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Bill C-38

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First Reading

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	(c) unless the company or society is an entity referred to in paragraph 47(2)(b) or (c) , the company or society will not use the word ``assurance'', ``assurances'' or ``insurance'' in its name after a certificate or letters patent referred to in subsection (1) or (1.1) are issued in respect of the company or society.
Withdrawing application	(3) If a special resolution authorizing the application for the certificate or letters patent so states, the directors of a company or society may, without further approval of the shareholders, policyholders entitled to vote or members, withdraw the application before it is acted on.
Day this Act ceases to apply	(4) On the day specified in the certificate or letters patent, this Act ceases to apply to the body corporate to which the certificate or letters patent relate.
1996, c. 6, s. 67	348. Paragraph 42(1)(e) of the Act is replaced by the following:
	(e) that is reserved under section 45 for another company or society or a proposed company or society or under section 734 for an insurance holding company or a proposed insurance holding company .
1996, c. 6, s. 68	349. Section 43 of the Act is replaced by the following:
Affiliated company or society	43. Despite section 42, a company or society 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.
1996, c. 6, s. 70	350. Subsection 46(2) of the Act is replaced by the following:
Revoking name	(2) If a company or society 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 Act, the Superintendent may revoke the name of the company or society and assign to it a name and, until changed in accordance with section 224, 238 or 544.1 , the name of the company or society is thereafter the name so assigned.
	351. Subsection 47(2) of the Act is amended by adding the following after paragraph (a):
	(a.1) an insurance holding company;
1996, c. 6, s. 70	352. Section 48 of the Act is replaced by the following:
Subsidiaries	48. Despite subsection 47(1), a subsidiary of a company or society may use the company's or society's name in its name.
	353. Subsection 50(1) of the Act is replaced by the following:
Calling shareholders' meeting	50. (1) If at least five million dollars, or any greater amount that the Minister may specify, has been received by a company, other than a mutual company, in respect of which letters patent were issued under section 22 from the issue of its shares, the directors of the company shall without delay call a meeting of the shareholders of the company.
	354. Clause 57(1)(a)(ii)(B) of the Act is replaced by the following:
	(B) at least five million dollars or any greater amount that is specified by the Minister under subsection 50(1), in the case of a company other than a mutual company,
	355. The Act is amended by adding the following after section 59:
Limit on assets	59.1 (1) The Minister may, by order, require a company that is a converted company in respect of which the Minister has issued an order under subsection 407(8) or a converted company in respect of which subsection 407(11) applied at any time not to have average total assets in any three month period ending on the last day of a month subsequent to the month specified in the order exceeding the company's average total assets in the three month period ending on the last day of the month immediately before the month specified in the order if the Minister is of the opinion that it is in the best interests of the financial system in Canada to do so, after having considered the Superintendent's opinion on
	(a) the nature and extent of the financial services activities carried out by entities affiliated with the company; and
	(b) the impact that the nature and degree of supervision and regulation of those financial services activities have on the supervision and regulation of the company.
Revocation of order	(2) If the Minister is of the opinion that the circumstances giving rise to the order have ceased to exist or have changed substantially, the Minister may, by further order, revoke the order.
Average total assets	(3) For the purposes of subsection (1), the average total assets of a company in a three month period shall be computed by adding the total assets of the company as calculated for the month end of each of the three months in the period and by dividing the sum by three.
	356. Subsection 65(3) of the Act is replaced by the following:
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 and policyholders at the meeting referred to in subsection (2).
1997, c. 15, s. 183	357. The portion of section 76.1 of the Act before paragraph (a) is replaced by the following:
Holding in market-indexe d segregated fund	76.1 A company may hold shares of the company or shares or ownership interests of an entity that controls the company, if
	358. Section 83 of the Act is amended by adding the following after subsection (4):
When dividend not to be declared	(5) The directors of a company shall not declare and a company shall not pay a dividend without the approval of the Superintendent if the total of all dividends declared by the company in any financial year would exceed the aggregate of the company's net income for that year and its retained net income for the preceding two financial years.
	359. Section 143 of the Act is amended by adding the following after subsection (1):
Number of eligible votes	(1.01) A converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 164.08(1), that may be cast at the meeting as of the record date for determining the shareholders or policyholders entitled to receive the notice of meeting or, if there are to be separate votes of shareholders or policyholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.
	360. Subsections 150(2) and (3) of the Act are replaced by the following:
Policyholders	(2) Unless the by-laws otherwise provide , a quorum of policyholders is present at a meeting of policyholders if at least five hundred policyholders who are entitled to vote at the meeting, or one per cent of the total number of those policyholders, whichever is lesser, are present in person or represented by proxyholders.
Shareholders and policyholders	(3) Unless the by-laws otherwise provide, a quorum of shareholders and policyholders is present at a meeting of shareholders and policyholders if the holders of a majority of the shares and at least five hundred policyholders, or one per cent of the total number of policyholders, whichever is lesser, who are entitled to vote at the meeting are present in person or represented by proxyholders.


	361. Section 152 of the Act is replaced by the following:
One share - one vote	152. Subject to section 164.08, if a share of a company entitles the holder of the share to vote at a meeting of shareholders or shareholders and policyholders, that share entitles the shareholder to one vote at the meeting.
	362. The Act is amended by adding the following after section 164.07:
	DIVISION I.2
	RESTRICTIONS ON VOTING
Meaning of ``eligible votes''	164.08 (1) In this section, ``eligible votes'' means the total number of votes that may be cast by or on behalf of shareholders and policyholders on a vote of shareholders or shareholders and policyholders or a vote of holders of a class or series of shares, as the case may be, in respect of any particular matter, calculated without regard to subsection (2).
Restriction	(2) At a meeting of shareholders and policyholders of a company in respect of which subsection 407(4) applies or of a company to which subsection 407(5) applies, no person and no entity controlled by any person may, in respect of any vote of shareholders or shareholders and policyholders or holders of any class or series of shares of the company, cast votes in respect of any shares beneficially owned by the person or the entity that are, in aggregate, more than 20 per cent of the eligible votes that may be cast in respect of that vote.
Proxyholders	(3) No person who is a proxyholder for a person or for an entity controlled by a person may cast votes to which the proxy relates that the person or entity may not cast by reason of subsection (2).
Exception	(4) Subsections (2) and (3) do not apply in respect of votes cast by or on behalf of
	(a) a company to which subsection 407(5) applies, or an insurance holding company to which subsection 407(6) applies, that controls the company; or
	(b) any entity that is controlled by a company or an insurance holding company referred to in paragraph (a).
Exception	(5) Subsections (2) and (3) do not apply in respect of a vote held under section 239.
Validity of vote	(6) A vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).
Disposition of shareholdings	(7) If, with respect to any company, a person contravenes subsection (2) or (3), the Minister may, by order, direct the shareholder of the shares to which the contravention relates or any person controlled by that shareholder to dispose of any number of shares of the company beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the shareholder and the persons controlled by that shareholder that is specified in the order.
Restriction on voting rights	(8) If the Minister makes an order under subsection (7), the person to whom the order relates may not, in person or by proxy, exercise any voting rights that are attached to shares of the company beneficially owned by the person.
Subsection (8) ceases to apply	(9) Subsection (8) ceases to apply in respect of a person when the shares to which the order relates have been disposed of.
Reliance on number in notice	(10) For the purpose of this section, a person is entitled to rely on the number of eligible votes set out in a notice of a meeting under subsection 143(1.01).
Designation of persons	(11) For the purpose of this section, the Minister may, with respect to a particular company, designate two or more persons who are parties to an agreement, commitment or understanding referred to in section 9 to be a single person.
	363. Subsection 167(2) of the Act is replaced by the following:
Residency requirement	(2) At least one half of the directors of a company that is a subsidiary of a foreign institution and at least two thirds of the directors of any other company must be, at the time of each director's election or appointment, resident Canadians.
1997, c. 15, s. 200	364. Paragraphs 168(1)(e) and (f) of the Act are replaced by the following:
	(e) a person who is prohibited by subsection 164.08(8) or section 418 or 430 from exercising voting rights attached to shares of the company;
	(f) a person who is an officer, director or full time employee of an entity that is prohibited by subsection 164.08(8) or section 418 or 430 from exercising voting rights attached to shares of the company;
	*365. Subsection 171(2) of the Act, as amended by section 201 of An Act to amend certain laws relating to financial institutions, being chapter 15 of the Statutes of Canada, 1997, is repealed.*
	366. Section 176 of the Act is amended by adding the following after subsection (3):
Exception	(3.1) Subsection (2) does not apply to a converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies.
	367. Subsection 180(1) of the Act is amended by striking out the word ``or'' at the end of paragraph (c), by adding the word ``or'' at the end of paragraph (d) and by adding the following after paragraph (d):
	(e) when the director is removed from office under section 678.1 or 678.2.
	368. The Act is amended by adding the following after section 192:
Presence of unaffiliated director	192.1 (1) The directors of a company shall not transact business at a meeting of directors unless at least one of the directors who is not affiliated with the company is present.
Exception	(2) Despite subsection (1), business transacted at a meeting of directors at which only directors who are affiliated with the company are present is valid only if a director who is not affiliated with the company approves, in writing or by telephonic, electronic or other communications facilities, the business.
	369. Subsection 197(3) of the Act is replaced by the following:
Separate vote	(2.1) If a by-law made, amended or repealed under subsection (1) deals with the quorum of policyholders at a meeting of shareholders and policyholders, the policyholders who are entitled to vote on a resolution to confirm or amend the by-law, amendment or repeal are entitled to vote on it separately from the shareholders.
Effective date of by-law	(3) Unless this Act otherwise provides, a by-law, or an amendment to or a repeal of a by-law, is effective from the date of the resolution of the directors under subsection (1) until it is confirmed, confirmed as amended or rejected by the shareholders and policyholders under subsection (2) or (2.1) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed, or confirmed as amended, it continues in effect in the form in which it was so confirmed.
1997, c. 15, s. 211(1)	370. Paragraph 204(3)(b) of the Act is replaced by the following:
	(b) review those procedures and their effectiveness in ensuring that the company is complying with Part XI;
	(b.1) if an insurance holding company or a bank holding company that is widely held has a significant interest in any class of shares of the company, establish policies for entering into transactions referred to in section 528.1; and
	371. The portion of section 220 of the Act before paragraph (a) is replaced by the following:
Reliance on statement	220. A director, an officer or an employee of a company is not liable under subsection 166(1) or (2), section 216 or 219 or subsection 539(1) if the director, officer or employee relies in good faith on
1997, c. 15, s. 214	372. Section 224 of the Act is replaced by the following:
Incorporating instrument	224. On the application of a company or society duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the incorporating instrument of the company or society.
	373. Subsection 225(1) of the Act is replaced by the following:
Letters patent to amend	225. (1) On receipt of an application referred to in section 224, the Minister may issue letters patent to effect the proposal.
	374. (1) Subsection 238(1) of the Act is amended by adding the following after paragraph (i):
	(i.1) change the name of the company;
	(2) Subsection 238(3) of the Act is replaced by the following:
Effective date of by-law	(3) A by-law, or an amendment to or a repeal of a by-law, made under subsection (1) is not effective until it is confirmed or confirmed as amended by the shareholders and policyholders under subsection (2) and, in the case of a by-law referred to in paragraph (1)(i.1) , approved by the Superintendent.
	375. Subsection 243(1) of the Act is replaced by the following:
Proposal to amend	243. (1) Subject to subsection (2), a director or a shareholder or policyholder who is entitled to vote at an annual meeting of shareholders and policyholders of a company may, in accordance with sections 147 and 148, make a proposal to make an application referred to in section 224 or to make, amend or repeal the by-laws referred to in subsection 238(1) of the company.

Bill C-38

DIVISION I.2

RESTRICTIONS ON VOTING