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Bill C-38

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First Reading

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	(b) in respect of any other transaction,
	(i) terms and conditions, including those relating to price, rent or interest rate, that might reasonably be expected to apply in a similar transaction in an open market under conditions requisite to a fair transaction between parties who are at arm's length and who are acting prudently, knowledgeably and willingly, or
	(ii) if the transaction is one that would not reasonably be expected to occur in an open market between parties who are at arm's length, terms and conditions, including those relating to price, rent or interest rate, that would reasonably be expected to provide each party to the transaction with fair value, having regard to all the circumstances of the transaction, and that would be consistent with the parties to the transaction acting prudently, knowledgeably and willingly.
	533. Section 494 of the Act is replaced by the following:
Order to void contract or to grant other remedy	494. (1) If a company enters into a transaction that it is prohibited from entering into by this Part, the company or the Superintendent may apply to a court for an order setting aside the transaction or for any other appropriate remedy, including an order directing that the related party of the company involved in the transaction account to the company for any profit or gain realized or that any director or senior officer of the company who authorized the transaction compensate the company for any loss or damage incurred by the company.
Time limit	(2) An application under subsection (1) in respect of a particular transaction may only be made within the period of three months following the day the notice referred to in section 493 in respect of the transaction is given to the Superintendent or, if no such notice is given, the day the Superintendent becomes aware of the transaction.
Certificate	(3) For the purposes of subsection (2), a document purporting to have been issued by the Superintendent, certifying the day on which the Superintendent became aware of the transaction, shall, in the absence of evidence to the contrary, be received in evidence as conclusive proof of that fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.
	534. The title of Part XII of the Act is replaced by the following:
	REGULATION OF COMPANIES - SUPERINTENDENT
	535. Sections 500 and 501 of the Act are replaced by the following:
Copy of by-laws	500. A company shall send to the Superintendent within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment.
Register of companies	501. (1) The Superintendent shall, in respect of each company for which an order approving the commencement and carrying on of business has been made, cause a register to be maintained containing a copy of
	(a) the incorporating instrument of the company; and
	(b) the information referred to in paragraphs 499(1)(a), (c) and (e) to (h) contained in the latest return sent to the Superintendent under section 499.
Form	(2) The register may be maintained in
	(a) a bound or loose-leaf form or in a photographic film form; or
	(b) a system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.
Access	(3) Persons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.
Evidence	(4) A statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent.
1996, c. 6, s. 122(1)	536. Subsection 503(1) of the Act is replaced by the following:
Confidential information	503. (1) Subject to sections 504 and 504.1, all information regarding the business or affairs of a company, or regarding a person dealing with a company , that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information , is confidential and shall be treated accordingly.
1996, c. 6, s. 124	537. Section 504.4 of the Act is replaced by the following:
Report respecting disclosure	504.4 The Superintendent shall prepare a report, to be included in the report referred to in section 40 of the Office of the Superintendent of Financial Institutions Act, respecting the disclosure of information by companies and describing the state of progress made in enhancing the disclosure of information in the financial services industry.
	538. Subsection 505(1) of the Act is replaced by the following:
Examination of companies	505. (1) The Superintendent, from time to time, but at least once in each calendar year, shall make or cause to be made any examination and inquiry into the business and affairs of each company that the Superintendent considers to be necessary or expedient to determine whether the company is complying with the provisions of this Act and whether the company is in a sound financial condition and, after the conclusion of each examination and inquiry, shall report on it to the Minister.
	*539. The Act is amended by adding the following after the heading ``Remedial Powers'' after section 506:*
	Prudential Agreements
Prudential agreement	506.1 The Superintendent may enter into an agreement, called a ``prudential agreement'', with a company for the purposes of implementing any measure designed to maintain or improve its safety and soundness.
	540. Subsection 509(1) of the Act is replaced by the following:
Court enforcement	509. (1) Where a company or person
	(a) is contravening or has failed to comply with a prudential agreement entered into under section 506.1 or a direction of the Superintendent issued to the company or person pursuant to subsection 507(1) or (3),
	(b) is contravening this Act, or
	(c) has omitted to do any thing under this Act that is required to be done by or on the part of the company or person,
	the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the company or person to comply with the prudential agreement or direction, cease the contravention or do any thing that is required to be done, and on such application the court may so order and make any other order it thinks fit.
1996, c. 6, s. 126	541. The heading before section 509.1 of the Act is replaced by the following:
	Disqualification and Removal of Directors or Senior Officers
Meaning of ``senior officer''	509.01 In sections 509.1 and 509.2, ``senior officer'' means the chief executive officer, secretary, treasurer or controller of a company or any other officer reporting directly to the company's board of directors or chief executive officer.
1996, c. 6, s. 126	542. (1) Paragraphs 509.1(1)(a) and (b) of the Act are replaced by the following:
	(a) that has been notified by the Superintendent that this section applies to it where the company is subject to measures designed to maintain or improve its safety and soundness, which measures
	(i) have been specified by the Superintendent by way of conditions or limitations in respect of the order approving the commencement and carrying on of the company's business, or
	(ii) are contained in a prudential agreement entered into under section 506.1 or an undertaking given by the company to the Superintendent; or
	(b) that is the subject of a direction made under section 507 or an order made under subsection 473(3).
1996, c. 6, s. 126	(2) Paragraph 509.1(2)(b) of the Act is replaced by the following:
	(b) each person who has been selected by the company for appointment as a senior officer , and
1996, c. 6, s. 126	(3) The portion of subsection 509.1(2) of the French version of the Act after paragraph (c) is replaced by the following:
	Elle lui communique également les renseignements personnels qui les concernent et les renseignements sur leur expérience et leur dossier professionnel qu'il peut exiger .
1996, c. 6, s. 126	(4) Subsections 509.1(4) and (5) of the Act are replaced by the following:
Disqualifi- cation or removal	(4) If the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold that position, the Superintendent may, by order
	(a) in the case of a person referred to in paragraph (2)(a) or (b) , disqualify the person from being elected or appointed as a director of a company or from being appointed as a senior officer; or
	(b) in the case of a person referred to in paragraph (2)(c), remove the person from office as a director of the company.
Risk of prejudice	(4.1) In forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors and creditors of the company would likely be prejudiced if the person were to take office or continue to hold office, as the case may be.
Representa- tions may be made	(5) The Superintendent must in writing notify the person concerned and the company of any action that the Superintendent proposes to take under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows , to make representations to the Superintendent in relation to the matter.
1996, c. 6, s. 126	(5) Subsection 509.1(6) of the English version of the Act is replaced by the following:
Prohibition	(6) Where an order has been made under subsection (4)
	(a) disqualifying a person from being elected or appointed to a position, the person shall not be, and the company shall not permit the person to be, elected or appointed to the position; or
	(b) removing a director from office , the person shall not continue to hold, and the company shall not permit the person to continue to hold, office as a director.
	543. The Act is amended by adding the following after section 509.1:
Removal of directors or senior officers	509.2 (1) The Superintendent may, by order, remove a person from office as a director or senior officer of a company if the Superintendent is of the opinion that the person is not suitable to hold that office
	(a) on the basis of the competence, business record, experience, conduct or character of the person; or
	(b) because the person has contravened or, by action or negligence, has contributed to the contravention of
	(i) this Act or the regulations made under it,
	(ii) a direction made under section 507,
	(iii) an order made under section 473(3),
	(iv) a condition or limitation in respect of the order approving the commencement and carrying on the company's business, or
	(v) a prudential agreement entered into under section 506.1 or an undertaking given by the company to the Superintendent.
Risk of prejudice	(2) In forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors and creditors of the company have been or are likely to be prejudiced by the person's holding office as a director or senior officer.
Representa- tions may be made	(3) The Superintendent must in writing notify the person concerned and the company of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.
Suspension	(4) If the Superintendent is of the opinion that the public interest may be prejudiced by the director or senior officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the director or senior officer. The suspension may not extend beyond 10 days after the expiration of that period.
Notice of order	(5) The Superintendent shall, without delay, notify the director or senior officer, as the case may be, and the company of a removal order or suspension order.
Consequences of removal order	(6) The director or senior officer, as the case may be, ceases to hold that office as of the date the removal order is made or any later date specified in the order.
Appeal	(7) The director or senior officer, as the case may be, or the company may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.
Powers of Federal Court	(8) The Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.
Order not stayed by appeal	(9) A removal order is not stayed by an appeal.
1996, c. 6, s. 127	544. (1) Paragraph 510(1.1)(b) of the Act is repealed.
	(2) Subsection 510(1.1) of the Act is amended by striking out the word ``or'' at the end of paragraph (f), by adding the word ``or'' at the end of paragraph (g) and by adding the following after paragraph (g):
	(h) in the opinion of the Superintendent, any other state of affairs exists in respect of the company that may be materially prejudicial to the interests of the company's depositors or creditors or the beneficiaries of any trust under the company's administration, including where proceedings under a law relating to bankruptcy or insolvency have been commenced in Canada or elsewhere in respect of the holding body corporate of the company.
	545. The Act is amended by adding the following after section 520:

Bill C-38

REGULATION OF COMPANIES - SUPERINTENDENT