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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 4 — Corporate Governance

Division 1 — Directors and Officers of Financial Institutions

Number of directors and unaffiliated directors

97  (1) A financial institution must have at least 5 directors, and, in the case of a trust company or an insurance company, at least 1/3 of the directors must be unaffiliated directors.

(2) On application by a trust company or an insurance company, if the commission believes, on reasonable grounds, that it is in the public interest, the commission may, for the purposes of subsection (1) and sections 61 (8) (b), 103 (2), 111 (3) and (4), 112 (1), 115 (1) and 135 (c), make a determination that an individual described by paragraph (h) of the definition of "unaffiliated director" is an unaffiliated director, unless that individual is also described in one or more of paragraphs (a) to (g) of that definition.

(3) The majority of the directors of every financial institution must be persons ordinarily resident in Canada.

(4) One director of every financial institution must be ordinarily resident in British Columbia.

(5) Without limiting section 124 of the Business Corporations Act, an individual is not qualified to become or act as a director of a trust company or an insurance company if that individual's registration in any capacity has been cancelled under

(a) the Securities Act by either the British Columbia Securities Commission or the executive director, or

(b) the Mortgage Brokers Act by the Commercial Appeals Commission, the Financial Services Tribunal or the registrar under that Act,

unless the person or body that cancelled the registration otherwise orders at the time of cancellation, or unless 5 years have elapsed since the cancellation of the registration.

(6) An order must not be made under subsection (5) of this section unless notice of the application for the order is given to the superintendent, who may appear as a party to the application.

Repealed

98  [Repealed 2011-29-72.]

Cumulative voting for directors

98.1  (1) The articles of a trust company or an insurance company may provide for cumulative voting by members in the election of directors and, in that event, the articles 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 the votes 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) Despite subsection (1), a provision in the articles of a trust company or an insurance company that authorizes cumulative voting by members in the election of directors does not apply when any one member of the company beneficially owns or controls, directly or indirectly, all of the issued voting shares in the company.

(3) If the articles of a trust company or an 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.

(4) If the articles of a trust company or an 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.

Removal of directors and officers

99  (1) Without limiting section 97 (5) of this Act, section 124 or 141 (3) of the Business Corporations Act or section 84.12 or 84.3 (2) of the Credit Union Incorporation Act, no person is qualified to become or act as a director or officer of a financial institution who is a public servant whose duties relate to financial institutions.

(2) Without limiting section 128 of the Business Corporations Act or section 84.24 of the Credit Union Incorporation Act, if the commission is satisfied that a director or officer of a financial institution or of its subsidiary

(a) because of section 97 (5) of this Act, section 124 or 141 (3) of the Business Corporations Act or section 84.12 or 84.3 (2) of the Credit Union Incorporation Act, is not qualified to be a director or an officer,

(b) because of subsection (1), is not qualified to be a director or officer,

(c) within the last 5 years has been bankrupt in Canada or elsewhere,

(d) has a conflicting interest that prevents the director or officer from properly discharging the duties as director or officer,

(e) is contravening or has contravened a written undertaking given under this Act,

(f) is an individual who ought not to be in a position to control or influence a financial institution, or

(g) is an individual who has been

(i)   convicted of an offence in Canada or another jurisdiction arising from a transaction, business or course of conduct related to financial services, or

(ii)   found by a regulator or a court in Canada or another jurisdiction to have contravened the laws of that jurisdiction respecting financial services,

the commission may order that the director or officer cease to be a director or officer of the financial institution; and on the date of the order the director or officer ceases to be a director or officer of the financial institution.

(3) When an individual ceases to be a director or officer of a financial institution under subsection (2), then, despite the Business Corporations Act or the Credit Union Incorporation Act, the individual is not eligible to again be or act as a director or officer of a financial institution without first applying for and receiving the consent of the commission.

(4) A financial institution must deliver written notice immediately to the superintendent of the resignation, removal, election or appointment of a director or senior officer.

(5) The commission may require a financial institution to provide any information the commission considers necessary to determine if there are grounds to take action under subsection (2).

Credit union directors ceasing to hold office

100  Without limiting section 99 of this Act or section 84.24 of the Credit Union Incorporation Act, a director of a credit union ceases to hold office when the director

(a) is not qualified under section 83 (3) of the Credit Union Incorporation Act,

(b) is not, or ceases to be, eligible to be insured as required under section 206 of this Act,

(c) being a person who is required under section 84 (3) of the Credit Union Incorporation Act to complete a director training program, fails to complete the program within the period specified under section 84 (2) (b) of that Act.

Standard of care for directors and officers

101  (1) A director or officer of a financial institution, in exercising the powers and performing the functions of a director or officer, must

(a) act honestly, in good faith and in the best interests of the financial institution, and

(b) exercise the care, diligence and skill of a reasonably prudent person under comparable circumstances,

and in doing so must take into account the interests of shareholders, depositors, if any, and policy holders, if any, and, without limiting this, of those to whom the directors owe a fiduciary duty.

(2) The provisions of this section are in addition to, and not in derogation of, any enactment or rule of law or equity relating to the duties or liabilities of directors of a corporation.

(3) Every director and officer of a financial institution must act in accordance with this Act and the regulations under it.

Director's application to Supreme Court — commission is party

101.1  The commission is a party to any proceedings in which a director of a trust company or an insurance company applies to the Supreme Court under section 70 (3) or 78 (2) of the Business Corporations Act.

Indemnification of directors and officers

102  (1) Except for an action by or on behalf of the financial institution to procure a judgment in favour of the financial institution, a financial institution may indemnify

(a) a director or officer of the financial institution,

(b) a former director or officer of the financial institution, or

(c) an individual who, at the request of the financial institution, is or was a director or officer of a corporation of which the financial institution is or was a member or creditor,

against any costs, charges and expenses, including an amount paid to settle an action or proceeding or to satisfy a judgment, reasonably incurred for any civil, criminal or administrative action or proceeding, whether threatened, pending, continuing or completed, to which the director or officer is or may be made a party because of being or having been a director or officer of the financial institution or corporation, if

(d) the director or officer acted honestly and in good faith with a view to the best interests of the financial institution or corporation, as the case may be, and

(e) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the director or officer had reasonable grounds for believing that the conduct was lawful.

(2) With the approval of a court, a financial institution may indemnify a person referred to in subsection (1) (a) or (b) for an action, whether threatened, pending, continuing or completed, by or on behalf of the financial institution to procure a judgment in favour of the financial institution, to which the person is or may be made a party because of being or having been a director or officer of the financial institution, against any costs, charges and expenses reasonably incurred in connection with the action if the conditions set out in subsection (1) (d) and (e) are fulfilled.

(3) A financial institution must indemnify a person referred to in subsection (1) (a) or (b) who has been substantially successful on the merits in the outcome of a civil, criminal or administrative action or proceeding, to which the person is made a party because of being or having been a director or officer of the financial institution, against all costs, charges and expenses reasonably incurred for the action or proceeding if the conditions set out in subsection (1) (d) and (e) are fulfilled.

(4) A financial institution or a person referred to in subsection (1) (a), (b) or (c) may apply to a court for an order approving an indemnity under this section and the court may make any order it thinks fit.

(5) An applicant under subsection (4) must give the commission not less than 14 days' notice of the application and the commission is entitled to appear and be heard in person or by counsel.

(6) On an application under subsection (4), the court may order notice to be given to any interested person and that person is entitled to appear and be heard in person or by counsel.

(7) A financial institution may purchase and maintain insurance for the benefit of a person referred to in subsection (1) (a), (b) or (c) against any liability incurred as a director or officer.

Quorum and unaffiliated directors

103  (1) A quorum

(a) of a meeting of directors of a financial institution consists of the greater of

(i)   3 directors, or

(ii)   a majority of the directors, and

(b) of a meeting of a committee consists of a majority of the individuals comprising the committee.

(2) Even though

(a) sufficient directors to form a quorum are present at a meeting of the directors of a trust company or insurance company, or

(b) sufficient individuals to form a quorum are present at a meeting of a committee that is required to have unaffiliated directors as members,

there is not a quorum unless at least one of them is an unaffiliated director.

Misuse of confidential information

104  If a director or officer of a financial institution or of an affiliate of a financial institution knows or reasonably ought to know that information is confidential to the financial institution, or to any affiliate of the financial institution the director or officer must not

(a) disclose the information, or

(b) enter into a transaction in which the director or officer makes use of the information,

in order, directly or indirectly, to obtain a benefit or advantage for the director, officer or anyone else other than the financial institution or any affiliate of it.

Information required of directors and senior officers

105  Before commencing duties, a director or senior officer of a financial institution must complete and submit to the superintendent a personal information return in the form established by the commission that discloses the information required by the commission.

Meeting requested by auditor

106  The directors of a financial institution, if requested to do so by its auditor, must call a general meeting of members or a meeting of directors within 30 days after the request, to consider a report made by the auditor regarding any matter arising out of the financial affairs of the financial institution.

Meeting requested by commission

107  (1) The commission by order may require a meeting of the directors of a financial institution for the purpose of considering matters specified in the order within the time specified in the order; and on receiving the order the directors must inform the commission in advance of the time and place of the meeting.

(2) The superintendent may attend and be heard at a meeting ordered under subsection (1).

Director's statement on own resignation or pending removal

108  (1) A director of a financial institution who

(a) resigns,

(b) receives a notice or otherwise learns of a meeting of members called for the purpose of removing the director from office, or

(c) receives a notice or otherwise learns of a meeting of directors or members at which another person is to be appointed or elected to fill the office of director because of the director's resignation or removal

is entitled to submit to the financial institution a written director's statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.

(2) If a director of a financial institution resigns as a result of a disagreement with the other directors or the management of a financial institution and does not take action under subsection (1), the director must submit to the superintendent a written director's statement giving the reasons for the resignation.

Circulation of director's statement

109  (1) On receiving a written director's statement under section 108 (1), the financial institution must deliver it to the superintendent immediately, and, unless the directors consider on reasonable grounds that delivery of the statement would materially and adversely affect the financial institution's financial viability, the financial institution must also deliver the statement immediately to its members who are entitled to notice of meetings.

(2) If the directors, on the basis set out in subsection (1), decide against delivery of the statement to the members, they must so inform the commission who, despite that decision, may order the financial institution to deliver the statement immediately to its members who are entitled to notice of meetings.

(3) A financial institution or person acting on its behalf does not incur any liability only because of circulating a written director's statement in compliance with subsection (1).

Directors' remuneration

110  (1) The remuneration, if any, of the directors of a financial institution in relation to their service as directors may be established by ordinary resolution.

(2) The members of a financial institution, by special resolution, may permit the remuneration, if any, of the directors to be established by the directors.

Committees

111  (1) Subject to subsections (2) and (3) and the charter of the financial institution, the directors of a financial institution may delegate any of their powers to a committee appointed or elected by them.

(2) A committee does not have authority to

(a) fill a vacancy among the directors or the members of the audit committee, or the investment and loan committee, or in the office of the auditor, or appoint or remove the chief operating officer, however designated, the chief executive officer, however designated, the chief financial officer, however designated, the chair of the board or the president of the company,

(b) issue securities except in the manner and on the terms authorized by the directors,

(c) declare dividends,

(d) purchase, redeem or otherwise acquire shares issued by the financial institution,

(e) approve an information circular,

(f) approve a take over bid circular, directors' circular or issuer bid circular,

(g) approve financial statements, or

(h) adopt, amend or repeal directors' bylaws.

(3) If the directors of a financial institution appoint or elect a committee, the committee must consist of not fewer than 3 individuals and, in the case of a trust company or insurance company, at least one of them must be an unaffiliated director.

(4) A committee appointed by the directors of a trust company or insurance company must not conduct any business unless at least one unaffiliated director is present at the meeting.

Conduct review committee

112  (1) The directors of a financial institution must elect from among themselves a conduct review committee consisting of at least 3 directors and, in the case of a trust company and an insurance company, 2/3 of the committee members must be unaffiliated directors.

(2) The conduct review committee, in addition to the duties set out in Part 5, must establish written procedures

(a) to provide disclosure in prescribed circumstances to customers of the financial institution, and

(b) designed to prevent conflicts of interest and to resolve them if they occur, setting out in those procedures techniques for the identification of potential conflict of interest situations and for restricting the flow of confidential information.

(3) The conduct review committee at intervals of not more than 2 years must review the written procedures established under subsection (2).

Division 2 — Auditors and Audit Committees of Financial Institutions

Auditor

113  Without limiting section 205 of the Business Corporations Act or section 39.51 of the Credit Union Incorporation Act, every financial institution must have an auditor who meets the prescribed qualifications.

Auditor may be a depositor

114  For the purpose of section 39.52 of the Credit Union Incorporation Act, the fact that the auditor of a credit union or the auditor's partner or employee is a depositor in the credit union or holds membership shares in the credit union does not by itself affect the independence of the auditor from the credit union, its affiliates and its directors and officers.

Audit committee and unaffiliated directors

115  (1) Without limiting section 224 (2) of the Business Corporations Act, not less than 1/3 of the members of the audit committee of a trust company or an insurance company must be unaffiliated directors.

(2) On the written request of the auditor, of a member of the audit committee or of any director, the chair of the audit committee must convene a meeting of the audit committee to consider any matters the auditor, member or director, as the case may be, believes should be brought to the attention of the directors or members.

(3) In addition to complying with its obligations under section 225 of the Business Corporations Act, the audit committee of a trust company or an insurance company must review

(a) returns of the trust company or insurance company that are to be filed with the superintendent under section 127 (1) of this Act,

(b) reports that have been made by the auditor under section 123, and

(c) prescribed reports, transactions or matters.

(3.1) In addition to complying with its obligations under section 225 of the Business Corporations Act, the audit committee of an insurance company must meet with the actuary of the company to discuss the parts of the annual financial statements and the annual return prepared by the actuary.

(4) If, under this Act or the Business Corporations Act, financial statements or a return requires the approval of the directors, that approval must not be given until

(a) the audit committee has reviewed and reported on those financial statements or that return, and

(b) the directors have received the report.

Auditor has right to attend directors' meetings

116  The auditor of a financial institution must be given notice of, and has the right to appear before and to be heard at, every meeting of the financial institution's

(a) directors, or

(b) conduct review committee

on matters with respect to which the auditor has a duty or function or has made a report; and the auditor must appear at a meeting of the directors or of the conduct review committee when requested to do so by the directors or by the committee, as the case may be.

Appointment and removal of auditor

117  (1) A financial institution must deliver written notice promptly to the superintendent of the appointment, removal or resignation of an auditor and of any other occurrence that causes a vacancy in the office of auditor and, in the case of a removal, of the reasons for the removal.

(2) If the office of auditor is vacant and no application has been made under section 204 (5) of the Business Corporations Act or section 39.5 (4) of the Credit Union Incorporation Act, the commission by order delivered to the financial institution, may require the appointment of an auditor by a deadline stipulated in the order; and if an auditor is not appointed by that deadline

(a) the commission may appoint an auditor to hold office until the close of the next annual general meeting, and, despite section 207 of the Business Corporations Act or section 39.53 of the Credit Union Incorporation Act, the financial institution must pay to the auditor so appointed remuneration at a rate directed by the commission, and

(b) despite section 209 of the Business Corporations Act or section 39.54 of the Credit Union Incorporation Act, without the written permission of the commission, the financial institution must not remove an auditor so appointed before the expiration of the auditor's term of office.

Report to accounting body

118  (1) If the commission has reasonable grounds to believe that the auditor of a financial institution

(a) has failed to perform duties,

(b) has failed to comply with this Act,

(c) has been a party to the preparation of or has approved financial statements that do not fairly present the financial position of the financial institution,

(d) is incompetent, or

(e) has committed professional misconduct,

the commission must deliver a written report promptly to the financial institution, and,

(f) if the auditor is a chartered accountant, to the council of the Institute of Chartered Accountants of British Columbia,

(g) if the auditor is a certified general accountant, to the Board of Governors of The Certified General Accountant's Association of British Columbia, and

(h) if the auditor is a person certified under section 222 of the Business Corporations Act by the Auditor Certification Board continued under section 221 of that Act, to that Board.

(2) The commission may require a financial institution or its auditor to provide information the commission considers necessary to determine if there are reasonable grounds for a report under subsection (1).

Resignation of auditor

119  (1) An auditor of a financial institution on resigning as auditor must deliver to the financial institution a written statement of the reasons for resignation.

(2) On receiving the statement under subsection (1), the financial institution must deliver a copy of it to the superintendent.

(3) On appointing a new auditor, a financial institution must deliver a copy of any statement made under subsection (1) by the new auditor's predecessor to the new auditor.

Auditor appointment for subsidiary

120  (1) A financial institution must

(a) ensure that its auditor, or one of them if more than one, is also auditor of any of its subsidiaries, or

(b) deliver to the superintendent a written explanation to the satisfaction of the superintendent of why it is unable to ensure that result.

(2) A trust company or insurance company that is a subsidiary of another corporation must

(a) ensure that its auditor, or one of them if more than one, is also auditor of that other corporation, or

(b) deliver to the superintendent a written explanation to the satisfaction of the superintendent of why it is unable to ensure that result.

Amendment of financial statements and auditor's report

121  In addition to complying with any applicable obligations under section 216 of the Business Corporations Act,

(a) the directors to whom section 216 (1) and (2) of the that Act applies must ensure that the amended financial statements referred to in section 216 (2) of that Act are delivered to the superintendent promptly after they are prepared,

(b) the auditor of a trust company or an insurance company to whom section 216 (3) of that Act applies must provide to the superintendent, in writing, the same information that the auditor is required by that section to provide to the directors of the trust company or insurance company, and

(c) without limiting section 216 (5) (a) (ii) of that Act, the auditor of an insurance company must deliver to the company's actuary, in writing, the amended report referred to in that section.

Repealed

122  [Repealed 2011-29-87.]

Report to directors

123  (1) The auditor of a financial institution must report in writing promptly to the financial institution's directors and, in the case of an insurance company, the company's actuary whenever, in the ordinary course of the auditor's duties, the auditor

(a) has reasonable grounds to believe that the circumstances of the financial institution have changed, are changing or are likely to change in a way that does or might

(i)   materially and adversely affect the viability of the financial institution, or

(ii)   otherwise impair the financial institution's ability to carry on or transact business,

(b) becomes aware of an occurrence or transaction or a series of them that does or might reasonably be expected to

(i)   materially and adversely affect the viability of the financial institution, or

(ii)   otherwise impair the financial institution's ability to carry on or transact business, or

(c) becomes aware that the financial institution or its director or officer has contravened this Act or the regulations under this Act or has contravened the Business Corporations Act or the Credit Union Incorporation Act.

(2) If the auditor considers that a matter that is the subject of a report under subsection (1) has not been appropriately responded to by the directors within 30 days after receipt by the directors of the report, the auditor must inform the superintendent immediately to that effect in writing, giving full particulars.

Additional reporting

124  (1) The superintendent or commission may order the auditor of a financial institution

(a) to report to the superintendent on the adequacy of the accounting procedures used by the financial institution,

(b) to enlarge or extend the scope of an audit,

(c) to examine and report on information prepared by the financial institution,

(d) to supply to the superintendent additional information pertinent to an audit, and

(e) to apply standards specified by the superintendent or commission in addition to generally accepted auditing standards.

(2) In addition to the remuneration set under section 207 of the Business Corporations Act or section 39.53 of the Credit Union Incorporation Act, the financial institution must pay the auditor additional remuneration at a rate directed by the commission for the work required under subsection (1) by the commission or superintendent.

(3) The auditor must address to the directors and deliver to the financial institution and, in the case of an insurance company, the company's actuary, a copy of a report under subsection (1) (a) or (c).

Additional auditor

125  (1) The commission may order a financial institution to appoint an additional auditor to hold office for a term specified by the commission.

(2) The financial institution must pay remuneration to an auditor appointed under subsection (1) at a rate specified by the commission in the order.

No liability

126  An auditor or former auditor of a financial institution who in good faith makes a statement or report under section 123 or 124 is not liable in a civil action because of making the statement or report or because of anything in it.

Division 2.1 — Actuaries — Insurance Companies

Definition

126.1  In this Division, "designated individual" means the individual that is required to be designated under section 126.13.

Actuaries

126.11  The directors of an insurance company must appoint an actuary for the company.

Notice of appointment

126.12  An insurance company must, immediately after the directors appoint a person to be the actuary of the company in accordance with section 126.11, notify the superintendent in writing of the appointment.

Designated individual

126.13  If the actuary of an insurance company is not an individual, the actuary must designate an individual who is responsible for acting on behalf of the actuary.

Qualifications of actuary

126.14  (1) A designated individual or an individual who is the actuary of an insurance company that is authorized to carry on life insurance business must be a fellow in good standing of the Canadian Institute of Actuaries.

(2) A designated individual or an individual who is the actuary of an insurance company that is authorized to carry on one or more classes of general business insurance, but is not authorized to carry on life insurance business, must be a fellow in good standing of the Canadian Institute of Actuaries or be approved by the commission as having the training and experience necessary to perform the duties of an actuary of a provincial company.

Senior officers precluded

126.15  (1) A senior officer of an insurance company may not be appointed as or hold the position of actuary of the insurance company unless authorized in writing by the commission.

(2) An authorization under subsection (1) may contain limitations and conditions, including a limitation on the time during which the person named in the authorization may hold the position of actuary of the insurance company.

(3) If an authorization under subsection (1) includes a time limit as described in subsection (2), the person holding the position of actuary pursuant to the authorization may not hold that position after the time limit expires.

Revocation of actuary's appointment

126.16  (1) The directors of an insurance company may revoke the appointment of the actuary of the company.

(2) The directors of an insurance company must revoke the appointment of its actuary if

(a) the actuary no longer meets the requirements of section 126.14 and does not resign, or

(b) the actuary's designated individual no longer meets the requirements of section 126.14 and the actuary does not replace its designated individual with an individual who does meet the requirements of that section.

(3) The commission may revoke the appointment of an actuary of an insurance company if the commission is satisfied that the actuary or the actuary's designated individual no longer meets the requirements of section 126.14.

Declaration of vacancy by court

126.17  Any interested party may apply to the Supreme Court for an order declaring that an actuary or its designated individual no longer meets the requirements of section 126.14 and that the office of actuary is vacant.

Ceasing to hold office

126.18  (1) The office of actuary of an insurance company becomes vacant when

(a) the actuary resigns,

(b) if the actuary is an individual, the individual dies,

(c) if the actuary is not an individual, the actuary is dissolved,

(d) the appointment of the actuary is revoked, or

(e) the office of actuary is declared to be vacant under section 126.17.

(2) The resignation of an actuary becomes effective at the time a written resignation is delivered to the insurance company or at the time specified in the resignation, whichever is later.

Filling vacancy

126.19  When a vacancy occurs in the office of actuary of an insurance company, the directors must immediately

(a) submit a written statement to the superintendent of the circumstances and the reasons why, in the directors' opinion, the office of actuary became vacant, and

(b) fill the vacancy.

Statement of actuary

126.2  An actuary of an insurance company who resigns or whose appointment is revoked must submit a written statement of the circumstances and reasons why the actuary resigned or why, in the actuary's opinion, the actuary's appointment was revoked, to

(a) the directors of the insurance company,

(b) the superintendent, and

(c) the replacement actuary of the company, when the replacement actuary requests the statement.

Duty of replacement actuary

126.21  (1) Where an actuary of an insurance company resigns or the appointment of an actuary is revoked, a person may not accept an appointment or consent to be appointed as actuary of the insurance company before requesting and receiving from the other actuary the statement referred to in section 126.2.

(2) A person may accept an appointment or consent to be appointed as actuary of an insurance company if no reply is received from the other actuary within 15 days after a request under subsection (1) is made.

(3) Unless subsection (2) applies, an appointment as actuary of an insurance company is void if subsection (1) is contravened.

Right to information

126.22 

(1) On the demand of the actuary of an insurance company, a person who is a former actuary of or is or has been a director, officer, employee or agent of the insurance company or any of its subsidiaries or holding companies must, to the best of the person's ability to do so,

(a) furnish all information and explanations to the actuary, and

(b) allow the actuary access to and furnish to the actuary copies of records, documents, books, accounts and vouchers of the insurance company and of any of its subsidiaries or holding companies

as the actuary considers necessary to enable the actuary to perform his or her duties as the company's actuary.

(2) A person who in good faith makes any communication under this section is not liable in a civil action only because of making the communication.

Actuary's valuation

126.23  (1) The actuary of an insurance company must value

(a) the actuarial and other policy liabilities of the company as at the end of a financial year, and

(b) any other matter specified in a direction made by the commission.

(2) The actuary's valuation must be in accordance with generally accepted actuarial practice, with such changes as may be specified in an order by the commission and any additional directions that may be made by the commission.

Special valuation

126.24  (1) The commission may appoint an actuary to value the matters referred to in section 126.23 (1) (a) or (b) if the commission is of the opinion that the appointment is necessary.

(2) The insurance company must pay remuneration to an actuary appointed under subsection (1), at a rate directed by the commission, for carrying out the valuation.

Notice of meeting to actuary

126.25  An insurance company must provide the company's actuary with not less than 21 days' notice of any general meeting of the company, unless the members of the insurance company have waived or reduced the period of notice for the meeting in accordance with section 143 of the Company Act.

Actuary's report

126.26  (1) The actuary of an insurance company must, not less than 21 days before the date of the annual general meeting of the members of the company, make a report to them on the valuation made under section 126.23 and on any other prescribed matter.

(2) In each report required under subsection (1), the actuary must state whether, in the actuary's opinion, the annual financial statement presents fairly the results of the valuation made under section 126.23.

Report to directors

126.27  (1) The directors or, where the directors so choose, the audit committee of the insurance company must meet with the actuary of the company at least once during each financial year.

(2) At the meeting, the actuary must report, in accordance with generally accepted actuarial practice and any change or direction made by the commission under section 126.23,

(a) on the financial position of the insurance company, and

(b) if directed to do so by the commission, the expected future financial condition of the company.

Report on matters requiring rectification

126.28  The actuary of an insurance company must report in writing to

(a) the directors, president and treasurer of the insurance company, and

(b) the superintendent

any matters that have come to the actuary's attention in the course of carrying out the actuary's duties that, in the actuary's opinion,

(c) have material adverse effects on the financial condition of the insurance company, and

(d) require rectification.

Actuary's procedures

126.29  (1) The commission may, in writing, require that the actuary of an insurance company

(a) report to the commission on the actuary's procedures in valuing the actuarially based liability figures contained in the annual return, and

(b) enlarge or extend the scope of that valuation, or perform any other procedure in any particular case,

and the actuary must comply with the commission's requirement and report to the commission.

(2) The insurance company must pay any additional remuneration, at a rate directed by the commission, to the actuary for the work required under subsection (1) by the commission.

Qualified privilege

126.3  An oral or written statement or report made under this Act by the actuary or former actuary of an insurance company has qualified privilege.

No liability

126.31  The actuary or former actuary of an insurance company who in good faith makes a statement or report under section 126.2, 126.28 or 126.29 is not liable in a civil action because of making the statement or report or because of anything in it.

Division 3 — Books, Records, Returns and Financial Statements of Financial Institutions

Filings

127  (1) Subject to subsection (1.1), within 90 days after the end of its financial year in each year, a financial institution must file with the superintendent a return in the form established by the superintendent outlining its financial condition and affairs during that financial year and must attach to the return

(a) its financial statements for that financial year,

(b) if its financial statements for that financial year are in consolidated form, the unconsolidated statements on which the consolidated financial statements are based,

(c) the report of the auditor required under section 212 of the Business Corporations Act or section 39.57 of the Credit Union Incorporation Act,

(d) a copy of a resolution of the directors showing that the return was approved by them, and

(e) if the financial institution is a subsidiary of another corporation, a copy of the annual financial statements for that financial year and auditor's report of the other corporation.

(1.1) An insurance company must, within 60 days after the end of its financial year in each year, file with the superintendent a return referred to in subsection (1).

(1.2) The actuary of an insurance company must make, and the company must file with its annual return, a report in a form determined by the superintendent on the reserve referred to in section 77.

(2) Within 5 days after a financial institution

(a) files with or delivers to the British Columbia Securities Commission or a similar authority outside British Columbia a statement concerning the financial affairs of the financial institution,

(b) distributes such a statement to the members of the financial institution, or

(c) makes an amendment to the financial institution's investment and lending policy established under section 136 (4),

the financial institution must file a copy of the statement or the amendment with the superintendent.

(3) At intervals specified by the superintendent, a financial institution must file with the superintendent a report in the form established by the superintendent outlining the financial affairs of the financial institution.

(4) For the purposes of subsection (3), the superintendent may specify different intervals for trust companies, insurance companies and credit unions.

Financial statements

128  (1) [Repealed 2011-29-91.]

(2) A financial institution that is a holding company must include,

(a) in the financial statements to be placed before an annual general meeting, and in each of its comparative interim financial statements, the assets and liabilities, and income and expense, of its subsidiaries, making due provision for minority interests, and indicating in the statement that it is presented in consolidated form, and

(b) in the financial statements to be placed before an annual general meeting,

(i)   the names of each corporation that is its subsidiary, and

(ii)   if the financial year of any of its subsidiaries does not coincide with the financial year of the financial institution, the date of the financial year end of the subsidiary and the reason why the financial years do not coincide.

(3) It is sufficient compliance with section 39.48 (1) of the Credit Union Incorporation Act if a credit union that otherwise complies with the requirements of that section substitutes for the financial statements referred to in that section condensed financial statements that conform to the requirements of subsection (4) of this section.

(4) The condensed financial statements referred to in subsection (3) must contain

(a) a condensed statement of profit and loss for the relevant financial year,

(b) a condensed balance sheet made up to the end of that financial year, and

(c) a notice in conspicuous type that any member or auxiliary member may obtain a free copy of the full financial statements at any branch of the credit union.

(5) A credit union that sends condensed financial statements to each member and auxiliary member as permitted by subsection (3) must

(a) keep at each of its branches or offices a copy of the full financial statements, and

(b) provide a free copy of the full financial statements to any member or auxiliary member who requests one.

(6) If financial statements are presented in accordance with this section, the auditor must qualify the auditor's report if, in the auditor's opinion, due provision has not been made for minority interests.

Accounting principles

129  A financial institution must prepare its financial statements in accordance with generally accepted accounting principles and with the regulations.

Public access to financial information

130  (1) A financial institution must keep at each branch or office of the financial institution a copy of its most recent annual financial statements and auditor's report.

(2) Every person may examine free of charge during the usual business hours of the financial institution a copy of the financial statements and auditor's report referred to in subsection (1).

(3) At the request of any person, a financial institution must provide that person with a copy of the financial statements and auditor's report on payment of a reasonable amount, if any, for that service that the directors may specify.

Financial year end

131  (1) The financial year end of a financial institution, incorporated on or after September 15, 1990, is December 31.

(2) If, immediately before September 15, 1990, the financial year end of a financial institution is a date other than December 31, the financial institution may change its financial year end to December 31, but not to another date.

(3) If, in any 12 month period, every credit union acting in concert with every other credit union adopts by special resolution the same date other than December 31 as its financial year end, then despite subsections (1) and (2), the financial year end of every credit union is changed to that date.

(4) Despite subsections (1) and (2), a financial institution may change its financial year end to October 31, if approved by the commission.

Records filed with registrar

132  The superintendent must file with the registrar a copy of

(a) every business authorization,

(b) any conditions attached to a business authorization or any modification of such conditions,

(c) an order under section 249 revoking a business authorization, and

(d) an order of the Supreme Court under section 251 appointing a receiver, a receiver manager or a trustee,

within 10 days after the business authorization is issued, the conditions are attached or modified or the order is made.

Location of records

133  (1) A financial institution must maintain facilities that the superintendent considers satisfactory by which the superintendent may obtain access to,

(a) if the financial institution is authorized to carry on deposit business, a record of all depositors, their names and addresses as far as is known and the sums deposited by the depositors,

(b) if the financial institution is authorized to carry on trust business, full and adequate records relating to the trust business of the financial institution,

(c) a record of all loans and investments made by the financial institution, and

(d) if the financial institution is authorized to carry on insurance business,

(i)   a record of contracts of insurance in which the financial institution is an insurer, and

(ii)   a record of all contracts of reinsurance and reinsurance treaties in which the financial institution is an insured or insurer.

(2) and (3) [Repealed 2004-48-65.]

Repealed

134  [Repealed 2004-48-66.]

Division 4 — Investments and Lending of Financial Institutions

Investment and loan committee

135  The directors of a financial institution must appoint or elect at the directors' first meeting following each annual general meeting, a committee, to be known as the investment and loan committee, composed of not fewer than 3 individuals, of which

(a) at least one member must be an officer,

(b) a majority of the members must not be officers or employees of the financial institution or of an affiliate of the financial institution, and

(c) in the case of a trust company or insurance company, not less than 1/3 of the members must be unaffiliated directors,

to hold office until the next annual general meeting.

Investment and loan standards

136  (1) For the purposes of this section and section 137, "prudent standards" are those that, in the overall context of an investment and loan portfolio, a prudent person would apply to investments and loans made on behalf of another person to whom there is owed a fiduciary duty to make investments without undue risk of loss and with a reasonable expectation of a fair return on the investments.

(2) A financial institution and any subsidiary of the financial institution must adhere to prudent standards in making investment and lending decisions, in giving guarantees and committing itself to other financial obligations, in writing down the value of investments and loans on its books and in managing its investments and loans.

(3) The investment and loan committee of a financial institution

(a) must recommend to the directors of the financial institution for their approval a written investment and lending policy that, for the financial institution and its subsidiaries, if any, the committee considers to

(i)   be consistent with prudent standards,

(ii)   comply with the regulations under subsection (5) and with sections 138 to 142,

(iii)   be comprehensive in addressing all aspects of risk associated with the investments and loans of the financial institution, and

(iv)   include mechanisms for measuring, limiting and managing risk, and

(b) as the committee or the directors consider necessary, and at least annually, must review the investment and lending policy and recommend amendments that the committee considers to be necessary or desirable.

(4) If the directors of the financial institution receive a recommendation under subsection (3), the financial institution must

(a) adopt the recommendation and establish the recommended policy, or the recommended amendments to that policy as part of the investment and lending policy of the financial institution and of its subsidiaries, if any, or

(b) make changes to the proposed policy or to the proposed amended policy that it considers to be necessary or desirable, and establish the policy, with those changes, as the investment and lending policy of the financial institution and of its subsidiaries, if any.

(5) A financial institution must ensure that the investment and lending policy established under subsection (4) contains the prescribed requirements.

(6) A financial institution must file with the superintendent a copy of the investment and lending policy established under subsection (4).

Commission's powers over investment and lending policy

137  If the commission believes on reasonable grounds that the investment and lending policy established under section 136 (4)

(a) is inconsistent with prudent standards,

(b) is not in compliance with regulations under section 136 (5) and with sections 138 to 142,

(c) is not comprehensive in addressing all aspects of risk associated with the investments and loans of the financial institution, or

(d) does not include mechanisms for measuring, limiting and managing risk,

the commission may order the directors of the financial institution to review immediately the investment and lending policy and must specify in the order the grounds under paragraph (a), (b), (c) or (d).

Compliance with investment and lending limits

138  (1) A financial institution and any subsidiary of the financial institution must not make investments or loans other than ones that,

(a) subject to section 140, are within the limits, if any, prescribed for the purpose of this section,

(b) subject to section 140, are in accordance with the conditions, if any, prescribed for the purposes of this section,

(c) are consistent with the investment and loan policy established under section 136 (4) by the financial institution, and

(d) subject to sections 140 and 141 (2), will not result in the financial institution, or any of its subsidiaries, or any combination of the financial institution and its subsidiaries, acquiring, holding or controlling, whether directly or indirectly,

(i)   more than 10% of the voting shares in a corporation, or

(ii)   more than a 10% interest in any entity.

(2) On application of a credit union, the commission, by written authorization applicable to

(a) one or more particular investments or loans,

(b) one or more classes of investments or loans, or

(c) all investments or loans

of that credit union that are made before the end of June, 1992, may authorize the credit union to make investments or loans in amounts greater than the limits, if any, prescribed for the purpose of this section or on conditions that vary from the conditions, if any, prescribed for the purpose of this section.

(3) In exercising the discretion given under subsection (2), the commission must take into account the criteria, if any, prescribed for the purpose of subsection (2).

Credit unions not permitted to invest in other credit unions

139  A credit union that is not a central credit union must not

(a) make a loan to or guarantee indebtedness of, or

(b) invest in equity shares issued by

another credit union that is not a central credit union.

Other authorized loans, investments and activities of subsidiaries

140  Section 138 (1) (a), (b) or (d) does not apply in respect of a prescribed type of loan or investment made in accordance with the regulations or a prescribed type of business or activity carried on by a subsidiary of a financial institution.

Investment in a corporation

141  (1) In this section, "venture capital corporation" means a corporation the activities of which are limited to

(a) the provision of financing and loans to entities in circumstances that involve the corporation in the holding of equity and debt security instruments of the entities being financed, and

(b) the provision of financial or management consulting services to entities whose security instruments have been acquired by the corporation that provides the services in a manner described in paragraph (a) or that participates in the provision of those services in contemplation of so acquiring security instruments.

(2) Section 138 (1) (d) does not apply if a financial institution directly or indirectly acquires, holds or controls

(a) more than 10% of the voting shares in a corporation that carries on, or more than a 10% interest in another type of entity that carries on, one or more of a prescribed type of business or activity,

(b) more than 10% of the voting shares in a venture capital corporation, or

(c) subject to first receiving the written consent of the commission and to any conditions that the commission in giving the consent may impose, more than 10% of the voting shares in a corporation that carries on a business that is reasonably ancillary to the business of a financial institution.

(3) [Repealed 2004-48-70.]

Other authorized investments

142  (1) Subject to subsection (2), a financial institution or a subsidiary of a financial institution may acquire assets that it would not otherwise be permitted to acquire under this Division,

(a) subject to first receiving the consent of the commission, in payment or part payment for security instruments sold by the financial institution or the subsidiary,

(b) subject to first receiving the consent of the commission, under an arrangement in good faith for the reorganization of a corporation whose security instruments were previously owned by the financial institution or the subsidiary,

(c) subject to first receiving consent of the commission, on amalgamation with another corporation of a corporation whose security instruments were previously owned by the financial institution or the subsidiary,

(d) for the purpose in good faith of protecting investments of the financial institution or the subsidiary,

(e) in the case of a trust company or an insurance company, on an amalgamation referred to in section 20 or on the company doing any of those things described in section 21, or

(f) by realizing on the security for a loan if the security is shares in a corporation and the effect of realizing on the security is that the financial institution or the subsidiary will hold, directly or indirectly, more than 10% of the voting shares in a corporation not described in section 141 (2).

(2) If a financial institution has acquired assets in accordance with subsection (1), it must dispose of them within 5 years after their acquisition unless the commission extends the time by order made before the time expires.

Disposal of investments

143  The commission may order a financial institution to dispose of and realize on, within a period specified by the commission, an investment or loan made in contravention of a provision of this Part.

Loans and guarantees prohibited

143.1  (1) A trust company or an insurance company must not give financial assistance to a person, directly or indirectly, by way of loan, guarantee, the provision of security, or otherwise,

(a) if at the time of the giving of financial assistance the trust company or insurance company is insolvent, or

(b) if, in the case of a loan, the giving of the loan would render the trust company or insurance company insolvent.

(2) On the application of a director of a trust company or an insurance company, the court may declare whether the giving of financial assistance by the trust company or insurance company would contravene subsection (1).

Financial assistance restricted

143.2  (1) A trust company or an insurance company must not give financial assistance to a person, directly or indirectly, by way of loan, guarantee, the provision of security, or otherwise,

(a) for the purpose of a purchase or subscription made or to be made by that person of, or for, shares of the trust company or insurance company, or any debt obligations of the trust company or insurance company carrying a right of conversion into or exchange for shares of the trust company or insurance company,

(b) on the security, in whole or in part, of a pledge of or charge on shares of the trust company or insurance company given by that person to the trust company or insurance company, or

(c) in any other case, unless there are reasonable grounds for believing that, or the directors are of the opinion that, the giving of the financial assistance is in the best interests of the trust company or insurance company.

(2) Despite subsection (1), a trust company or an insurance company, if previously authorized by special resolution and if there are reasonable grounds for believing that the giving of the financial assistance is in the best interests of the trust company or insurance company, may

(a) provide money, in accordance with a scheme for the time being in force, for the subscription for or purchase of shares or debt obligations of the trust company or insurance company by trustees, to be held by or for the benefit of a bona fide employee of the trust company or insurance company or of an affiliate of the trust company or insurance company, and

(b) provide financial assistance to bona fide full time employees of the trust company or insurance company, or of an affiliate, to enable the employees to purchase or subscribe for shares or debt obligations of the trust company or insurance company to be held beneficially by the employees.

(3) Despite subsection (1), financial assistance may be given to or for the benefit of

(a) a wholly owned subsidiary by its holding company,

(b) its holding company by a wholly owned subsidiary,

(c) a company by another company, if both companies are wholly owned subsidiaries of the same holding company or are wholly owned by the same person, and

(d) the sole member of a company, by that company.

Contract enforceable

143.3  Despite a contract to which a trust company or an insurance company is a party being made in contravention of section 143.1 or 143.2, a bona fide lender for value without notice, or the trust company or insurance company, may enforce the contract.

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