Insurance Companies Act (S.C. 1991, c. 47)

Marginal note:Appointment of officers

• 206 (1) The directors of a company may, subject to the by-laws, designate the offices of the company, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 207, to manage the business and affairs of the company.

• Marginal note:Directors as officers

  (2) Subject to section 172, a director of a company may be appointed to any office of the company.

• Marginal note:Two or more offices

  (3) Two or more offices of a company may be held by the same person.

Marginal note:Limits on power to delegate

207 The directors of a company may not delegate any of the following powers, namely, the power to

• (a) submit to the shareholders or policyholders a question or matter requiring the approval of the shareholders or policyholders;

• (b) fill a vacancy among the directors, on a committee of directors or in the office of auditor or actuary, 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 66, except in accordance with any authorization made by the directors;

• (d) declare a dividend on shares or a policy dividend, bonus or other benefit payable to policyholders, other than a dividend on a group policy that is a participating policy;

• (e) authorize the redemption or other acquisition by the company pursuant to section 75 of shares issued by the company;

• (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 company and any other financial statements issued by the company; or

• (i) adopt, amend or repeal by-laws.

Marginal note:Remuneration of directors, officers and employees

• 208 (1) Subject to this section and the by-laws, the directors of a company may fix the remuneration of the directors, officers and employees of the company.

• 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.

Marginal note:Validity of acts

• 209 (1) An act of a director or an officer of a company 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 company 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

210 A director of a company is entitled to attend and to be heard at every meeting of shareholders or policyholders.

Conflicts of Interest

Marginal note:Disclosure of interest

• 211 (1) A director or officer of a company shall disclose to the company, 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 company, 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 company’s business would not require approval by the directors, shareholders or policyholders, the director or officer shall disclose to the company, 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.

Marginal note:Director to abstain

• 212 (1) A director who is required to make a disclosure under subsection 211(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 company, an entity controlled by the company or an entity in which the company has a substantial investment;

  • (b) is for indemnity under section 221 or insurance under section 222; or

  • (c) is with an affiliate of the company.

• 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 company 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.

Marginal note:General notice

• 213 (1) For the purposes of subsection 211(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 211(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) A policyholder who is entitled to vote or a shareholder may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 211(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the company.

Marginal note:Avoidance standards

• 214 (1) A contract or transaction for which disclosure is required under subsection 211(1) is not invalid and a director or officer is not accountable to the company or its shareholders or policyholders 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 211 and subsection 213(1);

  • (b) the directors approved the contract or transaction; and

  • (c) the contract or transaction was reasonable and fair to the company at the time that it was approved.

• Marginal note:Confirmation by shareholders and policyholders

  (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 company or its shareholders or policyholders 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 and policyholders;

  • (b) disclosure of the interest was made to the shareholders and to the policyholders entitled to vote 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 company at the time that it was approved or confirmed.

Marginal note:Court may set aside or require accounting

215 If a director or officer of a company fails to comply with any of sections 211 to 214, a court, on application of the company or any of its policyholders entitled to vote or 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 company for any profit or gain realized on it.

Liability, Exculpation and Indemnification

Marginal note:Director liability

• 216 (1) Directors of a company who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 69(1) or the issue of subordinated indebtedness contrary to section 84 for a consideration other than money are jointly and severally, or solidarily, liable to the company to make good any amount by which the consideration received is less than the fair equivalent of the money that the company 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 company 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 company any amounts so distributed or paid and not otherwise recovered by the company and any amounts in relation to any loss suffered by the company:

  • (a) a redemption or purchase of shares contrary to section 75;

  • (b) a reduction of capital contrary to section 79;

  • (c) a payment of a dividend contrary to section 83;

  • (d) a payment of an indemnity contrary to section 221; or

  • (e) any transaction contrary to Part XI.

Marginal note:Contribution

• 217 (1) A director who has satisfied a judgment in relation to the director’s liability under section 216 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 216 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 75, 79, 83 or 221; or

  • (b) an amount equal to the value of the loss suffered by the company 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 75, 79, 83 or 221 or any amount referred to in paragraph (2)(b);

  • (b) order a company to return or issue shares to a person from whom the company has purchased, redeemed or otherwise acquired shares; or

  • (c) make any further order it thinks fit.

Marginal note:Limitation

218 An action to enforce a liability imposed by section 216 may not be commenced after two years from the date of the resolution authorizing the action complained of.

Marginal note:Directors liable for wages

• 219 (1) Subject to subsections (2) and (3), the directors of a company are jointly and severally, or solidarily, liable to each employee of the company for all debts not exceeding six months wages payable to the employee for services performed for the company while they are directors.

• Marginal note:Conditions precedent

  (2) A director is not liable under subsection (1) unless

  • (a) the company 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 company 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 company 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 company 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 company who has satisfied a claim under this section is entitled to a contribution from the other directors of the company who are liable for the claim.