Financial Institutions Act

1198514681/96141/tlc96141_f

E4tlc96141

Interpretation and Application

Definitions and

interpretation

In this Act:

articles has the same meaning as in the Business Corporations Act ;

auditor includes a partnership of auditors and an additional auditor appointed under

section 125;

Authority means the BC Financial Services Authority established under

section 2 of the Financial Services Authority Act ;

business authorization means an authorization to carry on

trust business,

deposit business,

insurance business, or

both trust business and deposit business,

issued under Division 1 of

Part 3 to a financial institution, under Division 1 of

Part 6 to an extraprovincial corporation or under Division 5 of

Part 6 to a society described in

section 191;

capital base of a financial institution or extraprovincial corporation means the capital base determined in accordance with the regulations under

section 289 (3) (

e) or (

f) and the rules made by the Authority under

section 201.1 (1) (

a) or (b);

central credit union means a credit union in which membership is restricted to credit unions, other corporations, public bodies and the Crown in right of Canada or British Columbia or in any other right;

charter includes

an Act, statute, ordinance, letters patent, certificate, declaration,

other instrument or provision of law by or under which a corporation is incorporated, amalgamated or continued,

the memorandum, articles or bylaws by whatever name called of a corporation, and

the constitution and rules of a credit union;

common trust fund means a fund in which moneys of different estates and trusts are co-mingled for the purpose of facilitating investment;

conduct review committee , in relation to a financial institution, means the conduct review committee elected by the directors as required under

section 112;

constitution means the document described in

section 6 (2) of the Credit Union Incorporation Act and includes the constitution of a credit union incorporated under the Credit Union Act , R.S.B.C. 1979, c. 79, or incorporated under a former Credit Unions Act ;

contract of insurance has the same meaning as "contract" in the Insurance Act ;

council means the Insurance Council of British Columbia continued under

section 220;

credit union means a corporation incorporated as a credit union under the Credit Union Incorporation Act , the Credit Union Act , R.S.B.C. 1979, c. 79, or a former Credit Unions Act , and includes a central credit union and a credit union continued into British Columbia under

section 15.1 of the Credit Union Incorporation Act , but does not include a credit union continued under the laws of another jurisdiction under

section 15.2 of the Credit Union Incorporation Act ;

debenture includes an instrument, secured or unsecured, issued by a financial institution which instrument is

in bearer or registered form,

of a kind commonly dealt in on securities exchanges or markets, or commonly recognized in any area in which it is issued or dealt in as a medium for investment, and

evidence of an obligation or indebtedness of the financial institution,

but does not include

a negotiable unsecured promissory note maturing not more than one year after the date of issue,

a receipt or another type of instrument issued by a financial institution evidencing

a deposit, or

an annuity payment, or

an investment contract or mutual fund certificate;

deposit business means the business of receiving on deposit or soliciting for deposit money that is repayable

on demand,

after notice,

on the expiry of a specified term, or

at specified intervals for a specified term,

whether or not the person undertaking an activity or activities set out in paragraphs (

a) to (

d) can or does distribute any gain, profit or dividend, or otherwise disposes of the person's assets, to a member or shareholder of the person other than during winding up or on dissolution;

deposit insurance corporation means the Credit Union Deposit Insurance Corporation of British Columbia continued under

section 261;

depositor means an individual or entity

that has money on deposit with a credit union, extraprovincial credit union or extraprovincial trust corporation, or

that holds non-equity shares in a credit union issued before January 1, 2020;

electronic meeting means a fully electronic meeting or a partially electronic meeting;

entity includes a corporation, trust, partnership, fund or other unincorporated association or organization, the Crown in right of Canada or of a province, a Crown agency, a foreign government and an agency of a foreign government, but does not include an individual;

equity share means a share in a credit union that represents an equity interest in a credit union;

extraprovincial corporation means an extraprovincial credit union, extraprovincial insurance corporation or extraprovincial trust corporation;

extraprovincial credit union means a credit union that is incorporated by or under the laws of a jurisdiction other than British Columbia and that is, under those laws, licensed, registered or in any way authorized to carry on activities that are substantially the same as trust business or deposit business or both, but does not include a federal credit union within the meaning of the Bank Act (Canada);

extraprovincial insurance corporation means

a corporation that is an insurer and is incorporated by or under the laws of a jurisdiction other than British Columbia and is, under those laws, licensed, registered or in any way authorized to carry on activities that are substantially the same as insurance business, or

an insurance association,

and includes a society that is named in an order of the superintendent made under

section 193 (2) to which society

section 159 applies because of

section 193 (3), but does not include

a corporation that

is licensed under Division 2 of

Part 6 as an insurance agent or insurance adjuster, and

carries on insurance business only in its capacity as an insurance agent or insurance adjuster;

extraprovincial trust corporation means a corporation incorporated by or under the laws of a jurisdiction other than British Columbia and is, under those laws, licensed, registered or in any way authorized to carry on activities that are substantially the same as trust business or deposit business or both, but does not include a credit union, a bank or a corporation that is a subsidiary of a bank and is a loan company to which the Trust and Loan Companies Act (Canada) applies;

fair market value means the amount, price, consideration or rent that would be obtained in an arm's length transaction in the open market between willing parties acting in good faith;

financial institution means a credit union, trust company or insurance company;

financial services includes deposit business, insurance business, trust business, trading in securities, mortgage brokerage and real estate services;

fully electronic meeting means a meeting in which persons are entitled to participate solely by telephone or other communications medium, as set out in the notice for the meeting, if all persons attending the meeting are able to participate in it, whether by telephone or other communications medium;

fund , except in the definition of "entity", means the fund continued under

section 267;

general insurance means insurance that is not life insurance;

general insurance business means insurance business in respect of general insurance only;

insolvent includes the inability of a corporation to pay its debts as they become due in the usual course of the corporation's business;

insurance association means an association of persons formed on the plan known as Lloyd's or on another prescribed plan by which each associate underwriter is liable for a stated, limited or proportionate part of the whole amount insured by a contract of insurance;

insurance business means

undertaking or offering to undertake to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of the insurance may be exposed,

soliciting or accepting any risk,

soliciting an application for a contract of insurance,

issuing or delivering a

receipt for any contract of insurance, or

contract of insurance,

in consideration of any premium or payment, granting an annuity on a life or lives,

collecting or receiving any premium for a contract of insurance,

adjusting any loss covered by a contract of insurance, or

advertising for any business described in paragraphs (

a) to (g),

whether or not the person undertaking an activity or activities set out in paragraphs (

a) to (

h) can or does distribute any gain, profit or dividend, or otherwise disposes of the person's assets, to a member or shareholder of the person other than during winding up or on dissolution;

insurance company means

a company incorporated under the Business Corporations Act for the purpose of carrying on insurance business,

an insurer incorporated by or under another Act, or

a pre-existing insurance company,

and includes

a special Act insurance company that has been converted into a company under

section 266 of the Business Corporations Act for the purpose of carrying on insurance business,

an extraprovincial insurance corporation that has been continued into British Columbia as a company under

section 303 of the Business Corporations Act ,

a company that results from an amalgamation referred to in

section 20 (2), and

a society that is named in an order of the superintendent made under

section 193 (2) of this Act to which society

section 59 applies because of

section 193 (3),

but does not include

a corporation continued under the laws of another jurisdiction,

a society deemed under

section 191 to have a business authorization issued under Division 5 of

Part 6,

a mutual fire insurance company as defined in

section 188 or a grandparented insurance society as defined in

section 200,

a corporation that

is licensed under Division 2 of

Part 6 as an insurance agent or insurance adjuster, and

carries on insurance business only in the corporation's capacity as an insurance agent or insurance adjuster, or

a corporation that is registered as a captive insurance company under the Insurance (Captive Company) Act ;

insurer means an entity carrying on insurance business, other than an entity that

is either of the following:

licensed under Division 2 of

Part 6 as an insurance agent or insurance adjuster;

exempted from

section 171 (2) by the regulations, and

carries on insurance business only in the capacity of the entity as an insurance agent or insurance adjuster;

life insurance business means insurance business in respect of life insurance;

member ,

in relation to a trust company or an insurance company, has the same meaning as "shareholder" in the Business Corporations Act , and

in relation to a credit union, means a person who has been admitted to membership or junior membership in the credit union and whose name is entered in its register of members, but does not include a person who is an auxiliary member as defined in

section 1 of the Credit Union Incorporation Act ;

memorandum means, in relation to a pre-existing trust company or pre-existing insurance company, the record that constituted the company's memorandum under

section 12 of this Act as that

section read before the coming into force of

section 67 of the Finance Statutes Amendment Act, 2011 ;

non-equity share means a share in a credit union that

evidences indebtedness of the credit union to the holder of the share, and

does not represent an equity interest in the credit union;

partially electronic meeting means a meeting in which persons are entitled to participate in person or by telephone or other communications medium, as set out in the notice for the meeting, if all persons attending the meeting are able to participate in it, whether by telephone, by other communications medium or in person;

personal information has the same meaning as in the Freedom of Information and Protection of Privacy Act ;

pre-existing insurance company means a corporation that was, before the coming into force of

section 64 of the Finance Statutes Amendment Act, 2011 , incorporated under this Act for the purpose of carrying on insurance business, and includes

a special Act insurance company that was, before the coming into force of

section 64 of the Finance Statutes Amendment Act, 2011 , converted into an insurance company under

section 21 of this Act as that

section read before the coming into force of

section 67 of the Finance Statutes Amendment Act, 2011 , and

an extraprovincial insurance corporation that was, before the coming into force of

section 64 of the Finance Statutes Amendment Act, 2011 , continued into British Columbia as a company under

section 23 of this Act as that

section read before the coming into force of

section 67 of the Finance Statutes Amendment Act, 2011 ,

but does not include any corporation referred to in paragraph (h), (i), (j), (

k) or (

l) of the definition of "insurance company";

pre-existing trust company means

a corporation that was, before the coming into force of

section 64 of the Finance Statutes Amendment Act, 2011 , incorporated under this Act for the purpose of carrying on trust business,

an extraprovincial trust company that was, before the coming into force of

section 64 of the Finance Statutes Amendment Act, 2011 , continued into British Columbia under

section 23 of this Act as that

section read before the coming into force of

section 67 of the Finance Statutes Amendment Act, 2011 , or

a corporation that was, before the coming into force of

section 64 of the Finance Statutes Amendment Act, 2011 , incorporated as a trust company under the Trust Company Act , R.S.B.C. 1979, c. 412, or was incorporated as a trust company under another Act,

but does not include a corporation continued under the laws of another jurisdiction;

prescribed means prescribed by regulation of the Lieutenant Governor in Council;

public body , in relation to a credit union, means

a municipality or regional district,

[Repealed 2003-52-64.]

the Municipal Finance Authority of British Columbia under the Municipal Finance Authority Act ,

a government body under the Financial Administration Act , or

a board, commission, authority or similar body established or authorized under

an Act to administer, regulate, manage or undertake the operation of schools, libraries, hospitals, health facilities, irrigation systems, drainage systems, water supply systems, local improvements or public utilities, or to regulate or facilitate the regulation of agricultural and other natural products marketing or to levy or raise taxes under the authority of

an Act;

security instrument means security as defined in

section 1 of the Securities Act ;

senior officer means each of the 5 highest paid officers of a corporation and includes an individual who, whether or not among those 5 highest paid officers,

is the chair or a vice chair of the board of directors or the president, a vice president, the secretary, the treasurer or the general manager of the corporation, or

performs functions of the corporation similar to those normally performed by an individual occupying any of the offices described in paragraph (a);

significant borrower , in relation to a trust company or insurance company, means

an entity that has outstanding indebtedness for money borrowed from the company, or from the company and one or more of its affiliates, or from one or more affiliates of the company, if the aggregate principal amount of the outstanding indebtedness exceeds the greater of

$1 million, or

1/3 of the sum of

the total indebtedness then outstanding for borrowed money of the entity, and

the amount by which the assets of the entity exceed its liabilities, as shown on the balance sheet of the entity at the end of its most recently completed financial year, or

an individual who has outstanding indebtedness for money borrowed from the company, or from the company and one or more of its affiliates, or from one or more affiliates of the company, if the aggregate principal amount of the outstanding indebtedness, excluding indebtedness secured by a mortgage of the individual's principal residence, exceeds $100 000;

special Act insurance company means an insurance company incorporated by another Act;

special resolution ,

in relation to a trust company or insurance company, means a resolution

passed by a majority of not less than 3/4 of the votes cast by those members of the company who, being entitled to do so, vote personally or by proxy at a general meeting of the company

of which notice as the articles provide and being not less than 21 days' notice specifying the intention to propose the resolution as a special resolution has been given, or

if every member entitled to attend and vote at the meeting agrees, at a meeting of which less than 21 days' notice has been given, or

consented to in writing by every member of the company who would have been entitled to vote personally or by proxy at a general meeting of the company, and a resolution so consented to is deemed to be a special resolution passed at a general meeting of the company, and

in relation to a credit union, means a special resolution as defined in

section 1 of the Credit Union Incorporation Act ;

spouse means a person who

is married to another person, or

is living with another person in a marriage-like relationship;

superintendent means the Superintendent of Financial Institutions appointed under

section 207;

tribunal means the Financial Services Tribunal continued under

section 242.1;

trust business means the business of providing or offering to provide services to the public as

trustee, executor or administrator,

guardian of a minor's estate,

committee, under the Patients Property Act , of the estate of a person with a mental disorder,

attorney under

Part 2 of the Power of Attorney Act , or

representative granted power over an adult's financial affairs under

section 7 (1) (

b) of the Representation Agreement Act ,

whether or not the person undertaking an activity or activities set out in paragraphs (

a) to (

e) can or does distribute any gain, profit or dividend, or otherwise disposes of the person's assets, to a member or shareholder of the person other than during winding up or on dissolution;

trust company means

a company incorporated under the Business Corporations Act for the purpose of carrying on trust business and includes

an extraprovincial trust company that has been continued into British Columbia as a company under

section 303 of the Business Corporations Act , and

a company that results from an amalgamation referred to in

section 20 (1),

a corporation incorporated as a trust company under another Act, or

a pre-existing trust company,

but does not include a corporation continued under the laws of another jurisdiction;

unaffiliated director , in relation to a trust company or insurance company, means a director who is not also

an officer or employee of the company or of an affiliate of it,

the owner of 5% or more of the voting shares of the company or of an affiliate of it,

a significant borrower from the company, or a director or senior officer of a significant borrower from the company or the owner of 10% or more of the voting shares of a significant borrower from the company,

a borrower from the company under a loan that is not in good standing, or a director, officer or employee of, or the owner of 10% or more of the voting shares of an entity that is a borrower from the company under a loan that is not in good standing,

the spouse of an individual described in any of paragraphs (

a) to (d),

a relative of an individual described in paragraph (

a) or (

b) who occupies the same home as that individual,

an individual who, within the 2 years before becoming a director, has been an officer or employee of the company or of an affiliate of it, or

unless determined to be an unaffiliated director by the superintendent under

section 97 (2),

an individual,

a partner in or an employee of a partnership,

iii

an officer or employee of a corporation, or

an owner of 10% or more of the voting shares of a corporation

that provides goods or services to the company, if the total annual billing to the company in respect of the goods or services exceeds 10% of the total annual billings of the individual, partnership or corporation, as the case may be;

voting share means a share of a class of shares of a corporation that carries the right to vote under all circumstances on a resolution electing directors, and includes a share of a class of shares of a corporation that carries the right to vote on such a resolution because of the occurrence of a contingency that has occurred and is continuing.

For the purposes of this Act, an affiliate of a corporation is deemed to be affiliated with all other corporations with which the corporation is affiliated.

3) and (4

[Repealed 2011-29-64.]

An activity referred to in paragraph (

a) of the definition of "insurance business" in subsection (1), whether or not the activity is conducted in British Columbia, is conclusively deemed for the purposes of this Act to constitute the carrying on of insurance business in British Columbia if the risk or peril is located in British Columbia.

A reference to "subsidiary" in this Act as it applies to credit unions,

except in sections 120 and 128, has the same meaning as in the Credit Union Incorporation Act , and

in sections 120 and 128, has the same meaning as in the Business Corporations Act ,

and "holding company" has the corresponding meaning.

Application of Business Corporations Act

The following provisions of the Business Corporations Act do not apply to trust companies or insurance companies:

Part 2.1;

Division 4 of

Part 9;

sections 16, 20, 84 to 86, 137, 154 (1) (e), 159 to 165, 183, 195, 197, 200, 203 and 229.

Except as expressly provided in this Act or the Credit Union Incorporation Act and except insofar as sections 31, 144, 145 and 236 and

Part 12 of the Business Corporations Act apply to credit unions by virtue of their application to corporations generally, the Business Corporations Act does not apply to credit unions.

A special Act insurance company is subject to the following in addition to the provisions to which it is subject under

section 4 of the Business Corporations Act :

sections 269 to 300 and 302 to 311 of the Business Corporations Act ;

regulations made under sections 269 to 300 and 302 to 311 of the Business Corporations Act ;

subject to subsection (4) of this section, the Pre-existing Company Provisions prescribed under

section 442.1 of the Business Corporations Act .

The Lieutenant Governor in Council may prescribe provisions of the Pre-existing Company Provisions that do not apply to a special Act insurance company or a class of special Act insurance companies.

Repealed

3-5

[Repealed 2011-29-65.]

Repealed

[Repealed 2006-12-42.]

Repealed

[Repealed 2011-29-65.]

Pre-existing trust company

The memorandum of a trust company existing at September 15, 1990 is deemed to have been amended on that date by striking out the objects clause contained in it and substituting the following:

"The businesses that the company is permitted to carry on are restricted to those that were set out in Schedules A and B to the Trust Company Act , R.S.B.C. 1979, c. 412, immediately before the repeal of that Act by the Financial Institutions Act ."

Every copy of a memorandum that has been deemed to be altered by subsection (1) that is issued on or after September 15, 1990 must be in accordance with the alterations.

Repealed

9-10

[Repealed 2011-29-65.]

Specific rules respecting Business Corporations Act application to extraprovincial corporations

10.1

Sections 90 to 102 and 302 to 307 of the Business Corporations Act do not apply to extraprovincial corporations.

Without limiting Division 11 of

Part 10 of the Business Corporations Act , before submitting an application to the registrar under that Division, the applicant must, if the application relates to an extraprovincial corporation,

first obtain the consent of the superintendent to a name and then reserve that name under the Business Corporations Act , and

obtain the consent of the superintendent to the reinstatement, limited reinstatement or extension of a limited reinstatement contemplated by the application.

For the purposes of

section 379 of the Business Corporations Act as it applies to extraprovincial corporations, the reference in

section 379 (1) to "within 2 months" must be read as "immediately".

This Act paramount

If a provision of this Act is inconsistent or in conflict with a provision of the Act by or under which a financial institution is incorporated, the provision of this Act prevails.

Incorporation, Significant Changes and Winding Up

Names

Names for trust companies and insurance companies

A trust company that proposes or is authorized to carry on trust business must have and use a name that includes the word

"trust" together with a designation such as "company" or "corporation", or

"trustco".

An insurance company that proposes or is authorized to carry on insurance business must have and use a name that includes the word "insurance" or "assurance" together with a designation such as "company" or "corporation".

A trust company, an insurance company or a person applying to incorporate a trust company or an insurance company must not apply to reserve a name under the Business Corporations Act that includes the word "trust", "trustco", "insurance" or "assurance" unless the consent of the superintendent is first obtained for that name.

False representation prohibited

12.1

A person must not, in British Columbia, assume or use, or carry on business under, a name that includes the words "trust", "trustee", "trustco", "deposit", "loan", "insurance", "assurance" or "insurer", or use any words in connection with the business of the person, in a way likely to

deceive or mislead the public about the ability of the person to undertake trust business, deposit business or insurance business, or

give a false impression that the person is a trust company or an insurance company.

1.1

Formation of Trust Companies and Insurance Companies

Consent required for incorporation

A person must not apply to the registrar to incorporate a company for the purpose of carrying on trust business or carrying on insurance business unless, before the incorporation application is submitted to the registrar for filing under

section 10 of the Business Corporations Act , the consent of the Authority is obtained to the incorporation.

The Authority must not consent to the incorporation of a trust company or an insurance company unless

the persons applying for consent (the "applicants") have

submitted to the Authority the proposed notice of articles and articles of the proposed company, and

paid the prescribed fee,

the applicants have submitted to the Authority a plan

specifying the names and addresses of the proposed first directors and senior officers of the proposed company,

specifying the services that the proposed company intends to offer to the public,

iii

describing, in detail satisfactory to the Authority, the period within which the proposed company will meet the requirements for being issued a business authorization and specifying the preliminary activities, not being trust business or insurance business, that the proposed company proposes to carry on during that period,

specifying, in the case of a proposed insurance company, whether the business proposed to be carried on is life insurance business, general insurance business or both, and

containing any other information required by the Authority,

the proposed notice of articles and articles comply with this Act and the regulations,

the Authority is satisfied that the preliminary activities set out in the plan under paragraph (

b) are appropriate and in compliance with this Act,

each of the proposed first directors and senior officers of the proposed company has completed and submitted to the superintendent a personal information return in the form established by the superintendent that discloses the information required by the superintendent,

the applicants have satisfied the Authority that the proposed company intends to obtain, and will be able to obtain, a business authorization to enable the company to offer to the public, within a reasonable time after the incorporation, the services set out in the plan under paragraph (b), and

the applicants have satisfied the Authority that the proposed company will have both the financial and managerial capacity to properly carry on the business proposed to be carried on by the company in compliance with this Act.

The Authority must not consent to the incorporation of a trust company or an insurance company if the Authority believes on reasonable grounds that it is not in the public interest to consent to the incorporation.

The superintendent may conduct an investigation and an applicant must provide to the superintendent information, verifications, forecasts of business operations or documents that the superintendent considers necessary in relation to the application.

Preliminary activities

A trust company or an insurance company that is incorporated but does not have a business authorization must not undertake any activity other than an activity specified under

section 13 (2) (b) (iii) as a preliminary activity in the plan described in

section 13 (2) (b).

Until a trust company or an insurance company receives a business authorization, the trust company or insurance company, in every written communication, advertisement and document in which the name of the trust company or insurance company appears, must add immediately after the name the following: "(Not authorized)".

1.2

Alteration of Charter of Trust Companies and Insurance Companies

Consent required for alteration of memorandum, notice of articles or articles

A trust company or an insurance company must not alter its memorandum, notice of articles or articles without first receiving the consent of the superintendent.

1.3

Conversion of Special Act Insurance Companies

Consent required for conversion of special Act insurance company

A special Act insurance company must not apply under

section 266 of the Business Corporations Act to convert itself into a company for the purpose of carrying on insurance business unless, before the conversion application is submitted to the registrar for filing, the consent of the superintendent is obtained to the conversion.

Continuation of business authorization on conversion of special Act insurance company

A business authorization held by a special Act insurance company when it is converted into a company under

section 266 of the Business Corporations Act for the purpose of carrying on insurance business continues in force after that conversion, subject to a subsequent surrender of the business authorization, and to any amendment or the suspension, revocation or cancellation of the business authorization, under this Act.

1.4

Continuation of Trust Companies and Insurance Companies

Consent required for continuation of extraprovincial trust corporation or extraprovincial insurance corporation into British Columbia

An extraprovincial trust corporation or extraprovincial insurance corporation must not apply under

section 302 of the Business Corporations Act to continue into British Columbia as a company unless, before the continuation application is submitted to the registrar for filing, the consent of the Authority is obtained to the continuation.

Without limiting

section 22 of this Act, the Authority must not give a consent referred to in subsection (1) of this

section unless satisfied that the extraprovincial trust corporation or extraprovincial insurance corporation, in its primary jurisdiction as defined in

section 157, is licensed, registered or authorized to carry on the business that it proposes to carry on in British Columbia.

A business authorization held by an extraprovincial trust corporation or an extraprovincial insurance corporation when it is continued into British Columbia as a company under

section 303 of the Business Corporations Act , continues in force after the continuation subject to a subsequent surrender of the business authorization, and to any amendment or the suspension, revocation or cancellation of the business authorization, under this Act.

Consent required for continuation of trust company or insurance company out of British Columbia

A trust company or an insurance company must not apply under

section 308 (1) of the Business Corporations Act to continue out of British Columbia unless

the jurisdiction into which the company proposes to continue has laws that permit corporations incorporated under the jurisdiction's laws to apply for continuation under the laws of British Columbia, and

the consent of the Authority is obtained to the continuation.

In addition to complying with its obligations under sections 308 to 311 of the Business Corporations Act , a trust company or an insurance company that is continued under the laws of another jurisdiction must promptly after continuation file with the superintendent a copy of any record issued to the continued corporation by the other jurisdiction to effect or confirm the continuation.

1.5

Amalgamation of Trust Companies and Insurance Companies

Consent required for amalgamation of trust company or insurance company

A trust company may amalgamate and continue as one company with one or more of the following only:

subsidiaries of it that are trust companies or extraprovincial trust corporations;

other trust companies;

extraprovincial trust corporations.

An insurance company may amalgamate and continue as one company with one or more of the following only:

subsidiaries of it that are insurance companies or extraprovincial insurance corporations;

other insurance companies;

extraprovincial insurance corporations.

A trust company or an insurance company must not amalgamate with a corporation referred to in subsection (1) or (2) unless, before the amalgamation application is submitted to the registrar for filing under

section 275 of the Business Corporations Act , the consent of the Authority is obtained to the amalgamation.

On an amalgamation referred to in this section, the amalgamated company

may carry on business under the business authorization issued with respect to one of the amalgamating corporations, as directed by the Authority, until the amalgamated company has been granted a new business authorization under

section 61, and

has 30 days in which to apply for a new business authorization.

A trust company or an insurance company must not amalgamate with a foreign corporation within the meaning of the Business Corporations Act to form an amalgamated foreign corporation.

1.6

Arrangements, Acquisitions or Dispositions by Trust Companies and Insurance Companies

Consent of Authority to arrangement, acquisition or disposition

An arrangement proposed with respect to a trust company or an insurance company is not binding unless, after the arrangement is adopted as required by Division 5 of

Part 9 of the Business Corporations Act and before approval is given by the Supreme Court, consent is also given by the Authority.

Unless it first receives the consent of the superintendent, a trust company or an insurance company must not acquire assets that, immediately after the acquisition, will constitute a percentage of the total assets of the trust company or insurance company that is greater than the prescribed percentage.

2.1

The superintendent must not consent to an acquisition referred to in subsection (2) if the superintendent believes on reasonable grounds that it is not in the public interest to consent.

Unless it first receives the consent of the Authority, an insurance company must not reinsure all or any portion of its policies with another insurance company if the reinsurance has the effect of transferring

the whole, or

a part that is greater than the prescribed percentage

of the business or property of the insurance company placing the reinsurance.

Subsection (3) does not apply to contracts of reinsurance made by an insurance company in the ordinary course of its business.

The Authority must not consent to an arrangement referred to in subsection (1) or a disposition by reinsurance referred to in subsection (3) if the Authority believes on reasonable grounds that it is not in the public interest to consent.

1.7

Background for Consents

Consent required for continuation or amalgamation

In subsection (2) (a), corporation means

an extraprovincial corporation proposing to be continued into British Columbia as a trust company or an insurance company, or

each of one or more corporations proposing to amalgamate and continue as one company.

The Authority must not consent under

section 18 (1) in respect of a continuation into British Columbia of an extraprovincial corporation as a trust company or an insurance company or consent under

section 20 (3) to an amalgamation, unless

the directors of the corporation have submitted to the Authority

the name and address of the corporation,

the financial statements of the corporation,

iii

the notice of articles proposed for the continued company or amalgamated company,

the articles proposed for the continued company or amalgamated company,

a plan for the continued company or amalgamated company

specifying, in the case of an insurance company, whether the business proposed to be carried on is life insurance business, general insurance business or both,

specifying the services that the company intends to offer to the public,

if the company does not have a business authorization, describing in detail satisfactory to the Authority the period within which the company will meet the requirements for being issued a business authorization and specifying the preliminary activities, not being trust business or insurance business, that the company proposes to carry on during that period, and

containing any other information required by the Authority, and

the full particulars, in the case of a proposed amalgamation, of

the terms on which the amalgamation is to take place, together with copies of every agreement relating to the amalgamation, and

the financial resources that will be available to the amalgamated company,

the Authority approves the notice of articles and articles submitted under paragraph (a),

each proposed director and senior officer of the continued company or amalgamated company has completed and submitted to the superintendent a personal information return in the form established by the superintendent and disclosing information required by the superintendent, and

the Authority believes on reasonable grounds that it is in the public interest to consent to the continuation or amalgamation.

Superintendent may obtain information to support consent considerations

The superintendent may conduct an investigation and the directors and officers must provide the superintendent with information, verifications, forecasts of business operations or documents that the superintendent considers necessary for determining whether to consent or refuse consent under

section 16, 18 (1), 20 (3) or 21.

Dissolution and Winding Up of Trust Companies and Insurance Companies

Notice to superintendent required on voluntary dissolution or winding up

The following are of no force and effect, and do not provide the purported authorization, unless 30 days' written notice of the company's intention to pass the resolution has been given to the superintendent and to any similar authority in any other province in which the company is registered, licensed or authorized to carry on business:

an ordinary resolution purporting to authorize the dissolution of a trust company or an insurance company in accordance with

section 314 (1) of the Business Corporations Act ;

a directors' resolution purporting to authorize the dissolution of a trust company or an insurance company in accordance with

section 314 (2) of the Business Corporations Act ;

a special resolution purporting to authorize liquidation in accordance with

section 319 (1) of the Business Corporations Act .

Winding up by Supreme Court order — superintendent is party

The superintendent is a party to any legal proceedings in which an application is made under

section 324 of the Business Corporations Act for the liquidation and dissolution of a trust company or an insurance company.

Liquidation and dissolution by court order

25.1

On an application made by the superintendent in respect of a trust company or an insurance company, the Supreme Court may order that the company be liquidated and dissolved if

in the case of an insurance company, the company has not, during the previous year, undertaken an activity set out in any of paragraphs (

d) to (

g) of the definition of "insurance business" in

section 1 (1), except to the extent necessary to wind up its insurance business, or

in the case of a trust company or an insurance company,

the company's business authorization has been revoked under

section 64 (1) or 249 (1) (j),

the company has contravened this Act or the regulations and it is in the public interest to liquidate and dissolve the company, or

iii

the court otherwise considers it just and equitable to do so.

Liquidation and dissolution on direction of Authority

If the Authority believes on reasonable grounds that it is contrary to the public interest that a trust company or an insurance company that is incorporated but has not been issued a business authorization continue in business, the Authority may order that the trust company or insurance company be liquidated and dissolved.

Without limiting subsection (1), if a trust company or an insurance company

has not within the time limited by

section 61 (1) applied for a business authorization,

is refused a business authorization,

has contravened

section 20 (1) or (2), or

without having a business authorization for that business, holds itself out to the public as authorized to carry on trust business or insurance business,

the Authority may order that the trust company or insurance company be liquidated and dissolved.

If the Authority makes an order under this section, the Authority must, in the order, appoint one or more liquidators and, in that event,

Part 10 of the Business Corporations Act applies to the powers and duties of the liquidator.

An appointment of a liquidator under subsection (3) takes effect on the commencement of the liquidation.

For the purposes of

section 30, subsection (4) of this

section and

Part 10 of the Business Corporations Act , commencement of the liquidation means, for a liquidation commenced by order of the Authority under this section,

the date the order was made, or

if the order specifies a date, or a date and time, for the commencement of the liquidation that is later than the date the order was made, the specified date and time or, if no time is specified, the beginning of the specified date.

If a vacancy occurs by death, resignation or otherwise in the office of liquidator in a liquidation and dissolution ordered by the Authority under this section, the Authority may fill the vacancy on its own initiative or on application of any person referred to in

section 325 (1) of the Business Corporations Act .

The Authority must set the remuneration of any liquidator it appoints under this section.

In a liquidation and dissolution ordered by the Authority under this section, the Authority may impose, either generally or with respect to certain matters, restrictions on the exercise of the powers of a liquidator.

Application of this Part

Any proceedings taken under this Act or the Business Corporations Act to liquidate and dissolve a trust company or an insurance company must be stayed if the company is at any time found, in a proceeding under the Winding-Up and Restructuring Act (Canada), to be insolvent within the meaning of that Act.

Duties of liquidators on Authority-ordered liquidation and dissolution

If the Authority makes an order under

section 26 that a trust company or an insurance company be liquidated and dissolved,

the duties of the liquidator referred to in

section 330 of the Business Corporations Act are subject to any restrictions or directions imposed or given by the Authority,

the notice of appointment filed by the liquidator under

section 329 of the Business Corporations Act must be accompanied by a copy of the order of the Authority,

the notice published under

section 331 (1) (

a) of the Business Corporations Act must disclose that the Authority has made an order that the company be liquidated and dissolved, and

a person who has been appointed as a liquidator by the Authority and who is not, or who ceases to be, qualified to act as a liquidator must promptly seek directions from the Authority.

Deferral of dissolution

If the Authority makes an order under

section 26 that a trust company or an insurance company be liquidated and dissolved, the Authority may, subject to subsection (2) of this section, make an order under this subsection

deferring the date of dissolution to a new date, or

deferring the dissolution generally.

No order made under subsection (1) is effective unless a copy of that order is filed with the registrar before the company is dissolved.

If an order is made under subsection (1) (

a) and is filed with the registrar before the company is dissolved, the company is dissolved on the beginning of the new date specified by that order.

Publication of notice

If the Authority makes an order under

section 26 that a trust company or an insurance company be liquidated and dissolved, the registrar must publish in the Gazette or in any other prescribed manner

notice that the company is being liquidated,

the date of the order, and

if the order specifies a date, or a date and time, for the commencement of the liquidation that is later than the date of the order, the specified date and time or, if no time is specified, the specified date,

and the cost of the publication must be paid by the company to the government and is recoverable by the government from the company as a simple contract debt.

Filing quarterly statements and producing records

Without limiting a liquidator's obligations under

section 338 of the Business Corporations Act , when a trust company or an insurance company is being liquidated and dissolved, the liquidator must, within 7 days after the close of each period of 3 months and until the date on which the final accounts of the liquidation are deposited in accordance with

section 341 (1) of the Business Corporations Act ,

in the case of a liquidation ordered by the Supreme Court, file with the Supreme Court and with the superintendent the accounts of the liquidation referred to in

section 338 of the Business Corporations Act unless otherwise ordered by the Supreme Court, or

in the case of a liquidation ordered by the Authority, file with the superintendent the accounts of the liquidation referred to in

section 338 of the Business Corporations Act unless otherwise ordered by the Authority.

Examination of trust and insurance companies being liquidated and dissolved

The superintendent, at any time, may examine the records of a trust company or an insurance company that is being liquidated and dissolved.

Information required on restoration applications

A person must not apply to the registrar or the Supreme Court for restoration under Division 11 of

Part 10 of the Business Corporations Act of a trust company or an insurance company unless, before making the application, the consent of the superintendent is obtained to the restoration.

Provisional liquidator

33.1

If the business authorization of a trust company or an insurance company has been revoked under

section 64 (1) or 249 (1) (j), the superintendent may appoint an employee of the Authority or another person as the provisional liquidator of the company.

The provisional liquidator of a trust company or an insurance company must apply under

section 324 of the Business Corporations Act for the liquidation and dissolution of the company.

The provisional liquidator of a trust company or an insurance company has the following powers:

to carry on, manage and conduct the operations of the company;

in the name of the company, to preserve, maintain, realize, dispose of and add to the property of the company;

to receive the income and revenues of the company;

to exercise all the powers of the company and of its directors and officers;

to exclude the directors, officers, employees, servants and agents of the company from the property and business of the company.

If a provisional liquidator of a trust company or an insurance company is appointed, a director, officer, employee, servant or agent of the company must not, without the approval of the provisional liquidator, do any of the following:

make a contract on behalf of the company;

incur any liability on behalf of the company;

expend any money of the company.

For the purposes of

section 42 of this Act, a provisional liquidator of an insurance company is a liquidator of that company.

A trust company or an insurance company must pay its provisional liquidator's remuneration at a rate directed by the superintendent.

Repealed

34-40

[Repealed 2011-29-67.]

Special Provisions Respecting Insurance Companies Ceasing Business or Winding Up

Provisions for subsisting contracts of insurance

An insurance company before or concurrently with ceasing to carry on business in British Columbia must provide for the whole sum insured under each of its contracts of insurance in British Columbia subsisting at the time of ceasing to carry on business by

obtaining the reinsurance of the sum insured, by agreement with

an insurance company, or

an extraprovincial insurance corporation that has a business authorization,

obtaining a surrender or discharge of the insurance contract, or

obtaining the written consent of the insured to the continuance of the insurance contract for its unexpired term.

If an insurance company is ceasing or has ceased to carry on insurance business in British Columbia then, concurrently with and after ceasing to carry on business in British Columbia, the insurance company must

make timely written reports to the superintendent showing how it is providing, and has provided, under subsection (1), for its contracts of insurance in British Columbia, and

file with the superintendent the agreements, lists or other documents that the superintendent may require with respect to the insurance business of the insurance company in British Columbia and the disposition of that insurance business.

Reinsurance arranged by liquidator

In this section, available assets of an insurance company that is being wound up means those assets of the insurance company that, according to the liquidator's reasonable estimates, will remain after payment in full of

the costs of winding up and dissolution,

claims for losses covered by the insurance company's contracts of insurance, of which claims notice is received by the liquidator or insurance company before the date on which reinsurance is obtained, and

claims of the secured creditors of the insurance company.

Subject to subsection (3), the liquidator of an insurance company that is being wound up

may use available assets of the insurance company to obtain the reinsurance in full of the sum insured under each of the insurance company's contracts of insurance subsisting at the time of winding up, or

if there are not enough available assets to obtain reinsurance in full under paragraph (a), may use the available assets to obtain the reinsurance of the largest possible proportion of the sum insured under each contract, that must be the same proportion for each contract.

The liquidator of an insurance company that is being wound up must not obtain reinsurance under subsection (2) except through a contract of reinsurance with

an insurance company, or

an extraprovincial insurance corporation

that has a business authorization and the liquidator must not enter into the contract of reinsurance without first applying for and receiving the approval of the Supreme Court to the terms of the proposed contract of reinsurance.

Rights of the insured on reinsurance

reinsurance has been obtained under

section 41 (1) (

a) or 42 (2) through an insurance company or extraprovincial insurance corporation (which company or corporation is in this

section called the "reinsurer"), and

the insurance company for whose contracts of insurance the reinsurance was obtained ceases to carry on business in British Columbia or is wound up,

an insured or other person entitled to rights under any of those contracts of insurance may enforce the rights against the reinsurer to the extent of the reinsurance as though the contract had been issued by the reinsurer.

Termination if reinsurance is not arranged

If the liquidator of an insurance company that is being wound up is unable to obtain reinsurance, or it is impractical, inexpedient or uneconomical for the liquidator to obtain reinsurance, the liquidator may apply to the Supreme Court to set a termination date proposed by the liquidator for the insurance company's subsisting contracts of insurance.

On application by the liquidator under subsection (1), the Supreme Court, on the terms, if any, specified by the court, may set as the termination date for the insurance company's subsisting contracts of insurance the date proposed by the liquidator or another date that the court considers appropriate in order to give adequate notice to policy holders.

On the termination date set under subsection (2) for the termination of an insurance company's subsisting contracts of insurance, the insurance company ceases to be liable under the contracts for any losses that occur on or after that termination date.

Liquidator's duty to give notice

Promptly after a termination date is set under

section 44, the liquidator must publish

in the Gazette,

in the gazette of each other province in which the insurance company is licensed or authorized to carry on insurance business, and

in newspapers the Supreme Court may direct

notice to the effect that on the termination date the insurance company being wound up will cease to be liable under its subsisting contracts of insurance for any losses that occur on or after that date.

On or before publication of the notice referred to in subsection (1), the liquidator must mail a copy of the notice to each policy holder at the address of the policy holder as shown in the records of the insurance company.

Provision for payment of losses, preferred claims and unearned premiums

The liquidator of an insurance company that is being wound up must pay or set aside from the assets of the insurance company assets sufficient in the liquidator's opinion to cover payment in full of

the costs of winding up and dissolution,

claims for losses covered by the insurance company's contracts of insurance and that occurred before the termination date set by the Supreme Court under

section 44 and of which claims notice is received by the liquidator or the insurance company,

the amount of the legal reserve in respect of each unmatured life insurance contract, and

claims of the secured creditors of the insurance company.

Except in the case of unmatured life insurance contracts referred to in subsection (1) (c), the assets remaining after payment, or making provision for payment as set out in subsection (1) must be used to pay claims of insured persons for refunds of unearned premiums on a proportional basis in proportion to the periods of their contracts respectively unexpired on the termination dates.

The claims of the insured persons for refunds of unearned premiums must be calculated as at the earlier of

the termination date set by the Supreme Court under

section 44, or

the date the insured person cancelled the contract.

The refund of all or a portion of the premium does not affect any other remedy the insured person may have against the insurance company.

This

section does not affect the priority of a mortgage, lien or charge on the property of the insurance company.

Endowment and life funds distributed

If a fraternal society transacts endowment or expectancy insurance and has an endowment fund separate and distinct from its life insurance fund, the society, by resolution passed at a general meeting after at least one month's notice of the intended resolution, may determine that the endowment or expectancy be discontinued, with the endowment or expectancy fund, as the case may be, to be distributed proportionately among the society's members then in good standing who are contributing to the fund, to each member according to the member's total contribution.

Subject to first receiving the written approval of the superintendent, the fraternal society may proceed to ascertain the persons entitled to rank on distribution of the fund and may distribute the fund among those entitled, and the distribution discharges the society from all liability in respect of the fund, and of the endowment or expectancy contracts undertaken by the society.

If all the members interested in the endowment or expectancy fund are also interested as holders of life insurance contracts, members at the general meeting, instead of determining that the endowment or expectancy fund be distributed, by resolution passed at the meeting, may determine that the fund be converted into or merged in a life insurance fund, and then, subject to the superintendent first approving the resolution, the endowment or expectancy fund becomes a life insurance fund.

Ownership of Trust and Insurance Companies

Definitions and

interpretation for Division

In this Division:

base level ownership percentage , used in relation to a person and connected parties who have a substantial interest in a trust company, insurance company or holding company, means the base level ownership percentage of votes in the company that under

section 49 is from time to time applicable to that person and connected parties;

connected party , used in relation to a person, means

a corporation that the person controls,

an affiliate of a corporation that the person controls,

a partner of the person if each of the person and the partner controls a 10% or greater interest in the partnership,

a trust or an estate in which the person has a 50% or greater beneficial interest,

if the person is not a trust company or extraprovincial trust corporation, a trust or estate for which the person is a trustee,

a relative by blood or marriage of the person or of the spouse of the person if the person and the relative have the same home, or

a person specified in an order of the superintendent under subsection (2);

holding company means a corporation that alone or together with all of its connected parties, if any, controls, within the meaning of

section 2 (3) of the Business Corporations Act , a trust company or insurance company;

person and connected parties means a person and all connected parties, if any, of the person, with the person and the connected parties considered together as one unit;

substantial interest , used in relation to a trust company, insurance company or holding company, means ownership or control, direct or indirect, of 10% or a higher percentage of all votes in the company;

votes in the company means the votes that

are attached to the outstanding voting shares in the company, and

may be cast in an election of the directors.

For the purposes of this Division, the superintendent by order may designate a person as a connected party of another person designated in the order if the superintendent believes on reasonable grounds that the first mentioned person is acting in concert with that other person to acquire or control voting shares of a trust company, insurance company or holding company.

Determination of base level ownership percentage

If, on September 15, 1990, a person and connected parties had a substantial interest in a trust company, insurance company or holding company, then on that date the person and connected parties were by this subsection assigned a base level ownership percentage that was the same as that substantial interest.

If, at the end of the consent expiry day specified in a consent under

section 50 (4), the person and connected parties to which the consent applies have a substantial interest in the company named in the consent, then the person and connected parties are by this subsection, as of the end of that day, assigned a base level ownership percentage that is the same as

the substantial interest of the person and connected parties at the end of that day, if that substantial interest is less than the proposed base level ownership percentage specified in the expired consent, or

the proposed base level ownership percentage specified in the expired consent, if the substantial interest of the person and connected parties at the end of that day is the same as or greater than the proposed base level ownership percentage specified in the expired consent.

If the substantial interest of a person and connected parties in a trust company, insurance company or holding company is decreased to a level constituting a substantial interest that is more than 5% lower than the base level ownership percentage applicable to the person and connected parties immediately before the decrease, then as of the time of the decrease to that level the person and connected parties are by this subsection assigned a new base level ownership percentage that is equal to the sum of

the substantial interest that the person and connected parties have in the company immediately after the decrease to that level, and

5% of the total votes in the company.

A base level ownership percentage assigned by subsection (2) or (3) to a person and connected parties who have voting shares in a trust company, insurance company or holding company

replaces any base level ownership percentage previously assigned by this

section to that person and connected parties, and

continues to apply to that person and connected parties until

replaced under paragraph (a), or

made inapplicable by subsection (5).

If the substantial interest of a person and connected parties in a trust company, insurance company or holding company is decreased to a level that is not a substantial interest in the company then as of the time of the decrease to that level any base level ownership percentage previously assigned by this

section to that person and connected parties ceases to be assigned to them and is on and after that time inapplicable to them.

Share acquisition restrictions

Subject to subsection (3), a person must not acquire, directly or indirectly, enough voting shares in a trust company, insurance company or holding company to give the person and connected parties a substantial interest in that company.

Subject to subsection (3), if a person and connected parties have a substantial interest in a trust company, insurance company or holding company, then neither the person nor any of the connected parties may acquire, directly or indirectly, the ownership or control of enough additional voting shares to give the person and connected parties an increased substantial interest in the company that is more than the sum of

the base level ownership percentage of votes in the company that is applicable to the person and connected parties, and

5% of the total votes in the company.

Subsections (1) and (2) do not apply in respect of the acquisition of a substantial interest or an increased substantial interest, as the case may be, that is

made

in accordance with a consent under subsection (4), and

before the consent expiry date, or

by a person acting as an underwriter, as defined in

section 1 of the Securities Act , in connection with a distribution as defined in that Act of the voting shares that are the subject of the acquisition.

Subject to

section 51, on application, the superintendent may consent to the acquisition of a substantial interest or increased substantial interest in a trust company, insurance company or holding company named in the consent, and, in giving the consent, the superintendent must specify in it

the name of the person to whom the consent is given,

the consent expiry day that the superintendent considers appropriate, and

the proposed base level ownership percentage of votes in the company or the proposed increased base level ownership percentage of votes in the company, as the case may be, that the superintendent considers appropriate.

A consent under subsection (4) allows the named person to whom the consent is given and any connected party of that named person to acquire, during the period ending at the end of the consent expiry day, the ownership or control of enough voting shares in the trust company, insurance company or holding company, named in the consent to give the person and connected parties a substantial interest or increased substantial interest in that company that is no greater than the sum of

the proposed base level ownership percentage or proposed increased base level ownership percentage of votes in the company specified in the consent, and

5% of the total votes in the company.

Grounds for refusal of consent to major share acquisition

The superintendent must not consent under

section 50 if the superintendent believes on reasonable grounds that the applicant for the consent or any connected party of the applicant is a person who, in the public interest, ought not to be in a position to control or influence a trust company, insurance company or holding company.

Reporting requirement

On the earlier of

the end of the consent expiry date specified in the consent, or

completion of the acquisition of the ownership or control of enough voting shares to reach the proposed base level ownership percentage or proposed increased base level ownership percentage specified in the consent,

the named person to whom a consent under

section 50 (4) is given must report to the superintendent in writing, stating the percentage of the total votes in the company named in the consent that on the date of the report are owned or controlled, directly or indirectly, by the named person and connected parties.

A person who

has a substantial interest, or

is one person in a unit consisting of a person and connected parties that have a substantial interest

in a trust company, insurance company or holding company, unless the decrease has been reported by another person, must report any decrease in that substantial interest to the superintendent in writing immediately.

Shares acquired in contravention of

section 50 not registrable

The directors of a trust company, insurance company or holding company must not allow a transfer of voting shares in the company to be entered in its register of members, in any branch register of its members or in its register of transfers if the directors have reasonable grounds to believe that the shares transferred were acquired in contravention of

section 50.

Prohibition on dividends

When a person holds voting shares in a trust company or insurance company or holding company consequent to an acquisition made in contravention of

section 50,

no dividend is payable, and

if the company has knowledge of the contravention, its directors must not authorize the payment of a dividend

in respect of the voting shares so held.

If dividends are paid by a trust company, insurance company or holding company in respect of voting shares in the company that are at the time of the dividend held by a person who holds them consequent to an acquisition made in contravention of

section 50, the company has a cause of action for the recovery of the amount of the dividends paid against the members to whom they were paid whether or not the company had knowledge of the contravention.

Despite subsection (1), the directors may authorize the payment of a dividend in respect of any voting shares to a person who would otherwise be disentitled to the dividend under that subsection if in the directors' opinion the contravention was inadvertent or of a technical nature; and a dividend so authorized and paid is not recoverable under subsection (2).

No voting rights if excess shareholdings

When voting shares in a trust company, insurance company or holding company are held by a person who holds them consequent to an acquisition made in contravention of

section 50, the voting rights attaching to them must not be exercised.

Validity of transfer of voting shares

The validity of a transfer of voting shares in a trust company, insurance company or holding company that has been entered in its register of members, in any branch register of its members or in its register of transfers is not affected by the fact that those shares are held consequent to an acquisition made in contravention of

section 50.

Directors' bylaws — members' declarations

The directors of a trust company, insurance company or holding company may make directors' bylaws

requiring a member of the trust company, insurance company or holding company to submit to the directors written declarations respecting

the ownership of a voting share of the trust company, of the insurance company or of the holding company,

whether the member is a connected party of any other member, and

iii

other matters that the directors consider relevant for the purposes of this Division,

establishing the times at which and the manner in which any written declarations required under paragraph (

a) are to be submitted, and

requiring persons who desire that a transfer of a voting share to them be entered in the register of members or in the register of transfers of the trust company, insurance company or holding company to submit written declarations respecting the matters referred to in paragraph (a) (

i) to (iii).

If, under a directors' bylaw made under subsection (1), a written declaration is required to be submitted by a member or other person in respect of the transfer of a voting share, the directors must not allow the transfer to be entered in its register of members, in any branch register of its members or in its register of transfers until the required written declaration has been submitted.

Superintendent may require declaration of share ownership

If the superintendent has reasonable grounds to believe that a person is the holder of a share in a trust company, insurance company or holding company, the superintendent may order that person to submit a written declaration to the superintendent respecting

the ownership or beneficial ownership of the share,

whether the share is held or beneficially owned by a person who is a connected party of a person specified by the superintendent,

the names and addresses of connected parties of the person, and

other matters specified by the superintendent.

Business Authorization and Business

Business Authorization of Financial Institution

Commencement of business

A trust company must not carry on trust business unless

it is authorized to do so by a business authorization issued to it under this Division,

it is carrying on business in accordance with

section 70 (d), or

it is authorized to carry on trust business without a business authorization by regulations under

section 70 (e).

1.1

A credit union must not carry on

deposit business unless it is authorized to do so by a business authorization issued to it under this Division, or

trust business unless it is authorized to do so by a business authorization issued to it under this Division or it is authorized by regulations under

section 70 (e).

An insurance company must not carry on insurance business unless authorized to do so by a business authorization issued to it under this Division.

A business authorization issued to a trust company must be confined to trust business.

A business authorization issued to an insurance company

may be confined to

general insurance business or life insurance business, or

one or more classes of insurance, or

may authorize both general insurance business and life insurance business.

A business authorization issued to a credit union may be confined to deposit business or may authorize both deposit business and trust business.

Business authorizations for corporations now in business

Without the necessity of an application, a credit union incorporated or amalgamated under the Credit Union Act , R.S.B.C. 1979, c. 69, is deemed to have a business authorization, issued under this Division on September 15, 1990, to carry on deposit business.

On application under

section 61 (5) of a credit union described in subsection (1), the superintendent, if satisfied that the credit union

was carrying on trust business immediately before September 15, 1990, and

has the financial and managerial capacity to carry on trust business,

may issue to the credit union a business authorization to carry on both trust business and deposit business.

[Repealed 2004-48-41.]

Application for business authorization

A financial institution other than

a financial institution described in

section 60 (1) or (2) of the Financial Institutions Act , S.B.C. 1989, c. 47, or

a society that is named in an order of the superintendent made under

section 193 (2),

must file with the superintendent, within one year after the date of its incorporation under this Act or under the Credit Union Incorporation Act or its continuation into British Columbia, an application in the form established by the superintendent for a business authorization.

The superintendent, by order applicable to a financial institution named in it, may extend the period referred to in subsection (1) before or after the expiry of that period for a further period not exceeding 6 months, but not more than one order may be made in respect of the same financial institution.

A society that is named in an order of the superintendent made under

section 193 (2) must file with the superintendent, by a date not later than 30 days before the date specified under

section 193 (2) (

b) in the order under

section 193 (2), an application in the form established by the superintendent for a business authorization.

On an amalgamation referred to in

section 20 of this Act, the amalgamated financial institution must, within 30 days after the date of amalgamation, file with the superintendent an application in the form established by the superintendent for a business authorization.

4.1

On the issue of a certificate of amalgamation under

section 20 (7) (

b) of the Credit Union Incorporation Act , the superintendent must issue the appropriate business authorization for which the credit union would qualify under this Part.

A credit union that has a business authorization confined to deposit business may file with the superintendent at any time an application in the form established by the superintendent for a business authorization for the credit union to carry on both trust business and deposit business.

[Repealed 2004-48-42.]

An insurance company that has a business authorization confined to

general insurance business or life insurance business, or

one or more classes of insurance

may file with the superintendent at any time an application in the form established by the superintendent for a business authorization for the insurance company to carry on

both general insurance business and life insurance business, or

one or more additional classes of insurance.

On application in accordance with this section, the superintendent may issue a business authorization to a financial institution if the superintendent is satisfied that

the financial institution has a capital base that

is adequate, taking into account the class of business that it proposes to carry on, the expected volume of its business and the restrictions on its business, and

is at least equal to the appropriate minimum imposed under

section 67 (1),

the financial institution has at least 5 directors and, in the case of a trust company or insurance company, at least 1/3 of the directors are unaffiliated directors,

[Repealed 2004-48-42.]

the financial institution is an insurance company that will carry on insurance business, and

there is an insurance compensation plan designated by regulation for the purpose of

section 66 (2),

the financial institution that will carry on insurance business will not carry on a class of insurance business in respect of which insurance is offered under that plan unless the financial institution is a member of that plan, and

the financial institution has a proposed plan of operations that is feasible.

Before issuing a business authorization to a financial institution, the superintendent may

conduct an investigation, and

require the financial institution to provide the superintendent with additional information, verifications, forecasts of business operations or documents

that the superintendent considers necessary for the evaluation of the application.

Conditions on business authorization

If conditions of any class of business authorization are prescribed under

section 289 (3) (g), the conditions are applicable to and are conclusively deemed to be part of every business authorization of that class, whether issued before or after the coming into force of the regulation prescribing the conditions.

Certificate of business authorization

A certificate of the superintendent that on a day stated in the certificate

a financial institution was or was not authorized as set out in the certificate under a business authorization to carry on trust business, deposit business, insurance business, or both trust business and deposit business, or

the business authorization of a financial institution was revoked

is evidence of the facts stated in the certificate.

Voluntary revocation of business authorization

On the written application of a financial institution, the superintendent may revoke the financial institution's business authorization, effective on a date specified by the superintendent, and in that case sections 249 (8) and 250 apply.

If a financial institution proposes to cease doing business, it must give the superintendent at least 30 days' written notice.

Operation of Financial Institutions

Authorized business

Subject to

section 14 (1) of this Act and to

section 13 (1) of the Credit Union Incorporation Act , a financial institution that has a business authorization must not carry on business other than

the business authorized under its business authorization,

business that

is ancillary to the business authorized under its business authorization, or

is a financial or related service that does not constitute business for which a business authorization is required, and

business or an activity of a prescribed type.

A contravention of this

section does not affect or invalidate

a transaction entered into by a financial institution, or

a contractual right or civil remedy that a person may have in respect of such a transaction.

Membership in insurance plan

[Repealed 2004-48-44.]

If an insurance compensation plan has been designated by regulation for the purpose of this subsection, an insurance company must not carry on a class of insurance business in respect of which insurance is offered under that plan unless the insurance company is a member of that plan.

Capital and liquidity of financial institutions

A financial institution must ensure that it has adequate liquid assets and an adequate capital base in relation to the business carried on by it, in accordance with the regulations and the rules made by the Authority.

If the superintendent considers that the liquid assets or capital base of a financial institution are, or within one year will be, inadequate in relation to the business carried on by it whether or not the financial institution is complying with the regulations and the rules made by the Authority, the superintendent may order the financial institution to acquire additional liquid assets or increase its capital base in the amount and form and by the date specified in the order.

2.1

Whether or not a credit union is otherwise complying with the regulations and the rules made by the Authority, the credit union must obtain the superintendent's written consent before engaging in the activities referred to in subsection (2.2) if the amount of the capital base of a credit union does not comprise any of the following percentages of the calculated value of the credit union's risk weighted assets:

a prescribed percentage;

a percentage within a prescribed range of percentages;

a percentage set out in the rules;

a percentage within a range of percentages set out in the rules.

2.2

For the purpose of subsection (2.1), the credit union must obtain the superintendent's written consent before engaging in the following activities:

prescribed activities;

prescribed activities

in prescribed circumstances, or

that have or may have prescribed consequences;

activities set out in the rules made by the Authority;

activities set out in the rules

in circumstances set out in the rules, or

that have or may have consequences set out in the rules.

Without first receiving the written consent of the superintendent, a trust company or an insurance company must not

redeem or purchase or otherwise acquire shares issued by it, or

declare a dividend, except a dividend in shares

if the redemption, purchase or other acquisition or the declaration would reduce the capital base of the financial institution to an amount less than the amount that constitutes an adequate capital base for that financial institution in accordance with the regulations and the rules made by the Authority.

Repealed

[Repealed 2004-48-46.]

Restriction on right to appoint receiver

Unless it first receives the written consent of the superintendent, a financial institution must not grant to a person the right to appoint a receiver or a receiver manager of the property or business of the financial institution.

The superintendent must not consent under subsection (1) if the superintendent believes on reasonable grounds that the person, in the public interest, ought not to be in a position to control or influence a financial institution.

Trust Business

Unauthorized trust business by corporations prohibited

A corporation must not carry on trust business in British Columbia unless the corporation is

a trust company, an extraprovincial trust corporation or a credit union that has a business authorization to carry on trust business,

a law corporation as defined in

section 1 (1) of the Legal Profession Act ,

[Repealed 1998-9-100.]

a corporation that is carrying on the business of a trustee in bankruptcy, receiver, receiver manager or liquidator and that is licensed as a trustee in bankruptcy under the Bankruptcy and Insolvency Act (Canada), or

a corporation that is carrying on a prescribed trust business or class of trust business or a prescribed corporation or class of corporations that is carrying on a prescribed trust business or class of trust business.

Repealed

[Repealed 1998-42-10.]

Common trust funds authorized

A trust company or credit union must keep any asset acquired or held in trust by it separate and distinct from the assets of the trust company or credit union not held in trust and must keep a separate account for each trust, but, unless the instrument creating a trust otherwise provides, a trust company or credit union may, subject to the regulations, co-mingle assets held in trust in a common trust fund for the purposes of investment.

Extent of liability

Subject to the terms of the instrument creating a trust, the liability of a trust company or credit union to persons interested in an estate held by the trust company or credit union as executor, administrator, trustee, receiver, liquidator, assignee, committee under the Patients Property Act , attorney under

Part 2 of the Power of Attorney Act or representative granted power over an adult's financial affairs under

section 7 (1) (

b) of the Representation Agreement Act is the same as if the estate were held by an individual in the like capacity, and the powers of the trust company or credit union are the same as the powers of an individual holding an estate in the like capacity.

A trust company or credit union authorized to carry on trust business may be appointed

a sole trustee, notwithstanding that but for this Act it would be necessary to appoint more than one trustee, or

the holder of an office mentioned in subsection (1) jointly with another person,

and the appointment may be made whether the trustee is required under a deed, will or other instrument creating a trust or whether the appointment is under the Trustee Act or otherwise.

Revocation of the business authorization of a trust company or credit union is sufficient cause to remove that company or credit union from an appointment or office held by it under this or another Act.

Despite any rule, practice or statutory provision, it is not necessary for a trust company or credit union to give security for the due performance of its duty as executor, administrator, trustee, receiver, liquidator, assignee, committee under the Patients Property Act , attorney under

Part 2 of the Power of Attorney Act or representative granted power over an adult's financial affairs under

section 7 (1) (

b) of the Representation Agreement Act unless so ordered by a court.

Execution of trusts

Unless the trust company or credit union is a trustee under the trust, a trust company or credit union is not bound to see to the execution of a trust, whether express, implied or constructive.

Insurance Business

Mutual company definition

74.1

In this Division, mutual company has the same meaning as "mutual fire insurance company" in Division 4 of

Part 6.

Unauthorized insurance business prohibited

A person must not carry on insurance business in British Columbia unless the person is

an insurance company or extraprovincial insurance corporation that has a business authorization to carry on insurance business,

a company registered under the Insurance (Captive Company) Act ,

a member of a reciprocal exchange as defined in

section 186 for which a permit under

section 187 has been issued and is in effect,

licensed under Division 2 of

Part 6 as an insurance agent, insurance salesperson, insurance adjuster or employed insurance adjuster and is carrying on the insurance business only in that capacity,

the deposit insurance corporation, the Canada Deposit Insurance Corporation or the Insurance Corporation of British Columbia,

an entity that administers an insurance compensation plan designated by regulation for the purpose of

section 66 (2),

a society described in

section 193 (1) (

a) to (

g) that, immediately before September 15, 1990, was carrying on the business of insurance,

a credit union that is carrying on insurance business only by making or participating in contracts of insurance as permitted by

section 82 of the Credit Union Incorporation Act , or

a central credit union that is carrying on insurance business only by providing or arranging insurance as permitted by

section 90 (2) of the Credit Union Incorporation Act .

Exceptions

Despite

section 75,

any person may require insurance to be placed by a borrower as security for a loan,

any person may

adjust a loss,

prosecute or maintain a writ, action or proceeding, or

iii

perform an obligation

under or arising out of a contract of insurance that was made or issued in British Columbia at a time when the person was authorized to carry on insurance business,

an insurance agent licensed under Division 2 of

Part 6 who is authorized by the resident to effect the contract of insurance may negotiate or procure a contract of insurance between a resident of British Columbia and an insurer prohibited by

section 75 from carrying on business in British Columbia, subject to the requirements or conditions, if any, imposed by regulation,

an insurer referred to in paragraph (

c) may, without a business authorization, enter into a contract of insurance in the circumstances set out in that paragraph, and

a person or insurer is exempted from the requirement to have a business authorization to carry on insurance business when permitted by the regulations.

An insurance agent licensed under Division 2 of

Part 6 who, under subsection (1) (c), procures or negotiates a contract of insurance must keep a record showing the particulars of the contract and at the request of the Commissioner of Income Tax or of the superintendent, must provide the record to the Commissioner of Income Tax or superintendent as requested.

the sum imposed by way of tax under

section 4 of the Insurance Premium Tax Act in respect of an insurance contract lawfully made under subsection (1) (

c) has been paid,

the insurer described in subsection (1) (

c) has notified the superintendent that it proposes to make an inspection for the purpose of the insurance contract or to adjust or appraise a loss under the contract, and

the superintendent has given written approval to the proposed activity by the insurer,

the insurer may make the inspection or adjust and appraise the loss.

The approval referred to in subsection (3) (

c) is valid for all necessary inspections, adjustment and appraisals during the period specified in the approval.

The superintendent may suspend, cancel or refuse to issue an approval referred to in subsection (3) (

c) if an insurer contravenes a provision of this Act.

Reserves

An insurance company must

establish adequate reserves against the value, as determined by the company's actuary,

under

section 126.23 (1) (a), of its actuarial and other policy liabilities, and

under

section 126.23 (1) (b), of any other matter specified in an order made by the superintendent, and

include those reserves in the liabilities set out in its annual return.

Reinsurance

An insurance company, in accordance with the regulations, may reinsure its liability under, or interest in, a lawful contract.

Rebates of premiums prohibited

A person, in relation to the sale of insurance, must not, directly or indirectly, pay or allow, or offer or agree to pay or allow, a rebate of premium or part of it or other consideration or thing of value intended to be a rebate of premium, unless the rebate of premium is less than a prescribed amount or percentage.

This

section does not apply to or in respect of

a payment by way of dividend, of patronage allocation, of bonus or of profit that is provided for by a contract of insurance,

a person who is licensed under Division 2 of

Part 6 as an insurance agent or insurance salesperson and who negotiates for or procures insurance on the agent's or salesperson's own person or property, and receives for own use the regular agent's commission having first in good faith negotiated or placed insurance on other persons or property the premiums for which, in the aggregate, are not less than the aggregate of the premiums for the insurance negotiated or procured on the agent's or salesperson's own person or property, or

the payment of a fee for a referral under

section 178 (2).

Separation of class funds of insurance company

An insurance company transacting more than one class of insurance business must

keep separate accounts for each class, and

account for all premiums and claims in relation to each class as a separate fund.

The investments of a separate fund kept under subsection (1) need not be kept separate from the investments of another fund.

Coverage by property insurer

80.1

An insurer that has a business authorization for property insurance may insure a vehicle against loss or damage under a policy that includes coverage for loss or damage to property.

Obligation of insurer with respect to agent's commission

80.2

In this section:

agent means an insurance agent

licensed under Division 2 of

Part 6,

authorized by an insurer that has a business authorization for property insurance to solicit, obtain or take applications for insurance, and to collect or receive premiums, on its behalf, and

whose compensation or profit for those activities consists wholly of a commission on premiums derived from that business;

premium has the same meaning as in the Insurance Act .

The commission, if any, on a policy that includes insurance against loss or damage to property and is issued at the head office of an insurer in British Columbia must be paid to an agent, and there must be written on the policy the words "Issued on behalf of ________________, authorized agent at ________________", with the name of the agent and of the place where the agent carries on business.

The person in charge of the head office of an insurer in British Columbia must immediately, on the issue of a policy referred to in subsection (2), notify the agent of the date of the policy, the name of the insured and the property insured.

This

section does not apply to

a mutual company,

a contract of reinsurance,

a contract insuring property in transit that is in the possession or custody of a railway company or common carrier, or

a contract insuring movable property owned by a railway company or other common carrier and used in the course of its business as such.

Insurer — complaint resolution

80.3

An insurer must

establish procedures for dealing with complaints made to the insurer by persons who have requested or received in British Columbia products or services from the insurer,

designate an officer or employee who is responsible for implementing those procedures, and

designate one or more officers or employees who are responsible for receiving and dealing with those complaints.

Subsection (1) does not apply to

a mutual company, or

a prescribed class of insurers.

The procedures established under subsection (1) do not apply in relation to

a matter to which

section 12 of the Insurance Act applies, or

complaints respecting a prescribed class of insurance.

An insurer must

publish the procedures it establishes under subsection (1) on websites through which its products or services are offered in British Columbia, and

provide those procedures in writing to any person who requests them.

Deposits and Borrowing of Trust Companies and Credit Unions

Unauthorized deposit business prohibited

A person must not carry on deposit business in British Columbia unless the person is

an extraprovincial trust corporation that has a business authorization to carry on deposit business,

a credit union or extraprovincial credit union that has a business authorization to carry on deposit business,

a bank, or

a corporation that is a subsidiary of a bank and is a loan company to which the Trust and Loan Companies Act (Canada) applies.

Subsection (1) does not prohibit an insurance company or extraprovincial insurance company from carrying on life insurance business in accordance with a business authorization issued to it.

Deposits in credit unions

A credit union may receive money on deposit only from, or on behalf of,

its members,

the government of British Columbia,

a public body,

any 2 or more members jointly on behalf of a partnership if the directors of the credit union are satisfied that a majority of the members of the partnership are persons who are eligible for membership in the credit union,

a member acting as trustee, whether for a named beneficiary or otherwise,

a member in joint ownership with another person,

a person, including the credit union, acting as trustee or agent as permitted by this Act, and

a person in a prescribed class of persons,

and the credit union may allow interest on deposits at a rate and in the manner determined by its directors.

A deposit permitted under subsection (1) (

e) may be recorded in the books of the credit union in the name of the partnership, and the credit union is not obliged to

see to the application of the money so deposited or any interest on it, whether or not it has notice of any trust, or

determine the powers of the members or the partnership,

and the partnership or a member of the partnership is not entitled to notice of, to be represented at or to vote at meetings of the credit union.

Deposits from persons unable to contract

A credit union, without the intervention of any other person being required, may

accept a deposit from any person whether or not the person is qualified by law to enter into ordinary contracts, and

pay any or all of the principal of the deposit and any or all of the interest to the order of the person.

Disposition of deposits

A person who has deposits, non-equity shares or both with a credit union may nominate a person in writing to receive the amount at the death of the depositor.

On receiving a certificate of death, or certified copy of a certificate of death, as described in

section 38 of the Vital Statistics Act or an affidavit showing that a person who has made a nomination under subsection (1) has died, the credit union must substitute on its books the name of the nominee in place of the name of the person or must pay to the nominee the amount due in accordance with the instructions of the nominee.

A payment by a credit union in accordance with this

section is valid and effectual discharge of the credit union with respect to a demand by a person against the credit union as to the amount paid.

Inactive deposits

In this section, administrator has the same meaning as in the Unclaimed Property Act .

1.1

If a debt is owing by a credit union because of a deposit and no transaction has taken place and no statement of account has been requested or acknowledged by the creditor during a period of 10 years,

in the case of a deposit made for a fixed period, from the day on which the fixed period terminated, and

in the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the creditor, whichever is later,

then, the debt is an inactive deposit for the purposes of this section.

1.2

When a debt becomes an inactive deposit under subsection (1.1), the credit union must, in accordance with

section 64 (1) to (7) of the Credit Union Incorporation Act , redeem any shares held by the depositor in the credit union.

1.3

If the shares redeemed under subsection (1.2) are membership shares, the redemption is deemed to be required by

section 52 (1) (

d) of the Credit Union Incorporation Act and, as a consequence,

section 64 (5) of that Act applies to the redemption.

1.4

Section 64 (8) of the Credit Union Incorporation Act does not apply to any redemption of shares under subsection (1.2) of this section.

1.5

Any amount payable to the depositor under

section 52 (1) (

d) or 64 (6) of the Credit Union Incorporation Act in respect of the shares redeemed under subsection (1.2) of this

section is a debt of the credit union and is to be treated as part of the depositor's inactive deposit referred to in subsection (1.1).

If the amount of an inactive deposit, including interest, is less than $100, then, subject to subsection (6), the credit union may treat it as income of the credit union.

If the amount of an inactive deposit, including interest, is $100 or more, then, within 30 days after the debt becomes an inactive deposit, the credit union must mail written notice to the depositor, at the depositor's last address known to the credit union, informing the depositor that the debt has become an inactive deposit and will be dealt with under this

section if the depositor does not, within 30 days after the date of the notice, give instructions as to the disposition of the deposit.

Money paid to the administrator under subsection (4) is deemed to be an unclaimed money deposit under the Unclaimed Property Act .

If, under subsection (2), a credit union has treated a debt and interest as income and payment is demanded of the credit union by the person who, but for that subsection, would be entitled to receive payment of the debt, the credit union must pay to that person

an amount equal to the amount so treated as income, and

for the period not exceeding 5 years from the day on which the debt and interest were treated as income until the date of payment to the claimant, and

at the prescribed rate.

If a credit union has under subsection (2) treated a debt and interest as income or under subsection (4) has paid an amount to the administrator, the credit union must keep all related signature cards and signing authorities or microfilm copies of them for a prescribed period after which the credit union may destroy them.

Limitation on lending

A credit union must not exercise its powers to lend money or guarantee an obligation at any time when it is in contravention of the requirements of

section 67 in respect of adequate liquid assets.

Subordinated notes

A trust company or credit union must not issue a note under which the indebtedness evidenced is subordinated in right of payment to all other indebtedness not evidenced by a subordinated note unless the note so issued meets each of the following requirements:

the note is evidenced by a certificate in a form approved by the superintendent and contains a statement in it to the effect of the statements made in paragraphs (

b) and (

c) and contains the information that it is a subordinated note and contains any other information that the superintendent requires in approving the form of certificate;

the borrowing evidenced by the note does not constitute a deposit of money with the trust company or credit union that issues the note and is not insured by the Canada Deposit Insurance Corporation or the deposit insurance corporation;

in the event of the insolvency or winding up of the trust company or credit union, the indebtedness evidenced by the note is subordinated in right of payment to all other indebtedness that is not evidenced by a subordinated note.

A trust company or credit union or person acting on behalf of a trust company or credit union, in any offering, circular, advertisement, correspondence or literature relating to a subordinated note issued or to be issued, must not refer to the subordinated note otherwise than as a subordinated note, and the trust company or credit union must indicate clearly in the offering, circular, advertisement, correspondence or literature that the money secured by the subordinated note is not an insured deposit.

Marketing of Financial Products

Repealed

88-90

[Repealed 2004-48-56.]

Disclosure of identity in advertising, etc

In all advertising, correspondence, application forms, evidences of indebtedness and other documents in its control relating to its business, a financial institution must ensure that its identity is clearly stated.

Insurers and licensees to file policy forms

The superintendent may order an insurer, or a licensee as defined in

section 168, to file a copy of any form that is

specified or otherwise described in the order, and

used or intended to be used by the insurer or the licensee in the insurer's or the licensee's insurance business.

Requirements of out of province insurers

92.1

In this section, insurer , policy , third party liability insurance coverage , vehicle insurance and vehicle liability policy have the same meanings as in the Insurance (Vehicle) Act .

An insurer that issues a policy evidencing a contract of vehicle insurance that provides third party liability insurance coverage outside British Columbia must file with the superintendent, in a form established by the superintendent,

a power of attorney authorizing the superintendent to accept service of notice or process for the insurer in any action or proceeding against the insurer arising out of a vehicle accident in British Columbia, and

an undertaking

to appear in any action or proceeding against the insurer or its insured arising out of a vehicle accident in British Columbia, and of which the insurer has knowledge,

that on receipt from the superintendent of any notice or process served on the superintendent in respect of its insured, or in respect of its insured and another or others, and sent by the superintendent to the insurer as provided, the insurer will immediately have the notice or process personally served on its insured,

iii

not to set up any defence to any claim, action or proceeding, under a policy issued by the insurer, that might not be set up if the policy had been issued in British Columbia in accordance with the law of British Columbia relating to vehicle liability policies, and

to satisfy up to the limits of liability stated in the policy, and in any event to an amount not less than the limits of liability established under

Part 1 of the Insurance (Vehicle) Act and the regulations under that Part any judgment rendered against the insurer or its insured by a court in British Columbia in the action or proceeding referred to in subparagraph (iii).

Online sale of insurance

92.2

In this section:

electronic agent has the same meaning as in

section 1 of the Electronic Transactions Act ;

insurance agent has the same meaning as in

section 168 of this Act;

insurance salesperson has the same meaning as in

section 168 of this Act.

An insurance company, an insurance agent or an insurance salesperson who issues, delivers or offers to undertake a contract of insurance through the use of an electronic agent must meet the prescribed requirements and the requirements established in the rules made by the Authority or the council, as applicable.

Prohibition against unfair, misleading or deceptive documents

If, in the opinion of the superintendent, a form of contract, trust instrument or other document provided by a financial institution to its customers, or a form of application or advertisement relating to such a document, is unfair, misleading or deceptive, the superintendent, by order, may prohibit the use of that form by a financial institution.

If, in the opinion of the superintendent, an insurer is issuing contracts of insurance for less than fair market value, the superintendent may order the insurer to cease doing so.

Coercive tied selling prohibited

A financial institution or person acting in a transaction with the approval of a financial institution must not place undue pressure on, or coerce, a person to obtain a product or service from another person, including the financial institution, its subsidiaries, affiliates or agents, as a condition of obtaining another product or service from the financial institution.

Insurance company — code of market conduct

94.1

An insurance company must adopt a code of market conduct as established, and as amended from time to time, by the Authority.

An insurance company must comply with its code of market conduct.

This

section does not apply to an insurance company whose insurance business is limited to reinsurance.

Credit union — code of market conduct

94.2

The board of directors of a credit union must adopt a code of market conduct.

The board of directors of a credit union must file with the superintendent the credit union's code of market conduct and any amendments to that code.

The superintendent may direct the board of directors of a credit union to amend the credit union's code of market conduct at any time.

If the board of directors of a credit union does not adopt a code of market conduct under subsection (1), the Authority may require that board to adopt a code of market conduct as established, and as amended from time to time, by the Authority.

A credit union must comply with its code of market conduct.

Credit union — complaint resolution

94.3

A credit union must

establish procedures for dealing with complaints made to the credit union by persons who have requested or received in British Columbia products or services from the credit union,

designate an officer or employee who is responsible for implementing those procedures, and

designate one or more officers or employees who are responsible for receiving and dealing with those complaints.

Subsection (1) does not apply to a prescribed class of credit unions.

A credit union must

publish the procedures established under subsection (1) on websites through which its products or services are offered in British Columbia, and

provide those procedures in writing to any person who requests them.

Repealed

[Repealed 2004-48-58.]

Substitute action of superintendent

If the superintendent is satisfied that a customer, in respect of a transaction, has

a cause of action,

a defence to an action,

grounds for setting aside a default judgment, or

grounds for an appeal or to contest an appeal,

then, on behalf of the customer, the superintendent may institute or assume the conduct of any proceedings, or defend any proceedings, with a view to enforcing or protecting the rights of the customer respecting a contravention or suspected contravention of those rights or of any enactment or law relating to the protection or interests of customers.

The superintendent must not institute, assume the conduct of or defend any proceedings under subsection (1) unless the superintendent

considers that the conduct of the financial institution or other person involved in the transaction was misleading, deceptive or unconscionable, and

first obtains

the irrevocable written consent of the customer, and

the written consent of the minister.

In respect of proceedings referred to in subsection (1),

the superintendent, on behalf of the customer, has the same rights in and control over the proceedings, including the same right to settle an action or part of an action, as the customer,

the superintendent, without consulting or seeking the further consent of the customer, may conduct the proceedings in the manner the superintendent considers appropriate, and

any money, excluding costs, recovered by the superintendent belongs to and must be paid to the customer without deduction, and any amount, excluding costs, awarded against the customer must be paid by and is recoverable from the customer, but in every case any costs of the proceedings awarded by the court having jurisdiction must be borne by, or paid to and retained by, the Authority, as the case may be.

a party to proceedings to which this

section applies files a counterclaim, or

the customer on whose behalf the proceedings are being defended is entitled to file a counterclaim,

and that counterclaim is not related to

the cause of action, and

the interests of the customer as a customer,

the court having jurisdiction in the proceedings must, on the application of the superintendent, order

that the counterclaim be heard separately, and

that the customer be made a party to the counterclaim in the customer's own right,

and the court may make other orders or give directions in that regard that it considers just.

Corporate Governance

Directors and Officers of Financial Institutions

Number of directors and unaffiliated directors

A financial institution must have at least 5 directors, and, in the case of a trust company or an insurance company, at least 1/3 of the directors must be unaffiliated directors.

On application by a trust company or an insurance company, if the superintendent believes, on reasonable grounds, that it is in the public interest, the superintendent may, for the purposes of subsection (1) and sections 61 (8) (b), 103 (2), 111 (3) and (4), 112 (1), 115 (1) and 135 (c), make a determination that an individual described by paragraph (

h) of the definition of "unaffiliated director" is an unaffiliated director, unless that individual is also described in one or more of paragraphs (

a) to (

g) of that definition.

The majority of the directors of every financial institution must be persons ordinarily resident in Canada.

One director of every financial institution must be ordinarily resident in British Columbia.

Without limiting

section 124 of the Business Corporations Act , an individual is not qualified to become or act as a director of a trust company or an insurance company if that individual's registration in any capacity has been cancelled under

the Securities Act by either the British Columbia Securities Commission or the executive director, or

the Mortgage Brokers Act by the Commercial Appeals Commission, the Financial Services Tribunal or the registrar under that Act,

unless the person or body that cancelled the registration otherwise orders at the time of cancellation, or unless 5 years have elapsed since the cancellation of the registration.

An order must not be made under subsection (5) of this

section unless notice of the application for the order is given to the superintendent, who may appear as a party to the application.

Repealed

[Repealed 2011-29-72.]

Cumulative voting for directors

98.1

The articles of a trust company or an insurance company may provide for cumulative voting by members in the election of directors and, in that event, the articles must include provisions to the following effect:

that the trust company or insurance company have a specific number of directors, with no allowance for minimum and maximum numbers of directors;

that each member entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the member multiplied by the number of directors to be elected, and that each member may cast all the votes in favour of one candidate or distribute the votes among the candidates in any manner;

that a separate vote of members must be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting 2 or more persons to be elected by a single resolution;

that, if a member has voted for more than one candidate without specifying the distribution of votes among the candidates, the votes must be distributed equally among the candidates;

that, if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes must be eliminated until the number of candidates remaining equals the number of positions to be filled;

that a director may not be removed from office if the votes cast against removal would be sufficient to elect a director if they were voted cumulatively at an election at which the same total number of votes were cast and the number of directors required by the articles were being elected;

that the number of directors required by the articles may not be decreased if the votes cast against the motion to decrease would be sufficient to elect a director if they were voted cumulatively at an election at which the same total number of votes were cast and the number of directors required by the articles were being elected.

Despite subsection (1), a provision in the articles of a trust company or an insurance company that authorizes cumulative voting by members in the election of directors does not apply when any one member of the company beneficially owns or controls, directly or indirectly, all of the issued voting shares in the company.

If the articles of a trust company or an insurance company provide for cumulative voting, no holders of any class of shares of the trust company or insurance company have an exclusive right to elect one or more directors.

If the articles of a trust company or an insurance company provide for cumulative voting, the members of the trust company or insurance company must,

at the first annual meeting of members held not earlier than 90 days following the date that cumulative voting is provided for in the articles, and

at each succeeding annual meeting,

elect directors to hold office until the close of the next annual meeting of members following the directors' election.

Removal of directors and officers

Without limiting

section 97 (5) of this Act,

section 124 or 141 (3) of the Business Corporations Act or

section 84.12 or 84.3 (2) of the Credit Union Incorporation Act , no person is qualified to become or act as a director or officer of a financial institution who is a public servant whose duties relate to financial institutions.

Without limiting

section 128 of the Business Corporations Act or

section 84.24 of the Credit Union Incorporation Act , if the superintendent is satisfied that a director or officer of a financial institution or of its subsidiary

because of

section 97 (5) of this Act,

section 124 or 141 (3) of the Business Corporations Act or

section 84.12 or 84.3 (2) of the Credit Union Incorporation Act , is not qualified to be a director or an officer,

because of subsection (1), is not qualified to be a director or officer,

within the last 5 years has been bankrupt in Canada or elsewhere,

has a conflicting interest that prevents the director or officer from properly discharging the duties as director or officer,

is contravening or has contravened a written undertaking given under this Act,

is an individual who ought not to be in a position to control or influence a financial institution, or

is an individual who has been

convicted of an offence in Canada or another jurisdiction arising from a transaction, business or course of conduct related to financial services, or

found by a regulator or a court in Canada or another jurisdiction to have contravened the laws of that jurisdiction respecting financial services,

the superintendent may order that the director or officer cease to be a director or officer of the financial institution; and on the date of the order the director or officer ceases to be a director or officer of the financial institution.

When an individual ceases to be a director or officer of a financial institution under subsection (2), then, despite the Business Corporations Act or the Credit Union Incorporation Act , the individual is not eligible to again be or act as a director or officer of a financial institution without first applying for and receiving the consent of the superintendent.

A financial institution must deliver written notice immediately to the superintendent of the resignation, removal, election or appointment of a director or senior officer.

The superintendent may require a financial institution to provide any information the superintendent considers necessary to determine if there are grounds to take action under subsection (2).

Credit union directors ceasing to hold office

Without limiting

section 99 of this Act or

section 84.24 of the Credit Union Incorporation Act , a director of a credit union ceases to hold office when the director

is not qualified under

section 83 (3) of the Credit Union Incorporation Act ,

is not, or ceases to be, eligible to be insured as required under

section 206 of this Act,

being a person who is required under

section 84 (3) of the Credit Union Incorporation Act to complete a director training program, fails to complete the program within the period specified under

section 84 (2) (

b) of that Act.

Standard of care for directors and officers

A director or officer of a financial institution, in exercising the powers and performing the functions of a director or officer, must

act honestly, in good faith and in the best interests of the financial inst