Bill 112 — Fourth Session, 16Th Legislature, 20 Elizabeth Ii the Legislative Assem~ ~ ~ Bill 112 An Act To Amend the Trust Companies Act the Attorney General (Legislature 16, Session 4)

L16 S4 4949

Alberta — Bills

1971 Bill 112 Fourth Session, 16th Legislature, 20 Elizabeth II THE LEGISLATIVE ASSEM~ ~ ~ BILL 112

An Act to amend The Trust Companies Act THE ATTORNEY GENERAL First Reading Second Reading Third Reading ............................. . Printed by L. S. Wall, Queen's Printer, Edmonton

BILL 112 1971

AN ACT TO AMEND THE TRUST COMPANIES ACT (Assented to , 1971) HER MAJESTY, by and with the advice and consent of the Legislative Assembly o,f Alberta, enacts as follows: 1. The Trust Companies Act is hereby amended.

Section 2, subsection (1) is amended (

a) by striking out clause 2 and by substituting the following: 2. "anc1illary co,rpo,ratio,n" means (

i) a co,rpo,ratio,n referred to, in

section 112, subsectio,n (1) and co,ntrolled by a provin cial co,mpany in accordance with that sub sectio,n, o,r (ii) a co,rpo,ratio,n whose assets have been pur chased by a pro,vincial co,mpany in accord ance with sectio,n 112.1; (

b) by adding the following clause after clause 18: 18.1 "o,ther evidence o,f indebtedness" does not include a mo,rtgage o,r a charge;

Section 13 is a1nended by striking out clause (a).

Section 14, subsection (1) is amended (

a) by adding after the words "or ,any by-law passed by the shwreholders" the wovrds ", respecting the fol lo,wing matters, namely,", (

b) by adding the following clause after clause (e): ( e1) the changing of the pll'ace where the h~ad o,ffice o,f the co,mpany is s,ituated, WhICh plaC'e shall be in Alberta,

Section 30 is amended by striking out subsection (7) and by sUbstituting the, following:

(7) The electio,n o,r apPo,intment o,f any perso,n as a directo,r o,f a co,mpany is Vo,id if

Explanatory Notes I. This Bill amends

chapter 372 of the Revised Statutes of Al berta 1970.

Section 2 contains

definitions of terms used in the Act. (

a) The present definition of "ancillary corporation" reads: 2. "ancillary corporation" means <l corporation referred to in

section 112, :mbsection (1) and controlled by a prOovincial company in accordance with that subsection; The re-enactment of the definition is a consequence of the new

section 112.1 being added by this Bill. (

b) In a number of places in the Act there occurs the phrase "bonds, debentures, notes or other evidence of indebted ness". The amendment is made to avoid a literal interpre tation that the phrase could include mortgages or charges on property.

Section 13(

a) presently reads: 13. The shareholders of a provincial company may, at any annual general meeting or at any special genera.! meeting duly caHed for the purpose, make by-laws respecting the following matters, namely: (

a) the changing of the place where the head office of the company is situated, which place shall be in Alberta; The power to pass a by-law to change the location of a provincial trust company's head office is to be transferred to the board of directors: see

section 4 of this Bill. The director's by-law is subject to shareholder confirmation under

section 14(2) of the Act. 4. (a)

Section 14(1) enumerates the subject matter of director's by-laws and commences 14.

(1) The d.irectors Qof a company may make by-laws nOot contrary to law or this Act 01' any by-law pas,sed by the shareholders The amendment corrects a drafting ommission. (

b) See

section 3 of this Bill. 5.

Section 30(7) presently reads: .

(7) The election or appointment of any person as a director is void If the composition of the board would as a result thereof fail to comply with subsection (6). The SUbsection is rewritten to make it clear that an unlawful election or appointment of a director is void in any case where he was ineligible, not just in the case under subsection (6) requiring three-quarters of the directors to be Canadians resident in Canada.

(!a) 'he was not etligible to' be so elected or lap pointed under subsection (2), (3), (4) or (5), or (

b) the composition of the board would as a result of the election or appointment fail to comply with subsection (6).

Section 33, subsection (2) is amended by adding the word "or" at the end of clau,se (

b) and by adding the fol lowing clause after clause (b),' (

c) he ceases to comply with the requirements of sec tion 30, subsection (4) or (5).

Section 42 is amended (

a) as to subsection (1) (

i) by striking out the words "directors" and by sUbst,ituting the, word "Director", (ii) by adding the word "directors," before the the words "officers or employees", (

b) by adding the following subsection:

(3) A bond under this

section shall be in the amount of not less than (a) $200,000, or (

b) such greater amount as the Director may fix for the company fron1 thne to time.

Section 49, subsection (1), clause (

a) is amended by striking out the words "if at the time the by-law is passed all of the capital stock has been subscribed and at least 90 per cent thereof is paid in".

Section 93, subsect,ion (1), clause (

b) is amended by adding at the end thereof the, words "unless it has obtained the pri'orconsent of the Minister to do so". 10. The following

section is added after

section 98: 98.~

(1) Where a provincial company has, with moneys held by it in 'a tru~t or representative eapadty, 2 (

a) m'ade 'any loan to' la 'corpor,ai:Jion associated wi,th the company, or (b) (

c) invested in, or made a loan on the security of, a?y securities issued by a corporation associated wIth the company, or invested in, or made a loan on the security of, an! mortgage or real estate held by a corporation assOCI ated with the company,

Section 33(2) presently reads:

(2) A director ceases to be a director if (

a) he cease~ to fulfill the requirements of

section 30, subsection (2) with respect to holding of shares, or (

b) he ceases to be a Canadian citzt'n ordinarily resident in Canada and as a result thereof the composition of the boa;rd of directors ceases to comply with

section 30, subsection (6). Clause (

c) is added to make it clear that all requirements for eligi bility in

section 30(4) and (5) must continue to be complied with after a director assumes office, and not applicable only at the time of election or appointment. 7.

Section 42(1) presently reads: 42.

(1) A company sh'JJI acquire and at aU times maintain a bond with a bonding company or insurance company acceptable to the directors for the indemnification of the company in the event of loss to it by reason of the fraudulent or criminal a;ct of any of its .officers or employees. The amendment will require directors to be bonded and sets a mini mum amount for the bond. 8.

Section 49(1) (

a) presently reads: 49.

(1) Where all ,of the common shares of a company have a par value, the directors may by by-law provide fer (

a) the increase of the capital stock of the company and the number and par value of the shares of the stock so increased, if at the time the by-law is passed all o·f the capital stock has been sub scribed and at least 90 per cent there.of is paid in, or 9.

Section 93(1) presently reads: 93.

(1) A provincial company (

a) may exercise its po,wers in any jurisdiction outside Alberta where it is registered .or licensed to car.ry on business as a trust company, in accordance with and subject to the laws in force in that jurisdiction, and (

b) shall 110t accept or exercise any additional powers that could otherwise be confened on it by or under the laws in force in that jurisdiction. 10. Order of the Minister to an Alberta trust company to dispose of investments and loans made with trust funds and involving cor porations associated with the company, i.e., where the trust com pany is not at arms length with the other corporation. 2

the Minister may by order direct the company to dispose of all or any of the investm'ents or loans so made within the time prescribed in the order. .

(2) An order under subsection (1) may be made sub Jec! to any terms or conditions that the M,inister may pre scrIbe.

(3) Where a company fails to comply with an order of the Minister under this se'ciion within the period pre scribed in the order, the 00mpany 'is lia1)le to a penalty of $100 for each day during which the failure to so comply continues, commencing with the day immediately following the expiry of that period. ( 4) This

section (

a) applies to investments or loans made before or after the commencement of this section, and (

b) applies notwithstanding anything in The Trustee Act or in any instrument or agreement. 11. The, follow'ing

section is added after

section 107: 107.1 ( 1 ) The Mi,IlIilsrter, on behalf of the P~ovince, may enter into agreements with the government of another province of Canada or 'a eorpoflation that liS an agent of that governn1'ent for any purpose in connection with an en actment of that province that provides for the insuring of the deposits and investment moneys, or any class thereof, of 'a provindal loompany regi1stered O'r licensled 'as 'a trust company in that province.

(2) An agreement made pursuant to subsection (1) may contain an undertaking by the Province to indemnify .the governm'ent of the other province, or its agent corporatIOn, for any loss to that government or corporation occurring by reason 'Of its. obligation to'miake paymenrt lin respect of any deposits or investment moneys insured by that government or corporation, where that obligation arises during the period specified in the agreement for that purpose. 12. The following

section is added after

section 112: 112.1

(1) Notwiths,iJanding anytJhing in thi,s Act, a pro· yincial company may acquire the assets of a corpor~ti.on Incorporated in Canada to carryon a business actiVIty reasonably ancillary to the business of a trust company, upon the assumption of the obligations and liabHities of tha;t corporation, but no agreement therefor takes 'effect untIl it has been approved by the Minister.

(2) Where the Minister approves an agreement under subsection (1) 3

II. The new

section 107.1 provides for indemnity agreements with other provinces relating to the insuring of deposits of Alberta trust companies in that province.

Section 112 provides for the purchase by an Alberta trust company of over 50 % of the shares of an "ancillary corporation". The new

section 112.1 provides for the purchase by the company of the assets of an ancillary corporation if it also assumes its liabil ities. This power is subject to conditions similar to those contained in

section 112. 3

(

a) the limitations and prohibitions relating to in vestments and loans contained in this Division do not apply to the purchase of the ass'ets of the an cillary corporation, and (

b) the lappr'Oval may be mlade subjelct to any terms and conditions prescribed from time to time by the Lieutenant Governor in Council.

(3) Where there has been a contravention of any terms or conditions prescribed under subsection (2), clause (b), the Director shall (

a) disallow the assets of the ancillary corporation owned by the company as assets of that company pUr'suantrbo

section 172, subsection (1),Cllausl8 (a), as if they were an unauthorized investment, and (

b) direct the company to dispose of all of the assets of the lancillary corpora!tion as if they were an unauthorized investment in such manner and upon such conditions as the Director prescribes.

Section 118 is anwnded by adding the following sub sections after subsection (3):

(4) The J\Iinister may increase the percentage limit referred to in subsection (1) in the case of an investment by a cOll1pany in the shares of an ancillary corporation where the Minister approves the investment and he is satis fied that the increase is in the best interests of the company. ( 5) Except where the Minister 'has taken any action under subsed;ion (3) or (4), the Direlc:tor may, notwith standing subsecti'On (1), with respect to .any 'company, bya directi'ol1 tlO ,the c'ompa;ny eOlllC'erned, fron1 time to t:!lle decrease the percentage Hmilt referred to in subsectIOn (1) either (

a) gener'aNy, 'Or (

b) with respe'ct to any dass 'Of investments or loans or any dass of securities O'r mortgages, or (

c) wilth respect 'to any specific seeurlityor mortgage.

(6) The Direetor miay from time .to time amend or rev:oke any direcJtion given by him under ,subsection (5) by the giving IQf a further direction to that effect to the company.

Section 119 is an~ended by adding the following subsections after subsection (4):

(5) T'he Ministelr may incn~ase the percentage limits referred 1;0 in subsec;tions (2) ,and (3) in th2 ca.se of an investment by a company in the shares of an ancillary 4

Section 118(1) presently reads: 118.

(1) Subject tq sectio·n 119, the amount of a company's invest ments and Il'oans in o,r upon anyone secul'ityor mortgage shall not exceed 15 per cent of the company's unimpaired paid-up capital and reserve.

Section 112 permits a provincial trust company to own a subsidiary corporation carrying on a business reasonably ancillary to that of a trust company_ 4

Section 119 presently reads: 119.

(1) In this

section "debt securities", with reference to a cor poration, means (

a) bonds, debentures, not.es, obligations :or other evidences of indebtedness is·sued by the corporation, and (

b) mnrtgages under which thecorp·oration i,s the mortgagor, but does not include a security issued by a corporation and guaranteed by the Government of Canada ,or the government of a province of Canada '01' notes or deposit receipts of chartered banks.

(2) Subject to subsection (3), the market value of (a) :vll debt securities, regardless of maturity date, of anyone corporation or of any corporations that to the knowledge of the company are asso·ciated, and (

b) the comm::m and preferred shares of that corporation or tho·se assodated corporations, held by a company as an investment 01' as security for a loan, shall not exceed the aggregate of (c) 20 per cent of the company's paid in capital stock and reserve, and (d) 5 per cent of the company's deposits and investment moneys.

(3) The market value of (

a) all debt securities maturing in more than one year of any one corporation or of any corporaUons ,that to the knowledge of the company are associated, and (

b) the common and preferred shares of that corporation or those associated corpo,rations, held by the company as an investment .or as security for a loan shaM not exceed 15 per cent of the c,ompany's paid in capital stock and reserve. (4) '1'he ~ggregate amount of the outstanding indebtedness to a company ot anyone individual or gl'OUP of two ·or more individuals under mortgages held by the company and loans made by the company shall not exceed 15 per cent .of the company's unimpaired paid-up capital and reserve.

ciOrpio'ratio~ where the Minister approves the investment ~n~er

sectIon .112 and he is satisfied that the increase IS In the best Interests 'Of the 'company.

(6) Not'Yithstanding a~ything in 'Subs'ectio~s (2) and (4) '. the. DIrector m1ay w1th respect to any company, by a dIrectIOn to the eompanyconcerned, from time to time decrease any percentage limit or limi,ts referred to in sub sections (2) to (4) eitiher (

a) genera:My, or (

b) with respect to any specified '00rporation, group of associated corporations, lindividual or group 'Of individuals, or (

c) with respe,et to any d~ss of debt s'ecurities or shares 'Of 'any c'Orpo~ation or group of associated c'Orpor1ati'Ons.

(7) The Direotor may fl'om time to time amend or revoke any direction given by him under subsection (6) by the giving of a furthe'r directdon to that effect to the company.

Section 145 is a'mended by adding the following clause after clause (f): (f1) authorizing proviTItClial comp1anies to 'apply :for and obtain a policy 'Of insurance res,pecting its deposits and investment moneys and is'sued under 'an en aetmelllt of any province where the companies are :registered or 1icenseld to Icarry .om business, and emp'Owering those 'clOmpanies to do any thing that they 'are required or permiUed t'O do under that en 'actment 'Or the by-laws 'Of 'any deposit insurance oorporation incorpor:wted by Itlhat enactment or to enter into any 'agreement 'Or a~rangement with that corporati'On, 16. The following

section is added after

section 173: 173.1

(1) Where it appears to the Director, frO'm an ex:a~llIination and inspection .of a registered 'C'ompan.y's aff/airs or 'On the basis 'Of 'any othe'r source 'Of informa~lOn avaHable to him, that thec'Ompany, or any dir£lcDor, offIcer, employee o-r agent of the company, is carrying on any practice that is, in th'e Director's opini'On, improper or imprudent, having regapd to' the best interests of the company, the Direotor may lissue an order directed to the company that the improper or imprudent practice cease.

(2) When the 'Order under subsection (1) is receiv.ed by t'he company, thec'Ompany shall immediately inform Its directors, officers and emp}oyee'S and any of its agents 5

15. The amendment would permit the making of regulations to empower provincial companies to obtain deposit insurance from any provincial government that required such insurance coverage as a condition to the company carrying on business there. 16. Orlder of iihe ni['1ecitor to 'ceas1e Ia; vioLation: of the Ad or an improper or imprudent business practice. 5

referred ito in the 'Order, and sucIh directors, offilcers, em. ployees ,and agents .siha:ll be deemed to have notice 'Of the order upon the explrah'on of 24 hours after it is received by the >company.

(3) Where t;hecomp,any .or any direlctor, officer, em ploy€e or agent 'Of the cmnpany fails to -comply with an order u~der s.ubsectJi1on (1) direCJted to that company, that perSi~n .IS glulty: of an offence 'and lilable on

summary C.onVIctIon rtoa fIne of not more tI11iaJll $5,000 and in default of payment t'O imp:r.i:sonmenrt; flOr a term not exceeding six months. 6

Section 179 is amended (

a) by striking out subsection (1) and by substituting the following: 179.

(1) A re,ceiver and manager appointed under

section 178 may be a f1irm of chartered ac>countants, another regi,stered trust <company or any other person.

(1.1) Where 'a receiver and m'a'llJager is appoint ed for the -company (

a) all .of the powers oftlhe shareholders and direc tors 'Of the -company are vested in the receiver and manager, (

b) the Teceiverand m'anager has, in addition to the powers of the shareholders and directors, the powers land duties .conferred or .imposed upon him by the Lieutenant Governor In Gorun- eil, and (

c) the shareholders and directors of the company may not exerdse their respective plOwe,rs. (

b) b'y striking out subsection (5) and by substituting the following:

(5) The fees payable to the receiver and ~anager f.or his services, and his expenses and dlsburs~ ments in connection with the discharge of hIS duties (Ia) shaH be fixed 'and determined by the Minister fvom time to time, (

b) shall be paid out of the company's own funds, or, where the Minister i,s satisfied that the 'Company's 'Own funds are then insufficient for the purpose, out 'Of the company's guaranteed fund, and (

c) in the '0als,e of rthe winding up 'Of the company, sihall rank 'On the estate equally w1th the re munerati'on paid to the liquidator.

(6) During the period of the appointment of a receiver and manager for a company,

Section 179(1) and (5) presently read: 179,

(1) A receiver and manager appointed under

section 178 (

a) may be a firm 'of chartered accountants, another registered trust company or any other person, and (

b) has the powers given to it by the order and, except as other wise provided in the order, has the powers and duties that are giYen or imposed on :l receiver and managfr appo.inted by the Supreme Crout by law

(5) The remuneration of the receiver and manager for its services, and its expenst's and disbursements in connectLon with the discharge of its duties, shall be fixed and determined by the Lieutenant Governor in Council, and shall be paid out of the assets of the company, and, in case of the winding-up of the company, shall rank on the estate equally with t.be remuneration of the liquidator. Subsection (1) is rewritten as two subsections to clarify the powers of the receiver and manager in relation to those of the shareholders and directors.

The new subsection (6) allows the company's guaranteed fund to be used for securing loans or operating the company when the company is in receivership. The new subsection (7) creates a lien in favour of the com pany's depositors and investment certificate holders on the com pany's own property, to the extent that the assets in the "guaranteed fund" under

section 104 are deficient. The company's own prop erty is not available, to the extent of the lien, to judgment creditors. 6

(

a) the !complany may, subject to the approval of ithe Minister, pledge lany part ofuhe ~ompany's guaranteed fund as slecurity for a l'Oan to tihe ,complany, and (

b) the company's guaranteed fund may be used for the purpose of carrying 'On the business a,nd iaffairs of the company, where the Minis ter ,is slatisfied that ,the company's own funds are insufficient fortJhat purpose.

(7) Where a receiver land manager has been appdinted for a 'company ,and tJhe value of the total assets in the company' s gua~anteed fund is at any tim,e during the appointment 'an !a:mount 'less than its liahiHtie:s f'Or deposirtsand ,investment moneys, (Ia) the company's own property shall be deemed to he subject to la lien in favour of the com pany'lS depositors and investment ,certificate holder,s ,to the extent 'Of the defirCiency, (

b) the Hen has priority lOver ,every other lien or ciharge .on the company's own property, and (

c) the company's own prlOperty is not, to the ex tent of the lien, exigible in exeoution or liable to attachment or distress, nlOtwilbhsta'nding any otiher Act.

Section 180 is amended by adding the following sub

section after subsection (5): (6) vVhere a pl~ovincJioal (~ompany is being wound up, the fees, expenses 'and disburrsements may be paid from ~he company's guaranteed fund ,in the event thalt the company's own funds are insufflident forr rbhat purpose. 19. The fo!llowing heading and

section are added after

section 189: Government Claims Against a Provincial Company 189.1.

(1) Where, w,ith respect to 'any provincial com pany, the Gove-rnment pays moOney ('

a) to the Ganada Deposi!t Ins'UI'Iance CorpQr,ation by reason of its liabiHty to the Carrporation under an 'agr'eement 'of indemnilty mrade pursuant to

section 1 of .ohapter 86 'Of the Statutes of Alberta, 1967, 'Or (

b) to the government of a province or to a pro¥incial deposit insur1ance <corporation by reason of its liability to that government or c'Orpo~ation under -an agreement 'Of indemnity made pursuant to

section 107.1, 'Or 1

18. Remuneration of a liquidator may be paid from trust assets in the event that the company's own assets are insufficient. 19. Claims by the Government against the company as a result of providing financial assistance or guarantees. 7

(

c) by wa~ of expepdi tures certified by the Minister 'as 'havIng been Incurred by the Government in the '00urse of the iaJdministration of lthis Act 'and direct. ly rellating .to that eompany, the moneys SIO paid may be recovered by the Government frlOm the company as 'a debt.

(2) Clai'ms by ijhe Gove,rnm'ent 'against a company (

a) in respect IOf any moneys referred to in suhsection (1), lOr (

b) in respect 'Of any loans t'0 the ,company by the Government ,and inte'r'est thereon, on (

c) in respect IOf moneys paid by the Government as a result of its litabi1:ity underr a guairan1Jee of a loan tiQ the company, shaH on the winding up IOf the oompany rlank iimmediately 'after the remunera,uion of the liiquid1ator and of the re ceiver -and m'anager, if 'any, 'and before any othe'r -claims.

Section 199 is amended by adding the following subsection:

(3) The Minislter m'ay exempt f~om the ope~ation of subse,ction (1) ac'Orporation that lis not itseU a trust company but is a subs:idiary of laregisl.iered trust Ci?mpany. if 'he is s,atisfied that the name 'Of the 'CiorporatlOn Wlll not mislead the ge,ne,ral publmc iinto believing that the corpor1wtion is a trust >company. 21.

(1) This Act, except

section 7, comes into force on the day upon which it is assented to'. (:2)

Section 7 comes into force on July 1, 1971. 8

Section 199 0) presently reads: 199.

(1) No person Dr association of persons not being a registered trust company shall assume or us,e in Alberta a name that includes any of the words "Trust" or "Trusts" or "Trustee" in combination or connection with any of the words "Corporation", "Company", "Association", 0'1' "Society", or "Limited", or Incorporated" or any abbreviation thereof, or in combination or connection with any similar colilective term, or assume or use in Alberta any similar name, ,or any name or combination of names that is likely to deceive or mislead the public. Title: 1971 (16th, 4th) Bill 112,

An Act to amend The Trust Companies Act

Document details

Collection	Alberta — Bills
Citation	L16 S4 4949
Type	bill
Volume / chapter	L16 S4 4949
Language	en
Format	json
Source	PROVINCIAL
Identifier	500f5e5cc7b93d252ff62402b28efea8c72453a1

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