Bill C-82

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	(ii) shares of a body corporate that immediately before the exchange, or because of the exchange, did not deal with the company at arm's length within the meaning of the Income Tax Act; or
	(b) under an agreement referred to in subsection 246(1) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated company.
Limit on addition to a stated capital account	(2.2) On the issuance of a share, a company shall not add to the stated capital account in respect of the share an amount greater than the amount of the consideration it receives for the share.
Constraint on addition to a stated capital account	(2.3) Where a company that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the company as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 81(4).
	183. The Act is amended by adding the following after section 76:
Holding in market- indexed segregated fund	76.1 A company may, with the Superintendent's approval, hold shares of the company or shares or ownership interests of an entity that controls the company, where
	(a) the shares or ownership interests are assets of a fund maintained by the company as required by paragraph 451(b); and
	(b) the assets of the fund reflect the securities upon which a generally recognized market index is based and the weighting of those securities in that index.
	184. Subsections 83(5) to (8) of the Act are repealed.
	185. The Act is amended by adding the following after section 83:
	Restrictions Specific to Shares of Mutual Companies
Definitions	83.01 The definitions in this section apply in this section and in sections 83.02 to 83.11.
``participating share'' « action partici- pante »	``participating share'' means a share issued by a mutual company that confers on the holder of the share the right to receive remaining property of the company on the dissolution of the company.
``participating shareholder'' « actionnaire participant »	``participating shareholder'' means the holder of a participating share.
``participating shareholder account'' « compte des actionnaires partici- pants »	``participating shareholder account'' means an account that a mutual company is required by section 83.04 to maintain.
Voting rights	83.02 (1) Except as provided in subsections (2) and (3), a mutual company shall not issue any share that confers on its holder the right to vote at meetings of the shareholders and policyholders of the company.
Exception - specified events or conditions	(2) A share may confer on its holder the right to vote where an event has occurred and is continuing or a condition is fulfilled.
Exception - election of directors	(3) Subject to subsection 173(4.1), participating shares may confer on their holders the right to elect the number of directors indicated in the company's by-laws.
Participating shares	83.03 A mutual company shall not issue participating shares unless the by-laws of the company authorize it to issue participating shares.
Participating shareholder accounts	83.04 A mutual company that issues participating shares shall maintain separate accounts, in the form and manner determined by the Superintendent, in respect of those shares.
Allocation of income	83.05 There shall be credited to, or debited from, a participating shareholder account that portion of the income or losses of the company for a financial year, including accrued capital gains or losses, whether or not realized, that is determined in accordance with a method that is
	(a) in the written opinion of the actuary of the company, fair and equitable to the participating policyholders of the company;
	(b) approved by resolution of the directors, after considering the written opinion of the actuary; and
	(c) not disallowed by the Superintendent, on the ground that it is not fair and equitable to the participating policyholders, within sixty days after receiving the resolution.
Allocation of expenses	83.06 There shall be debited from a participating shareholder account that portion of the expenses, including taxes, of the company for a financial year that is determined in accordance with a method that is
	(a) in the written opinion of the actuary of the company, fair and equitable to the participating policyholders of the company;
	(b) approved by resolution of the directors, after considering the written opinion of the actuary; and
	(c) not disallowed by the Superintendent, on the ground that it is not fair and equitable to the participating policyholders, within sixty days after receiving the resolution.
Filing of allocation method	83.07 A mutual company the directors of which by resolution approve a method of allocating its income and losses and expenses to a participating shareholder account shall, within thirty days after the making of the resolution, file a copy of it with the Superintendent, together with a copy of the written opinion of the actuary of the company and any other information relevant to the allocation method that the Superintendent requests.
Review of allocation method	83.08 The actuary of a company shall annually report in writing to the directors on the fairness and equitableness of the method used by the company for allocating its income and losses and expenses to a participating shareholder account.
Payment of dividends	83.09 A mutual company that pays a dividend under section 83 on participating shares shall debit from the participating shareholder account in respect of those shares
	(a) in the case of a dividend paid by issuing fully paid shares, the amount recorded as stated capital in respect of the dividend as required by subsection 83(3); and
	(b) in any other case, the amount or value of the dividend.
Participating share redemptions, etc.	83.1 (1) On a purchase, redemption or other acquisition by a company of participating shares issued by it or fractions of participating shares issued by it, other than participating shares held under section 76 or acquired through the realization of security and sold as required by subsection 77(2), there shall be debited from the participating shareholder account for the class or series of shares so purchased, redeemed or otherwise acquired the amount determined by the formula
	A x B/C
	where
	A is the balance of the participating shareholder account for the shares of that class or series immediately before the purchase, redemption or other acquisition;
	B is the number of shares of that class or series so purchased, redeemed or otherwise acquired; and
	C is the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.
Shares converted to another class	(2) On a conversion of outstanding participating shares of a company into shares of another class or series, or on a change of outstanding participating shares of the company into shares of another class or series
	(a) there shall be deducted from the participating shareholder account maintained for the class or series of participating shares converted or changed the amount determined by the formula
	A x B/C
	where
	A is the balance of the participating share holder account for the shares of that class or series immediately before the conversion or change,
	B is the number of shares of that class or series converted or changed, and
	C is the number of shares of that class or series outstanding immediately before the conversion or change; and
	(b) if the shares of that other class or series are participating shares, the amount determined under the formula in paragraph (a) shall be credited to the participating shareholder account for those participating shares.
Participating shareholder account for convertible participating shares	(3) For the purposes of subsection (2) and subject to the company's by-laws, where a company issues two classes of participating shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount in a participating shareholder account attributable to a share in either class is the amount determined by the formula
	A/B
	where
	A is the total of the balances of the participating shareholder accounts of both classes; and
	B is the number of outstanding shares of both classes immediately before the conversion.
Remaining property on dissolution	83.11 The remaining property of a company that a participating shareholder of the company is entitled to receive on the dissolution of the company shall not exceed the sum of all amounts each of which is the amount in respect of a class or series of participating shares of the company determined by the formula
	A x B/C
	where
	A is the balance in the participating shareholder account for the shares of that class or series immediately before the dissolution;
	B is the number of shares of that class or series held by the participating shareholder immediately before the dissolution; and
	C is the number of shares of that class or series immediately before the dissolution.
	186. (1) Subsection 142(3) of the Act is replaced by the following:
Record date for policyholders' vote	(2.1) Before a meeting of policyholders, the directors may fix a date as the record date for the purpose of determining policyholders entitled to vote at the meeting. That record date must not be more than ten days before the date on which the meeting is to be held.
No record date fixed under subsection (1)	(3) If no record date is fixed under subsection (1) for the determination of shareholders or policyholders for any purpose for which a record date could have been fixed under that subsection, the record date for the determination of shareholders or policyholders for that purpose is the date on which the directors pass the resolution relating to that purpose.
No record date fixed for shareholders under subsection (2)	(3.1) If no record date is fixed under subsection (2) for the determination of shareholders entitled to receive notice of a meeting, the record date for the determination of shareholders entitled to receive notice of, or to vote at, that meeting is
	(a) the day immediately before the day on which the notice is given; or
	(b) if no notice is given, the day on which the meeting is held.
No record date fixed for policyholders under subsection (2)	(3.2) If no record date is fixed under subsection (2) for the determination of policyholders entitled to receive notice of a meeting, the record date for that purpose is
	(a) the day immediately before the day on which the notice is given; or
	(b) if no notice is given, the day on which the meeting is held.
No record date fixed under subsection (2.1)	(3.3) If no record date is fixed under subsection (2.1) for the determination of policyholders entitled to vote at a meeting, the record date for that purpose is the day on which the meeting is held.
	(2) The portion of subsection 142(4) of the Act before paragraph (a) is replaced by the following:
Notice of record date	(4) Subject to subsection (5), where a record date is fixed for the determination of shareholders for any purpose, notice of the record date shall, not less than seven days before the record date, be given
	(3) Subsection 142(5) of the Act is replaced by the following:
Exception	(5) Notice of a record date need not be given where the requirement to give the notice is waived in writing by every holder of a share of the class or series affected by the fixing of the record date whose name is set out in the central securities register at the close of business on the day on which the directors fix the record date.
1993, c. 34, s. 78	187. (1) Paragraph 143(1)(b) of the Act is replaced by the following:
	(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;
	(2) Section 143 of the Act is amended by adding the following after subsection (1):
Waiver of notice	(1.1) A company is not required under subsection (1) to send to a person notice of a meeting if the person waives notice of the meeting. That waiver may be in any manner.
Attendance constitutes waiver	(1.2) A person who attends a meeting of shareholders or policyholders is deemed to have waived notice of the meeting, except where the person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
Practices of policyholder notification	(1.3) A company shall adopt and follow either of the two practices set out in subsections (1.4) and (1.5) for the notification of policyholders under paragraph (1)(b).
First practice	(1.4) One practice requires the company to send the notice to each policyholder entitled to vote at the meeting. If that practice is adopted, each of those policyholders is entitled to notice under paragraph (1)(b).
Second practice	(1.5) The other practice requires the company, at the time of the application for or issuance of a policy that gives the policyholder the right to vote at meetings of the shareholders and policyholders of the company, and after that time at least once every three years,
	(a) to advise the policyholder of the policyholder's right to attend and to vote in person or by proxy at those meetings; and
	(b) to provide the policyholder with a form on which the policyholder may indicate whether the policyholder wants to receive notices of those meetings.
Notice under second practice	(1.6) If a company chooses to adopt and follow the practice under subsection (1.5), each policyholder entitled to vote at a meeting of shareholders and policyholders of the company is entitled to notice under paragraph (1)(b) if
	(a) the policyholder, within three years before the record date fixed or determined under subsection 142(2) or (3.2) for the meeting, completes and returns to the company a form referred to in paragraph (1.5)(b) or a form referred to in paragraph 164(1)(b), as that paragraph read before the coming into force of this subsection; and
	(b) the policyholder indicates on that form that the policyholder wants to receive notices of meetings of shareholders and policyholders of the company.
	(3) Paragraph 143(3)(b) of the Act is replaced by the following:

Bill C-82

Restrictions Specific to Shares of Mutual Companies