Bill C-38

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First Reading

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	PART XVI
	REGULATION OF COMPANIES AND FOREIGN COMPANIES - COMMISSIONER
Definition of ``société''	693. In the French version of this Part, ``société'' means a ``société'' or ``société étrangère'' within the meaning of section 2.
Required information	694. A company or foreign company shall provide the Commissioner with the information at the times and in the form that the Commissioner may require for the purposes of the administration of the consumer provisions.
Confidential information	695. (1) Subject to subsection (2), information regarding the business or affairs of a company or foreign company or regarding persons dealing with any of them that is obtained by the Commissioner or by any person acting under the direction of the Commissioner, in the course of the exercise or performance of powers, duties and functions referred to in subsection 5(1) of the Financial Consumer Agency of Canada Act, and any information prepared from that information, is confidential and shall be treated accordingly.
Disclosure permitted	(2) If the Commissioner is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed, subsection (1) does not prevent the Commissioner from disclosing it
	(a) to any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;
	(b) to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;
	(c) to any compensation association designated by order of the Minister under subsection 449(1) or 591(1), for purposes related to its operation; and
	(d) to the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions.
Examination	696. (1) The Commissioner, from time to time, but at least once in each calendar year, shall make or cause to be made any examination and inquiry that the Commissioner considers necessary for the purposes of satisfying the Commissioner that the applicable consumer provisions are being complied with and, after the conclusion of each examination and inquiry, shall report on it to the Minister.
Access to records	(2) The Commissioner or a person acting under the Commissioner's direction in carrying out his or her duties under subsection (1)
	(a) has a right of access to any records, including electronic records, of a company or foreign company; and
	(b) may require the directors or officers of a company or foreign company to provide information and explanations, to the extent that they are reasonably able to do so, in respect of any matter subject to examination or inquiry under subsection (1).
Power of Commissioner on inquiry	697. The Commissioner, in carrying out his or her duties in relation to consumer provisions, has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Commissioner's direction.
Compliance agreement	698. The Commissioner may enter into an agreement, called a ``compliance agreement'', with a company or foreign company for the purposes of implementing any measure designed to further compliance by it with the consumer provisions.
	PART XVII
	INSURANCE HOLDING COMPANIES
	Purpose
Purpose	699. The purpose of this Part is to provide for the incorporation, formation and regulation of insurance holding companies that are holding bodies corporate of life companies.
	DIVISION 1
	INTERPRETATION
Definitions	700. (1) The definitions in this section apply in this Part.
``affairs'' « affaires internes »	``affairs'', with respect to an insurance holding company, means the relationships among the insurance holding company and its affiliates and the shareholders, directors and officers of the insurance holding company and its affiliates, but does not include the business of the insurance holding company or any of its affiliates.
``complainant '' « plaignant »	``complainant'', in relation to an insurance holding company or any matter concerning an insurance holding company, means
	(a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of the insurance holding company or any of its affiliates;
	(b) a director or an officer, or a former director or officer, of the insurance holding company or any of its affiliates; or
	(c) any other person who, in the discretion of a court, is a proper person to make an application under section 912, 916 or 1031.
``subordinated indebtedness'' « titre secondaire »	``subordinated indebtedness'' means an instrument evidencing an indebtedness of an insurance holding company that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the insurance holding company, be subordinate in right of payment to all liabilities of the insurance holding company except those liabilities that, by their terms, rank equally with or are subordinate to such indebtedness.
Provisions in other Parts	(2) A reference in a provision in this Part to a provision in any other Part is deemed to be a reference to that provision as it has been made applicable by this Part in respect of insurance holding companies.
References in other Parts	(3) A reference in a provision of another Part to a provision that has been made applicable in respect of insurance holding companies by this Part is to be read as including a reference to that provision as it has been made applicable in respect of insurance holding companies.
	DIVISION 2
	STATUS AND POWERS
Corporate powers	701. (1) An insurance holding company has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.
Powers restricted	(2) An insurance holding company shall not carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.
Business in Canada	(3) An insurance holding company may carry on business throughout Canada.
Powers outside Canada	(4) Subject to this Act, an insurance holding company has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.
No invalidity	702. No act of an insurance holding company, including any transfer of property to or by an insurance holding company, is invalid by reason only that the act or transfer is contrary to the insurance holding company's incorporating instrument or this Act.
By-law not necessary	703. It is not necessary for an insurance holding company to pass a by-law in order to confer any particular power on the insurance holding company or its directors.
No personal liability	704. The shareholders of an insurance holding company are not, as shareholders, liable for any liability, act or default of the insurance holding company except as otherwise provided by this Act.
No constructive notice	705. No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning an insurance holding company by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at an office of the insurance holding company.
Authority of directors and officers	706. An insurance holding company or a guarantor of an obligation of an insurance holding company may not assert against a person dealing with the insurance holding company or with any person who has acquired rights from the insurance holding company that
	(a) the insurance holding company's incorporating instrument or any by-laws of the insurance holding company have not been complied with,
	(b) the persons named as directors of the insurance holding company in the most recent return sent to the Superintendent under section 994 are not the directors of the insurance holding company,
	(c) the place named in the incorporating instrument or the by-laws of the insurance holding company is not the head office of the insurance holding company,
	(d) a person held out by the insurance holding company as a director, an officer or a representative of the insurance holding company has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the insurance holding company or usual for any such director, officer or representative, or
	(e) a document issued by any director, officer or representative of the insurance holding company with actual or usual authority to issue the document is not valid or not genuine,
	except where the person has or ought to have by virtue of the person's position with or relationship to the insurance holding company knowledge to that effect.
Sunset provision	707. Insurance holding companies shall not carry on business after the day that is five years after this section comes into force, except that if Parliament dissolves on that day or at any time within the three-month period before that day, insurance holding companies may continue to carry on business until the day that is one hundred and eighty days after the first day of the first session of the next Parliament.
	DIVISION 3
	INCORPORATION, CONTINUANCE AND DISCONTINUANCE
	Formalities of Incorporation
Incorporation of insurance holding company	708. On the application of one or more persons made in accordance with this Part, the Minister may, subject to this Division, issue letters patent incorporating an insurance holding company.
Restrictions on incorporation	709. Letters patent incorporating an insurance holding company may not be issued if the application therefor is made by or on behalf of
	(a) Her Majesty in right of Canada or in right of a province, an agency of Her Majesty in either of those rights, or an entity controlled by Her Majesty in either of those rights;
	(b) the government of a foreign country or any political subdivision thereof;
	(c) an agency of the government of a foreign country or any political subdivision thereof; or
	(d) an entity, other than a foreign institution or any subsidiary of a foreign institution, that is controlled by the government of a foreign country or any political subdivision thereof.
National treatment	710. (1) If a proposed insurance holding company would be a subsidiary of a foreign institution that is engaged in the insurance business, letters patent to incorporate the insurance holding company may not be issued unless the Minister is satisfied that, if the application is made by a non-WTO Member foreign institution, treatment as favourable for insurance holding companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign institution principally carries on business, either directly or through a subsidiary.
Part XII of the Bank Act	(2) Nothing in subsection (1) affects the operation of Part XII of the Bank Act.
Application for incorporation	711. An application for letters patent to incorporate an insurance holding company setting out the names of the first directors of the insurance holding company shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.
Matters for consideration	712. Before issuing letters patent to incorporate an insurance holding company, the Minister shall take into account all matters that the Minister considers relevant to the application, including
	(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the company that is proposed to be its subsidiary;
	(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the company that is proposed to be its subsidiary;
	(c) the business record and experience of the applicant or applicants;
	(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;
	(e) whether the insurance holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;
	(f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the insurance holding company and its affiliates on the conduct of those businesses and operations; and
	(g) the best interests of the financial system in Canada.
Contents of letters patent	713. (1) There shall be set out in the letters patent incorporating an insurance holding company
	(a) the name of the insurance holding company;
	(b) the place in Canada where the head office of the insurance holding company is to be situated; and
	(c) the date that the insurance holding company came, or is to come, into existence.
Provisions in letters patent	(2) The Minister may set out in the letters patent incorporating an insurance holding company any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed insurance holding company.
Terms and conditions	(3) The Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating an insurance holding company as the Minister considers necessary or appropriate.
Letters patent of incorporation on application of life company	714. (1) If the Minister, under section 708, issues letters patent incorporating an insurance holding company on the application of a life company, including a converted company, there may, on the request of the company, and with the approval of the Minister, be included in the letters patent of incorporation of the insurance holding company a provision deeming shares of the insurance holding company to be issued, on a share for share basis, to all shareholders of the company in exchange for all the issued and outstanding shares of the company.
Effect of provision	(2) Shares of an insurance holding company deemed to be issued under subsection (1) are subject to the same designation, rights, privileges and restrictions or conditions and, subject to any agreement to the contrary, to the same charges, encumbrances and other restrictions as the shares of the company for which they are exchanged and the shares of the company, on the issuance of the letters patent, become the property of the insurance holding company free and clear of any charge, encumbrance or other restriction.
Effect of provision	(3) An exchange of shares of a company referred to in subsection (1) under a provision included in the letters patent incorporating an insurance holding company does not deprive a person who was a holder of shares of the company immediately before the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect of the shares, but that right or privilege must be exercised in accordance with this Act.
Transfer and voting of company shares	(4) Despite subsection (3), no share of an insurance holding company that is deemed to be issued under a provision included in the letters patent incorporating an insurance holding company may subsequently be transferred or voted contrary to this Act.
Shareholder and policyholder approval	(5) No provision described in subsection (1) may be included in letters patent issued under section 708 unless the application for the letters patent is accompanied by evidence that the request for the provision was approved by a special resolution of the shareholders and the policyholders of the company who are entitled to vote at a meeting of shareholders and policyholders called to consider the application.
Exchange of share certificates	(6) If, under a provision included in the letters patent incorporating an insurance holding company, a share exchange is deemed to have taken place, the insurance holding company shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the insurance holding company and for the exchange of those certificates for share certificates representing the shares of the company that were outstanding on the effective date of the letters patent.
Proposal involving fundamental change	715. (1) On application, made in accordance with the regulations, by a life company, including a converted company, to give effect to a proposal to incorporate an insurance holding company as the holding body corporate of the company and to make any other fundamental change to the company, including an exchange of any or all of the shares of the company for shares of the insurance holding company, the Minister may, to give effect to the proposal, include in the letters patent of incorporation of the insurance holding company issued under section 708 any provision the Minister considers necessary and give any approval that the Minister considers necessary.