquire shares held by a dissenting offeree by sending by registered mail within sixty days after the date of termination of the take-over bid and in any event within one hundred and eighty days after the date of the take-over bid, an offeror’s notice to each dissenting offeree and to the Superintendent stating that
(a) offerees holding not less than 90 per cent of the shares of any class of shares to which the take-over bid relates, other than shares held at the date of the take-over bid by or on behalf of the offeror or an affiliate or associate of the offeror, have accepted the take-over bid;
(b) the offeror is bound to take up and pay for or has taken up and paid for the shares of the offerees who accepted the take-over bid;
(c) a dissenting offeree is required to elect
(i) to transfer the dissenting offeree’s shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid, or
(ii) to demand payment of the fair value of the dissenting offeree’s shares in accordance with sections 289 to 292 by notifying the offeror within twenty days after receipt of the offeror’s notice;
(d) a dissenting offeree who does not notify the offeror in accordance with paragraph 286(b) is deemed to have elected to transfer the shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid; and
(e) a dissenting offeree must send the dissenting offeree’s shares to which the take-over bid relates to the offeree bank within twenty days after the dissenting offeree receives the offeror’s notice.
Marginal note:Notice of adverse claim
(2) Concurrently with sending the offeror’s notice under subsection (1), the offeror shall send to the offeree bank a notice of adverse claim in accordance with subsection 129(1) with respect to each share held by a dissenting offeree.
- 1991, c. 46, s. 285
- 2005, c. 54, s. 60
Marginal note:Share certificates and election
286 A dissenting offeree to whom a notice is sent under subsection 285(1) shall within 20 days after receiving the notice
(a) send to the offeree bank the share certificates representing the shares to which the take-over bid relates; and
(b) elect to transfer the shares to the offeror on the same terms as those on which the offeror acquired shares from the offerees who accepted the take-over bid or to demand payment of the fair value of the shares in accordance with sections 289 to 292 by notifying the offeror.
- 1991, c. 46, s. 286
- 2005, c. 54, s. 61
Marginal note:Deemed election
286.1 A dissenting offeree who does not notify the offeror in accordance with paragraph 286(b) is deemed to have elected to transfer the shares to the offeror on the same terms as those on which the offeror acquired shares from the offerees who accepted the take-over bid.
- 2005, c. 54, s. 61
Marginal note:Payment to offeree bank
287 (1) Within 20 days after the offeror sends a notice under subsection 285(1), the offeror shall pay the money, or transfer the other consideration, to the offeree bank that the offeror would have had to pay or transfer to a dissenting offeree if the dissenting offeree had elected to transfer their shares in accordance with paragraph 286(b).
Marginal note:Consideration in trust
(2) An offeree bank is deemed to hold in a fiduciary capacity for the dissenting offerees the money or other consideration it receives under subsection (1).
Marginal note:Deposit or custody
(3) An offeree bank shall deposit the money received under subsection (1) in a separate account in another deposit-taking financial institution in Canada and the offeree bank shall place any other consideration in the custody of another deposit-taking financial institution in Canada.
- 1991, c. 46, s. 287
- 2005, c. 54, s. 62
Marginal note:Fiduciary capacity of bank
287.1 A bank that is making a take-over bid to repurchase all of the shares of a class is deemed to hold in a fiduciary capacity for the dissenting shareholders the money that it would have had to pay, and the other consideration that it would have had to transfer, to a dissenting offeree if the dissenting offeree had elected to transfer their shares in accordance with paragraph 286(b). The bank shall within 20 days after a notice is sent under subsection 285(1) deposit the money in a separate account in another deposit-taking financial institution in Canada and place any other consideration in the custody of another deposit-taking financial institution in Canada.
- 2005, c. 54, s. 63
Marginal note:Duty of offeree bank
288 Within thirty days after an offeror sends an offeror’s notice under subsection 285(1), the offeree bank shall
(a) if the payment or transfer required by subsection 287(1) is made, issue to the offeror a share certificate in respect of the shares that were held by the dissenting offerees;
(b) give to each dissenting offeree who elects to transfer shares under paragraph 286(b) and who sends the share certificates as required under paragraph 286(a) the money or other consideration to which they are entitled, disregarding fractional shares, which may be paid for in money; and
(c) if the payment or transfer required by subsection 287(1) is made and the money or other consideration is deposited as required by subsections 287(2) and (3) or by section 287.1, send to each dissenting offeree who has not sent share certificates as required under paragraph 286(a) a notice stating that
(i) their shares have been cancelled,
(ii) the offeree bank or its designated person holds in a fiduciary capacity for that offeree the money or other consideration to which they are entitled as payment for or in exchange for the shares, and
(iii) the offeree bank will, subject to sections 289 to 292, send that money or other consideration to that offeree without delay after receiving the share certificates.
- 1991, c. 46, s. 288
- 2005, c. 54, s. 64
Marginal note:Court may fix fair value
289 (1) If a dissenting offeree has elected to demand payment of the fair value of their shares under paragraph 286(b), the offeror may, within 20 days after it has paid the money or transferred the other consideration under subsection 287(1), apply to a court to fix the fair value of the shares of that dissenting offeree.
Marginal note:Idem
(2) If an offeror fails to apply to a court under subsection (1), a dissenting offeree may apply to a court for the same purpose within a further period of twenty days.
Marginal note:Venue
(3) An application under subsection (1) or (2) shall be made to a court having jurisdiction in the place at which the head office of the bank is situated or in the province in which the dissenting offeree resides if the bank carries on business in that province.
Marginal note:No security for costs
(4) A dissenting offeree is not required to give security for costs in an application made under subsection (1) or (2).
- 1991, c. 46, s. 289
- 2005, c. 54, s. 65
Marginal note:Parties and notice
290 On an application under subsection 289(1) or (2),
(a) all dissenting offerees who have made elections to demand payment under paragraph 286(b) and whose shares have not been acquired by the offeror shall be joined as parties and are bound by the decision of the court; and
(b) the offeror shall notify each affected dissenting offeree of the date, place and consequences of the application and of the dissenting offeree’s right to appear and be heard in person or by counsel at the hearing of the application.
- 1991, c. 46, s. 290
- 2005, c. 54, s. 66
Marginal note:Powers of court
291 (1) On an application to a court under subsection 289(1) or (2), the court may determine whether any other person is a dissenting offeree who should be joined as a party, and the court shall then fix a fair value for the shares of all dissenting offerees.
Marginal note:Appraisers
(2) A court may in its discretion appoint one or more appraisers to assist the court in fixing a fair value for the shares of a dissenting offeree.
Marginal note:Final order
(3) The final order of a court shall be made against the offeror in favour of each dissenting offeree and for the amount for each dissenting offeree’s shares as fixed by the court.
Marginal note:Additional powers of court
(4) In connection with proceedings under subsection 289(1) or (2), a court may make any order it thinks fit and, without limiting the generality of the foregoing, may
(a) fix the amount of money or other consideration that is deemed to be held in a fiduciary capacity under subsection 287(2) or section 287.1;
(b) order that the money or other consideration is to be held in trust by a person other than the offeree bank;
(c) allow a reasonable rate of interest on the amount payable to each dissenting offeree from the date the dissenting offeree sends the share certificates required under section 286 until the date of payment; or
(d) order that any money payable to a shareholder who cannot be found is to be paid to the Minister.
- 1991, c. 46, s. 291
- 2005, c. 54, s. 67
Marginal note:Status of dissenter
292 Where no application is made to a court under subsection 289(2) within the period set out in that subsection, a dissenting offeree is deemed to have elected to transfer the dissenting offeree’s shares to the offeror on the same terms on which the offeror acquired the shares from the offerees who accepted the take-over bid.
Marginal note:Obligation to acquire shares
292.1 (1) If a shareholder who holds shares of an offeree bank does not receive the notice referred to in subsection 285(1), the shareholder may require the offeror to acquire the shares
(a) within 90 days after the date of termination of the take-over bid; or
(b) if the shareholder did not receive an offer under the take-over bid, within 90 days after the later of
(i) the date of termination of the take-over bid, and
(ii) the day on which the shareholder learned of the take-over bid.
Marginal note:Acquisition on same terms
(2) If the shareholder requires the offeror to acquire shares, the offeror shall acquire them on the same terms as those on which the offeror acquires shares from offerees who accept the take-over bid.
- 2005, c. 54, s. 68
Marginal note:Payment of unclaimed money
293 The Minister shall pay to the Bank of Canada any amounts paid to the Minister under subsection 291(4), and section 367 applies in respect thereof as if the amounts paid under subsection 291(4) had been paid under subsection 366(3).
Trust Indentures
Marginal note:Definitions
294 In this section and sections 295 to 306,
- event of default
event of default means, in relation to a trust indenture, an event specified in the trust indenture on the occurrence of which the principal, interest and other moneys payable thereunder become or may be declared to be payable before maturity, but the event is not an event of default until all the conditions set out in the trust indenture in connection with the giving of notice of the event have been satisfied or the period of time for giving the notice has elapsed; (cas de défaut)
- issuer
issuer means a bank that has issued, is about to issue or is in the process of issuing subordinated indebtedness; (émetteur)
- trustee
trustee means any person appointed as trustee under the terms of a trust indenture to which a bank is a party, and includes any successor trustee; (fiduciaire)
- trust indenture
trust indenture means any deed, indenture or other instrument, including any supplement or amendment thereto, made by a bank under which the bank issues subordinated indebtedness and in which a person is appointed as trustee for the holders of the subordinated indebtedness issued thereunder. (acte de fiducie)
Marginal note:Application
295 Sections 296 to 306 apply in respect of a trust indenture if the subordinated indebtedness issued or to be issued under the trust indenture is part of a distribution to the public.
Marginal note:Exemption
296 The Superintendent may, in writing, exempt a trust indenture from the application of sections 297 to 306 if, in the Superintendent’s opinion, the trust indenture and the subordinated indebtedness are subject to a law of a province or other jurisdiction, other than Canada, that is substantially equivalent to the provisions of this Act relating to trust indentures.
Marginal note:Conflict of interest
297 (1) No person shall be appointed as trustee if at the time of the appointment there is a material conflict of interest between the person’s role as trustee and any other role of the person.
Marginal note:Eliminating conflict of interest
(2) A trustee shall, within ninety days after the trustee becomes aware that a material conflict of interest exists,
(a) eliminate the conflict of interest; or
(b) resign from office.
Marginal note:Validity despite conflict
298 A trust indenture and any subordinated indebtedness issued thereunder are valid notwithstanding a material conflict of interest of the trustee.
Marginal note:Removal of trustee
299 If a trustee is appointed in contravention of subsection 297(1) or if a trustee contravenes subsection 297(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on such terms as it thinks fit.
Marginal note:Trustee qualifications
300 A trustee, or at least one of the trustees if more than one is appointed, must be
(a) a trust company pursuant to subsection 57(2) of the Trust and Loan Companies Act; or
(b) a body corporate that is incorporated by or under an Act of the legislature of a province and authorized to carry on business as a trustee.
- 1991, c. 46, ss. 300, 577
- 2007, c. 6, s. 18
Marginal note:List of security holders
301 (1) A holder of subordinated indebtedness issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, within fifteen days after the delivery to the trustee of the statutory declaration, a list setting out
(a) the names and addresses of the registered holders of the outstanding subordinated indebtedness,
(b) the principal amount of outstanding subordinated indebtedness owned by each such holder, and
(c) the aggregate principal amount of subordinated indebtedness outstanding
as shown on the records maintained by the trustee on the day the statutory declaration is delivered to that trustee.
Marginal note:Duty of issuer
(2) On the demand of a trustee, the issuer of subordinated indebtedness shall provide the trustee with the information required to enable the trustee to comply with subsection (1).
Marginal note:Where applicant is entity
(3) Where the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection shall be made by a director or an officer of the entity or a person acting in a similar capacity.
Marginal note:Contents of statutory declaration
(4) The statutory declaration required under subsection (1) must state
(a) the name and address of the person requiring the trustee to provide the list and, if the person is an entity, the address for service thereof; and
(b) that the list will not be used except as permitted by subsection (5).
Marginal note:Use of list
(5) No person shall use a list obtained under this section except in connection with
(a) an effort to influence the voting of the holders of subordinated indebtedness;
(b) an offer to acquire subordinated indebtedness; or
(c) any other matter relating to the subordinated indebtedness or the affairs of the issuer or guarantor thereof.
Marginal note:Compliance with trust indentures
302 (1) An issuer or a guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall, before undertaking
(a) the issue, certification and delivery of subordinated indebtedness under the trust indenture, or
(b) the satisfaction and discharge of the trust indenture,
provide the trustee with evidence of compliance with the conditions in the trust indenture in respect thereof.
Marginal note:Compliance by issuer or guarantor
(2) On the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall provide the trustee with evidence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.
Marginal note:Evidence of compliance
(3) The following documents constitute evidence of compliance for the purposes of subsections (1) and (2):
(a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;
(b) an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been complied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; and
(c) an opinion or report of the auditors of the issuer or guarantor, or such other accountant as the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires compliance with conditions that are subject to review by auditors.
Marginal note:Further evidence of compliance
(4) The evidence of compliance referred to in subsection (3) shall include a statement by the person giving the evidence
(a) declaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);
(b) describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; and
(c) declaring that the person has made such examination or investigation as the person believes necessary to enable the statements to be made or the opinions contained or expressed therein to be given.
Marginal note:Trustee may require evidence
303 (1) On the request of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with evidence in such form as the trustee requires of compliance with any condition thereof relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.
Marginal note:Certificate of compliance
(2) At least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars thereof.
Marginal note:Notice of default
304 A trustee shall, within thirty days after the trustee becomes aware of the occurrence thereof, give to the holders of subordinated indebtedness issued under a trust indenture notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the subordinated indebtedness to withhold the notice and so informs the issuer and guarantor in writing.
Marginal note:Duty of care
305 (1) In exercising a trustee’s powers and discharging a trustee’s duties, the trustee shall
(a) act honestly and in good faith with a view to the best interests of the holders of the subordinated indebtedness issued under the trust indenture; and
(b) exercise the care, diligence and skill of a reasonably prudent trustee.
Marginal note:Reliance on statements
(2) Notwithstanding subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.
Marginal note:No exculpation
306 No term of a trust indenture or of any agreement between a trustee and the holders of subordinated indebtedness issued thereunder or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by sections 297, 301 and 304 and subsection 305(1).
Financial Statements and Auditors
Annual Financial Statement
Marginal note:Financial year
307 (1) The financial year of a bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in each year.
Marginal note:First financial year
(2) If a bank, after the first day of July in any year, obtains an order approving the commencement and carrying on of business, the first financial year of the bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.
Marginal note:Exception
(3) Despite subsection (1), the financial year of a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force ends on the expiration of the thirty-first day of October in each year unless the bank elects in its by-laws to have its financial year end on the thirty-first day of December in each year.
- 1991, c. 46, s. 307
- 2001, c. 9, s. 91
Marginal note:Annual financial statement
308 (1) The directors of a bank shall place before the shareholders at every annual meeting
(a) a comparative annual financial statement (in this Act referred to as an “annual statement”) relating separately to
(i) the financial year immediately preceding the meeting, and
(ii) the financial year, if any, immediately preceding the financial year referred to in subparagraph (i);
(b) the report of the auditor or auditors of the bank; and
(c) any further information respecting the financial position of the bank and the results of its operations required by the by-laws of the bank to be placed before the shareholders at the annual meeting.
Marginal note:Annual statement — contents
(2) With respect to each of the financial years to which it relates, the annual statement of a bank must contain the prescribed statements and any information that is in the opinion of the directors necessary to present fairly, in accordance with the accounting principles referred to in subsection (4), the financial position of the bank 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 bank for that financial year.
Marginal note:Additional information
(3) A bank shall include with its annual statement
(a) a list of the subsidiaries of the bank, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 472 or pursuant to a realization of security in accordance with section 473 and which the bank would not otherwise be permitted to hold, showing, with respect to each subsidiary,
(i) its name and the address of its head or principal office,
(ii) the book value of the aggregate of any shares of the subsidiary beneficially owned by the bank and by other subsidiaries of the bank, and
(iii) the percentage of the voting rights attached to all the outstanding voting shares of the subsidiary that is carried by the aggregate of any voting shares of the subsidiary beneficially owned by the bank and by other subsidiaries of the bank; and
(b) such other information as the Governor in Council may, by order, require in such form as may be prescribed.
Marginal note:Accounting principles
(4) The financial statements referred to in subsection (1), paragraph (3)(b) and subsection 310(1) shall, except as otherwise specified by the Superintendent, be prepared in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants. A reference in any provision of this Act to the accounting principles referred to in this subsection shall be construed as a reference to those generally accepted accounting principles with any specifications so made.
Marginal note:Regulations
(5) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).
- 1991, c. 46, s. 308
- 1997, c. 15, s. 33
- 2001, c. 9, s. 92
- 2005, c. 54, s. 69
Marginal note:Annual statement — approval
309 (1) The directors of a bank shall approve the annual statement and their approval shall be evidenced by the signature or a printed or otherwise mechanically reproduced facsimile of the signature of
(a) the chief executive officer or, in the event of that officer’s absence or inability to act, any other officer of the bank authorized by the directors to sign in the stead of the chief executive officer; and
(b) one director, if the signature required by paragraph (a) is that of a director, or two directors if the signature required by that paragraph is that of an officer who is not a director.
Marginal note:Condition precedent to publication
(2) A bank shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).
- 1991, c. 46, s. 309
- 2005, c. 54, s. 70
Marginal note:Statements — subsidiaries
310 (1) A bank shall keep at its head office a copy of the current financial statements of each subsidiary of the bank.
Marginal note:Examination
(2) Subject to this section, the shareholders of a bank and their personal representatives may, on request therefor, examine the statements referred to in subsection (1) during the usual business hours of the bank and may take extracts therefrom free of charge.
Marginal note:Barring examination
(3) A bank may refuse to permit an examination under subsection (2) by any person.
Marginal note:Application for order
(4) Within fifteen days after a refusal under subsection (3), the bank shall apply to a court for an order barring the right of the person concerned to make an examination under subsection (2) and the court shall either order the bank to permit the examination or, if it is satisfied that the examination would be detrimental to the bank or to any other body corporate the financial statements of which would be subject to examination, bar the right and make any further order it thinks fit.
Marginal note:Notice to Superintendent
(5) A bank shall give the Superintendent and the person seeking to examine the statements referred to in subsection (1) notice of an application to a court under subsection (4), and the Superintendent and the person may appear and be heard in person or by counsel at the hearing of the application.
Marginal note:Annual statement — distribution
311 (1) A bank shall, no later than 21 days before the date of each annual meeting or before the signing of a resolution under paragraph 152(1)(b) in lieu of the annual meeting, send to each shareholder a copy of the documents referred to in subsections 308(1) and (3) unless that time period is waived by the shareholder.
Marginal note:Exception
(2) A bank is not required to comply with subsection (1) with respect to a shareholder who has informed the bank, in writing, that the shareholder does not wish to receive the annual statement.
Marginal note:Effect of default
(3) Where a bank is required to comply with subsection (1) and the bank does not comply with that subsection, the annual meeting at which the documents referred to in that subsection are to be considered shall be adjourned until that subsection has been complied with.
- 1991, c. 46, s. 311
- 1997, c. 15, s. 34
- 2005, c. 54, s. 71
Marginal note:Copy to Superintendent
312 (1) Subject to subsection (2), a bank shall send to the Superintendent a copy of the documents referred to in subsections 308(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the bank.
Marginal note:Later filing
(2) If a bank’s shareholders sign a resolution under paragraph 152(1)(b) in lieu of an annual meeting, the bank shall send a copy of the documents referred to in subsections 308(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.
- 1991, c. 46, s. 312
- 1997, c. 15, s. 35
- 2001, c. 9, s. 93
Auditors
Marginal note:Definitions
313 For the purposes of this section and sections 314 to 333,
- firm of accountants
firm of accountants means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting; (cabinet de comptables)
- member
member, in relation to a firm of accountants, means
(a) an accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting, or
(b) an accountant who is an employee of a firm of accountants. (membre)
Marginal note:Appointment of auditors
314 (1) The shareholders of a bank shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting, appoint a firm of accountants to be the auditor of the bank until the close of the next annual meeting.
Marginal note:Auditors
(2) The shareholders of a bank may, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting, appoint two firms of accountants to be the auditors of the bank until the close of the next annual meeting.
Marginal note:Remuneration of auditors
(3) The remuneration of the auditor or auditors may be fixed by ordinary resolution of the shareholders but, if not so fixed, shall be fixed by the directors.
Marginal note:Qualification of auditors
315 (1) A firm of accountants is qualified to be an auditor of a bank if
(a) two or more members thereof are accountants who
(i) are members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,
(ii) each have at least five years experience at a senior level in performing audits of a financial institution,
(iii) are ordinarily resident in Canada, and
(iv) are independent of the bank; and
(b) the member of the firm jointly designated by the firm and the bank to conduct the audit of the bank on behalf of the firm is qualified in accordance with paragraph (a).
Marginal note:Independence
(2) For the purposes of subsection (1),
(a) independence is a question of fact; and
(b) a member of a firm of accountants is deemed not to be independent of a bank if that member, a business partner of that member or the firm of accountants
(i) is a business partner, director, officer or employee of the bank or of any affiliate of the bank or is a business partner of any director, officer or employee of the bank or of any affiliate of the bank,
(ii) beneficially owns or controls, directly or indirectly, a material interest in the shares of the bank or of any affiliate of the bank, or
(iii) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the bank within the two years immediately preceding the firm’s proposed appointment as auditor of the bank, other than an affiliate that is a subsidiary of the bank acquired pursuant to section 472 or through a realization of security pursuant to section 473.
Marginal note:Business partners
(2.1) For the purposes of subsection (2), a business partner of a member of a firm of accountants includes
(a) another member of the firm; and
(b) a shareholder of the firm or of a business partner of the member.
Marginal note:Notice of designation
(3) Within fifteen days after appointing a firm of accountants as auditor of a bank, the bank and the firm of accountants shall jointly designate a member of the firm who has the qualifications described in subsection (1) to conduct the audit of the bank on behalf of the firm and the bank shall forthwith notify the Superintendent in writing of the designation.
Marginal note:New designation
(4) Where for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the bank, the bank and the firm of accountants may jointly designate another member of the same firm of accountants who has the qualifications described in subsection (1) to conduct the audit of the bank and the bank shall forthwith notify the Superintendent in writing of the designation.
Marginal note:Deemed vacancy
(5) In any case where subsection (4) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit of the bank, there shall be deemed to be a vacancy in the office of auditor of the bank.
- 1991, c. 46, s. 315
- 2001, c. 9, s. 94
- 2005, c. 54, s. 72
Marginal note:Duty to resign
316 (1) An auditor that ceases to be qualified under section 315 shall resign forthwith after any member of the firm becomes aware that the firm has ceased to be so qualified.
Marginal note:Disqualification order
(2) Any interested person may apply to a court for an order declaring that an auditor of a bank has ceased to be qualified under section 315 and declaring the office of auditor to be vacant.
Marginal note:Revocation of appointment
317 (1) The shareholders of a bank may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.
Marginal note:Idem
(2) The Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 314(1) or section 319 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the bank addressed to the usual place of business of the auditor and the bank.
Marginal note:Filling vacancy
(3) A vacancy created by the revocation of the appointment of an auditor under subsection (1) may be filled at the meeting at which the appointment was revoked and, if not so filled, shall be filled by the directors under section 319.
Marginal note:Ceasing to hold office
318 (1) An auditor of a bank ceases to hold office when
(a) the auditor resigns; or
(b) the appointment of the auditor is revoked by the shareholders or the Superintendent.
Marginal note:Effective date of resignation
(2) The resignation of an auditor becomes effective at the time a written resignation is sent to the bank or at the time specified in the resignation, whichever is later.
Marginal note:Filling vacancy
319 (1) Subject to subsection 317(3), where a vacancy occurs in the office of auditor of a bank, the directors shall forthwith fill the vacancy, and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.
Marginal note:Where Superintendent may fill vacancy
(2) Where the directors fail to fill a vacancy in accordance with subsection (1), the Superintendent may fill the vacancy and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.
Marginal note:Designation of member of firm
(3) Where the Superintendent has, pursuant to subsection (2), appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit of the bank on behalf of the firm.
Marginal note:Right to attend meetings
320 (1) The auditor or auditors of a bank are entitled to receive notice of every meeting of shareholders and, at the expense of the bank, to attend and be heard thereat on matters relating to the duties of the auditor or auditors.
Marginal note:Duty to attend meeting
(2) If a director or shareholder of a bank, whether or not the shareholder is entitled to vote at the meeting, gives written notice, not less than ten days before a meeting of shareholders, to an auditor or former auditor of the bank that the director or shareholder wishes the auditor’s attendance at the meeting, the auditor or former auditor shall attend the meeting at the expense of the bank and answer questions relating to the auditor’s or former auditor’s duties as auditor.
Marginal note:Notice to bank
(3) A director or shareholder who gives notice under subsection (2) shall send concurrently a copy of the notice to the bank and the bank shall forthwith send a copy thereof to the Superintendent.
Marginal note:Superintendent may attend
(4) The Superintendent may attend and be heard at any meeting referred to in subsection (2).
Marginal note:Statement of auditor
321 (1) An auditor of a bank that
(a) resigns,
(b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of revoking the appointment of the auditor, or
(c) receives a notice or otherwise learns of a meeting of directors or shareholders at which another firm of accountants is to be appointed in its stead, whether because of the auditor’s resignation or revocation of appointment or because the auditor’s term of office has expired or is about to expire,
shall submit to the bank and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.
Marginal note:Other statements
(1.1) In the case of a proposed replacement of an auditor whether because of removal or the expiry of their term, the bank shall make a statement of the reasons for the proposed replacement and the proposed replacement auditor may make a statement in which they comment on those reasons.
Marginal note:Statements to be sent
(2) The bank shall send a copy of the statements referred to in subsections (1) and (1.1) without delay to every shareholder entitled to vote at the annual meeting of shareholders and to the Superintendent.
- 1991, c. 46, s. 321
- 2005, c. 54, s. 73
Marginal note:Duty of replacement auditor
322 (1) Where an auditor of a bank has resigned or the appointment of an auditor has been revoked, no firm of accountants shall accept an appointment as auditor of the bank or consent to be an auditor of the bank until the firm of accountants has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.
Marginal note:Exception
(2) Notwithstanding subsection (1), a firm of accountants may accept an appointment or consent to be appointed as auditor of a bank if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.
Marginal note:Effect of non-compliance
(3) Unless subsection (2) applies, an appointment as auditor of a bank is void if subsection (1) has not been complied with.
Marginal note:Auditors’ examination
323 (1) The auditor or auditors of a bank shall make such examination as the auditor or auditors consider necessary to enable the auditor or auditors to report on the annual statement and on other financial statements required by this Act to be placed before the shareholders, except such annual statements or parts thereof as relate to the period referred to in subparagraph 308(1)(a)(ii).
Marginal note:Auditing standards
(2) The examination of the auditor or auditors referred to in subsection (1) shall, except as otherwise specified by the Superintendent, be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants.
Marginal note:Right to information
324 (1) On the request of the auditor or auditors of a bank, the present or former directors, officers, employees or agents of the bank shall, to the extent that such persons are reasonably able to do so,
(a) permit access to such records, assets and security held by the bank or any entity in which the bank has a substantial investment, and
(b) provide such information and explanations
as are, in the opinion of the auditor or auditors, necessary to enable the auditor or auditors to perform the duties of the auditor or auditors of the bank.
Marginal note:Directors to provide information
(2) On the request of the auditor or auditors of a bank, the directors of the bank shall, to the extent that they are reasonably able to do so,
(a) obtain from the present or former directors, officers, employees and agents of any entity in which the bank has a substantial investment the information and explanations that such persons are reasonably able to provide and that are, in the opinion of the auditor or auditors, necessary to enable them to perform the duties of the auditor or auditors of the bank; and
(b) provide the auditor or auditors with the information and explanations so obtained.
Marginal note:No civil liability
(3) A person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.
Marginal note:Auditors’ report and extended examination
325 (1) The Superintendent may, in writing, require that the auditor or auditors of a bank report to the Superintendent on the extent of the procedures of the auditor or auditors in the examination of the annual statement and may, in writing, require that the auditor or auditors enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor or auditors 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 or auditors of a bank make a particular examination relating to the adequacy of the procedures adopted by the bank 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 bank be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose a firm of accountants qualified pursuant to subsection 315(1) to be an auditor of the bank.
Marginal note:Expenses payable by bank
(4) The expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the bank on being approved in writing by the Superintendent.
- 1991, c. 46, s. 325
- 1999, c. 31, s. 13(F)
Marginal note:Auditors’ report
326 (1) The auditor or auditors shall, not less than twenty-one days before the date of the annual meeting of the shareholders of the bank, make a report in writing to the shareholders on the annual statement referred to in subsection 308(1).
Marginal note:Audit for shareholders
(2) In each report required under subsection (1), the auditor or auditors shall state whether, in the opinion of the auditor or auditors, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the bank 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 bank for that financial year.
Marginal note:Auditors’ remarks
(3) In each report referred to in subsection (2), the auditor or auditors shall include such remarks as the auditor or auditors consider necessary when
(a) the examination has not been made in accordance with the auditing standards referred to in subsection 323(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 308(4), the financial position of the bank 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 bank for that financial year.
Marginal note:Report on directors’ statement
327 (1) The auditor or auditors of a bank 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 their opinion, the financial statement presents fairly the information required by the shareholders.
Marginal note:Making of report
(2) A report of the auditor or auditors 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
328 (1) It is the duty of the auditor or auditors of a bank to report in writing to the chief executive officer and chief financial officer of the bank any transactions or conditions that have come to the attention of the auditor or auditors affecting the well-being of the bank that in the opinion of the auditor or auditors are not satisfactory and require rectification and, without restricting the generality of the foregoing, the auditor or auditors shall, as occasion requires, make a report to those officers in respect of
(a) transactions of the bank that have come to the attention of the auditor or auditors and that in the opinion of the auditor or auditors have not been within the powers of the bank, and
(b) loans owing to the bank by any person the aggregate amount of which exceeds one half of one per cent of the regulatory capital of the bank and in respect of which, in the opinion of the auditor or auditors, loss to the bank 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 or auditors, the amount of the loss likely to occur has increased.
Marginal note:Transmission of report
(2) Where the auditor or auditors of a bank make a report under subsection (1),
(a) the auditor or auditors shall transmit the report, in writing, to the chief executive officer and chief financial officer of the bank;
(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 or auditors shall, at the time of transmitting the report to the chief executive officer and chief financial officer, provide the audit committee of the bank and the Superintendent with a copy.
- 1991, c. 46, s. 328
- 2005, c. 54, s. 74
Marginal note:Auditors of subsidiaries
329 (1) A bank shall take all necessary steps to ensure that each of its subsidiaries has as its auditor the auditor or one of the auditors of the bank.
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 an auditor of the bank as the auditor of that subsidiary.
Marginal note:Exception
(3) Subsection (1) does not apply in respect of any particular subsidiary where the bank, after having consulted its auditor or auditors, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the bank.
Marginal note:Auditors’ attendance
330 (1) The auditor or auditors of a bank are entitled to receive notice of every meeting of the audit committee and the conduct review committee of the bank and, at the expense of the bank, to attend and be heard at that meeting.
Marginal note:Attendance
(2) If so requested by a member of the audit committee, the auditor or auditors shall attend every meeting of the audit committee held during the member’s term of office.
- 1991, c. 46, s. 330
- 1993, c. 34, s. 7(F)
Marginal note:Calling meeting
331 (1) The auditor or auditors of a bank 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 bank or any officer or employee of the bank acting in a similar capacity shall, at the request of the auditor or auditors of the bank and on receipt of reasonable notice, meet with the auditor or auditors.
Marginal note:Notice of errors
332 (1) A director or an officer of a bank shall forthwith notify the audit committee and the auditor or auditors of the bank 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 auditors or any former auditor or auditors have reported.
Marginal note:Error noted by auditors
(2) If the auditor or auditors or former auditor or auditors of a bank are notified or become aware of an error or misstatement in an annual statement or other financial statement on which the auditor or auditors reported and in the opinion of the auditor or auditors the error or misstatement is material, the auditor or auditors or former auditor or auditors shall inform each director of the bank accordingly.
Marginal note:Duty of directors
(3) When under subsection (2) the auditor or auditors or former auditor or auditors of a bank inform 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
333 Any oral or written statement or report made under this Act by the auditor or auditors or former auditor or auditors of a bank has qualified privilege.
Remedial Actions
Marginal note:Derivative action
334 (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 bank or any of its subsidiaries, or to intervene in an action under this Act to which the bank or a subsidiary of the bank is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the bank 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 bank or the bank’s subsidiary of the complainant’s intention to apply to the court under subsection (1) if the directors of the bank or the bank’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 bank 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. 46, s. 334
- 2005, c. 54, s. 75
Marginal note:Powers of court
335 (1) In connection with an action brought or intervened in under subsection 334(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 bank or of the subsidiary instead of to the bank or to the subsidiary; and
(d) an order requiring the bank 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
336 (1) An application made or an action brought or intervened in under subsection 334(1) or section 338 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 bank or its subsidiary has been or might be approved by the shareholders of the bank 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 335.
Marginal note:Court approval to discontinue
(2) An application made or an action brought or intervened in under subsection 334(1) or section 338 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
337 (1) A complainant is not required to give security for costs in any application made or any action brought or intervened in under subsection 334(1) or section 338.
Marginal note:Interim costs
(2) In an application made or an action brought or intervened in under subsection 334(1) or section 338, the court may at any time order the bank 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. 46, s. 337
- 2005, c. 54, s. 76(F)
Marginal note:Application to rectify records
338 (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 bank, the bank, a security holder of the bank 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 bank to be rectified;
(b) an order restraining a bank 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 bank, whether the issue arises between two or more security holders or alleged security holders, or between the bank and any security holder or alleged security holder; and
(d) an order compensating a party who has incurred a loss.
Liquidation and Dissolution
Definition of court
339 For the purposes of subsections 346(1) and 347(1) and (2), sections 348 to 352, subsection 353(1), sections 355 and 357 to 359, subsections 363(3) and (4) and section 368, court means a court having jurisdiction in the place where the bank has its head office.
Marginal note:Application of subsection (2) and sections 341 to 368
340 (1) Subsection (2) and sections 341 to 368 do not apply to a bank 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 bank shall be stayed if the bank is at any time found to be insolvent within the meaning of the Winding-up and Restructuring Act.
- 1991, c. 46, s. 340
- 1996, c. 6, s. 167
Marginal note:Returns to Superintendent
341 A liquidator appointed under this Part to wind up the business of a bank shall provide the Superintendent with such information relating to the business and affairs of the bank in such form as the Superintendent requires.
Simple Liquidation
Marginal note:No property and no liabilities
342 (1) A bank that has no property and no liabilities may, if authorized by a special resolution of the shareholders or, if there are no shareholders, by a resolution of all the directors, apply to the Minister for letters patent dissolving the bank.
Marginal note:Dissolution by letters patent
(2) Where the Minister has received an application under subsection (1) and is satisfied that all the circumstances so warrant, the Minister may issue letters patent dissolving the bank.
Marginal note:Effect of letters patent
(3) A bank in respect of which letters patent are issued under subsection (2) ceases to exist on the day stated in the letters patent.
Marginal note:Proposing liquidation
343 (1) The voluntary liquidation and dissolution of a bank, other than a bank referred to in subsection 342(1),
(a) may be proposed by its directors; or
(b) may be initiated by way of a proposal made by a shareholder who is entitled to vote at an annual meeting of shareholders in accordance with sections 143 and 144.
Marginal note:Terms must be set out
(2) A notice of any meeting of shareholders at which the voluntary liquidation and dissolution of a bank is to be proposed shall set out the terms of the proposal.
Marginal note:Shareholders’ resolution
344 Where the voluntary liquidation and dissolution of a bank is proposed, the bank may apply to the Minister for letters patent dissolving the bank if authorized by a special resolution of the shareholders or, where the bank has issued more than one class of shares, by special resolution of each class of shareholders whether or not those shareholders are otherwise entitled to vote.
Marginal note:Approval of Minister required
345 (1) No action directed toward the voluntary liquidation and dissolution of a bank shall be taken by a bank, other than as provided in sections 343 and 344, until an application made by the bank pursuant to section 344 has been approved by the Minister.
Marginal note:Conditional approval
(2) Where the Minister is satisfied on the basis of an application made pursuant to section 344 that the circumstances warrant the voluntary liquidation and dissolution of a bank, the Minister may, by order, approve the application.
Marginal note:Effect of approval
(3) Where the Minister has approved an application made pursuant to section 344 with respect to a bank, the bank shall not carry on business except to the extent necessary to complete its voluntary liquidation.
Marginal note:Liquidation process
(4) Where the Minister has approved an application made pursuant to section 344 with respect to a bank, the bank shall
(a) cause notice of the approval to be sent to each known claimant against and creditor of the bank;
(b) publish notice of the approval once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the bank transacted any business within the preceding twelve months;
(c) proceed to collect its property, dispose of property that is not to be distributed in kind to its shareholders, discharge all its obligations and do all other acts required to liquidate its business; and
(d) after giving the notice required under paragraphs (a) and (b) and adequately providing for the payment or discharge of all its obligations, distribute its remaining property, either in money or in kind, among its shareholders according to their respective rights.
Marginal note:Dissolution instrument
346 (1) Unless a court has made an order in accordance with subsection 347(1), the Minister may, if satisfied that the bank has complied with subsection 345(4) and that all the circumstances so warrant, issue letters patent dissolving the bank.
Marginal note:Bank dissolved
(2) A bank in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the day stated in the letters patent.
Court-supervised Liquidation
Marginal note:Application for court supervision
347 (1) The Superintendent or any interested person may, at any time during the liquidation of a bank, apply to a court for an order for the continuance of the voluntary liquidation under the supervision of the court in accordance with this section and sections 348 to 360 and on such application the court may so order and make any further order it thinks fit.
Marginal note:Idem
(2) An application under subsection (1) to a court to supervise a voluntary liquidation shall state the reasons, verified by an affidavit of the applicant, why the court should supervise the liquidation.
Marginal note:Notice to Superintendent
(3) Where a person, other than the Superintendent, makes an application under subsection (1), the person 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:Court supervision thereafter
348 (1) When a court makes an order under subsection 347(1), the liquidation of the bank shall continue under the supervision of the court.
Marginal note:Commencement of liquidation
(2) The supervision of the liquidation of a bank by the court pursuant to an order made under subsection 347(1) commences on the day the order is made.
Marginal note:Powers of court
349 In connection with the liquidation and dissolution of a bank, the court may, where it is satisfied that the bank is able to pay or adequately provide for the discharge of all its obligations, make any order it thinks fit including, without limiting the generality of the foregoing,
(a) an order to liquidate;
(b) an order appointing a liquidator, with or without security, fixing a liquidator’s remuneration and replacing a liquidator;
(c) an order appointing inspectors or referees, specifying their powers, fixing their remuneration and replacing inspectors or referees;
(d) an order determining the notice to be given to any interested person, or dispensing with notice to any person;
(e) an order determining the validity of any claims made against the bank;
(f) an order, at any stage of the proceedings, restraining the directors and officers of the bank from
(i) exercising any of their powers, or
(ii) collecting or receiving any debt or other property of the bank, and from paying out or transferring any property of the bank, except as permitted by the court;
(g) an order determining and enforcing the duty or liability of any present or former director, officer or shareholder
(i) to the bank, or
(ii) for an obligation of the bank;
(h) an order approving the payment, satisfaction or compromise of claims against the bank and the retention of assets for that purpose, and determining the adequacy of provisions for the payment, discharge or transfer of any obligation of the bank, whether liquidated, unliquidated, future or contingent;
(i) with the concurrence of the Superintendent, an order providing for the disposal or destruction of the documents, records or registers of the bank;
(j) on the application of a creditor, an inspector or the liquidator, an order giving directions on any matter arising in the liquidation;
(k) after notice has been given to all interested parties, an order relieving the liquidator from any omission or default on such terms as the court thinks fit and confirming any act of the liquidator;
(l) subject to sections 356 to 358, an order approving any proposed, interim or final distribution to shareholders, if any, or incorporators, in money or in property;
(m) an order disposing of any property belonging to creditors, shareholders and incorporators who cannot be found;
(n) on the application of any director, officer, shareholder, incorporator, creditor or the liquidator,
(i) an order staying the liquidation proceedings on such terms and conditions as the court thinks fit,
(ii) an order continuing or discontinuing the liquidation proceedings, or
(iii) an order to the liquidator to restore to the bank all of its remaining property; and
(o) after the liquidator has rendered the liquidator’s final account to the court, an order directing the bank to apply to the Minister for letters patent dissolving the bank.
- 1991, c. 46, s. 349
- 2005, c. 54, s. 77(F)
Marginal note:Cessation of business and powers
350 (1) Where a court makes an order for the liquidation of a bank,
(a) the bank continues in existence but shall cease to carry on business, except the business that is, in the opinion of the liquidator, required for an orderly liquidation; and
(b) the powers of the directors and shareholders, if any, are vested in the liquidator and cease to be vested in the directors or shareholders, except as specifically authorized by the court.
Marginal note:Delegation by liquidator
(2) A liquidator may delegate any of the powers vested by paragraph (1)(b) to the directors or shareholders, if any.
Marginal note:Appointment of liquidator
351 When making an order for the liquidation of a bank or at any time thereafter, the court may appoint any person, including a director, an officer or a shareholder of the bank or any other bank, as liquidator of the bank.
Marginal note:Vacancy in liquidator’s office
352 Where an order for the liquidation of a bank has been made and the office of liquidator is or becomes vacant, the property of the bank is under the control of the court until the office of liquidator is filled.
Marginal note:Duties of liquidator
353 (1) A liquidator shall
(a) forthwith after appointment give notice thereof to the Superintendent and to each claimant and creditor of the bank known to the liquidator;
(b) forthwith after appointment publish notice thereof once a week for four consecutive weeks in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the bank has transacted any business within the preceding twelve months, requiring
(i) any person indebted to the bank to render an account and pay to the liquidator at the time and place specified in the notice any amount owing,
(ii) any person possessing property of the bank to deliver it to the liquidator at the time and place specified in the notice, and
(iii) any person having a claim against the bank, whether liquidated, unliquidated, future or contingent, to present particulars thereof in writing to the liquidator not later than sixty days after the first publication of the notice;
(c) take into custody and control the property of the bank;
(d) open and maintain a trust account for the moneys received by the liquidator in the course of the liquidation of the bank;
(e) keep accounts of the moneys received and paid out by the liquidator in the course of the liquidation of the bank;
(f) maintain separate lists of each class of creditors, shareholders and other persons having claims against the bank;
(g) if at any time the liquidator determines that the bank is unable to pay or adequately provide for the discharge of its obligations, apply to the court for directions;
(h) deliver to the court and to the Superintendent, at least once in every twelve month period after the liquidator’s appointment or more often as the court requires, the annual statement of the bank prepared in accordance with subsection 308(1) or prepared in such manner as the liquidator thinks proper or as the court requires; and
(i) after the final accounts are approved by the court, distribute any remaining property of the bank among the shareholders, if any, or incorporators, according to their respective rights.
Marginal note:Powers of liquidator
(2) A liquidator may
(a) retain lawyers, notaries, accountants, appraisers and other professional advisers;
(b) bring, defend or take part in any civil, criminal or administrative action or proceeding in the name and on behalf of the bank;
(c) carry on the business of the bank as required for an orderly liquidation;
(d) sell by public auction or private sale any property of the bank;
(e) do all acts and execute documents in the name and on behalf of the bank;
(f) borrow money on the security of the property of the bank;
(g) settle or compromise any claims by or against the bank; and
(h) do all other things necessary for the liquidation of the bank and distribution of its property.
Marginal note:Due diligence
354 A liquidator is not liable if they exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on
(a) financial statements of the bank represented to the liquidator by an officer of the bank or in a written report of the auditor or auditors of the bank fairly to reflect the financial condition of the bank; or
(b) a report of a person whose profession lends credibility to a statement made by them.
- 1991, c. 46, s. 354
- 2005, c. 54, s. 78
Marginal note:Examination of others
355 (1) Where a liquidator has reason to believe that any property of the bank is in the possession or under the control of a person or that a person has concealed, withheld or misappropriated any such property, the liquidator may apply to the court for an order requiring that person to appear before the court at the time and place designated in the order and to be examined.
Marginal note:Restoration and compensation
(2) Where an examination conducted pursuant to subsection (1) discloses that a person has concealed, withheld or misappropriated any property of the bank, the court may order that person to restore the property or pay compensation to the liquidator.
Marginal note:Costs of liquidation
356 A liquidator shall pay the costs of liquidation out of the property of the bank and shall pay or make adequate provision for all claims against the bank.
Marginal note:Final accounts
357 (1) Within one year after the appointment of a liquidator and after paying or making adequate provision for all claims against the bank, the liquidator shall apply to the court
(a) for approval of the final accounts of the liquidator and for an order permitting the distribution, in money or in kind, of the remaining property of the bank to its shareholders, if any, or to the incorporators, according to their respective rights; or
(b) for an extension of time, setting out the reasons therefor.
Marginal note:Shareholder application
(2) If a liquidator fails to make the application required by subsection (1), a shareholder of the bank or, if there are no shareholders of the bank, an incorporator may apply to the court for an order for the liquidator to show cause why a final accounting and distribution should not be made.
Marginal note:Notification of final accounts
(3) A liquidator shall give notice of the liquidator’s intention to make an application under subsection (1) to the Superintendent, to each inspector appointed under section 349, to each shareholder of the bank or, if there are no shareholders, to each incorporator and to any person who provided a security or fidelity bond for the liquidation.
Marginal note:Publication
(4) The liquidator shall publish the notice required under subsection (3) in the Canada Gazette and once a week for two consecutive weeks in one or more newspapers in general circulation in each province in which the bank has transacted any business within the preceding twelve months or as otherwise directed by the court.
Marginal note:Final order
358 (1) If the court approves the final accounts rendered by a liquidator, the court shall make an order
(a) directing the bank to apply to the Minister for letters patent dissolving the bank;
(b) directing the custody or disposal of the documents, records and registers of the bank; and
(c) discharging the liquidator except in respect of the duty of a liquidator under subsection (2).
Marginal note:Delivery of order
(2) The liquidator shall forthwith send a certified copy of the order referred to in subsection (1) to the Superintendent.
Marginal note:Right to distribution of money
359 (1) If in the course of the liquidation of a bank the shareholders resolve to, or the liquidator proposes to,
(a) exchange all or substantially all of the remaining property of the bank for securities of another entity that are to be distributed to the shareholders or to the incorporators, or
(b) distribute all or part of the remaining property of the bank to the shareholders or to the incorporators in kind,
a shareholder or incorporator may apply to the court for an order requiring the distribution of the remaining property of the bank to be in money.
Marginal note:Powers of court
(2) On an application under subsection (1), the court may order
(a) all of the remaining property of the bank to be converted into and distributed in money; or
(b) the claim of any shareholder or incorporator applying under this section to be satisfied by a distribution in money.
Marginal note:Order by court
(3) Where an order is made by a court under paragraph (2)(b), the court
(a) shall fix a fair value on the share of the property of the bank attributable to the shareholder or incorporator;
(b) may in its discretion appoint one or more appraisers to assist the court in fixing a fair value in accordance with paragraph (a); and
(c) shall render a final order against the bank in favour of the shareholder or incorporator for the amount of the share of the property of the bank attributable to the shareholder or incorporator.
Marginal note:Dissolution by letters patent
360 (1) On an application made pursuant to an order under paragraph 358(1)(a), the Minister may issue letters patent dissolving the bank.
Marginal note:Bank dissolved
(2) A bank in respect of which letters patent are issued under subsection (1) is dissolved and ceases to exist on the date of the issuance of the letters patent.
General
Definition of shareholder and incorporator
361 In sections 363 and 364, shareholder and incorporator include the heirs and personal representatives of a shareholder or incorporator.
Marginal note:Continuation of actions
362 (1) Notwithstanding the dissolution of a bank under this Part,
(a) a civil, criminal or administrative action or proceeding commenced by or against the bank before its dissolution may be continued as if the bank had not been dissolved;
(b) a civil, criminal or administrative action or proceeding may be brought against the bank within two years after its dissolution as if the bank had not been dissolved; and
(c) any property that would have been available to satisfy any judgment or order if the bank had not been dissolved remains available for that purpose.
Marginal note:Service on bank
(2) Service of a document on a bank after its dissolution may be effected by serving the document on a person shown as a director in the incorporating instrument of the bank or, if applicable, in the latest return sent to the Superintendent under section 632.
- 1991, c. 46, s. 362
- 1999, c. 28, s. 17
Marginal note:Limitations on liability
363 (1) Notwithstanding the dissolution of a bank, a shareholder or incorporator to whom any of its property has been distributed is liable to any person claiming under subsection 362(1) to the extent of the amount received by that shareholder or incorporator on the distribution.
Marginal note:Limitation
(2) An action to enforce liability under subsection (1) may not be commenced except within two years after the date of the dissolution of the bank.
Marginal note:Action against class
(3) A court may order an action referred to in subsections (1) and (2) to be brought against the persons who were shareholders or incorporators as a class, subject to such conditions as the court thinks fit.
Marginal note:Reference
(4) If the plaintiff establishes a claim in an action under subsection (3), the court may refer the proceedings to a referee or other officer of the court who may
(a) add as a party to the proceedings each person found by the plaintiff to have been a shareholder or incorporator;
(b) determine, subject to subsection (1), the amount that each person who was a shareholder or incorporator must contribute towards satisfaction of the plaintiff’s claim; and
(c) direct payment of the amounts so determined.
Marginal note:Where creditor cannot be found
364 Where a creditor, shareholder or incorporator to whom property is to be distributed on the dissolution of a bank cannot be found, the portion of the property to be distributed to that creditor, shareholder or incorporator shall be converted into money and paid in accordance with section 366.
Marginal note:Vesting in Crown
365 Subject to subsection 362(1) and sections 366 and 367, property of a bank that has not been disposed of at the date of the dissolution of the bank vests in Her Majesty in right of Canada.
Marginal note:Unclaimed money on winding-up
366 (1) Notwithstanding the Winding-up and Restructuring Act, where the business of a bank is being wound up, the liquidator or the bank shall pay to the Minister on demand and in any event before the final winding-up of that business any amount that is payable by the liquidator or the bank to a creditor, shareholder or incorporator of the bank to whom payment thereof has not, for any reason, been made.
Marginal note:Records
(2) Where a liquidator or a bank makes a payment to the Minister under subsection (1) with respect to a creditor, shareholder or incorporator, the liquidator or bank shall concurrently forward to the Minister all documents, records and registers in the possession of the liquidator or bank that relate to the entitlement of the creditor, shareholder or incorporator.
Marginal note:Payment to Bank of Canada
(3) The Minister shall pay to the Bank of Canada all amounts paid to the Minister under subsection (1) and shall provide the Bank of Canada with any document, record or register received by the Minister under subsection (2).
Marginal note:Liquidator and bank discharged
(4) Payment by a liquidator or a bank to the Minister under subsection (1) discharges the liquidator and the bank in respect of which the payment is made from all liability for the amount so paid, and payment by the Minister to the Bank of Canada under subsection (3) discharges the Minister from all liability for the amount so paid.
- 1991, c. 46, s. 366
- 1996, c. 6, s. 167
Marginal note:Liability of Bank of Canada
367 (1) Subject to section 22 of the Bank of Canada Act, where payment has been made to the Bank of Canada of an amount under subsection 366(3), the Bank of Canada, if payment is demanded by a person who, but for subsection 366(4), would be entitled to receive payment of that amount from the liquidator, the bank or the Minister, is liable to pay to that person at its head office an amount equal to the amount so paid to it, with interest thereon for the period, not exceeding ten years, from the day on which the payment was received by the Bank of Canada until the date of payment to the person, at such rate and computed in such manner as the Minister determines.
Marginal note:Enforcing liability
(2) The liability of the Bank of Canada under subsection (1) may be enforced by action against the Bank of Canada in the court in the province in which the debt or instrument was payable.
Marginal note:Custody of records after dissolution
368 A person who has been granted custody of the documents, records and registers of a dissolved bank shall keep them available for production for six years following the date of the dissolution of the bank or until the expiration of such shorter period as may be ordered by the court when it orders the dissolution.
Marginal note:Insolvency
369 (1) In the case of the insolvency of a bank,
(a) the payment of any amount due to Her Majesty in right of Canada, in trust or otherwise, except indebtedness evidenced by subordinated indebtedness, shall be a first charge on the assets of the bank;
(b) the payment of any amount due to Her Majesty in right of a province, in trust or otherwise, except indebtedness evidenced by subordinated indebtedness, shall be a second charge on the assets of the bank;
(c) the payment of the deposit liabilities of the bank and all other liabilities of the bank, except the liabilities referred to in paragraphs (d) and (e), shall be a third charge on the assets of the bank;
(d) subordinated indebtedness of the bank and all other liabilities that by their terms rank equally with or subordinate to such subordinated indebtedness shall be a fourth charge on the assets of the bank; and
(e) the payment of any fines and penalties for which the bank is liable shall be a last charge on the assets of the bank.
Marginal note:Priority not affected
(2) Nothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of a bank.
Marginal note:Priorities
(3) Priorities within each of paragraphs (1)(a) to (e) shall be determined in accordance with the laws governing priorities and, where applicable, by the terms of the indebtedness and liabilities referred to therein.
- 1991, c. 46, s. 369
- 2001, c. 9, s. 95
PART VIIOwnership
DIVISION IDefinitions and Interpretation
Marginal note:Definitions
370 (1) In this Part,
- agent
agent means
(a) in relation to Her Majesty in right of Canada or of a province, any agent of Her Majesty in either of those rights and includes a municipal or public body empowered to perform a function of government in Canada or any entity empowered to perform a function or duty on behalf of Her Majesty in either of those rights, but does not include
(i) an official or entity performing a function or duty in connection with the administration or management of the estate or property of a natural person,
(ii) an official or entity performing a function or duty in connection with the administration, management or investment of a fund established to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons, or moneys derived from such a fund, or
(iii) the trustee of any trust for the administration of a fund to which Her Majesty in either of those rights contributes and of which an official or entity that is an agent of Her Majesty in either of those rights is a trustee, and
(b) in relation to the government of a foreign country or any political subdivision thereof, a person empowered to perform a function or duty on behalf of the government of the foreign country or political subdivision, other than a function or duty in connection with the administration or management of the estate or property of a natural person; (mandataire)
- eligible agent
eligible agent means an agent or agency of Her Majesty in right of Canada or of a province or an agent or agency of a government of a foreign country or any political subdivision of a foreign country
(a) whose mandate is publicly available;
(b) that controls the assets of an investment fund in a manner intended to maximize long-term risk-adjusted returns and that fund is
(i) one to which, as the case may be, Her Majesty in right of Canada or of a province or the government of a foreign country or political subdivision contributes, or
(ii) established to provide compensation, hospitalization, medical care, annuities, pensions or similar benefits to natural persons; and
(c) whose decisions with respect to the assets of the fund referred to in paragraph (b) are not influenced in any significant way by, as the case may be, Her Majesty in right of Canada or of the province or the government of the foreign country or the political subdivision; (mandataire admissible)
- eligible Canadian financial institution
eligible Canadian financial institution means a Canadian financial institution that is a body corporate and that is widely held; (institution financière canadienne admissible)
- eligible financial institution
eligible financial institution means an eligible Canadian financial institution or an eligible foreign institution; (institution financière admissible)
- eligible foreign institution
eligible foreign institution means
(a) a foreign bank that, in the opinion of the Minister, after consultation with the Superintendent, is regulated as or like a bank, according to the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business, or
(b) a foreign institution that, in the opinion of the Minister,
(i) is, with respect to its provision of financial services, regulated in the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business, and
(ii) is widely held; (institution étrangère admissible)
- foreign institution
foreign institution means an entity that is
(a) engaged in the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities, and
(b) incorporated or formed otherwise than by or under an Act of Parliament or the legislature of a province. (institution étrangère)
(2) to (4) [Repealed, 2001, c. 9, s. 96]
- 1991, c. 46, s. 370, c. 48, s. 494
- 2001, c. 9, s. 96
- 2012, c. 19, s. 331
Marginal note:Associates
371 (1) For the purpose of determining ownership of a bank, where two persons who each beneficially own shares of a bank are associated with each other, those persons are deemed to be a single person who beneficially owns the aggregate number of shares of the bank beneficially owned by them.
Marginal note:Idem
(2) For the purposes of subsection (1), a person who beneficially owns shares of a bank is associated with another person who beneficially owns shares of the bank if
(a) one person is Her Majesty in right of Canada and the other person is Her Majesty in right of a province or one person is Her Majesty in right of a province and the other person is Her Majesty in right of another province;
(b) each person is an agent of Her Majesty in right of Canada or in right of a province;
(c) each person is an official, a trustee or an entity referred to in subparagraphs (a)(ii) and (iii) of the definition agent in subsection 370(1);
(d) each person is an entity owned or controlled by Her Majesty in right of Canada or in right of a province that is not an agent of Her Majesty and is not empowered to perform a function or duty on behalf of Her Majesty;
(e) both persons are trustees of any trusts for the administration of funds to which Her Majesty in right of Canada contributes and of which no official or entity that is an agent of Her Majesty in such right is a trustee;
(f) both persons are trustees of any trusts for the administration of funds to which Her Majesty in right of a particular province contributes and of which no official or entity that is an agent of Her Majesty in right of that province is a trustee;
(g) one person is a local cooperative credit society and the other person is a central cooperative credit society of which the first person is a member;
(h) both persons are local cooperative credit societies that are members of the same central cooperative credit society;
(i) one person is a central cooperative credit society, the other person is a federation of cooperative credit societies of which the first is a member, and both persons are incorporated or organized by or pursuant to legislation enacted by the same legislative body;
(j) both persons are central cooperative credit societies that are members of the same federation of cooperative credit societies, and both persons and the federation of cooperative credit societies are incorporated or organized by or pursuant to legislation enacted by the same legislative body; or
(k) both persons are associated within the meaning of paragraphs (a) to (j) with the same person.
- 1991, c. 46, s. 371
- 2001, c. 9, s. 97
Marginal note:Associates
371.1 (1) Despite section 371, for the purpose of determining ownership of a bank by an eligible agent, where two persons, at least one of whom is an eligible agent, are associated with each other, those persons are deemed to be a single eligible agent who beneficially owns the aggregate number of shares of the bank beneficially owned by them.
Marginal note:Associates
(2) For the purposes of subsection (1), a person is associated with another person if
(a) each person is an agent or agency of Her Majesty in right of Canada;
(b) each person is an agent or agency of Her Majesty in right of the same province;
(c) each person is an agent or agency of a government of the same foreign country or a political subdivision of the same foreign country;
(d) one person is Her Majesty in right of Canada and the other person is an agent or agency of Her Majesty in that right;
(e) one person is Her Majesty in right of a province and the other person is an agent or agency of Her Majesty in right of that province; or
(f) one person is a government of a foreign country or any political subdivision of a foreign country and the other person is its agent or agency.
- 2012, c. 19, s. 332
DIVISION IIOwnership of Banks
Constraints on Ownership
Marginal note:Significant interest
372 Except as permitted by this Part, no person shall have a significant interest in any class of shares of a bank.
- 1991, c. 46, s. 372
- 2001, c. 9, s. 98
372.1 [Repealed, 2001, c. 9, s. 98]
Marginal note:Acquisition of significant interest
373 (1) Subject to this Part, no person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of a bank or purchase or otherwise acquire control of any entity that holds any share of a bank if
(a) the acquisition would cause the person to have a significant interest in any class of shares of the bank; or
(b) where the person has a significant interest in a class of shares of the bank, the acquisition would increase the significant interest of the person in that class of shares.
Marginal note:Amalgamation, etc., constitutes acquisition
(2) If the entity that would result from an amalgamation, a merger or a reorganization would have a significant interest in a class of shares of a bank, the entity is deemed to be acquiring a significant interest in that class of shares of the bank through an acquisition for which the approval of the Minister is required under subsection (1).
- 1991, c. 46, s. 373
- 1994, c. 47, s. 17
- 1997, c. 15, s. 37(E)
- 2001, c. 9, s. 98
- 2007, c. 6, s. 19
373.1 [Repealed, 1999, c. 28, s. 18]
Marginal note:Limitations on share holdings
374 (1) No person may be a major shareholder of a bank with equity of twelve billion dollars or more.
Marginal note:Exception — widely held bank
(2) Subsection (1) does not apply to a widely held bank that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of twelve billion dollars or more if it controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached twelve billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day.
Marginal note:Exception — widely held bank holding company
(3) Subsection (1) does not apply to a widely held bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of twelve billion dollars or more if
(a) the bank holding company controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached twelve billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day;
(b) the bank holding company acquired control, within the meaning of those paragraphs, of the bank under section 677 or 678 and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day the bank holding company acquired control; or
(c) the bank was a subsidiary of another bank that was continued under section 684 as the bank holding company and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day it came into existence as a bank holding company.
Marginal note:Exception — insurance holding companies and certain institutions
(4) Subsection (1) does not apply to any of the following that controls, within the meaning of paragraph 3(1)(d), the bank with equity of twelve billion dollars or more if it controlled, within the meaning of that paragraph, the bank on the day the bank’s equity reached twelve billion dollars and it has controlled, within the meaning of that paragraph, the bank since that day:
(a) a widely held insurance holding company;
(b) an eligible Canadian financial institution, other than a bank; or
(c) an eligible foreign institution.
Marginal note:Exception — other entities
(5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of twelve billion dollars or more if the entity is controlled, within the meaning of those paragraphs, by a widely held bank to which subsection (2) applies, or a widely held bank holding company to which subsection (3) applies, that controls the bank.
Marginal note:Exception — other entities
(6) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the bank with equity of twelve billion dollars or more if the entity is controlled, within the meaning of that paragraph, by
(a) a widely held insurance holding company to which subsection (4) applies that controls the bank;
(b) an eligible Canadian financial institution to which subsection (4) applies, other than a bank, that controls the bank; or
(c) an eligible foreign institution to which subsection (4) applies that controls the bank.
- 1991, c. 46, s. 374, c. 48, s. 494
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 12
Marginal note:Exception
374.1 (1) Despite section 374, if a bank with equity of twelve billion dollars or more was formed as the result of an amalgamation, a person who is a major shareholder of the bank on the effective date of the letters patent of amalgamation shall do all things necessary to ensure that the person is no longer a major shareholder of the bank on the day that is one year after that day or on the day that is after any shorter period specified by the Minister.
Marginal note:Exception — widely held banks and bank holding companies
(2) Subsection (1) does not apply to a widely held bank or a widely held bank holding company that controlled, within the meaning of paragraphs 3(1)(a) and (d), one of the applicants for the letters patent of amalgamation and that has controlled, within the meaning of those paragraphs, the amalgamated bank since the effective date of those letters patent.
Marginal note:Exception — insurance holding companies and certain institutions
(3) Subsection (1) does not apply to any of the following that controlled, within the meaning of paragraph 3(1)(d), one of the applicants for the letters patent of amalgamation if it has controlled, within the meaning of that paragraph, the amalgamated bank since the effective date of those letters patent:
(a) a widely held insurance holding company;
(b) an eligible Canadian financial institution, other than a bank; or
(c) an eligible foreign institution.
Marginal note:Exception — other entities
(4) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the amalgamated bank if the entity is controlled, within the meaning of those paragraphs, by a widely held bank or widely held bank holding company to which subsection (2) applies that controls the amalgamated bank.
Marginal note:Exception — other entities
(5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the amalgamated bank if the entity is controlled, within the meaning of that paragraph, by any of the following:
(a) a widely held insurance holding company to which subsection (3) applies that controls the amalgamated bank;
(b) an eligible Canadian financial institution to which subsection (3) applies, other than a bank, that controls the amalgamated bank; or
(c) an eligible foreign institution to which subsection (3) applies that controls the amalgamated bank.
Marginal note:Extension
(6) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 13
Marginal note:Limitation on share holdings
375 (1) If a person is a major shareholder of a bank with equity of less than twelve billion dollars and the bank’s equity reaches twelve billion dollars or more, the person shall do all things necessary to ensure that the person is not a major shareholder of the bank on the day that is three years after the day the bank’s equity reached twelve billion dollars.
Marginal note:Exception
(2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.
Marginal note:Extension
(3) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.
- 1991, c. 46, s. 375
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 14
Marginal note:Obligation of widely held bank
376 (1) If a widely held bank with equity of twelve billion dollars or more controls another bank and a person becomes a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the other bank or entity that controls the other bank,
(a) the widely held bank no longer controls the other bank; or
(b) the other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.
Marginal note:Exception
(2) Subsection (1) does not apply in respect of a bank with equity of less than two hundred and fifty million dollars or any other amount that is prescribed.
Marginal note:Extension
(3) If general market conditions so warrant and the Minister is satisfied that the widely held bank has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.
- 1991, c. 46, s. 376
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 15
Marginal note:Obligation of widely held bank
376.01 (1) Despite subsection 376(1), if a widely held bank with equity of twelve billion dollars or more controls a bank (in this subsection referred to as the “other bank”) in respect of which that subsection does not apply by reason of subsection 376(2) and the equity of the other bank reaches two hundred and fifty million dollars or more or any other amount that is prescribed and on the day the equity of the other bank reaches two hundred and fifty million dollars or more, or the prescribed amount, as the case may be, a person is a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is three years after that day,
(a) the widely held bank no longer controls the other bank; or
(b) the other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.
Marginal note:Extension
(2) If general market conditions so warrant and the Minister is satisfied that the widely held bank has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 16
Marginal note:Prohibition against significant interest
376.1 No person who has a significant interest in any class of shares of a widely held bank with equity of twelve billion dollars or more may have a significant interest in any class of shares of a subsidiary of the widely held bank that is a bank or a bank holding company.
- 1991, c. 46, s. 578
- 1997, c. 15, s. 39
- 1999, c. 28, s. 19
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 17
Marginal note:Prohibition against significant interest
376.2 No person who has a significant interest in any class of shares of a bank may have a significant interest in any class of shares of any widely held bank with equity of twelve billion dollars or more, or of any widely held bank holding company with equity of twelve billion dollars or more, that controls the bank.
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 18
Marginal note:Prohibition against control
377 (1) No person shall control, within the meaning of paragraph 3(1)(d), a bank with equity of twelve billion dollars or more.
Marginal note:Exception
(2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.
- 1991, c. 46, s. 377
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 19
Marginal note:Restriction on control
377.1 (1) No person shall, without the approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank with equity of less than twelve billion dollars.
Marginal note:Amalgamation, etc., constitutes acquisition
(2) If the entity that would result from an amalgamation, a merger or a reorganization would control, within the meaning of paragraph 3(1)(d), a bank with equity of less than twelve billion dollars, the entity is deemed to be acquiring control, within the meaning of that paragraph, of the bank through an acquisition for which the approval of the Minister is required under subsection (1).
- 2001, c. 9, s. 98
- 2007, c. 6, s. 20
- 2012, c. 5, s. 20
Marginal note:Former Schedule I banks with equity of less than five billion dollars
378 (1) A bank that was named in Schedule I as that Schedule read immediately before October 24, 2001 and that had equity of less than five billion dollars on that day is deemed, for the purposes of sections 138, 156.09, 374, 376, 376.01, 376.1, 376.2, 377, 380 and 382, subsection 383(2), section 385 and subsection 396(2), to be a bank with equity of twelve billion dollars or more.
Marginal note:Application — amalgamation
(2) If a bank to which subsection (1) applies is an applicant for letters patent of amalgamation and the letters patent are issued in respect of the application, the amalgamated bank is deemed to be a bank to which that subsection applies.
Marginal note:Non-application of subsection (1)
(3) Subsection (1) ceases to apply to a bank with equity of less than twelve billion dollars if the Minister specifies that it no longer applies to the bank.
- 1991, c. 46, s. 378
- 2001, c. 9, s. 98
- 2007, c. 6, s. 20
- 2012, c. 5, s. 21
Marginal note:Prohibition
378.1 No person may control or be a major shareholder of a bank if the person or an entity affiliated with the person
(a) has control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or
(b) engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.
- 1994, c. 47, s. 18
- 2001, c. 9, s. 98
Marginal note:Prohibition
378.2 No person who controls a bank or who is a major shareholder of a bank, and no entity affiliated with that person, may
(a) control or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or
(b) engage in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.
- 2001, c. 9, s. 98
Marginal note:Constraint on registration
379 No bank shall, unless the acquisition of the share has been approved by the Minister, record in its securities register a transfer or issue of any share of the bank to any person or to any entity controlled by a person if
(a) the transfer or issue of the share would cause the person to have a significant interest in any class of shares of the bank; or
(b) where the person has a significant interest in a class of shares of the bank, the transfer or issue of the share would increase the significant interest of the person in that class of shares.
- 1991, c. 46, s. 379
- 1997, c. 15, s. 40
- 2001, c. 9, s. 98
Marginal note:Exemption
380 On application by a bank, other than a bank with equity of twelve billion dollars or more, the Superintendent may exempt any class of non-voting shares of the bank the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares of the bank from the application of sections 373 and 379.
- 1991, c. 46, s. 380
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 22
Marginal note:Exception — small holdings
381 Despite section 379, if, as a result of a transfer or issue of shares of a class of shares of a bank to a person, other than an eligible agent, the total number of shares of that class registered in the securities register of the bank in the name of that person would not exceed 5,000 and would not exceed 0.1% of the outstanding shares of that class, the bank is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the bank as a result of that issue or transfer of shares.
- 1991, c. 46, s. 381
- 2001, c. 9, s. 98
- 2012, c. 31, s. 110
Marginal note:When approval not required
382 (1) Despite sections 373 and 379, the approval of the Minister is not required in respect of a bank with equity of less than twelve billion dollars if a person with a significant interest in a class of shares of the bank, or an entity controlled by a person with a significant interest in a class of shares of the bank, purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the bank to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.
Marginal note:Percentage
(2) Subject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.
Marginal note:Percentage
(3) If a person has a significant interest in a class of shares of a bank and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of
(a) 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, and
(b) 10 percentage points in excess of the lowest significant interest of the person in that class of shares of the bank at any time after the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.
Marginal note:Exception — eligible agent
(3.1) If the person referred to in subsection (1) is an eligible agent or an entity controlled by an eligible agent, then the Minister may reduce the percentage referred to in subsection (2) or (3).
Marginal note:Exception
(4) Subsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection would
(a) result in the acquisition of control of the bank by the person referred to in that subsection;
(b) if the person controls the bank but the voting rights attached to the aggregate of any voting shares of the bank beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank;
(c) result in the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; or
(d) result in an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.
Marginal note:Regulations
(5) The Governor in Council may make regulations
(a) exempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person; and
(b) exempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.
- 1991, c. 46, s. 382
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 23, c. 31, s. 111
Marginal note:When approval not required
383 (1) Despite sections 373 and 379, the approval of the Minister is not required if
(a) the Superintendent has, by order, directed the bank to increase its capital and shares of the bank are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or
(b) a person, other than an eligible agent, who controls, within the meaning of paragraph 3(1)(a), the bank acquires additional shares of the bank.
Marginal note:Exception
(2) Paragraph (1)(a) does not apply in respect of a bank with equity of twelve billion dollars or more.
- 1991, c. 46, s. 383
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 24, c. 31, s. 112
Marginal note:Pre-approval
384 For the purposes of sections 373 and 379, the Minister may approve
(a) the purchase or other acquisition of any number or percentage of shares of a bank that may be required in a particular transaction or series of transactions; or
(b) the purchase or other acquisition of up to a specified number or percentage of shares of a bank within a specified period.
- 1991, c. 46, s. 384
- 2001, c. 9, s. 98
Marginal note:Public holding requirement
385 (1) Every bank with equity of two billion dollars or more but less than twelve billion dollars shall, from and after the day determined under this section in respect of that bank, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that are
(a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and
(b) shares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.
Marginal note:Determination of day
(2) The day referred to in subsection (1) is
(a) if the bank had equity of two billion dollars or more but less than twelve billion dollars on the day the bank came into existence, the day that is three years after that day; and
(b) in any other case, the day that is three years after the day of the first annual meeting of the shareholders of the bank held after the equity of the bank first reaches two billion dollars.
Marginal note:Extension
(3) If general market conditions so warrant and the Minister is satisfied that a bank has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the bank must comply with subsection (1).
- 1991, c. 46, s. 385
- 2001, c. 9, s. 98
- 2007, c. 6, ss. 132, 133
- 2012, c. 5, s. 25
Marginal note:Public holding requirement
385.1 If a bank to which section 385 applies becomes a bank with equity of twelve billion dollars or more, that section continues to apply to the bank until no person is a major shareholder of the bank, other than a person to whom subsections 374(2) to (6) apply.
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 26
Marginal note:Limit on assets
386 (1) Unless an exemption order with respect to the bank is granted under section 388, if a bank fails to comply with section 385 in any month, the Minister may, by order, require the bank not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.
Marginal note:Average total assets
(2) For the purposes of subsection (1), the average total assets of a bank in a three month period is to be computed by adding the total assets of the bank as calculated for the month end of each of the three months in the period and by dividing the sum by three.
Definition of total assets
(3) For the purposes of subsections (1) and (2), total assets, in respect of a bank, has the meaning given that expression by the regulations.
- 1991, c. 46, s. 386
- 2001, c. 9, s. 98
Marginal note:Increase of capital
387 If the Superintendent has, by order, directed a bank with equity of two billion dollars or more but less than twelve billion dollars to increase its capital and shares of the bank are issued and acquired in accordance with any terms and conditions that may be specified in the order, section 385 does not apply in respect of the bank until the time that the Superintendent may, by order, specify.
- 1991, c. 46, s. 387
- 2001, c. 9, s. 98
- 2007, c. 6, ss. 132, 133
- 2012, c. 5, s. 27
Marginal note:Exemption by order of the Minister
388 (1) On application by a bank, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank from the requirements of section 385, subject to any terms and conditions that the Minister considers appropriate.
Marginal note:Compliance with section 385
(2) If an exemption order granted under this section in respect of a bank expires, the bank shall comply with section 385 as of the day the exemption order expires.
Marginal note:Limit on assets
(3) If a bank fails to comply with section 385 on the day referred to in subsection (2), the bank shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the day referred to in subsection (2) or any later day that the Minister may, by order, specify.
Marginal note:Application of ss. 386(2) and (3)
(4) Subsections 386(2) and (3) apply for the purposes of subsection (3).
- 1991, c. 46, s. 388
- 1997, c. 15, s. 41
- 2001, c. 9, s. 98
Marginal note:Exception
389 (1) If a bank fails to comply with section 385 as the result of any of the following, section 386 does not apply in respect of the bank until the expiration of six months after the day it failed to comply with section 385:
(a) a distribution to the public of voting shares of the bank;
(b) a redemption or purchase of voting shares of the bank;
(c) the exercise of any option to acquire voting shares of the bank; or
(d) the conversion of any convertible securities into voting shares of the bank.
Marginal note:Shares acquiring voting rights
(2) If, as the result of an event that has occurred and is continuing, shares of a bank acquire voting rights in such number as to cause the bank to no longer be in compliance with section 385, section 386 does not apply in respect of that bank until the expiration of six months after the day the bank ceased to be in compliance with section 385 or any later day that the Minister may, by order, specify.
- 1991, c. 46, s. 389
- 2001, c. 9, s. 98
Marginal note:Acquisition of control permitted
390 (1) Subject to subsection (2) and sections 379 and 391, section 385 does not apply in respect of a bank if a person acquires control of the bank through the purchase or other acquisition of all or any number of the shares of the bank by the person or by any entity controlled by the person.
Marginal note:Undertaking required
(2) Subsection (1) applies only if the person referred to in that subsection provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the bank has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that are
(a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and
(b) shares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.
- 1991, c. 46, s. 390
- 1999, c. 28, s. 20
- 2001, c. 9, s. 98
Marginal note:Application of section 385
391 At the expiration of the period for compliance with an undertaking referred to in subsection 390(2), section 385 shall apply in respect of the bank to which the undertaking relates.
- 1991, c. 46, s. 391
- 2001, c. 9, s. 98
Marginal note:Restriction on voting rights
392 (1) If, with respect to any bank, a particular person contravenes section 372, subsection 373(1), 374(1) or 375(1), section 376.1 or 376.2, subsection 377(1) or section 377.1 or fails to comply with an undertaking referred to in subsection 390(2) or with any term or condition imposed under section 397, no person, and no entity controlled by the particular person, shall, in person or by proxy, exercise any voting rights
(a) that are attached to shares of the bank beneficially owned by the particular person or any entity controlled by the particular person; or
(b) that are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.
Marginal note:Subsection (1) ceases to apply
(2) Subsection (1) ceases to apply in respect of a person when, as the case may be,
(a) the shares to which the contravention relates have been disposed of;
(b) the person ceases to control the bank within the meaning of paragraph 3(1)(d);
(c) if the person failed to comply with an undertaking referred to in subsection 390(2), the bank complies with section 385; or
(d) if the person failed to comply with a term or condition imposed under section 397, the person complies with the term or condition.
Marginal note:Saving
(3) Despite subsection (1), if a person contravenes subsection 374(1) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the bank beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the bank, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the bank beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.
- 1991, c. 46, s. 392
- 2001, c. 9, s. 98
Marginal note:Loss of control — banks and bank holding companies
393 (1) Despite sections 374 and 377, a widely held bank or a widely held bank holding company may be a major shareholder of a bank with equity of twelve billion dollars or more and cease to control, within the meaning of paragraphs 3(1)(a) and (d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.
Marginal note:Extension
(2) If general market conditions so warrant and the Minister is satisfied that the bank or the bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.
- 1991, c. 46, s. 393
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 28
Marginal note:Loss of control — other entities
393.1 (1) Despite sections 374 and 377, an eligible foreign institution, an eligible Canadian financial institution, other than a bank, or a widely held insurance holding company may be a major shareholder of a bank with equity of twelve billion dollars or more and cease to control, within the meaning of paragraph 3(1)(d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.
Marginal note:Extension
(2) If general market conditions so warrant and the Minister is satisfied that the institution or insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 29
Marginal note:Change in status
394 (1) If a body corporate that is an eligible financial institution other than a bank controls, within the meaning of paragraph 3(1)(d), a bank with equity of twelve billion dollars or more and the body corporate subsequently ceases to be an eligible financial institution, the body corporate must do all things necessary to ensure that, on the day that is one year after the day it ceased to be an eligible financial institution,
(a) it does not control, within the meaning of paragraph 3(1)(d), the bank; and
(b) it is not a major shareholder of the bank.
Marginal note:Extension
(2) If general market conditions so warrant and the Minister is satisfied that the body corporate has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.
- 1991, c. 46, s. 394
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 30
Approval Process
Marginal note:Application for approval
395 (1) An application for an approval of the Minister required under this Part must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.
Marginal note:Applicant
(2) If, with respect to any particular transaction, this Part applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.
- 1991, c. 46, s. 395
- 2001, c. 9, s. 98
Marginal note:Matters for consideration
396 (1) Subject to subsection (2), if an application for an approval under section 373 is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, including
(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;
(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;
(c) the business record and experience of the applicant or applicants;
(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;
(e) whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;
(f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;
(g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard to
(i) the nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, and
(ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank; and
(h) the best interests of the financial system in Canada.
Marginal note:Exception
(2) Except for an application by an eligible agent for an approval under section 373, and subject to subsection 377(1), the Minister shall take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holding
(a) more than 10 per cent but no more than 20 per cent of any class of the outstanding voting shares of a widely held bank with equity of twelve billion dollars or more; or
(b) more than 10 per cent but no more than 30 per cent of any class of the outstanding non-voting shares of such a bank.
Marginal note:Favourable treatment
(3) The Minister shall not approve a transaction that would cause a bank to become a subsidiary of a foreign bank within the meaning of any of paragraphs (a) to (f) of the definition foreign bank in section 2 that is a non-WTO Member foreign bank unless the Minister is satisfied that treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.
- 1991, c. 46, s. 396
- 2001, c. 9, s. 98
- 2007, c. 6, s. 132
- 2012, c. 5, s. 31, c. 31, s. 113
396.1 [Repealed, 1994, c. 47, s. 19]
Marginal note:Terms and conditions
397 The Minister may impose any terms and conditions in respect of an approval given under this Part that the Minister considers necessary to ensure compliance with any provision of this Act.
- 1991, c. 46, s. 397, c. 47, s. 757
- 1993, c. 44, s. 26
- 1994, c. 47, s. 19
- 2001, c. 9, s. 98
Marginal note:Certifying receipt of application
398 (1) If, in the opinion of the Superintendent, an application filed under this Part contains all the required information, the Superintendent shall without delay refer the application to the Minister and send a receipt to the applicant certifying the date on which the completed application was received by the Superintendent.
Marginal note:Incomplete application
(2) If, in the opinion of the Superintendent, an application filed under this Part is incomplete, the Superintendent shall send a notice to the applicant specifying the information required by the Superintendent to complete the application.
- 1991, c. 46, s. 398
- 2001, c. 9, s. 98
- 2007, c. 6, s. 21(F)
Marginal note:Notice of decision
399 (1) Subject to subsections (2) and (3) and 400(1), the Minister shall, within a period of thirty days after the certified date referred to in subsection 398(1), send to the applicant
(a) a notice approving the transaction to which the application relates; or
(b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.
Marginal note:Notice of decision
(2) Subject to subsections (4) and 400(2), the notice referred to in paragraph (1)(a) or (b) shall be sent by the Minister within a period of 45 days after the certified date referred to in subsection 398(1) in the following cases:
(a) the application involves the acquisition of control of a bank;
(b) the application is made by an eligible agent or an entity controlled by an eligible agent; or
(c) an application is made for the approval referred to in subsection 401.2(3).
Marginal note:Extension of period for notice
(3) If the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall
(a) within that period, send a notice to that effect to the applicant; and
(b) within a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within any other further period that may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.
Marginal note:Further extensions
(4) If the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.
- 1991, c. 46, s. 399
- 1994, c. 47, s. 20
- 2001, c. 9, s. 98
- 2012, c. 31, s. 114
Marginal note:Reasonable opportunity to make representations
400 (1) If, after receipt of the notice referred to in paragraph 399(1)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of thirty days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.
Marginal note:Reasonable opportunity to make representations
(2) If, after receipt of the notice sent in accordance with subsection 399(2) that the Minister is not satisfied that the transaction to which the application relates should be approved, the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of 45 days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.
- 1991, c. 46, s. 400
- 1994, c. 47, s. 21
- 2001, c. 9, s. 98
- 2012, c. 31, s. 115(E)
Marginal note:Notice of decision
401 (1) Within a period of thirty days after the expiration of the period for making representations referred to in subsection 400(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.
Marginal note:Notice of decision
(2) Within a period of forty-five days after the expiration of the period for making representations referred to in subsection 400(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.
- 1991, c. 46, s. 401
- 1994, c. 47, s. 22
- 2001, c. 9, s. 98
Marginal note:Deemed approval
401.1 If the Minister does not send a notice under subsection 399(1) or (3) or 401(1) within the period provided for in those subsections, the Minister is deemed to have approved the transaction to which the application relates.
- 2001, c. 9, s. 98
Marginal note:Constraining registration: Crown and foreign governments
401.2 (1) No bank shall record in its securities register a transfer or issue of any share of the bank to
(a) Her Majesty in right of Canada or of a province or any agent or agency of Her Majesty in either of those rights; or
(b) the government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government.
Marginal note:Exception
(2) Despite subsection (1), a bank may record in its securities register a transfer or issue of any share of the bank to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country, or by any agent or agency of a foreign government, if the share that is transferred or issued is beneficially owned by the foreign bank or foreign institution or by an entity controlled by the foreign bank or foreign institution.
Marginal note:Certain foreign banks excluded
(2.1) Subsection (2) does not permit a bank to record in its securities register a transfer or issue of any share of the bank to a foreign bank that is a foreign bank by reason only of paragraph (f) of the definition foreign bank in section 2.
Marginal note:Exception
(3) Despite subsection (1), a bank may, with the Minister’s approval, record in its securities register the issue of any share of the bank to an eligible agent.
Marginal note:Application made jointly
(4) The application for the approval referred to in subsection (3) must be made jointly by the bank and the eligible agent.
Marginal note:Matters for consideration
(5) The Minister, in determining whether to grant the approval referred to in subsection (3), shall take into account all matters that he or she considers relevant, including those set out in paragraphs 396(1)(a) to (h).
Marginal note:Consequence of revocation of approval
(6) If an approval referred to in subsection (3) is revoked, the bank shall delete any entry in its securities register in respect of the recording of the issuance of shares to the eligible agent.
Marginal note:Disposition of shareholdings
(7) If a bank or an eligible agent fails to comply with any undertaking or term or condition in relation to an approval referred to in subsection (3), or if an eligible agent ceases to be an eligible agent, the Minister may, if the Minister considers it to be in the public interest to do so, by order, direct the eligible agent or former eligible agent and any person controlled by the eligible agent or former eligible agent to dispose of any number of shares of the bank beneficially owned by the eligible agent or former eligible agent or the persons controlled by the eligible agent or former eligible agent that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the eligible agent or former eligible agent and the persons controlled by the eligible agent or former eligible agent that is specified in the order.
Marginal note:Representations
(8) No direction shall be made under subsection (7) unless the Minister has provided each person to whom the direction relates and the bank concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.
Marginal note:Appeal
(9) Any person with respect to whom a direction has been made under subsection (7) may, within 30 days after the date of the direction, appeal the matter in accordance with section 977.
- 2001, c. 9, s. 98
- 2012, c. 5, s. 32, c. 19, s. 333, c. 31, s. 116
Marginal note:Suspension of voting rights held by governments
401.3 (1) Despite section 148, no person shall, in person or by proxy, exercise any voting rights attached to any share of a bank that is beneficially owned by
(a) Her Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights; or
(b) the government of a foreign country or any political subdivision thereof, or any agency thereof.
Marginal note:Exception
(2) Subsection (1) does not apply to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country, or by any agent or agency of a foreign government, if the share referred to in subsection (1) is beneficially owned by the foreign bank or foreign institution or by an entity controlled by the foreign bank or foreign institution.
Marginal note:Exception — eligible agent
(3) Subsection (1) does not apply in respect of the exercise of voting rights attached to any share referred to in subsection 401.2(3).
Marginal note:Consequence of suspension of approval
(4) If an approval referred to in subsection 401.2(3) is suspended, the eligible agent shall not exercise, in person or by proxy, any voting rights attached to any share of the bank that is beneficially owned by the eligible agent.
- 2001, c. 9, s. 98
- 2012, c. 5, s. 33, c. 19, s. 334, c. 31, s. 117
DIVISION VDirections
Marginal note:Disposition of shareholdings
402 (1) If, with respect to any bank, a person contravenes section 372 or subsection 373(1), 374(1) or 375(1) or section 376.1 or 376.2, subsection 377(1) or section 377.1 or fails to comply with an undertaking referred to in subsection 390(2) or with any terms and conditions imposed under section 397, the Minister may, if the Minister deems it in the public interest to do so, by order, direct that person and any person controlled by that person to dispose of any number of shares of the bank beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the person and the persons controlled by that person that is specified in the order.
Marginal note:Representations
(2) No direction shall be made under subsection (1) unless the Minister has provided each person to whom the direction relates and the bank concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.
Marginal note:Appeal
(3) Any person with respect to whom a direction has been made under subsection (1) may, within thirty days after the date of the direction, appeal the matter in accordance with section 977.
(4) [Repealed, 2001, c. 9, s. 99]
- 1991, c. 46, s. 402
- 1999, c. 28, s. 21
- 2001, c. 9, s. 99
Marginal note:Permission to become another body corporate
402.1 If subsection 402(1) applies, the Minister may, on application by the bank, permit the bank to apply to be continued as a body corporate under any Act of Parliament referred to in subsection 39.1(1) instead of, or in addition to, issuing an order under subsection 402(1).
- 1991, c. 46, s. 579
- 2007, c. 6, s. 22
Marginal note:Application to court
403 (1) If a person fails to comply with a direction made under subsection 401.2(7) or 402(1), an application on behalf of the Minister may be made to a court for an order to enforce the direction.
Marginal note:Court order
(2) A court may, on an application under subsection (1), make such order as the circumstances require to give effect to the terms of the direction and may, without limiting the generality of the foregoing, require the bank concerned to sell the shares that are the subject-matter of the direction.
Marginal note:Appeal
(3) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.
- 1991, c. 46, s. 403
- 2012, c. 31, s. 118
General Provisions
Marginal note:Interest of securities underwriter
404 This Part does not apply to a securities underwriter in respect of shares of a body corporate or ownership interests in an unincorporated entity that are acquired by the underwriter in the course of a distribution to the public of those shares or ownership interests and that are held by the underwriter for a period of not more than six months.
Marginal note:Arrangements to effect compliance
405 (1) The directors of a bank may make such arrangements as they deem necessary to carry out the intent of this Part and, in particular, but without limiting the generality of the foregoing, may
(a) require any person in whose name a share of the bank is held to submit a declaration setting out
(i) the beneficial ownership of the share, and
(ii) such other information as the directors deem relevant for the purposes of this Part;
(b) require any person who wishes to have a transfer of a share registered in the name of, or to have a share issued to, that person to submit a declaration referred to in paragraph (a) as though the person were the holder of that share; and
(c) determine the circumstances in which a declaration referred to in paragraph (a) is to be required, the form of the declaration and the times at which it is to be submitted.
Marginal note:Order of Superintendent
(2) The Superintendent may, by order, direct a bank to obtain from any person in whose name a share of the bank is held a declaration setting out the name of every entity controlled by that person and containing information concerning
(a) the ownership or beneficial ownership of the share; and
(b) such other related matters as are specified by the Superintendent.
Marginal note:Compliance required
(3) As soon as possible after receipt by a bank of a direction under subsection (2),
(a) the bank shall comply with the direction; and
(b) every person who is requested by the bank to provide a declaration containing information referred to in subsection (1) or (2) shall comply with the request.
Marginal note:Outstanding declaration: effect
(4) Where, pursuant to this section, a declaration is required to be submitted by a shareholder or other person in respect of the issue or transfer of any share, a bank may refuse to issue the share or register the transfer unless the required declaration is submitted.
Marginal note:Reliance on information
406 A bank and any person who is a director or an officer, employee or agent of the bank may rely on any information contained in a declaration required by the directors pursuant to section 405 or on any information otherwise acquired in respect of any matter that might be the subject of such a declaration, and no action lies against the bank or any such person for anything done or omitted to be done in good faith in reliance on any such information.
407 [Repealed, 1994, c. 47, s. 23]
Marginal note:Competition Act
408 Nothing in, or done under the authority of, this Act affects the operation of the Competition Act.
PART VIIIBusiness and Powers
General Business
Marginal note:Main business
409 (1) Subject to this Act, a bank shall not engage in or carry on any business other than the business of banking and such business generally as appertains thereto.
Marginal note:Idem
(2) For greater certainty, the business of banking includes
(a) providing any financial service;
(b) acting as a financial agent;
(c) providing investment counselling services and portfolio management services; and
(d) issuing payment, credit or charge cards and, in cooperation with others including other financial institutions, operating a payment, credit or charge card plan.
- 1991, c. 46, s. 409
- 2009, c. 2, s. 269(F)
Marginal note:Additional activities
410 (1) In addition, a bank may
(a) hold, manage and otherwise deal with real property;
(b) provide prescribed bank-related data processing services;
(c) outside Canada or, with the prior written approval of the Minister, in Canada, engage in any of the following activities, namely,
(i) collecting, manipulating and transmitting
(A) information that is primarily financial or economic in nature,
(B) information that relates to the business of a permitted entity, as defined in subsection 464(1), or
(C) any other information that the Minister may, by order, specify,
(ii) providing advisory or other services in the design, development or implementation of information management systems,
(iii) designing, developing or marketing computer software, and
(iv) designing, developing, manufacturing or selling, as an ancillary activity to any activity referred to in any of subparagraphs (i) to (iii) that the bank is engaging in, computer equipment integral to the provision of information services related to the business of financial institutions or to the provision of financial services;
(c.1) with the prior written approval of the Minister, develop, design, hold, manage, manufacture, sell or otherwise deal with data transmission systems, information sites, communication devices or information platforms or portals that are used
(i) to provide information that is primarily financial or economic in nature,
(ii) to provide information that relates to the business of a permitted entity, as defined in subsection 464(1), or
(iii) for a prescribed purpose or in prescribed circumstances;
(c.2) engage, under prescribed terms and conditions, if any are prescribed, in specialized business management or advisory services;
(d) promote merchandise and services to the holders of any payment, credit or charge card issued by the bank;
(e) engage in the sale of
(i) tickets, including lottery tickets, on a non-profit public service basis in connection with special, temporary and infrequent non-commercial celebrations or projects that are of local, municipal, provincial or national interest,
(ii) urban transit tickets, and
(iii) tickets in respect of a lottery sponsored by the federal government or a provincial or municipal government or an agency of any such government or governments;
(f) act as a custodian of property; and
(g) act as receiver, liquidator or sequestrator.
Marginal note:Restriction
(2) Except as authorized by or under this Act, a bank shall not deal in goods, wares or merchandise or engage in any trade or other business.
Marginal note:Regulations
(3) The Governor in Council may make regulations
(a) respecting what a bank may or may not do with respect to the carrying on of the activities referred to in paragraphs (1)(c) to (c.2);
(b) imposing terms and conditions in respect of
(i) the provision of financial services referred to in paragraph 409(2)(a) that are financial planning services,
(ii) the provision of services referred to in paragraph 409(2)(c), and
(iii) the carrying on of the activities referred to in any of paragraphs (1)(c) to (c.2); and
(c) respecting the circumstances in which banks may be exempted from the requirement to obtain the approval of the Minister before carrying on a particular activity referred to in paragraph (1)(c) or (c.1).
- 1991, c. 46, s. 410
- 1993, c. 34, s. 8(F)
- 1997, c. 15, s. 42
- 2001, c. 9, s. 100
Marginal note:Networking
411 (1) Subject to section 416, a bank may
(a) act as agent for any person in respect of the provision of any service that is provided by a financial institution, a permitted entity as defined in subsection 464(1) or a prescribed entity and may enter into an arrangement with any person in respect of the provision of that service; or
(b) refer any person to any such financial institution or entity.
Marginal note:Regulations
(2) The Governor in Council may make regulations respecting the disclosure of
(a) the name of the principal for whom a bank is acting as agent pursuant to subsection (1); and
(b) whether any commission is being earned by a bank when acting as agent pursuant to subsection (1).
- 1991, c. 46, s. 411
- 2001, c. 9, s. 101
Marginal note:Restriction on fiduciary activities
412 No bank shall act in Canada as
(a) an executor, administrator or official guardian or a guardian, tutor, curator, judicial adviser or committee of a mentally incompetent person; or
(b) a trustee for a trust.
Marginal note:Restriction on deposit taking
413 (1) A bank shall not accept deposits in Canada unless
(a) it is a member institution, as defined in section 2 of the Canada Deposit Insurance Corporation Act;
(b) it has been authorized under subsection 26.03(1) of that Act to accept deposits without being a member institution, as defined in section 2 of that Act; or
(c) the order approving the commencement and carrying on of business by the bank authorizes it to accept deposits solely in accordance with subsection (3).
(2) [Repealed, 2001, c. 9, s. 102]
Marginal note:Deposits that fall below $150,000
(3) A bank referred to in paragraph (1)(b) or (c) shall ensure that, on each day that is at least 30 days after the bank receives the authorization referred to in that paragraph,
A/B ≤ 0.01
where
- A
- is the sum of all amounts each of which is the sum of all the deposits held by the bank at the end of a day in the preceding 30 days each of which deposits is less than $150,000 and payable in Canada; and
- B
- is the sum of all amounts each of which is the sum of all deposits held by the bank at the end of a day in those preceding 30 days and payable in Canada.
Marginal note:Exchange rate
(4) For the purpose of subsection (3), the rate of exchange that shall be applied on any day in determining the amount in Canadian dollars of a deposit in a currency of a country other than Canada shall be determined in accordance with rules prescribed under subsection 26.03(2) of the Canada Deposit Insurance Corporation Act.
Definition of deposit
(5) For the purpose of subsection (3), deposit has the meaning that would be given to it by the schedule to the Canada Deposit Insurance Corporation Act for the purposes of deposit insurance if that schedule were read without reference to subsections 2(2), (5) and (6) of that schedule, but does not include prescribed deposits.
Marginal note:Regulations
(6) The Governor in Council may make regulations
(a) prescribing the deposits referred to in subsection (5); and
(b) prescribing terms and conditions with respect to the acceptance of those deposits.
- 1991, c. 46, s. 413
- 1997, c. 15, s. 43
- 1999, c. 28, s. 21.1
- 2001, c. 9, s. 102
- 2007, c. 6, s. 23
Marginal note:Notice before opening account or providing prescribed product
413.1 (1) Before a bank referred to in paragraph 413(1)(b) or (c) opens a deposit account in Canada or provides in Canada a prescribed product that relates to a deposit, the bank shall, at the prescribed time and place and in the prescribed form and manner, give the person requesting the opening of the account or the provision of the product
(a) a notice in writing that deposits to the deposit account, or that the deposit that relates to the prescribed product, as the case may be, will not be insured by the Canada Deposit Insurance Corporation or, if the request is made by telephone, a verbal notice to that effect; and
(b) any other information that may be prescribed.
Marginal note:Other notice
(2) A bank referred to in paragraph 413(1)(b) or (c) shall, in accordance with the regulations,
(a) post notices at all of its branches, and at prescribed points of service, in Canada where deposits are accepted, and on all of its websites at which deposits are accepted in Canada, to inform the public that deposits with the bank are not insured by the Canada Deposit Insurance Corporation; and
(b) include in its advertisements notices to inform the public that deposits with the bank are not insured by the Canada Deposit Insurance Corporation.
Marginal note:Regulations
(3) The Governor in Council may make regulations
(a) prescribing the time and place at which and the form and manner in which notices referred to in subsection (1) are to be given and the other information to be contained in the notices; and
(b) respecting notices for the purpose of subsection (2).
- 1997, c. 15, s. 43
- 2001, c. 9, s. 103
- 2007, c. 6, s. 24
- 2012, c. 5, s. 34
Marginal note:Deposits less than $150,000
413.2 (1) Subject to the regulations, a bank referred to in paragraph 413(1)(b) or (c) may not, in respect of its business in Canada, act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.
Meaning of deposit
(2) In this section, deposit has the meaning assigned to that term by subsection 413(5).
Marginal note:Regulations
(3) The Governor in Council may make regulations respecting the circumstances in which, and the conditions under which, a bank referred to in subsection (1) may act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.
- 2001, c. 9, s. 104
- 2007, c. 6, s. 25
Marginal note:Shared premises
413.3 (1) Subject to the regulations, no bank referred to in paragraph 413(1)(b) or (c) shall carry on business in Canada on premises that are shared with those of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the bank.
Marginal note:Limitation
(2) Subsection (1) only applies in respect of premises or any portion of premises on which both the bank and the member institution carry on business with the public and to which the public has access.
Marginal note:Adjacent premises
(3) Subject to the regulations, no bank referred to in paragraph 413(1)(b) or (c) shall carry on business in Canada on premises that are adjacent to a branch or office of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the bank, unless the bank clearly indicates to its customers that its business and the premises on which it is carried on are separate and distinct from the business and premises of the affiliated member institution.
Marginal note:Regulations
(4) The Governor in Council may make regulations
(a) respecting the circumstances in which, and the conditions under which, a bank referred to in paragraph 413(1)(b) or (c) may carry on business in Canada on premises that are shared with those of a member institution referred to in subsection (1); and
(b) respecting the circumstances in which, and the conditions under which, a bank referred to in paragraph 413(1)(b) or (c) may carry on business in Canada on premises that are adjacent to a branch or office of a member institution referred to in subsection (3).
- 2001, c. 9, s. 104
- 2007, c. 6, s. 26
Marginal note:Restriction on guarantees
414 (1) A bank shall not guarantee on behalf of any person the payment or repayment of any sum of money unless
(a) the sum of money is a fixed sum of money with or without interest thereon; and
(b) the person on whose behalf the bank has undertaken to guarantee the payment or repayment has an unqualified obligation to reimburse the bank for the full amount of the payment or repayment to be guaranteed.
Marginal note:Exception
(2) Paragraph (1)(a) does not apply where the person on whose behalf the bank has undertaken to guarantee the payment or repayment is a subsidiary of the bank.
Marginal note:Regulations
(3) The Governor in Council may make regulations imposing terms and conditions in respect of guarantees permitted by this section.
- 1991, c. 46, s. 414
- 1997, c. 15, s. 44
- 2001, c. 9, s. 105
Marginal note:Restriction on securities activities
415 A bank shall not deal in Canada in securities to the extent prohibited or restricted by such regulations as the Governor in Council may make for the purposes of this section.
Marginal note:Restriction on insurance business
416 (1) A bank shall not undertake the business of insurance except to the extent permitted by this Act or the regulations.
Marginal note:Restriction on acting as agent
(2) A bank shall not act in Canada as agent for any person in the placing of insurance and shall not lease or provide space in any branch in Canada of the bank to any person engaged in the placing of insurance.
Marginal note:Regulations
(3) The Governor in Council may make regulations respecting the matters referred to in subsection (1) and regulations respecting relations between banks and
(a) entities that undertake the business of insurance; or
(b) insurance agents or insurance brokers.
Marginal note:Saving
(4) Nothing in this section precludes a bank from
(a) requiring insurance to be placed by a borrower for the security of the bank; or
(b) obtaining group insurance for its employees or the employees of any bodies corporate in which it has a substantial investment pursuant to section 468.
(5) [Repealed, 1997, c. 15, s. 45]
Definition of business of insurance
(6) In this section, business of insurance includes
(a) the issuance of any annuity if the liability in respect of the annuity is contingent on the death of a person; and
(b) the issuance of any debt obligation, any of whose terms and conditions are established on the basis of mortality considerations, under which the issuer is obliged to make periodic payments.
- 1991, c. 46, s. 416
- 1997, c. 15, s. 45
- 2012, c. 19, s. 206
Marginal note:Restriction on leasing
417 A bank shall not engage in Canada in any personal property leasing activity in which a financial leasing entity, as defined in subsection 464(1), is not permitted to engage.
- 1991, c. 46, s. 417
- 2001, c. 9, s. 106
Marginal note:Restriction on residential mortgages
418 (1) A bank shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance such a loan, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed 80 per cent of the value of the property at the time of the loan.
Marginal note:Exception
(2) Subsection (1) does not apply in respect of
(a) a loan made or guaranteed under the National Housing Act or any other Act of Parliament by or pursuant to which a different limit on the value of property on the security of which the bank may make a loan is established;
(b) a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or a private insurer approved by the Superintendent;
(c) the acquisition by the bank from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the bank to the entity against the issue of such securities; or
(d) a loan secured by a mortgage where
(i) the mortgage is taken back by the bank on a property disposed of by the bank, including where the disposition is by way of a realization of a security interest, and
(ii) the mortgage secures payment of an amount payable to the bank for the property.
- 1991, c. 46, s. 418
- 1997, c. 15, s. 46
- 2007, c. 6, s. 27
Marginal note:Restriction on charges to borrowers
418.1 (1) Subject to any regulations made under subsection (2), a bank that has obtained insurance or a guarantee against default on a loan made in Canada on the security of residential property shall not charge a borrower an amount for the insurance or guarantee that exceeds the actual cost to the bank of the insurance or guarantee.
Marginal note:Regulations
(2) The Governor in Council may make regulations
(a) respecting the determination of the actual cost to a bank for the purposes of subsection (1);
(b) respecting the circumstances in which a bank is exempt from the application of subsection (1);
(c) respecting, in relation to insurance or a guarantee against default on a loan made by a bank in Canada on the security of residential property,
(i) the arrangements into which the bank and any affiliates that it controls, and the representatives and the employees of each, may or may not enter, and
(ii) the payments or benefits that the bank and any affiliates that it controls, and the representatives and the employees of each, may or may not accept from an insurer or the insurer’s affiliates; and
(d) respecting any other matters necessary to carry out the purposes of subsection (1).
Marginal note:Regulations — disclosure
(3) The Governor in Council may make regulations respecting the disclosure by a bank of information relating to insurance or a guarantee against default on a loan made by the bank in Canada on the security of residential property, including regulations respecting
(a) the information that must be disclosed, including information relating to
(i) the person who benefits from the insurance or guarantee,
(ii) the arrangements between
(A) the bank or any affiliates that it controls, or the representatives or the employees of each, and
(B) the insurer or the insurer’s affiliates, and
(iii) the payments and benefits that the bank and any affiliates that it controls, and the representatives and the employees of each, accept from an insurer or the insurer’s affiliates;
(b) the time and place at which, the form and manner in which and the persons to whom information is to be disclosed; and
(c) the circumstances under which a bank is not required to disclose information.
- 2009, c. 2, s. 270
- 2012, c. 5, s. 35(E)
Marginal note:Policies re security interests
419 (1) The directors of a bank shall establish and the bank shall adhere to policies regarding the creation of security interests in property of the bank to secure obligations of the bank and the acquisition by the bank of beneficial interests in property that is subject to security interests.
Marginal note:Order to amend policies
(2) The Superintendent may, by order, direct a bank to amend its policies as specified in the order.
Marginal note:Compliance
(3) A bank shall comply with an order made under subsection (2) within the time specified in the order.
- 1991, c. 46, s. 419
- 2001, c. 9, s. 107
Marginal note:Regulations and guidelines
419.1 The Governor in Council may make regulations and the Superintendent may make guidelines respecting the creation by a bank of security interests in its property to secure obligations of the bank and the acquisition by the bank of beneficial interests in property that is subject to security interests.
- 2001, c. 9, s. 107
Marginal note:Exception
419.2 Sections 419 and 419.1 do not apply in respect of a security interest created by a bank to secure an obligation of the bank to the Bank of Canada or the Canada Deposit Insurance Corporation.
- 2001, c. 9, s. 107
Marginal note:Restriction on receivers
420 A bank shall not grant to a person the right to appoint a receiver or a receiver and manager of the property or business of the bank.
Marginal note:Restriction on partnerships
421 (1) Except with the approval of the Superintendent, a bank may not be a general partner in a limited partnership or a partner in a general partnership.
Meaning of general partnership
(2) For the purposes of subsection (1), general partnership means any partnership other than a limited partnership.
- 1991, c. 46, s. 421
- 2001, c. 9, s. 108
422 (1) [Repealed, 2001, c. 9, s. 109]
(2) [Repealed, 1993, c. 44, s. 27]
Definition of non-WTO Member bank subsidiary
422.1 In section 422.2, non-WTO Member bank subsidiary means a bank that is a subsidiary of a foreign bank and that is not controlled by a WTO Member resident.
- 1993, c. 44, s. 28
- 1994, c. 47, s. 24
- 1999, c. 28, s. 22
- 2001, c. 9, s. 110
Marginal note:Limitation on branches in Canada of non-WTO Member bank subsidiaries
422.2 No non-WTO Member bank subsidiary shall have any branch in Canada, other than its head office and one branch, without the approval of the Minister.
- 1993, c. 44, s. 28
- 1999, c. 28, s. 22
422.3 to 424 [Repealed, 1994, c. 47, s. 25]
Special Security
Marginal note:Definitions
425 (1) For the purposes of sections 426 to 436,
- agricultural equipment
agricultural equipment means implements, apparatus, appliances and machinery of any kind usually affixed to real property, for use on a farm, but does not include a farm electric system; (installations agricoles ou matériel agricole immobilier)
- agricultural implements
agricultural implements means tools, implements, apparatus, appliances and machines of any kind not usually affixed to real property, for use on or in connection with a farm, and vehicles for use in the business of farming and, without restricting the generality of the foregoing, includes plows, harrows, drills, seeders, cultivators, mowing machines, reapers, binders, threshing machines, combines, leaf tobacco tying machines, tractors, movable granaries, trucks for carrying products of agriculture, equipment for bee-keeping, cream separators, churns, washing machines, spraying apparatus, portable irrigation apparatus, incubators, milking machines, refrigerators and heating and cooking appliances for farming operations or use in the farm home of a kind not usually affixed to real property; (instruments agricoles ou matériel agricole mobilier)
- aquacultural electric system
aquacultural electric system means all machinery, apparatus and appliances for the generation or distribution of electricity in an aquaculture operation, whether or not affixed to real property; (installation électrique aquicole)
- aquacultural equipment
aquacultural equipment means implements, apparatus, appliances and machinery of any kind usually affixed to real property for use in an aquaculture operation, but does not include an aquacultural electric system; (installations aquicoles ou matériel aquicole immobilier)
- aquacultural implements
aquacultural implements means tools, implements, apparatus, appliances and machines of any kind not usually affixed to real property, for use in an aquaculture operation, and includes net pen systems, vehicles and boats for use in aquaculture; (instruments aquicoles ou matériel aquicole mobilier)
- aquacultural stock growing or produced in the aquaculture operation
aquacultural stock growing or produced in the aquaculture operation means all products of the aquaculture operation; (stock en croissance ou produits de l’exploitation aquicole)
- aquaculture
aquaculture means the cultivation of aquatic plants and animals; (aquiculture)
- aquaculture operation
aquaculture operation means any premises or site where aquaculture is carried out; (exploitation aquicole)
- aquaculturist
aquaculturist includes the owner, occupier, landlord and tenant of an aquaculture operation; (aquiculteur)
- aquatic broodstock
aquatic broodstock means any aquatic plants and animals used to produce aquatic seedstock; (stock géniteur aquicole)
- aquatic plants and animals
aquatic plants and animals means plants and animals that, at most stages of their development or life cycles, live in an aquatic environment; (organismes animaux et végétaux aquatiques)
- aquatic seedstock
aquatic seedstock means aquatic plants and animals that at any stage of their development are purchased or collected by an aquaculturist for cultivation; (stock aquicole de départ)
- bill of lading
bill of lading includes all receipts for goods, wares and merchandise accompanied by an undertaking
(a) to move the goods, wares and merchandise from the place where they were received to some other place, by any means whatever, or
(b) to deliver to a place other than the place where the goods, wares and merchandise were received a like quantity of goods, wares and merchandise of the same or a similar grade or kind; (connaissement)
- crops growing or produced on the farm
crops growing or produced on the farm means all products of the farm; (récoltes sur pied ou produites à la ferme)
- farm
farm means land in Canada used for the purpose of farming, which term includes livestock raising, dairying, bee-keeping, fruit growing, the growing of trees and all tillage of the soil; (ferme)
- farm electric system
farm electric system means all machinery, apparatus and appliances for the generation or distribution of electricity on a farm whether or not affixed to real property; (installation électrique de ferme)
- farmer
farmer includes the owner, occupier, landlord and tenant of a farm; (agriculteur)
- fish
fish includes shellfish, crustaceans and marine animals; (poisson)
- fisherman
fisherman means a person whose business consists in whole or in part of fishing; (pêcheur)
- fishing
fishing means fishing for or catching fish by any method; (pêche)
- fishing equipment and supplies
fishing equipment and supplies means equipment, apparatus, appliances and supplies for use in the operation of a fishing vessel and not forming part thereof, or for use in fishing, and, without restricting the generality of the foregoing, includes detachable engines and machinery, lines, hooks, trawls, nets, anchors, traps, bait, salt, fuel and stores; (engins et fournitures de pêche)
- fishing vessel
fishing vessel means any ship or boat or any other description of vessel for use in fishing and equipment, apparatus and appliances for use in the operation thereof and forming part thereof, or any share or part interest therein; (bateau de pêche)
- forest
forest means land in Canada covered with timber stands or that, formerly so covered, is not put to any use inconsistent with forestry, and includes a sugar bush; (forêt)
- forestry
forestry means the conservation, cultivation, improvement, harvesting and rational utilization of timber stands and the resources contained therein and obtainable therefrom, and includes the operation of a sugar bush; (sylviculture)
- forestry equipment
forestry equipment means implements, apparatus, appliances and machinery of any kind usually affixed to real property, for use in a forest; (matériel sylvicole immobilier)
- forestry implements
forestry implements means tools, implements, apparatus, appliances and machines of any kind not usually affixed to real property, for use in forestry, and includes vehicles for use in forestry; (matériel sylvicole mobilier)
- forestry producer
forestry producer means a person whose business consists in whole or in part of forestry and includes a producer of maple products; (sylviculteur)
- goods, wares and merchandise
goods, wares and merchandise includes products of agriculture, products of aquaculture, products of the forest, products of the quarry and mine, products of the sea, lakes and rivers, and all other articles of commerce; (effets, denrées ou marchandises)
- grain
grain includes wheat, oats, barley, rye, corn, buckwheat, flax, beans and all kinds of seeds; (grain)
- hydrocarbons
hydrocarbons means solid, liquid and gaseous hydrocarbons and any natural gas whether consisting of a single element or of two or more elements in chemical combination or uncombined and, without restricting the generality of the foregoing, includes oil-bearing shale, tar sands, crude oil, petroleum, helium and hydrogen sulphide; (hydrocarbures)
- livestock
livestock includes
(a) horses and other equines,
(b) cattle, sheep, goats and other ruminants, and
(c) swine, poultry, bees and fur-bearing animals; (bétail)
- manufacturer
manufacturer means any person who manufactures or produces by hand, art, process or mechanical means any goods, wares and merchandise and, without restricting the generality of the foregoing, includes a manufacturer of logs, timber or lumber, maltster, distiller, brewer, refiner and producer of petroleum, tanner, curer, packer, canner, bottler and a person who packs, freezes or dehydrates any goods, wares and merchandise; (fabricant)
- minerals
minerals includes base and precious metals, coal, salt and every other substance that is an article of commerce obtained from the earth by any method of extraction, but does not include hydrocarbons or any animal or vegetable substance other than coal; (substances minérales)
- products of agriculture
products of agriculture includes
(a) grain, hay, roots, vegetables, fruits, other crops and all other direct products of the soil, and
(b) honey, livestock (whether alive or dead), dairy products, eggs and all other indirect products of the soil; (produits agricoles)
- products of aquaculture
products of aquaculture includes all cultivated aquatic plants and animals; (produits aquicoles)
- products of the forest
products of the forest includes
(a) logs, pulpwood, piling, spars, railway ties, poles, pit props and all other timber,
(b) boards, laths, shingles, deals, staves and all other lumber, bark, wood chips and sawdust and Christmas trees,
(c) skins and furs of wild animals, and
(d) maple products; (produits de la forêt)
- products of the quarry and mine
products of the quarry and mine includes stone, clay, sand, gravel, metals, ores, coal, salt, precious stones, metalliferous and non-metallic minerals and hydrocarbons, whether obtained by excavation, drilling or otherwise; (produits des carrières et des mines)
- products of the sea, lakes and rivers
products of the sea, lakes and rivers includes fish of all kinds, marine and freshwater organic and inorganic life and any substances extracted or derived from any water, but does not include products of aquaculture; (produits aquatiques)
- unperfected
unperfected, in relation to a security interest, means that the security interest has not been registered in a public register maintained under the law under which the security interest is created, or has not been perfected or published by any other means recognized by that law, where the registration or other means of perfection or publication would have made the security interest effective against third parties or would have determined priorities in rank in respect of rights in, on or in respect of the property that is subject to the security interest; (non parfaite)
- warehouse receipt
warehouse receipt includes
(a) any receipt given by any person for goods, wares and merchandise in the person’s actual, visible and continued possession as bailee thereof in good faith and not as the owner thereof,
(b) receipts given by any person who is the owner or keeper of a harbour, cove, pond, wharf, yard, warehouse, shed, storehouse or other place for the storage of goods, wares and merchandise, for goods, wares and merchandise delivered to the person as bailee, and actually in the place or in one or more of the places owned or kept by the person, whether or not that person is engaged in other business,
(c) receipts given by any person in charge of logs or timber in transit from timber limits or other lands to the place of destination of the logs or timber,
(d) Lake Shippers’ Clearance Association receipts and transfer certificates, British Columbia Grain Shippers’ Clearance Association receipts and transfer certificates, and all documents recognized by the Canada Grain Act as elevator receipts, and
(e) receipts given by any person for any hydrocarbons received by the person as bailee, whether the person’s obligation to restore requires delivery of the same hydrocarbons or may be satisfied by delivery of a like quantity of hydrocarbons of the same or a similar grade or kind. (récépissé d’entrepôt)
Marginal note:Interpretation — products and by-products
(2) For the purposes of sections 426 to 436, each thing included in the following terms as defined in subsection (1), namely,
(a) aquacultural stock growing or produced in the aquaculture operation,
(b) crops growing or produced on the farm,
(c) livestock,
(d) products of agriculture,
(e) products of aquaculture,
(f) products of the forest,
(g) products of the quarry and mine, and
(h) products of the sea, lakes and rivers,
comprises that thing in any form or state and any part thereof and any product or by-product thereof or derived therefrom.
- 1991, c. 46, s. 425
- 2012, c. 5, s. 36
Marginal note:Loans on hydrocarbons and minerals
426 (1) A bank may lend money and make advances on the security of any or all of the following, namely,
(a) hydrocarbons or minerals in, under or on the ground, in place or in storage,
(b) the rights, licences or permits of any person to obtain and remove any such hydrocarbons or minerals and to enter on, occupy and use lands from or on which any of such hydrocarbons or minerals are or may be extracted, mined or produced,
(c) the estate or interest of any person in or to any such hydrocarbons or minerals, rights, licences, permits and lands whether the estate or interest is entire or partial, and
(d) the equipment and casing used or to be used in extracting, mining or producing or seeking to extract, mine or produce, and storing any such, hydrocarbons or minerals,
or of any rights or interests in or to any of the foregoing whether the security be taken from the borrower or from a guarantor of the liability of the borrower or from any other person.
Marginal note:Security
(2) Security under this section may be given by signature and delivery to the bank, by or on behalf of the person giving the security, of an instrument in the prescribed form or in a form to the like effect, and shall affect the property described in the instrument giving the security
(a) of which the person giving the security is the owner at the time of the delivery of the instrument, or
(b) of which that person becomes the owner at any time thereafter before the release of the security by the bank, whether or not the property is in existence at the time of the delivery,
all of which property is for the purposes of this Act property covered by the security.
Marginal note:Rights under security
(3) Any security given under this section vests in the bank, in addition to and without limitation of any other rights or powers vested in or conferred on it, full power, right and authority, through its officers, employees or agents, in the event of
(a) non-payment of any loan or advance as security for the payment of which the bank has taken the security, or
(b) failure to care for, maintain, protect or preserve the property covered by the security,
to do all or any of the following, namely, take possession of, seize, care for, maintain, use, operate and, subject to the provisions of any other Act and any regulations made under any other Act governing the ownership and disposition of the property that is the subject of the security, sell the property covered by the security or part thereof as it sees fit.
Marginal note:Liability to account for surplus
(4) Where a bank exercises any right conferred on it by subsection (3) in relation to property given to it as security, the bank shall provide to the person entitled thereto any surplus proceeds resulting from the exercise of the right that remain after payment of all loans and advances, together with interest and expenses, in relation to which the property was given as security.
Marginal note:Effect of sale
(5) A sale pursuant to subsection (3) of any property given to a bank as security vests in the purchaser all the right and title in and to such property that the person giving the security had when the security was given and that that person thereafter acquired.
Marginal note:Sale to be by public auction
(6) Unless a person by whom property was given to a bank as security has agreed otherwise, a sale pursuant to subsection (3) shall be made by public auction after
(a) notice of the time and place of the sale has been sent by registered mail to the recorded address of the person by whom the property was given as security at least ten days prior to the sale; and
(b) publication of an advertisement of the sale, at least two days prior to the sale, in at least two newspapers published in or nearest to the place where the sale is to be made.
Marginal note:Priority of bank’s rights
(7) Subject to subsections (8), (9) and (10), all the rights and powers of a bank in respect of the property covered by security given under this section have priority over all rights subsequently acquired in, on or in respect of the property and also over the claim of any mechanics’ lien holder, of any unpaid vendor of equipment or casing or of any person who had a security interest in that property that was unperfected at the time the bank acquired its security in the property.
Marginal note:Exception
(7.1) The priority referred to in subsection (7) does not extend over the claim of any unpaid vendor who had a lien on the equipment or casing, or of any person who has a security interest in the property that was unperfected at the time the bank acquired its security in the property, if the bank acquired its security with knowledge of that unpaid vendor’s lien or that other person’s security interest.
Marginal note:Idem
(8) The rights and powers of a bank in respect of the property covered by security given under this section do not have priority over an interest or a right acquired in, on or in respect of the property unless, prior to
(a) the registration of such interest or right, or
(b) the registration or filing of the deed or other instrument evidencing such interest or right, or of a caution, caveat or memorial in respect thereof,
there has been registered or filed in the proper land registry or land titles office or office in which are recorded the rights, licences or permits referred to in this section,
(c) an original of the instrument giving the security,
(d) a copy of the instrument giving the security, certified by an officer or employee of the bank to be a true copy, or
(e) a caution, caveat or memorial in respect of the rights of the bank.
Marginal note:Procedure for registering
(9) Every registrar or officer in charge of the proper land registry or land titles or other office to whom a document mentioned in paragraph (8)(c), (d) or (e) is tendered shall register or file the document according to the ordinary procedure for registering or filing within that office documents that evidence liens or charges against, or cautions, caveats or memorials in respect of claims to, interests in or rights in respect of any such property and subject to payment of the like fees.
Marginal note:Exception
(10) Subsections (8) and (9) do not apply if the law of the appropriate province does not permit the registration or filing of the tendered document or if any law enacted by or under the authority of Parliament, governing the ownership and disposal of the property that is the subject of security given under this section, does not provide by specific reference to this section for the registration or filing of the tendered document.
Marginal note:Further security
(11) When making a loan or an advance on the security provided for by this section, a bank may take, on any property covered by the security, any further security it sees fit.
Marginal note:Substitution of security
(12) Notwithstanding anything in this Act, where the bank holds any security covering hydrocarbons or minerals, it may take in lieu of that security, to the extent of the quantity covered by the security taken, any security covering or entitling it to the delivery of the same hydrocarbons or minerals or hydrocarbons or minerals of the same or a similar grade or kind.
- 1991, c. 46, s. 426
- 2012, c. 5, s. 37
Marginal note:Loans to certain borrowers and security
427 (1) A bank may lend money and make advances
(a) to any wholesale or retail purchaser or shipper of, or dealer in, products of agriculture, products of aquaculture, products of the forest, products of the quarry and mine, products of the sea, lakes and rivers or goods, wares and merchandise, manufactured or otherwise, on the security of such products or goods, wares and merchandise and of goods, wares and merchandise used in or procured for the packing of such products or goods, wares and merchandise,
(b) to any person engaged in business as a manufacturer, on the security of goods, wares and merchandise manufactured or produced by that person or procured for such manufacture or production and of goods, wares and merchandise used in or procured for the packing of goods, wares and merchandise so manufactured or produced,
(c) to any aquaculturist, on the security of aquacultural stock growing or produced in the aquaculture operation or on the security of aquacultural equipment or aquacultural implements,
(d) to any farmer, on the security of crops growing or produced on the farm or on the security of agricultural equipment or agricultural implements,
(e) to any aquaculturist
(i) for the purchase of aquatic broodstock or aquatic seedstock, on the security of the aquatic broodstock or aquatic seedstock and any aquatic stock to be grown therefrom,
(ii) for the purchase of pesticide, on the security of the pesticide and any aquatic stock to be grown from the site on which the pesticide is to be used, and
(iii) for the purchase of feed, veterinary drugs, biologicals or vaccines, on the security of the feed, veterinary drugs, biologicals or vaccines and any aquatic stock to be grown in the aquaculture operation on which the feed, veterinary drugs, biologicals or vaccines are to be used,
(f) to any farmer
(i) for the purchase of seed grain or seed potatoes, on the security of the seed grain or seed potatoes and any crop to be grown therefrom, and
(ii) for the purchase of fertilizer or pesticide, on the security of the fertilizer or pesticide and any crop to be grown from land on which, in the same season, the fertilizer or pesticide is to be used,
(g) to any aquaculturist on the security of aquatic plants and animals, but security taken under this paragraph is not effective in respect of any aquatic plants and animals that, at the time the security is taken, by any statutory law that is then in force, are exempt from seizure under writs of execution and the aquaculturist is prevented from giving as security for money lent to the aquaculturist,
(h) to any farmer or to any person engaged in livestock raising, on the security of feed or livestock, but security taken under this paragraph is not effective in respect of any livestock that, at the time the security is taken, by any statutory law that is then in force, is exempt from seizure under writs of execution and the farmer or other person engaged in livestock raising is prevented from giving as security for money lent to the farmer or other person,
(i) to any aquaculturist for the purchase of aquacultural implements, on the security of those aquacultural implements,
(j) to any farmer for the purchase of agricultural implements, on the security of those agricultural implements,
(k) to any aquaculturist for the purchase or installation of aquacultural equipment or an aquacultural electric system, on the security of that aquacultural equipment or aquacultural electric system,
(l) to any farmer for the purchase or installation of agricultural equipment or a farm electric system, on the security of that agricultural equipment or farm electric system,
(m) to any aquaculturist for
(i) the repair or overhaul of an aquacultural implement, aquacultural equipment or an aquaculture electric system,
(ii) the alteration or improvement of an aquacultural electric system,
(iii) the erection or construction of fencing or works for drainage in an aquaculture operation for the holding, rearing or protection of aquatic plants and animals or for the supply of water to such plants and animals or the disposal of effluent from them,
(iv) the construction, repair or alteration of or making of additions to any building or structure in an aquaculture operation, and
(v) any works for the improvement or development of an aquaculture operation for which a loan, as defined in the Canada Small Business Financing Act, or a business improvement loan, as defined in the Small Business Loans Act, may be made,
on the security of aquacultural equipment or aquacultural implements, but security taken under this paragraph is not effective in respect of aquacultural equipment or aquacultural implements that, at the time the security is taken, by any statutory law that is then in force, are exempt from seizure under writs of execution and the aquaculturist is prevented from giving as security for money lent to the aquaculturist,
(n) to any farmer for
(i) the repair or overhaul of an agricultural implement, agricultural equipment or a farm electric system,
(ii) the alteration or improvement of a farm electric system,
(iii) the erection or construction of fencing or works for drainage on a farm,
(iv) the construction, repair or alteration of or making of additions to any building or structure on a farm,
(v) [Repealed, 2009, c. 15, s. 13]
(vi) any purpose for which a loan as defined in the Canadian Agricultural Loans Act may be made,
on the security of agricultural equipment or agricultural implements, but security taken under this paragraph is not effective in respect of agricultural equipment or agricultural implements that, at the time the security is taken, by any statutory law that is then in force, are exempt from seizure under writs of execution and the farmer is prevented from giving as security for money lent to the farmer,
(o) to any fisherman, on the security of fishing vessels, fishing equipment and supplies or products of the sea, lakes and rivers, but security taken under this paragraph is not effective in respect of any such property that, at the time the security is taken, by any statutory law that is then in force, is exempt from seizure under writs of execution and the fisherman is prevented from giving as security for money lent to the fisherman, and
(p) to any forestry producer, on the security of fertilizer, pesticide, forestry equipment, forestry implements or products of the forest, but security taken under this paragraph is not effective in respect of any such property that, at the time the security is taken, by any statutory law that is then in force, is exempt from seizure under writs of execution and the forestry producer is prevented from giving as security for money lent to the forestry producer,
and the security may be given by signature and delivery to the bank, by or on behalf of the person giving the security, of a document in the prescribed form or in a form to the like effect.
Marginal note:Rights and powers vested by delivery of document
(2) Delivery of a document giving security on property to a bank under the authority of this section vests in the bank in respect of the property therein described
(a) of which the person giving security is the owner at the time of the delivery of the document, or
(b) of which that person becomes the owner at any time thereafter before the release of the security by the bank, whether or not the property is in existence at the time of the delivery,
the following rights and powers, namely,
(c) if the property is property on which security is given under paragraph (1)(a), (b), (g), (h), (i), (j) or (o), under paragraph (1)(c) or (m) consisting of aquacultural implements, under paragraph (1)(d) or (n) consisting of agricultural implements or under paragraph (1)(p) consisting of forestry implements, the same rights and powers as if the bank had acquired a warehouse receipt or bill of lading in which that property was described, or
(d) if the property
(i) is property on which security is given under paragraph (1)(c) consisting of aquacultural stock growing or produced in the aquaculture operation or aquacultural equipment,
(ii) is property on which security is given under paragraph (1)(d) consisting of crops or agricultural equipment,
(iii) is property on which security is given under any of paragraphs (1)(e), (f), (k) and (l),
(iv) is property on which security is given under paragraph (1)(m) consisting of aquacultural equipment,
(v) is property on which security is given under paragraph (1)(n) consisting of agricultural equipment, or
(vi) is property on which security is given under paragraph (1)(p) consisting of forestry equipment,
a first and preferential lien and claim thereon for the sum secured and interest thereon, and as regards a crop as well before as after the severance from the soil, harvesting or threshing thereof, and, in addition thereto, the same rights and powers in respect of the property as if the bank had acquired a warehouse receipt or bill of lading in which the property was described, and all rights and powers of the bank subsist notwithstanding that the property is affixed to real property and notwithstanding that the person giving the security is not the owner of that real property,
and all such property in respect of which such rights and powers are vested in the bank under this section is for the purposes of this Act property covered by the security.
Marginal note:Power of the bank to take possession, etc.
(3) Where security on any property is given to a bank under any of paragraphs (1)(c) to (p), the bank, in addition to and without limitation of any other rights or powers vested in or conferred on it, has full power, right and authority, through its officers, employees or agents, in the case of
(a) non-payment of any of the loans or advances for which the security was given,
(b) failure to care for or harvest any crop or to care for any livestock covered by the security,
(c) failure to care for or harvest any aquatic stock growing or produced in the aquaculture operation or to care for any aquatic plants and animals covered by the security,
(d) failure to care for any property on which security is given under any of paragraphs (1)(i) to (p),
(e) any attempt, without the consent of the bank, to dispose of any property covered by the security, or
(f) seizure of any property covered by the security,
to take possession of or seize the property covered by the security, and in the case of aquacultural stock growing or produced in the aquaculture operation or a crop growing or produced on the farm to care for it and, where applicable, harvest it or thresh the grain therefrom, and in the case of livestock or aquatic plants and animals to care for them, and has the right and authority to enter on any land, premises or site whenever necessary for any such purpose and to detach and remove such property, exclusive of wiring, conduits or piping incorporated in a building, from any real property to which it is affixed.
Marginal note:Notice of intention
(4) The following provisions apply where security on property is given to a bank under this section:
(a) the rights and powers of the bank in respect of property covered by the security are void as against creditors of the person giving the security and as against subsequent purchasers or mortgagees in good faith of the property covered by the security unless a notice of intention signed by or on behalf of the person giving the security was registered in the appropriate agency not more than three years immediately before the security was given;
(b) registration of a notice of intention may be cancelled by registration in the appropriate agency in which the notice of intention was registered of a certificate of release signed on behalf of the bank named in the notice of intention stating that every security to which the notice of intention relates has been released or that no security was given to the bank, as the case may be;
(c) every person, on payment of the fee prescribed pursuant to subsection (6), is entitled to have access through the agent to any system of registration, notice of intention or certificate of release kept by or in the custody of the agent;
(d) any person desiring to ascertain whether a notice of intention given by a person is registered in an agency may inquire by sending a prepaid telegram or written communication addressed to the agent, and it is the duty of the agent, in the case of a written inquiry, only if it is accompanied by the payment of the fee prescribed pursuant to subsection (6), to make the necessary examination of the information contained in the system of registration and of the relevant documents, if any, and to reply to the inquirer stating the name of the bank mentioned in any such notice of intention, which reply shall be sent by mail unless a telegraphic reply is requested, in which case it shall be sent at the expense of the inquirer; and
(e) evidence of registration in an agency of a notice of intention or a certificate of release and of the place, date, time and serial number, if any, of its registration may be given by the production of a copy of the notice of intention or certificate of release duly certified by the agent to be a true copy thereof without proof of the signature or of the official character of the agent.
Marginal note:Definitions
(5) In subsections (4) and (6),
- agency
agency means, in a province, the office of the Bank of Canada or its authorized representative but does not include its Ottawa office, and in Yukon, the Northwest Territories and Nunavut means the office of the clerk of the court of each of those territories respectively; (agence)
- agent
agent means the officer in charge of an agency, and includes any person acting for that officer; (agent)
- appropriate agency
appropriate agency means
(a) the agency for the province in which is located the place of business of the person by whom or on whose behalf a notice of intention is signed,
(b) if that person has more than one place of business in Canada and the places of business are not in the same province, the agency for the province in which is located the principal place of business of that person, or
(c) if that person has no place of business, the agency for the province in which the person resides,
and in respect of any notice of intention registered before the day this Part comes into force, means the office in which registration was required to be made by the law in force at the time of such registration; (agence appropriée)
- notice of intention
notice of intention means a notice of intention in the prescribed form or in a form to the like effect, and includes a notice of intention registered before the day this Part comes into force, in the form and registered in the manner required by the law in force at the time of the registration of the notice of intention; (préavis)
- principal place of business
principal place of business means
(a) in the case of a body corporate incorporated by or under an Act of Parliament or the legislature of a province, the place where, according to the body corporate’s charter, memorandum of association or by-laws, the head office of the body corporate in Canada is situated, and
(b) in the case of any other body corporate, the place at which a civil process in the province in which the loans or advances will be made can be served on the body corporate; (principal établissement)
- system of registration
system of registration means all registers and other records required by subsection (4) to be prepared and maintained and any such system may be in a bound or loose-leaf form or in a photographic film form, or may be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time. (archives)
Marginal note:Regulations
(6) The Governor in Council may, for the purposes of this section, make regulations
(a) respecting the practice and procedure for the operation of a system of registration, including registration of notices of intention, the cancellation of such registrations and access to the system of registration;
(b) requiring the payment of fees relating to the system of registration and prescribing the amounts thereof; and
(c) respecting any other matter necessary for the maintenance and operation of a system of registration.
Marginal note:Priority of wages and money owing for perishable agricultural products
(7) Despite subsection (2) and despite the fact that a notice of intention by a person giving security on property under this section has been registered under this section, if, under the Bankruptcy and Insolvency Act, a bankruptcy order is made against, or an assignment is made by, that person,
(a) claims for wages, salaries or other remuneration owing in respect of the period of three months immediately preceding the making of the order or assignment, to employees of the person employed in connection with the business or farm in respect of which the property covered by the security was held or acquired by the person, and
(b) claims of a grower or producer of products of agriculture for money owing by a manufacturer to the grower or producer for such products that were grown or produced by the grower or producer on land owned or leased by the grower or producer and that were delivered to the manufacturer during the period of six months immediately preceding the making of the order or assignment to the extent of the lesser of
(i) the total amount of the claims of the grower or producer therefor, and
(ii) the prescribed amount
have priority over the rights of the bank in a security given to the bank under this section, in the order in which they are mentioned in this subsection, and if the bank takes possession or in any way disposes of the property covered by the security, the bank is liable for those claims to the extent of the net amount realized on the disposition of the property, after deducting the cost of realization, and the bank is subrogated in and to all the rights of the claimants to the extent of the amounts paid to them by the bank.
(8) [Repealed, 1997, c. 15, s. 47]
- 1991, c. 46, s. 427
- 1992, c. 27, s. 90
- 1993, c. 6, s. 6(E), c. 28, s. 78
- 1997, c. 15, s. 47
- 1998, c. 36, s. 21
- 2002, c. 7, s. 82(E)
- 2004, c. 25, s. 185
- 2009, c. 15, s. 13
Marginal note:Priority of bank’s rights
428 (1) All the rights and powers of a bank in respect of the property mentioned in or covered by a warehouse receipt or bill of lading acquired and held by the bank, and the rights and powers of the bank in respect of the property covered by security given to the bank under section 427 that are the same as if the bank had acquired a warehouse receipt or bill of lading in which that property was described, have, subject to subsection 427(4) and subsections (3) to (6) of this section, priority over all rights subsequently acquired in, on or in respect of that property, and also over the claim of any unpaid vendor or of any person who has a security interest in that property that was unperfected at the time the bank acquired its security in the property.
Marginal note:Affixation to real property
(1.1) If security is given to the bank under paragraph 427(1)(c) or (m) consisting of aquacultural equipment, under paragraph 427(1)(d) or (n) consisting of agricultural equipment, under paragraph 427(1)(k) consisting of aquacultural equipment or an aquacultural electric system, under paragraph 427(1)(l) consisting of agricultural equipment or a farm electric system or under paragraph 427(1)(p) consisting of forestry equipment, the priority referred to in subsection (1) exists even if the property is or becomes affixed to real property.
Marginal note:Exception
(2) The priority referred to in subsection (1) does not extend over the claim of any unpaid vendor who had a lien on the property, or of any person who has a security interest in the property that was unperfected at the time the bank acquired its warehouse receipt, bill of lading or security, if the bank acquired it with knowledge of that unpaid vendor’s lien or that other person’s security interest.
Marginal note:Bank required to register against land in certain cases
(3) Where security has been given to a bank under paragraph 427(1)(c) or (m) consisting of aquacultural equipment, under paragraph 427(1)(d) or (n) consisting of agricultural equipment, under paragraph 427(1)(k) consisting of aquacultural equipment or an aquacultural electric system, under paragraph 427(1)(l) consisting of agricultural equipment or a farm electric system or under paragraph 427(1)(p) consisting of forestry equipment that is or has become affixed to real property, the rights and powers of the bank do not have priority over any interest or right acquired in, on or in respect of the real property after that property has become affixed thereto unless, prior to
(a) the registration of the interest or right, or
(b) the registration or filing of the deed or other instrument evidencing the interest or right, or of a caution, caveat or memorial in respect thereof,
there has been registered or filed in the proper land registry or land titles office,
(c) an original of the document giving the security,
(d) a copy of the document giving the security, certified by an officer or employee of the bank to be a true copy, or
(e) a caution, caveat or memorial in respect of the rights of the bank.
Marginal note:Procedure for registering
(4) Every registrar or officer in charge of the proper land registry or land titles office to whom a document mentioned in paragraph (3)(c), (d) or (e) is tendered shall register or file the document according to the ordinary procedure for registering or filing within that office documents that evidence liens or charges against, or cautions, caveats or memorials in respect of claims to, or interests or rights in respect of, real property and subject to payment of the like fees, but subsection (3) and this subsection do not apply if the provincial law does not permit such registration or filing of the tendered document.
Marginal note:Security on fishing vessels
(5) If security has been given to a bank under paragraph 427(1)(o) on a fishing vessel that is recorded or registered under the Canada Shipping Act, 2001, the rights and powers of the bank do not have priority over any rights that are subsequently acquired in the vessel and are recorded or registered under that Act unless a copy of the document giving the security, certified by an officer of the bank to be a true copy, has been recorded or registered under that Act in respect of the vessel before the recording or registration under that Act of those rights.
Marginal note:Effect of registration of security
(6) A copy of the document giving the security described in subsection (5), certified by an officer of the bank, may be recorded or registered under the Canada Shipping Act, 2001 as if it were a mortgage given under that Act and, on the recording or registration of the document, the bank, in addition to and without limitation of any other rights or powers vested in or conferred on it, has all the rights and powers in respect of the vessel that it would have if the security were a mortgage recorded or registered under that Act.
Marginal note:Sale of goods on non-payment of debt
(7) In the event of non-payment of any debt, liability, loan or advance, as security for the payment of which a bank has acquired and holds a warehouse receipt or bill of lading or has taken any security under section 427, the bank may sell all or any part of the property mentioned therein or covered thereby and apply the proceeds against that debt, liability, loan or advance, with interest and expenses, returning the surplus, if any, to the person by whom the security was given.
Marginal note:Idem
(8) The power of sale referred to in subsection (7) shall, unless the person by whom the security mentioned in that subsection was given has agreed to the sale of the property otherwise than as herein provided or unless the property is perishable and to comply with the following provisions might result in a substantial reduction in the value of the property, be exercised subject to the following provisions, namely,
(a) every sale of such property other than livestock shall be by public auction after
(i) notice of the time and place of the sale has been sent by registered mail to the recorded address of the person by whom the security was given, at least ten days prior to the sale in the case of any such property other than products of the forest, and at least thirty days prior to the sale in the case of any such property consisting of products of the forest, and
(ii) publication of an advertisement of the sale, at least two days prior to the sale, in at least two newspapers published in or nearest to the place where the sale is to be made stating the time and place thereof; and
(b) every sale of livestock shall be made by public auction not less than five days after
(i) publication of an advertisement of the time and place of the sale in a newspaper, published in or nearest to the place where the sale is to be made, and
(ii) posting of a notice in writing of the time and place of the sale, in or at the post office nearest to the place where the sale is to be made,
and the proceeds of such a sale of livestock, after deducting all expenses incurred by the bank and all expenses of seizure and sale, shall first be applied to satisfy privileges, liens or pledges having priority over the security given to the bank and for which claims have been filed with the person making the sale, and the balance shall be applied in payment of the debt, liability, loan or advance, with interest and the surplus, if any, returned to the person by whom the security was given.
Marginal note:Right and title of purchaser
(9) Any sale of property by a bank under subsections (7) and (8) vests in the purchaser all the right and title in and to the property that the person from whom security was taken under section 435 had when the security was given or that the person from whom security was taken under section 427 had when the security was given and that the person acquired thereafter.
Marginal note:Duty to act honestly and in good faith
(10) In connection with any sale of property by a bank pursuant to subsections (7) and (8) or pursuant to any agreement between the bank and the person by whom the security was given, the bank shall act honestly and in good faith and shall deal with the property in a timely and appropriate manner having regard to the nature of the property and the interests of the person by whom the security was given and, in the case of a sale pursuant to an agreement, shall give the person by whom the security was given reasonable notice of the sale except where the property is perishable and to do so might result in a substantial reduction in the value of the property.
Marginal note:Duty to act expeditiously in respect of seized property
(11) Subject to section 427 and this section and any agreement between the bank and the person by whom the property was given as security, where, pursuant to subsection 427(3), a bank takes possession of or seizes property given as security to the bank, the bank shall, as soon as is reasonably practical having regard to the nature of the property, sell the property or so much thereof as will enable it to satisfy the debt, liability, loan or advance, with interest and expenses, in relation to which the property was given as security.
Marginal note:Goods manufactured from articles pledged
(12) Where goods, wares and merchandise are manufactured or produced from goods, wares and merchandise, or any of them, mentioned in or covered by any warehouse receipt or bill of lading acquired and held by a bank or any security given to a bank under section 427, the bank has the same rights and powers in respect of the goods, wares and merchandise so manufactured or produced, as well during the process of manufacture or production as after the completion thereof, and for the same purposes and on the same conditions as it had with respect to the original goods, wares and merchandise.
Marginal note:Subrogation of security
(13) Where payment or satisfaction of any debt, liability, loan or advance in respect of which a bank has taken security under section 426, 427 or 435 is guaranteed by a third person and the debt, liability, loan or advance is paid or satisfied by the guarantor, the guarantor is subrogated in and to all of the powers, rights and authority of the bank under the security that the bank holds in respect thereof under sections 426, 427 and 435 and this section.
Marginal note:Bank may assign its rights
(14) A bank may assign to any person all or any of its rights and powers in respect of any property on which security has been given to it under paragraph 427(1)(i), (j), (k), (l), (m), (n), (o) or (p), whereupon that person has all or any of the assigned rights and powers of the bank under that security.
- 1991, c. 46, s. 428
- 2001, c. 26, s. 275
- 2012, c. 5, s. 38
Marginal note:Conditions under which bank may take security
429 (1) A bank shall not acquire or hold any warehouse receipt or bill of lading, or any security under section 427, to secure the payment of any debt, liability, loan or advance unless the debt, liability, loan or advance is contracted or made
(a) at the time of the acquisition thereof by the bank, or
(b) on the written promise or agreement that a warehouse receipt or bill of lading or security under section 427 would be given to the bank, in which case the debt, liability, loan or advance may be contracted or made before or at the time of or after that acquisition,
and such debt, liability, loan or advance may be renewed, or the time for the payment thereof extended, without affecting any security so acquired or held.
Marginal note:Exchange of one security for another
(2) A bank may
(a) on the shipment of any property for which it holds a warehouse receipt or any security under section 427, surrender the receipt or security and receive a bill of lading in exchange therefor;
(b) on the receipt of any property for which it holds a bill of lading, or any security under section 427, surrender the bill of lading or security, store the property and take a warehouse receipt therefor, or ship the property, or part of it, and take another bill of lading therefor;
(c) surrender any bill of lading or warehouse receipt held by it and receive in exchange therefor any security that may be taken under this Act;
(d) when it holds any security under section 427 on grain in any elevator, take a bill of lading covering the same grain or grain of the same grade or kind shipped from that elevator, in lieu of that security, to the extent of the quantity shipped; and
(e) when it holds any security whatever covering grain, take in lieu of that security, to the extent of the quantity covered by the security taken, a bill of lading or warehouse receipt for, or any document entitling it under the Canada Grain Act to the delivery of, the same grain or grain of the same grade or kind.
Marginal note:Loans to receiver, liquidator, etc.
430 A bank may lend money and make advances to a receiver, to a receiver and manager, to a liquidator appointed under any winding-up Act, or to a custodian, an interim receiver or a trustee under the Bankruptcy and Insolvency Act, if the receiver, receiver and manager, liquidator, custodian, interim receiver or trustee has been duly authorized or empowered to borrow, and, in making the loan or advance, and thereafter, the bank may take security, with or without personal liability, from the receiver, receiver and manager, liquidator, custodian, interim receiver or trustee to such an amount and on such property as may be directed or authorized by any court of competent jurisdiction.
- 1991, c. 46, s. 430
- 1992, c. 27, s. 90
Marginal note:Securities may be sold
431 Securities acquired and held by a bank as security may, in case of default in the payment of the loan, advance or debt or in the discharge of the liability for the securing of which they were so acquired and held, be dealt with, sold and conveyed, in like manner as and subject to the restrictions under which a private individual might in like circumstances deal with, sell and convey the same, and the right to deal with and dispose of securities as provided in this section may be waived or varied by any agreement between the bank and the person by whom the security was given.
Marginal note:Rights in respect of personal property
432 The rights, powers and privileges that a bank is by this Act declared to have, or to have had, in respect of real property on which it has taken security, shall be held and possessed by it in respect of any personal property on which it has taken security.
Marginal note:Purchase of realty
433 A bank may purchase any real property offered for sale
(a) under execution, or in insolvency, or under the order or decree of a court, or at a sale for taxes, as belonging to any debtor to the bank,
(b) by a mortgagee or other encumbrancer, having priority over a mortgage or other encumbrance held by the bank, or
(c) by the bank under a power of sale given to it for that purpose, notice of the sale by auction to the highest bidder having been first given by advertisement for four weeks in a newspaper published in the county or electoral district in which the property is situated,
in cases in which, under similar circumstances, an individual could so purchase, without any restriction as to the value of the property that it may so purchase, and may acquire title thereto as any individual, purchasing at a sheriff’s sale or sale for taxes or under a power of sale, in like circumstances could do, and may take, have, hold and dispose of the property so purchased.
Marginal note:Bank may acquire absolute title
434 (1) A bank may acquire and hold an absolute title in or to real property affected by a mortgage or hypothec securing a loan or an advance made by the bank or a debt or liability to the bank, either by the obtaining of a release of the equity of redemption in the mortgaged property, or by procuring a foreclosure, or by other means whereby, as between individuals, an equity of redemption can, by law, be barred, or a transfer of title to real property can, by law, be effected, and may purchase and acquire any prior mortgage or charge on such property.
Marginal note:No act or law to prevent
(2) Nothing in any charter, Act or law shall be construed as ever having been intended to prevent or as preventing a bank from acquiring and holding an absolute title to and in any mortgaged or hypothecated real property, whatever the value thereof, or from exercising or acting on any power of sale contained in any mortgage given to or held by the bank, authorizing or enabling it to sell or convey any property so mortgaged.
Marginal note:Warehouse receipts and bills of lading
435 (1) A bank may acquire and hold any warehouse receipt or bill of lading as security for the payment of any debt incurred in its favour, or as security for any liability incurred by it for any person, in the course of its banking business.
Marginal note:Effect of taking
(2) Any warehouse receipt or bill of lading acquired by a bank under subsection (1) vests in the bank, from the date of the acquisition thereof,
(a) all the right and title to the warehouse receipt or bill of lading and to the goods, wares and merchandise covered thereby of the previous holder or owner thereof; and
(b) all the right and title to the goods, wares and merchandise mentioned therein of the person from whom the goods, wares and merchandise were received or acquired by the bank, if the warehouse receipt or bill of lading is made directly in favour of the bank, instead of to the previous holder or owner of the goods, wares and merchandise.
Marginal note:When previous holder is agent
436 (1) Where the previous holder of a warehouse receipt or bill of lading referred to in section 435 is a person
(a) entrusted with the possession of the goods, wares and merchandise mentioned therein, by or by the authority of the owner thereof,
(b) to whom the goods, wares and merchandise are, by or by the authority of the owner thereof, consigned, or
(c) who, by or by the authority of the owner of the goods, wares and merchandise, is possessed of any bill of lading, receipt, order or other document covering the same, such as is used in the course of business as proof of the possession or control of goods, wares and merchandise, or as authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of such a document to transfer or receive the goods, wares and merchandise thereby represented,
a bank is, on the acquisition of that warehouse receipt or bill of lading, vested with all the right and title of the owner of the goods, wares and merchandise, subject to the right of the owner to have the same re-transferred to the owner if the debt or liability, as security for which the warehouse receipt or bill of lading is held by the bank, is paid.
Marginal note:Possessor
(2) For the purposes of this section, a person shall be deemed to be the possessor of goods, wares and merchandise, or a bill of lading, receipt, order or other document,
(a) who is in actual possession thereof; or
(b) for whom, or subject to whose control the goods, wares and merchandise are, or bill of lading, receipt, order or other document is, held by any other person.
Marginal note:Regulations — aircraft objects
436.1 (1) The Governor in Council may make regulations respecting the application of sections 426 to 436 to aircraft objects, including regulations
(a) removing classes of aircraft objects from the application of those sections or reinstating their application to those classes of aircraft objects; and
(b) eliminating rights and powers acquired under those sections in relation to aircraft objects.
Marginal note:Definition of aircraft objects
(2) In subsection (1), aircraft objects has the same meaning as in subsection 2(1) of the International Interests in Mobile Equipment (aircraft equipment) Act.
- 2005, c. 3, s. 10
Deposit Acceptance
Marginal note:Deposit acceptance
437 (1) A bank may, without the intervention of any other person,
(a) accept a deposit from any person whether or not the person is qualified by law to enter into contracts; and
(b) pay all or part of the principal of the deposit and all or part of the interest thereon to or to the order of that person.
Marginal note:Exception
(2) Paragraph (1)(b) does not apply if, before payment, the money deposited in the bank pursuant to paragraph (1)(a) is claimed by some other person
(a) in any action or proceeding to which the bank is a party and in respect of which service of a writ or other process originating that action or proceeding has been made on the bank, or
(b) in any other action or proceeding pursuant to which an injunction or order made by the court requiring the bank not to make payment of that money or make payment thereof to some person other than the depositor has been served on the bank,
and, in the case of any such claim so made, the money so deposited may be paid to the depositor with the consent of the claimant or to the claimant with the consent of the depositor.
Marginal note:Execution of trust
(3) A bank is not bound to see to the execution of any trust to which any deposit made under the authority of this Act is subject.
Marginal note:Payment when bank has notice of trust
(4) Subsection (3) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the bank has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.
- 1991, c. 46, s. 437
- 2001, c. 9, s. 111
Unclaimed Balances
Marginal note:Unclaimed balances
438 (1) Where
(a) a deposit has been made in Canada that is payable in Canada in Canadian currency and in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor during a period of ten years
(i) in the case of a deposit made for a fixed period, from the day on which the fixed period terminated, and
(ii) in the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the creditor, whichever is later, or
(b) a cheque, draft or bill of exchange (including any such instrument drawn by one branch of a bank on another branch of the bank but not including such an instrument issued in payment of a dividend on the capital of a bank) payable in Canada in Canadian currency has been issued, certified or accepted by a bank in Canada and no payment has been made in respect thereof for a period of ten years after the date of issue, certification, acceptance or maturity, whichever is later,
the bank shall pay to the Bank of Canada not later than December 31 in each year an amount equal to the principal amount of the deposit or instrument, plus interest, if any, calculated in accordance with the terms of the deposit or instrument, and payment accordingly discharges the bank from all liability in respect of the deposit or instrument.
Marginal note:Provision of information
(2) A bank shall, on making a payment under subsection (1), provide the Bank of Canada, for each deposit or instrument in respect of which the payment is made, with the following information current as of the day the payment is made, in so far as it is known to the bank:
(a) in the case of a deposit,
(i) the name of the depositor in whose name the deposit is held,
(ii) the recorded address of the depositor,
(iii) the outstanding amount of the deposit, and
(iv) the branch of the bank at which the last transaction took place in respect of the deposit, and the date of that last transaction; and
(b) in the case of an instrument,
(i) the name of the person to whom or at whose request the instrument was issued, certified or accepted,
(ii) the recorded address of that person,
(iii) the name of the payee of the instrument,
(iv) the amount and date of the instrument,
(v) the name of the place where the instrument was payable, and
(vi) the branch of the bank at which the instrument was issued, certified or accepted.
Marginal note:Copies of signature cards and signing authorities
(2.1) A bank shall, on written request by the Bank of Canada, provide the Bank of Canada with copies of signature cards and signing authorities relating to any deposit or instrument in respect of which it has made a payment under subsection (1). If it does not have any with respect to a deposit or instrument to which the request relates, it shall so inform the Bank of Canada.
Marginal note:Payment to claimant
(3) Subject to section 22 of the Bank of Canada Act, where payment has been made to the Bank of Canada under subsection (1) in respect of any deposit or instrument, and if payment is demanded or the instrument is presented at the Bank of Canada by the person who, but for that section, would be entitled to receive payment of the deposit or instrument, the Bank of Canada is liable to pay, at its agency in the province in which the deposit or instrument was payable, an amount equal to the amount so paid to it together with interest, if interest was payable under the terms of the deposit or instrument,
(a) for a period not exceeding ten years from the day on which the payment was received by the Bank of Canada until the date of payment to the claimant; and
(b) at such rate and computed in such manner as the Minister determines.
Marginal note:Enforcing liability
(4) The liability of the Bank of Canada under subsection (3) may be enforced by action against the Bank of Canada in the court in the province in which the deposit or instrument was payable.
Marginal note:Application of subsection (1)
(5) Subsection (1) applies only in respect of
(a) deposits made, and cheques, drafts and bills of exchange issued, certified or accepted, in the ten year period immediately preceding the day on which this section comes into force; and
(b) deposits made, and cheques, drafts and bills of exchange issued, certified or accepted, on or after the day on which this section comes into force.
- 1991, c. 46, s. 438
- 1999, c. 28, s. 23
- 2007, c. 6, s. 29
Marginal note:Notice of unpaid amount
439 (1) A bank shall mail to each person, in so far as is known to the bank,
(a) to whom a deposit referred to in paragraph 438(1)(a) is payable, or
(b) to whom or at whose request an instrument referred to in paragraph 438(1)(b) was issued, certified or accepted,
at the person’s recorded address, a notice stating that the deposit or instrument remains unpaid.
Marginal note:When notice to be sent
(2) The notice must be sent during the month of January next following the end of the first two-year period, during the month of January next following the end of the first five-year period and also during the month of January next following the end of the first nine-year period
(a) in the case of a deposit made for a fixed period, after the fixed period has terminated;
(b) in the case of any other deposit, in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor; and
(c) in the case of a cheque, draft or bill of exchange, in respect of which the instrument has remained unpaid.
Marginal note:Notification of transfer to the Bank of Canada
(3) The notice to be sent during the month of January next following the end of the first nine-year period determined under paragraphs (2)(a) to (c), as the case may be, must also
(a) [Not in force]
(b) include the mailing address and websites where information can be obtained on how to claim the unpaid deposit or instrument.
- 1991, c. 46, s. 439
- 2007, c. 6, s. 30
Accounts
Marginal note:Definitions
439.1 The following definitions apply in this section and in sections 445 to 448.2, 458.1, 459.2 and 459.4.
- low-fee retail deposit account
low-fee retail deposit account means a retail deposit account that has the prescribed characteristics. (compte de dépôt de détail à frais modiques)
- member bank
member bank means a bank that is a member institution as defined in section 2 of the Canada Deposit Insurance Corporation Act. (banque membre)
- personal deposit account
personal deposit account means a deposit account in the name of one or more natural persons that is kept by that person or those persons for a purpose other than that of carrying on business. (compte de dépôt personnel)
- retail deposit account
retail deposit account means a personal deposit account that is opened with a deposit of less than $150,000 or any greater amount that may be prescribed. (compte de dépôt de détail)
- 2001, c. 9, s. 113
Marginal note:Account charges
440 A bank shall not, directly or indirectly, charge or receive any sum for the keeping of an account unless the charge is made by express agreement between the bank and a customer or by order of a court.
Marginal note:Disclosure on opening account
441 (1) A bank shall not open or maintain an interest-bearing deposit account in Canada in the name of any natural person unless the bank discloses, in accordance with the regulations, to the person who requests the bank to open the account, the rate of interest applicable to the account and how the amount of interest to be paid is to be calculated.
Marginal note:Exception
(2) Subsection (1) does not apply in respect of an interest-bearing deposit account that is opened with a deposit in excess of $150,000 or any greater amount that may be prescribed.
- 1991, c. 46, s. 441
- 2001, c. 9, s. 114
Marginal note:Disclosure in advertisements
442 No person shall authorize the publication, issue or appearance of any advertisement in Canada that indicates the rate of interest offered by a bank on an interest-bearing deposit or a debt obligation unless the advertisement discloses, in accordance with the regulations, how the amount of interest is to be calculated.
Marginal note:Disclosure regulations
443 The Governor in Council may make regulations respecting
(a) the time and place at which and the form and manner in which disclosure is to be made by a bank of
(i) interest rates applicable to debts of the bank and deposits with the bank, and
(ii) the manner in which the amount of interest paid is to be calculated; and
(b) such other matters or things as may be necessary to carry out the requirements of sections 441 and 442.
- 1991, c. 46, s. 443
- 2012, c. 5, s. 39
444 [Repealed, 2001, c. 9, s. 115]
Marginal note:Disclosure required on opening a deposit account
445 (1) Subject to subsections (2) to (4), a bank shall not open a deposit account in the name of a customer unless, at or before the time the account is opened, the bank provides in writing to the individual who requests the opening of the account
(a) a copy of the account agreement with the bank;
(b) information about all charges applicable to the account;
(c) information about how the customer will be notified of any increase in those charges and of any new charges applicable to the account;
(d) information about the bank’s procedures relating to complaints about the application of any charge applicable to the account; and
(e) such other information as may be prescribed.
Marginal note:Exception
(2) If a deposit account is not a personal deposit account and the amount of a charge applicable to the account cannot be established at or before the time the account is opened, the bank shall, as soon as is practicable after the amount is established, provide the customer in whose name the account is kept with a notice in writing of the amount of the charge.
Marginal note:Exception
(3) If a bank has a deposit account in the name of a customer and the customer by telephone requests the opening of another deposit account in the name of the customer and the bank has not complied with subsection (1) in respect of the opening of that other account, the bank shall not open the account unless it provides the customer orally with any information prescribed at or before the time the account is opened.
Marginal note:Disclosure in writing
(4) If a bank opens an account under subsection (3), it shall, not later than seven business days after the account is opened, provide to the customer in writing the agreement and information referred to in subsection (1).
Marginal note:Right to close account
(5) A customer may, within 14 business days after a deposit account is opened under subsection (3), close the account without charge and in such case is entitled to a refund of any charges related to the operation of the account, other than interest charges, incurred while the account was open.
Marginal note:Regulations
(6) For the purposes of subsection (4), the Governor in Council may make regulations prescribing circumstances in which, and the time when, the agreement and information will be deemed to have been provided to the customer.
- 1991, c. 46, s. 445
- 1997, c. 15, s. 48
- 2001, c. 9, s. 116
Marginal note:Disclosure of charges
446 A bank shall disclose to its customers and to the public, at the prescribed time and place and in the prescribed form and manner, the charges applicable to deposit accounts with the bank and the usual amount, if any, charged by the bank for services normally provided by the bank to its customers and to the public.
- 1991, c. 46, s. 446
- 2012, c. 5, s. 40
Marginal note:No increase or new charges without disclosure
447 (1) A bank shall not increase any charge applicable to a personal deposit account with the bank or introduce any new charge applicable to a personal deposit account with the bank unless the bank discloses the charge at the prescribed time and place and in the prescribed form and manner to the customer in whose name the account is kept.
Marginal note:Mandatory disclosure
(2) With respect to prescribed services in relation to deposit accounts, other than personal deposit accounts, a bank shall not increase any charge for any such service in relation to a deposit account with the bank or introduce any new charge for any such service in relation to a deposit account with the bank unless the bank discloses the charge at the prescribed time and place and in the prescribed form and manner to the customer in whose name the account is kept.
- 1991, c. 46, s. 447
- 2012, c. 5, s. 40
Marginal note:Application
448 Sections 445 to 447 apply only in respect of charges applicable to deposit accounts with the bank in Canada and services provided by the bank in Canada.
- 1991, c. 46, s. 448
- 2001, c. 9, s. 117
Marginal note:Retail deposit accounts
448.1 (1) Subject to regulations made under subsection (3), a member bank shall, at any prescribed point of service in Canada or any branch in Canada at which it opens retail deposit accounts through a natural person, open a retail deposit account for an individual who meets the prescribed conditions at his or her request made there in person.
Marginal note:No minimum deposit or balance requirements
(2) A member bank shall not require that, in the case of an account opened under subsection (1), the individual make an initial minimum deposit or maintain a minimum balance.
Marginal note:Regulations
(3) The Governor in Council may make regulations
(a) for the purposes of subsection (1), defining point of service and prescribing points of service;
(b) respecting circumstances in which subsection (1) does not apply; and
(c) prescribing conditions to be met by an individual for the purposes of subsection (1).
- 2001, c. 9, s. 117
Marginal note:Low-fee retail deposit accounts — regulations
448.2 The Governor in Council may make regulations
(a) requiring a member bank, at any prescribed point of service in Canada or any branch referred to in subsection 448.1(1), to open a low-fee retail deposit account for an individual who meets the prescribed conditions at his or her request made there in person;
(b) for the purposes of paragraph (a), defining point of service and prescribing points of service;
(c) prescribing the characteristics, including the name, of a low-fee retail deposit account;
(d) respecting circumstances in which a regulation made under paragraph (a) does not apply; and
(e) prescribing conditions to be met by an individual for the purposes of paragraph (a).
- 2001, c. 9, s. 117
Registered Products
Marginal note:Disclosure required concerning registered products
448.3 (1) Subject to subsection (2), a bank shall not open an account that is or forms part of a registered product in the name of a customer, or enter into an agreement with a customer for a prescribed product or service that is or forms part of a registered product, unless the bank provides, in the prescribed manner, to the individual requesting the account or the prescribed product or service
(a) information about all charges applicable to the registered product;
(b) information about how the customer will be notified of any increase in those charges and of any new charges applicable to the registered product;
(c) information about the bank’s procedures relating to complaints about the application of any charge applicable to the registered product; and
(d) any other information that may be prescribed.
Marginal note:Regulations
(2) The Governor in Council may make regulations specifying the circumstances under which a bank need not provide the information.
Definition of registered product
(3) In this section, registered product means a product that is defined to be a registered product by the regulations.
- 2007, c. 6, s. 31
Borrowing Costs
Definition of cost of borrowing
449 For the purposes of this section and sections 449.1 to 456, cost of borrowing means, in respect of a loan made by a bank,
(a) the interest or discount applicable to the loan;
(b) any amount charged in connection with the loan that is payable by the borrower to the bank; and
(c) any charge prescribed to be included in the cost of borrowing.
For those purposes, however, cost of borrowing does not include any charge prescribed to be excluded from the cost of borrowing.
- 1991, c. 46, s. 449
- 1997, c. 15, s. 49
- 2001, c. 9, s. 118
Marginal note:Rebate of borrowing costs
449.1 (1) Where a bank makes a loan in respect of which the disclosure requirements of section 450 apply, and the loan is not secured by a mortgage on real property and is required to be repaid either on a fixed future date or by instalments, the bank shall, if there is a prepayment of the loan, rebate to the borrower a portion of the charges included in the cost of borrowing in respect of the loan.
Marginal note:Exception
(2) The charges to be rebated do not include the interest or discount applicable to the loan.
Marginal note:Regulations
(3) The Governor in Council may make regulations governing the rebate of charges under subsection (1). The rebate shall be made in accordance with those regulations.
- 1997, c. 15, s. 49
Marginal note:Disclosing borrowing costs
450 (1) A bank shall not make a loan to a natural person that is repayable in Canada unless the cost of borrowing, as calculated and expressed in accordance with section 451, and other prescribed information have been disclosed by the bank to the borrower at the prescribed time and place and in the prescribed form and manner.
Marginal note:Non-application
(2) Subsection (1) does not apply in respect of a loan that is of a prescribed class of loans.
- 1991, c. 46, s. 450
- 1997, c. 15, s. 49
- 2012, c. 5, s. 41
Marginal note:Calculating borrowing costs
451 The cost of borrowing shall be calculated, in the prescribed manner, on the basis that all obligations of the borrower are duly fulfilled and shall be expressed as a rate per annum and, in prescribed circumstances, as an amount in dollars and cents.
Marginal note:Additional disclosure
452 (1) Where a bank makes a loan in respect of which the disclosure requirements of section 450 are applicable and the loan is required to be repaid either on a fixed future date or by instalments, the bank shall disclose to the borrower, in accordance with the regulations,
(a) whether the borrower has the right to repay the amount borrowed before the maturity of the loan and, if applicable,
(i) any terms and conditions relating to that right, including the particulars of the circumstances in which the borrower may exercise that right, and
(ii) whether, in the event that the borrower exercises the right, any portion of the cost of borrowing is to be rebated, the manner in which any such rebate is to be calculated or, if a charge or penalty will be imposed on the borrower, the manner in which the charge or penalty is to be calculated;
(b) in the event that an amount borrowed is not repaid at maturity or, if applicable, an instalment is not paid on the day the instalment is due to be paid, particulars of the charges or penalties to be paid by the borrower because of the failure to repay or pay in accordance with the contract governing the loan;
(c) at the prescribed time and place and in the prescribed form and manner, any prescribed changes respecting the cost of borrowing or the loan agreement;
(d) particulars of any other rights and obligations of the borrower; and
(e) any other prescribed information, at the prescribed time and place and in the prescribed form and manner.
Marginal note:Disclosure in credit card applications
(1.1) A bank shall, in accordance with the regulations, at the prescribed time and place and in the prescribed form and manner, provide prescribed information in any application forms or related documents that it prepares for the issuance of credit, payment or charge cards and provide prescribed information to any person applying to it for a credit, payment or charge card.
Marginal note:Disclosure re credit cards
(2) Where a bank issues or has issued a credit, payment or charge card to a natural person, the bank shall, in addition to disclosing the costs of borrowing in respect of any loan obtained through the use of the card, disclose to the person, in accordance with the regulations,
(a) any charges or penalties described in paragraph (1)(b);
(b) particulars of the person’s rights and obligations;
(c) any charges for which the person becomes responsible by accepting or using the card;
(d) at the prescribed time and place and in the prescribed form and manner, any prescribed changes respecting the cost of borrowing or the loan agreement; and
(e) any other prescribed information, at the prescribed time and place and in the prescribed form and manner.
Marginal note:Additional disclosure re other loans
(3) Where a bank enters into or has entered into an arrangement, including a line of credit, for the making of a loan in respect of which the disclosure requirements of section 450 apply and the loan is not a loan in respect of which subsection (1) or (2) applies, the bank shall, in addition to disclosing the costs of borrowing, disclose to the person to whom the loan is made, in accordance with the regulations,
(a) any charges or penalties described in paragraph (1)(b);
(b) particulars of the person’s rights and obligations;
(c) any charges for which the person is responsible under the arrangement;
(d) at the prescribed time and place and in the prescribed form and manner, any prescribed changes respecting the cost of borrowing under the arrangement; and
(e) any other prescribed information, at the prescribed time and place and in the prescribed form and manner.
- 1991, c. 46, s. 452
- 1997, c. 15, s. 50
- 2012, c. 5, s. 42
Marginal note:Renewal statement
452.1 If a bank makes a loan in respect of which the disclosure requirements of section 450 apply and the loan is secured by a mortgage on real property, the bank shall disclose to the borrower, at the prescribed time and place and in the prescribed form and manner, any information that is prescribed respecting the renewal of the loan.
- 1997, c. 15, s. 51
- 2012, c. 5, s. 43
Marginal note:Disclosure in advertising
453 No person shall authorize the publication, issue or appearance of any advertisement in Canada relating to arrangements referred to in subsection 452(3), loans, credit cards, payment cards or charge cards, offered to natural persons by a bank, and purporting to disclose prescribed information about the cost of borrowing or about any other matter unless the advertisement discloses prescribed information at the prescribed time and place and in the prescribed form and manner.
- 1991, c. 46, s. 453
- 1997, c. 15, s. 51
- 2012, c. 5, s. 43
Marginal note:Regulations re borrowing costs
454 The Governor in Council may make regulations
(a) respecting the time and place at which, and the form and manner in which, a bank is to disclose to a borrower
(i) the cost of borrowing,
(ii) any rebate of the cost of borrowing, and
(iii) any other information relating to a loan, arrangement, credit card, payment card or charge card referred to in section 452;
(b) respecting the contents of any statement disclosing the cost of borrowing and other information required to be disclosed by a bank to a borrower;
(c) respecting the manner of calculating the cost of borrowing;
(d) respecting the circumstances under which the cost of borrowing is to be expressed as an amount in dollars and cents;
(e) specifying any class of loans that are not to be subject to section 449.1 or subsection 450(1) or 452(1) or (3) or section 452.1 or 453 or the regulations or any specified provisions of the regulations;
(f) respecting the time and place at which, and the form and manner in which, any rights, obligations, charges or penalties referred to in sections 449.1 to 453 are to be disclosed;
(g) prohibiting the imposition of any charge or penalty referred to in section 452 or providing that the charge or penalty, if imposed, will not exceed a prescribed amount;
(h) respecting the nature or amount of any charge or penalty referred to in paragraph 452(1)(b), (2)(a) or (3)(a) and the costs of the bank that may be included or excluded in the determination of the charge or penalty;
(i) respecting the method of calculating the amount of rebate of the cost of borrowing, or the portion of the cost of borrowing referred to in subparagraph 452(1)(a)(ii);
(j) respecting advertisements made by a bank regarding arrangements referred to in subsection 452(3), loans, credit cards, payment cards or charge cards;
(k) respecting the renewal of loans; and
(l) respecting such other matters or things as are necessary to carry out the purposes of sections 449.1 to 453.
- 1991, c. 46, s. 454
- 1997, c. 15, s. 51
- 2012, c. 5, s. 44
Complaints
Marginal note:Procedures for dealing with complaints
455 (1) A bank shall
(a) establish procedures for dealing with complaints made by persons having requested or received products or services in Canada from a bank;
(b) designate an officer or employee of the bank to be responsible for implementing those procedures; and
(c) designate one or more officers or employees of the bank to receive and deal with those complaints.
Marginal note:Procedures to be filed with Commissioner
(2) A bank shall file with the Commissioner a copy of its procedures established under paragraph (1)(a).
Marginal note:How procedures to be made available
(3) A bank shall make its procedures established under paragraph (1)(a) available
(a) in the form of a brochure, at its branches where products or services are offered in Canada;
(b) on its websites through which products or services are offered in Canada; and
(c) in written format to be sent to any person who requests them.
Marginal note:Information on contacting Agency
(4) A bank shall also make prescribed information on how to contact the Agency available whenever it makes its procedures established under paragraph (1)(a) available under subsection (3).
- 1991, c. 46, s. 455
- 1997, c. 15, s. 52
- 2001, c. 9, s. 120
- 2007, c. 6, s. 32
Marginal note:Designation of complaints body
455.1 (1) The Minister may, for the purposes of this section, designate a body corporate incorporated under the Canada Not-for-profit Corporations Act whose purpose, in the view of the Minister, is dealing with complaints, made by persons having requested or received products or services from its member financial institutions, that have not been resolved to the satisfaction of those persons under procedures established by those financial institutions under paragraph 455(1)(a).
Marginal note:Obligation to be member
(2) A bank shall be a member of any body corporate that is designated under subsection (1).
Marginal note:Directors
(3) The Minister may, in accordance with the letters patent and by-laws of the body corporate designated under subsection (1), appoint the majority of its directors.
Marginal note:Not an agent
(4) A body corporate designated under subsection (1) is not an agent of Her Majesty.
Marginal note:Designation to be published
(5) A designation under subsection (1) shall be published in the Canada Gazette.
- 2001, c. 9, s. 121
- 2009, c. 23, s. 306
Marginal note:Information on contacting Agency
456 (1) A bank shall, in accordance with the regulations, at the prescribed time and place and in the prescribed form and manner, provide a person requesting or receiving a product or service from it with prescribed information on how to contact the Agency if the person has a complaint about a deposit account, an arrangement referred to in subsection 452(3), a payment, credit or charge card, the disclosure of or manner of calculating the cost of borrowing in respect of a loan or about any other obligation of the bank under a consumer provision.
Marginal note:Report
(2) The Commissioner shall prepare a report, to be included in the report referred to in section 34 of the Financial Consumer Agency of Canada Act, respecting
(a) procedures for dealing with complaints established by banks pursuant to paragraph 455(1)(a); and
(b) the number and nature of complaints that have been brought to the attention of the Agency by persons who have requested or received a product or service from a bank.
- 1991, c. 46, s. 456
- 1997, c. 15, s. 53
- 2001, c. 9, s. 122
- 2012, c. 5, s. 45
Miscellaneous
Marginal note:Charges for prescribed products or services
457 A bank shall not, directly or indirectly, charge or receive any sum for the provision of any prescribed products or services unless the charge is made by express agreement between it and a customer or by order of a court.
- 1991, c. 46, s. 457
- 1999, c. 31, s. 14
- 2007, c. 6, s. 33
Marginal note:Prepayment protected
458 (1) A bank shall not make a loan to a natural person that is repayable in Canada, the terms of which prohibit prepayment of the money advanced or any instalment thereon before its due date.
Marginal note:Minimum balance
(2) Except by express agreement between the bank and the borrower, the making in Canada of a loan or advance by a bank to a borrower shall not be subject to a condition that the borrower maintain a minimum credit balance with the bank.
Marginal note:Non-application of subsection (1)
(3) Subsection (1) does not apply in respect of a loan
(a) that is secured by a mortgage on real property; or
(b) that is made for business purposes and the principal amount of which is more than $100,000 or such other amount as may be prescribed.
Marginal note:Government cheques
(4) A bank shal