Bill C-38

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First Reading

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1991, c. 45	Trust and Loan Companies Act
	*463. (1) The definition ``subsidiary'' in section 2 of the Trust and Loan Companies Act* is replaced by the following:**
``subsidia- ry'' « filiale »	``subsidiary'' means an entity that is a subsidiary of another entity within the meaning of section 5;
1991, c. 47, par. 753(a), c. 48, par. 493(a)	(2) Paragraphs (c) and (d) of the definition ``financial institution'' in section 2 of the Act are replaced by the following:
	(c) an association incorporated or formed under the Cooperative Credit Associations Act or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act,
	(d) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act,
	(3) Section 2 of the Act is amended by adding the following in alphabetical order:
``Agency'' « Agence »	``Agency'' means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act;
``bank holding company'' « société de portefeuille bancaire »	``bank holding company'' means a body corporate that is incorporated or formed under Part XV of the Bank Act;
``Commission er'' « commissaire »	``Commissioner'' means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act;
``consumer provision'' « disposition visant les consomma- teurs »	``consumer provision'' means a provision referred to in paragraph (d) of the definition ``consumer provision'' in section 2 of the Financial Consumer Agency of Canada Act;
``equity'' « capitaux propres »	``equity'', in respect of a company, means its equity as determined in accordance with the regulations;
``federal financial institution'' « institution financière fédérale »	``federal financial institution'' means
	(a) a company,
	(b) a bank,
	(c) an association incorporated or formed under the Cooperative Credit Associations Act or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act, or
	(d) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act;
``insurance holding company'' « société de portefeuille d'assuran- ces »	``insurance holding company'' means a body corporate that is incorporated or formed under Part XVII of the Insurance Companies Act;
	464. The Act is amended by adding the following before section 3:
Major shareholder	2.1 For the purposes of this Act, a person is a major shareholder of a body corporate if
	(a) the aggregate of the shares of any class of voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the body corporate; or
	(b) the aggregate of the shares of any class of non-voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the body corporate.
Widely held	2.2 For the purposes of this Act, a body corporate is widely held if it has no major shareholder.
	465. The portion of subsection 3(3) of the Act before paragraph (a) is replaced by the following:
Deemed control	(3) A person is deemed to control, within the meaning of paragraph (1)(a) or (b) , an entity if the aggregate of
	466. Sections 4 and 5 of the Act are replaced by the following:
Holding body corporate	4. A body corporate is the holding body corporate of any entity that is its subsidiary.
Subsidiary	5. An entity is a subsidiary of another entity if it is controlled by the other entity .
	467. Subsection 6(2) of the Act is replaced by the following:
Affiliated entities	(2) Despite subsection (1), for the purposes of subsections 270(1) and 288(1), one entity is affiliated with another entity if one of them is controlled, determined without regard to paragraph 3(1)(d), by the other or both are controlled, determined without regard to paragraph 3(1)(d), by the same person.
	468. The portion of subsection 9(1) of the Act before paragraph (a) is replaced by the following:
Acting in concert	9. (1) For the purposes of Part VII, if two or more persons have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of
1997, c. 15, s. 341	469. Section 20 of the Act is replaced by the following:
Sunset provision	20. 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 , 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.
	470. Section 23 of the Act is replaced by the following:
Subsidiary of foreign institution	23. If a proposed company would be a subsidiary of a foreign institution that is engaged in trust or loan business and the application for letters patent to incorporate the company is made by a non-WTO Member foreign institution, letters patent to incorporate the company may not be issued unless the Minister is satisfied that treatment as favourable for 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.
	471. Section 26 of the Act is replaced by the following:
Matters for consideration	26. Before issuing letters patent to incorporate a 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;
	(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;
	(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 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 company on the conduct of those businesses and operations; and
	(g) the best interests of the financial system in Canada.
1991, c. 45, par. 559(a); 1994, c. 24, par. 34(1)(g)(F); 1997, c. 15, s. 343	472. Section 38 of the Act is replaced by the following:
Transferring to other federal Acts	38. (1) A company may
	(a) apply, with the approval in writing of the Minister, for a certificate of continuance under section 187 of the Canada Business Corporations Act; or
	(b) apply for letters patent continuing the company as a bank under subsection 35(1) of the Bank Act or amalgamating and continuing the company as a bank under subsections 223(1) and 229(1) of that Act.
Conditions for approval	(2) No approval referred to in paragraph (1)(a) may be given to a company unless the Minister is satisfied that
	(a) the application has been authorized by a special resolution;
	(b) the company
	(i) holds no deposits that are insured under the Canada Deposit Insurance Corporation Act, and
	(ii) is not carrying on any of the fiduciary activities referred to in section 412;
	and
	(c) unless authorized pursuant to section 48, the company will not use the word ``fiduciaire'', ``fiduciary'', ``fiducie'', ``loan'', ``loanco'', ``prêt'', ``trust'' or ``trustco'' in its name after a certificate of continuance in respect of the company is issued under the Canada Business Corporations Act.
1996, c. 6, s. 113	473. Section 43 of the Act is replaced by the following:
Affiliated company	43. Despite section 41, a 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.
1996, c. 6, s. 115	474. Subsection 46(2) of the Act is replaced by the following:
Revoking name	(2) If a 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 Act, the Superintendent may revoke the name of the company and assign to it a name and, until changed in accordance with section 220 or 222 , the name of the company is thereafter the name so assigned.
1996, c. 6, s. 115	474.1 Section 48 of the Act is replaced by the following:
Subsidiaries	48. Despite subsections 47(1) and (2) , a subsidiary of a company may use the company's name in its name.
	475. 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 in respect of which letters patent were issued under section 21 from the issue of its shares, the directors of the company shall without delay call a meeting of the shareholders of the company.
	476. Paragraph 56(1)(b) of the Act is replaced by the following:
	(b) the company has paid-in capital of at least five million dollars or any greater amount that is specified by the Minister under subsection 50(1);
	477. Subsection 64(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 at the meeting referred to in subsection (2).
	478. (1) Subsection 82(1) of the Act is replaced by the following:
Declaration of dividend	82. (1) The directors of a company may declare and a company may pay a dividend by issuing fully paid shares of the company or options or rights to acquire fully paid shares of the company and, subject to subsections (4) and (5) , the directors of a company may declare and a company may pay a dividend in money or property, and where a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.
	(2) Section 82 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 of its retained net income for the preceding two financial years.
	479. Subsection 163(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.
	*480. Subsection 167(2) of the Act, as amended by section 351 of An Act to amend certain laws relating to financial institutions, being chapter 15 of the Statutes of Canada, 1997, is repealed.*
	481. Subsection 176(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 509.1 or 509.2.
	482. The Act is amended by adding the following after section 187:
Presence of unaffiliated director	187.1 (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), the directors of a company may transact business at a meeting of directors if a director who is not affiliated with the company and who is not able to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting.
1997, c. 15, s. 361(1)	483. Paragraph 199(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 a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of the company, establish policies for entering into transactions referred to in section 483.1; and
	484. The portion of section 216 of the Act before paragraph (a) is replaced by the following:
Reliance on statement	216. A director, an officer or an employee of a company is not liable under subsection 162(1) or (2) or section 212 or 215 or subsection 494(1) if the director, officer or employee relies in good faith on
	485. Section 220 of the Act is replaced by the following:
Incorporating instrument	220. On the application of a company 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.
	486. Subsection 221(1) of the Act is replaced by the following:

Bill C-38

Trust and Loan Companies Act