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This Act has "Not in Force" sections. See the Table of Legislative Changes.

Financial Institutions Act

[RSBC 1996] CHAPTER 141

Part 2 — Incorporation, Significant Changes and Winding Up

Division 1 — Names

Names for trust companies and insurance companies

12  (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".

(3) A person must not apply to reserve a name under the Business Corporations Act that includes the word "trust", "trustco", "insurance" or "assurance" unless the consent of the superintendent is first obtained for that name.

Division 1.1 — Formation of Trust Companies and Insurance Companies

Consent required for incorporation

13  (1) A person must not apply to the registrar to incorporate a company for the purpose of carrying on trust business or carrying on insurance business unless, before the incorporation application is submitted to the registrar for filing under section 10 of the Business Corporations Act, the consent of the commission is obtained to the incorporation.

(2) The commission must not consent to the incorporation of a trust company or an insurance company unless

(a) the persons applying for consent (the "applicants") have

(i)   submitted to the commission the proposed notice of articles and articles of the proposed company, and

(ii)   paid the prescribed fee,

(b) the applicants have submitted to the commission a plan

(i)   specifying the names and addresses of the proposed first directors and senior officers of the proposed company,

(ii)   specifying the services that the proposed company intends to offer to the public,

(iii)   describing, in detail satisfactory to the commission, the period within which the proposed 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 company proposes to carry on during that period,

(iv)   specifying, in the case of a proposed insurance company, whether the business proposed to be carried on is life insurance business, general insurance business or both, and

(v)   containing any other information required by the commission,

(c) the proposed notice of articles and articles comply with this Act and the regulations,

(d) the commission is satisfied that the 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 proposed 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 applicants have satisfied the commission that the proposed company intends to obtain, and will be able to obtain, a business authorization to enable the company 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 applicants have satisfied the commission that the proposed company will have both the financial and managerial capacity to properly carry on the business proposed to be carried on by the company 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 an applicant must provide to the commission information, verifications, forecasts of business operations or documents that the commission considers necessary in relation to the application.

Preliminary activities

14  (1) A trust company or an insurance company that is incorporated but does not have a business authorization must not undertake any activity other than an activity specified under section 13 (2) (b) (iii) as a preliminary activity in the plan described in section 13 (2) (b).

(2) Until a trust company or an 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)".

Division 1.2 — Alteration of Charter of Trust Companies and Insurance Companies

Consent required for alteration of memorandum, notice of articles or articles

15  A trust company or an insurance company must not alter its memorandum, notice of articles or articles without first receiving the consent of the commission.

Division 1.3 — Conversion of Special Act Insurance Companies

Consent required for conversion of special Act insurance company

16  A special Act insurance company must not apply under section 266 of the Business Corporations Act to convert itself into a company for the purpose of carrying on insurance business unless, before the conversion application is submitted to the registrar for filing, the consent of the commission is obtained to the conversion.

Continuation of business authorization on conversion of special Act insurance company

17  A business authorization held by a special Act insurance company when it is converted into a company under section 266 of the Business Corporations Act for the purpose of carrying on insurance business continues in force after that conversion, 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.

Division 1.4 — Continuation of Trust Companies and Insurance Companies

Consent required for continuation of extraprovincial trust corporation or extraprovincial insurance corporation into British Columbia

18  (1) An extraprovincial trust corporation or extraprovincial insurance corporation must not apply under section 302 of the Business Corporations Act to continue into British Columbia as a company unless, before the continuation application is submitted to the registrar for filing, the consent of the commission is obtained to the continuation.

(2) Without limiting section 22 of this Act, the commission must not give a consent referred to in subsection (1) of this section unless satisfied that the extraprovincial trust corporation or extraprovincial insurance 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.

(3) A business authorization held by an extraprovincial trust corporation or an extraprovincial insurance corporation when it is continued into British Columbia as a company under section 303 of the Business Corporations Act, continues in force after the continuation 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.

Consent required for continuation of trust company or insurance company out of British Columbia

19  (1) A trust company or an insurance company must not apply under section 308 (1) of the Business Corporations Act to continue out of British Columbia unless

(a) the jurisdiction into which the company proposes to continue has laws that permit corporations incorporated under the jurisdiction's laws to apply for continuation under the laws of British Columbia, and

(b) the consent of the commission is obtained to the continuation.

(2) In addition to complying with its obligations under sections 308 to 311 of the Business Corporations Act, a trust company or an insurance company that is continued under the laws of another jurisdiction must promptly after continuation file with the superintendent a copy of any record issued to the continued corporation by the other jurisdiction to effect or confirm the continuation.

Division 1.5 — Amalgamation of Trust Companies and Insurance Companies

Consent required for amalgamation of trust company or insurance company

20  (1) A trust company may amalgamate and continue as one company with one or more of the following only:

(a) subsidiaries of it that are trust companies or extraprovincial trust corporations;

(b) other trust companies;

(c) extraprovincial trust corporations.

(2) An insurance company may amalgamate and continue as one company with one or more of the following only:

(a) subsidiaries of it that are insurance companies or extraprovincial insurance corporations;

(b) other insurance companies;

(c) extraprovincial insurance corporations.

(3) A trust company or an insurance company must not amalgamate with a corporation referred to in subsection (1) or (2) unless, before the amalgamation application is submitted to the registrar for filing under section 275 of the Business Corporations Act, the consent of the commission is obtained to the amalgamation.

(4) On an amalgamation referred to in this section, the amalgamated company

(a) may carry on business under the business authorization issued with respect to one of the amalgamating corporations, 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.

(5) A trust company or an insurance company must not amalgamate with a foreign corporation within the meaning of the Business Corporations Act to form an amalgamated foreign corporation.

Division 1.6 — Arrangements, Acquisitions or Dispositions by Trust Companies and Insurance Companies

Consent of commission to arrangement, acquisition or disposition

21  (1) An arrangement proposed with respect to a trust company or an insurance company is not binding unless, after the arrangement is adopted as required by Division 5 of Part 9 of the Business Corporations Act 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 an 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 an insurance company in the ordinary course of its business.

(5) The commission must not consent to an arrangement, acquisition or disposition by reinsurance if the commission believes on reasonable grounds that it is not in the public interest to consent.

Division 1.7 — Background for Consents

Consent required for continuation or amalgamation

22  (1) In subsection (2) (a), "corporation" means

(a) an extraprovincial corporation proposing to be continued into British Columbia as a trust company or an 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 18 (1) in respect of a continuation into British Columbia of an extraprovincial corporation as a trust company or an insurance company or consent under section 20 (3) to an amalgamation, 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 notice of articles 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 any other information required by the commission, and

(vi)   the full particulars, in the case of a proposed amalgamation, 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 notice of articles 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.

Commission may obtain information to support consent considerations

23  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 16, 18 (1), 20 (3) or 21.

Division 2 — Dissolution and Winding Up of Trust Companies and Insurance Companies

Notice to superintendent required on voluntary dissolution or winding up

24  The following are of no force and effect, and do not provide the purported authorization, unless 30 days' written notice of the 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 company is registered, licensed or authorized to carry on business:

(a) an ordinary resolution purporting to authorize the dissolution of a trust company or an insurance company in accordance with section 314 (1) of the Business Corporations Act;

(b) a directors' resolution purporting to authorize the dissolution of a trust company or an insurance company in accordance with section 314 (2) of the Business Corporations Act;

(c) a special resolution purporting to authorize liquidation in accordance with section 319 (1) of the Business Corporations Act.

Winding up by Supreme Court order — commission is party

25  The commission is a party to any legal proceedings in which an application is made under section 324 of the Business Corporations Act for the liquidation and dissolution of a trust company or an insurance company.

Liquidation and dissolution on direction of commission

26  (1) If the commission believes on reasonable grounds that it is contrary to the public interest that a trust company or an 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 liquidated and dissolved.

(2) Without limiting subsection (1), if a trust company or an 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 liquidated and dissolved.

(3) If the commission makes an order under this section, the commission must, in the order, appoint one or more liquidators and, in that event, Part 10 of the Business Corporations Act applies to the powers and duties of the liquidator.

(4) An appointment of a liquidator under subsection (3) takes effect on the commencement of the liquidation.

(5) For the purposes of section 30, subsection (4) of this section and Part 10 of the Business Corporations Act, "commencement of the liquidation" means, for a liquidation commenced by order of the commission under this section,

(a) the date the order was made, or

(b) if the order specifies a date, or a date and time, for the commencement of the liquidation that is later than the date the order was made, the specified date and time or, if no time is specified, the beginning of the specified date.

(6) If a vacancy occurs by death, resignation or otherwise in the office of liquidator in a liquidation and dissolution ordered by the commission under this section, the commission may fill the vacancy on its own initiative or on application of any person referred to in section 325 (1) of the Business Corporations Act.

(7) The commission must set the remuneration of any liquidator it appoints under this section.

(8) In a liquidation and dissolution ordered by the commission under this section, the commission may impose, either generally or with respect to certain matters, restrictions on the exercise of the powers of a liquidator.

Application of this Part

27  Any proceedings taken under this Act or the Business Corporations Act to liquidate and dissolve a trust company or an insurance company must be stayed if the company is at any time found, in a proceeding under the Winding-Up and Restructuring Act (Canada), to be insolvent within the meaning of that Act.

Duties of liquidators on commission-ordered liquidation and dissolution

28  If the commission makes an order under section 26 that a trust company or an insurance company be liquidated and dissolved,

(a) the duties of the liquidator referred to in section 330 of the Business Corporations Act are subject to any restrictions or directions imposed or given by the commission,

(b) the notice of appointment filed by the liquidator under section 329 of the Business Corporations Act must be accompanied by a copy of the order of the commission,

(c) the notice published under section 331 (1) (a) of the Business Corporations Act must disclose that the commission has made an order that the company be liquidated and dissolved, and

(d) a person who has been appointed as a liquidator by the commission and who is not, or who ceases to be, qualified to act as a liquidator must promptly seek directions from the commission.

Deferral of dissolution

29  (1) If the commission makes an order under section 26 that a trust company or an insurance company be liquidated and dissolved, the commission may, subject to subsection (2) of this section, make an order under this subsection

(a) deferring the date of dissolution to a new date, or

(b) deferring the dissolution generally.

(2) No order made under subsection (1) is effective unless a copy of that order is filed with the registrar before the company is dissolved.

(3) If an order is made under subsection (1) (a) and is filed with the registrar before the company is dissolved, the company is dissolved on the beginning of the new date specified by that order.

Publication of notice

30  If the commission makes an order under section 26 that a trust company or an insurance company be liquidated and dissolved, the registrar must publish in the Gazette or in any other prescribed manner

(a) notice that the company is being liquidated,

(b) the date of the order, and

(c) if the order specifies a date, or a date and time, for the commencement of the liquidation that is later than the date of the order, the specified date and time or, if no time is specified, the specified date,

and the cost of the publication must be paid by the company to the government and is recoverable by the government from the company as a simple contract debt.

Filing quarterly statements and producing records

31  Without limiting a liquidator's obligations under section 338 of the Business Corporations Act, when a trust company or an insurance company is being liquidated and dissolved, the liquidator must, within 7 days after the close of each period of 3 months and until the date on which the final accounts of the liquidation are deposited in accordance with section 341 (1) of the Business Corporations Act,

(a) in the case of a liquidation ordered by the Supreme Court, file with the Supreme Court and with the superintendent the accounts of the liquidation referred to in section 338 of the Business Corporations Act unless otherwise ordered by the Supreme Court, or

(b) in the case of a liquidation ordered by the commission, file with the superintendent the accounts of the liquidation referred to in section 338 of the Business Corporations Act unless otherwise ordered by the commission.

Examination of trust and insurance companies being liquidated and dissolved

32  The superintendent, at any time, may examine the records of a trust company or an insurance company that is being liquidated and dissolved.

Information required on restoration applications

33  A person must not apply to the registrar or the Supreme Court for restoration under Division 11 of Part 10 of the Business Corporations Act of a trust company or an insurance company unless, before making the application, the consent of the commission is obtained to the restoration.

Division 2 — Repealed

Repealed

34 to 40  [Repealed 2011-29-67.]

Division 3 — Special Provisions Respecting Insurance Companies Ceasing Business or Winding Up

Provisions for subsisting contracts of insurance

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.

Reinsurance arranged by liquidator

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.

Rights of the insured on 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.

Termination if reinsurance is not arranged

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.

Liquidator's duty to give notice

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.

Provision for payment of losses, preferred claims and unearned premiums

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.

Endowment and life funds distributed

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

Definitions and interpretation for Division

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 2 (3) of the Business Corporations 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.

Determination of base level ownership percentage

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.

Share acquisition restrictions

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.

Grounds for refusal of consent to major share acquisition

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.

Reporting requirement

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.

Shares acquired in contravention of section 50 not registrable

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.

Prohibition on dividends

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).

No voting rights if excess shareholdings

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.

Validity of transfer of voting shares

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.

Directors' bylaws — members' declarations

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.

Commission may require declaration of share ownership

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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