Bill C-38

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First Reading

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Donated shares	(3) An insurance holding company may accept from any shareholder a share of the insurance holding company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 757.
Holding as personal representa- tive	755. (1) An insurance holding company may permit its subsidiaries to hold, in the capacity of a personal representative, shares of the insurance holding company or of any body corporate that controls the insurance holding company or ownership interests in any unincorporated entity that controls the insurance holding company, but only if the subsidiary does not have a beneficial interest in the shares or ownership interests.
Security interest	(2) An insurance holding company may permit its subsidiaries to hold, by way of a security interest, shares of the insurance holding company or of any body corporate that controls the insurance holding company or any ownership interests of any entity that controls the insurance holding company if the security interest is nominal or immaterial when measured by criteria established by the insurance holding company that have been approved in writing by the Superintendent.
Cancellation of shares	756. (1) Subject to subsection (2), where an insurance holding company purchases shares of the insurance holding company or fractions thereof or redeems or otherwise acquires shares of the insurance holding company, the insurance holding company shall cancel those shares.
Requirement to sell	(2) If a subsidiary of an insurance holding company, through the realization of security, acquires any shares of the insurance holding company or of any body corporate that controls the insurance holding company or any ownership interests in an unincorporated entity that controls the insurance holding company, the insurance holding company shall cause its subsidiary to, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.
Reduction of capital	757. (1) The stated capital of an insurance holding company may be reduced by special resolution.
Limitation	(2) An insurance holding company shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the insurance holding company is, or the reduction would cause the insurance holding company to be, in contravention of a regulation referred to in subsection 992(1) or (2) or in a direction made under subsection 992(3).
Contents of special resolution	(3) A special resolution to reduce the stated capital of an insurance holding company shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.
Approval by Superinten- dent	(4) A special resolution to reduce the stated capital of an insurance holding company has no effect until it is approved in writing by the Superintendent.
Conditions for approval	(5) No approval to reduce the stated capital of an insurance holding company may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.
Statements to be submitted	(6) In addition to evidence of the passing of a special resolution to reduce the stated capital of an insurance holding company and of the publication thereof, statements showing
	(a) the number of the insurance holding company's shares issued and outstanding,
	(b) the results of the voting by class of shares of the insurance holding company,
	(c) the insurance holding company's assets and liabilities, and
	(d) the reason why the insurance holding company seeks the reduction of capital
	shall be submitted to the Superintendent at the time of the application for approval of the special resolution.
Recovery by action	758. (1) Where any money or property was paid or distributed to a shareholder or other person as a consequence of a reduction of capital made contrary to section 757, a creditor of the insurance holding company may apply to a court for an order compelling the shareholder or other person to pay the money or deliver the property to the insurance holding company.
Shares held by personal representa- tive	(2) No person holding shares in the capacity of a personal representative and registered on the records of the insurance holding company as a shareholder and therein described as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.
Limitation	(3) An action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.
Remedy preserved	(4) This section does not affect any liability that arises under section 841.
Adjustment of stated capital account	759. (1) On a purchase, redemption or other acquisition by an insurance holding company of shares or fractions thereof issued by it, the insurance holding company shall deduct from the stated capital account maintained for the class or series of shares so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series by the number of shares of that class or series so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.
Adjustment of stated capital account	(2) An insurance holding company shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 757.
Shares converted to another class	(3) On a conversion of outstanding shares of an insurance holding company into shares of another class or series, or on a change of outstanding shares of the insurance holding company into shares of another class or series, the insurance holding company shall
	(a) deduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; and
	(b) record the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.
Stated capital of convertible shares	(4) For the purposes of subsection (3) and subject to the insurance holding company's by-laws, where an insurance holding company issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.
Conversion or change of shares	(5) Shares issued by an insurance holding company and converted into shares of another class or series, or changed under subsection 851(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.
Addition to stated capital account	760. On a conversion of any debt obligation of an insurance holding company into shares of a class or series of shares, the insurance holding company shall
	(a) deduct from the liabilities of the insurance holding company the nominal value of the debt obligation being converted; and
	(b) record the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the class or series of shares into which the debt obligation has been converted.
Declaration of dividend	761. (1) The directors of an insurance holding company may declare and an insurance holding company may pay a dividend by issuing fully paid shares of the insurance holding company or options or rights to acquire fully paid shares of the insurance holding company and, subject to subsection (4), the directors of an insurance holding company may declare and an insurance holding 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.
Notice to Superinten- dent	(2) The directors of an insurance holding company shall notify the Superintendent of the declaration of a dividend at least ten days prior to the day fixed for its payment.
Share dividend	(3) If shares of an insurance holding company are issued in payment of a dividend, the insurance holding company shall record in the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend the declared amount of the dividend stated as an amount of money.
When dividend not to be declared	(4) The directors of an insurance holding company shall not declare and an insurance holding company shall not pay a dividend if there are reasonable grounds for believing that the insurance holding company is, or the payment would cause the insurance holding company to be, in contravention of a regulation referred to in subsection 992(1) or (2) or in a direction made under subsection 992(3).
	Subordinated Indebtedness
Restriction on subordinated indebtedness	762. (1) An insurance holding company shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.
References to subordinated indebtedness	(2) A person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by an insurance holding company refer to the subordinated indebtedness otherwise than as subordinated indebtedness.
Other currencies	(3) When issuing subordinated indebtedness, an insurance holding company may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.
	Security Certificates and Transfers
Sections 85 to 139 apply	763. Sections 85 to 139 apply in respect of insurance holding companies, subject to the following:
	(a) references to ``company'' in those sections are to be read as references to ``insurance holding company'';
	(b) references to ``this Act'' in those sections are to be read as references to ``this Part'';
	(c) references to ``Part VII'' in those sections are to be read as references to ``Division 7 of Part XVII'';
	(d) references to ``this Part'' in those sections are to be read as references to ``this Division'';
	(e) paragraph 92(1)(a) is to be read without reference to the words ``other than section 427'';
	(f) the reference to ``sections 142 to 145 and section 149'' in subsection 97(1) is to be read as a reference to ``sections 766 to 769 and 772''; and
	(g) the reference to ``section 75 or 81'' in subsection 101(3) is to be read as a reference to ``section 754 or 759''.
	DIVISION 6
	CORPORATE GOVERNANCE
	Subdivision 1
	Shareholders
	Place of Meetings
Place of meetings	764. Meetings of shareholders of an insurance holding company shall be held at the place within Canada provided for in the by-laws of the insurance holding company or, in the absence of any such provision, at the place within Canada that the directors determine.
	Calling Meetings
Calling meetings	765. The directors of an insurance holding company
	(a) shall, after the meeting called under subsection 740(1), call the first annual meeting of shareholders of the insurance holding company, which meeting must be held not later than six months after the end of the first financial year of the insurance holding company;
	(b) shall subsequently call an annual meeting of shareholders, which meeting must be held not later than six months after the end of each financial year; and
	(c) may at any time call a special meeting of shareholders.
	Record Dates
Fixing record date	766. (1) For the purpose of determining
	(a) shareholders entitled to receive payment of a dividend,
	(b) shareholders entitled to participate in a liquidation distribution, or
	(c) who is a shareholder for any other purpose except the right to receive notice of, or to vote at, a meeting,
	the directors may fix in advance a date as the record date for the determination of shareholders, but the record date so fixed shall not precede by more than fifty days the particular action to be taken.
Record date for meetings	(2) For the purpose of determining shareholders entitled to receive notice of a meeting of shareholders, the directors may fix in advance a date as the record date for the determination of shareholders, but the record date so fixed shall not precede the date on which the meeting is to be held by more than fifty days or less than twenty-one days.
No record date fixed under subsection (1)	(3) If no record date is fixed under subsection (1) for the determination of shareholders for any purpose for which a record date could have been fixed under that subsection, the record date for the determination of shareholders for that purpose is the date on which the directors pass the resolution relating to that purpose.
No record date fixed for shareholders under subsection (2)	(4) If no record date is fixed under subsection (2) for the determination of shareholders entitled to receive notice of a meeting, the record date for the determination of shareholders entitled to receive notice of, or to vote at, that meeting is
	(a) the day immediately before the day on which the notice is given; or
	(b) if no notice is given, the day on which the meeting is held.
Notice of record date	(5) Subject to subsection (6), where a record date is fixed for the determination of shareholders for any purpose, notice of the record date shall, not less than seven days before the record date, be given
	(a) by advertisement in a newspaper in general circulation in the place where the head office of the insurance holding company is situated and in each place in Canada where the insurance holding company has a transfer agent or where a transfer of the insurance holding company's shares may be recorded; and
	(b) by written notice to each stock exchange, if any, in Canada on which the shares of the insurance holding company are listed for trading.
Exception	(6) Notice of a record date need not be given where the requirement to give the notice is waived in writing by every holder of a share of the class or series affected by the fixing of the record date whose name is set out in the central securities register at the close of business on the day on which the directors fix the record date.
	Notices of Meetings
Notice of meeting	767. (1) Notice of the time and place of a meeting of shareholders of a company shall be sent not less than twenty-one days or more than fifty days before the meeting to
	(a) each shareholder entitled to vote at the meeting;
	(b) each director; and
	(c) the auditor of the insurance holding company.
Number of eligible votes	(2) An insurance holding company in respect of which subsection 927(4) applies shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 793(1), that may be cast at the meeting as of the record date for determining the shareholders entitled to receive the notice of meeting, or if there are to be separate votes of shareholders 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.
Waiver of notice	(3) An insurance holding company is not required under subsection (1) to send to a person notice of a meeting if the person waives notice of the meeting. That waiver may be in any manner.
Attendance constitutes waiver	(4) A person who attends a meeting of shareholders is deemed to have waived notice of the meeting, except where the person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
Publication in newspaper	(5) In addition to the notice required under subsection (1), where any class of shares of an insurance holding company is publicly traded on a recognized stock exchange in Canada, notice of the time and place of the meeting of shareholders shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in the place where the head office of the insurance holding company is situated and in each place in Canada where the insurance holding company has a transfer agent or where a transfer of the insurance holding company's shares may be recorded.

Bill C-38

DIVISION 6

CORPORATE GOVERNANCE