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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2020-05-04 and last amended on 2020-04-30. Previous Versions

PART XVBank Holding Companies (continued)

DIVISION 6Corporate Governance (continued)

Shareholders (continued)

Marginal note:Court review of election

  •  (1) A bank holding company or a shareholder or director of a bank holding company may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the bank holding company.

  • Marginal note:Powers of court

    (2) On an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,

    • (a) an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;

    • (b) an order declaring the result of the disputed election or appointment;

    • (c) an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the bank holding company until a new election is held or the new appointment is made; and

    • (d) an order determining the voting rights of shareholders and of persons claiming to own shares.

  • 2001, c. 9, s. 183

Marginal note:Notice to Superintendent

  •  (1) A person who makes an application under subsection 743(1) or 744(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.

  • Marginal note:Superintendent representation

    (2) The Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).

  • 2001, c. 9, s. 183

Proxies and Voting Restrictions

Marginal note:Sections 156.01 to 156.09 apply

 Sections 156.01 to 156.09 apply in respect of 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 Part” in those sections are to be read as references to “this Division”;

  • (c) the English version of subsection 156.05(1) is to be read without reference to “or auditors”;

  • (d) the reference to “section 375” in subsection 156.09(4) is to be read as a reference to “section 878”; and

  • (e) the reference to “subsection 138(1.1)” in subsection 156.09(11) is to be read as a reference to “subsection 727(2)”.

  • 2001, c. 9, s. 183

Directors and Officers

Duties

Marginal note:Duty to manage

  •  (1) Subject to this Act, the directors of a bank holding company shall manage or supervise the management of the business and affairs of the bank holding company.

  • Marginal note:Specific duties

    (2) Without limiting the generality of subsection (1), the directors of a bank holding company shall

    • (a) establish an audit committee to perform the duties referred to in subsections 782(3) and (4);

    • (b) establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;

    • (c) designate a committee of the board of directors to monitor the procedures referred to in paragraph (b); and

    • (d) establish investment and lending policies, standards and procedures in accordance with section 927.

  • Marginal note:Exception

    (3) Paragraph (2)(a) does not apply to the directors of a bank holding company if

    • (a) all the voting shares of the bank holding company are beneficially owned by a Canadian financial institution described in any of paragraphs (a) to (d) of the definition financial institution in section 2; and

    • (b) the audit committee of the financial institution performs for and on behalf of the bank holding company all the functions that would otherwise be required to be performed by the audit committee of the bank holding company under this Part.

  • 2001, c. 9, s. 183

Marginal note:Duty of care

  •  (1) Every director and officer of a bank holding company in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shall

    • (a) act honestly and in good faith with a view to the best interests of the bank holding company; and

    • (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

  • Marginal note:Duty to comply

    (2) Every director, officer and employee of a bank holding company shall comply with this Act, the regulations, the bank holding company’s incorporating instrument and the by-laws of the bank holding company.

  • Marginal note:No exculpation

    (3) No provision in any contract, in any resolution or in the by-laws of a bank holding company relieves any director, officer or employee of the bank holding company from the duty to act in accordance with this Act and the regulations or relieves a director, officer or employee from liability for a breach thereof.

  • 2001, c. 9, s. 183
Qualification and Number — Directors

Marginal note:Minimum number of directors

  •  (1) A bank holding company shall have at least seven directors.

  • Marginal note:Residency requirement

    (2) At least one half of the directors of a bank holding company that is a subsidiary of a foreign bank and a majority of the directors of any other bank holding company must be, at the time of each director’s election or appointment, resident Canadians.

  • 2001, c. 9, s. 183
  • 2007, c. 6, s. 114

Marginal note:Disqualified persons

 The following persons are disqualified from being directors of a bank holding company:

  • (a) a person who is less than eighteen years of age;

  • (b) a person who is of unsound mind and has been so found by a court in Canada or elsewhere;

  • (c) a person who has the status of a bankrupt;

  • (d) a person who is not a natural person;

  • (e) a person who is prohibited by subsection 156.09(9) or section 901 or 914 from exercising voting rights attached to shares of the bank holding company;

  • (f) a person who is an officer, director or full time employee of an entity that is prohibited by subsection 156.09(9) or section 901 or 914 from exercising voting rights attached to shares of the bank holding company;

  • (f.1) a person who is an officer, director, employee or agent of — or any other person acting on behalf of — an eligible agent within the meaning of subsection 370(1);

  • (g) [Repealed, 2013, c. 40, s. 163]

  • (h) a minister of Her Majesty in right of Canada or in right of a province; and

  • (i) a person who is an agent or employee of the government of a foreign country or any political subdivision thereof.

  • 2001, c. 9, s. 183
  • 2012, c. 19, s. 335, c. 31, s. 119
  • 2013, c. 40, s. 163

Marginal note:No shareholder requirement

 A director of a bank holding company is not required to hold shares of the bank holding company.

  • 2001, c. 9, s. 183

Marginal note:Limit on directors

 No more than 15 per cent of the directors of a bank holding company may, at each director’s election or appointment, be employees of the bank holding company or a subsidiary of the bank holding company, except that up to four persons who are employees of the bank holding company or a subsidiary of the bank holding company may be directors of the bank holding company if those directors constitute not more than one half of the directors of the bank holding company.

  • 2001, c. 9, s. 183
Election and Tenure — Directors

Marginal note:Number of directors

  •  (1) Subject to section 217, subsection 749(1) and section 756, the directors of a bank holding company shall, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.

  • Marginal note:Election at annual meeting

    (2) A by-law made pursuant to subsection (1) that provides for a minimum and maximum number of directors may provide that the number of directors to be elected at any annual meeting of the shareholders be such number as is fixed by the directors prior to the annual meeting.

  • 2001, c. 9, s. 183
 
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