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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2021-03-23 and last amended on 2021-03-06. Previous Versions

PART VCapital Structure (continued)

Security Certificates and Transfers (continued)

Marginal note:Minors

 If a minor exercises any rights of ownership in the securities of a bank, no subsequent repudiation or avoidance is effective against the bank.

  • 1991, c. 46, s. 94
  • 2005, c. 54, s. 15(E)

Marginal note:Joint shareholders

 A bank may treat as owners of a security the survivors of persons to whom the security was issued as joint holders, if the bank receives proof satisfactory to it of the death of any of the joint holders.

Marginal note:Transmission of securities

  •  (1) Subject to the provisions of Part VII and any applicable law relating to the collection of taxes, a person referred to in paragraph 93(2)(a) is entitled to become registered as the owner of a security, or to designate another person to be registered as the owner of a security, if the person referred to in paragraph 93(2)(a) delivers to the bank or its transfer agent

    • (a) the original grant of probate or of letters of administration, or a copy thereof certified to be a true copy by

      • (i) the court that granted the probate or letters of administration,

      • (ii) a trust company incorporated under the Trust and Loan Companies Act or under the laws of a province, or

      • (iii) a lawyer or notary acting on behalf of the person referred to in paragraph 93(2)(a), or

    • (b) in the case of transmission by notarial will in the Province of Quebec, a copy thereof authenticated pursuant to the laws of that Province,

    together with

    • (c) an affidavit or declaration of transmission made by the person referred to in paragraph 93(2)(a) that states the particulars of the transmission, and

    • (d) the security certificate that was owned by the deceased holder

      • (i) in the case of a transfer to the person referred to in paragraph 93(2)(a), with or without the endorsement of that person, and

      • (ii) in the case of a transfer to any other person, endorsed in accordance with section 111,

    and accompanied by any assurance the bank may require under section 127.

  • Marginal note:Excepted transmissions

    (2) Notwithstanding subsection (1), if the laws of the jurisdiction governing the transmission of a security of a deceased holder do not require a grant of probate or of letters of administration in respect of the transmission, a personal representative of the deceased holder is entitled, subject to Part VII and any applicable law relating to the collection of taxes, to become registered as the owner or to designate a person to be registered as the owner, if the personal representative delivers to the bank or its transfer agent the following documents, namely,

    • (a) the security certificate that was owned by the deceased holder; and

    • (b) reasonable proof of the governing laws, of the deceased holder’s interest in the security and of the right of the personal representative or the designated person to become the registered shareholder.

  • Marginal note:Right of bank to treat as owner

    (3) Subject to Part VII, delivery of the documents referred to in this section empowers a bank or its transfer agent to record in a securities register the transmission of a security from the deceased holder to a person referred to in paragraph 93(2)(a) or to such person as the person referred to in that paragraph may designate and, thereafter, to treat the person who becomes so registered as the owner of that security.

  • 1991, c. 46, ss. 96, 575

Marginal note:Over-issue

  •  (1) The provisions of this Part that validate a security or compel its issue or reissue do not apply to the extent that a validation, issue or reissue would result in over-issue, but

    • (a) if a valid security similar in all respects to the security involved in the over-issue is reasonably available for purchase, the person entitled to the validation or issue may compel the issuer to purchase and deliver such a security to that person against surrender of the security that the person holds; or

    • (b) if a valid security similar in all respects to the security involved in the over-issue is not reasonably available for purchase, the person entitled to the validation or issue may recover from the issuer an amount equal to the price the last purchaser for value paid for the invalid security.

  • Marginal note:Retroactive validation

    (2) Where an issuer is subsequently authorized to issue securities of a number equal to or exceeding the number of securities previously authorized plus the amount of the securities over-issued, the securities so over-issued are valid from the date of their issue.

  • Marginal note:Payment not a purchase or redemption

    (3) A purchase or payment by an issuer under subsection (1) is not a purchase or payment in respect of which section 71 or 77 applies.

Marginal note:Burden of proof

 In any action on a security,

  • (a) unless specifically denied in the pleadings, each signature on the security or in a necessary endorsement is admitted;

  • (b) a signature on the security is presumed to be genuine and authorized but, if the effectiveness of the signature is put in issue, the burden of establishing that it is genuine and authorized is on the party claiming under the signature;

  • (c) if a signature is admitted or established, production of the instrument entitles a holder to recover on it unless the defendant establishes a defence or a defect going to the validity of the security; and

  • (d) if the defendant establishes that a defence or defect exists, the plaintiff has the burden of establishing that the defence or defect is ineffective against the plaintiff or any person under whom the plaintiff claims.

Marginal note:Securities fungible

 Unless otherwise agreed, and subject to any applicable law, regulation or stock exchange rule, a person required to deliver securities may deliver any security of the specified issue in bearer form or registered in the name of the transferee or endorsed to the transferee or in blank.

Marginal note:Notice of defect

  •  (1) Even against a purchaser for value and without notice of a defect going to the validity of a security, the terms of the security include those stated on the security and those incorporated therein by reference to another instrument, statute, rule, regulation or order to the extent that the terms so referred to do not conflict with the stated terms, but such a reference is not of itself notice to a purchaser for value of a defect going to the validity of the security, notwithstanding that the security expressly states that a person accepting it admits the notice.

  • Marginal note:Purchaser for value

    (2) A security is valid in the hands of a purchaser for value without notice of any defect going to its validity.

  • Marginal note:Lack of genuineness

    (3) Except as provided in section 101, the fact that a security is not genuine is a complete defence even against a purchaser for value and without notice.

  • Marginal note:Ineffective defences

    (4) All defences of an issuer, including non-delivery and conditional delivery of a security but not including lack of genuineness, are ineffective against a purchaser for value without notice of the particular defence.

  • Marginal note:Staleness as defect notice

    (5) After an event that creates a right to immediate performance of the principal obligation evidenced by a security, or that sets a date on or after which a security is to be presented or surrendered for redemption or exchange, a purchaser is deemed to have notice of any defect in its issue or of any defence of the issuer

    • (a) if the event requires the payment of money or the delivery of securities, or both, on presentation or surrender of the security, and the funds or securities are available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or

    • (b) if the purchaser takes the security more than two years after the date set for presentation or surrender or the date on which the performance became due.

Marginal note:Unauthorized signature

 An unauthorized signature on a security before or in the course of issue is ineffective, except that the signature is effective in favour of a purchaser for value and without notice of the lack of authority, if the signing has been done by

  • (a) an authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security, or of similar securities, or their immediate preparation for signing; or

  • (b) an employee of the issuer or of a person referred to in paragraph (a) who, in the ordinary course of the employee’s duties, handles the security.

Marginal note:Completion or alteration

  •  (1) Where a security contains the signatures necessary to its issue or transfer but is incomplete in any other respect,

    • (a) any person may complete it by filling in the blanks in accordance with the person’s authority; and

    • (b) notwithstanding that the blanks are incorrectly filled in, the security as completed is enforceable by a purchaser who took it for value and without notice of the incorrectness.

  • Marginal note:Enforceability

    (2) A completed security that has been improperly altered, even if fraudulently altered, remains enforceable, but only according to its original terms.

 
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