Bill 38 — The Trust Companies Amendment Act, 1913 the Attorney General (Legislature 17, Session 2)

L17 S2 5172

Alberta — Bills

1973 BiH 3g Second Session, 17th Legislature, 21 Elizabeth II THE LEGISLATIVE ASSEMBLY OF ALBERTA BILL 38 The Trust Companies Amendment Act, 1913 THE ATTORNEY GENERAL First Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Second Reading .. Third Reading ... l'l'inted by QUEEN'S PRINTER for the Province of Alberta., EDMONTON

Bill 38 BILL 38 1973 THE TRUST COMPANIES AMENDMENT ACT, 1973 (Assented to , 1973) HER lVIAJESTY, by and with the advice and consent of the Legislative Assembly of Alberta, enacts as follows: 1. The Trust Companies Act is hereby amended.

Section 13, clause (

d) is amended by striking out the words "an even number of".

Section 16 is struck out and the. following

section is substituted: 16.

(1) Every company shall furnish to the Director a certified copy of every by-law made by its directors or its shareholders or approved by its shareholders, whether the by-law is new or amends, repeals, replaces or 00nsolidates a previous by-law, within 30 days of the passing or ap proval of the by-law.

(2) Where the Director decides that any by-law of the company was not validly passed 'or approved or is repug nant to this Act 'Or any law in force in Alberta, he may by notice require the company to amend or repeal the by-law within the period prescribed in the notice, and shall give reasons in the notice for his decision.

(3) The company may appeal the decision of the Director to the Supreme Court by way of originating notice return able within 30 days after the date of service of the notice on the company and showing the Director as the respondent.

(4) The judge determining an appeal under this

section shall by his order confirm, vary or revoke the Director's decision.

(5) The order of the judge may be appealed to the AppeHa:te Division by the Director 'Or the company and the Appellate Division has the same duties and jurisdiction under subsection (4) as the judge who heard the motion.

Explanatory Notes I. This Bill will amend

chapter 372 of the Revised Statutes of Alberta 1970.

Section 13(

d) presently reads: 13. The shareholders of a provinciaJ company may, at any annual gen eral meeting or at any special general meeting duly called for the pur pose, make by-laws respecting the following matters, namely: (

d) the number of directors, which shall be an even number of not less than six nor more than 20; The result will be that the number of directors of an Alberta trust company need not be an even number. See ·also 'Section 5 of this BUL

Section 16 presently reads: 16. Every company shall deliver to the Dire·cttor within one month after the passing thereof a certified copy of it,s by-laws and of every re peal, o·r addiUon to, or amendment, re-enactment, or ()onS'olidation thereof. See also

section 152(2.) oct: the Act which enables the Director to require an amendment to a repugnant by-law at the time of the company's application for registration. The new ,section 16 will per mit him to require an amendment at any time after registration, subject to appeal to the Supreme Court.

Section 30 is ame.nded by striking out subsection (2) and by substituting the following:

(2) A person is not eligible to be a director unless he holds common shares of the company, as the absolute and sole owner thereof in his individual right and n'Ot as trustee or in the right 'Of another, in respect of which not less than (a) $3,000, 'Or such greater amount as the by-laws require, have been paid in or Icredited by the com pany as capital, when the paid in capital stock of the company is $1,000,000 'Or less, or (b) $4,000, or such greater amount as the by-laws re quire, have been paid in or credited by the com pany as capital, when the paid lin capital stock 'Of the company is over $1,000,000 and does not ex ceed $3,000,000, or (c) $5,000, or such greater amount as the by-laws re quire, have been paid in or credited by the 00m pany as capital, when the paid in Icapital stock 'Of the company is over $3,000,000.

Section 31 is amended by striking out subsection (1) and by sUbstituting the following subsections: 31.

(1) There :shall be an election 'Of directors in 'each year in accordance with this secti'On and the by-laws of the company.

(1.1) In the case of a company whose by-laws provide f'Or an even number of directors, 'One-half of the number of directors shall be elected f'Or a term expiring at the annual meeting held in the second year after the year [n which they are elected.

(1.2) In the case 'Of a company whose by-laws provide for an odd number of directors, (

a) a bare maj'Ority of directors shall be elected in 'One year, and (

b) the remaining number of d.irect'Ors shall be elected in the next or the preceding year, on an alternating basis in accordance with the by-laws, and in the case of each election the directors shall be elected for a term expiring at the annual m'eeting held in the second year after the year in which they are elected.

Section 66, subsection (1), clause (

b) is amended by striking out subclause (

i) and by substitut,ing the following: (

i) an individual who is not ordinarily resident in Canada or an individual wh'O lis 'Ordinarily resident in Canada but who is n'Ot a Canadian citizen, 'Or

Section 96, subsection (1) is amended by adding after the words ",subs'ecui'Ons (2) and (6) 'Of this secti'On," the words "secti'On 96.1,". 2

Section 30(2) presently reads:

(2) A person is not eligible to be a director unless he holds' common shares of the company as the absolute and sole owner thereof in his individuaI right and not as trustee or in the right of another, on which not less than (a) $3,000, or s'uch greater amount as the by-laws require, have been paid in, when the paid in capital stock of the oompany is $1,000,000 o'r less, or (b) $4,000, or such greater amount as the by-laws require, have been paid in. when the paid in capital stock of the company is over $1,000,000 and does not exceed $3,000,000, or (c) $5,000. or such greater amount as the by-laws require, have been paid in. when the paid in capital stock of the oompany is over $3,000,000.

The subsection is rewritten so that any money paid by a director to the company as a premium on his shares (i.e., money "credited by the company as capital") may be Icounted as part of the amount required to qualify under subsection (2). At present, the only amount that qualifies is, in the case of par shares, the amount paid in on the shares themselves up to the par value. 5.

Section 31(1) presently reads: 31.

(1) At the election of directors in each year, one-half of the num ber of directors shall be elected f'or a term expiring at the annual general meeting held in the second year after the year in which they are elected. At present, the number of directors must be an even number with one-half the number being elected annually for two year terms. The amendment to

section 13(

d) of the Act (see

section 2 of this Bill) wiH allow for the number to be an odd number.

Section 31 (1) must as a consequence be rewritten to allow for this variation. In the case of a company with 15, directors fOT example, 8 will be elected in one year and 7 the next, with the by-laws of the company pro viding for the alternation. G.

Section 66 (1) (b) (

i) presently reads: 66.

(1) In this

section and s'ections 67 to 69, (b) "non-resident" means (

i) an individual who is not ordinarily resident in Canada, or Sections 66 to 69 deal with restrictions on ownership by persons or corporations not resident in Canada of more than 25% of the share's of a provincial trust company. The effect of the amendment is to include landed immigrants resident in Canada in the definition of "non-resident". 7.

Section 96(1) presently reads: 96,

(1) Except as provided in ,subsections (2) and (6) of this section,

section 115, subsection (2), clause (

d) and the regulations under

section 145, clause (f), a provincial company has no power to borrow money. See

section 8 of this Bill. 2

8. The following sectiorn is added after

section 96: 00.1.

(1) Subject to subsection (2), a provincial com pany may borrow money by the issue of debentures.

(2) No debentures shall be issued under this

section un less the borr'Owing and the issue of the debentures have been approved by a by-law 'Of the shareholders and by the Director. 9. SecUon 111 is amended by adding the following sub

section after subsection (3):

(4) A company may loan the company's own funds and its deposits and investment moneys without the taking by the company of security otherwise required by this Divi sion if (

a) the loan is guaranteed as to repayment of the whole of the principal and interest thereunder by the Gov ernment of Canada, the government of any prov ince of Canada or by the government iQf any 'Country where the company is registered or licensed to carry en the business of a trust company, and (

b) loans under this subsection de not in the aggregate exceed an amount equal te 10 per cent of the com ,pany's 'Own funds and <its deposits and investment moneys 'Or such lesser amount as the Director may pr'escribe for the company.

Section 114, subsection (2) is ame.nded by striking out clauses (

e) and (

f) and by substituting the following: (

e) the c'Ompany holds, as additional security, at the time 'Of the investment or loan and at all times thereafter, a general assignment in its favour of all rents payable under subleases 'Of the leasehold estate, (

f) there are in existence at the time of the investment or loan one or more subleases of the leasehold estate that will provide for a net revenue sufficient to yield a reas'Onable interest return during the terms of the subleases and to repay at least 85 p'er cent of the amount invested or loaned by the company within the terms of the subleases, but not exceed ing 30 years from the date of the investment or loan, and (

g) there are in existence, at the time of the ,investment 'Or loan, any additional agreements or arrangements required by the regulations for the protection of the company in the event 'Of default 'Of the mort gagor under the lease. 3

8. The new

section 96.1 will authorize an Alberta trust company to borrow money by the issue of d~bentures. 9. 'The new ,subsection (4) of

section 111 enables a provincial trust company to make government-guaranteed loans, without other security.

Section 114, subsection (2), clauses (

e) and (

f) presently read:

(2) A provincial company may, with the company's o'wn funds and its deposits and investment moneys, invest in mortgages' of leasehold estates or make Ioans under mO'rtgages executed in favour of the com pany of leasehold estates if in each case (

e) the company holds as additional security, at the time of the in vestment or loan and at all times thereafter, an assignment in 'its favour ·of the leasehold estate, and (of) if the lease provides for a net revenue ,sufficient to' yield a reasonable interest return during the term of the lease and to re pay at least 85 per cent of the amount loaned by the company within the term of the lease, but not exceeding 30 years from the date of the investment or loan. Clause (

e) is rewritten to refer to a general assignment of sub 'rents ra,tiher than an assignment of the leasehold estate itself. This reflects the normal practice in mortgage loans of leasehold estates. Clause (

f) is Irewritten to remove a drafting inconsistency in the use of the words "the lease". Since the clause refers to revenue derived from the leasehold estate, the revenue must necessarily come from subleases, and not under the lease that created the leasehold estate. Clause (

g) is added! to allow for additional security to be required by regulations: see the proposed clause (dl) of

section 145 in

section 17 of this Bill. The protective .agreements or arrangements con templated by the regulations will reflect normal practice in these cases involving covel1JaJIlts on the part of the landlord under the head lea'se in favour of the trust company in the event that the mortgagor (the 'Owner of the leasehold estate) defaults under the head lease. 3

Section 116 is amended by adding after the words "registered trust company," the words "a loan company or insurance company incorporated in Canada,". 12. SectifYrL 118, subsection (1) is amended by striking (nd the~c0i'ds "Subject to

section 119, the" and by sub stihdi'i!g the word "The". 18. Sectio/( 119 is amended (

a) by striking out subsections (2) and (3) and by sub stituting the following,'

(2) Except as provided in subsection (3), the market value of (

a) all 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 common and preferred shares of that cor- poration or those associated corporations, held by the company as investments or as security for loans shall not exceed 15 per cent of the com pany's paid in capital stock and reserve.

(3) Notwithstanding

section 118, the total of (

a) any loans to anyone corporation or any cor: porations that to the knowledge of the com pany are associated, where the loans are made on the security of improved real estate and are repayable in full in one year or less, and (

b) the market value of (

i) any other debt securities of that corpora tion or those associated corporations, and (ii) the common and preferred shares of that corporation or those associated corpora tions, held by the company as investments or as secur ity for loans, 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 in vestment moneys.

(3.1) The Direetor may, with respect to any loan referred to in subsection (3), dause (a), consent to the extension of the loan for a period greater than one year where he is satisfied that special circumstances exist. (

b) as to subsection (6), by striking out the words "sub secti'Ons (2) and (4)" and by substituting the words "subsed;ion (2), (3) or (4)". 4

1 I.

Section 116 presently reads: 116. A company may make an investment or loan under

section 114 or

section 115, subsection (2), clause (a) 'Or (

c) j'Ointly with any 'Other registered trust company, subject tQ the appro-val of the Dire.ctor and to any conditions prescribed by the Director. The amendment will now al:1ow an Alberta trust company to invest in or loan on the security of mortgages of real estate or leasehold estates or certain N.H.A. mortgages jointly with a loan company or insurance company. A ;similar amendment is made in

section 125, subsection (1) which deals with investments in real estate. 12.

Section 118(1) presently reads: 118.

(1) Subject to

section 119, the am'Ount of a company's invest ments and loans in or upon anyone s'ecurity or mo-rtgage shall not ex ceed 15 per cent of the company's unilmpaired paid-up eap'ital and reserve. The amendment is made to remove a difficulty in the

interpretation of

section 118(1) and

section 119. The words "Subject to

section 119" have been interpreted to mean both that

section 119 prevails over

section 118(1) or that

section 119 operates as an exception to

section 118(1). To remove the difficulty,

section 118(1) is amended and the proposed subsection (3) of seotion MI9 (see

section '13 of this Bill) is stated to operate "notwithstanding

section 118". The result is that interim financing loans referred to in the proposed

section 119(3) will operate as an exception to the rule in

section 118(1).

Section 119, subsections (1), (2) and (3) presently read: 119.

(1) In this

section "debt securities", with reference t'O a corpora Uon, means (

a) bo'nds. debentures, notes. obligaUo·ns or other evidences of in debtedness iss'ued by the corporation, and (

b) mortgages under which the corporation is the mortgag'Or, but d'Oe·s not include a security issued by a corpo'ratiQn and guaranteed by the Government of Canada o-r the government o-f a province o-f Can ada or notes or deposit receipts of chartered banks.

(2) Subject tOo s'ubse·ction (3), the market value 'Of (

a) all debt securities, regardless of maturity date, of any 'One cor poration or of any corporations that to the knowledge of the company are associated, and (

b) the common and preferred shares of that corporation or thQse associated corporations, held by a company as' an investment or 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 depo'sits and investment moneys.

(3) The market value of (

a) all debt securitie;s maturing in more than one ye'ar 'Of any 'One corporation or 'of any corp'Orations that to the knowledge of the company are associated, and (

b) the common and preferred shares 'Of that corporation lo,r those associated corp'oratio'ns, held by the company as an investment or as security for a loan shall not exceed 15 per cent .of thpcompany's paid in capital stloek and reserve. Subsections (2) and (3) are rewritten partly because of difficulties arising out of their

interpretation and partly because subsection (2) operates to unduly encourage short term investments and loans instead of long-term ones. The effect of the amendment is to make the 1'5 per cent Hmit in the present subsection (3) the general rule, just as the limit is also the general rule in

section 118 (1). The 20 and 5 per cent limits in the present subsection (2.) would apply only in cases of short-term real estate mortgages made for the purpose of providing interim financing. Subsection (16) is amended as a consequence of the rewriting of SUbsections (2) and (3), 4

Section 124 is amended by adding the following sub

section after subsection (1):

(1.1) The Director may with respect to any company by a direction to the company concerned, from time to time increase or decreas'e :the percentage limit referred to lin subs'ection (1), clause (

a) or (

b) or both either (

a) generally, or (

b) with respect only rtJo mortgages and the book value of foreclosed mortgages, or (

c) with respect to any class of mortgages.

Section 125, subsection (1) is amended by adding after the words "~ther alone lOr jointly with any other reg istered trust company," the words "a loan eompany incor porated in Canada and approved by the Director or an insurance company incorporated in Canada,".

Section 144 is amended by striking out the words "section 6A" where.ver it occurs and by substituting the words "section 6.1".

Section 145 is amended by adding the following clause after clause (d): (d1) prescr,ibing additional agreements or arrangements required for the protection of a company for the purposes of

section 114, subsection (2), clause (g).

Section 155 is amended (

a) as to subsection (1), clause (

c) by striking out the words "except in the case of a federal company,", (

b) by adding the following subsection after subsec tion (1): (1.1) Subsection (1), clause (

c) does not apply (

a) where the applicant is a federal ,co.mpany, or (

b) where the registration o.f the company will be made subject to a co.ndition that the company ,is pro.h~bited from accepting deposits in Alberta or from issuing o.r 'entering into. investment certificates in Alberta.

Section 156, subsection (3) is amended by striking out the word "Directo.ra" and by substituting the worrd "Directo.r" . 5

Section 124(1) presently reads: 124.

(1) The aggregate amount of all outstanding investments and loans' in or upon mortgages under sections 114 and 115 and the book value of foreclosed mortgages lof real estate··and of real e~tate acquired pursuant to secti'On 125, subsection (2) shall not at any t1me exceed (

a) in the <:!ase of investments and loans made with the company's own funds, 75 per' cent 0,[ tho'se funds, ·or (

b) in the case 'Of investments and loans made with the company's depos'its and investment moneys, 75 per cent of those deposits and investment moneys.

Section 12,5, subsection (1) commences: 125.

(1) Subject to subse'ctions (3) and (4), a company may invest its own funds and its deposits and investment moneys in improved real estate for thepJ;oduGti·on of inClome, either alone or jOintly with any other registered trust company, See Note to

section 11 of the Bill. The investment powers given by this amendment and the amendment to

section 116 follow similar ones made to the Trust Companies Act (Canada) in 1970. 16. Updates a

section reference in the Trust Companies Ad of Canada which changed as a consequence of the Revised Statutes iQf Canada 1970.

Section 145 authorizes the ,Lieutenant Governor in Council to make regulations and! the new clause (

d) will authorize regula tions governing additional protective arrangements that may be required where an Alberta trust company loans money on the security of a leasehold estate under 'section 114(2).

Section 155, subsection (1), clause (

c) presently reads: 155.

(1) No application by an extra-provincial c,ompany shall be grant ed and no registration of the company shall be made until it has been shown to the satisfaction of the Director by affidavit or otherwise that (

c) except in the case of a federal company, it is the holder of a policy orr deposit insurance under the Canada Deposit Insurance Corporation Act. The exception for federall Icompanies in clause (

c) is transferred to clause (

a) of the new subsection (1.1). Clause (

b) of subsection (1.1) will remove an anomaly that presently exists which could bar registration to a company for want of a policy of deposit insurance from the Canada Deposit Insurance Corporation when that com pany will not be ,accepting any deposits or investment moneys that could be so insured. 19. Corrects a typographical error in the Revised Statutes. 5

Section 179 is amended by adding the following sub

section after subsection (7):

(8) Where the order appointing the r'eceiver and man ager is revoked effeictive as 'Of a future date, the order 'Of revocation may empower the receiver and manager to do such acts as are necessary for him to arrange a meeting of the shareholders of the company on a date subsequent to the effective date of the revocation order. 21. This Act comes into force Om the day upon which it is assented to. 6

Section 179(1.1) states that where a receiver and manager is appointed for a company, the powers of the directors and share holders are suspended. If his appointment were revoked, these powers would be restored but there might not be any directors in office who Icould resume control of the company and call a shareholders meeting. The new subsection (8) would allow for a procedure to permit the receiver and manager to call and ar,range a shareholders' meeting to take place immediately after his ap pointment is terminated. 6 Title: 1973 (17th, 2nd) Bill 38, The Trust Companies Amendment Act, 1973

Document details

Collection	Alberta — Bills
Citation	L17 S2 5172
Type	bill
Volume / chapter	L17 S2 5172
Language	en
Format	json
Source	PROVINCIAL
Identifier	543c7a3bc48129f7ddf95a7806253ae276d329ae

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