Bank Act (S.C. 1991, c. 46)

Marginal note:When approval not required

• 383 (1) Despite sections 373 and 379, the approval of the Minister is not required if

  • (a) the Superintendent has, by order, directed the bank to increase its capital and shares or membership shares of the bank are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or

  • (b) a person, other than an eligible agent, who controls, within the meaning of paragraph 3(1)(a), the bank acquires additional shares of the bank.

• Marginal note:Exception

  (2) Paragraph (1)(a) does not apply in respect of a bank with equity of twelve billion dollars or more.

Marginal note:Pre-approval

384 For the purposes of sections 373 and 379, the Minister may approve

• (a) the purchase or other acquisition of any number or percentage of shares or membership shares of a bank that may be required in a particular transaction or series of transactions; or

• (b) the purchase or other acquisition of up to a specified number or percentage of shares or membership shares of a bank within a specified period.

Marginal note:Public holding requirement

• 385 (1) Every bank with equity of two billion dollars or more but less than twelve billion dollars shall, from and after the day determined under this section in respect of that bank, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that are

  • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

  • (b) shares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.

• Marginal note:Exception — federal credit union

  (1.1) Subsection (1) does not apply in respect of a federal credit union.

• Marginal note:Determination of day

  (2) The day referred to in subsection (1) is

  • (a) if the bank had equity of two billion dollars or more but less than twelve billion dollars on the day the bank came into existence, the day that is three years after that day; and

  • (b) in any other case, the day that is three years after the day of the first annual meeting of the shareholders of the bank held after the equity of the bank first reaches two billion dollars.

• Marginal note:Extension

  (3) If general market conditions so warrant and the Minister is satisfied that a bank has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the bank must comply with subsection (1).

Marginal note:Public holding requirement

385.1 If a bank to which section 385 applies becomes a bank with equity of twelve billion dollars or more, that section continues to apply to the bank until no person is a major shareholder of the bank, other than a person to whom subsections 374(2) to (6) apply.

Marginal note:Limit on assets

• 386 (1) Unless an exemption order with respect to the bank is granted under section 388, if a bank fails to comply with section 385 in any month, the Minister may, by order, require the bank not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.

• Marginal note:Average total assets

  (2) For the purposes of subsection (1), the average total assets of a bank in a three month period is to be computed by adding the total assets of the bank as calculated for the month end of each of the three months in the period and by dividing the sum by three.

• Definition of total assets

  (3) For the purposes of subsections (1) and (2), total assets, in respect of a bank, has the meaning given that expression by the regulations.

Marginal note:Increase of capital

387 If the Superintendent has, by order, directed a bank with equity of two billion dollars or more but less than twelve billion dollars to increase its capital and shares of the bank are issued and acquired in accordance with any terms and conditions that may be specified in the order, section 385 does not apply in respect of the bank until the time that the Superintendent may, by order, specify.

Marginal note:Exemption by order of the Minister

• 388 (1) On application by a bank, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank from the requirements of section 385, subject to any terms and conditions that the Minister considers appropriate.

• Marginal note:Compliance with section 385

  (2) If an exemption order granted under this section in respect of a bank expires, the bank shall comply with section 385 as of the day the exemption order expires.

• Marginal note:Limit on assets

  (3) If a bank fails to comply with section 385 on the day referred to in subsection (2), the bank shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the day referred to in subsection (2) or any later day that the Minister may, by order, specify.

• Marginal note:Application of ss. 386(2) and (3)

  (4) Subsections 386(2) and (3) apply for the purposes of subsection (3).

Marginal note:Exception

• 389 (1) If a bank fails to comply with section 385 as the result of any of the following, section 386 does not apply in respect of the bank until the expiration of six months after the day it failed to comply with section 385:

  • (a) a distribution to the public of voting shares of the bank;

  • (b) a redemption or purchase of voting shares of the bank;

  • (c) the exercise of any option to acquire voting shares of the bank; or

  • (d) the conversion of any convertible securities into voting shares of the bank.

• Marginal note:Shares acquiring voting rights

  (2) If, as the result of an event that has occurred and is continuing, shares of a bank acquire voting rights in such number as to cause the bank to no longer be in compliance with section 385, section 386 does not apply in respect of that bank until the expiration of six months after the day the bank ceased to be in compliance with section 385 or any later day that the Minister may, by order, specify.

Marginal note:Acquisition of control permitted

• 390 (1) Subject to subsection (2) and sections 379 and 391, section 385 does not apply in respect of a bank if a person acquires control of the bank through the purchase or other acquisition of all or any number of the shares of the bank by the person or by any entity controlled by the person.

• Marginal note:Undertaking required

  (2) Subsection (1) applies only if the person referred to in that subsection provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the bank has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that are

  • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

  • (b) shares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.

Marginal note:Application of section 385

391 At the expiration of the period for compliance with an undertaking referred to in subsection 390(2), section 385 shall apply in respect of the bank to which the undertaking relates.

Marginal note:Restriction on voting rights

• 392 (1) If, with respect to any bank, a particular person contravenes section 372, subsection 373(1), 374(1) or 375(1), section 376.1 or 376.2, subsection 377(1) or section 377.1 or 377.2 or fails to comply with an undertaking referred to in subsection 390(2) or with any term or condition imposed under section 397, no person, and no entity controlled by the particular person, shall, in person, by proxy or by delegate, exercise any voting rights

  • (a) that are attached to shares of the bank beneficially owned by the particular person or any entity controlled by the particular person;

  • (a.1) that may be exercised by a member of a federal credit union if the bank is a federal credit union; or

  • (b) that are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.

• Marginal note:Subsection (1) ceases to apply

  (2) Subsection (1) ceases to apply in respect of a person when, as the case may be,

  • (a) the shares or membership shares to which the contravention relates have been disposed of;

  • (b) the person ceases to control the bank within the meaning of paragraph 3(1)(d);

  • (c) if the person failed to comply with an undertaking referred to in subsection 390(2), the bank complies with section 385; or

  • (d) if the person failed to comply with a term or condition imposed under section 397, the person complies with the term or condition.

• Marginal note:Saving

  (3) Despite subsection (1), if a person contravenes subsection 374(1) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the bank beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the bank, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the bank beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.

Marginal note:Loss of control — banks and bank holding companies

• 393 (1) Despite sections 374 and 377, a widely held bank or a widely held bank holding company may be a major shareholder of a bank with equity of twelve billion dollars or more and cease to control, within the meaning of paragraphs 3(1)(a) and (d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the bank or the bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Loss of control — other entities

• 393.1 (1) Despite sections 374 and 377, an eligible foreign institution, an eligible Canadian financial institution, other than a bank, or a widely held insurance holding company may be a major shareholder of a bank with equity of twelve billion dollars or more and cease to control, within the meaning of paragraph 3(1)(d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the institution or insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Change in status

• 394 (1) If a body corporate that is an eligible financial institution other than a bank controls, within the meaning of paragraph 3(1)(d), a bank with equity of twelve billion dollars or more and the body corporate subsequently ceases to be an eligible financial institution, the body corporate must do all things necessary to ensure that, on the day that is one year after the day it ceased to be an eligible financial institution,

  • (a) it does not control, within the meaning of paragraph 3(1)(d), the bank; and

  • (b) it is not a major shareholder of the bank.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the body corporate has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Approval Process

Marginal note:Application for approval

• 395 (1) An application for an approval of the Minister required under this Part must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.

• Marginal note:Applicant

  (2) If, with respect to any particular transaction, this Part applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.