Bill C-59

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	1st Session, 36th Parliament, 46-47 Elizabeth II, 1997-98
	The House of Commons of Canada
	BILL C-59
	An Act to amend the Insurance Companies Act
1991, cc. 47, 48; 1992, c. 51; 1993, cc. 28, 34, 44; 1994, cc. 24, 26, 47; 1996, c. 6; 1997, c. 15	Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
	1. Paragraph 142(1)(d) of the Insurance Companies Act is amended by striking out the word ``and'' at the end of subparagraph (ii), by adding the word ``and'' at the end of subparagraph (iii) and by adding the following after subparagraph (iii):
	(ii) the right to receive benefits in respect of the conversion of a mutual company into a company with common shares,
1997, c. 15, s. 187(1)	2. (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 (iii) is to be dealt with at the meeting;
	(2) Paragraph 143(1)(c) of the Act is amended by adding the word ``or'' at the end of subparagraph (ii), by striking out the word ``or'' at the end of subparagraph (iii) and by repealing subparagraph (ii).
1997, c. 15, s. 192(1)	3. Subsection 149(1.2) of the Act is replaced by the following:
Time to prepare policyholder list	(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 on the day on which the meeting is held.
	4. The Act is amended by adding the following after the heading ``Conversion into Company with Common Shares'' before section 237:
Definitions	236.1 The definitions in this section apply in sections 237 and 237.1.
``conver- sion proposal'' « proposi- tion de transforma- tion »	``conversion proposal'' means a proposal to convert a mutual company into a company with common shares.
``converting company'' « société en transforma- tion »	``converting company'' has the meaning given to that expression by the regulations.
``eligible policyholder'' « souscrip- teur admissible »	``eligible policyholder'' has the meaning given to that expression by the regulations.
``letters patent of conversion'' « lettres patentes de transforma- tion »	``letters patent of conversion'' means letters patent issued under paragraph 237(1)(b).
	5. (1) Subsection 237(1) of the Act is replaced by the following:
Conversion into company with common shares	237. (1) On the application of a mutual company made in accordance with the regulations, the Minister may, on the recommendation of the Superintendent,
	(a) approve a conversion proposal; and
	(b) issue letters patent of conversion to effect the conversion proposal.
Special meeting of eligible policyholders	(1.1) Before an application is made under subsection (1), the directors of the company must call a special meeting of eligible policyholders to obtain
	(a) approval of the conversion proposal;
	(b) confirmation of any by-law or of any amendment to or repeal of a by-law that is necessary to implement the conversion proposal; and
	(c) authorization to make the application.
Notice of meeting and policyholder list	(1.2) A company shall, in respect of a special meeting,
	(a) send, not less than 45 days and not more than 75 days before the meeting, to each eligible policyholder a notice of the time and place of the meeting, describing the conversion proposal in sufficient detail to permit a policyholder to form a reasoned judgment about the terms of the proposal and its impact on both policyholders and the company, together with the prescribed information in respect of the conversion proposal; and
	(b) prepare, not less than 45 days before the meeting, a list, which may be in electronic form, of all eligible policyholders.
Application of subsection 149(5)	(1.3) Subsection 149(5) applies, with any modifications that the circumstances require, in respect of the list of eligible policyholders.
Entitlement to notice and right to vote	(1.4) Only eligible policyholders are entitled to notice of and to vote at a special meeting.
Special resolution	(1.5) Any approval, confirmation or authorization referred to in subsection (1.1) must be given by special resolution of the eligible policyholders.
	(2) Paragraphs 237(2)(a) and (b) of the Act are replaced by the following:
	(a) respecting the application referred to in subsection (1), including the form of the application and the information to be contained in the application, and authorizing the Superintendent to require additional information in order to make a recommendation;
	(a.1) respecting the conversion proposal, including the information to be contained in the conversion proposal, and authorizing the Superintendent to approve the measures to be taken by the converting company in respect of any proposed amendment to the conversion proposal;
	(a.2) respecting the value of a converting company for the purposes of the regulations and authorizing the Superintendent to specify a day at which the value shall be estimated by the converting company;
	(b) concerning the fair and equitable treatment of policyholders under a conversion proposal;
	(3) Subsection 237(2) of the Act is amended by striking out the word ``and'' at the end of paragraph (c) and by adding the following after paragraph (c):
	(c.1) respecting the authorization by the Superintendent of the sending of a notice of a special meeting referred to in subsection (1.1), including
	(i) prescribing the information to be submitted by the converting company in support of an authorization,
	(ii) authorizing the Superintendent to consider information in addition to that referred to in subparagraph (i), and
	(iii) authorizing the Superintendent to require that information, in addition to the prescribed information referred to in paragraph (1.2)(a), be sent with a notice;
	(c.2) authorizing the Superintendent to
	(i) require the converting company to hold one or more information sessions for eligible policyholders and to take other measures to assist eligible policyholders in forming a reasoned judgment on the conversion proposal, and
	(ii) set the rules under which the information sessions must be held;
	(c.3) respecting restrictions on any fee, compensation or other consideration that may be paid, in respect of the conversion of a mutual company into a company with common shares, to any director, officer or employee of the company or to any entity with which a director, officer or employee of the company is associated;
	(c.4) prohibiting, during the period set out in the regulations, the issuance or provision of shares, share options or rights to acquire shares, of a company that has been converted from a mutual company into a company with common shares to
	(i) any director, officer or employee of the company, or
	(ii) any person who was a director, officer or employee of the company during the year preceding the effective date of conversion of the company; and
1997, c. 15, s. 215	(4) Subsection 237(3) of the Act is replaced by the following:
Exemption by Superinten- dent	(3) A regulation made under subsection (2) may provide that the Superintendent may, on such terms and conditions as the Superintendent considers appropriate, exempt a company from prescribed requirements of that regulation.
1997, c. 15, s. 216	6. Section 237.1 of the Act is replaced by the following:
Effect of letters patent of conversion	237.1 (1) Letters patent of conversion become effective on the day stated in the letters patent of conversion, 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 or any interest in the company as a mutual company.
Considera- tion for shares	(2) For the purposes of subsection 69(1) and section 70, shares issued by a company under a conversion proposal are deemed to be fully paid for in money and the amount of consideration received by the company for those shares is deemed to be equal to the book value of the company immediately after the effective date of its conversion, determined in accordance with the accounting principles referred to in subsection 331(4) and calculated without taking into account any amounts remaining at that time in the participating accounts that the company maintains under section 456.
	7. Subsection 407(4) of the Act is replaced by the following:
Demutuali- zed companies	(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 otherwise acquire any share of an entity that holds any share of such a company, if the result of the purchase or other acquisition would be that the company would not be widely held within the meaning of the regulations.
	8. Section 462 of the Act is amended by striking out the word ``and'' at the end of paragraph (b), by adding the word ``and'' at the end of paragraph (c) and by adding the following after paragraph (c):
	(d) transfers made in respect of the conversion of a mutual company into a company with common shares.
	9. Section 587.1 of the Act is amended by adding the following after subsection (1):
Ordinary reinsurance exempted	(1.1) Subsection (1) does not apply in respect of reinsurance transactions entered into by a foreign company in the ordinary course of its business.
Coming into force	10. This Act comes into force on a day to be fixed by order of the Governor in Council.

Bill C-59

BILL C-59