Bank Act (S.C. 1991, c. 46)

Marginal note:Compliance with trust indentures

• 302 (1) An issuer or a guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall, before undertaking

  • (a) the issue, certification and delivery of subordinated indebtedness under the trust indenture, or

  • (b) the satisfaction and discharge of the trust indenture,

  provide the trustee with evidence of compliance with the conditions in the trust indenture in respect thereof.

• Marginal note:Compliance by issuer or guarantor

  (2) On the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued or to be issued under a trust indenture shall provide the trustee with evidence of compliance with the conditions in the trust indenture by the issuer or guarantor in respect of any act to be done by the trustee at the request of the issuer or guarantor.

• Marginal note:Evidence of compliance

  (3) The following documents constitute evidence of compliance for the purposes of subsections (1) and (2):

  • (a) a statutory declaration or certificate made by a director or an officer of the issuer or guarantor stating that the conditions referred to in subsections (1) and (2) have been complied with;

  • (b) an opinion of legal counsel that the conditions of the trust indenture requiring review by legal counsel have been complied with, if the trust indenture requires compliance with conditions that are subject to review by legal counsel; and

  • (c) an opinion or report of the auditors of the issuer or guarantor, or such other accountant as the trustee selects, that the conditions of the trust indenture have been complied with, if the trust indenture requires compliance with conditions that are subject to review by auditors.

• Marginal note:Further evidence of compliance

  (4) The evidence of compliance referred to in subsection (3) shall include a statement by the person giving the evidence

  • (a) declaring that the person has read and understands the conditions of the trust indenture referred to in subsections (1) and (2);

  • (b) describing the nature and scope of the examination or investigation on which the person based the certificate, statement or opinion; and

  • (c) declaring that the person has made such examination or investigation as the person believes necessary to enable the statements to be made or the opinions contained or expressed therein to be given.

Marginal note:Trustee may require evidence

• 303 (1) On the request of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with evidence in such form as the trustee requires of compliance with any condition thereof relating to any action required or permitted to be taken by the issuer or guarantor under the trust indenture.

• Marginal note:Certificate of compliance

  (2) At least once in each twelve month period beginning on the date of the trust indenture and at any other time on the demand of a trustee, the issuer or guarantor of subordinated indebtedness issued under a trust indenture shall provide the trustee with a certificate stating that the issuer or guarantor has complied with all requirements contained in the trust indenture that, if not complied with, would, with the giving of notice, lapse of time or otherwise, constitute an event of default, or, if there has been failure to so comply, giving particulars thereof.

Marginal note:Notice of default

304 A trustee shall, within thirty days after the trustee becomes aware of the occurrence thereof, give to the holders of subordinated indebtedness issued under a trust indenture notice of every event of default arising under the trust indenture and continuing at the time the notice is given, unless the trustee believes on reasonable grounds that it is in the best interests of the holders of the subordinated indebtedness to withhold the notice and so informs the issuer and guarantor in writing.

Marginal note:Duty of care

• 305 (1) In exercising a trustee’s powers and discharging a trustee’s duties, the trustee shall

  • (a) act honestly and in good faith with a view to the best interests of the holders of the subordinated indebtedness issued under the trust indenture; and

  • (b) exercise the care, diligence and skill of a reasonably prudent trustee.

• Marginal note:Reliance on statements

  (2) Notwithstanding subsection (1), a trustee is not liable if the trustee relies in good faith on statements contained in a statutory declaration, certificate, opinion or report that complies with this Act or the trust indenture.

Marginal note:No exculpation

306 No term of a trust indenture or of any agreement between a trustee and the holders of subordinated indebtedness issued thereunder or between the trustee and the issuer or guarantor operates to relieve a trustee from the duties imposed on the trustee by sections 297, 301 and 304 and subsection 305(1).

Financial Statements and Auditors

Annual Financial Statement

Marginal note:Financial year

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

• Marginal note:First financial year

  (2) If a bank, after the first day of July in any year, obtains an order approving the commencement and carrying on of business, the first financial year of the bank ends, at the election of the bank 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:Exception

  (3) Despite subsection (1), the financial year of a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force ends on the expiration of the thirty-first day of October in each year unless the bank elects in its by-laws to have its financial year end on the thirty-first day of December in each year.

Marginal note:Annual financial statement

• 308 (1) The directors of a bank must place before the shareholders or members, as the case may be, at every annual meeting

  • (a) a comparative annual financial statement (in this Act 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 or auditors of the bank; and

  • (c) any further information respecting the financial position of the bank and the results of its operations required by the by-laws of the bank to be placed before the shareholders or members 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 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 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 for that financial year.

• Marginal note:Additional information

  (3) A bank shall include with its annual statement

  • (a) a list of the subsidiaries of the bank, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 472 or pursuant to a realization of security in accordance with section 473 and which the bank 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 and by other subsidiaries of the bank, 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 and by other subsidiaries of the bank;

  • (a.1) in the case of a federal credit union, a statement that sets out

    • (i) the number of its members at the end of the financial year,

    • (ii) the percentage of financial services that during the financial year were transacted with members on the basis of the gross revenue of the federal credit union for the financial year,

    • (iii) the percentage of its members who are natural persons at the end of the financial year, and

    • (iv) whether the federal credit union was organized and carrying on business on a cooperative basis at the end of the financial year in accordance with section 12.1; 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 310(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

• 309 (1) The directors of a bank 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 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 shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).

Marginal note:Statements — subsidiaries

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

• Marginal note:Examination

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

• Marginal note:Barring examination

  (3) A bank 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 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 to permit the examination or, if it is satisfied that the examination would be detrimental to the bank 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 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:Distribution of annual statement

• 311 (1) A bank must, not later than 21 days before the date of each annual meeting or before the signing of a resolution under paragraph 152(1)(b) in lieu of the annual meeting, send to each shareholder or, in the case of a federal credit union, to each member and shareholder, if any, a copy of the documents referred to in subsections 308(1) and (3), unless that time period is waived by the shareholder or member, as the case may be.

• Marginal note:Exception

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

• Marginal note:Effect of default

  (3) Where a bank is required to comply with subsection (1) and the bank 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

• 312 (1) Subject to subsection (2), a bank must send to the Superintendent a copy of the documents referred to in subsections 308(1) and (3) not later than 21 days before the date of each annual meeting of shareholders or members of the bank.

• Marginal note:Later filing

  (2) If a bank’s shareholders or members sign a resolution under paragraph 152(1)(b) in lieu of an annual meeting, the bank must send a copy of the documents referred to in subsections 308(1) and (3) to the Superintendent not later than 30 days after the signing of the resolution.

Auditors

Marginal note:Definitions

313 For the purposes of this section and sections 314 to 333,

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 auditors

• 314 (1) The shareholders of a bank, or the members of a federal credit union, must, by ordinary resolution at the first meeting of shareholders or members, as the case may be, and at each succeeding annual meeting, appoint a firm of accountants to be the auditor of the bank until the close of the next annual meeting.

• Marginal note:Auditors

  (2) The shareholders of a bank, or the members of a federal credit union, may, by ordinary resolution at the first meeting of shareholders or members, as the case may be, and at each succeeding annual meeting, appoint two firms of accountants to be the auditors of the bank until the close of the next annual meeting.

• Marginal note:Remuneration of auditors

  (3) The remuneration of the auditor or auditors may be fixed by ordinary resolution of the shareholders or members of the federal credit union but, if not so fixed, must be fixed by the directors.