Financial Institutions Act

Definitions and interpretation

1 (1) In this Act and in the Company Act as it applies for the purposes of this Act:

"articles" means the document described in section 13 and includes the articles, articles of association or bylaws by whatever name called of a trust company or insurance company;

"auditor" includes a partnership of auditors and an additional auditor appointed under section 125;

"business authorization" means an authorization to carry on

(a) trust business,

(b) deposit business,

(c) insurance business, or

(d) both trust business and deposit business,

issued under Division 1 of Part 3 to a financial institution, under Division 1 of Part 6 to an extraprovincial corporation or under Division 5 of Part 6 to a society described in section 191;

"capital base" of a financial institution or extraprovincial corporation means the capital base determined in accordance with the regulations under section 289 (3) (e) or (f);

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

"charter" includes

(a) an Act, statute, ordinance, letters patent, certificate, declaration,

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

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

(d) the constitution and rules of a credit union;

"commission" means the Financial Institutions Commission established under section 201;

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

"Company Act", except in section 245 (1) (j) (ii) of this Act and subsection (4) of this section, means the Company Act, R.S.B.C. 1996, c. 62, as that Act is applied under subsection (4) of this section;

"conduct review committee", in relation to a financial institution, means the conduct review committee elected by the directors as required under section 112;

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

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

"council" means the Insurance Council of British Columbia continued under section 220;

"credit union" means a corporation incorporated as a credit union under the Credit Union Incorporation Act, the Credit Union Act, R.S.B.C. 1979, c. 79, or a former Credit Unions Act, and includes a central credit union and a credit union continued into British Columbia under section 15.1 of the Credit Union Incorporation Act, but does not include a credit union continued under the laws of another jurisdiction under section 15.2 of the Credit Union Incorporation Act;

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

(a) in bearer or registered form,

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

(c) evidence of an obligation or indebtedness of the financial institution,

but does not include

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

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

(i) a deposit, or

(ii) an annuity payment, or

(f) an investment contract or mutual fund certificate;

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

(a) on demand,

(b) after notice,

(c) on the expiry of a specified term, or

(d) at specified intervals for a specified term,

whether or not the person undertaking an activity or activities set out in paragraphs (a) to (d) can or does distribute any gain, profit or dividend, or otherwise disposes of the person's assets, to a member or shareholder of the person other than during winding up or on dissolution;

"deposit insurance corporation" means the Credit Union Deposit Insurance Corporation of British Columbia continued under section 261;

"depositor" means

(a) an individual, or

(b) an entity

that has money on deposit with a credit union, extraprovincial credit union or extraprovincial trust corporation, and includes an individual or entity who holds non-equity shares in a credit union;

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

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

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

"extraprovincial credit union" means a credit union that is incorporated by or under the laws of a jurisdiction other than British Columbia and that is, under those laws, licensed, registered or in any way authorized to carry on activities that are substantially the same as trust business or deposit business or both;

"extraprovincial insurance corporation" means

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

(b) an insurance association,

and includes a society that is named in an order of the commission made under section 193 (2) to which society section 159 applies because of section 193 (3), but does not include

(c) a corporation that

(i) is licensed under Division 2 of Part 6 as an insurance agent or insurance adjuster, and

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

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

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

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

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

"fund", except in the definition of "entity", means the fund continued under section 267;

"general insurance" means insurance that is not life insurance;

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

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

"insurance business" means

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

(b) soliciting or accepting any risk,

(c) soliciting an application for a contract of insurance,

(d) issuing or delivering a

(i) receipt for any contract of insurance, or

(ii) contract of insurance,

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

(f) collecting or receiving any premium for a contract of insurance,

(g) adjusting any loss covered by a contract of insurance, or

(h) advertising for any business described in paragraphs (a) to (g),

whether or not the person undertaking an activity or activities set out in paragraphs (a) to (h) can or does distribute any gain, profit or dividend, or otherwise disposes of the person's assets, to a member or shareholder of the person other than during winding up or on dissolution;

"insurance company" means

(a) a corporation incorporated under Division 1 of Part 2 for the purpose of carrying on insurance business, or

(b) an insurer incorporated by or under another Act,

and includes

(c) a corporation converted under section 21 or continued into British Columbia under section 23, and

(d) a society that is named in an order of the commission, made under section 193 (2) to which society section 59 applies because of section 193 (3)

but does not include

(e) a corporation continued under the laws of another jurisdiction,

(f) a society deemed under section 191 to have a business authorization issued under Division 5 of Part 6,

(g) a mutual fire insurance company as defined in section 188 or a grandparented insurance society as defined in section 200,

(h) a corporation that

(i) is licensed under Division 2 of Part 6 as an insurance agent or insurance adjuster, and

(ii) carries on insurance business only in its capacity as an insurance agent or insurance adjuster, or

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

"insurer" means an individual, corporation or other entity carrying on insurance business;

"life insurance" means insurance by which an insurer undertakes to pay money

(a) on death,

(b) on the happening of an event or a contingency dependent on human life,

(c) at a fixed or determinable future time, or

(d) for a term dependent on human life,

and, without restricting the generality of the foregoing, includes

(e) accidental death insurance, but not accident insurance,

(f) disability insurance, and

(g) an undertaking entered into by an insurer in the ordinary course of its business to provide an annuity, including an annuity in respect of which the periodic payments may be unequal in amount;

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

"member",

(a) in relation to a trust company or insurance company, means a subscriber of the memorandum of a company, and includes every other person who agrees to become a member of the company and whose name is entered in its register of members or a branch register of members, and

(b) in relation to a credit union, means a person who has been admitted to membership or junior membership in the credit union and whose name is entered in its register of members, but does not include a person who is an auxiliary member as defined in section 1 of the Credit Union Incorporation Act;

"memorandum" means the document described in section 12 and includes the memorandum, memorandum of association or constitution by whatever name called of a trust company or insurance company;

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

(a) evidences indebtedness of the credit union to the holder of the share, and

(b) does not represent an equity interest in the credit union;

"public body", in relation to a credit union, means

(a) a municipality or regional district,

(b) [Repealed 2003-52-64.]

(c) the Municipal Finance Authority of British Columbia under the Municipal Finance Authority Act,

(d) a government body under the Financial Administration Act, or

(e) a board, commission, authority or similar body established or authorized under an Act to administer, regulate, manage or undertake the operation of schools, libraries, hospitals, health facilities, irrigation systems, drainage systems, water supply systems, local improvements or public utilities, or to regulate or facilitate the regulation of agricultural and other natural products marketing or to levy or raise taxes under the authority of an Act;

"security instrument" means security as defined in section 1 of the Securities Act;

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

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

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

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

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

(i) $1 million, or

(ii) 1/3 of the sum of

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

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

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

"special resolution",

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

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

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

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

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

(b) in relation to a credit union, means a special resolution as defined in section 1 of the Credit Union Incorporation Act;

"spouse" means a person who

(a) is married to another person, or

(b) is living and cohabiting with another person in a marriage-like relationship, including a marriage-like relationship between persons of the same gender;

"superintendent" means the Superintendent of Financial Institutions appointed under section 207;

"tribunal" means the Financial Services Tribunal continued under section 242.1;

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

(a) trustee, executor or administrator,

(b) guardian of a minor's estate,

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

(d) attorney under Part 2 of the Power of Attorney Act, or

(e) representative granted power over an adult's financial affairs under section 7 (1) (b) of the Representation Agreement Act,

whether or not the person undertaking an activity or activities set out in paragraphs (a) to (e) can or does distribute any gain, profit or dividend, or otherwise disposes of the person's assets, to a member or shareholder of the person other than during winding up or on dissolution;

"trust company" means

(a) a corporation incorporated under Division 1 of Part 2, for the purpose of carrying on trust business and includes a corporation continued into British Columbia under section 23, or

(b) a corporation incorporated as a trust company under the Trust Company Act, R.S.B.C. 1979, c. 412, or incorporated under another Act,

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

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

(a) an officer or employee of the company or of an affiliate of it,

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

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

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

(e) the spouse of an individual described in any of paragraphs (a) to (d),

(f) a relative of an individual described in paragraph (a) or (b) who occupies the same home as that individual,

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

(h) unless determined to be an unaffiliated director by the commission under section 97 (2),

(i) an individual,

(ii) a partner in or an employee of a partnership,

(iii) an officer or employee of a corporation, or

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

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

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

(2) For the purposes of this Act and the Company Act as it applies for the purposes of this Act, an affiliate of a corporation is deemed to be affiliated with all other corporations with which the corporation is affiliated.

(3) Subject to subsections (1) and (2) and unless the context requires otherwise, words and expressions used in the Company Act, whether or not defined in that Act, have the same meaning for the purposes of this Act as they have in the Company Act.

(4) Despite the repeal of the Company Act, R.S.B.C. 1996, c. 62,

(a) a reference in this Act to the Company Act is, except in section 245 (1) (j) (ii) of this Act, deemed to be a reference to the Company Act, R.S.B.C. 1996, c. 62, and is, in section 245 (1) (j) (ii) of this Act, deemed to include a reference to the Company Act, R.S.B.C. 1996, c. 62, and

(b) the provisions of the Company Act, R.S.B.C. 1996, c. 62, continue to apply, as though that Act had not been repealed, to and in respect of the deposit insurance corporation, and to every financial institution, in the manner and to the extent provided by this Act.

(c) [Repealed 2006-12-40.]

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

Company Act and Business Corporations Act apply to financial institutions only as specified in this Act

2 Except as provided in this Act or the Credit Union Incorporation Act, the Company Act and the Business Corporations Act do not apply to or in respect of a financial institution.

Specific rules respecting Business Corporations Act application to extraprovincial corporations

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

(2) Without limiting Division 11 of Part 10 of the Business Corporations Act, before submitting an application to the registrar under that Division or before making an application to the court under that Division, the applicant must, if the application relates to an extraprovincial corporation,

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

(b) obtain the consent of the commission to the restoration, or conversion of a limited restoration, contemplated by the application.

(3) For the purposes of section 379 of the Business Corporations Act as it applies to extraprovincial corporations, the reference in section 379 (1) to "within 2 months" must be read as "immediately".

This Act paramount

11 Except as provided in section 4 (3), if a provision of this Act is inconsistent or in conflict with a provision of the Act by or under which a financial institution is incorporated, the provision of this Act prevails.

Financial Institutions Act

[RSBC 1996] CHAPTER 141