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Insurance Companies Act (S.C. 1991, c. 47)

Act current to 2024-05-28 and last amended on 2024-01-01. Previous Versions

PART XVIIInsurance Holding Companies (continued)

DIVISION 5Capital Structure (continued)

Share Capital (continued)

Marginal note:Consideration for share

  •  (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.

  • Marginal note: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.

  • 1991, c. 47, s. 748
  • 2001, c. 9, s. 465

Marginal note:Stated capital account

  •  (1) An insurance holding company shall maintain a separate stated capital account for each class and series of shares it issues.

  • Marginal note: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.

  • Marginal note:Exception

    (3) Despite subsection (2), an insurance holding company may, subject to subsection (4), record in the stated capital account maintained for the shares of a class or series any part of the consideration it receives in an exchange if it issues shares

    • (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 that expression in the Income Tax Act,

      • (ii) shares of or another interest in a body corporate that immediately before the exchange or because of it did not deal with the insurance holding company at arm’s length within the meaning of that expression in the Income Tax Act, or

      • (iii) property of a person who immediately before the exchange dealt with the insurance holding company at arm’s length within the meaning of that expression in the Income Tax Act if the person, the insurance holding company and all of the holders of shares in the class or series of shares so issued consent to the exchange;

    • (b) under an agreement referred to in subsection 858(1); or

    • (c) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated insurance holding company.

  • Marginal note: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.

  • Marginal note: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).

  • 1991, c. 47, s. 749
  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 308

Marginal note:Stated capital of continued insurance holding company

  •  (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.

  • Marginal note: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.

  • Marginal note: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.

  • 1991, c. 47, s. 750
  • 2001, c. 9, s. 465

Marginal note:Pre-emptive right

  •  (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.

  • Marginal note: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.

  • Marginal note: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.

  • 1991, c. 47, s. 751
  • 2001, c. 9, s. 465

Marginal note:Conversion privileges

  •  (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.

  • Marginal note: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.

  • Marginal note: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.

  • 1991, c. 47, s. 752
  • 2001, c. 9, s. 465

Marginal note:Holding of own shares

 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.

  • 1991, c. 47, s. 753
  • 2001, c. 9, s. 465

Marginal note:Purchase and redemption of shares

  •  (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.

  • Marginal note: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 subsection 992(1), any regulation made under subsection 992(2) or any order made under subsection 992(3).

  • Marginal note: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.

  • 1991, c. 47, s. 754
  • 2001, c. 9, s. 465
  • 2007, c. 6, s. 315

Marginal note:Holding as personal representative

  •  (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.

  • Marginal note: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.

  • 1991, c. 47, s. 755
  • 2001, c. 9, s. 465
  • 2005, c. 54, s. 309(F)

Marginal note:Exception — conditions before acquisition

  •  (1) An insurance holding company may permit any of its subsidiaries to acquire shares of the insurance holding company through the issuance of those shares by the insurance holding company to the subsidiary if the conditions prescribed for the purposes of this subsection are met before the subsidiary acquires the shares.

  • Marginal note:Conditions after acquisition

    (2) After a subsidiary has acquired shares under the purported authority of subsection (1), the conditions prescribed for the purposes of this subsection must be met.

  • Marginal note:Non-compliance with conditions

    (3) If an insurance holding company permits any of its subsidiaries to acquire shares of the insurance holding company under the purported authority of subsection (1) and one or more of the conditions prescribed for the purposes of subsections (1) and (2) were not met, are not met or cease to be met, as the case may be, then, despite section 702 and subsection 749(2), the insurance holding company must comply with the prescribed requirements.

  • 2007, c. 6, s. 316

Marginal note:Cancellation of shares

  •  (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.

  • Marginal note: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.

  • 1991, c. 47, s. 756
  • 2001, c. 9, s. 465

Marginal note:Reduction of capital

  •  (1) The stated capital of an insurance holding company may be reduced by special resolution.

  • Marginal note: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 subsection 992(1), any regulation made under subsection 992(2) or any order made under subsection 992(3).

  • Marginal note: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.

  • Marginal note:Approval by Superintendent

    (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.

  • Marginal note:Exception

    (4.1) Subsection (4) does not apply if

    • (a) the reduction in the stated capital is made solely as a result of changes made to the accounting principles referred to in subsection 331(4); and

    • (b) there is to be no return of capital to shareholders as a result of the reduction.

  • Marginal note: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.

  • Marginal note: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.

  • 1991, c. 47, s. 757
  • 2001, c. 9, s. 465
  • 2007, c. 6, s. 317

Marginal note:Recovery by action

  •  (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.

  • Marginal note:Shares held by personal representative

    (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.

  • Marginal note: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.

  • Marginal note:Remedy preserved

    (4) This section does not affect any liability that arises under section 841.

  • 1991, c. 47, s. 758
  • 2001, c. 9, s. 465
 

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