Bill C-38

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First Reading

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	Corporate Name
Prohibited names	693. A bank holding company may not be incorporated under this Part with a name
	(a) that is prohibited by an Act of Parliament;
	(b) that is, in the opinion of the Superintendent, deceptively misdescriptive;
	(c) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existing
	(i) trade-mark or trade name, or
	(ii) corporate name of a body corporate,
	except where the trade-mark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name and consent to the use of the trade-mark, trade name or corporate name is signified to the Superintendent in such manner as the Superintendent may require;
	(d) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any entity carries on business or is identified; or
	(e) that is reserved under section 43 for a bank or an authorized foreign bank or a proposed bank or proposed authorized foreign bank or under section 697 for another bank holding company or a proposed bank holding company.
Affiliated bank holding company	694. Despite section 693 and subject to section 695, a bank holding company that is affiliated with another entity may, with the consent of that entity and the approval of the Superintendent, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.
Restriction	695. A bank holding company may not be incorporated or continued with a name that is substantially similar to that of a bank unless the name contains words that, in the opinion of the Superintendent, indicate to the public that the bank holding company is distinct from any bank that is a subsidiary of the bank holding company.
French or English form of name	696. (1) The name of a bank holding company may be set out in its letters patent in an English form, a French form, an English form and a French form or in a combined English and French form, and the bank holding company may use and be legally designated by any such form.
Mandatory abbreviation	(2) Despite any other provision of this Act and subject to the regulations, every bank holding company shall have as part of its name, the abbreviations ``bhc'' or ``spb''.
Alternate name	(3) A bank holding company may identify itself outside Canada by its name in any language and the bank holding company may use and be legally designated by any such form of its name outside Canada.
Other name	(4) Subject to subsection (5) and section 832, a bank holding company may carry on business under or identify itself by a name other than its corporate name.
Directions	(5) Where a bank holding company is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the bank holding company not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 693(a) to (e).
Regulations	(6) The Governor in Council may make regulations respecting the use of the abbreviations ``bhc'' or ``spb'' in the name of bank holding companies.
Reserved name	697. The Superintendent may, on request, reserve for ninety days a name for a proposed bank holding company or for a bank holding company that intends to change its name.
Directing change of name	698. (1) If through inadvertence or otherwise a bank holding company
	(a) comes into existence or is continued with a name, or
	(b) on an application to change its name, is granted a name
	that is prohibited by section 693 or 695, the Superintendent may, by order, direct the bank holding company to change its name and the bank holding company shall comply with that direction.
Revoking name	(2) Where a bank holding company has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Part, the Superintendent may revoke the name of the bank holding company and assign to it a name and, until changed in accordance with section 215 or 217, the name of the bank holding company is thereafter the name so assigned.
	Publication of Information
Publication of information	699. The Superintendent shall, within sixty days after the end of each year, cause a notice to be published in the Canada Gazette, showing
	(a) the name of every bank holding company; and
	(b) the place in Canada where the head office of the bank holding company is situated.
	DIVISION 4
	ORGANIZATION AND COMMENCEMENT
First directors' meeting	700. (1) After letters patent incorporating a bank holding company are issued, a meeting of the directors of the bank holding company shall be held at which the directors may, subject to this Division,
	(a) make by-laws;
	(b) adopt forms of share certificates and corporate records;
	(c) authorize the issue of shares of the bank holding company;
	(d) appoint officers;
	(e) appoint an auditor to hold office until the first meeting of shareholders;
	(f) make banking arrangements; and
	(g) deal with any other matters necessary to organize the bank holding company.
Calling directors' meeting	(2) An incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 770(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the bank holding company.
Calling shareholders' meeting	701. (1) After the meeting referred to in subsection 700(1) is held, the directors of the bank holding company shall without delay call a meeting of the shareholders of the bank holding company.
Meeting of shareholders	(2) The shareholders of a bank holding company shall, by resolution at the meeting of shareholders called pursuant to subsection (1),
	(a) approve, amend or reject any by-law made by the directors of the bank holding company;
	(b) subject to section 756, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election; and
	(c) appoint an auditor to hold office until the close of the first annual meeting of shareholders.
Term of first directors	702. A director named in the application for letters patent to incorporate a bank holding company holds office until the election of directors at the meeting of shareholders called pursuant to subsection 701(1).
	DIVISION 5
	CAPITAL STRUCTURE
	Share Capital
Power to issue shares	703. (1) Subject to this Part and the by-laws of the bank holding company, shares of a bank holding company may be issued at such times and to such persons and for such consideration as the directors of the bank holding company may determine.
Shares	(2) Shares of a bank holding company shall be in registered form and shall be without nominal or par value.
Shares of continued bank holding company	(3) Where a body corporate is continued as a bank holding company under this Part, shares with nominal or par value issued by the body corporate before it was so continued are deemed to be shares without nominal or par value.
Deemed share conditions	(4) If a right of a holder of a share with nominal or par value of a body corporate continued as a bank holding company under this Part, other than a voting right, was stated or expressed in terms of the nominal or par value of the share immediately before the body corporate was continued under this Part, that right is deemed, after the continuance, to be the same right stated or expressed without reference to the nominal or par value of the share.
Common shares	704. (1) A bank holding company shall have one class of shares, to be designated as ``common shares'', which are non-redeemable and in which the rights of the holders thereof are equal in all respects, and those rights include
	(a) the right to vote at all meetings of shareholders except where only holders of a specified class of shares are entitled to vote;
	(b) the right to receive dividends declared on those shares; and
	(c) the right to receive the remaining property of the bank holding company on dissolution.
Designations of shares	(2) No bank holding company shall designate more than one class of its shares as ``common shares'' or any variation of that term.
Continued bank holding company	(3) A body corporate continued as a bank holding company under this Part that is not in compliance with subsection (2) on the date letters patent continuing it as a bank holding company are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.
Classes of shares	705. (1) The by-laws of a bank holding company may provide for more than one class of shares and, if they so provide, shall set out
	(a) the rights, privileges, restrictions and conditions attaching to the shares of each class; and
	(b) the maximum number, if any, of shares of any class that the bank holding company is authorized to issue.
Shareholder approval	(2) Where a by-law referred to in subsection (1) is made, the directors of the bank holding company shall submit the by-law to the shareholders at the next meeting of shareholders.
Effective date	(3) A by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders at the meeting referred to in subsection (2).
Shares in series	706. (1) The by-laws of a bank holding company made pursuant to section 705 may authorize the issue of any class of shares in one or more series and may authorize the directors of the bank holding company to fix the maximum number, if any, of shares in each series and to determine the designation, rights, privileges, restrictions and conditions attaching to the shares of each series, subject to the limitations set out in the by-laws.
Series participation	(2) If any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.
Voting rights	(3) Where voting rights are attached to any series of a class of shares, the shares of every other series of that class shall have the same voting rights.
Restriction on series	(4) No rights, privileges, restrictions or conditions attached to a series of shares authorized under this section confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.
Material to Superinten- dent	(5) Before the issue of shares of a series of shares authorized under this section, the directors shall send to the Superintendent a copy of the by-law authorizing the directors to fix the rights, privileges, restrictions and conditions of those shares and shall provide the Superintendent with particulars of the proposed series of shares.
One share, one vote	707. Where voting rights are attached to a share of a bank holding company, the voting rights may confer only one vote in respect of that share.
Shares non-assessabl e	708. Shares issued by a bank holding company are non-assessable and the shareholders are not liable to the bank holding company or to its creditors in respect thereof.
Considera- tion for share	709. (1) No share of any class of shares of a bank holding company shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.
Other currencies	(2) When issuing shares, a bank holding company may provide that any aspect of the shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.
Stated capital account	710. (1) A bank holding company shall maintain a separate stated capital account for each class and series of shares it issues.
Addition to stated capital account	(2) A bank holding company shall record in the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.
Exception	(3) Notwithstanding subsection (2), a bank holding company may record in the appropriate stated capital account part of the amount of any consideration it receives for shares it issues
	(a) in exchange for
	(i) property of a person who immediately before the exchange did not deal with the bank holding company at arm's length within the meaning of the Income Tax Act, or
	(ii) shares of a body corporate that immediately before the exchange, or because of the exchange, did not deal with the bank holding company at arm's length within the meaning of the Income Tax Act; or
	(b) under an agreement referred to in subsection 804(1) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated bank holding company.
Limit on addition to a stated capital account	(4) On the issuance of a share, a bank holding 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	(5) Where a bank holding 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 bank holding 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 720(4).
Stated capital of continued bank holding company	711. (1) Where a body corporate is continued as a bank holding company under this Part, the bank holding company shall record in the stated capital account maintained for each class and series of shares then outstanding an amount that is equal to the aggregate of
	(a) the aggregate amount paid up on the shares of each class and series of shares immediately before the body corporate was so continued, and
	(b) the amount of the contributed surplus of the bank holding company that is attributable to those shares.
Contributed surplus entry	(2) The amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (1)(b) shall be deducted from the contributed surplus account of the bank holding company.
Shares issued before continuance	(3) Any amount unpaid in respect of a share issued by a body corporate before it was continued as a bank holding company under this Part and paid after it was so continued shall be recorded in the stated capital account maintained by the bank holding company for the shares of that class or series.
Pre-emptive right	712. (1) Where the by-laws of a bank holding company so provide, no shares of any class shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.

Bill C-38

DIVISION 4

ORGANIZATION AND COMMENCEMENT

DIVISION 5

CAPITAL STRUCTURE