Bank Act (S.C. 1991, c. 46)

Trust Indentures

Marginal note:Sections 294 to 306 apply

838 Sections 294 to 306 apply in respect to bank holding companies, subject to the following:

• (a) references to “bank” in those sections are to be read as references to “bank holding company”;

• (b) references to “this Act” in those sections are to be read as references to “this Part”; and

• (c) references to “subordinated indebtedness” in those sections are to be read as references to “subordinated indebtedness” as defined in subsection 663(1).

Financial Statements and Auditor

Annual Financial Statement

Marginal note:Financial year of bank holding company

• 839 (1) The financial year of a bank holding company ends, at the election of the bank holding company in its by-laws, on the expiration of the thirty-first day of October of each year or the thirty-first day of December of each year.

• Marginal note:First financial year

  (2) If, in any year, a bank holding company comes into existence after the first day of July, its first financial year ends, at its election in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.

Marginal note:Annual financial statement

• 840 (1) The directors of a bank holding company shall place before the shareholders at every annual meeting

  • (a) a comparative annual financial statement (in this Part referred to as an “annual statement”) relating separately to

    • (i) the financial year immediately preceding the meeting, and

    • (ii) the financial year, if any, immediately preceding the financial year referred to in subparagraph (i);

  • (b) the report of the auditor of the bank holding company; and

  • (c) any further information respecting the financial position of the bank holding company and the results of its operations required by the by-laws of the bank holding company to be placed before the shareholders at the annual meeting.

• Marginal note:Annual statement — contents

  (2) With respect to each of the financial years to which it relates, the annual statement of a bank holding company must contain the prescribed statements and any information that is in the opinion of the directors necessary to present fairly, in accordance with the accounting principles referred to in subsection (4), the financial position of the bank holding company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank holding company for that financial year.

• Marginal note:Additional information

  (3) A bank holding company shall include with its annual statement

  • (a) a list of the subsidiaries of the bank holding company, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 934 or pursuant to a realization of security in accordance with section 935 and which the bank holding company would not otherwise be permitted to hold, showing, with respect to each subsidiary,

    • (i) its name and the address of its head or principal office,

    • (ii) the book value of the aggregate of any shares of the subsidiary beneficially owned by the bank holding company and by other subsidiaries of the bank holding company, and

    • (iii) the percentage of the voting rights attached to all the outstanding voting shares of the subsidiary that is carried by the aggregate of any voting shares of the subsidiary beneficially owned by the bank holding company and by other subsidiaries of the bank holding company; and

  • (b) such other information as the Governor in Council may, by order, require in such form as may be prescribed.

• Marginal note:Accounting principles

  (4) The financial statements referred to in subsection (1), paragraph (3)(b) and subsection 842(1) shall, except as otherwise specified by the Superintendent, be prepared in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Chartered Professional Accountants of Canada. A reference in any provision of this Act to the accounting principles referred to in this subsection shall be construed as a reference to those generally accepted accounting principles with any specifications so made.

• Marginal note:Regulations

  (5) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).

Marginal note:Annual statement — approval

• 841 (1) The directors of a bank holding company shall approve the annual statement and their approval shall be evidenced by the signature or a printed or otherwise mechanically reproduced facsimile of the signature of

  • (a) the chief executive officer or, in the event of that officer’s absence or inability to act, any other officer of the bank holding company authorized by the directors to sign in the stead of the chief executive officer; and

  • (b) one director, if the signature required by paragraph (a) is that of a director, or two directors if the signature required by that paragraph is that of an officer who is not a director.

• Marginal note:Condition precedent to publication

  (2) A bank holding company shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).

Marginal note:Statements — subsidiaries

• 842 (1) A bank holding company shall keep at its head office a copy of the current financial statements of each subsidiary of the bank holding company.

• Marginal note:Examination

  (2) Subject to this section, the shareholders of a bank holding company and their personal representatives may, on request therefor, examine the statements referred to in subsection (1) during the usual business hours of the bank holding company and may take extracts therefrom free of charge.

• Marginal note:Barring examination

  (3) A bank holding company may refuse to permit an examination under subsection (2) by any person.

• Marginal note:Application for order

  (4) Within fifteen days after a refusal under subsection (3), the bank holding company shall apply to a court for an order barring the right of the person concerned to make an examination under subsection (2) and the court shall either order the bank holding company to permit the examination or, if it is satisfied that the examination would be detrimental to the bank holding company or to any other body corporate the financial statements of which would be subject to examination, bar the right and make any further order it thinks fit.

• Marginal note:Notice to Superintendent

  (5) A bank holding company shall give the Superintendent and the person seeking to examine the statements referred to in subsection (1) notice of an application to a court under subsection (4), and the Superintendent and the person may appear and be heard in person or by counsel at the hearing of the application.

Marginal note:Annual statement — distribution

• 843 (1) A bank holding company shall, no later than 21 days before the date of each annual meeting or before the signing of a resolution under paragraph 741(1)(b) in lieu of the annual meeting, send to each shareholder a copy of the documents referred to in subsections 840(1) and (3) unless that time period is waived by the shareholder.

• Marginal note:Exception

  (2) A bank holding company is not required to comply with subsection (1) with respect to a shareholder who has informed the bank holding company, in writing, that the shareholder does not wish to receive the annual statement.

• Marginal note:Effect of default

  (3) Where a bank holding company is required to comply with subsection (1) and the bank holding company does not comply with that subsection, the annual meeting at which the documents referred to in that subsection are to be considered shall be adjourned until that subsection has been complied with.

Marginal note:Copy to Superintendent

• 844 (1) Subject to subsection (2), a bank holding company shall send to the Superintendent a copy of the documents referred to in subsections 840(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the bank holding company.

• Marginal note:Later filing

  (2) If a bank holding company’s shareholders sign a resolution under paragraph 741(1)(b) in lieu of an annual meeting, the bank holding company shall send a copy of the documents referred to in subsections 840(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.

Auditors

Marginal note:Definitions

845 The following definitions apply in this section and sections 846 to 864.

firm of accountants

firm of accountants means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting. (cabinet de comptables)

member

member, in relation to a firm of accountants, means

• (a) an accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting; or

• (b) an accountant who is an employee of a firm of accountants. (membre)

Marginal note:Appointment of auditor

• 846 (1) The shareholders of a bank holding company shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting, appoint a firm of accountants to be the auditor of the bank holding company until the close of the next annual meeting.

• Marginal note:Remuneration of auditor

  (2) The remuneration of the auditor may be fixed by ordinary resolution of the shareholders but, if not so fixed, shall be fixed by the directors.

Marginal note:Qualification of auditor

• 847 (1) A firm of accountants is qualified to be an auditor of a bank holding company if

  • (a) two or more members thereof are accountants who

    • (i) are members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,

    • (ii) each have at least five years experience at a senior level in performing audits of a financial institution,

    • (iii) are ordinarily resident in Canada, and

    • (iv) are independent of the bank holding company; and

  • (b) the member of the firm jointly designated by the firm and the bank holding company to conduct the audit of the bank holding company on behalf of the firm is qualified in accordance with paragraph (a).

• Marginal note:Independence

  (2) For the purposes of subsection (1),

  • (a) independence is a question of fact; and

  • (b) a member of a firm of accountants is deemed not to be independent of a bank holding company if that member, a business partner of that member or the firm of accountants

    • (i) is a business partner, director, officer or employee of the bank holding company or of any affiliate of the bank holding company or is a business partner of any director, officer or employee of the bank holding company or of any affiliate of the bank holding company,

    • (ii) beneficially owns or controls, directly or indirectly, a material interest in the shares of the bank holding company or of any affiliate of the bank holding company, or

    • (iii) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the bank holding company within the two years immediately preceding the firm’s proposed appointment as auditor of the bank holding company, other than an affiliate that is a subsidiary of the bank holding company acquired pursuant to section 934 or through a realization of security pursuant to section 935.

• Marginal note:Business partners

  (2.1) For the purposes of subsection (2), a business partner of a member of a firm of accountants includes

  • (a) another member of the firm; and

  • (b) a shareholder of the firm or of a business partner of the member.

• Marginal note:Notice of designation

  (3) Within fifteen days after appointing a firm of accountants as auditor of a bank holding company, the bank holding company and the firm of accountants shall jointly designate a member of the firm who has the qualifications described in subsection (1) to conduct the audit of the bank holding company on behalf of the firm and the bank holding company shall forthwith notify the Superintendent in writing of the designation.

• Marginal note:New designation

  (4) Where for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the bank holding company, the bank holding company and the firm of accountants may jointly designate another member of the same firm of accountants who has the qualifications described in subsection (1) to conduct the audit of the bank holding company and the bank holding company shall forthwith notify the Superintendent in writing of the designation.

• Marginal note:Deemed vacancy

  (5) In any case where subsection (4) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit of the bank holding company, there shall be deemed to be a vacancy in the office of auditor of the bank holding company.

Marginal note:Duty to resign

• 848 (1) An auditor that ceases to be qualified under section 847 shall resign forthwith after any member of the firm becomes aware that the firm has ceased to be so qualified.

• Marginal note:Disqualification order

  (2) Any interested person may apply to a court for an order declaring that an auditor of a bank holding company has ceased to be qualified under section 847 and declaring the office of auditor to be vacant.

Marginal note:Revocation of appointment

• 849 (1) The shareholders of a bank holding company may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.

• Marginal note:Revocation of appointment

  (2) The Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 846(1) or section 851 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the bank holding company addressed to the usual place of business of the auditor and the bank holding company.

• Marginal note:Filling vacancy

  (3) A vacancy created by the revocation of the appointment of an auditor under subsection (1) may be filled at the meeting at which the appointment was revoked and, if not so filled, shall be filled by the directors under section 851.