C-57 1 38 53-54 Elizabeth II 2004-2005

An Act to amend certain Acts in relation to financial institutions

Financial Institutions,

An Act to amend certain Acts in relation to

Financial Institutions 2005 11 25 54 2005 90335

SUMMARY

This enactment amends certain Acts governing federal financial institutions. It makes changes to the corporate governance framework of banks, bank holding companies, insurance companies, insurance holding companies, trust and loan companies and cooperative credit associations to bring the Acts governing those institutions up to the standards adopted in 2001 for business corporations in the

Canada Business Corporations Act that are appropriate for financial institutions and adapted to the financial institutions context, and updates certain governance standards that are unique to financial institutions.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

1991, c. 46

BANK ACT

(1) The

definitions form of proxy and proxy in

section 2 of the Bank Act are replaced by the following:

form of proxy

formulaire de procuration

form of proxy means a form of proxy as defined in the regulations;

proxy

procuration

proxy means a proxy as defined in the regulations;

(2) Section 2 of the Act is amended by adding the following in alphabetical order:

going-private transaction

transaction de fermeture

going-private transaction means a going-private transaction as defined in the regulations;

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;

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;

(3) Section 2 of the French version of the Act is amended by adding the following in alphabetical order:

banque n’ayant pas fait appel au public

French version only

banque n’ayant pas fait appel au public S’entend d’une banque autre qu’une banque ayant fait appel au public.

société de portefeuille bancaire n’ayant pas fait appel au public

French version only

société de portefeuille bancaire n’ayant pas fait appel au public S’entend d’une société de portefeuille bancaire autre qu’une société de portefeuille bancaire ayant fait appel au public.

The Act is amended by adding the following after

section 2.3:

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.

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.

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.

1997, c. 15, s. 1; 2001, c. 9, s. 42

Section 11 of the Act is repealed.

2001, c. 9, s. 43

(1) Subparagraph 14(1)( a )(iii) of the Act is replaced by the following:

(iii)

the province in which the head office of the bank is situated; and

2001, c. 9, s. 43

(2) Subparagraph 14(1)( b )(iii) of the Act is replaced by the following:

(iii)

the province in which the head office of the bank is situated.

1999, c. 28, s. 5

Paragraph 14.1(1)(

b) of the Act is replaced by the following:

(

b) the province in which the principal office of the authorized foreign bank is situated; and

1999, c. 28, s. 8

Section 20 of the Act is replaced by the following:

Authority of directors and officers

(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.

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.

Paragraph 28(1)(

b) of the Act is replaced by the following:

(

b) the province in which the head office of the bank is to be situated; and

(1) Subsection 62(1) of the Act is replaced by the following:

Shares issued in series

(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 ).

(2) Subsection 62(5) of the Act is replaced by the following:

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 a copy of the by-law authorizing the directors to fix the rights, privileges, restrictions and conditions of those shares and shall provide the Superintendent with particulars of the proposed series of shares.

1997, c. 15, s. 7

Subsection 66(3) of the Act is replaced by the following:

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.

Subsection 72(1) of the French version of the Act is replaced by the following:

Exception — représentant personnel

(1) La banque — ainsi que ses filiales si elle le leur permet — peut, en qualité de représentant personnel, mais à condition de ne pas en avoir la propriété effective, détenir soit des actions de la banque ou d’une personne morale qui la contrôle, soit des titres de participation d’une entité non constituée en personne morale qui la contrôle.

The Act is amended by adding the following after

section 72:

Exception — conditions before acquisition

72.1

(1) A bank may permit its subsidiary to acquire shares of the bank, shares of an entity that controls the bank or any ownership interests of any unincorporated entity that controls the bank if before the subsidiary acquires them the conditions prescribed for the purposes of this subsection are met.

Conditions after acquisition

(2) After a subsidiary has acquired shares or ownership interests in accordance with subsection (1), the conditions prescribed for the purposes of this subsection are to be met.

Non-compliance with conditions

(3) Despite

section 16 and subsection 66(2), the issue and acquisition of the shares or ownership interests are subject to the prescribed requirements if

(

a) the bank permits the subsidiary to acquire the shares or ownership interests; and

(

b) either

(

i) a condition prescribed for the purposes of subsection (1) was not met, or

(ii)

a condition prescribed for the purposes of subsection (2) was not met or ceased to be met.

Section 86 of the Act is replaced by the following:

Signatures

(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.

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.

Section 88 of the Act is replaced by the following:

Restrictions and charges

(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.

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.

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).

2001, c. 9, s. 62(F)

(1) Subsection 93(1) of the Act is replaced by the following:

Dealings with registered owner

(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.

2001, c. 9, s. 62(F)

(2) Paragraph 93(2)(

b) of the English version of the Act is replaced by the following:

(

b) the personal representative of a registered security holder who is a minor, an incompetent person or a missing person; or

Section 94 of the English version of the Act is replaced by the following:

Minors

If a minor exercises any rights of ownership in the securities of a bank, no subsequent repudiation or avoidance is effective against the bank.

Section 136 of the Act is renumbered as subsection 136(1) and is amended by adding the following:

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.

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.

Subsections 137(2) to (5) of the Act are replaced by the following:

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.

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.

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.

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.

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.

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.

Subsection 138(1) of the Act is replaced by the following:

Notice of meeting

(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.

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.

Subsection 139(1) of the Act is replaced by the following:

Notice not required

(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 ).

(1) Subsection 143(1) of the Act is replaced by the following:

Proposals

(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.

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.

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.

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).

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).

(2) Subsections 143(3) to (5) of the Act are replaced by the following:

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.

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.

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.

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.

(1) Subsections 144(1) and (2) of the Act are replaced by the following:

Notice of refusal

(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.

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.

(2) Subsection 144(3) of the French version of the Act is replaced by the following:

Demande de la banque

(3) La banque ou toute personne qui prétend qu’une proposition lui cause un préjudice peut demander au tribunal une ordonnance autorisant la banque à ne pas la faire figurer à la circulaire de la direction sollicitant des procurations ou en annexe; le tribunal, s’il est convaincu que le paragraphe 143(5) s’applique, peut rendre en l’espèce la décision qu’il estime pertinente.

2001, c. 9, s. 65

(1) Subsections 145(1) to (3) of the Act are replaced by the following:

List of shareholders entitled to notice

(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 ).

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.

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.

(2) The portion of subsection 145(4) of the Act before paragraph (

a) is replaced by the following:

Examination of list

(4) A shareholder may examine the list of shareholders

Section 151 of the Act is amended by adding the following after subsection (2):

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.

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.

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.

Section 152 of the Act is amended by adding the following after subsection (2):

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.

Paragraph 153(3)(

a) of the Act is replaced by the following:

(

a) a record date has been fixed under paragraph 137(5)(

c) and notice of it has been given under subsection 137(7);

Subsection 154(1) of the Act is replaced by the following:

Court may order meeting to be called

(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.

1997, c. 15, s. 10

(1) The definition registrant in

section 156.01 of the Act is repealed.

1997, c. 15, s. 10

(2) The definition “ solicit or solicitation ” in

section 156.01 of the Act is replaced by the following:

solicitation

sollicitation

solicitation

(

a) includes

(

i) a request for a proxy whether or not accompanied by a form of proxy,

(ii)

a request to execute or not to execute a form of proxy or to revoke a proxy,

(iii)

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

(iv)

the sending of a form of proxy to a shareholder under subsection 156.04(1); but

(

b) does not include

(

i) the sending of a form of proxy in response to an unsolicited request made by or on behalf of a shareholder,

(ii)

the performance of administrative acts or professional services on behalf of a person soliciting a proxy,

(iii)

the sending by an intermediary of the documents referred to in subsection 156.07(1),

(iv)

a solicitation by a person in respect of shares of which they are the beneficial owner,

(

v) a prescribed public announcement by a shareholder of how they intend to vote and the reasons for that decision,

(vi)

a communication for the purpose of obtaining the support of persons in accord­ance with paragraph 143(1.1)( b ), or

(vii)

a communication, other than a solic­itation by or on behalf of the management of a bank, that is made to shareholders in the prescribed circumstances.

(3) Section 156.01 of the Act is amended by adding the following in alphabetical order:

intermediary

intermédiaire

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.

1997, c. 15, s. 10

Subsection 156.04(2) of the Act is replaced by the following:

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.

Section 156.05 of the Act is amended by adding the following after subsection (1):

Exceptions

(1.1) Despite paragraph (1)( b ), it is not necessary to send a dissident’s proxy circular if

(

a) the total number of shareholders whose proxies are solicited is 15 or fewer, two or more joint holders of a share being counted as one shareholder; or

(

b) the solicitation is conveyed by public broadcast, speech or publication and the prescribed requirements are complied with.

1997, c. 15, s. 10

The portion of subsection 156.06(3) of the Act before paragraph (

a) is replaced by the following:

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,

1997, c. 15, s. 10

Section 156.07 of the Act is replaced by the following:

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.

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 ).

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.

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 ).

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.

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.

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.

Intermediary may not vote

(8) Nothing in this Part gives an intermediary the right to vote shares that they are otherwise prohibited from voting.

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.

The Act is amended by adding the following after

section 165:

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.

Paragraphs 168(1)(

g) and (

h) of the Act are replaced by the following:

(

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.

Subsection 177(1) of the Act is replaced by the following:

Directors filling vacancy

(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.

Paragraph 178(

a) of the Act is replaced by the following:

(

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;

Subsection 182(3) of the Act is replaced by the following:

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.

Section 184.1 of the Act is amended by adding the following after subsection (4):

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.

Paragraphs 198(

b) and (

c) of the Act are replaced by the following:

(

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;

Section 202 of the Act is replaced by the following:

Disclosure of interest

(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.

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.

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.

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.

1997, c. 15, s. 26(1)

Subsection 203(1) of the Act is replaced by the following:

Director to abstain

(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.

2001, c. 9, s. 77.1(F)

Sections 204 to 206 of the Act are replaced by the following:

General notice

(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.

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.

Avoidance standards

(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.

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.

Court may set aside or require accounting

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.

Section 207 of the English version of the Act is replaced by the following:

Director liability

(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.

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.

Subsection 210(1) of the English version of the Act is replaced by the following:

Directors liable for wages

(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.

2001, c. 9, ss. 78 and 79(F)

Sections 211 and 212 of the Act are replaced by the following:

Defence — due diligence

(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.

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.

Indemnification

(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.

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).

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.

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).

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).

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.

Paragraph 213(

b) of the Act is replaced by the following:

(

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.

Paragraph 217(1)(

j) of the Act is replaced by the following:

(

j) change the province in which the head office of the bank is situated.

Paragraph 224(2)(

a) of the Act is replaced by the following:

(

a) the name of the amalgamated bank and the province in which its head office is to be situated;

(1) Subsection 226(2) of the Act is replaced by the following:

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.

(2) Subsection 226(3) of the English version of the Act is replaced by the following:

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.

Subsections 237(1) and (2) of the Act are replaced by the following:

Head office

(1) A bank shall at all times have a head office in the province specified in its incorporating instrument or by-laws.

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.

Subsection 239(5) of the Act is replaced by the following:

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.

Subsection 240(3) of the Act is replaced by the following:

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.

2001, c. 9, s. 89

(1) Subsections 245(1) and (2) of the Act are replaced by the following:

Location and processing of information or data

(1) Subject to subsection (3), a bank shall maintain and process in Canada any information or data relating to the preparation or maintenance of the records referred to in

section 238 or of its central securities register unless the Superintendent has, subject to any terms and conditions that the Superintendent considers appropriate, exempted the bank from the application of this section.

Copies

(2) Subject to subsections (4) and (5), the bank may maintain copies of the records referred to in

section 238 or of its central securities register outside Canada and may process outside Canada any information or data relating to those copies.

(2) Subsection 245(3) of the French version of the Act is replaced by the following:

Exception

(3) Le paragraphe (1) ne s’applique pas à l’égard des succursales de la banque qui sont situées à l’étranger ou des clients de celles-ci.

2001, c. 9, s. 90

Subsection 248(3) of the Act is replaced by the following:

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.

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.

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.

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.

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.

Section 256 of the Act is replaced by the following:

Corporate seal

(1) A bank may adopt a corporate seal and change one that it adopted.

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.

(1) The

definitions distributing bank and insider in subsection 265(1) of the Act are repealed.

(2) The definition business combination in subsection 265(1) of the Act is replaced by the following:

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;

(3) Subsections 265(3) and (4) of the Act are repealed.

1997, c. 15, ss. 31 and 32

Sections 266 to 269 of the Act are replaced by the following:

Insider report

An insider shall submit an insider report in accordance with the regulations.

Exemption by Superintendent

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.

Regulations

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.

1996, c. 6. s. 6; 1999, c. 31, ss. 11 and 12

Sections 270 to 282 of the Act are replaced by the following:

Meaning of insider

(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.

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.

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.

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.

Civil remedies

Extended meaning of insider

(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.

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.

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.

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.

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 ).

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.

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 ).

Measure of damages

(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.

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.

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.

Prospectus

Distribution

(1) No person, including a bank, shall distribute securities of a bank except in accordance with the regulations made under subsection (2).

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).

Order of exemption

(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.

Conditions

(2) An order under subsection (1) may contain any conditions or limitations that the Superintendent deems appropriate.

Going-private Transactions and Squeeze-out Transactions

Going-private transactions

A bank may carry out a going-private transaction if it complies with any applicable provincial securities laws.

Squeeze-out transactions

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.

Right to dissent

(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.

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.

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.

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.

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.

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.

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.

Forfeiture

(8) A dissenting shareholder who fails to comply with subsection (7) has no right to make a claim under this section.

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.

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.

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.

Same terms

(12) Every offer made under subsection (11) for shares of the same class or series is to be on the same terms.

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.

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.

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.

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.

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).

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.

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.

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.

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.

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.

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.

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.

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).

(1) The definition exempt offer in subsection 283(1) of the Act is repealed.

(2) The definition offre publique d’achat in subsection 283(1) of the French version of the Act is repealed.

(3) The

definitions dissenting offeree and share in subsection 283(1) of the Act are replaced by the following:

dissenting offeree

pollicité opposant

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;

share

action

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 );

2000, c. 12, s. 4

(4) Paragraph (

c) of the definition associate of the offeror in subsection 283(1) of the English version of the Act is replaced by the following:

(

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,

(5) The definition take-over bid in subsection 283(1) of the English version of the Act is replaced by the following:

take-over bid

offre d’achat visant à la mainmise

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.

(6) The

definitions banque pollicitée , pollicitant and pollicité in subsection 283(1) of the French version of the Act are replaced by the following:

banque pollicitée

offeree bank

banque pollicitée Banque dont les actions font l’objet d’une offre d’achat visant à la mainmise.

pollicitant

offeror

pollicitant Toute personne, à l’exception du mandataire, qui fait une offre d’achat visant à la mainmise et, en outre, les personnes qui conjointement ou de concert, même indirectement :

a) soit font une telle offre;

b) soit ont l’intention d’exercer les droits de vote dont sont assorties les actions faisant l’objet d’une telle offre.

pollicité

offeree

pollicité Toute personne à laquelle est faite une offre dans le cadre d’une offre d’achat visant à la mainmise.

(7) Subsection 283(1) of the French version of the Act is amended by adding the following in alphabetical order:

offre d’achat visant à la mainmise

take-over bid

offre d’achat visant à la mainmise L’offre qu’un pollicitant adresse à peu près au même moment à tous les actionnaires d’une banque ayant fait appel au public pour acquérir toutes les actions d’une catégorie d’actions émises. Y est assimilée la pollicitation d’une telle banque visant le rachat de toutes les actions d’une catégorie de ses actions.

(8) Subsection 283(3) of the French version of the Act is replaced by the following:

Date de l’offre

(3) L’offre d’achat visant à la mainmise est réputée être datée du jour de son envoi.

Section 284 of the French version of the Act is replaced by the following:

Droit d’acquérir des actions

Le pollicitant peut, en se conformant aux articles 285 à 290, aux paragraphes 291(1) et (2) et à l’article 292, acquérir les actions des pollicités opposants lorsque l’offre d’achat visant à la mainmise est, dans les cent vingt jours suivant la date où elle est faite, acceptée par les détenteurs d’au moins quatre-vingt-dix pour cent des actions de la catégorie en cause, sans qu’il soit tenu compte des actions détenues à la date de l’offre d’achat visant à la mainmise, même indirectement, par lui-même, les personnes morales de son groupe ou ses associés.

(1) The portion of subsection 285(1) of the French version of the Act before paragraph (

a) is replaced by the following:

Avis du pollicitant aux opposants

(1) Le pollicitant peut acquérir les actions des pollicités opposants en leur faisant parvenir ainsi qu’au surintendant, par courrier recommandé, dans les soixante jours suivant la date d’expiration de l’offre d’achat visant à la mainmise et, en tout état de cause, dans les cent quatre-vingts jours suivant la date de l’offre d’achat visant à la mainmise, un avis précisant à la fois :

(2) Paragraph 285(1)(

d) of the Act is replaced by the following:

(

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

Section 286 of the Act is replaced by the following:

Share certificates and election

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.

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.

Subsection 287(1) of the Act is replaced by the following:

Payment to offeree bank

(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 ).

The Act is amended by adding the following after

section 287:

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.

Paragraphs 288(

a) to (

c) of the Act are replaced by the following:

(

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.

Subsection 289(1) of the Act is replaced by the following:

Court may fix fair value

(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.

Paragraph 290(

a) of the Act is replaced by the following:

(

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

Paragraph 291(4)(

a) of the Act is replaced by the following:

(

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;

The Act is amended by adding the following after

section 292:

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.

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.

Subsection 308(2) of the Act is replaced by the following:

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.

The portion of subsection 309(1) of the Act before paragraph (

a) is replaced by the following:

Annual statement — approval

(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

Subsection 311(1) of the Act is replaced by the following:

Annual statement — distribution

(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.

(1) The portion of paragraph 315(2)(

b) of the Act before subparagraph (ii) is replaced by the following:

(

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,

(2) Section 315 of the Act is amended by adding the following after subsection (2):

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.

Subsection 321(2) of the Act is replaced by the following:

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.

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.

Paragraph 328(2)(

d) of the Act is replaced by the following:

(

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.

Paragraph 334(2)(

a) of the Act is replaced by the following:

(

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;

Subsection 337(1) of the French version of the Act is replaced by the following:

Absence de cautionnement

(1) Les plaignants ne sont pas tenus de fournir de cautionnement pour les frais.

Paragraph 349(

b) of the French version of the Act is replaced by the following:

b) nommer un liquidateur en exigeant ou non un cautionnement, fixer sa rémunération et le remplacer;

Section 354 of the Act is replaced by the following:

Due diligence

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.

1999, c. 28, s. 35(1)

Paragraph 527(1)(

b) of the Act is replaced by the following:

(

b) the province in which the principal office of the authorized foreign bank is to be situated;

1999, c. 28, s. 35(1)

Paragraph 528(1)(

a) of the Act is replaced by the following:

(

a) change the name under which it is permitted to carry on business in Canada or the province in which its principal office is to be situated as that name or province is set out in the order made under subsection 524(1) or in any other order made under this section;

1999, c. 28, s. 35(1)

Subsections 535(1) and (2) of the Act are replaced by the following:

Principal office

(1) An authorized foreign bank shall at all times have a principal office in the province specified in the order made under subsection 524(1) or 528(1) with respect to it.

Change of principal office

(2) An authorized foreign bank may change the address of its principal office within the province specified in the order made under subsection 524(1) or 528(1) with respect to it.

1999, c. 28, s. 35(1)

(1) The portion of paragraph 585(3)(

b) of the Act before subparagraph (ii) is replaced by the following:

(

b) a member of a firm of accountants is deemed not to be independent of an authorized foreign 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 authorized foreign bank or of any affiliate of the authorized foreign bank or is a business partner of any director, officer or employee of the authorized foreign bank or of any affiliate of the authorized foreign bank,

(2) Section 585 of the Act is amended by adding the following after subsection (3):

Business partners

(3.1) For the purposes of subsection (3), 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 another business partner of the member.

2001, c. 9, s. 183

Section 669 of the Act is replaced by the following:

Authority of directors, officers and representatives

(1) No bank holding company and no guarantor of an obligation of a bank holding company may assert against a person dealing with the bank holding company or against a person who has acquired rights from the bank holding company that

(

a) the bank holding company’s incorporating instrument or any by-laws of the bank holding company have not been complied with;

(

b) the persons named as directors of the bank holding company in the most recent return sent to the Superintendent under

section 951 are not the directors of the bank holding company;

(

c) the place named in the incorporating instrument or by-laws of the bank holding company is not the place where the head office of the bank holding company is situated;

(

d) a person held out by the bank holding company as a director, officer or representative of the bank holding company 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 holding company or usual for a director, officer or representative; or

(

e) a document issued by any director, officer or representative of the bank holding company with actual or usual authority to issue the document is not valid or not genuine.

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 holding company.

2001, c. 9, s. 183

Paragraph 676(1)(

b) of the Act is replaced by the following:

(

b) the province in which the head office of the bank holding company is to be situated; and

2001, c. 9, s. 183

Paragraph 699(

b) of the Act is replaced by the following:

(

b) the province in which the head office of the bank holding company is situated.

2001, c. 9, s. 183

(1) Subsection 706(1) of the Act is replaced by the following:

Shares issued in series

(1) The by-laws of a bank holding company 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 ).

2001, c. 9, s. 183

(2) Subsection 706(5) of the Act is replaced by the following:

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 a copy of the by-law authorizing the directors to fix the rights, privileges, restrictions and conditions of those shares and shall provide the Superintendent with particulars of the proposed series of shares.

2001, c. 9, s. 183

Subsection 710(3) of the Act is replaced by the following:

Exception

(3) Despite subsection (2), a bank holding company 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 holding company 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 holding company 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 holding company at arm’s length within the meaning of that expression in the Income Tax Act if the person, the bank holding company 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 804(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 holding company.

2001, c. 9, s. 183

Subsection 716(1) of the French version of the Act is replaced by the following:

Exception — représentant personnel

(1) La société de portefeuille bancaire peut autoriser ses filiales à détenir, en qualité de représentant personnel, mais à condition de ne pas en avoir la propriété effective, soit des actions de la société ou d’une personne morale qui la contrôle, soit des titres de participation d’une entité non constituée en personne morale qui la contrôle.

The Act is amended by adding the following after

section 716:

Exception — conditions before acquisition

716.1

(1) A bank holding company may permit its subsidiary to acquire shares of the bank holding company, shares of an entity that controls the bank holding company or any ownership interests of any unincorporated entity that controls the bank holding company if before the subsidiary acquires them the conditions prescribed for the purposes of this subsection are met.

Conditions after acquisition

(2) After a subsidiary has acquired shares or ownership interests in accordance with subsection (1), the conditions prescribed for the purposes of this subsection are to be met.

Non-compliance with conditions

(3) Despite

section 665 and subsection 710(2), the issue and acquisition of the shares or ownership interests are subject to the prescribed requirements if

(

a) the bank holding company permits the subsidiary to acquire the shares or ownership interests; and

(

b) either

(

i) a condition prescribed for the purposes of subsection (1) was not met, or

(ii)

a condition prescribed for the purposes of subsection (2) was not met or ceased to be met.

2001, c. 9, s. 183

Paragraph 724(

e) of the Act is replaced by the following:

(

e) the reference to “subsections 137(5) to (7) and sections 138 to 141 and 145” in subsection 93(1) is to be read as a reference to “subsections 726(5) to (7) and sections 727 to 730 and 734”; and

2001, c. 9, s. 183

Section 725 of the Act is renumbered as subsection 725(1) and is amended by adding the following:

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 holding company makes one available. A person who is participating in a meeting by one of those means is deemed for the purposes of this Part to be present at the meeting.

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.

2001, c. 9, s. 183

Subsections 726(2) to (5) of the Act are replaced by the following:

Order to delay calling annual meeting

(2) Despite subsection (1), the bank holding company may apply to the court for an order extending the time for calling an annual meeting.

Obligation to notify Superintendent

(3) The bank holding company 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.

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.

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.

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.

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 holding company’s head office is situated and in each place in Canada where the bank holding company 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 holding company’s shares are listed for trading.

2001, c. 9, s. 183

Subsection 727(1) of the Act is replaced by the following:

Notice of meeting

(1) Notice of the time and place of a meeting of shareholders of a bank holding company shall be sent within the prescribed period to

(

a) each shareholder entitled to vote at the meeting;

(

b) each director;

(

c) the auditor of the bank holding company; and

(

d) the Superintendent.

Exception

(1.1) In the case of a bank holding company that is not a distributing bank holding company, notice may be sent within any shorter period specified in its by-laws.

2001, c. 9, s. 183

Subsection 728(1) of the Act is replaced by the following;

Notice not required

(1) A notice of a meeting is not required to be sent to shareholders who are not registered on the records of the bank holding company or the bank holding company’s transfer agent on the record date fixed under paragraph 726(5)(

c) or determined under paragraph 726(6)( a ).

2001, c. 9, s. 183

Subsections 732(1) to (5) of the Act are replaced by the following:

Proposals

(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 holding company notice of any matter that they propose to raise at the meeting (in this

section and

section 733 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.

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 holding company’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 holding company’s outstanding shares.

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.

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).

Proof may be required

(1.4) If the bank holding company 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).

Circulation of proposal

(2) A bank holding company that solicits proxies shall set out in the management proxy circular required by subsection 156.05(1) or attach to it any proposal submitted for consideration at a meeting of shareholders.

Supporting statement

(3) At the request of the person who submits a proposal, the bank holding company 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.

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 holding company 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.

Exemption

(5) A bank holding company is not required to comply with subsections (2) and (3) if

(

a) the proposal is not submitted to the bank holding company 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 holding company 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 holding company;

(

c) the person submitting the proposal failed within the prescribed period before the bank holding company 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.

Bank holding company 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 holding company 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.

2001, c. 9, s. 183

(1) Subsections 733(1) and (2) of the Act are replaced by the following:

Notice of refusal

(1) If a bank holding company 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 732(1.4), the day on which it receives the proof.

Application to court

(2) On the application of a person submitting a proposal who claims to be aggrieved by a bank holding company’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.

(2) Subsection 733(3) of the French version of the Act is replaced by the following:

Demande de la société

(3) La société ou toute personne qui prétend qu’une proposition lui cause un préjudice peut demander au tribunal une ordonnance autorisant la société à ne pas la faire figurer à la circulaire de la direction sollicitant des procurations ou en annexe; le tribunal, s’il est convaincu que le paragraphe 732(5) s’applique, peut rendre en l’espèce la décision qu’il estime pertinente.

2001, c. 9, s. 183

(1) Subsections 734(1) to (3) of the Act are replaced by the following:

List of shareholders entitled to notice

(1) A bank holding company 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 726(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 726(6)( a ).

Voting list

(2) The bank holding company 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 726(5)( d ), no later than 10 days after that date; and

(

b) if no record date is fixed under paragraph 726(5)( d ), no later than 10 days after a record date is fixed under paragraph 726(5)(

c) or no later than the record date determined under paragraph 726(6)( a ), as the case may be.

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.

2001, c. 9, s. 183

(2) The portion of subsection 734(4) of the Act before paragraph (

a) is replaced by the following:

Examination of list

(4) A shareholder may examine the list of shareholders

Section 740 of the Act is amended by adding the following after subsection (2):

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 holding company makes one available.

Voting while participating electronically

(4) Unless the by-laws provide otherwise, any person who is participating in a meeting of shareholders under subsection 725(2) and entitled to vote at that meeting may vote by means of the telephonic, electronic or other communication facility that the bank holding company has made available for that purpose.

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.

Section 741 of the Act is amended by adding the following after subsection (2):

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.

2001, c. 9, s. 183

Paragraph 742(3)(

a) of the Act is replaced by the following:

(

a) a record date has been fixed under paragraph 726(5)(

c) and notice of it has been given under subsection 726(7);

2001, c. 9, s. 183

Subsection 743(1) of the Act is replaced by the following:

Court may order meeting to be called

(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 Part 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.

Section 746 of the Act is amended by striking out the word “and” at the end of paragraph ( d ), by adding the word “and” at the end of paragraph (

e) and by adding the following after paragraph ( e ):

(

f) the reference to “paragraph 143(1.1)( b )” in subparagraph ( b )(vi) of the definition solicitation in

section 156.01 is to be read as a reference to “paragraph 732(1.1)( b )”.

The Act is amended by adding the following after

section 753:

Election or appointment as director

753.1

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.

2001, c. 9, s. 183

Paragraphs 756(1)(

g) and (

h) of the Act are replaced by the following:

(

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.

2001, c. 9, s. 183

Subsection 765(1) of the Act is replaced by the following:

Directors filling vacancy

(1) Despite

section 772 but subject to subsection (2) and sections 764 and 766, 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.

2001, c. 9, s. 183

Paragraph 766(

a) of the Act is replaced by the following:

(

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;

2001, c. 9, s. 183

Subsection 771(3) of the Act is replaced by the following:

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 790(1), present at any particular time during the meeting is considered to be present for the purposes of this section.

Section 774 of the Act is amended by adding the following after subsection (4):

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.

2001, c. 9, s. 183

Paragraphs 785(

b) and (

c) of the Act are replaced by the following:

(

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 706, except in accordance with any authorization made by the directors;

2001, c. 9, s. 183

Section 789 of the Act is replaced by the following:

Disclosure of interest

(1) A director or officer of a bank holding company shall disclose to the bank holding 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 bank holding 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.

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.

Time of disclosure — officer

(3) The disclosure required by subsection (1) 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.

Time of disclosure — contract not requiring