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Part 2 — Incorporation, Significant Changes and Winding Up
Division 1 — Incorporation and Significant Changes
12 (1) One or more persons who
(a) propose to
(i) form a corporation other than a credit union for the purpose of carrying on trust business, or
(ii) form a corporation for the purpose of carrying on insurance business,
(b) complete an application in the form established by the commission, and
(c) file the completed application with the superintendent,
subject to this Division, may form a trust company or an insurance company by
(d) subscribing to a memorandum prepared in accordance with subsection (2), and
(e) adopting articles prepared in accordance with sections 13 and 14.
(2) The memorandum must
(a) be printed or typewritten,
(b) be divided into paragraphs numbered consecutively,
(c) show opposite the name of each subscriber the number of shares, and, if there are shares of different kinds and classes, the number of shares of each kind and class taken,
(d) contain the agreement of each subscriber to be a member of the trust company or insurance company, and
(e) contain the restrictions, if any, other than those imposed under this Act, on the business to be carried on by the company or on the powers of the trust company or insurance company.
13 (1) A trust company or insurance company must have articles specifying rules for its conduct.
(2) A trust company or insurance company may by its articles adopt all or any of the provisions of Table A in the First Schedule to the Company Act.
(3) The articles must
(a) be printed or typewritten, and
(b) be divided into paragraphs numbered consecutively.
(4) The articles may provide for cumulative voting by members in the election of directors in accordance with section 14.
(5) A provision in the articles of a trust company or insurance company for cumulative voting by members in the election of directors does not apply at any time when any one member of the company beneficially owns or controls, directly or indirectly, all of the issued voting shares in the company.
14 (1) The articles of a trust company or insurance company that provide for cumulative voting by members in the election of directors must include provisions to the following effect:
(a) that the trust company or insurance company have a specific number of directors, with no allowance for minimum and maximum numbers of directors;
(b) that each member entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the member multiplied by the number of directors to be elected, and that each member may cast all the votes in favour of one candidate or distribute them among the candidates in any manner;
(c) that a separate vote of members must be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting 2 or more persons to be elected by a single resolution;
(d) that, if a member has voted for more than one candidate without specifying the distribution of votes among the candidates, the votes must be distributed equally among the candidates;
(e) that, if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes must be eliminated until the number of candidates remaining equals the number of positions to be filled;
(f) that a director may not be removed from office if the votes cast against removal would be sufficient to elect a director if they were voted cumulatively at an election at which the same total number of votes were cast and the number of directors required by the articles were being elected;
(g) that the number of directors required by the articles may not be decreased if the votes cast against the motion to decrease would be sufficient to elect a director if they were voted cumulatively at an election at which the same total number of votes were cast and the number of directors required by the articles were being elected.
(2) If the articles of a trust company or insurance company provide for cumulative voting, no holders of any class of shares of the trust company or insurance company have an exclusive right to elect one or more directors.
(3) If the articles of a trust company or insurance company provide for cumulative voting, the members of the trust company or insurance company must,
(a) at the first annual meeting of members held not earlier than 90 days following the date that cumulative voting is provided for in the articles, and
(b) at each succeeding annual meeting,
elect directors to hold office until the close of the next annual meeting of members following the directors' election.
15 On the registrar receiving
(a) the memorandum,
(b) the articles, and
(c) a notice of the trust company's or insurance company's
(i) registered office, and
(ii) records office,
the registrar, subject to section 18, must register the memorandum and articles and enter the name of the trust company or insurance company, as the case may be, in the register of financial institutions.
16 On registration under section 15, the registrar must
(a) issue a certificate of incorporation showing that the trust company or insurance company is incorporated under this Act, and
(b) publish in the Gazette notice of the incorporation.
17 A certificate of incorporation is conclusive evidence that the trust company has been duly incorporated under this Act or the Trust Company Act, R.S.B.C. 1979, c. 412, or that the insurance company has been duly incorporated under this Act.
18 (1) The registrar must not register the memorandum and articles of a trust company or insurance company or enter its name in the register of financial institutions without first receiving the consent of the commission to the incorporation.
(2) The commission must not consent to the incorporation of a trust company or insurance company unless
(a) the persons applying to incorporate ("the subscribers") have
(i) submitted to the commission the proposed memorandum and articles of the proposed trust company or insurance company, and
(ii) paid the prescribed fee,
(b) the subscribers have submitted to the commission a plan
(i) specifying the names and addresses of the proposed first directors and senior officers of the proposed trust company or insurance company,
(ii) specifying, in the case of an insurance company, whether the business proposed to be carried on is life insurance business, general insurance business or both,
(iii) specifying the services that the proposed trust company or insurance company intends to offer to the public,
(iv) describing, in detail satisfactory to the commission, the period within which the proposed trust company or insurance company will meet the requirements for being issued a business authorization and specifying the preliminary activities, not being trust business or insurance business, that the proposed trust company or insurance company proposes to carry on during that period, and
(v) containing information required by the commission,
(c) the proposed memorandum and articles comply with this Act and the regulations,
(d) the commission is satisfied that preliminary activities set out in the plan under paragraph (b) are appropriate and in compliance with this Act,
(e) each of the proposed first directors and senior officers of the trust company or insurance company has completed and submitted to the commission a personal information return in the form established by the commission and disclosing information required by the commission,
(f) the subscribers have satisfied the commission that the proposed trust company or insurance company intends to obtain, and will be able to obtain, a business authorization to enable it to offer to the public, within a reasonable time after the incorporation, the services set out in the plan under paragraph (b), and
(g) the subscribers have satisfied the commission that the proposed trust company or insurance company will have both the financial and managerial capacity to properly carry on the business proposed to be carried on by it in compliance with this Act.
(3) The commission must not consent to the incorporation of a trust company or an insurance company if the commission believes on reasonable grounds that it is not in the public interest to consent to the incorporation.
(4) The commission may conduct an investigation and a subscriber must provide to the commission information, verifications, forecasts of business operations or documents that the commission considers necessary in relation to the proposed incorporation.
19 A corporation that is a trust company or insurance company has the power and capacity of an individual of full capacity.
20 (1) A trust company or insurance company that is incorporated but does not have a business authorization must not undertake any activity other than an activity specified under section 18 (2) (b) (iv) as a preliminary activity in the plan described in section 18 (2) (b).
(2) Until a trust company or insurance company receives a business authorization, the trust company or insurance company, in every written communication, advertisement and document in which the name of the trust company or insurance company appears, must add immediately after the name the following: "(Not authorized)".
21 (1) An insurance company incorporated by another Act may convert itself into an insurance company incorporated under this Division for the purposes of carrying on insurance business by a special resolution that
(a) alters the form of the charter of the corporation by substituting for its charter a memorandum and articles that comply with this Act,
(b) if it is necessary to comply with section 30 or 31 of this Act or with the Company Act as it applies for the purposes of this Act, alters the name of the corporation, and
(c) authorizes 2 or more directors to execute the memorandum and articles on behalf of the corporation and to deliver them to the registrar and the superintendent with a copy of the special resolution and the other documents relating to the corporation that the superintendent requires.
(2) On receipt of
(a) the special resolution and documents referred to in subsection (1) and the prescribed fees, and
(b) consent of the commission,
the registrar must issue a certificate of conversion showing that the corporation is converted into an insurance company incorporated under this Division for the purpose of carrying on insurance business and, on and after the date of the certificate, the substituted memorandum and articles apply to the insurance company in the same manner as if the insurance company were an insurance company incorporated under this Division with that memorandum and those articles, and the former charter of the corporation ceases to apply.
(3) The registrar must publish in the Gazette a notice of the conversion of the corporation.
(4) A business authorization held by an insurance company on the date a certificate of conversion is issued to the insurance company under this section continues in force after that date, subject to a subsequent surrender of the business authorization, and to any amendment or the suspension, revocation or cancellation of the business authorization, under this Act.
22 The conversion of an insurance company under section 21 does not affect a debt, liability, obligation or contract incurred or entered into by, to, with or on behalf of the insurance company before the conversion, and legal proceedings in respect of them may be continued or commenced against the insurance company in the same manner as if the conversion had not taken place.
23 (1) Subject to this section and section 29, an extraprovincial insurance corporation or extraprovincial trust corporation, if it appears to the registrar to be authorized to do so by the laws of the jurisdiction in which it was incorporated, may deliver to the registrar an instrument of continuation in duplicate continuing the extraprovincial insurance corporation or extraprovincial trust corporation as if it had been incorporated under this Act.
(2) The instrument of continuation must
(a) set out prescribed matters,
(b) be executed under seal and signed by an officer or director of the extraprovincial insurance corporation or extraprovincial trust corporation and verified by an affidavit of the person signing the instrument of continuation, and
(c) be accompanied by other material required by the commission.
(3) The instrument of continuation must make the amendments to the charter of the extraprovincial insurance corporation or extraprovincial trust corporation that are necessary to make the instrument conform to the laws of British Columbia and may make other amendments permitted under this Act as if the extraprovincial insurance corporation or extraprovincial trust corporation were incorporated under this Act as a trust company or insurance company, as the case may be.
(4) If the registrar under subsection (1) receives from an extraprovincial insurance corporation or extraprovincial trust corporation
(a) an instrument of continuation that complies with subsections (2) and (3),
(b) the prescribed fees, and
(c) the consent of the commission
the registrar must file one duplicate of the instrument of continuation and issue to the extraprovincial insurance corporation or extraprovincial trust corporation a certificate of continuation to which the registrar must affix the other duplicate.
(5) In addition to the requirements under section 29, the commission must not give a consent referred to in subsection (4) (c) unless satisfied that the extraprovincial insurance corporation or extraprovincial trust corporation, in its primary jurisdiction as defined in section 157, is licensed, registered or authorized to carry on the business that it proposes to carry on in British Columbia.
(6) On and after the date in a certificate of continuation issued to an extraprovincial insurance corporation or extraprovincial trust corporation under subsection (4), this Act applies to the corporation to the same extent as if it had been incorporated under this Act as a trust company or insurance company, as the case may be.
(7) A business authorization, that an extraprovincial trust corporation or an extraprovincial insurance corporation has immediately before the date that a certificate of continuation is issued to the extraprovincial corporation under this section, continues in force on and after that date subject to a subsequent surrender of the business authorization, and to any amendment or the suspension, revocation or cancellation of the business authorization, under this Act.
24 (1) A trust company or an insurance company, if authorized by
(a) a special resolution,
(b) the consent given by the commission for the purpose of this section, and
(c) the laws of another jurisdiction,
may apply to the proper officer of that other jurisdiction for an instrument of continuation continuing the company as if it had been incorporated under the laws of that other jurisdiction.
(2) A trust company or insurance company ceases to be a trust company or insurance company under this Act on and after the date on which it is continued under the laws of the other jurisdiction and it must promptly file with the registrar and the commission a copy of the instrument of continuation certified by the proper officer of the other jurisdiction.
(3) This section applies only in respect of a jurisdiction that has laws that permit corporations incorporated under its laws to apply for continuation under the laws of British Columbia.
(4) Until 2 days before the meeting at which the special resolution referred to in subsection (1) is to be passed, a member of the trust company or insurance company may give notice of dissent to the company concerning the member's shares, and then section 207 of the Company Act, as adopted by section 3 of this Act, applies.
25 All rights of creditors against the property, rights and assets of an extraprovincial insurance corporation or extraprovincial trust corporation continued under section 23 as a trust company or insurance company and all liens on its property, rights and assets are unimpaired by the continuation, and all debts, contracts, liabilities and duties of the corporation from then on attach to the continued corporation and may be enforced against it.
26 (1) A trust company may amalgamate with one or more
(a) subsidiaries of it that are trust companies or extraprovincial trust corporations,
(b) other trust companies, and
(c) extraprovincial trust corporations.
(2) An insurance company may amalgamate with one or more
(a) subsidiaries of it that are insurance companies or extraprovincial insurance corporations,
(b) other insurance companies, and
(c) extraprovincial insurance corporations.
(3) On an amalgamation under subsection (1) or (2), the amalgamating companies continue as one company called the "amalgamated company" under the name of one of them, or under a name approved by the commission.
(4) On an amalgamation under subsection (1) or (2), the amalgamated company
(a) may carry on business under the business authorization issued with respect to one of the amalgamating companies, as directed by the commission, until the amalgamated company has been granted a new business authorization under section 61, and
(b) has 30 days in which to apply for a new business authorization.
27 If an approval of the registrar referred to in section 248 (1) of the Company Act as it applies for the purposes of this Act is sought, the registrar must not give approval under that section without first receiving the consent of the commission to the amalgamation agreement.
28 (1) Despite section 252 of the Company Act as it applies for the purposes of this Act, a compromise or arrangement made with respect to a trust company or insurance company is not binding unless, after the vote that is required by that section and before approval is given by the Supreme Court, consent is also given by the commission.
(2) Unless it first receives the consent of the commission, a trust company or insurance company must not acquire assets that, immediately after the acquisition, will constitute a percentage of the total assets of the trust company or insurance company that is greater than the prescribed percentage.
(3) Unless it first receives the consent of the commission, an insurance company must not reinsure all or any portion of its policies with another insurance company if the reinsurance has the effect of transferring
(a) the whole, or
(b) a part that is greater than the prescribed percentage
of the business or property of the insurance company placing the reinsurance.
(4) Subsection (3) does not apply to contracts of reinsurance made by insurance companies in the ordinary course of their business.
29 (1) In subsection (2) (a), "corporation" means
(a) an extraprovincial corporation proposing to be continued in British Columbia as a trust company or insurance company, or
(b) each of one or more corporations proposing to amalgamate and continue as one company.
(2) The commission must not consent under section 23 (4) (c) in respect of a continuation in British Columbia of an extraprovincial corporation as a trust company or insurance company or consent under section 27 to an amalgamation agreement, unless
(a) the directors of the corporation have submitted to the commission
(i) the name and address of the corporation,
(ii) the financial statements of the corporation,
(iii) the memorandum proposed for the continued company or amalgamated company,
(iv) the articles proposed for the continued company or amalgamated company,
(v) a plan for the continued company or amalgamated company
(A) specifying, in the case of an insurance company, whether the business proposed to be carried on is life insurance business, general insurance business or both,
(B) specifying the services that the company intends to offer to the public,
(C) if the company does not have a business authorization, describing in detail satisfactory to the commission the period within which the company will meet the requirements for being issued a business authorization and specifying the preliminary activities, not being trust business or insurance business, that the company proposes to carry on during that period, and
(D) containing information required by the commission, and
(vi) in the case of a proposed amalgamation, the full particulars of
(A) the terms on which the amalgamation is to take place, together with copies of every agreement relating to the amalgamation, and
(B) the financial resources that will be available to the amalgamated company,
(b) the commission approves the memorandum and articles submitted under paragraph (a),
(c) each proposed director and senior officer of the continued company or amalgamated company has completed and submitted to the commission a personal information return in the form established by the commission and disclosing information required by the commission, and
(d) the commission believes on reasonable grounds that it is in the public interest to consent to the continuation or amalgamation.
(3) [Repealed 2004-48-37.]
(4) The commission must not consent under section 28 in respect of a compromise, arrangement, acquisition or disposition by reinsurance if the commission believes on reasonable grounds that it is not in the public interest to consent.
(5) The commission may conduct an investigation and the directors and officers must provide the commission with information, verifications, forecasts of business operations or documents that the commission or the minister considers necessary in determining whether to consent or refuse consent under section 23 (4) (c), 27 or 28.
30 (1) A trust company that proposes or is authorized to carry on trust business must have and use a name that includes the word
(a) "trust" together with a designation such as "company" or "corporation", or
(b) "trustco".
(2) An insurance company that proposes or is authorized to carry on insurance business must have and use a name that includes the word "insurance" or "assurance" together with a designation such as "company" or "corporation".
31 A person must not use
(a) any of the words
(i) "trust" or "trustee",
(ii) "deposit" or "loan", or
(iii) "insurance", "assurance" or "insurer", or
(b) any other words in connection with the business of a person,
in a way likely to
(c) deceive or mislead the public about the ability of the person to undertake trust business, deposit business or insurance business, or
(d) give a false impression that the person is a trust company or insurance company, as the case may be.
32 The commission is a party to any proceedings in which a director of a trust company or insurance company applies to the Supreme Court under section 127 (2) or 236 (2) of the Company Act as it applies for the purposes of this Act.
33 The registrar must not accept for filing
(a) a resolution, referred to in section 217 (3) of the Company Act as it applies for the purposes of this Act, to alter the memorandum of a trust company or insurance company, or
(b) a resolution referred to in section 219 (2) of the Company Act as it applies for the purposes of this Act, to alter the articles of a trust company or insurance company,
without first receiving the consent of the commission.
Division 2 — Dissolution and Winding Up of Trust Companies and Insurance Companies
34 (1) The registrar must not strike a trust company or insurance company off the register under section 257 of the Company Act as it applies for the purposes of this Act, without first receiving the consent of the commission.
(2) The Supreme Court must not make an order restoring a trust company or insurance company to the register under section 262 of the Company Act as it applies for the purposes of this Act, without first receiving the consent of the commission.
35 Neither an ordinary resolution under section 258 of the Company Act nor a special resolution under section 267 of the Company Act as either provision applies to trust companies or insurance companies for the purposes of this Act has any effect unless 30 days' written notice of the trust company's or insurance company's intention to pass the resolution has been given to the superintendent and to any similar authority in any other province in which the trust company or insurance company is registered, licensed or authorized to carry on business.
36 The commission is a party to any proceedings in which an application is made to the Supreme Court under section 271 of the Company Act as it applies for the purposes of this Act.
37 (1) In this section, "administrator" has the same meaning as in the Unclaimed Property Act.
(1.1) If a liquidator has or controls any unclaimed or undistributed assets or money of a trust company or insurance company that is being wound up or dissolved and the assets or money have remained unclaimed or undistributed for more than 6 months after the date on which any dividend or other distribution of assets or money declared by the liquidator became payable or distributable, the liquidator must publish in one or more newspapers selected by the liquidator a statement of
(a) the assets or money unclaimed or undistributed,
(b) the procedure required to claim the assets or money, and
(c) the date, not sooner than 60 days or later than 120 days after the publication, on which the liquidator will pay or deliver the assets or money to the administrator.
(2) On the date specified under subsection (1.1) (c), the liquidator must pay or deliver the unclaimed assets or money to the administrator with a statement showing, to the extent known to the liquidator, the full names and last known addresses of the persons appearing to be entitled to the assets or money and the amount to which each appears to be entitled.
(3) The receipt of the administrator for the assets or money is an effective discharge to the liquidator for them.
(4) The administrator, in respect of assets paid or delivered to the administrator under this section, may realize any assets, and any money received or realized under this section is deemed to be unclaimed money deposits under the Unclaimed Property Act.
38 (1) If the commission believes on reasonable grounds that it is contrary to the public interest that a trust company or insurance company that is incorporated but has not been issued a business authorization continue in business, the commission may order that the trust company or insurance company be wound up.
(2) Without limiting the generality of subsection (1), if a trust company or insurance company
(a) has not within the time limited by section 61 (1) applied for a business authorization,
(b) is refused a business authorization,
(c) has contravened section 20 (1) or (2), or
(d) without having a business authorization for that business, holds itself out to the public as authorized to carry on trust business or insurance business,
the commission may order that the trust company or insurance company be wound up.
(3) If the commission makes an order under this section, the references in sections 273 to 275 (2) (b), 278 (b), 279 (1) (a), 283 (1) (b) and (3), 286, 288 (3) and 293 (3) of the Company Act as it applies for the purposes of this Act to the court or to a court order, for the purposes of the winding up, must be read as references to the commission or to the commission's order.
(4) On the winding up of a trust company or insurance company under this section, the registrar must publish in the Gazette notice that the trust company or insurance company is being wound up, and the date of the winding up order; and the cost of the publication must be paid by the trust company or insurance company to the government and is recoverable by the government from the trust company or insurance company as a simple contract debt.
39 When a trust company or an insurance company is being wound up, then, unless otherwise ordered
(a) by the commission, if the commission under section 38 ordered the winding up, or
(b) by the Supreme Court, if it ordered the winding up,
within 7 days after the close of each period of 3 months and until the affairs of the trust company or insurance company are wound up and the accounts are finally closed, the liquidator must file with the Supreme Court and with the superintendent detailed schedules in the forms that may be prescribed, showing receipts, expenditures, assets and liabilities.
40 The superintendent, at any time, may examine the records of a trust company or insurance company that is being wound up.
Division 3 — Special Provisions Respecting Insurance Companies Ceasing Business or Winding Up
41 (1) An insurance company before or concurrently with ceasing to carry on business in British Columbia must provide for the whole sum insured under each of its contracts of insurance in British Columbia subsisting at the time of ceasing to carry on business by
(a) obtaining the reinsurance of the sum insured, by agreement with
(i) an insurance company, or
(ii) an extraprovincial insurance corporation that has a business authorization,
(b) obtaining a surrender or discharge of the insurance contract, or
(c) obtaining the written consent of the insured to the continuance of the insurance contract for its unexpired term.
(2) If an insurance company is ceasing or has ceased to carry on insurance business in British Columbia then, concurrently with and after ceasing to carry on business in British Columbia, the insurance company must
(a) make timely written reports to the superintendent showing how it is providing, and has provided, under subsection (1), for its contracts of insurance in British Columbia, and
(b) file with the superintendent the agreements, lists or other documents that the superintendent may require with respect to the insurance business of the insurance company in British Columbia and the disposition of that insurance business.
42 (1) In this section, "available assets" of an insurance company that is being wound up means those assets of the insurance company that, according to the liquidator's reasonable estimates, will remain after payment in full of
(a) the costs of winding up and dissolution,
(b) claims for losses covered by the insurance company's contracts of insurance, of which claims notice is received by the liquidator or insurance company before the date on which reinsurance is obtained, and
(c) claims of the secured creditors of the insurance company.
(2) Subject to subsection (3), the liquidator of an insurance company that is being wound up
(a) may use available assets of the insurance company to obtain the reinsurance in full of the sum insured under each of the insurance company's contracts of insurance subsisting at the time of winding up, or
(b) if there are not enough available assets to obtain reinsurance in full under paragraph (a), may use the available assets to obtain the reinsurance of the largest possible proportion of the sum insured under each contract, that must be the same proportion for each contract.
(3) The liquidator of an insurance company that is being wound up must not obtain reinsurance under subsection (2) except through a contract of reinsurance with
(a) an insurance company, or
(b) an extraprovincial insurance corporation
that has a business authorization and the liquidator must not enter into the contract of reinsurance without first applying for and receiving the approval of the Supreme Court to the terms of the proposed contract of reinsurance.
43 If
(a) reinsurance has been obtained under section 41 (1) (a) or 42 (2) through an insurance company or extraprovincial insurance corporation (which company or corporation is in this section called the "reinsurer"), and
(b) the insurance company for whose contracts of insurance the reinsurance was obtained ceases to carry on business in British Columbia or is wound up,
an insured or other person entitled to rights under any of those contracts of insurance may enforce the rights against the reinsurer to the extent of the reinsurance as though the contract had been issued by the reinsurer.
44 (1) If the liquidator of an insurance company that is being wound up is unable to obtain reinsurance, or it is impractical, inexpedient or uneconomical for the liquidator to obtain reinsurance, the liquidator may apply to the Supreme Court to set a termination date proposed by the liquidator for the insurance company's subsisting contracts of insurance.
(2) On application by the liquidator under subsection (1), the Supreme Court, on the terms, if any, specified by the court, may set as the termination date for the insurance company's subsisting contracts of insurance the date proposed by the liquidator or another date that the court considers appropriate in order to give adequate notice to policy holders.
(3) On the termination date set under subsection (2) for the termination of an insurance company's subsisting contracts of insurance, the insurance company ceases to be liable under the contracts for any losses that occur on or after that termination date.
45 (1) Promptly after a termination date is set under section 44, the liquidator must publish
(a) in the Gazette,
(b) in the gazette of each other province in which the insurance company is licensed or authorized to carry on insurance business, and
(c) in newspapers the Supreme Court may direct
notice to the effect that on the termination date the insurance company being wound up will cease to be liable under its subsisting contracts of insurance for any losses that occur on or after that date.
(2) On or before publication of the notice referred to in subsection (1), the liquidator must mail a copy of the notice to each policy holder at the address of the policy holder as shown in the records of the insurance company.
46 (1) The liquidator of an insurance company that is being wound up must pay or set aside from the assets of the insurance company assets sufficient in the liquidator's opinion to cover payment in full of
(a) the costs of winding up and dissolution,
(b) claims for losses covered by the insurance company's contracts of insurance and that occurred before the termination date set by the Supreme Court under section 44 and of which claims notice is received by the liquidator or the insurance company,
(c) the amount of the legal reserve in respect of each unmatured life insurance contract, and
(d) claims of the secured creditors of the insurance company.
(2) Except in the case of unmatured life insurance contracts referred to in subsection (1) (c), the assets remaining after payment, or making provision for payment as set out in subsection (1) must be used to pay claims of insured persons for refunds of unearned premiums on a proportional basis in proportion to the periods of their contracts respectively unexpired on the termination dates.
(3) The claims of the insured persons for refunds of unearned premiums must be calculated as at the earlier of
(a) the termination date set by the Supreme Court under section 44, or
(b) the date the insured person cancelled the contract.
(4) The refund of all or a portion of the premium does not affect any other remedy the insured person may have against the insurance company.
(5) This section does not affect the priority of a mortgage, lien or charge on the property of the insurance company.
47 (1) If a fraternal society transacts endowment or expectancy insurance and has an endowment fund separate and distinct from its life insurance fund, the society, by resolution passed at a general meeting after at least one month's notice of the intended resolution, may determine that the endowment or expectancy be discontinued, with the endowment or expectancy fund, as the case may be, to be distributed proportionately among the society's members then in good standing who are contributing to the fund, to each member according to the member's total contribution.
(2) Subject to first receiving the written approval of the commission, the fraternal society may proceed to ascertain the persons entitled to rank on distribution of the fund and may distribute the fund among those entitled, and the distribution discharges the society from all liability in respect of the fund, and of the endowment or expectancy contracts undertaken by the society.
(3) If all the members interested in the endowment or expectancy fund are also interested as holders of life insurance contracts, members at the general meeting, instead of determining that the endowment or expectancy fund be distributed, by resolution passed at the meeting, may determine that the fund be converted into or merged in a life insurance fund, and then, subject to the commission first approving the resolution, the endowment or expectancy fund becomes a life insurance fund.
Division 4 — Ownership of Trust and Insurance Companies
48 (1) In this Division:
"base level ownership percentage", used in relation to a person and connected parties who have a substantial interest in a trust company, insurance company or holding company, means the base level ownership percentage of votes in the company that under section 49 is from time to time applicable to that person and connected parties;
"connected party", used in relation to a person, means
(a) a corporation that the person controls,
(b) an affiliate of a corporation that the person controls,
(c) a partner of the person if each of the person and the partner controls a 10% or greater interest in the partnership,
(d) a trust or an estate in which the person has a 50% or greater beneficial interest,
(e) if the person is not a trust company or extraprovincial trust corporation, a trust or estate for which the person is a trustee,
(f) a relative by blood or marriage of the person or of the spouse of the person if the person and the relative have the same home, or
(g) a person specified in an order of the commission under subsection (2);
"holding company" means a corporation that alone or together with all of its connected parties, if any, controls, within the meaning of section 1 (4) of the Company Act as it applies for the purposes of this Act, a trust company or insurance company;
"person and connected parties" means a person and all connected parties, if any, of the person, with the person and the connected parties considered together as one unit;
"substantial interest", used in relation to a trust company, insurance company or holding company, means ownership or control, direct or indirect, of 10% or a higher percentage of all votes in the company;
"votes in the company" means the votes that
(a) are attached to the outstanding voting shares in the company, and
(b) may be cast in an election of the directors.
(2) For the purposes of this Division, the commission by order may designate a person as a connected party of another person designated in the order if the commission believes on reasonable grounds that the first mentioned person is acting in concert with that other person to acquire or control voting shares of a trust company, insurance company or holding company.
49 (1) If, on September 15, 1990, a person and connected parties had a substantial interest in a trust company, insurance company or holding company, then on that date the person and connected parties were by this subsection assigned a base level ownership percentage that was the same as that substantial interest.
(2) If, at the end of the consent expiry day specified in a consent under section 50 (4), the person and connected parties to which the consent applies have a substantial interest in the company named in the consent, then the person and connected parties are by this subsection, as of the end of that day, assigned a base level ownership percentage that is the same as
(a) the substantial interest of the person and connected parties at the end of that day, if that substantial interest is less than the proposed base level ownership percentage specified in the expired consent, or
(b) the proposed base level ownership percentage specified in the expired consent, if the substantial interest of the person and connected parties at the end of that day is the same as or greater than the proposed base level ownership percentage specified in the expired consent.
(3) If the substantial interest of a person and connected parties in a trust company, insurance company or holding company is decreased to a level constituting a substantial interest that is more than 5% lower than the base level ownership percentage applicable to the person and connected parties immediately before the decrease, then as of the time of the decrease to that level the person and connected parties are by this subsection assigned a new base level ownership percentage that is equal to the sum of
(a) the substantial interest that the person and connected parties have in the company immediately after the decrease to that level, and
(b) 5% of the total votes in the company.
(4) A base level ownership percentage assigned by subsection (2) or (3) to a person and connected parties who have voting shares in a trust company, insurance company or holding company
(a) replaces any base level ownership percentage previously assigned by this section to that person and connected parties, and
(b) continues to apply to that person and connected parties until
(i) replaced under paragraph (a), or
(ii) made inapplicable by subsection (5).
(5) If the substantial interest of a person and connected parties in a trust company, insurance company or holding company is decreased to a level that is not a substantial interest in the company then as of the time of the decrease to that level any base level ownership percentage previously assigned by this section to that person and connected parties ceases to be assigned to them and is on and after that time inapplicable to them.
50 (1) Subject to subsection (3), a person must not acquire, directly or indirectly, enough voting shares in a trust company, insurance company or holding company to give the person and connected parties a substantial interest in that company.
(2) Subject to subsection (3), if a person and connected parties have a substantial interest in a trust company, insurance company or holding company, then neither the person nor any of the connected parties may acquire, directly or indirectly, the ownership or control of enough additional voting shares to give the person and connected parties an increased substantial interest in the company that is more than the sum of
(a) the base level ownership percentage of votes in the company that is applicable to the person and connected parties, and
(b) 5% of the total votes in the company.
(3) Subsections (1) and (2) do not apply in respect of the acquisition of a substantial interest or an increased substantial interest, as the case may be, that is
(a) made
(i) in accordance with a consent under subsection (4), and
(ii) before the consent expiry date, or
(b) by a person acting as an underwriter, as defined in section 1 of the Securities Act, in connection with a distribution as defined in that Act of the voting shares that are the subject of the acquisition.
(4) Subject to section 51, on application, the commission may consent to the acquisition of a substantial interest or increased substantial interest in a trust company, insurance company or holding company named in the consent, and, in giving the consent, the commission must specify in it
(a) the name of the person to whom the consent is given,
(b) the consent expiry day that the commission considers appropriate, and
(c) the proposed base level ownership percentage of votes in the company or the proposed increased base level ownership percentage of votes in the company, as the case may be, that the commission considers appropriate.
(5) A consent under subsection (4) allows the named person to whom the consent is given and any connected party of that named person to acquire, during the period ending at the end of the consent expiry day, the ownership or control of enough voting shares in the trust company, insurance company or holding company, named in the consent to give the person and connected parties a substantial interest or increased substantial interest in that company that is no greater than the sum of
(a) the proposed base level ownership percentage or proposed increased base level ownership percentage of votes in the company specified in the consent, and
(b) 5% of the total votes in the company.
51 The commission must not consent under section 50 if the commission believes on reasonable grounds that the applicant for the consent or any connected party of the applicant is a person who, in the public interest, ought not to be in a position to control or influence a trust company, insurance company or holding company.
52 (1) On the earlier of
(a) the end of the consent expiry date specified in the consent, or
(b) completion of the acquisition of the ownership or control of enough voting shares to reach the proposed base level ownership percentage or proposed increased base level ownership percentage specified in the consent,
the named person to whom a consent under section 50 (4) is given must report to the superintendent in writing, stating the percentage of the total votes in the company named in the consent that on the date of the report are owned or controlled, directly or indirectly, by the named person and connected parties.
(2) A person who
(a) has a substantial interest, or
(b) is one person in a unit consisting of a person and connected parties that have a substantial interest
in a trust company, insurance company or holding company, unless the decrease has been reported by another person, must report any decrease in that substantial interest to the superintendent in writing immediately.
53 The directors of a trust company, insurance company or holding company must not allow a transfer of voting shares in the company to be entered in its register of members, in any branch register of its members or in its register of transfers if the directors have reasonable grounds to believe that the shares transferred were acquired in contravention of section 50.
54 (1) When a person holds voting shares in a trust company or insurance company or holding company consequent to an acquisition made in contravention of section 50,
(a) no dividend is payable, and
(b) if the company has knowledge of the contravention, its directors must not authorize the payment of a dividend
in respect of the voting shares so held.
(2) If dividends are paid by a trust company, insurance company or holding company in respect of voting shares in the company that are at the time of the dividend held by a person who holds them consequent to an acquisition made in contravention of section 50, the company has a cause of action for the recovery of the amount of the dividends paid against the members to whom they were paid whether or not the company had knowledge of the contravention.
(3) Despite subsection (1), the directors may authorize the payment of a dividend in respect of any voting shares to a person who would otherwise be disentitled to the dividend under that subsection if in the directors' opinion the contravention was inadvertent or of a technical nature; and a dividend so authorized and paid is not recoverable under subsection (2).
55 When voting shares in a trust company, insurance company or holding company are held by a person who holds them consequent to an acquisition made in contravention of section 50, the voting rights attaching to them must not be exercised.
56 The validity of a transfer of voting shares in a trust company, insurance company or holding company that has been entered in its register of members, in any branch register of its members or in its register of transfers is not affected by the fact that those shares are held consequent to an acquisition made in contravention of section 50.
57 (1) The directors of a trust company, insurance company or holding company may make directors' bylaws
(a) requiring a member of the trust company, insurance company or holding company to submit to the directors written declarations respecting
(i) the ownership of a voting share of the trust company, of the insurance company or of the holding company,
(ii) whether the member is a connected party of any other member, and
(iii) other matters that the directors consider relevant for the purposes of this Division,
(b) establishing the times at which and the manner in which any written declarations required under paragraph (a) are to be submitted, and
(c) requiring persons who desire that a transfer of a voting share to them be entered in the register of members or in the register of transfers of the trust company, insurance company or holding company to submit written declarations respecting the matters referred to in paragraph (a) (i) to (iii).
(2) If, under a directors' bylaw made under subsection (1), a written declaration is required to be submitted by a member or other person in respect of the transfer of a voting share, the directors must not allow the transfer to be entered in its register of members, in any branch register of its members or in its register of transfers until the required written declaration has been submitted.
58 If the commission has reasonable grounds to believe that a person is the holder of a share in a trust company, insurance company or holding company, the commission may order that person to submit a written declaration to the commission respecting
(a) the ownership or beneficial ownership of the share,
(b) whether the share is held or beneficially owned by a person who is a connected party of a person specified by the commission,
(c) the names and addresses of connected parties of the person, and
(d) other matters specified by the commission.
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