SUMMARY

This enactment amends the Insurance Companies Act to facilitate the establishment of a demutualization regime for mutual insurance companies proposing to convert to companies with common shares. The amendments set out the framework governing an application by a mutual insurance company to the Minister of Finance for approval of a conversion proposal and for the issuance of letters patent of conversion, including requirements governing the holding of a special meeting of policyholders.

This enactment also amends provisions of the Insurance Companies Act concerning the preparation of policyholder lists and reinsurance transactions entered into by foreign companies in the ordinary course of business.

EXPLANATORY NOTES

Clause 1: The relevant portion of subsection 142(1) reads as follows:

0142. (1) For the purpose of determining

    . . .

    (d) who is a policyholder for any other purpose except

      . . .

the directors may fix in advance a date as the record date for the determination of shareholders or policyholders, but the record date so fixed shall not precede by more than fifty days the particular action to be taken.

Clause 2: (1) and (2) The relevant portion of subsection 143(1) reads as follows:

143. (1) Notice of the time and place of a meeting of shareholders or policyholders of a company shall be sent not less than twenty-one days or more than fifty days before the meeting to

    . . .

    (b) each policyholder who is determined under subsection (1.4) or (1.6) to be a policyholder entitled to notice under this paragraph, if no business referred to in any of subparagraphs (c)(i) to (iv) is to be dealt with at the meeting;

    (c) each policyholder entitled to vote at the meeting, if any of the following business is to be dealt with at the meeting:

      . . .

      (iv) approving a proposal to convert the company from a mutual company into a company with common shares;

Clause 3: Subsection 149(1.2) reads as follows:

(1.2) If a record date is fixed under subsection 142(2.1), the list referred to in paragraph (1)(b) shall be prepared not later than the day on which the meeting is held. If no record date is fixed under that subsection, the list shall be prepared

    (a) at the close of business on the day before the day on which the notice of the meeting is given; or

    (b) if no notice is given, on the day on which the meeting is held.

Clause 4: New.

Clause 5: (1) Subsections 237(1.1) to (1.5) are new. Subsection 237(1) reads as follows:

237. (1) On the application of a mutual company made in accordance with the regulations, the Minister may approve a proposal to convert the company into a company with common shares.

(2) and (3) Paragraphs 237(2)(a.1), (a.2) and (c.1) to (c.4) are new. The relevant portion of subsection 237(2) reads as follows:

(2) The Governor in Council may make regulations

    (a) respecting the form and content of an application referred to in subsection (1);

    (b) concerning the fair and equitable treatment of policyholders under a proposal referred to in subsection (1);

(4) Subsection 237(3) reads as follows:

(3) A regulation made under subsection (2) may provide that the Superintendent may, by order, on such terms and conditions as the Superintendent considers appropriate, exempt a company from prescribed requirements of that regulation.

Clause 6: Section 237.1 reads as follows:

237.1 Letters patent issued to effect a proposal to convert a company from a mutual company into a company with common shares become effective on the day stated in the letters patent, and on that day

    (a) the company ceases to be a mutual company; and

    (b) the policyholders of the company cease to have any rights with respect to the company as a mutual company or any interest in the company as a mutual company.

Clause 7: Subsection 407(4) reads as follows:

(4) Notwithstanding subsection (1), no person, or entity controlled by a person, shall purchase or otherwise acquire any share of a company that has been converted from a mutual company into a company with common shares, or purchase or acquire control of any entity that holds any share of such a company, if the result thereof would be that the company would not be widely held within the meaning of the regulations.

Clause 8: New. The relevant portion of section 462 reads as follows:

462. The only transfers that may be made from a participating account maintained pursuant to section 456 are

Clause 9: New.