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Bill C-38

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First Reading

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	(a) is not a financial institution,
	(b) carries on business in Canada under a reserved name, and
	(c) acquires control of an insurance holding company,
	the entity shall not control the insurance holding company one year after the date on which the entity acquires control of the insurance holding company.
Exceptions	(5) Subsections (2) to (4) do not apply with respect to a person or entity that was carrying on business in Canada under a reserved name on June 25, 1999.
	Publication of Information
Publication of information	738. 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 insurance holding company; and
	(b) the place in Canada where the head office of the insurance holding company is situated.
	DIVISION 4
	ORGANIZATION AND COMMENCEMENT
First directors' meeting	739. (1) After letters patent incorporating an insurance holding company are issued, a meeting of the directors of the insurance 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 insurance holding company;
	(d) appoint officers;
	(e) appoint an auditor to hold office until the meeting called under subsection 740(1);
	(f) make banking arrangements; and
	(g) deal with any other matters necessary to organize the insurance 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 817(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the insurance holding company.
Calling shareholders' meeting	740. (1) After the meeting referred to in subsection 739(1) is held, the directors of the insurance holding company shall without delay call a meeting of the shareholders of the insurance holding company.
Meeting of shareholders or incorporators	(2) The shareholders of an insurance holding company shall, by resolution at the meeting of shareholders called under subsection (1),
	(a) approve, amend or reject any by-law made by the directors of the insurance holding company;
	(b) subject to section 803, 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	741. A director named in the application for letters patent to incorporate an insurance holding company holds office until the election of directors at the meeting of shareholders called under subsection 740(1).
	DIVISION 5
	CAPITAL STRUCTURE
	Share Capital
Power to issue shares	742. (1) Subject to this Part and the by-laws of the insurance holding company, shares of an insurance holding company may be issued at such times and to such persons and for such consideration as the directors of the insurance holding company may determine.
Shares	(2) Shares of an insurance holding company shall be in registered form and shall be without nominal or par value.
Shares of continued insurance holding company	(3) If a body corporate is continued as an insurance 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 any right of a holder of a share with nominal or par value of a body corporate continued as an insurance 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 continuance under this Part that right is thereafter deemed to be the same right stated or expressed without reference to the nominal or par value of the share.
Common shares	743. (1) An insurance 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 insurance holding company on dissolution.
Designations of shares	(2) No insurance holding company shall designate more than one class of its shares as ``common shares'' or any variation of that term.
Continued insurance holding company	(3) A body corporate continued as an insurance holding company under this Part that is not in compliance with subsection (2) on the date letters patent continuing it as an insurance holding company are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.
Classes of shares	744. (1) The by-laws of an insurance 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 insurance holding company is authorized to issue.
Shareholder approval	(2) Where a by-law referred to in subsection (1) is made, the directors of the insurance 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	745. (1) The by-laws of an insurance holding company made pursuant to section 744 may authorize the issue of any class of shares in one or more series and may authorize the directors of the insurance 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	746. Where voting rights are attached to a share of an insurance holding company, the voting rights may confer only one vote in respect of that share.
Shares non-assessabl e	747. Shares issued by an insurance holding company are non-assessable and the shareholders are not liable to the insurance holding company or to its creditors in respect thereof.
Considera- tion for share	748. (1) No share of any class of shares of an insurance 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, an insurance 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	749. (1) An insurance holding company shall maintain a separate stated capital account for each class and series of shares it issues.
Addition to stated capital account	(2) An insurance 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) Despite subsection (2), an insurance 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 insurance 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 insurance holding company at arm's length within the meaning of the Income Tax Act; or
	(b) under an agreement referred to in subsection 858(1) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated insurance holding company.
Limit on addition to a stated capital account	(4) On the issuance of a share, an insurance 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 an insurance 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 insurance 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 759(4).
Stated capital of continued insurance holding company	750. (1) Where a body corporate is continued as an insurance holding company under this Part, the insurance 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 insurance 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 insurance 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 an insurance holding company under this Part and paid after it was so continued shall be recorded in the stated capital account maintained by the insurance holding company for the shares of that class or series.
Pre-emptive right	751. (1) Where the by-laws of an insurance 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.
Exception	(2) Despite the existence of a pre-emptive right, a shareholder of an insurance holding company has no pre-emptive right in respect of shares of a class to be issued
	(a) for a consideration other than money;
	(b) as a share dividend; or
	(c) pursuant to the exercise of conversion privileges, options or rights previously granted by the insurance holding company.
Exception	(3) Despite the existence of a pre-emptive right, a shareholder of an insurance holding company has no pre-emptive right in respect of shares to be issued
	(a) where the issue of shares to the shareholder is prohibited by this Part; or
	(b) where, to the knowledge of the directors of the insurance holding company, the offer of shares to a shareholder whose recorded address is in a country other than Canada ought not to be made unless the appropriate authority in that country is provided with information in addition to that submitted to the shareholders at the last annual meeting.
Conversion privileges	752. (1) An insurance holding company may issue conversion privileges, options or rights to acquire securities of the insurance holding company, and shall set out the conditions thereof
	(a) in the documents that evidence the conversion privileges, options or rights; or
	(b) in the securities to which the conversion privileges, options or rights are attached.
Transferable rights	(2) Conversion privileges, options and rights to acquire securities of an insurance holding company may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.
Reserved shares	(3) Where an insurance holding company has granted privileges to convert any securities issued by the insurance holding company into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the insurance holding company shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.
Holding of own shares	753. Except as provided in sections 754 to 756, or unless permitted by the regulations, an insurance holding company shall not
	(a) hold shares of the insurance holding company or of any body corporate that controls the insurance holding company;
	(b) hold any ownership interests of any unincorporated entity that controls the insurance holding company;
	(c) permit any of its subsidiaries to hold any shares of the insurance holding company or of any body corporate that controls the insurance holding company; or
	(d) permit any of its subsidiaries to hold any ownership interests of any unincorporated entity that controls the insurance holding company.
Purchase and redemption of shares	754. (1) Subject to subsection (2) and to its by-laws, an insurance holding company may, with the consent of the Superintendent, purchase, for the purpose of cancellation, any shares issued by it, or redeem any redeemable shares issued by it at prices not exceeding the redemption price thereof calculated according to a formula stated in its by-laws or the conditions attaching to the shares.
Restrictions on purchase and redemption	(2) An insurance holding company shall not make any payment to purchase or redeem any shares issued by it if there are reasonable grounds for believing that it is, or the payment would cause it to be, in contravention of a regulation referred to in subsection 992(1) or (2) or a direction made under subsection 992(3).

Bill C-38

DIVISION 4

ORGANIZATION AND COMMENCEMENT

DIVISION 5

CAPITAL STRUCTURE