PART VICorporate Governance (continued)
Corporate Records (continued)
294 In this section and sections 295 to 306,
- event of default
event of default means, in relation to a trust indenture, an event specified in the trust indenture on the occurrence of which the principal, interest and other moneys payable thereunder become or may be declared to be payable before maturity, but the event is not an event of default until all the conditions set out in the trust indenture in connection with the giving of notice of the event have been satisfied or the period of time for giving the notice has elapsed; (cas de défaut)
issuer means a bank that has issued, is about to issue or is in the process of issuing subordinated indebtedness; (émetteur)
trustee means any person appointed as trustee under the terms of a trust indenture to which a bank is a party, and includes any successor trustee; (fiduciaire)
- trust indenture
trust indenture means any deed, indenture or other instrument, including any supplement or amendment thereto, made by a bank under which the bank issues subordinated indebtedness and in which a person is appointed as trustee for the holders of the subordinated indebtedness issued thereunder. (acte de fiducie)
295 Sections 296 to 306 apply in respect of a trust indenture if the subordinated indebtedness issued or to be issued under the trust indenture is part of a distribution to the public.
296 The Superintendent may, in writing, exempt a trust indenture from the application of sections 297 to 306 if, in the Superintendent’s opinion, the trust indenture and the subordinated indebtedness are subject to a law of a province or other jurisdiction, other than Canada, that is substantially equivalent to the provisions of this Act relating to trust indentures.
Marginal note:Conflict of interest
297 (1) No person shall be appointed as trustee if at the time of the appointment there is a material conflict of interest between the person’s role as trustee and any other role of the person.
Marginal note:Eliminating conflict of interest
(2) A trustee shall, within ninety days after the trustee becomes aware that a material conflict of interest exists,
(a) eliminate the conflict of interest; or
(b) resign from office.
Marginal note:Validity despite conflict
298 A trust indenture and any subordinated indebtedness issued thereunder are valid notwithstanding a material conflict of interest of the trustee.
Marginal note:Removal of trustee
299 If a trustee is appointed in contravention of subsection 297(1) or if a trustee contravenes subsection 297(2), any interested person may apply to a court for an order that the trustee be replaced, and the court may make an order on such terms as it thinks fit.
Marginal note:Trustee qualifications
300 A trustee, or at least one of the trustees if more than one is appointed, must be
(a) a trust company pursuant to subsection 57(2) of the Trust and Loan Companies Act; or
(b) a body corporate that is incorporated by or under an Act of the legislature of a province and authorized to carry on business as a trustee.
- 1991, c. 46, ss. 300, 577
- 2007, c. 6, s. 18
Marginal note:List of security holders
301 (1) A holder of subordinated indebtedness issued under a trust indenture may, on payment to the trustee of a reasonable fee and on delivery of a statutory declaration to the trustee, require the trustee to provide, within fifteen days after the delivery to the trustee of the statutory declaration, a list setting out
(a) the names and addresses of the registered holders of the outstanding subordinated indebtedness,
(b) the principal amount of outstanding subordinated indebtedness owned by each such holder, and
(c) the aggregate principal amount of subordinated indebtedness outstanding
as shown on the records maintained by the trustee on the day the statutory declaration is delivered to that trustee.
Marginal note:Duty of issuer
(2) On the demand of a trustee, the issuer of subordinated indebtedness shall provide the trustee with the information required to enable the trustee to comply with subsection (1).
Marginal note:Where applicant is entity
(3) Where the person requiring the trustee to provide a list under subsection (1) is an entity, the statutory declaration required under that subsection shall be made by a director or an officer of the entity or a person acting in a similar capacity.
Marginal note:Contents of statutory declaration
(4) The statutory declaration required under subsection (1) must state
(a) the name and address of the person requiring the trustee to provide the list and, if the person is an entity, the address for service thereof; and
(b) that the list will not be used except as permitted by subsection (5).
Marginal note:Use of list
(5) No person shall use a list obtained under this section except in connection with
(a) an effort to influence the voting of the holders of subordinated indebtedness;
(b) an offer to acquire subordinated indebtedness; or
(c) any other matter relating to the subordinated indebtedness or the affairs of the issuer or guarantor thereof.
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.
(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.
- 1991, c. 46, s. 307
- 2001, c. 9, s. 91
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.
(5) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).
- 1991, c. 46, s. 308
- 1997, c. 15, s. 33
- 2001, c. 9, s. 92
- 2005, c. 54, s. 69
- 2010, c. 12, s. 2018
- 2017, c. 26, s. 62
- Date modified: