1969 Bill 116 Second Session, 16th Legislature, 18 Elizabeth II BILL 116

An Act to amend The Trust Companies Act, 1967 THE ATTORNEY GENERAL First Reading Second Reading ............................. . Third Reading . Printed by L. S. Wall, Queen's Printer, Edmonton

BILL 116 1969

An Act to amend The Trust Companies Act, 1967 (Assented to , 1969) HER MAJESTY, by and with the advice and consent of the Legislative Assembly of the Province of Alberta, enacts as follows: 1. The Trust C01npanies Act, 1967 is hereby amended.

Section 7 is amended by adding the following subsec­ tion:

(3) Where a petition is made to the Legislature for a special Act, the petitioners shall furnish to the Private Bills Committee of the Legislative Assembly, satisfactory evi­ dence that, in the locality in which the head office of the proposed company is to be situated, there exists a public necessity for a trust company or for an additional trust company.

Section 10, subsection (1) is amended by striking out the words "section 66" and by substituting the words "sec­ tion 68".

Section 28 is amended by striking out the words "for or".

Section 48, subsection (3), clause (

a) is amended by adding after the word "company" the words "held by those shareholders entitled to vote on the question of the approval at the time the vote is taken".

Explanatory Notes I. This Bill amends

chapter 87 of the Statutes of Alberta, 1967.

Section 7 deals with the incorporation of trust companies by special Act. 3. The re-enactment of

section 66 as

section 68 (3) necessitates the amendment to

section 10 (1): See note to clause 8 of this Bill.

Section 28 presently reads: 28. If the aggregate number of shares re!)resentEd at a meeting by proxies required to be voted for or against a particular matter or group of matters are, to the knowledge of the chairman of the meet­ ing, less than 5 per cent of the shares entitled to vote and represented at the meeting, the chairman of the meeting has the right not to conduct a vote by way of ballot on any such matter or gorup of mat­ ters unless a poll is demanded at the meeting. The same amendment is being made in

section 105 of The Se­ curities Act, 1967 in order to have the

section conform to the original recommendation in the part of the "Kimber Report" dealing with proxy solicitation. See clause 13 of Bill 57 to amend The Securities Act, 1967. 5.

Section 48 (3) presently reads:

(3) A by-law under this

section is invalid unless (

a) it is approved by a vote of the shareholders at a special general meeting called for that purpose aDd the shares voted in fa~our of the approval represent at least two-thirds of the subscnbed and issued capital stock of the company, and (

b) it is afterwards approved by the Lieutenant Governor in Council.

Section 48 deals with the creation of preferred shares and su b­ section (3) states the requirements to be met before the by-law of the directors under that

section is valid. The amendment is similar to one being proposed for

section 49 (6) (b): see note to clause 6 of this Bill.

Section 49, subsection (6), clause (

a) is amended by adding after the word "company" the words "held by those shareholders entitled to vote on the question of the approval a t the time the vote is taken". 7. The following

section is added after

section 63: G3a.

(1) In this section, (a) "maj or shareholder" means (

i) a person who is the registered shareholder of 10 per cent or more of the voting shares of a provincial company, or (ii) any person who is designated by the Director as a n1Hj or shareholder of a provincial company pursuant to subsection (3) and who has been notified in writing of the designation; ( b) "voting share" means (

i) an issued and subscribed common share, or (ii) an issued and subscribed preferred share carry­ ing, at a material time under this section, full or limited voting rights.

(2) For the purposes only of this section, in calculating the number of shares held or proposed to be held (

a) where voting shares are owned by two or more persons, each of those persons shall be deemed to own the shares, and (

b) where a transfer of voting shares is in favour of two or more persons, each of those persons shall be deemed to be the transferee. ~3) The Director may designate a person as a major shareholder of a provincial company for the purposes of this

section where that person (

a) is the registered shareholder of less than 10 per cent of the voting shares of the company, and (

b) in the opinion of the Director, exercises a signifi­ cant degree of control, either alone or in concert with others, over the business and affairs of the company.

(4) Where the Director. makes a designation under subsection (3) or revokes such a designation, he shall im­ mediately give written notice of that fact to the company and to the shareholder concerned.

(5) A designation by the Director under subsection (3) is not affected by a transmission of the shares held by the maj or shareholder referred to in the designation, and ex­ tends to the person who becomes the registered owner of the shares on the transmission until the Director revokes the designation. 2

Section 49 (6) presently reads:

(6) A by-law under this

section is invalid unless (

a) it is approved by a vote of the shareholders at a special general meeting called for that purpose and the shares voted. in favour of the approval represent at least two-thirds· of the subscribed and issued capital stock of the company, and (

b) it is afterwards approved by the Lieutenant Governor in Council.

Section 49 deals with the increase or decrease of .capital stock and reorganization of a provincial trust company's capital stock. Subsection (6) (

a) on a literal

interpretation, requires that the vote of the shareholders for the approval of the by-law must represent. two:-thirds of the issued stock. A difficulty in in­ terpretation of this provision arises in the case where more than one-third of the capital stock of the company consists of non­ voting preferred shares. In such a case, the company, on the literal

interpretation, can never approve a by-law under the

section because the voting shares (i.e., the common shares) can never represent two-thirds of the issued capital stock.

Section 49 (6) was carried forward from the previous Trust Companies Act, 1960 which did not contemplate the issue of preferred shares of any kind. This anomolous result was not intended in the 1967 Act and an amendment to the Trust Companies Regulations was filed as Alberta Regulation 385/68 in order to cure the difficulty. It is felt such a provision should be included in the Act itself and so

section 49 (6) as amended will permit the by-law to be approved by a two-thirds vote of those entitled to vote. A similar problem occurs in sections 48 (3), 135 (4), 136 (2) and 137 (2) and these provisions are being amended accordingly. The amendment to

section 49 ('6) and these other provisions is made effective as of December 2, 1968, the date on which Alberta Regulation 385/68 was filed. 7. The new

section 63a is intended to regulate changes in share control in a provincial trust company. 2

(6) Notwithstanding anything in this Part, a company shall not, except with the consent of the Director, record in the share transfer register of the company (

a) a transfer of any shares held by a maj or share­ holder, or (

b) a transfer of shares in favour of a person who is already a maj or shareholder, or (

c) a transfer of shares which, upon recording, would result in any person becoming the owner of 10 per­ cent or more of the voting shares of the company.

(7) The Director may refuse his consent to a transfer under this

section in any case where he is satisfied (

a) in the case of a transfer in favour of a natural per­ son, that the transferee is not a fit and proper per­ son to discharge the duties of a director of the com­ pany, having regard to his character and business experience, or (

b) that the result of the recording of the transfer could materially affect the operations, management or financial condition of the company in a manner prejudicial to the interests of the company's de­ positors and investment certificate holders or its creditors.

(8) Every director of a company who knowingly author­ izes or permits a contravention of this

section is guilty of an offence and liable on

summary conviction to a fine of not more than $5,000 or to imprisonment for a term of not more than one year or to both such fine and imprisonment.

(9) A transfer recorded in contravention of subsection (6) is not thereby invalid if the Director is notified of the transfer by the company and does not, within 30 days of being so notified, inform the company in writing that he refuses his consent to the transfer, but if the Director, within that 30-day period, informs the company that he refuses his consent to the transfer, (

a) the company shall cancel the entries in its share transfer register and the shareholders register made by reason of the transfer and shall restore the entries showing the transferor as shareholders, (

b) the company shall cancel any share certificate issued as a result of recording the transfer, if the certificate is in its possession, (

c) the transferee shall, on demand, return the share certificate to the company, and (

d) upon compliance with clause (a), the transfer shall be deemed never to have been recorded. 3

8. Sections 64 to 69 are struck out and the following are substituted: 64.

(1) In this

section and sections 65 to 67, (a) "corporation" includes an association, partnership or other organization; (b) "non-resident" means (

i) an individual who is not ordinarily resident in Canada, or (ii) a corporation incorporated, formed or other­ wise organized, elsewhere than in Canada, or (iii) a corporation that is controlled directly or indirectly by non-residents as defined in. sub­ clause (

i) or (ii), or (iv) a trust established by a non-resident as defined in subclause (i), (ii) or (iii), or a trust in which non-residents as so defined have more than 50 per cent of the beneficial interest, or (

v) a corporation that is controlled directly or in­ directly by a trust mentioned in subclause (iv) ; (c) "resident" means an individual, corporation or trust that is not a non-resident.

(2) For the purposes of sections 65 to 67, a shareholder is deemed to be associated with another shareholder if (

a) one shareholder is a corporation of which the other shareholder is an officer or director, or (

b) one shareholder is a partnership of which the other shareholder is a partner, or (

c) one shareholder is a corporation that is controlled directly or indirectly by the other shareholder, or (

d) both shareholders are corporations and one share­ holder is controlled directly or indirectly by the same individual or corporation that controls directly or indirectly the other shareholder, or (

e) both shareholders are members of a voting trust where the trust relates to shares of the company, or (

I) both shareholders are associated within the mean­ ing of cIa uses (

a) to (

e) with the same shareholder.

(3) For the purposes of

section 65 to 67, where a share of the capital stock of the company is held jointly and one or more of the joint holders thereof is a non-resident, the share is deemed to be held by a non-resident. ( 4) For the purposes of this

section and sections 65 to 67, a "shareholder" is a person who according to the register of shareholders of the company is the holder of one or more shares of the capital stock of the company and a reference in sections 65 to 67 to a share being held by or in the name 4

8. The new sections 64 to 67 deal with restrictions on sharehold­ ings in provincial trust companies by persons or corporations not resident in Canada. These sections are modelled on the equivalent provisions in the Trust Companies Act of Canada. The present sections 64, 65, '66, 68 and 69 are re-enacted as sec­ tions 68 and 69. The present

section 67 is omitted as it is now a spent provision. Sections 64 to 69 presently read: 4 64. A company shall at all times have recorded in its register of shareholders at least 25 shareholders. 65. The directors shall refuse to allow a transfer of the share of the capital stock of the company to be recordEd in the share transfer register of the company if as a result thereof the number of share­ holders would be fewer than 25. 66. In determining the number of shareholders of the company for the purposes of sections 64 and 65, either before or after the record­ ing of any transfer, only shares of the fOllowing kinds shall be counted: (

a) shares recorded in the name of one person only, except where that person (

i) to the knowledge of the company, holds the shares as trustee for or in the right of another sharehoLder or share­ holders, or (ii) is recorded as holding the shares in a trust capacity for the benefit of two or more persons, ,or (iii) is recorded as holding the shares as mortgagee or as holding the shares as collateral security, if he is also descrIbed as only representing two or more mortgagors or two or more persons giving the collateral security, as the case may be; and (

b) shares held by two or more persons upon the recording of u transmission under this Division if, prlOr to the recording of the transmission, the shares could have been counted under clause (a). 67. Where at the commencement of this Act a company does not have at least 25 shareholders, sectIOns 64 and 65 do not app"y to the com­ pany until May I, 1968. 68. Where the register of shareholders does not, on May I, 1968, comply with

section 64, the company is liable to a penalty of $100 for each day, commenclllg on May I, 1968, that the default continues. 69. Every director of a company who knowingly authorizes or per­ mits a contravention of

section 65 is guilty of an offence and liable on

summary conviction to a fine of not more than $5,000 or to imprison­ ment for a term of not more than one year or to both such fine and imprisonmen t. 64.

Interpretation provisions re sections 65 to 67.

of any person is a reference to his being the holder of the share according to the register of shareholders of the com­ pany.

(5) Where after the commencement of this

section a cor­ poration or trust that was at any time a resident becomes a non-resident, any shares of the capital stock of the com­ pany acquired by the corporation or the trust while it was a resident and held by it while it is a non-resident shall be deemed, for the purposes of sections 65 and 66, to be shares held by a resident for the use or benefit of a non-resident. 65.

(1) The directors of a company shall refuse to allow a transfer of a share of the capital stock of the company to a non-resident to be recorded in the share transfer register of the company (

a) if, when the total number of shares of the capital stock of the company held by non-residents exceeds 25 per cent of the total number of the issued and outstanding shares of such stock, the transfer would increase the percentage of such shares held by non-residents, or (

b) if, when the total number of shares of the capital stock of the company held by non-residents is 25 per cent or less of the total number of the issued and outstanding shares of such stock, the transfer would cause the total number of such shares held by non-residents to exceed 25 per cent of the total number of the issued and outstanding shares of such stock, or (

c) if, when the total number of shares of the capital stock of the company held by the non-resident and by other shareholders associated with him, if any, exceeds 10 per cent of the total number of issued and outstanding shares of such stock, and the rec­ ording of the transfer would increase the per­ centage of such shares held by the non-resident and by other shareholders associated with him, if any, or (

d) if, when the total number of shares of the capital stock of the company held by the non-resident and by other shareholders associated with him, if any, is 10 per cent or less of the total number of issued and outstanding shares of such stock, the recording of the transfer would cause the number of such shares of stock held by the non-resident and by other shareholders associated with him, if any, to exceed 10 per cent of the issued and outstanding shares of such stock.

(2) The directors of a company shall not allot or allow the allotment of any shares of the capital stock of the com­ pany in circumstances where, if the allotment were a trans-

65. Limitations as to non-resident shareholdings. 5

fer of the shares, the directors would be required under subsection (1) to refuse to allow the transfer to be rec­ orded.

(3) Default in complying with the provisions of this sec­ tion does not affect the validity of a transfer of a share of the capital stock of the company that has been recorded in the share transfer register of the company or the validity of the allotment of shares of the capital stock of the com­ pany. '6:6.

(1) Notwithstanding

section 21 and

section 47, subs2ction (2), where a resident holds shares of the capital stock of the company in the right of, or for the use or benefit of, a non-resident, the resident shall not, in person or by proxy, exercise the voting rights pertaining to those shares.

(2) Where any shares of the capital stock of a company are held in the name or right of or for the use or benefit of a non-resident, no person shall, either as proxy or in person, exercise the voting rights pertaining to such shares held by the non-resident or in his right or for his use or benefit, if the total of such shares so held, together with such shares held in the name or right of or for the use or benefit of (

a) any shareholders associated with the non-resident, or (

b) any persons who would, under

section 64, sub­ sect'on (2), be deemed to be shareholders associated with the non-resident were such persons and the non-resident themselves shareholders exceed in number 10 per cent of the issued and outstanding shares of such stock.

(3) If any provision of this

section is contravened at a general meeting of the shareholders of the company, no proceeding, matter or thing at that meeting is void by reason only of such contravention, but any such proceeding, matter or thing is, at any time within one year from the day of commencement of the general meeting at which the contravention occurred, voidable at the option of the share­ holders by a resolution passed at a special general meeting of the shareholders. 67.

(1) The directors may make such by-laws as they consider necessary to carry out the intent of sections 64 to 66 and subsections (2) to (6) of this

section and in particular, and without restricting the generality of the foregoing, the directors may make by-laws 6 (

a) requiring any shareholders of the company to sub­ mit a declaration (

i) with respect to the ownership of such share,

66. No voting of shares held by a nominee for a non-resident. 67. By;..laws and rules re non-resident shareholders. 6

(b) (ii) (iii) (iv) with respect to the place in which the share­ holder and any person in whose right or for whose use or benefit the share is held are ordi­ narily resident, wheher the shareholder is associated with any other shareholder, and with respect to such other matters as the di­ rEctors consider relevant for the purposes of sEctions 64 to 66 and this section, requiring any person desiring to have a transfer of a share to him recorded in the share transfer register of the company or desiring to subscribe for a share of the capital stock of the company to sub­ mit such a declaration as may be required pursuant to this

section in the case of a shareholder, and (

c) prescribing the times at which and the manner in which any declaration required under clause (

a) or (

b) is to be submitted.

(2) Where pursuant to any by-law made under subsec­ tion (1) any declaration is required to be submitted by any shareholder or person in respect of the transfer of or sub­ scrip lion for any share, the directors may refuse to allow a transfer to be recorded in the share transfer register of the company or to accept a subscription without the submis­ sion of the required declaration.

(3) In determining for the purposes of sections 64 to 66 (

a) whether a person is a resident or non-resident, (

b) by whom a corporation is controlled, or (

c) any other circumstances relevant to the perform- ance of their duties under those sections, the directors of the company may rely upon any statements made in any declarations submitted under this

section or rely upon their own knowledge of the circumstances, and the directors are not liable in any action for any thing done or omitted by them in good faith as a result of any conclu­ sions made by them on the basis of any such statements or knowledge. 68.

(1) A company shall at all times have recorded in its register of shareholders at least 25 shareholders.

(2) The directors shall refuse to allow a transfer of the share of the capital stock of the company to be recorded in the share transfer register of the company if as a result thereof the number of shareholders would be fewer than 25.

(3) In determining the number of shareholders of the company for the purposes of this section, either before or after the recording of any transfer, only shares of the following kinds shall be counted: 7

68. No transfer shall reduce the number of shareholders to les3 than 25. The present sections 64 to 66. 7

(

a) shares recorded in the name of one person only, except where that person (

i) to the knowledge of the company, holds the shares as trustee for or in the right of another shareholder or shareholders, or (ii) is recorded as holding the shares in a trust capacity for the benefit of two or more per­ sons, or (iii) is recorded as holding the shares as mortgagee or as holding the shares as collateral security, if he is also described as only representing two or more mortgagors or two or more persons giving the collateral security, as the case may be; and (

b) shares held by two or more persons upon the record­ ing of a transmission under this Division if, prior to the recording of the transmission, the shares could have been counted under clause (a). 69.

(1) Every director of a company who knowingly authorizes or permits a contravention of any provision of

section 65 or 68 is guilty of an offence and liable on sum­ mary conviction to a fine of not more than $5,000 or to im­ prisonment for a term of not more than one year or to both such fine and imprisonment.

(2) Every person who knowingly contravenes

section 66 is guilty of an offence and liable on

summary conviction to a fine of not more than $5,000 or to imprisonment for a term of not more than one year or to both such fine and imprisonment.

Section 70, subsection (1), clause (

f) is amended by adding the word "or" at the end of subclause (ii) and by adding the following: 8 (iii) any person who exercises control or direction over the equity shares of a provincial company carrying more than 10 per cent of the voting rights attached to all equity shares of the com­ pany for the time being outstanding;

Section 71 is amended (

a) by adding the following subsection after subsec­ tion (1): (la) A person who is an insider of a provincial company under

section 70, subsection (1), clause (I), subclause (iii) shall, within 10 days after the end of the month in which this subsection comes into force, file with the Commission a report, as of such day, of the direction or control he exercises over the capital shares of the company.

69. Offences re prohibited share transfers and mmImum re­ quirement of 25 shareholders. The present sections 68 and 69. 9.

Section 70 (1) (

f) presently reads: (f) "insider" or "insidEr of a provincial company" means (

i) any dire,ctor or senior officer of a provincial company, or (ii) any person who beneficially owns, directly or indirectly, equity shares of a provincial company carrying more than 10 per cent of the voting rights attached to all equity shares ,of the company for the time being outstanding, except that in computing the percentage of voting rights attached to equity shdles own d by an undel'writer there shall be excluded any equity shares that have been acquired by him as underwriter in the course of distribution to the public of such shares, but such exclusion ceases to have effect on completion or cessation of the distribution to the public by him; Subclause (ii) of the definition refers only to the beneficial owner of equity shares of the provincial company.

The new sub­ clause (iii) will extend the definition of "insider" to include a person who is not the beneficial owner but exercises control and direction over equity shares carrying more than 10 per cent of the voting rights attached to all equity shares of the company for the time being outstanding. The change in the definition necessitatEs amendment to

section 71 so as to include reference to persons who exercise control or direction over equity shares. This follows the equivalent amendment being made to the definition of "ins:der" in

section 108 of The Securities Act, 1967: see clause 14 of Bill 57.

Section 71 presently reads: 71.

(1) A person who is an insider of a provincial company at the cDmmencement of th.s Act shall,on cr before July 10, 1%7, file with the Commlssion a report, as of the date of the commencement of this Act, of his direct or indirect beneficial ownership of capital shares of the company.

(2) A person who, after the commencement of this Act, becomes an insider of a provincial company shall, Within 10 daJ s after the end of the month in which he b"comes an insider, file with the Com­ mlssion a report, as of the day on which he became an insider, of h. s <in ect or indirect beneficial ownershlp ofcapi tal shares of the company.

(3) If a person who is an insider ,of a provincial company, but has no direct or indirect beneficial ownership of capital shares of the company, acqUlres direct or indirect beneficial ownership of any such shar<.s, he shall, within 10 days after the end. of the month in which he acquired such direct or indirect beneficial ownership, file with the Commission a report, as of the date of such acquiSItion, ,of his direct or indirect be.leficial ownership of capital shares of the company.

(4) A person who has filed or is required to file a report under subsection (1), (2) or (3) and whose direct or indirect beneficial ownership o,f capital shares of the ,company changes from that shown or required to be shown in such report or in the last report fiLd by him under this subsection shall, within 10 days following th~ end of the month in which such change takes place, if he was an insider of the company at any time during such month, file with th3 Com­ mission a report of his direct or indirect beneficial ownership of capital shares of the company at the end of such month and the change or changes there in that occurred. during the mJnth and giving such details of each transaction as may be required by the regulations made under

section 76. See note to clause 9 of this Bill and clause 15 of Bill 57 which amends

section 109 of The Securities Act, 1967 in the same way. 8

(

b) by striking out subsections (2), (3) and (4) and by substituting the following:

(2) A person who becomes an insider of a pro~ vincial company shall, within 10 days after the end of the month in which he becomes an insider, file with the Commission a report, as of the day on which he became an insider, of his direct or indi­ rect beneficial ownership of or control or direction over capital shares of the company.

(3) If a person who is an insider of a provincial company, but has no direct or indirect beneficial ownership of or control or direction over capital shares of the company, [I.cquires direct or indirect beneficial ownership of or control or direction over any such capital shares he shall, within 10 days after the end of the month in which he acquired such direct or indirect beneficial ownership or such control or direction, file with the Commission a report, as of the date of such acquisition, of his direct or indirect beneficial ownership of or control or direction over capital shares of the company.

(4) A person who has filed or is required to file a report under subsection (1), (la), (2) or (3) and whose direct or indirect beneficial ownership of or control or direction over capital shares of the company changes from that shown or required to be shown in such report or in the last report filed by him under this subsection shall, within 10 days following the end of the month in which such change takes place, provided that he was an insider of the company at any time during such month, file with the Commission a report of his direct or indirect beneficial ownership of or his con­ trol or direction over capital shares of the com­ pany at the end of such month and the change or changes therein that occurred during the month giving such details of each transaction as may be required by the regulations.

Section 92 is amended by striking out the word "and" at the end of clause (i), by adding the word "and" at the end of clause (

j) and by adding the following clause: (

k) act as a real estate agent.

Section 93 is amended (

a) by renumbering the

section as subsection (1), (

b) by adding the following subsection:

(2) Notwithstanding subsection (1), where a provincial company is permitted by the laws of any 9

II.

Section 92 enumerates the general powers of provincial trust companies. The amendment is intended to remove doubt as to whether a trust company may act as a real estate agent.

Section 93 presently reads: 93. A provincial company (

a) may exercise its powers in any jurisdiction outside Alb"rta where it is registered or licensed to carryon business as a trust company, in accordance with and subject to the laws in force in that jurisdiction, and (

b) shall not accept or exercise any additional powers that could otherwise be conferred on it by or under the laws in force in that jurisdiction. 9

jurisdiction outside Alberta to become registered or licensed to carryon any business in that other jurisdiction, a provincial company shall not apply for or obtain such registration or licence except with the prior approval of the Director, and then only on such conditions as the Director prescribes.

Section 103 is amended by striking out the words "15 times" and by substituting the words "20 times".

Section 104 is amended by adding the following subsection:

(6) Where the valuation of the company's guaranteed fund at any time is less than the amount of the company's liability to its depositors and investment certificate holders, a portion of the company's own property equal in value to the deficiency at that time shall be deemed to be held by the company in trust for the benefit of those depositors and investment certificate holders, notwithstanding that such property has not been ear-marked and definitely set aside under this

section and does not form part of the guaranteed fund.

Section 117 is amended by renumbering the

section as subsection (1) and by adding the following subsections:

(2) Notwithstanding subsection (1), the Director may, with respect to any company by a direction to the company concerned, from time to time decrease either or both of the percentage limits referred to in subsection (1).

(3) The Director may from time to time amend or revoke any direction given by him under subsection (2) by the giving of a further direction to that effect to the company. 1:6.

Section 118 is amended by striking out clause (

b) and by substituting the following: 10 (b) 95 per cent of their market value, in the case of securities other than those referred to in clauses (a), (

c) and (d), or

Section 103 presently reads: 103. The total of the sums of money received as deposits and in­ vestment moneys shall not exceed such amount as the Lieutenant Governor in Council, in his discretion, determines for the company, not exceeding an amount equal to 15 times the combined amounts of its unimpaired paid-up capital and reserve. This amendment will come into force on Proclamation.

Section 104 requires the company to ear-mark assets to form a "guaranteed fund" of sufficient value to meet all its liabilities to its depositors and investment certificate holders. As the guaranteed fund assets may decrease in value and sufficient company assets may not be ear-marked for the fund at any given time, there could be a deficiency. The new subsection (6) is in­ tended to impose a trust on the company's own assets sufficient to offset such a deficiency.

Section 117 presently reads: 117. The book value of a company's investments and loans in or upon the security of common shares (

a) in the case of the company's own funds, shall not exceed in the aggregate 25 per cent of the company's unimpaired paid-up capital and reserve, or (

b) in the case of the company's deposits and investment moneys, shall not exceed in the aggregate 25 per cent of the total of its deposits and investment moneys.

Section 118 presently reads: 118. A company shall not make a loan secured by any securities unless under the terms upon which the loan is made the outstanding amount of the loan will not at any time exceed (

a) their market vaue, in the case of Canada Savings Bonds issued by the Government of Canada, or (b) 95 per cent of their market value, in the case of securities other than Canada Savings Bonds issued by the Government of Can­ ada, investment 'certificates isued by the company and common shares. or (c) 90 per cent of their face value, in the case of investment certificates issued by the company, or (d) 50 per cent of their market value, in the case of common shares. Clause (

b) is rewritten as its present wording has caused some difficulty in

interpretation. 10

Section 120 is amended (

a) as to subsection (1) by striking out the figure "65" where it occurs in clauses (

a) and (

b) and by substituting the figure "75", (

b) as to subsection (3) by striking out clause (

c) and by substituting the following: (

c) any agreement for sale or option to purchase, or (

d) any option to lease unless, under the lease or tenancy to be granted pursuant to the option, (

i) the company holds as additional security, at the time of the investment or loan and at all times thereafter, an assignment in its favour of the rents payable under that lease or tenancy and all subsequent leases and tenancies of that real estate, or (ii) that lease or tenancy, according to its terms, will expire within one year or can be terminated by the lessor within one year.

Section 125, subsection (1) is amended by adding the word "or" at the end of clause (

i) and by adding 't,he following clause: (

j) any shareholder of the company who holds (i) 10 per cent or more of the subscribed and issued common shares of the company, or (ii) 10 per cent or more of the subscribed and issued preferred shares of the company having, at that time, full or limited voting rights, or (iii) both common shares and preferred shares of the company having, at that time, full or lim­ ited voting rights and the number

s) held is equal to or exceeds 10 per cent of the total number of the subscribed and issued common and preferred shares of the company, or (

k) any director or officer of a corporation that is a shareholder to which clause (

j) applies, or any person who holds 10 per cent or more of the voting shares of that corporation. 1.9.

Section 130, subsection (5), clause (

b) is amended by striking out the word "whether" and by substituting the word "where". 11

Section 120 (1) and (3) presently read: 12J.

(1) The aggregate amount of all outstanding investments and loans in or upon mortgages under sections 112 and 113 and the book value of foreclosed mortgages ·oJ real estate and of real estate acquired pursuant to subsection (2) of

section 121 shall not at any time exceed (

a) in the case of investments and loans made with the company's own funds, 65 per cent of those funds, or (

b) in the case of investments and loans made with the company's deposits and investment moneys, 65 per cent of those deposits and investment moneys.

(3) A company shall not make any investment or loan in or upon a mortgage under

section 112 .or 113 where the title to the real estate concerned is subject to (

a) any encumbrance or notification, or (

b) any lease or tenancy unless (

i) the company holds as additional security, at the time of the investment or loan and at all times thereafter, an as­ signment in its favour of the rents payable under that lease ·or tenancy and all subsequent leases and tenancies of that real estate, or (ii) that lease or tenancy, according to its terms, will expire within one year or can be terminated by the lessor within one year, or (

c) any agreement for sale Dr option to purchase or option to lease. Subsection (3) (

c) is the same except for the omission of the reference to options to lease. The new clause (

d) deals with options to lease separately but is worded to make it consistent with clause (b). At present,a trust company cannot invest in mortgages where the land is subject to a lease unless the company also holds as security an assignment of future rents and the lease is terminable in one year or less: see subclauses (

i) and (ii) of clause (b). How­ ever, the land cannot be subject to any kind of an option to lease. The amendment will now permit the land to be subject to the option if the same requirements will be met when the option is exercised, as in the case of a lease.

Section 125 commences: 125.

(1) Notwithstanding anything in this Division, a company shall not directly or indirectly with the company's own funds or its deposits and investment moneys make any loan to, or purchase any mortgage, loan, securities or real estate from, The new clauses (

j) and (

k) will prohibit a provincial trust company from making loans to or purchasing investments from shareholders having 10 per cent of the voting shares of the company, or in the case of corporate shareholders, from its directors, officers or shareholders having 10 per cent of its voting shares. 19. Corrects a typographical error. 11

Section 135, subsection (4) is amended by adding after the words "subscribed and issued capital stock of the company" the words "held by those shareholders entitled to vote on the question of the adoption at the time the vote is taken". 21..

Section 136, subsection (2) is amended (

a) as to clause 2, subclause (ii) by adding at the end thereof the words "held by those shareholders en­ titled to vote on the question of the approval at the time the vote is taken", (

b) by adding the following clause after clause 4: 5. Where a company purchases shares under this section, then, during the period from the effec­ tive date of the order of the Lieutenant Gov­ ernor in Council under this subsection until the selling company is liquidated or otherwise distributes its assets to its shareholders or until the purchasing company holds less than 67 per cent of the outstanding shares of the selling company, whichever occurs first, (

i) the directors of the purchasing company may by by-law order that the persons who are the directors of the purchasing com­ pany from time to time are the directors of the selling company, in which case

section 30, subsection (2) and sections 31 to 33 do not apply, (ii)

section 63a does not apply to the purchas­ ing company in respect of its shares in the selling company, and (iii)

section 68 does not apply to the selling company.

Section 137, subsection (2) is amended by adding at the end thereof the words "held by those shareholders entitled to vote on the question of the approval at the time the vote is taken". 12

Section 135 (4) presently reads:

(4) The amalgamation agreement shall be submitted to the share­ holde.rs of each of the amalgamating companies at special general meetmgs thereof called fo,r the purpose Dfconsidering the ad.option of the agreement and if at each meeting the shares voted in favour of adopting the amalgamation agreement represent at least two-thirds 01 the subscribld and issued capital stock of the company, (

a) the secretary of each of the amalgamating companies shall certify that fact under the corporate seal thereof, and (

b) the amalgamation agreement shall be deemed to have been adopted by each of the amalgamating companies.

Section 135 deals with the amalgamation of provincial trust companies. As to the reasons for the change, see the note to clause 6 of this Bill. 21.

Section 136 (2)/2(ii) presently reads: 2. The Lieutenant Governor in Council may authcrize such pur­ chase on the rElport of the Director, supported by evidence that (

i) an offer to purchase has been accepted by the holders of at least 67 per cent of the outstanding shares of such com­ pany, the evidence ·of acceptance being in the form of written agreements or in the form of a resolution signed by or on behalf of the shareholders voting therefor, in person or by proxy, at a meeting of the shareholders duly called to consider the offer, or being partly in one form and partly in the other, and (ii) the purchase has been approved by at least a three-fourths vote of such shares as are represented in person or by proxy at a meeting of the shareholders duly called to con­ sider the purchase, if those shares also represent at least 50 per cent of the issued capital stock of the purchasing company.

Section 136 deals with the acquisition by a provincial trust company of the assets of another trust company and subsection (2) deals with the purchase of at least 67 per cent of the shares of the selling company. As to the reasons for the amendment to clause 2 (ii), see clause 6 of this Bill. The new clause 5 is aimed at resolving possible conflicts between

section 136 (2) and other provisions of the Act, e.g., where one company buys 100 per cent of the shares of the other, it will not be necessary for the directors of the selling company to hold qualifying shares required by

section 30 (2) or that there be at least 25 shareholders as required by

section 68 (as enacted in clause 8 of this Bill). As to the reference to

section 63a, see clause 7 of this Bill. 22.

Section 137 (2) presently reads:

(2) No sale or disposal under this

section shall be made until it is approved by at least a three-fourths vote of such shares as are represented in person or by proxy at a meeting Df the shareholders duly called for that purpose, if those shares also represent at least 50 per cent of the issued capital stock of the company.

Section 137 permits a provincial trust company to sell its assets to another trust company. As to the reasons for the amendment, see clause 6 of this Bill. 12

Section 138 is struck out and the following is sub­ stituted: 138.

(1) In this section, (a) "approval" means the approval of the Lieutenant Governor in Council under

section 136, subsection (1) or

section 137, subsection (3); (b) "instrument" includes (

i) any will, codicil or other document having effect on the death of any person, (ii) a settlement, trust deed or any other document creating a trust, (iii) an agreement, transfer, assignment, mortgage, encumbrance, charge or certificate of title, or certificate of registration, (iv) letters probate, letters of administration of any kind, a judgment, order, direction or appointment of any court, judge or other con­ stituted authority, (

v) any pleading, notice or document in an action or other proceeding in a court, and (vi) any document registered, filed, lodged or de­ posited by or with a registrar; (c) "purchasing company" means the company that is the purchasing company under

section 136 or 137; (d) "registrar" means a Registrar of Titles under The Land Titles Act, the registrar of the Central Registry, the registration clerk of the Motor Vehicle Branch of the Department of Highways, a mining recorder, a Minister of the Crown, a clerk of the court or the chief officer of any registry estab­ lished by or pursuant to

an Act of the Legislature; (e) "selling company" means the company that is the selling company under

section 136 or 137.

(2) On and from the effective date of an approval (

a) an instrument naming or appointing the selling company in a trust or representative capacity shall be read, construed and enforced as if the purchas­ ing company was so named or appointed therein, and the purchasing company has, in respect of the instrument, the same rights, obligations and status as the selling company had, (

b) all trusts of every kind and description, including incomplete or inchoate trusts, and every duty as­ sumed by or binding upon the selling company is vested in and binds and may be enforced against the purchasing company as fully and effectively as if it had been originally named or appointed in a trust or representative capacity in the instrument creating the trust, and 13

Section 138 presently reads: 138

(1) In this section, (a) "approval" means the approval of the Lieutenant Governor in Council under subsection (1) of

section 136 or subsection (3) of

section 137; (b) "fiduciary" includes trustee, executor, administrator, bailee, assIgnee, guardian, committee, receiver, liquidator or agent; (c) "instrument" includes every will, codicil, or other testamentary document, settlement, instrument of creation, transfer, mort­ gage, assignment, Act of the Legislature, and a judgment, decree, order, direction and appomtment of any court, judge or other constituted authority; (d) "purchasing ·company" means the company that is the purchas­ ing company under

section 136 or 137; (e) "selling company" means the company that is the selling company under

section 136 or 137.

(2) On and from the effective date of the approval, all trusts of every kind and description, including incomplete or inchoate trusts, and every duty assumed by or binding upon either the selllng company or the purchasing company are vested in and bind and may be en­ forced against the purchasing company as fully and effectually as if it had been originally named as the fiduciary in the instrument.

(3) Whenever in any instrument any estate, money or other prop­ erty, or any interest, possibIlity or right is intended at the time or times of the publishing, making or signing of the instrument to be thereafter vested in or administered or managed by or put in the charge of the selling company as the fiduciary, then, on and from the effective date of the approval, the name ·of the purchasing company shall be deemed to be substituted for the name of the selling company, and such instrument vests the subject matte.r therein described in the purchasing company according to the tenor of, and at the time indicated or intended by, the instrument, and the purchasing company shall be deemed to stand in the place and stead of the selling company.

(4) Where the name of the selling company appears as executor, trustee, guardian, or curator in a will or codicil, the will or codicil shall on and from the effective date of the approval be read, con­ strued and enforced as if the purchasing company was so named therein, and it then has in respect of the will or codicil, the same status and rights as the selling company.

(5) In all probates, administrations, guardianships, curatorships or appointments of administrator .or guardian ad litem issued or made by any court of Alberta to the selling company, from which at the effective date of the approval it had not been finally discharged, the purchasing company shall ipso facto be substituted therefor. The

section is rewritten so as to conform to the equivalent pro­ visions in

section 135· (14) and (15) regarding amalgamations of provincial trust companies. The new

section 138 does not involve any substantial change apart from the inclusion of the definition of "registrar" and subsection (2), clause (c). These are presently contained in

section 18 of the Trust Companies Regulations (added by Alberta Regulation 373/68) and are now being brought into the Act. The new

section 138 is therefore being made effective on November 13, 1968, the date of filing of Alberta Regulation 373/68. 13

(

c) where the selling company is referred to in a docu­ ment registered, filed, lodged or deposited by or with a registrar and being uncancelled or undis­ charged as of the effective date of the approval, the document shall thereafter be dealt with by the registrar as though the document named the pur­ chasing company instead of the selling company, without the necessity of filing a copy of the approval or any other document, or of making any entry in the registrar's records or of paying any fees to the registrar, or of filing any document with the regis­ trar other than a certified copy of the approval and the agreement between the selling company and the purchasing company made pursuant to

section 136 or 137, as the case may be.

Section 139 is amended by adding the following after cIa use (c) : (c1) providing for the methods of valuation to be used with respect to assets comprising a company's guar­ anteed fund under

section 104,

Section 145, subsection (1) is amended (

a) as to clause (

b) by striking out the words "section 66" and by substituting the words "section 68", (

b) by adding the following after subsection (3):

(4) A provincial company is not entitled to registration unless the company becomes the holder of a policy of deposit insurance under the Canada Deposit Insurance Corporation Act after it has made its application for registration, unless provin­ cial companies are not then authorized by the regu­ lations to obtain such policies.

Section 149, subsection (1) is amended by striking out the word "and" at the end of clause (a), by adding the word "and" at the end of clause (

b) and by adding the fol­ lowing clause: (

c) except in the case of a federal company, it is the holder of a policy of deposit insurance under the Canada Deposit Insurance Corporation Act.

Section 166, subsection (1) is amended by adding after the words "examination and inspection of that com­ pany's affairs" the word "or".

Section 168, subsection (5) is amended by striking out the words "a judge of the Supreme Court upon peti­ tion" and by substituting the words "the Lieutenant Gov­ ernor in Council". 14

Section 139 empowers the Lieutenant Governor in Council to make regulations respecting provincial trust companies.

Section 104 (4) refers in a general way to regulations and the new clause will be an express authority for regulations for the purposes of

section 104 (4). 25. (

a) The change in the

section reference is necessitated by the re-enactment of

section 66 as

section 68 (3): see note to clause 8 of this Bill. (

b) The new subsection (4) will require a provincial company applying for registration to have a policy of deposit insurance from the Canada Deposit Insurance Corporation.

Section 149 deals with application for registration by extra­ provincial trust companies. The new clause (

c) will require a company incorporated in another province to show that it is the holder of a policy of deposit insurance from the Canada Deposit Insurance Corporation. 27. Corrects a typographical omission. 28.

Section 168 (5) presently reads:

(5) The remuneration of the receiver and manager for its services, and its expenses and disbursements in connection with the discharge of its duties, shall be fixed and determined by a judge of the Supreme Court upon petition, and shall be paid out of the assets of the com­ pany, and, incase of the winding-up of the company, shall rank on the estate equally with the remuneration of the liquidator. Corrects a drafting oversight. As an appointment under

section 168 would be made by the Lieutenant Governor in Council, it is appropriate that remuneration should also be fixed by him. 14

29. The following heading and

section are added after

section 170: Dissolution After Distribution of Assets 170a.

(1) The directors of a provincial company may make a by-law providing for the distribution of the assets of the corflpany in specie to its shareholders after the dis­ charge or payment of all liabilities of the company and providing that the company is thereafter to be dissolved.

(2) A by-law under subsection (1) is invalid unless (

a) it is approved by a vote of the shareholders at a special general meeting called for that purpose and the shares voted in favour of the approval repre­ sent at least two-thirds of the subscribed and issued capital stock of the company held by those share­ holders entitled to vote on the question of the approval at the time the vote is taken, and (

b) it is approved by the Lieutenant Governor in Coun­ cil.

(3) Upon the effective date of the order of the Lieuten­ ant Governor in Council under subsection (2) (

a) the Director shall cancel the registration of the company, unless the company is then not registered, and (

b) the company shall proceed forthwith to carry out the provisions of the by-law in accordance with its terms. ( 4) The Director shall make a report to the Minister upon being satisfied (

a) that the company has ceased to carryon business and that its registration has been cancelled, and (

b) that, in accordance with the by-law, all liabilities of the company have been discharged or paid and that the assets of the company have been distributed in sepcie to its shareholders.

(5) Where a report has been made under subsection (4), (

a) the special Act for the provincial company may be repealed on a date to be fixed by Proclamation, or (

b) in the case of a company incorporated in Alberta under the Companies Ordinance before October 1, 1929, the company's registration under The Com­ panies Act may be cancelled by an order of the Lieutenant Governor in Council, whereupon the company is dissolved.

Section 172 is amended by adding the following sub­ section:

(4) The Director may, with the approval of the Lieuten­ ant Governor in Council, suspend or cancel the registration 15

29. The new

section 170a is intended to provide a means of re­ pealing a trust company's special Act of incorporation after it has been wound up or ceases to have any assets or liabilities. In the case of companies that were incorporated under the Companies Ordinance, this would result in cancellation of registration.

Section 172 deals with grounds for suspension or cancellation of registration. 15

of a registered company other than a federal company, where the company ceases to be the holder of a policy of deposit insurance under the Canada Deposit Insurance Corporation A ct.

Section 175 is amended by striking out the word "and" at the end of clause (

e) and by striking out clause (

f) and by substituting the following: (

f) prohibiting registered companies or any of them from using any specified business practices in con­ nection with their transactions and affairs, (

g) providing for the method of calculation to be used by a registered company for the purpose of deter­ mining the amount of its unimpaired paid-up capi­ tal from time to time, including the methods of valu­ ation of assets for that purpose, and (

h) generally, for the carrying out of the provisions of this Act or to meet cases that may arise and for which no provision is made by this Act. 32. The following

section is added after

section 181: 181a. No action lies against a receiver and manager or liquidator appointed under Division 4, or any officer or employee of any person so appointed, in respect of any loss or damage suffered by any person by reason of anything done or omitted to be done in the exercise or purported exercise of the powers of the receiver and manager or liquid­ ator, as the case may be, except in the case of wanton or wilful misconduct. 33.

(1) This Act, except sections 3, 7 to 10, 13, 18, 25 and 26, comes into force on the day upon which it is assented to.

(2) Sections 3, 7 to 10, 18, 25 and 26 come into force on July 1, 1969.

(3) Upon coming into force (

a) sections 5, 6, 20, 21 and 22 shall be deemed to have been in force at all times on and after December 2,1968,and (

b) section 2'3 shall be deemed to have been in force at all times on and after November 13, 1968.

(4) Section 13 comes into force on a date to be fixed by Proclamation. 16

Section 175 empowers the Lieutenant Governor in Council to make regulations. The new clause (

h) isa re-enactment of the present clause (f). 32. Liability of receiver and manager or liquidator of a trust company. 33. The amendments to sections 48 (3), 49 (6), 135 (4), 136 (2) and 137 (2) are made effective as to December 2, 1968, the date of filing of Alberta Regulation 385/68: see note to clause '6 of this Bill. The new

section 138 is made effective of November 13, 1968, the date of filing of Alberta Regulation 373/68: see note to clause 22 of this Bill. 16 Title: 1969 (16th, 2nd) Bill 116,

An Act to amend The Trust Companies Act, 1967