Definitions and interpretation

1   (1) In this Act:

"articles" has the same meaning as in the Business Corporations Act;

"auditor" includes a partnership of auditors and an additional auditor appointed under section 125;

"Authority" means the BC Financial Services Authority established under section 2 of the Financial Services Authority Act;

"business authorization" means an authorization to carry on

(a) trust business,

(b) deposit business,

(c) insurance business, or

(d) both trust business and deposit business,

issued under Division 1 of Part 3 to a financial institution, under Division 1 of Part 6 to an extraprovincial corporation or under Division 5 of Part 6 to a society described in section 191;

"capital base" of a financial institution or extraprovincial corporation means the capital base determined in accordance with the regulations under section 289 (3) (e) or (f) and the rules made by the Authority under section 201.1 (1) (a) or (b);

"central credit union" means a credit union in which membership is restricted to credit unions, other corporations, public bodies and the Crown in right of Canada or British Columbia or in any other right;

"charter" includes

(a) an Act, statute, ordinance, letters patent, certificate, declaration,

(b) other instrument or provision of law by or under which a corporation is incorporated, amalgamated or continued,

(c) the memorandum, articles or bylaws by whatever name called of a corporation, and

(d) the constitution and rules of a credit union;

"common trust fund" means a fund in which moneys of different estates and trusts are co-mingled for the purpose of facilitating investment;

"conduct review committee", in relation to a financial institution, means the conduct review committee elected by the directors as required under section 112;

"constitution" means the document described in section 6 (2) of the Credit Union Incorporation Act and includes the constitution of a credit union incorporated under the Credit Union Act, R.S.B.C. 1979, c. 79, or incorporated under a former Credit Unions Act;

"contract of insurance" has the same meaning as "contract" in the Insurance Act;

"council" means the Insurance Council of British Columbia continued under section 220;

"credit union" means a corporation incorporated as a credit union under the Credit Union Incorporation Act, the Credit Union Act, R.S.B.C. 1979, c. 79, or a former Credit Unions Act, and includes a central credit union and a credit union continued into British Columbia under section 15.1 of the Credit Union Incorporation Act, but does not include a credit union continued under the laws of another jurisdiction under section 15.2 of the Credit Union Incorporation Act;

"debenture" includes an instrument, secured or unsecured, issued by a financial institution which instrument is

(a) in bearer or registered form,

(b) of a kind commonly dealt in on securities exchanges or markets, or commonly recognized in any area in which it is issued or dealt in as a medium for investment, and

(c) evidence of an obligation or indebtedness of the financial institution,

but does not include

(d) a negotiable unsecured promissory note maturing not more than one year after the date of issue,

(e) a receipt or another type of instrument issued by a financial institution evidencing

(i) a deposit, or

(ii) an annuity payment, or

(f) an investment contract or mutual fund certificate;

"deposit business" means the business of receiving on deposit or soliciting for deposit money that is repayable

(a) on demand,

(b) after notice,

(c) on the expiry of a specified term, or

(d) at specified intervals for a specified term,

whether or not the person undertaking an activity or activities set out in paragraphs (a) to (d) can or does distribute any gain, profit or dividend, or otherwise disposes of the person's assets, to a member or shareholder of the person other than during winding up or on dissolution;

"deposit insurance corporation" means the Credit Union Deposit Insurance Corporation of British Columbia continued under section 261;

"depositor" means an individual or entity

(a) that has money on deposit with a credit union, extraprovincial credit union or extraprovincial trust corporation, or

(b) that holds non-equity shares in a credit union issued before January 1, 2020;

"electronic meeting" means a fully electronic meeting or a partially electronic meeting;

"entity" includes a corporation, trust, partnership, fund or other unincorporated association or organization, the Crown in right of Canada or of a province, a Crown agency, a foreign government and an agency of a foreign government, but does not include an individual;

"equity share" means a share in a credit union that represents an equity interest in a credit union;

"extraprovincial corporation" means an extraprovincial credit union, extraprovincial insurance corporation or extraprovincial trust corporation;

"extraprovincial credit union" means a credit union that is incorporated by or under the laws of a jurisdiction other than British Columbia and that is, under those laws, licensed, registered or in any way authorized to carry on activities that are substantially the same as trust business or deposit business or both, but does not include a federal credit union within the meaning of the Bank Act (Canada);

"extraprovincial insurance corporation" means

(a) a corporation that is an insurer and is incorporated by or under the laws of a jurisdiction other than British Columbia and is, under those laws, licensed, registered or in any way authorized to carry on activities that are substantially the same as insurance business, or

(b) an insurance association,

and includes a society that is named in an order of the superintendent made under section 193 (2) to which society section 159 applies because of section 193 (3), but does not include

(c) a corporation that

(i) is licensed under Division 2 of Part 6 as an insurance agent or insurance adjuster, and

(ii) carries on insurance business only in its capacity as an insurance agent or insurance adjuster;

"extraprovincial trust corporation" means a corporation incorporated by or under the laws of a jurisdiction other than British Columbia and is, under those laws, licensed, registered or in any way authorized to carry on activities that are substantially the same as trust business or deposit business or both, but does not include a credit union, a bank or a corporation that is a subsidiary of a bank and is a loan company to which the Trust and Loan Companies Act (Canada) applies;

"fair market value" means the amount, price, consideration or rent that would be obtained in an arm's length transaction in the open market between willing parties acting in good faith;

"financial institution" means a credit union, trust company or insurance company;

"financial services" includes deposit business, insurance business, trust business, trading in securities, mortgage brokerage and real estate services;

"fully electronic meeting" means a meeting in which persons are entitled to participate solely by telephone or other communications medium, as set out in the notice for the meeting, if all persons attending the meeting are able to participate in it, whether by telephone or other communications medium;

"fund", except in the definition of "entity", means the fund continued under section 267;

"general insurance" means insurance that is not life insurance;

"general insurance business" means insurance business in respect of general insurance only;

"insolvent" includes the inability of a corporation to pay its debts as they become due in the usual course of the corporation's business;

"insurance association" means an association of persons formed on the plan known as Lloyd's or on another prescribed plan by which each associate underwriter is liable for a stated, limited or proportionate part of the whole amount insured by a contract of insurance;

"insurance business" means

(a) undertaking or offering to undertake to indemnify another person against loss or liability for loss in respect of a certain risk or peril to which the object of the insurance may be exposed,

(b) soliciting or accepting any risk,

(c) soliciting an application for a contract of insurance,

(d) issuing or delivering a

(i) receipt for any contract of insurance, or

(ii) contract of insurance,

(e) in consideration of any premium or payment, granting an annuity on a life or lives,

(f) collecting or receiving any premium for a contract of insurance,

(g) adjusting any loss covered by a contract of insurance, or

(h) advertising for any business described in paragraphs (a) to (g),

whether or not the person undertaking an activity or activities set out in paragraphs (a) to (h) can or does distribute any gain, profit or dividend, or otherwise disposes of the person's assets, to a member or shareholder of the person other than during winding up or on dissolution;

"insurance company" means

(a) a company incorporated under the Business Corporations Act for the purpose of carrying on insurance business,

(b) an insurer incorporated by or under another Act, or

(c) a pre-existing insurance company,

and includes

(d) a special Act insurance company that has been converted into a company under section 266 of the Business Corporations Act for the purpose of carrying on insurance business,

(e) an extraprovincial insurance corporation that has been continued into British Columbia as a company under section 303 of the Business Corporations Act,

(f) a company that results from an amalgamation referred to in section 20 (2), and

(g) a society that is named in an order of the superintendent made under section 193 (2) of this Act to which society section 59 applies because of section 193 (3),

but does not include

(h) a corporation continued under the laws of another jurisdiction,

(i) a society deemed under section 191 to have a business authorization issued under Division 5 of Part 6,

(j) a mutual fire insurance company as defined in section 188 or a grandparented insurance society as defined in section 200,

(k) a corporation that

(i) is licensed under Division 2 of Part 6 as an insurance agent or insurance adjuster, and

(ii) carries on insurance business only in the corporation's capacity as an insurance agent or insurance adjuster, or

(l) a corporation that is registered as a captive insurance company under the Insurance (Captive Company) Act; 

"insurer" means an entity carrying on insurance business, other than an entity that

(a) is either of the following:

(i) licensed under Division 2 of Part 6 as an insurance agent or insurance adjuster;

(ii) exempted from section 171 (2) by the regulations, and

(b) carries on insurance business only in the capacity of the entity as an insurance agent or insurance adjuster;

"life insurance business" means insurance business in respect of life insurance;

"member",

(a) in relation to a trust company or an insurance company, has the same meaning as "shareholder" in the Business Corporations Act, and

(b) in relation to a credit union, means a person who has been admitted to membership or junior membership in the credit union and whose name is entered in its register of members, but does not include a person who is an auxiliary member as defined in section 1 of the Credit Union Incorporation Act;

"memorandum" means, in relation to a pre-existing trust company or pre-existing insurance company, the record that constituted the company's memorandum under section 12 of this Act as that section read before the coming into force of section 67 of the Finance Statutes Amendment Act, 2011;

"non-equity share" means a share in a credit union that

(a) evidences indebtedness of the credit union to the holder of the share, and

(b) does not represent an equity interest in the credit union;

"partially electronic meeting" means a meeting in which persons are entitled to participate in person or by telephone or other communications medium, as set out in the notice for the meeting, if all persons attending the meeting are able to participate in it, whether by telephone, by other communications medium or in person;

"personal information" has the same meaning as in the Freedom of Information and Protection of Privacy Act;

"pre-existing insurance company" means a corporation that was, before the coming into force of section 64 of the Finance Statutes Amendment Act, 2011, incorporated under this Act for the purpose of carrying on insurance business, and includes

(a) a special Act insurance company that was, before the coming into force of section 64 of the Finance Statutes Amendment Act, 2011, converted into an insurance company under section 21 of this Act as that section read before the coming into force of section 67 of the Finance Statutes Amendment Act, 2011, and

(b) an extraprovincial insurance corporation that was, before the coming into force of section 64 of the Finance Statutes Amendment Act, 2011, continued into British Columbia as a company under section 23 of this Act as that section read before the coming into force of section 67 of the Finance Statutes Amendment Act, 2011,

but does not include any corporation referred to in paragraph (h), (i), (j), (k) or (l) of the definition of "insurance company";

"pre-existing trust company" means

(a) a corporation that was, before the coming into force of section 64 of the Finance Statutes Amendment Act, 2011, incorporated under this Act for the purpose of carrying on trust business,

(b) an extraprovincial trust company that was, before the coming into force of section 64 of the Finance Statutes Amendment Act, 2011, continued into British Columbia under section 23 of this Act as that section read before the coming into force of section 67 of the Finance Statutes Amendment Act, 2011, or

(c) a corporation that was, before the coming into force of section 64 of the Finance Statutes Amendment Act, 2011, incorporated as a trust company under the Trust Company Act, R.S.B.C. 1979, c. 412, or was incorporated as a trust company under another Act,

but does not include a corporation continued under the laws of another jurisdiction;

"prescribed" means prescribed by regulation of the Lieutenant Governor in Council;

"public body", in relation to a credit union, means

(a) a municipality or regional district,

(b) [Repealed 2003-52-64.]

(c) the Municipal Finance Authority of British Columbia under the Municipal Finance Authority Act,

(d) a government body under the Financial Administration Act, or

(e) a board, commission, authority or similar body established or authorized under an Act to administer, regulate, manage or undertake the operation of schools, libraries, hospitals, health facilities, irrigation systems, drainage systems, water supply systems, local improvements or public utilities, or to regulate or facilitate the regulation of agricultural and other natural products marketing or to levy or raise taxes under the authority of an Act;

"security instrument" means security as defined in section 1 of the Securities Act;

"senior officer" means each of the 5 highest paid officers of a corporation and includes an individual who, whether or not among those 5 highest paid officers,

(a) is the chair or a vice chair of the board of directors or the president, a vice president, the secretary, the treasurer or the general manager of the corporation, or

(b) performs functions of the corporation similar to those normally performed by an individual occupying any of the offices described in paragraph (a);

"significant borrower", in relation to a trust company or insurance company, means

(a) an entity that has outstanding indebtedness for money borrowed from the company, or from the company and one or more of its affiliates, or from one or more affiliates of the company, if the aggregate principal amount of the outstanding indebtedness exceeds the greater of

(i) $1 million, or

(ii) 1/3 of the sum of

(A) the total indebtedness then outstanding for borrowed money of the entity, and

(B) the amount by which the assets of the entity exceed its liabilities, as shown on the balance sheet of the entity at the end of its most recently completed financial year, or

(b) an individual who has outstanding indebtedness for money borrowed from the company, or from the company and one or more of its affiliates, or from one or more affiliates of the company, if the aggregate principal amount of the outstanding indebtedness, excluding indebtedness secured by a mortgage of the individual's principal residence, exceeds $100 000;

"special Act insurance company" means an insurance company incorporated by another Act;

"special resolution",

(a) in relation to a trust company or insurance company, means a resolution

(i) passed by a majority of not less than 3/4 of the votes cast by those members of the company who, being entitled to do so, vote personally or by proxy at a general meeting of the company

(A) of which notice as the articles provide and being not less than 21 days' notice specifying the intention to propose the resolution as a special resolution has been given, or

(B) if every member entitled to attend and vote at the meeting agrees, at a meeting of which less than 21 days' notice has been given, or

(ii) consented to in writing by every member of the company who would have been entitled to vote personally or by proxy at a general meeting of the company, and a resolution so consented to is deemed to be a special resolution passed at a general meeting of the company, and

(b) in relation to a credit union, means a special resolution as defined in section 1 of the Credit Union Incorporation Act;

"spouse" means a person who

(a) is married to another person, or

(b) is living with another person in a marriage-like relationship;

"superintendent" means the Superintendent of Financial Institutions appointed under section 207;

"tribunal" means the Financial Services Tribunal continued under section 242.1;

"trust business" means the business of providing or offering to provide services to the public as

(a) trustee, executor or administrator,

(b) guardian of a minor's estate,

(c) committee, under the Patients Property Act, of the estate of a person with a mental disorder,

(d) attorney under Part 2 of the Power of Attorney Act, or

(e) representative granted power over an adult's financial affairs under section 7 (1) (b) of the Representation Agreement Act,

whether or not the person undertaking an activity or activities set out in paragraphs (a) to (e) can or does distribute any gain, profit or dividend, or otherwise disposes of the person's assets, to a member or shareholder of the person other than during winding up or on dissolution;

"trust company" means

(a) a company incorporated under the Business Corporations Act for the purpose of carrying on trust business and includes

(i) an extraprovincial trust company that has been continued into British Columbia as a company under section 303 of the Business Corporations Act, and

(ii) a company that results from an amalgamation referred to in section 20 (1),

(b) a corporation incorporated as a trust company under another Act, or

(c) a pre-existing trust company,

but does not include a corporation continued under the laws of another jurisdiction;

"unaffiliated director", in relation to a trust company or insurance company, means a director who is not also

(a) an officer or employee of the company or of an affiliate of it,

(b) the owner of 5% or more of the voting shares of the company or of an affiliate of it,

(c) a significant borrower from the company, or a director or senior officer of a significant borrower from the company or the owner of 10% or more of the voting shares of a significant borrower from the company,

(d) a borrower from the company under a loan that is not in good standing, or a director, officer or employee of, or the owner of 10% or more of the voting shares of an entity that is a borrower from the company under a loan that is not in good standing,

(e) the spouse of an individual described in any of paragraphs (a) to (d),

(f) a relative of an individual described in paragraph (a) or (b) who occupies the same home as that individual,

(g) an individual who, within the 2 years before becoming a director, has been an officer or employee of the company or of an affiliate of it, or

(h) unless determined to be an unaffiliated director by the superintendent under section 97 (2),

(i) an individual,

(ii) a partner in or an employee of a partnership,

(iii) an officer or employee of a corporation, or

(iv) an owner of 10% or more of the voting shares of a corporation

that provides goods or services to the company, if the total annual billing to the company in respect of the goods or services exceeds 10% of the total annual billings of the individual, partnership or corporation, as the case may be;

"voting share" means a share of a class of shares of a corporation that carries the right to vote under all circumstances on a resolution electing directors, and includes a share of a class of shares of a corporation that carries the right to vote on such a resolution because of the occurrence of a contingency that has occurred and is continuing.

(2) For the purposes of this Act, an affiliate of a corporation is deemed to be affiliated with all other corporations with which the corporation is affiliated.

(3) and (4) [Repealed 2011-29-64.]

(5) An activity referred to in paragraph (a) of the definition of "insurance business" in subsection (1), whether or not the activity is conducted in British Columbia, is conclusively deemed for the purposes of this Act to constitute the carrying on of insurance business in British Columbia if the risk or peril is located in British Columbia.

(6) A reference to "subsidiary" in this Act as it applies to credit unions,

(a) except in sections 120 and 128, has the same meaning as in the Credit Union Incorporation Act, and

(b) in sections 120 and 128, has the same meaning as in the Business Corporations Act,

and "holding company" has the corresponding meaning.

Application of Business Corporations Act

2   (1) The following provisions of the Business Corporations Act do not apply to trust companies or insurance companies:

(a) Part 2.1;

(b) Division 4 of Part 9;

(c) sections 16, 20, 84 to 86, 137, 154 (1) (e), 159 to 165, 183, 195, 197, 200, 203 and 229.

(2) Except as expressly provided in this Act or the Credit Union Incorporation Act and except insofar as sections 31, 144, 145 and 236 and Part 12 of the Business Corporations Act apply to credit unions by virtue of their application to corporations generally, the Business Corporations Act does not apply to credit unions.

(3) A special Act insurance company is subject to the following in addition to the provisions to which it is subject under section 4 of the Business Corporations Act:

(a) sections 269 to 300 and 302 to 311 of the Business Corporations Act;

(b) regulations made under sections 269 to 300 and 302 to 311 of the Business Corporations Act;

(c) subject to subsection (4) of this section, the Pre-existing Company Provisions prescribed under section 442.1 of the Business Corporations Act.

(4) The Lieutenant Governor in Council may prescribe provisions of the Pre-existing Company Provisions that do not apply to a special Act insurance company or a class of special Act insurance companies.

Repealed

3-5   [Repealed 2011-29-65.]

Repealed

6   [Repealed 2006-12-42.]

Repealed

7   [Repealed 2011-29-65.]

Pre-existing trust company

8   (1) The memorandum of a trust company existing at September 15, 1990 is deemed to have been amended on that date by striking out the objects clause contained in it and substituting the following:

"The businesses that the company is permitted to carry on are restricted to those that were set out in Schedules A and B to the Trust Company Act, R.S.B.C. 1979, c. 412, immediately before the repeal of that Act by the Financial Institutions Act."

(2) Every copy of a memorandum that has been deemed to be altered by subsection (1) that is issued on or after September 15, 1990 must be in accordance with the alterations.

Repealed

9-10   [Repealed 2011-29-65.]

Specific rules respecting Business Corporations Act application to extraprovincial corporations

10.1   (1) Sections 90 to 102 and 302 to 307 of the Business Corporations Act do not apply to extraprovincial corporations.

(2) Without limiting Division 11 of Part 10 of the Business Corporations Act, before submitting an application to the registrar under that Division, the applicant must, if the application relates to an extraprovincial corporation,

(a) first obtain the consent of the superintendent to a name and then reserve that name under the Business Corporations Act, and

(b) obtain the consent of the superintendent to the reinstatement, limited reinstatement or extension of a limited reinstatement contemplated by the application.

(3) For the purposes of section 379 of the Business Corporations Act as it applies to extraprovincial corporations, the reference in section 379 (1) to "within 2 months" must be read as "immediately".

This Act paramount

11   If a provision of this Act is inconsistent or in conflict with a provision of the Act by or under which a financial institution is incorporated, the provision of this Act prevails.

Names for trust companies and insurance companies

12   (1) A trust company that proposes or is authorized to carry on trust business must have and use a name that includes the word

(a) "trust" together with a designation such as "company" or "corporation", or

(b) "trustco".

(2) An insurance company that proposes or is authorized to carry on insurance business must have and use a name that includes the word "insurance" or "assurance" together with a designation such as "company" or "corporation".

(3) A trust company, an insurance company or a person applying to incorporate a trust company or an insurance company must not apply to reserve a name under the Business Corporations Act that includes the word "trust", "trustco", "insurance" or "assurance" unless the consent of the superintendent is first obtained for that name.

False representation prohibited

12.1   A person must not, in British Columbia, assume or use, or carry on business under, a name that includes the words "trust", "trustee", "trustco", "deposit", "loan", "insurance", "assurance" or "insurer", or use any words in connection with the business of the person, in a way likely to

(a) deceive or mislead the public about the ability of the person to undertake trust business, deposit business or insurance business, or

(b) give a false impression that the person is a trust company or an insurance company.

Consent required for incorporation

13   (1) A person must not apply to the registrar to incorporate a company for the purpose of carrying on trust business or carrying on insurance business unless, before the incorporation application is submitted to the registrar for filing under section 10 of the Business Corporations Act, the consent of the Authority is obtained to the incorporation.

(2) The Authority must not consent to the incorporation of a trust company or an insurance company unless

(a) the persons applying for consent (the "applicants") have

(i) submitted to the Authority the proposed notice of articles and articles of the proposed company, and

(ii) paid the prescribed fee,

(b) the applicants have submitted to the Authority a plan

(i) specifying the names and addresses of the proposed first directors and senior officers of the proposed company,

(ii) specifying the services that the proposed company intends to offer to the public,

(iii) describing, in detail satisfactory to the Authority, the period within which the proposed company will meet the requirements for being issued a business authorization and specifying the preliminary activities, not being trust business or insurance business, that the proposed company proposes to carry on during that period,

(iv) specifying, in the case of a proposed insurance company, whether the business proposed to be carried on is life insurance business, general insurance business or both, and

(v) containing any other information required by the Authority,

(c) the proposed notice of articles and articles comply with this Act and the regulations,

(d) the Authority is satisfied that the preliminary activities set out in the plan under paragraph (b) are appropriate and in compliance with this Act,

(e) each of the proposed first directors and senior officers of the proposed company has completed and submitted to the superintendent a personal information return in the form established by the superintendent that discloses the information required by the superintendent,

(f) the applicants have satisfied the Authority that the proposed company intends to obtain, and will be able to obtain, a business authorization to enable the company to offer to the public, within a reasonable time after the incorporation, the services set out in the plan under paragraph (b), and

(g) the applicants have satisfied the Authority that the proposed company will have both the financial and managerial capacity to properly carry on the business proposed to be carried on by the company in compliance with this Act.

(3) The Authority must not consent to the incorporation of a trust company or an insurance company if the Authority believes on reasonable grounds that it is not in the public interest to consent to the incorporation.

(4) The superintendent may conduct an investigation and an applicant must provide to the superintendent information, verifications, forecasts of business operations or documents that the superintendent considers necessary in relation to the application.

Preliminary activities

14   (1) A trust company or an insurance company that is incorporated but does not have a business authorization must not undertake any activity other than an activity specified under section 13 (2) (b) (iii) as a preliminary activity in the plan described in section 13 (2) (b).

(2) Until a trust company or an insurance company receives a business authorization, the trust company or insurance company, in every written communication, advertisement and document in which the name of the trust company or insurance company appears, must add immediately after the name the following: "(Not authorized)".

Consent required for alteration of memorandum, notice of articles or articles

15   A trust company or an insurance company must not alter its memorandum, notice of articles or articles without first receiving the consent of the superintendent.

Consent required for conversion of special Act insurance company

16   A special Act insurance company must not apply under section 266 of the Business Corporations Act to convert itself into a company for the purpose of carrying on insurance business unless, before the conversion application is submitted to the registrar for filing, the consent of the superintendent is obtained to the conversion.

Continuation of business authorization on conversion of special Act insurance company

17   A business authorization held by a special Act insurance company when it is converted into a company under section 266 of the Business Corporations Act for the purpose of carrying on insurance business continues in force after that conversion, subject to a subsequent surrender of the business authorization, and to any amendment or the suspension, revocation or cancellation of the business authorization, under this Act.

Consent required for continuation of extraprovincial trust corporation or extraprovincial insurance corporation into British Columbia

18   (1) An extraprovincial trust corporation or extraprovincial insurance corporation must not apply under section 302 of the Business Corporations Act to continue into British Columbia as a company unless, before the continuation application is submitted to the registrar for filing, the consent of the Authority is obtained to the continuation.

(2) Without limiting section 22 of this Act, the Authority must not give a consent referred to in subsection (1) of this section unless satisfied that the extraprovincial trust corporation or extraprovincial insurance corporation, in its primary jurisdiction as defined in section 157, is licensed, registered or authorized to carry on the business that it proposes to carry on in British Columbia.

(3) A business authorization held by an extraprovincial trust corporation or an extraprovincial insurance corporation when it is continued into British Columbia as a company under section 303 of the Business Corporations Act, continues in force after the continuation subject to a subsequent surrender of the business authorization, and to any amendment or the suspension, revocation or cancellation of the business authorization, under this Act.

Consent required for continuation of trust company or insurance company out of British Columbia

19   (1) A trust company or an insurance company must not apply under section 308 (1) of the Business Corporations Act to continue out of British Columbia unless

(a) the jurisdiction into which the company proposes to continue has laws that permit corporations incorporated under the jurisdiction's laws to apply for continuation under the laws of British Columbia, and

(b) the consent of the Authority is obtained to the continuation.

(2) In addition to complying with its obligations under sections 308 to 311 of the Business Corporations Act, a trust company or an insurance company that is continued under the laws of another jurisdiction must promptly after continuation file with the superintendent a copy of any record issued to the continued corporation by the other jurisdiction to effect or confirm the continuation.

Consent required for amalgamation of trust company or insurance company

20   (1) A trust company may amalgamate and continue as one company with one or more of the following only:

(a) subsidiaries of it that are trust companies or extraprovincial trust corporations;

(b) other trust companies;

(c) extraprovincial trust corporations.

(2) An insurance company may amalgamate and continue as one company with one or more of the following only:

(a) subsidiaries of it that are insurance companies or extraprovincial insurance corporations;

(b) other insurance companies;

(c) extraprovincial insurance corporations.

(3) A trust company or an insurance company must not amalgamate with a corporation referred to in subsection (1) or (2) unless, before the amalgamation application is submitted to the registrar for filing under section 275 of the Business Corporations Act, the consent of the Authority is obtained to the amalgamation.

(4) On an amalgamation referred to in this section, the amalgamated company

(a) may carry on business under the business authorization issued with respect to one of the amalgamating corporations, as directed by the Authority, until the amalgamated company has been granted a new business authorization under section 61, and

(b) has 30 days in which to apply for a new business authorization.

(5) A trust company or an insurance company must not amalgamate with a foreign corporation within the meaning of the Business Corporations Act to form an amalgamated foreign corporation.

Consent of Authority to arrangement, acquisition or disposition

21   (1) An arrangement proposed with respect to a trust company or an insurance company is not binding unless, after the arrangement is adopted as required by Division 5 of Part 9 of the Business Corporations Act and before approval is given by the Supreme Court, consent is also given by the Authority.

(2) Unless it first receives the consent of the superintendent, a trust company or an insurance company must not acquire assets that, immediately after the acquisition, will constitute a percentage of the total assets of the trust company or insurance company that is greater than the prescribed percentage.

(2.1) The superintendent must not consent to an acquisition referred to in subsection (2) if the superintendent believes on reasonable grounds that it is not in the public interest to consent.

(3) Unless it first receives the consent of the Authority, an insurance company must not reinsure all or any portion of its policies with another insurance company if the reinsurance has the effect of transferring

(a) the whole, or

(b) a part that is greater than the prescribed percentage

of the business or property of the insurance company placing the reinsurance.

(4) Subsection (3) does not apply to contracts of reinsurance made by an insurance company in the ordinary course of its business.

(5) The Authority must not consent to an arrangement referred to in subsection (1) or a disposition by reinsurance referred to in subsection (3) if the Authority believes on reasonable grounds that it is not in the public interest to consent.

Consent required for continuation or amalgamation

22   (1) In subsection (2) (a), "corporation" means

(a) an extraprovincial corporation proposing to be continued into British Columbia as a trust company or an insurance company, or

(b) each of one or more corporations proposing to amalgamate and continue as one company.

(2) The Authority must not consent under section 18 (1) in respect of a continuation into British Columbia of an extraprovincial corporation as a trust company or an insurance company or consent under section 20 (3) to an amalgamation, unless

(a) the directors of the corporation have submitted to the Authority

(i) the name and address of the corporation,

(ii) the financial statements of the corporation,

(iii) the notice of articles proposed for the continued company or amalgamated company,

(iv) the articles proposed for the continued company or amalgamated company,

(v) a plan for the continued company or amalgamated company

(A) specifying, in the case of an insurance company, whether the business proposed to be carried on is life insurance business, general insurance business or both,

(B) specifying the services that the company intends to offer to the public,

(C) if the company does not have a business authorization, describing in detail satisfactory to the Authority the period within which the company will meet the requirements for being issued a business authorization and specifying the preliminary activities, not being trust business or insurance business, that the company proposes to carry on during that period, and

(D) containing any other information required by the Authority, and

(vi) the full particulars, in the case of a proposed amalgamation, of

(A) the terms on which the amalgamation is to take place, together with copies of every agreement relating to the amalgamation, and

(B) the financial resources that will be available to the amalgamated company,

(b) the Authority approves the notice of articles and articles submitted under paragraph (a),

(c) each proposed director and senior officer of the continued company or amalgamated company has completed and submitted to the superintendent a personal information return in the form established by the superintendent and disclosing information required by the superintendent, and

(d) the Authority believes on reasonable grounds that it is in the public interest to consent to the continuation or amalgamation.

Superintendent may obtain information to support consent considerations

23   The superintendent may conduct an investigation and the directors and officers must provide the superintendent with information, verifications, forecasts of business operations or documents that the superintendent considers necessary for determining whether to consent or refuse consent under section 16, 18 (1), 20 (3) or 21.

Notice to superintendent required on voluntary dissolution or winding up

24   The following are of no force and effect, and do not provide the purported authorization, unless 30 days' written notice of the company's intention to pass the resolution has been given to the superintendent and to any similar authority in any other province in which the company is registered, licensed or authorized to carry on business:

(a) an ordinary resolution purporting to authorize the dissolution of a trust company or an insurance company in accordance with section 314 (1) of the Business Corporations Act;

(b) a directors' resolution purporting to authorize the dissolution of a trust company or an insurance company in accordance with section 314 (2) of the Business Corporations Act;

(c) a special resolution purporting to authorize liquidation in accordance with section 319 (1) of the Business Corporations Act.

Winding up by Supreme Court order — superintendent is party

25   The superintendent is a party to any legal proceedings in which an application is made under section 324 of the Business Corporations Act for the liquidation and dissolution of a trust company or an insurance company.

Liquidation and dissolution by court order

25.1   On an application made by the superintendent in respect of a trust company or an insurance company, the Supreme Court may order that the company be liquidated and dissolved if

(a) in the case of an insurance company, the company has not, during the previous year, undertaken an activity set out in any of paragraphs (d) to (g) of the definition of "insurance business" in section 1 (1), except to the extent necessary to wind up its insurance business, or

(b) in the case of a trust company or an insurance company,

(i) the company's business authorization has been revoked under section 64 (1) or 249 (1) (j),

(ii) the company has contravened this Act or the regulations and it is in the public interest to liquidate and dissolve the company, or

(iii) the court otherwise considers it just and equitable to do so.

Liquidation and dissolution on direction of Authority

26   (1) If the Authority believes on reasonable grounds that it is contrary to the public interest that a trust company or an insurance company that is incorporated but has not been issued a business authorization continue in business, the Authority may order that the trust company or insurance company be liquidated and dissolved.

(2) Without limiting subsection (1), if a trust company or an insurance company

(a) has not within the time limited by section 61 (1) applied for a business authorization,

(b) is refused a business authorization,

(c) has contravened section 20 (1) or (2), or

(d) without having a business authorization for that business, holds itself out to the public as authorized to carry on trust business or insurance business,

the Authority may order that the trust company or insurance company be liquidated and dissolved.

(3) If the Authority makes an order under this section, the Authority must, in the order, appoint one or more liquidators and, in that event, Part 10 of the Business Corporations Act applies to the powers and duties of the liquidator.

(4) An appointment of a liquidator under subsection (3) takes effect on the commencement of the liquidation.

(5) For the purposes of section 30, subsection (4) of this section and Part 10 of the Business Corporations Act, "commencement of the liquidation" means, for a liquidation commenced by order of the Authority under this section,

(a) the date the order was made, or

(b) if the order specifies a date, or a date and time, for the commencement of the liquidation that is later than the date the order was made, the specified date and time or, if no time is specified, the beginning of the specified date.

(6) If a vacancy occurs by death, resignation or otherwise in the office of liquidator in a liquidation and dissolution ordered by the Authority under this section, the Authority may fill the vacancy on its own initiative or on application of any person referred to in section 325 (1) of the Business Corporations Act.

(7) The Authority must set the remuneration of any liquidator it appoints under this section.

(8) In a liquidation and dissolution ordered by the Authority under this section, the Authority may impose, either generally or with respect to certain matters, restrictions on the exercise of the powers of a liquidator.

Application of this Part

27   Any proceedings taken under this Act or the Business Corporations Act to liquidate and dissolve a trust company or an insurance company must be stayed if the company is at any time found, in a proceeding under the Winding-Up and Restructuring Act (Canada), to be insolvent within the meaning of that Act.

Duties of liquidators on Authority-ordered liquidation and dissolution

28   If the Authority makes an order under section 26 that a trust company or an insurance company be liquidated and dissolved,

(a) the duties of the liquidator referred to in section 330 of the Business Corporations Act are subject to any restrictions or directions imposed or given by the Authority,

(b) the notice of appointment filed by the liquidator under section 329 of the Business Corporations Act must be accompanied by a copy of the order of the Authority,

(c) the notice published under section 331 (1) (a) of the Business Corporations Act must disclose that the Authority has made an order that the company be liquidated and dissolved, and

(d) a person who has been appointed as a liquidator by the Authority and who is not, or who ceases to be, qualified to act as a liquidator must promptly seek directions from the Authority.

Deferral of dissolution

29   (1) If the Authority makes an order under section 26 that a trust company or an insurance company be liquidated and dissolved, the Authority may, subject to subsection (2) of this section, make an order under this subsection

(a) deferring the date of dissolution to a new date, or

(b) deferring the dissolution generally.

(2) No order made under subsection (1) is effective unless a copy of that order is filed with the registrar before the company is dissolved.

(3) If an order is made under subsection (1) (a) and is filed with the registrar before the company is dissolved, the company is dissolved on the beginning of the new date specified by that order.

Publication of notice

30   If the Authority makes an order under section 26 that a trust company or an insurance company be liquidated and dissolved, the registrar must publish in the Gazette or in any other prescribed manner

(a) notice that the company is being liquidated,

(b) the date of the order, and

(c) if the order specifies a date, or a date and time, for the commencement of the liquidation that is later than the date of the order, the specified date and time or, if no time is specified, the specified date,

and the cost of the publication must be paid by the company to the government and is recoverable by the government from the company as a simple contract debt.

Filing quarterly statements and producing records

31   Without limiting a liquidator's obligations under section 338 of the Business Corporations Act, when a trust company or an insurance company is being liquidated and dissolved, the liquidator must, within 7 days after the close of each period of 3 months and until the date on which the final accounts of the liquidation are deposited in accordance with section 341 (1) of the Business Corporations Act,

(a) in the case of a liquidation ordered by the Supreme Court, file with the Supreme Court and with the superintendent the accounts of the liquidation referred to in section 338 of the Business Corporations Act unless otherwise ordered by the Supreme Court, or

(b) in the case of a liquidation ordered by the Authority, file with the superintendent the accounts of the liquidation referred to in section 338 of the Business Corporations Act unless otherwise ordered by the Authority.

Examination of trust and insurance companies being liquidated and dissolved

32   The superintendent, at any time, may examine the records of a trust company or an insurance company that is being liquidated and dissolved.

Information required on restoration applications

33   A person must not apply to the registrar or the Supreme Court for restoration under Division 11 of Part 10 of the Business Corporations Act of a trust company or an insurance company unless, before making the application, the consent of the superintendent is obtained to the restoration.

Provisional liquidator

33.1   (1) If the business authorization of a trust company or an insurance company has been revoked under section 64 (1) or 249 (1) (j), the superintendent may appoint an employee of the Authority or another person as the provisional liquidator of the company.

(2) The provisional liquidator of a trust company or an insurance company must apply under section 324 of the Business Corporations Act for the liquidation and dissolution of the company.

(3) The provisional liquidator of a trust company or an insurance company has the following powers:

(a) to carry on, manage and conduct the operations of the company;

(b) in the name of the company, to preserve, maintain, realize, dispose of and add to the property of the company;

(c) to receive the income and revenues of the company;

(d) to exercise all the powers of the company and of its directors and officers;

(e) to exclude the directors, officers, employees, servants and agents of the company from the property and business of the company.

(4) If a provisional liquidator of a trust company or an insurance company is appointed, a director, officer, employee, servant or agent of the company must not, without the approval of the provisional liquidator, do any of the following:

(a) make a contract on behalf of the company;

(b) incur any liability on behalf of the company;

(c) expend any money of the company.

(5) For the purposes of section 42 of this Act, a provisional liquidator of an insurance company is a liquidator of that company.

(6) A trust company or an insurance company must pay its provisional liquidator's remuneration at a rate directed by the superintendent.

Repealed

34-40   [Repealed 2011-29-67.]

Provisions for subsisting contracts of insurance

41   (1) An insurance company before or concurrently with ceasing to carry on business in British Columbia must provide for the whole sum insured under each of its contracts of insurance in British Columbia subsisting at the time of ceasing to carry on business by

(a) obtaining the reinsurance of the sum insured, by agreement with

(i) an insurance company, or

(ii) an extraprovincial insurance corporation that has a business authorization,

(b) obtaining a surrender or discharge of the insurance contract, or

(c) obtaining the written consent of the insured to the continuance of the insurance contract for its unexpired term.

(2) If an insurance company is ceasing or has ceased to carry on insurance business in British Columbia then, concurrently with and after ceasing to carry on business in British Columbia, the insurance company must

(a) make timely written reports to the superintendent showing how it is providing, and has provided, under subsection (1), for its contracts of insurance in British Columbia, and

(b) file with the superintendent the agreements, lists or other documents that the superintendent may require with respect to the insurance business of the insurance company in British Columbia and the disposition of that insurance business.

Reinsurance arranged by liquidator

42   (1) In this section, "available assets" of an insurance company that is being wound up means those assets of the insurance company that, according to the liquidator's reasonable estimates, will remain after payment in full of

(a) the costs of winding up and dissolution,

(b) claims for losses covered by the insurance company's contracts of insurance, of which claims notice is received by the liquidator or insurance company before the date on which reinsurance is obtained, and

(c) claims of the secured creditors of the insurance company.

(2) Subject to subsection (3), the liquidator of an insurance company that is being wound up

(a) may use available assets of the insurance company to obtain the reinsurance in full of the sum insured under each of the insurance company's contracts of insurance subsisting at the time of winding up, or

(b) if there are not enough available assets to obtain reinsurance in full under paragraph (a), may use the available assets to obtain the reinsurance of the largest possible proportion of the sum insured under each contract, that must be the same proportion for each contract.

(3) The liquidator of an insurance company that is being wound up must not obtain reinsurance under subsection (2) except through a contract of reinsurance with

(a) an insurance company, or

(b) an extraprovincial insurance corporation

that has a business authorization and the liquidator must not enter into the contract of reinsurance without first applying for and receiving the approval of the Supreme Court to the terms of the proposed contract of reinsurance.

Rights of the insured on reinsurance

43   If

(a) reinsurance has been obtained under section 41 (1) (a) or 42 (2) through an insurance company or extraprovincial insurance corporation (which company or corporation is in this section called the "reinsurer"), and

(b) the insurance company for whose contracts of insurance the reinsurance was obtained ceases to carry on business in British Columbia or is wound up,

an insured or other person entitled to rights under any of those contracts of insurance may enforce the rights against the reinsurer to the extent of the reinsurance as though the contract had been issued by the reinsurer.

Termination if reinsurance is not arranged

44   (1) If the liquidator of an insurance company that is being wound up is unable to obtain reinsurance, or it is impractical, inexpedient or uneconomical for the liquidator to obtain reinsurance, the liquidator may apply to the Supreme Court to set a termination date proposed by the liquidator for the insurance company's subsisting contracts of insurance.

(2) On application by the liquidator under subsection (1), the Supreme Court, on the terms, if any, specified by the court, may set as the termination date for the insurance company's subsisting contracts of insurance the date proposed by the liquidator or another date that the court considers appropriate in order to give adequate notice to policy holders.

(3) On the termination date set under subsection (2) for the termination of an insurance company's subsisting contracts of insurance, the insurance company ceases to be liable under the contracts for any losses that occur on or after that termination date.

Liquidator's duty to give notice

45   (1) Promptly after a termination date is set under section 44, the liquidator must publish

(a) in the Gazette,

(b) in the gazette of each other province in which the insurance company is licensed or authorized to carry on insurance business, and

(c) in newspapers the Supreme Court may direct

notice to the effect that on the termination date the insurance company being wound up will cease to be liable under its subsisting contracts of insurance for any losses that occur on or after that date.

(2) On or before publication of the notice referred to in subsection (1), the liquidator must mail a copy of the notice to each policy holder at the address of the policy holder as shown in the records of the insurance company.

Provision for payment of losses, preferred claims and unearned premiums

46   (1) The liquidator of an insurance company that is being wound up must pay or set aside from the assets of the insurance company assets sufficient in the liquidator's opinion to cover payment in full of

(a) the costs of winding up and dissolution,

(b) claims for losses covered by the insurance company's contracts of insurance and that occurred before the termination date set by the Supreme Court under section 44 and of which claims notice is received by the liquidator or the insurance company,

(c) the amount of the legal reserve in respect of each unmatured life insurance contract, and

(d) claims of the secured creditors of the insurance company.

(2) Except in the case of unmatured life insurance contracts referred to in subsection (1) (c), the assets remaining after payment, or making provision for payment as set out in subsection (1) must be used to pay claims of insured persons for refunds of unearned premiums on a proportional basis in proportion to the periods of their contracts respectively unexpired on the termination dates.

(3) The claims of the insured persons for refunds of unearned premiums must be calculated as at the earlier of

(a) the termination date set by the Supreme Court under section 44, or

(b) the date the insured person cancelled the contract.

(4) The refund of all or a portion of the premium does not affect any other remedy the insured person may have against the insurance company.

(5) This section does not affect the priority of a mortgage, lien or charge on the property of the insurance company.

Endowment and life funds distributed

47   (1) If a fraternal society transacts endowment or expectancy insurance and has an endowment fund separate and distinct from its life insurance fund, the society, by resolution passed at a general meeting after at least one month's notice of the intended resolution, may determine that the endowment or expectancy be discontinued, with the endowment or expectancy fund, as the case may be, to be distributed proportionately among the society's members then in good standing who are contributing to the fund, to each member according to the member's total contribution.

(2) Subject to first receiving the written approval of the superintendent, the fraternal society may proceed to ascertain the persons entitled to rank on distribution of the fund and may distribute the fund among those entitled, and the distribution discharges the society from all liability in respect of the fund, and of the endowment or expectancy contracts undertaken by the society.

(3) If all the members interested in the endowment or expectancy fund are also interested as holders of life insurance contracts, members at the general meeting, instead of determining that the endowment or expectancy fund be distributed, by resolution passed at the meeting, may determine that the fund be converted into or merged in a life insurance fund, and then, subject to the superintendent first approving the resolution, the endowment or expectancy fund becomes a life insurance fund.

Definitions and interpretation for Division

48   (1) In this Division:

"base level ownership percentage", used in relation to a person and connected parties who have a substantial interest in a trust company, insurance company or holding company, means the base level ownership percentage of votes in the company that under section 49 is from time to time applicable to that person and connected parties;

"connected party", used in relation to a person, means

(a) a corporation that the person controls,

(b) an affiliate of a corporation that the person controls,

(c) a partner of the person if each of the person and the partner controls a 10% or greater interest in the partnership,

(d) a trust or an estate in which the person has a 50% or greater beneficial interest,

(e) if the person is not a trust company or extraprovincial trust corporation, a trust or estate for which the person is a trustee,

(f) a relative by blood or marriage of the person or of the spouse of the person if the person and the relative have the same home, or

(g) a person specified in an order of the superintendent under subsection (2);

"holding company" means a corporation that alone or together with all of its connected parties, if any, controls, within the meaning of section 2 (3) of the Business Corporations Act, a trust company or insurance company;

"person and connected parties" means a person and all connected parties, if any, of the person, with the person and the connected parties considered together as one unit;

"substantial interest", used in relation to a trust company, insurance company or holding company, means ownership or control, direct or indirect, of 10% or a higher percentage of all votes in the company;

"votes in the company" means the votes that

(a) are attached to the outstanding voting shares in the company, and

(b) may be cast in an election of the directors.

(2) For the purposes of this Division, the superintendent by order may designate a person as a connected party of another person designated in the order if the superintendent believes on reasonable grounds that the first mentioned person is acting in concert with that other person to acquire or control voting shares of a trust company, insurance company or holding company.

Determination of base level ownership percentage

49   (1) If, on September 15, 1990, a person and connected parties had a substantial interest in a trust company, insurance company or holding company, then on that date the person and connected parties were by this subsection assigned a base level ownership percentage that was the same as that substantial interest.

(2) If, at the end of the consent expiry day specified in a consent under section 50 (4), the person and connected parties to which the consent applies have a substantial interest in the company named in the consent, then the person and connected parties are by this subsection, as of the end of that day, assigned a base level ownership percentage that is the same as

(a) the substantial interest of the person and connected parties at the end of that day, if that substantial interest is less than the proposed base level ownership percentage specified in the expired consent, or

(b) the proposed base level ownership percentage specified in the expired consent, if the substantial interest of the person and connected parties at the end of that day is the same as or greater than the proposed base level ownership percentage specified in the expired consent.

(3) If the substantial interest of a person and connected parties in a trust company, insurance company or holding company is decreased to a level constituting a substantial interest that is more than 5% lower than the base level ownership percentage applicable to the person and connected parties immediately before the decrease, then as of the time of the decrease to that level the person and connected parties are by this subsection assigned a new base level ownership percentage that is equal to the sum of

(a) the substantial interest that the person and connected parties have in the company immediately after the decrease to that level, and

(b) 5% of the total votes in the company.

(4) A base level ownership percentage assigned by subsection (2) or (3) to a person and connected parties who have voting shares in a trust company, insurance company or holding company

(a) replaces any base level ownership percentage previously assigned by this section to that person and connected parties, and

(b) continues to apply to that person and connected parties until

(i) replaced under paragraph (a), or

(ii) made inapplicable by subsection (5).

(5) If the substantial interest of a person and connected parties in a trust company, insurance company or holding company is decreased to a level that is not a substantial interest in the company then as of the time of the decrease to that level any base level ownership percentage previously assigned by this section to that person and connected parties ceases to be assigned to them and is on and after that time inapplicable to them.

Share acquisition restrictions

50   (1) Subject to subsection (3), a person must not acquire, directly or indirectly, enough voting shares in a trust company, insurance company or holding company to give the person and connected parties a substantial interest in that company.

(2) Subject to subsection (3), if a person and connected parties have a substantial interest in a trust company, insurance company or holding company, then neither the person nor any of the connected parties may acquire, directly or indirectly, the ownership or control of enough additional voting shares to give the person and connected parties an increased substantial interest in the company that is more than the sum of

(a) the base level ownership percentage of votes in the company that is applicable to the person and connected parties, and

(b) 5% of the total votes in the company.

(3) Subsections (1) and (2) do not apply in respect of the acquisition of a substantial interest or an increased substantial interest, as the case may be, that is

(a) made

(i) in accordance with a consent under subsection (4), and

(ii) before the consent expiry date, or

(b) by a person acting as an underwriter, as defined in section 1 of the Securities Act, in connection with a distribution as defined in that Act of the voting shares that are the subject of the acquisition.

(4) Subject to section 51, on application, the superintendent may consent to the acquisition of a substantial interest or increased substantial interest in a trust company, insurance company or holding company named in the consent, and, in giving the consent, the superintendent must specify in it

(a) the name of the person to whom the consent is given,

(b) the consent expiry day that the superintendent considers appropriate, and

(c) the proposed base level ownership percentage of votes in the company or the proposed increased base level ownership percentage of votes in the company, as the case may be, that the superintendent considers appropriate.

(5) A consent under subsection (4) allows the named person to whom the consent is given and any connected party of that named person to acquire, during the period ending at the end of the consent expiry day, the ownership or control of enough voting shares in the trust company, insurance company or holding company, named in the consent to give the person and connected parties a substantial interest or increased substantial interest in that company that is no greater than the sum of

(a) the proposed base level ownership percentage or proposed increased base level ownership percentage of votes in the company specified in the consent, and

(b) 5% of the total votes in the company.

Grounds for refusal of consent to major share acquisition

51   The superintendent must not consent under section 50 if the superintendent believes on reasonable grounds that the applicant for the consent or any connected party of the applicant is a person who, in the public interest, ought not to be in a position to control or influence a trust company, insurance company or holding company.

Reporting requirement

52   (1) On the earlier of

(a) the end of the consent expiry date specified in the consent, or

(b) completion of the acquisition of the ownership or control of enough voting shares to reach the proposed base level ownership percentage or proposed increased base level ownership percentage specified in the consent,

the named person to whom a consent under section 50 (4) is given must report to the superintendent in writing, stating the percentage of the total votes in the company named in the consent that on the date of the report are owned or controlled, directly or indirectly, by the named person and connected parties.

(2) A person who

(a) has a substantial interest, or

(b) is one person in a unit consisting of a person and connected parties that have a substantial interest

in a trust company, insurance company or holding company, unless the decrease has been reported by another person, must report any decrease in that substantial interest to the superintendent in writing immediately.

Shares acquired in contravention of section 50 not registrable

53   The directors of a trust company, insurance company or holding company must not allow a transfer of voting shares in the company to be entered in its register of members, in any branch register of its members or in its register of transfers if the directors have reasonable grounds to believe that the shares transferred were acquired in contravention of section 50.

Prohibition on dividends

54   (1) When a person holds voting shares in a trust company or insurance company or holding company consequent to an acquisition made in contravention of section 50,

(a) no dividend is payable, and

(b) if the company has knowledge of the contravention, its directors must not authorize the payment of a dividend

in respect of the voting shares so held.

(2) If dividends are paid by a trust company, insurance company or holding company in respect of voting shares in the company that are at the time of the dividend held by a person who holds them consequent to an acquisition made in contravention of section 50, the company has a cause of action for the recovery of the amount of the dividends paid against the members to whom they were paid whether or not the company had knowledge of the contravention.

(3) Despite subsection (1), the directors may authorize the payment of a dividend in respect of any voting shares to a person who would otherwise be disentitled to the dividend under that subsection if in the directors' opinion the contravention was inadvertent or of a technical nature; and a dividend so authorized and paid is not recoverable under subsection (2).

No voting rights if excess shareholdings

55   When voting shares in a trust company, insurance company or holding company are held by a person who holds them consequent to an acquisition made in contravention of section 50, the voting rights attaching to them must not be exercised.

Validity of transfer of voting shares

56   The validity of a transfer of voting shares in a trust company, insurance company or holding company that has been entered in its register of members, in any branch register of its members or in its register of transfers is not affected by the fact that those shares are held consequent to an acquisition made in contravention of section 50.

Directors' bylaws — members' declarations

57   (1) The directors of a trust company, insurance company or holding company may make directors' bylaws

(a) requiring a member of the trust company, insurance company or holding company to submit to the directors written declarations respecting

(i) the ownership of a voting share of the trust company, of the insurance company or of the holding company,

(ii) whether the member is a connected party of any other member, and

(iii) other matters that the directors consider relevant for the purposes of this Division,

(b) establishing the times at which and the manner in which any written declarations required under paragraph (a) are to be submitted, and

(c) requiring persons who desire that a transfer of a voting share to them be entered in the register of members or in the register of transfers of the trust company, insurance company or holding company to submit written declarations respecting the matters referred to in paragraph (a) (i) to (iii).

(2) If, under a directors' bylaw made under subsection (1), a written declaration is required to be submitted by a member or other person in respect of the transfer of a voting share, the directors must not allow the transfer to be entered in its register of members, in any branch register of its members or in its register of transfers until the required written declaration has been submitted.

Superintendent may require declaration of share ownership

58   If the superintendent has reasonable grounds to believe that a person is the holder of a share in a trust company, insurance company or holding company, the superintendent may order that person to submit a written declaration to the superintendent respecting

(a) the ownership or beneficial ownership of the share,

(b) whether the share is held or beneficially owned by a person who is a connected party of a person specified by the superintendent,

(c) the names and addresses of connected parties of the person, and

(d) other matters specified by the superintendent.

Commencement of business

59   (1) A trust company must not carry on trust business unless

(a) it is authorized to do so by a business authorization issued to it under this Division,

(b) it is carrying on business in accordance with section 70 (d), or

(c) it is authorized to carry on trust business without a business authorization by regulations under section 70 (e).

(1.1) A credit union must not carry on

(a) deposit business unless it is authorized to do so by a business authorization issued to it under this Division, or

(b) trust business unless it is authorized to do so by a business authorization issued to it under this Division or it is authorized by regulations under section 70 (e).

(2) An insurance company must not carry on insurance business unless authorized to do so by a business authorization issued to it under this Division.

(3) A business authorization issued to a trust company must be confined to trust business.

(4) A business authorization issued to an insurance company

(a) may be confined to

(i) general insurance business or life insurance business, or

(ii) one or more classes of insurance, or

(b) may authorize both general insurance business and life insurance business.

(5) A business authorization issued to a credit union may be confined to deposit business or may authorize both deposit business and trust business.

Business authorizations for corporations now in business

60   (1) Without the necessity of an application, a credit union incorporated or amalgamated under the Credit Union Act, R.S.B.C. 1979, c. 69, is deemed to have a business authorization, issued under this Division on September 15, 1990, to carry on deposit business.

(2) On application under section 61 (5) of a credit union described in subsection (1), the superintendent, if satisfied that the credit union

(a) was carrying on trust business immediately before September 15, 1990, and

(b) has the financial and managerial capacity to carry on trust business,

may issue to the credit union a business authorization to carry on both trust business and deposit business.

(3) [Repealed 2004-48-41.]

Application for business authorization

61   (1) A financial institution other than

(a) a financial institution described in section 60 (1) or (2) of the Financial Institutions Act, S.B.C. 1989, c. 47, or

(b) a society that is named in an order of the superintendent made under section 193 (2),

must file with the superintendent, within one year after the date of its incorporation under this Act or under the Credit Union Incorporation Act or its continuation into British Columbia, an application in the form established by the superintendent for a business authorization.

(2) The superintendent, by order applicable to a financial institution named in it, may extend the period referred to in subsection (1) before or after the expiry of that period for a further period not exceeding 6 months, but not more than one order may be made in respect of the same financial institution.

(3) A society that is named in an order of the superintendent made under section 193 (2) must file with the superintendent, by a date not later than 30 days before the date specified under section 193 (2) (b) in the order under section 193 (2), an application in the form established by the superintendent for a business authorization.

(4) On an amalgamation referred to in section 20 of this Act, the amalgamated financial institution must, within 30 days after the date of amalgamation, file with the superintendent an application in the form established by the superintendent for a business authorization.

(4.1) On the issue of a certificate of amalgamation under section 20 (7) (b) of the Credit Union Incorporation Act, the superintendent must issue the appropriate business authorization for which the credit union would qualify under this Part.

(5) A credit union that has a business authorization confined to deposit business may file with the superintendent at any time an application in the form established by the superintendent for a business authorization for the credit union to carry on both trust business and deposit business.

(6) [Repealed 2004-48-42.]

(7) An insurance company that has a business authorization confined to

(a) general insurance business or life insurance business, or

(b) one or more classes of insurance

may file with the superintendent at any time an application in the form established by the superintendent for a business authorization for the insurance company to carry on

(c) both general insurance business and life insurance business, or

(d) one or more additional classes of insurance.

(8) On application in accordance with this section, the superintendent may issue a business authorization to a financial institution if the superintendent is satisfied that

(a) the financial institution has a capital base that

(i) is adequate, taking into account the class of business that it proposes to carry on, the expected volume of its business and the restrictions on its business, and

(ii) is at least equal to the appropriate minimum imposed under section 67 (1),

(b) the financial institution has at least 5 directors and, in the case of a trust company or insurance company, at least 1/3 of the directors are unaffiliated directors,

(c) [Repealed 2004-48-42.]

(d) if

(i) the financial institution is an insurance company that will carry on insurance business, and

(ii) there is an insurance compensation plan designated by regulation for the purpose of section 66 (2),

the financial institution that will carry on insurance business will not carry on a class of insurance business in respect of which insurance is offered under that plan unless the financial institution is a member of that plan, and

(e) the financial institution has a proposed plan of operations that is feasible.

(9) Before issuing a business authorization to a financial institution, the superintendent may

(a) conduct an investigation, and

(b) require the financial institution to provide the superintendent with additional information, verifications, forecasts of business operations or documents

that the superintendent considers necessary for the evaluation of the application.

Conditions on business authorization

62   If conditions of any class of business authorization are prescribed under section 289 (3) (g), the conditions are applicable to and are conclusively deemed to be part of every business authorization of that class, whether issued before or after the coming into force of the regulation prescribing the conditions.

Certificate of business authorization

63   A certificate of the superintendent that on a day stated in the certificate

(a) a financial institution was or was not authorized as set out in the certificate under a business authorization to carry on trust business, deposit business, insurance business, or both trust business and deposit business, or

(b) the business authorization of a financial institution was revoked

is evidence of the facts stated in the certificate.

Voluntary revocation of business authorization

64   (1) On the written application of a financial institution, the superintendent may revoke the financial institution's business authorization, effective on a date specified by the superintendent, and in that case sections 249 (8) and 250 apply.

(2) If a financial institution proposes to cease doing business, it must give the superintendent at least 30 days' written notice.

Authorized business

65   (1) Subject to section 14 (1) of this Act and to section 13 (1) of the Credit Union Incorporation Act, a financial institution that has a business authorization must not carry on business other than

(a) the business authorized under its business authorization,

(b) business that

(i) is ancillary to the business authorized under its business authorization, or

(ii) is a financial or related service that does not constitute business for which a business authorization is required, and

(c) business or an activity of a prescribed type.

(2) A contravention of this section does not affect or invalidate

(a) a transaction entered into by a financial institution, or

(b) a contractual right or civil remedy that a person may have in respect of such a transaction.

Membership in insurance plan

66   (1) [Repealed 2004-48-44.]

(2) If an insurance compensation plan has been designated by regulation for the purpose of this subsection, an insurance company must not carry on a class of insurance business in respect of which insurance is offered under that plan unless the insurance company is a member of that plan.

Capital and liquidity of financial institutions

67   (1) A financial institution must ensure that it has adequate liquid assets and an adequate capital base in relation to the business carried on by it, in accordance with the regulations and the rules made by the Authority.

(2) If the superintendent considers that the liquid assets or capital base of a financial institution are, or within one year will be, inadequate in relation to the business carried on by it whether or not the financial institution is complying with the regulations and the rules made by the Authority, the superintendent may order the financial institution to acquire additional liquid assets or increase its capital base in the amount and form and by the date specified in the order.

(2.1) Whether or not a credit union is otherwise complying with the regulations and the rules made by the Authority, the credit union must obtain the superintendent's written consent before engaging in the activities referred to in subsection (2.2) if the amount of the capital base of a credit union does not comprise any of the following percentages of the calculated value of the credit union's risk weighted assets:

(a) a prescribed percentage;

(b) a percentage within a prescribed range of percentages;

(c) a percentage set out in the rules;

(d) a percentage within a range of percentages set out in the rules.

(2.2) For the purpose of subsection (2.1), the credit union must obtain the superintendent's written consent before engaging in the following activities:

(a) prescribed activities;

(b) prescribed activities

(i) in prescribed circumstances, or

(ii) that have or may have prescribed consequences;

(c) activities set out in the rules made by the Authority;

(d) activities set out in the rules

(i) in circumstances set out in the rules, or

(ii) that have or may have consequences set out in the rules.

(3) Without first receiving the written consent of the superintendent, a trust company or an insurance company must not

(a) redeem or purchase or otherwise acquire shares issued by it, or

(b) declare a dividend, except a dividend in shares

if the redemption, purchase or other acquisition or the declaration would reduce the capital base of the financial institution to an amount less than the amount that constitutes an adequate capital base for that financial institution in accordance with the regulations and the rules made by the Authority.

Repealed

68   [Repealed 2004-48-46.]

Restriction on right to appoint receiver

69   (1) Unless it first receives the written consent of the superintendent, a financial institution must not grant to a person the right to appoint a receiver or a receiver manager of the property or business of the financial institution.

(2) The superintendent must not consent under subsection (1) if the superintendent believes on reasonable grounds that the person, in the public interest, ought not to be in a position to control or influence a financial institution.

Unauthorized trust business by corporations prohibited

70   A corporation must not carry on trust business in British Columbia unless the corporation is

(a) a trust company, an extraprovincial trust corporation or a credit union that has a business authorization to carry on trust business,

(b) a law corporation as defined in section 1 (1) of the Legal Profession Act,

(c) [Repealed 1998-9-100.]

(d) a corporation that is carrying on the business of a trustee in bankruptcy, receiver, receiver manager or liquidator and that is licensed as a trustee in bankruptcy under the Bankruptcy and Insolvency Act (Canada), or

(e) a corporation that is carrying on a prescribed trust business or class of trust business or a prescribed corporation or class of corporations that is carrying on a prescribed trust business or class of trust business.

Repealed

71   [Repealed 1998-42-10.]

Common trust funds authorized

72   A trust company or credit union must keep any asset acquired or held in trust by it separate and distinct from the assets of the trust company or credit union not held in trust and must keep a separate account for each trust, but, unless the instrument creating a trust otherwise provides, a trust company or credit union may, subject to the regulations, co-mingle assets held in trust in a common trust fund for the purposes of investment.

Extent of liability

73   (1) Subject to the terms of the instrument creating a trust, the liability of a trust company or credit union to persons interested in an estate held by the trust company or credit union as executor, administrator, trustee, receiver, liquidator, assignee, committee under the Patients Property Act, attorney under Part 2 of the Power of Attorney Act or representative granted power over an adult's financial affairs under section 7 (1) (b) of the Representation Agreement Act is the same as if the estate were held by an individual in the like capacity, and the powers of the trust company or credit union are the same as the powers of an individual holding an estate in the like capacity.

(2) A trust company or credit union authorized to carry on trust business may be appointed

(a) a sole trustee, notwithstanding that but for this Act it would be necessary to appoint more than one trustee, or

(b) the holder of an office mentioned in subsection (1) jointly with another person,

and the appointment may be made whether the trustee is required under a deed, will or other instrument creating a trust or whether the appointment is under the Trustee Act or otherwise.

(3) Revocation of the business authorization of a trust company or credit union is sufficient cause to remove that company or credit union from an appointment or office held by it under this or another Act.

(4) Despite any rule, practice or statutory provision, it is not necessary for a trust company or credit union to give security for the due performance of its duty as executor, administrator, trustee, receiver, liquidator, assignee, committee under the Patients Property Act, attorney under Part 2 of the Power of Attorney Act or representative granted power over an adult's financial affairs under section 7 (1) (b) of the Representation Agreement Act unless so ordered by a court.

Execution of trusts

74   Unless the trust company or credit union is a trustee under the trust, a trust company or credit union is not bound to see to the execution of a trust, whether express, implied or constructive.

Mutual company definition

74.1   In this Division, "mutual company" has the same meaning as "mutual fire insurance company" in Division 4 of Part 6.

Unauthorized insurance business prohibited

75   A person must not carry on insurance business in British Columbia unless the person is

(a) an insurance company or extraprovincial insurance corporation that has a business authorization to carry on insurance business,

(b) a company registered under the Insurance (Captive Company) Act,

(c) a member of a reciprocal exchange as defined in section 186 for which a permit under section 187 has been issued and is in effect,

(d) licensed under Division 2 of Part 6 as an insurance agent, insurance salesperson, insurance adjuster or employed insurance adjuster and is carrying on the insurance business only in that capacity,

(e) the deposit insurance corporation, the Canada Deposit Insurance Corporation or the Insurance Corporation of British Columbia,

(f) an entity that administers an insurance compensation plan designated by regulation for the purpose of section 66 (2),

(g) a society described in section 193 (1) (a) to (g) that, immediately before September 15, 1990, was carrying on the business of insurance,

(h) a credit union that is carrying on insurance business only by making or participating in contracts of insurance as permitted by section 82 of the Credit Union Incorporation Act, or

(i) a central credit union that is carrying on insurance business only by providing or arranging insurance as permitted by section 90 (2) of the Credit Union Incorporation Act.

Exceptions

76   (1) Despite section 75,

(a) any person may require insurance to be placed by a borrower as security for a loan,

(b) any person may

(i) adjust a loss,

(ii) prosecute or maintain a writ, action or proceeding, or

(iii) perform an obligation

under or arising out of a contract of insurance that was made or issued in British Columbia at a time when the person was authorized to carry on insurance business,

(c) an insurance agent licensed under Division 2 of Part 6 who is authorized by the resident to effect the contract of insurance may negotiate or procure a contract of insurance between a resident of British Columbia and an insurer prohibited by section 75 from carrying on business in British Columbia, subject to the requirements or conditions, if any, imposed by regulation,

(d) an insurer referred to in paragraph (c) may, without a business authorization, enter into a contract of insurance in the circumstances set out in that paragraph, and

(e) a person or insurer is exempted from the requirement to have a business authorization to carry on insurance business when permitted by the regulations.

(2) An insurance agent licensed under Division 2 of Part 6 who, under subsection (1) (c), procures or negotiates a contract of insurance must keep a record showing the particulars of the contract and at the request of the Commissioner of Income Tax or of the superintendent, must provide the record to the Commissioner of Income Tax or superintendent as requested.

(3) If

(a) the sum imposed by way of tax under section 4 of the Insurance Premium Tax Act in respect of an insurance contract lawfully made under subsection (1) (c) has been paid,

(b) the insurer described in subsection (1) (c) has notified the superintendent that it proposes to make an inspection for the purpose of the insurance contract or to adjust or appraise a loss under the contract, and

(c) the superintendent has given written approval to the proposed activity by the insurer,

the insurer may make the inspection or adjust and appraise the loss.

(4) The approval referred to in subsection (3) (c) is valid for all necessary inspections, adjustment and appraisals during the period specified in the approval.

(5) The superintendent may suspend, cancel or refuse to issue an approval referred to in subsection (3) (c) if an insurer contravenes a provision of this Act.

Reserves

77   An insurance company must

(a) establish adequate reserves against the value, as determined by the company's actuary,

(i) under section 126.23 (1) (a), of its actuarial and other policy liabilities, and

(ii) under section 126.23 (1) (b), of any other matter specified in an order made by the superintendent, and

(b) include those reserves in the liabilities set out in its annual return.

Reinsurance

78   An insurance company, in accordance with the regulations, may reinsure its liability under, or interest in, a lawful contract.

Rebates of premiums prohibited

79   (1) A person, in relation to the sale of insurance, must not, directly or indirectly, pay or allow, or offer or agree to pay or allow, a rebate of premium or part of it or other consideration or thing of value intended to be a rebate of premium, unless the rebate of premium is less than a prescribed amount or percentage.

(2) This section does not apply to or in respect of

(a) a payment by way of dividend, of patronage allocation, of bonus or of profit that is provided for by a contract of insurance,

(b) a person who is licensed under Division 2 of Part 6 as an insurance agent or insurance salesperson and who negotiates for or procures insurance on the agent's or salesperson's own person or property, and receives for own use the regular agent's commission having first in good faith negotiated or placed insurance on other persons or property the premiums for which, in the aggregate, are not less than the aggregate of the premiums for the insurance negotiated or procured on the agent's or salesperson's own person or property, or

(c) the payment of a fee for a referral under section 178 (2).

Separation of class funds of insurance company

80   (1) An insurance company transacting more than one class of insurance business must

(a) keep separate accounts for each class, and

(b) account for all premiums and claims in relation to each class as a separate fund.

(2) The investments of a separate fund kept under subsection (1) need not be kept separate from the investments of another fund.

Coverage by property insurer

80.1   An insurer that has a business authorization for property insurance may insure a vehicle against loss or damage under a policy that includes coverage for loss or damage to property.

Obligation of insurer with respect to agent's commission

80.2   (1) In this section:

"agent" means an insurance agent

(a) licensed under Division 2 of Part 6,

(b) authorized by an insurer that has a business authorization for property insurance to solicit, obtain or take applications for insurance, and to collect or receive premiums, on its behalf, and

(c) whose compensation or profit for those activities consists wholly of a commission on premiums derived from that business;

"premium" has the same meaning as in the Insurance Act.

(2) The commission, if any, on a policy that includes insurance against loss or damage to property and is issued at the head office of an insurer in British Columbia must be paid to an agent, and there must be written on the policy the words "Issued on behalf of ________________, authorized agent at ________________", with the name of the agent and of the place where the agent carries on business.

(3) The person in charge of the head office of an insurer in British Columbia must immediately, on the issue of a policy referred to in subsection (2), notify the agent of the date of the policy, the name of the insured and the property insured.

(4) This section does not apply to

(a) a mutual company,

(b) a contract of reinsurance,

(c) a contract insuring property in transit that is in the possession or custody of a railway company or common carrier, or

(d) a contract insuring movable property owned by a railway company or other common carrier and used in the course of its business as such.

Insurer — complaint resolution

80.3   (1) An insurer must

(a) establish procedures for dealing with complaints made to the insurer by persons who have requested or received in British Columbia products or services from the insurer,

(b) designate an officer or employee who is responsible for implementing those procedures, and

(c) designate one or more officers or employees who are responsible for receiving and dealing with those complaints.

(2) Subsection (1) does not apply to

(a) a mutual company, or

(b) a prescribed class of insurers.

(3) The procedures established under subsection (1) do not apply in relation to

(a) a matter to which section 12 of the Insurance Act applies, or

(b) complaints respecting a prescribed class of insurance.

(4) An insurer must

(a) publish the procedures it establishes under subsection (1) on websites through which its products or services are offered in British Columbia, and

(b) provide those procedures in writing to any person who requests them.

Unauthorized deposit business prohibited

81   (1) A person must not carry on deposit business in British Columbia unless the person is

(a) an extraprovincial trust corporation that has a business authorization to carry on deposit business,

(b) a credit union or extraprovincial credit union that has a business authorization to carry on deposit business,

(c) a bank, or

(d) a corporation that is a subsidiary of a bank and is a loan company to which the Trust and Loan Companies Act (Canada) applies.

(2) Subsection (1) does not prohibit an insurance company or extraprovincial insurance company from carrying on life insurance business in accordance with a business authorization issued to it.

Deposits in credit unions

82   (1) A credit union may receive money on deposit only from, or on behalf of,

(a) its members,

(b) the government of Canada,

(c) the government of British Columbia,

(d) a public body,

(e) any 2 or more members jointly on behalf of a partnership if the directors of the credit union are satisfied that a majority of the members of the partnership are persons who are eligible for membership in the credit union,

(f) a member acting as trustee, whether for a named beneficiary or otherwise,

(g) a member in joint ownership with another person,

(h) a person, including the credit union, acting as trustee or agent as permitted by this Act, and

(i) a person in a prescribed class of persons,

and the credit union may allow interest on deposits at a rate and in the manner determined by its directors.

(2) A deposit permitted under subsection (1) (e) may be recorded in the books of the credit union in the name of the partnership, and the credit union is not obliged to

(a) see to the application of the money so deposited or any interest on it, whether or not it has notice of any trust, or

(b) determine the powers of the members or the partnership,

and the partnership or a member of the partnership is not entitled to notice of, to be represented at or to vote at meetings of the credit union.

Deposits from persons unable to contract

83   A credit union, without the intervention of any other person being required, may

(a) accept a deposit from any person whether or not the person is qualified by law to enter into ordinary contracts, and

(b) pay any or all of the principal of the deposit and any or all of the interest to the order of the person.

Disposition of deposits

84   (1) A person who has deposits, non-equity shares or both with a credit union may nominate a person in writing to receive the amount at the death of the depositor.

(2) On receiving a certificate of death, or certified copy of a certificate of death, as described in section 38 of the Vital Statistics Act or an affidavit showing that a person who has made a nomination under subsection (1) has died, the credit union must substitute on its books the name of the nominee in place of the name of the person or must pay to the nominee the amount due in accordance with the instructions of the nominee.

(3) A payment by a credit union in accordance with this section is valid and effectual discharge of the credit union with respect to a demand by a person against the credit union as to the amount paid.

Inactive deposits

85   (1) In this section, "administrator" has the same meaning as in the Unclaimed Property Act.

(1.1) If a debt is owing by a credit union because of a deposit and no transaction has taken place and no statement of account has been requested or acknowledged by the creditor during a period of 10 years,

(a) in the case of a deposit made for a fixed period, from the day on which the fixed period terminated, and

(b) in the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the creditor, whichever is later,

then, the debt is an inactive deposit for the purposes of this section.

(1.2) When a debt becomes an inactive deposit under subsection (1.1), the credit union must, in accordance with section 64 (1) to (7) of the Credit Union Incorporation Act, redeem any shares held by the depositor in the credit union.

(1.3) If the shares redeemed under subsection (1.2) are membership shares, the redemption is deemed to be required by section 52 (1) (d) of the Credit Union Incorporation Act and, as a consequence, section 64 (5) of that Act applies to the redemption.

(1.4) Section 64 (8) of the Credit Union Incorporation Act does not apply to any redemption of shares under subsection (1.2) of this section.

(1.5) Any amount payable to the depositor under section 52 (1) (d) or 64 (6) of the Credit Union Incorporation Act in respect of the shares redeemed under subsection (1.2) of this section is a debt of the credit union and is to be treated as part of the depositor's inactive deposit referred to in subsection (1.1).

(2) If the amount of an inactive deposit, including interest, is less than $100, then, subject to subsection (6), the credit union may treat it as income of the credit union.

(3) If the amount of an inactive deposit, including interest, is $100 or more, then, within 30 days after the debt becomes an inactive deposit, the credit union must mail written notice to the depositor, at the depositor's last address known to the credit union, informing the depositor that the debt has become an inactive deposit and will be dealt with under this section if the depositor does not, within 30 days after the date of the notice, give instructions as to the disposition of the deposit.

(4) If, under subsection (3), a credit union mails written notice to its depositor and does not, within 30 days after the date of the notice, receive instructions from its depositor as to the disposition of the deposit, then the credit union must pay to the administrator an amount equal to the debt, including interest if any, in accordance with the terms and conditions of the debt, and the payment discharges the credit union from all liability to the creditor in respect of the debt and interest.

(5) Money paid to the administrator under subsection (4) is deemed to be an unclaimed money deposit under the Unclaimed Property Act.

(6) If, under subsection (2), a credit union has treated a debt and interest as income and payment is demanded of the credit union by the person who, but for that subsection, would be entitled to receive payment of the debt, the credit union must pay to that person

(a) an amount equal to the amount so treated as income, and

(b) if interest was payable in accordance with the terms and conditions of the debt or instrument, interest on the amount so treated as income

(i) for the period not exceeding 5 years from the day on which the debt and interest were treated as income until the date of payment to the claimant, and

(ii) at the prescribed rate.

(7) If a credit union has under subsection (2) treated a debt and interest as income or under subsection (4) has paid an amount to the administrator, the credit union must keep all related signature cards and signing authorities or microfilm copies of them for a prescribed period after which the credit union may destroy them.

Limitation on lending

86   A credit union must not exercise its powers to lend money or guarantee an obligation at any time when it is in contravention of the requirements of section 67 in respect of adequate liquid assets.

Subordinated notes

87   (1) A trust company or credit union must not issue a note under which the indebtedness evidenced is subordinated in right of payment to all other indebtedness not evidenced by a subordinated note unless the note so issued meets each of the following requirements:

(a) the note is evidenced by a certificate in a form approved by the superintendent and contains a statement in it to the effect of the statements made in paragraphs (b) and (c) and contains the information that it is a subordinated note and contains any other information that the superintendent requires in approving the form of certificate;

(b) the borrowing evidenced by the note does not constitute a deposit of money with the trust company or credit union that issues the note and is not insured by the Canada Deposit Insurance Corporation or the deposit insurance corporation;

(c) in the event of the insolvency or winding up of the trust company or credit union, the indebtedness evidenced by the note is subordinated in right of payment to all other indebtedness that is not evidenced by a subordinated note.

(2) A trust company or credit union or person acting on behalf of a trust company or credit union, in any offering, circular, advertisement, correspondence or literature relating to a subordinated note issued or to be issued, must not refer to the subordinated note otherwise than as a subordinated note, and the trust company or credit union must indicate clearly in the offering, circular, advertisement, correspondence or literature that the money secured by the subordinated note is not an insured deposit.

Repealed

88-90   [Repealed 2004-48-56.]

Disclosure of identity in advertising, etc

91   In all advertising, correspondence, application forms, evidences of indebtedness and other documents in its control relating to its business, a financial institution must ensure that its identity is clearly stated.

Insurers and licensees to file policy forms

92   The superintendent may order an insurer, or a licensee as defined in section 168, to file a copy of any form that is

(a) specified or otherwise described in the order, and

(b) used or intended to be used by the insurer or the licensee in the insurer's or the licensee's insurance business.

Requirements of out of province insurers

92.1   (1) In this section, "insurer", "policy", "third party liability insurance coverage", "vehicle insurance" and "vehicle liability policy" have the same meanings as in the Insurance (Vehicle) Act.

(2) An insurer that issues a policy evidencing a contract of vehicle insurance that provides third party liability insurance coverage outside British Columbia must file with the superintendent, in a form established by the superintendent,

(a) a power of attorney authorizing the superintendent to accept service of notice or process for the insurer in any action or proceeding against the insurer arising out of a vehicle accident in British Columbia, and

(b) an undertaking

(i) to appear in any action or proceeding against the insurer or its insured arising out of a vehicle accident in British Columbia, and of which the insurer has knowledge,

(ii) that on receipt from the superintendent of any notice or process served on the superintendent in respect of its insured, or in respect of its insured and another or others, and sent by the superintendent to the insurer as provided, the insurer will immediately have the notice or process personally served on its insured,

(iii) not to set up any defence to any claim, action or proceeding, under a policy issued by the insurer, that might not be set up if the policy had been issued in British Columbia in accordance with the law of British Columbia relating to vehicle liability policies, and

(iv) to satisfy up to the limits of liability stated in the policy, and in any event to an amount not less than the limits of liability established under Part 1 of the Insurance (Vehicle) Act and the regulations under that Part any judgment rendered against the insurer or its insured by a court in British Columbia in the action or proceeding referred to in subparagraph (iii).

Online sale of insurance

92.2   (1) In this section:

"electronic agent" has the same meaning as in section 1 of the Electronic Transactions Act;

"insurance agent" has the same meaning as in section 168 of this Act;

"insurance salesperson" has the same meaning as in section 168 of this Act.

(2) An insurance company, an insurance agent or an insurance salesperson who issues, delivers or offers to undertake a contract of insurance through the use of an electronic agent must meet the prescribed requirements and the requirements established in the rules made by the Authority or the council, as applicable.

Prohibition against unfair, misleading or deceptive documents

93   (1) If, in the opinion of the superintendent, a form of contract, trust instrument or other document provided by a financial institution to its customers, or a form of application or advertisement relating to such a document, is unfair, misleading or deceptive, the superintendent, by order, may prohibit the use of that form by a financial institution.

(2) If, in the opinion of the superintendent, an insurer is issuing contracts of insurance for less than fair market value, the superintendent may order the insurer to cease doing so.

Coercive tied selling prohibited

94   A financial institution or person acting in a transaction with the approval of a financial institution must not place undue pressure on, or coerce, a person to obtain a product or service from another person, including the financial institution, its subsidiaries, affiliates or agents, as a condition of obtaining another product or service from the financial institution.

Insurance company — code of market conduct

94.1   (1) An insurance company must adopt a code of market conduct as established, and as amended from time to time, by the Authority.

(2) An insurance company must comply with its code of market conduct.

(3) This section does not apply to an insurance company whose insurance business is limited to reinsurance.

Credit union — code of market conduct

94.2   (1) The board of directors of a credit union must adopt a code of market conduct.

(2) The board of directors of a credit union must file with the superintendent the credit union's code of market conduct and any amendments to that code.

(3) The superintendent may direct the board of directors of a credit union to amend the credit union's code of market conduct at any time.

(4) If the board of directors of a credit union does not adopt a code of market conduct under subsection (1), the Authority may require that board to adopt a code of market conduct as established, and as amended from time to time, by the Authority.

(5) A credit union must comply with its code of market conduct.

Credit union — complaint resolution

94.3   (1) A credit union must

(a) establish procedures for dealing with complaints made to the credit union by persons who have requested or received in British Columbia products or services from the credit union,

(b) designate an officer or employee who is responsible for implementing those procedures, and

(c) designate one or more officers or employees who are responsible for receiving and dealing with those complaints.

(2) Subsection (1) does not apply to a prescribed class of credit unions.

(3) A credit union must

(a) publish the procedures established under subsection (1) on websites through which its products or services are offered in British Columbia, and

(b) provide those procedures in writing to any person who requests them.

Repealed

95   [Repealed 2004-48-58.]

Substitute action of superintendent

96   (1) If the superintendent is satisfied that a customer, in respect of a transaction, has

(a) a cause of action,

(b) a defence to an action,

(c) grounds for setting aside a default judgment, or

(d) grounds for an appeal or to contest an appeal,

then, on behalf of the customer, the superintendent may institute or assume the conduct of any proceedings, or defend any proceedings, with a view to enforcing or protecting the rights of the customer respecting a contravention or suspected contravention of those rights or of any enactment or law relating to the protection or interests of customers.

(2) The superintendent must not institute, assume the conduct of or defend any proceedings under subsection (1) unless the superintendent

(a) considers that the conduct of the financial institution or other person involved in the transaction was misleading, deceptive or unconscionable, and

(b) first obtains

(i) the irrevocable written consent of the customer, and

(ii) the written consent of the minister.

(3) In respect of proceedings referred to in subsection (1),

(a) the superintendent, on behalf of the customer, has the same rights in and control over the proceedings, including the same right to settle an action or part of an action, as the customer,

(b) the superintendent, without consulting or seeking the further consent of the customer, may conduct the proceedings in the manner the superintendent considers appropriate, and

(c) any money, excluding costs, recovered by the superintendent belongs to and must be paid to the customer without deduction, and any amount, excluding costs, awarded against the customer must be paid by and is recoverable from the customer, but in every case any costs of the proceedings awarded by the court having jurisdiction must be borne by, or paid to and retained by, the Authority, as the case may be.

(4) If

(a) a party to proceedings to which this section applies files a counterclaim, or

(b) the customer on whose behalf the proceedings are being defended is entitled to file a counterclaim,

and that counterclaim is not related to

(c) the cause of action, and

(d) the interests of the customer as a customer,

the court having jurisdiction in the proceedings must, on the application of the superintendent, order

(e) that the counterclaim be heard separately, and

(f) that the customer be made a party to the counterclaim in the customer's own right,

and the court may make other orders or give directions in that regard that it considers just.

Number of directors and unaffiliated directors

97   (1) A financial institution must have at least 5 directors, and, in the case of a trust company or an insurance company, at least 1/3 of the directors must be unaffiliated directors.

(2) On application by a trust company or an insurance company, if the superintendent believes, on reasonable grounds, that it is in the public interest, the superintendent may, for the purposes of subsection (1) and sections 61 (8) (b), 103 (2), 111 (3) and (4), 112 (1), 115 (1) and 135 (c), make a determination that an individual described by paragraph (h) of the definition of "unaffiliated director" is an unaffiliated director, unless that individual is also described in one or more of paragraphs (a) to (g) of that definition.

(3) The majority of the directors of every financial institution must be persons ordinarily resident in Canada.

(4) One director of every financial institution must be ordinarily resident in British Columbia.

(5) Without limiting section 124 of the Business Corporations Act, an individual is not qualified to become or act as a director of a trust company or an insurance company if that individual's registration in any capacity has been cancelled under

(a) the Securities Act by either the British Columbia Securities Commission or the executive director, or

(b) the Mortgage Brokers Act by the Commercial Appeals Commission, the Financial Services Tribunal or the registrar under that Act,

unless the person or body that cancelled the registration otherwise orders at the time of cancellation, or unless 5 years have elapsed since the cancellation of the registration.

(6) An order must not be made under subsection (5) of this section unless notice of the application for the order is given to the superintendent, who may appear as a party to the application.

Repealed

98   [Repealed 2011-29-72.]

Cumulative voting for directors

98.1   (1) The articles of a trust company or an insurance company may provide for cumulative voting by members in the election of directors and, in that event, the articles must include provisions to the following effect:

(a) that the trust company or insurance company have a specific number of directors, with no allowance for minimum and maximum numbers of directors;

(b) that each member entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the member multiplied by the number of directors to be elected, and that each member may cast all the votes in favour of one candidate or distribute the votes among the candidates in any manner;

(c) that a separate vote of members must be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting 2 or more persons to be elected by a single resolution;

(d) that, if a member has voted for more than one candidate without specifying the distribution of votes among the candidates, the votes must be distributed equally among the candidates;

(e) that, if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes must be eliminated until the number of candidates remaining equals the number of positions to be filled;

(f) that a director may not be removed from office if the votes cast against removal would be sufficient to elect a director if they were voted cumulatively at an election at which the same total number of votes were cast and the number of directors required by the articles were being elected;

(g) that the number of directors required by the articles may not be decreased if the votes cast against the motion to decrease would be sufficient to elect a director if they were voted cumulatively at an election at which the same total number of votes were cast and the number of directors required by the articles were being elected.

(2) Despite subsection (1), a provision in the articles of a trust company or an insurance company that authorizes cumulative voting by members in the election of directors does not apply when any one member of the company beneficially owns or controls, directly or indirectly, all of the issued voting shares in the company.

(3) If the articles of a trust company or an insurance company provide for cumulative voting, no holders of any class of shares of the trust company or insurance company have an exclusive right to elect one or more directors.

(4) If the articles of a trust company or an insurance company provide for cumulative voting, the members of the trust company or insurance company must,

(a) at the first annual meeting of members held not earlier than 90 days following the date that cumulative voting is provided for in the articles, and

(b) at each succeeding annual meeting,

elect directors to hold office until the close of the next annual meeting of members following the directors' election.

Removal of directors and officers

99   (1) Without limiting section 97 (5) of this Act, section 124 or 141 (3) of the Business Corporations Act or section 84.12 or 84.3 (2) of the Credit Union Incorporation Act, no person is qualified to become or act as a director or officer of a financial institution who is a public servant whose duties relate to financial institutions.

(2) Without limiting section 128 of the Business Corporations Act or section 84.24 of the Credit Union Incorporation Act, if the superintendent is satisfied that a director or officer of a financial institution or of its subsidiary

(a) because of section 97 (5) of this Act, section 124 or 141 (3) of the Business Corporations Act or section 84.12 or 84.3 (2) of the Credit Union Incorporation Act, is not qualified to be a director or an officer,

(b) because of subsection (1), is not qualified to be a director or officer,

(c) within the last 5 years has been bankrupt in Canada or elsewhere,

(d) has a conflicting interest that prevents the director or officer from properly discharging the duties as director or officer,

(e) is contravening or has contravened a written undertaking given under this Act,

(f) is an individual who ought not to be in a position to control or influence a financial institution, or

(g) is an individual who has been

(i) convicted of an offence in Canada or another jurisdiction arising from a transaction, business or course of conduct related to financial services, or

(ii) found by a regulator or a court in Canada or another jurisdiction to have contravened the laws of that jurisdiction respecting financial services,

the superintendent may order that the director or officer cease to be a director or officer of the financial institution; and on the date of the order the director or officer ceases to be a director or officer of the financial institution.

(3) When an individual ceases to be a director or officer of a financial institution under subsection (2), then, despite the Business Corporations Act or the Credit Union Incorporation Act, the individual is not eligible to again be or act as a director or officer of a financial institution without first applying for and receiving the consent of the superintendent.

(4) A financial institution must deliver written notice immediately to the superintendent of the resignation, removal, election or appointment of a director or senior officer.

(5) The superintendent may require a financial institution to provide any information the superintendent considers necessary to determine if there are grounds to take action under subsection (2).

Credit union directors ceasing to hold office

100   Without limiting section 99 of this Act or section 84.24 of the Credit Union Incorporation Act, a director of a credit union ceases to hold office when the director

(a) is not qualified under section 83 (3) of the Credit Union Incorporation Act,

(b) is not, or ceases to be, eligible to be insured as required under section 206 of this Act,

(c) being a person who is required under section 84 (3) of the Credit Union Incorporation Act to complete a director training program, fails to complete the program within the period specified under section 84 (2) (b) of that Act.

Standard of care for directors and officers

101   (1) A director or officer of a financial institution, in exercising the powers and performing the functions of a director or officer, must

(a) act honestly, in good faith and in the best interests of the financial institution, and

(b) exercise the care, diligence and skill of a reasonably prudent person under comparable circumstances,

and in doing so must take into account the interests of shareholders, depositors, if any, and policy holders, if any, and, without limiting this, of those to whom the directors owe a fiduciary duty.

(2) The provisions of this section are in addition to, and not in derogation of, any enactment or rule of law or equity relating to the duties or liabilities of directors of a corporation.

(3) Every director and officer of a financial institution must act in accordance with this Act and the regulations under it.

Director's application to Supreme Court — superintendent is party

101.1   The superintendent is a party to any proceedings in which a director of a trust company or an insurance company applies to the Supreme Court under section 70 (3) or 78 (2) of the Business Corporations Act.

Indemnification of directors and officers

102   (1) Except for an action by or on behalf of the financial institution to procure a judgment in favour of the financial institution, a financial institution may indemnify

(a) a director or officer of the financial institution,

(b) a former director or officer of the financial institution, or

(c) an individual who, at the request of the financial institution, is or was a director or officer of a corporation of which the financial institution is or was a member or creditor,

against any costs, charges and expenses, including an amount paid to settle an action or proceeding or to satisfy a judgment, reasonably incurred for any civil, criminal or administrative action or proceeding, whether threatened, pending, continuing or completed, to which the director or officer is or may be made a party because of being or having been a director or officer of the financial institution or corporation, if

(d) the director or officer acted honestly and in good faith with a view to the best interests of the financial institution or corporation, as the case may be, and

(e) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the director or officer had reasonable grounds for believing that the conduct was lawful.

(2) With the approval of a court, a financial institution may indemnify a person referred to in subsection (1) (a) or (b) for an action, whether threatened, pending, continuing or completed, by or on behalf of the financial institution to procure a judgment in favour of the financial institution, to which the person is or may be made a party because of being or having been a director or officer of the financial institution, against any costs, charges and expenses reasonably incurred in connection with the action if the conditions set out in subsection (1) (d) and (e) are fulfilled.

(3) A financial institution must indemnify a person referred to in subsection (1) (a) or (b) who has been substantially successful on the merits in the outcome of a civil, criminal or administrative action or proceeding, to which the person is made a party because of being or having been a director or officer of the financial institution, against all costs, charges and expenses reasonably incurred for the action or proceeding if the conditions set out in subsection (1) (d) and (e) are fulfilled.

(4) A financial institution or a person referred to in subsection (1) (a), (b) or (c) may apply to a court for an order approving an indemnity under this section and the court may make any order it thinks fit.

(5) An applicant under subsection (4) must give the superintendent not less than 14 days' notice of the application and the superintendent is entitled to appear and be heard in person or by counsel.

(6) On an application under subsection (4), the court may order notice to be given to any interested person and that person is entitled to appear and be heard in person or by counsel.

(7) A financial institution may purchase and maintain insurance for the benefit of a person referred to in subsection (1) (a), (b) or (c) against any liability incurred as a director or officer.

Quorum and unaffiliated directors

103   (1) A quorum

(a) of a meeting of directors of a financial institution consists of the greater of

(i) 3 directors, or

(ii) a majority of the directors, and

(b) of a meeting of a committee consists of a majority of the individuals comprising the committee.

(2) Even though

(a) sufficient directors to form a quorum are present at a meeting of the directors of a trust company or insurance company, or

(b) sufficient individuals to form a quorum are present at a meeting of a committee that is required to have unaffiliated directors as members,

there is not a quorum unless at least one of them is an unaffiliated director.

Misuse of confidential information

104   If a director or officer of a financial institution or of an affiliate of a financial institution knows or reasonably ought to know that information is confidential to the financial institution, or to any affiliate of the financial institution the director or officer must not

(a) disclose the information, or

(b) enter into a transaction in which the director or officer makes use of the information,

in order, directly or indirectly, to obtain a benefit or advantage for the director, officer or anyone else other than the financial institution or any affiliate of it.

Information required of directors and senior officers

105   Before commencing duties, a director or senior officer of a financial institution must complete and submit to the superintendent a personal information return in the form established by the superintendent that discloses the information required by the superintendent.

Meeting requested by auditor

106   The directors of a financial institution, if requested to do so by its auditor, must call a general meeting of members or a meeting of directors within 30 days after the request, to consider a report made by the auditor regarding any matter arising out of the financial affairs of the financial institution.

Meeting requested by superintendent

107   (1) The superintendent by order may require a meeting of the directors of a financial institution for the purpose of considering matters specified in the order within the time specified in the order; and on receiving the order the directors must inform the superintendent in advance of the time and, if applicable, the place of the meeting.

(1.1) If a meeting ordered under subsection (1) is an electronic meeting, the directors of the financial institution must also provide the superintendent with instructions for attending and participating in the meeting by telephone or other communications medium.

(2) The superintendent may attend and be heard at a meeting ordered under subsection (1).

Director's statement on own resignation or pending removal

108   (1) A director of a financial institution who

(a) resigns,

(b) receives a notice or otherwise learns of a meeting of members called for the purpose of removing the director from office, or

(c) receives a notice or otherwise learns of a meeting of directors or members at which another person is to be appointed or elected to fill the office of director because of the director's resignation or removal

is entitled to submit to the financial institution a written director's statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.

(2) If a director of a financial institution resigns as a result of a disagreement with the other directors or the management of a financial institution and does not take action under subsection (1), the director must submit to the superintendent a written director's statement giving the reasons for the resignation.

Circulation of director's statement

109   (1) On receiving a written director's statement under section 108 (1), the financial institution must deliver it to the superintendent immediately, and, unless the directors consider on reasonable grounds that delivery of the statement would materially and adversely affect the financial institution's financial viability, the financial institution must also deliver the statement immediately to its members who are entitled to notice of meetings.

(2) If the directors, on the basis set out in subsection (1), decide against delivery of the statement to the members, they must so inform the superintendent who, despite that decision, may order the financial institution to deliver the statement immediately to its members who are entitled to notice of meetings.

(3) A financial institution or person acting on its behalf does not incur any liability only because of circulating a written director's statement in compliance with subsection (1).

Directors' remuneration

110   (1) The remuneration, if any, of the directors of a financial institution in relation to their service as directors may be established by ordinary resolution.

(2) The members of a financial institution, by special resolution, may permit the remuneration, if any, of the directors to be established by the directors.

Committees

111   (1) Subject to subsections (2) and (3) and the charter of the financial institution, the directors of a financial institution may delegate any of their powers to a committee appointed or elected by them.

(2) A committee does not have authority to

(a) fill a vacancy among the directors or the members of the audit committee, or the investment and loan committee, or in the office of the auditor, or appoint or remove the chief operating officer, however designated, the chief executive officer, however designated, the chief financial officer, however designated, the chair of the board or the president of the company,

(b) issue securities except in the manner and on the terms authorized by the directors,

(c) declare dividends,

(d) purchase, redeem or otherwise acquire shares issued by the financial institution,

(e) approve an information circular,

(f) approve a take over bid circular, directors' circular or issuer bid circular,

(g) approve financial statements, or

(h) adopt, amend or repeal directors' bylaws.

(3) If the directors of a financial institution appoint or elect a committee, the committee must consist of not fewer than 3 individuals and, in the case of a trust company or insurance company, at least one of them must be an unaffiliated director.

(4) A committee appointed by the directors of a trust company or insurance company must not conduct any business unless at least one unaffiliated director is present at the meeting.

Conduct review committee

112   (1) The directors of a financial institution must elect from among themselves a conduct review committee consisting of at least 3 directors and, in the case of a trust company and an insurance company, 2/3 of the committee members must be unaffiliated directors.

(2) The conduct review committee, in addition to the duties set out in Part 5, must establish written procedures

(a) to provide disclosure in prescribed circumstances to customers of the financial institution, and

(b) designed to prevent conflicts of interest and to resolve them if they occur, setting out in those procedures techniques for the identification of potential conflict of interest situations and for restricting the flow of confidential information.

(3) The conduct review committee at intervals of not more than 2 years must review the written procedures established under subsection (2).

Auditor

113   Without limiting section 205 of the Business Corporations Act or section 39.51 of the Credit Union Incorporation Act, every financial institution must have an auditor who meets the prescribed qualifications.

Auditor may be a depositor

114   For the purpose of section 39.52 of the Credit Union Incorporation Act, the fact that the auditor of a credit union or the auditor's partner or employee is a depositor in the credit union or holds membership shares in the credit union does not by itself affect the independence of the auditor from the credit union, its affiliates and its directors and officers.

Audit committee and unaffiliated directors

115   (1) Without limiting section 224 (2) of the Business Corporations Act, not less than 1/3 of the members of the audit committee of a trust company or an insurance company must be unaffiliated directors.

(2) On the written request of the auditor, of a member of the audit committee or of any director, the chair of the audit committee must convene a meeting of the audit committee to consider any matters the auditor, member or director, as the case may be, believes should be brought to the attention of the directors or members.

(3) In addition to complying with its obligations under section 225 of the Business Corporations Act, the audit committee of a trust company or an insurance company must review

(a) returns of the trust company or insurance company that are to be filed with the superintendent under section 127 (1) of this Act,

(b) reports that have been made by the auditor under section 123, and

(c) prescribed reports, transactions or matters.

(3.1) In addition to complying with its obligations under section 225 of the Business Corporations Act, the audit committee of an insurance company must meet with the actuary of the company to discuss the parts of the annual financial statements and the annual return prepared by the actuary.

(4) If, under this Act or the Business Corporations Act, financial statements or a return requires the approval of the directors, that approval must not be given until

(a) the audit committee has reviewed and reported on those financial statements or that return, and

(b) the directors have received the report.

Auditor has right to attend directors' meetings

116   The auditor of a financial institution must be given notice of, and has the right to attend and to be heard at, every meeting of the financial institution's

(a) directors, or

(b) conduct review committee

on matters with respect to which the auditor has a duty or function or has made a report; and the auditor must attend a meeting of the directors or of the conduct review committee when requested to do so by the directors or by the committee, as the case may be.

Appointment and removal of auditor

117   (1) A financial institution must deliver written notice promptly to the superintendent of the appointment, removal or resignation of an auditor and of any other occurrence that causes a vacancy in the office of auditor and, in the case of a removal, of the reasons for the removal.

(2) If the office of auditor is vacant and no application has been made under section 204 (5) of the Business Corporations Act or section 39.5 (4) of the Credit Union Incorporation Act, the superintendent by order delivered to the financial institution, may require the appointment of an auditor by a deadline stipulated in the order; and if an auditor is not appointed by that deadline

(a) the superintendent may appoint an auditor to hold office until the close of the next annual general meeting, and, despite section 207 of the Business Corporations Act or section 39.53 of the Credit Union Incorporation Act, the financial institution must pay to the auditor so appointed remuneration at a rate directed by the superintendent, and

(b) despite section 209 of the Business Corporations Act or section 39.54 of the Credit Union Incorporation Act, without the written permission of the superintendent, the financial institution must not remove an auditor so appointed before the expiration of the auditor's term of office.

Report to accounting body

118   (1) If the superintendent has reasonable grounds to believe that the auditor of a financial institution

(a) has failed to perform duties,

(b) has failed to comply with this Act,

(c) has been a party to the preparation of or has approved financial statements that do not fairly present the financial position of the financial institution,

(d) is incompetent, or

(e) has committed professional misconduct,

the superintendent must deliver a written report promptly to the financial institution, and,

(f) if the auditor is

(i) a chartered accountant, to a provincial institute of chartered accountants within Canada of which the auditor is a member, or

(ii) a chartered professional accountant, to a provincial organization of chartered professional accountants within Canada of which the auditor is a member.

(g) [Repealed 2015-1-91.]

(h) [Repealed 2018-23-17.]

(2) The superintendent may require a financial institution or its auditor to provide information the superintendent considers necessary to determine if there are reasonable grounds for a report under subsection (1).

Resignation of auditor

119   (1) An auditor of a financial institution on resigning as auditor must deliver to the financial institution a written statement of the reasons for resignation.

(2) On receiving the statement under subsection (1), the financial institution must deliver a copy of it to the superintendent.

(3) On appointing a new auditor, a financial institution must deliver a copy of any statement made under subsection (1) by the new auditor's predecessor to the new auditor.

Auditor appointment for subsidiary

120   (1) A financial institution must

(a) ensure that its auditor, or one of them if more than one, is also auditor of any of its subsidiaries, or

(b) deliver to the superintendent a written explanation to the satisfaction of the superintendent of why it is unable to ensure that result.

(2) A trust company or insurance company that is a subsidiary of another corporation must

(a) ensure that its auditor, or one of them if more than one, is also auditor of that other corporation, or

(b) deliver to the superintendent a written explanation to the satisfaction of the superintendent of why it is unable to ensure that result.

Amendment of financial statements and auditor's report

121   In addition to complying with any applicable obligations under section 216 of the Business Corporations Act,

(a) the directors to whom section 216 (1) and (2) of that Act applies must ensure that the amended financial statements referred to in section 216 (2) of that Act are delivered to the superintendent promptly after they are prepared,

(b) the auditor of a trust company or an insurance company to whom section 216 (3) of that Act applies must provide to the superintendent, in writing, the same information that the auditor is required by that section to provide to the directors of the trust company or insurance company, and

(c) without limiting section 216 (5) (a) (ii) of that Act, the auditor of an insurance company must deliver to the company's actuary, in writing, the amended report referred to in that section.

Repealed

122   [Repealed 2011-29-87.]

Report to directors

123   (1) The auditor of a financial institution must report in writing promptly to the financial institution's directors and, in the case of an insurance company, the company's actuary whenever, in the ordinary course of the auditor's duties, the auditor

(a) has reasonable grounds to believe that the circumstances of the financial institution have changed, are changing or are likely to change in a way that does or might

(i) materially and adversely affect the viability of the financial institution, or

(ii) otherwise impair the financial institution's ability to carry on or transact business,

(b) becomes aware of an occurrence or transaction or a series of them that does or might reasonably be expected to

(i) materially and adversely affect the viability of the financial institution, or

(ii) otherwise impair the financial institution's ability to carry on or transact business, or

(c) becomes aware that the financial institution or its director or officer has contravened this Act or the regulations under this Act or has contravened the Business Corporations Act or the Credit Union Incorporation Act.

(2) If the auditor considers that a matter that is the subject of a report under subsection (1) has not been appropriately responded to by the directors within 30 days after receipt by the directors of the report, the auditor must inform the superintendent immediately to that effect in writing, giving full particulars.

Additional reporting

124   (1) The superintendent may order the auditor of a financial institution

(a) to report to the superintendent on the adequacy of the accounting procedures used by the financial institution,

(b) to enlarge or extend the scope of an audit,

(c) to examine and report on information prepared by the financial institution,

(d) to supply to the superintendent additional information pertinent to an audit, and

(e) to apply standards specified by the superintendent in addition to generally accepted auditing standards.

(2) In addition to the remuneration set under section 207 of the Business Corporations Act or section 39.53 of the Credit Union Incorporation Act, the financial institution must pay the auditor additional remuneration at a rate directed by the superintendent for the work required under subsection (1) by the superintendent.

(3) The auditor must address to the directors and deliver to the financial institution and, in the case of an insurance company, the company's actuary, a copy of a report under subsection (1) (a) or (c).

Additional auditor

125   (1) The superintendent may order a financial institution to appoint an additional auditor to hold office for a term specified by the superintendent.

(2) The financial institution must pay remuneration to an auditor appointed under subsection (1) at a rate specified by the superintendent in the order.

No liability

126   An auditor or former auditor of a financial institution who in good faith makes a statement or report under section 123 or 124 is not liable in a civil action because of making the statement or report or because of anything in it.

Definition

126.1   In this Division, "designated individual" means the individual that is required to be designated under section 126.13.

Actuaries

126.11   The directors of an insurance company must appoint an actuary for the company.

Notice of appointment

126.12   An insurance company must, immediately after the directors appoint a person to be the actuary of the company in accordance with section 126.11, notify the superintendent in writing of the appointment.

Designated individual

126.13   If the actuary of an insurance company is not an individual, the actuary must designate an individual who is responsible for acting on behalf of the actuary.

Qualifications of actuary

126.14   (1) A designated individual or an individual who is the actuary of an insurance company that is authorized to carry on life insurance business must be a fellow in good standing of the Canadian Institute of Actuaries.

(2) A designated individual or an individual who is the actuary of an insurance company that is authorized to carry on one or more classes of general business insurance, but is not authorized to carry on life insurance business, must be a fellow in good standing of the Canadian Institute of Actuaries or be approved by the superintendent as having the training and experience necessary to perform the duties of an actuary of a provincial company.

Senior officers precluded

126.15   (1) A senior officer of an insurance company may not be appointed as or hold the position of actuary of the insurance company unless authorized in writing by the superintendent.

(2) An authorization under subsection (1) may contain limitations and conditions, including a limitation on the time during which the person named in the authorization may hold the position of actuary of the insurance company.

(3) If an authorization under subsection (1) includes a time limit as described in subsection (2), the person holding the position of actuary pursuant to the authorization may not hold that position after the time limit expires.

Revocation of actuary's appointment

126.16   (1) The directors of an insurance company may revoke the appointment of the actuary of the company.

(2) The directors of an insurance company must revoke the appointment of its actuary if

(a) the actuary no longer meets the requirements of section 126.14 and does not resign, or

(b) the actuary's designated individual no longer meets the requirements of section 126.14 and the actuary does not replace its designated individual with an individual who does meet the requirements of that section.

(3) The superintendent may revoke the appointment of an actuary of an insurance company if the superintendent is satisfied that the actuary or the actuary's designated individual no longer meets the requirements of section 126.14.

Declaration of vacancy by court

126.17   Any interested party may apply to the Supreme Court for an order declaring that an actuary or its designated individual no longer meets the requirements of section 126.14 and that the office of actuary is vacant.

Ceasing to hold office

126.18   (1) The office of actuary of an insurance company becomes vacant when

(a) the actuary resigns,

(b) if the actuary is an individual, the individual dies,

(c) if the actuary is not an individual, the actuary is dissolved,

(d) the appointment of the actuary is revoked, or

(e) the office of actuary is declared to be vacant under section 126.17.

(2) The resignation of an actuary becomes effective at the time a written resignation is delivered to the insurance company or at the time specified in the resignation, whichever is later.

Filling vacancy

126.19   When a vacancy occurs in the office of actuary of an insurance company, the directors must immediately

(a) submit a written statement to the superintendent of the circumstances and the reasons why, in the directors' opinion, the office of actuary became vacant, and

(b) fill the vacancy.

Statement of actuary

126.2   An actuary of an insurance company who resigns or whose appointment is revoked must submit a written statement of the circumstances and reasons why the actuary resigned or why, in the actuary's opinion, the actuary's appointment was revoked, to

(a) the directors of the insurance company,

(b) the superintendent, and

(c) the replacement actuary of the company, when the replacement actuary requests the statement.

Duty of replacement actuary

126.21   (1) Where an actuary of an insurance company resigns or the appointment of an actuary is revoked, a person may not accept an appointment or consent to be appointed as actuary of the insurance company before requesting and receiving from the other actuary the statement referred to in section 126.2.

(2) A person may accept an appointment or consent to be appointed as actuary of an insurance company if no reply is received from the other actuary within 15 days after a request under subsection (1) is made.

(3) Unless subsection (2) applies, an appointment as actuary of an insurance company is void if subsection (1) is contravened.

Right to information

126.22   (1) On the demand of the actuary of an insurance company, a person who is a former actuary of or is or has been a director, officer, employee or agent of the insurance company or any of its subsidiaries or holding companies must, to the best of the person's ability to do so,

(a) furnish all information and explanations to the actuary, and

(b) allow the actuary access to and furnish to the actuary copies of records, documents, books, accounts and vouchers of the insurance company and of any of its subsidiaries or holding companies

as the actuary considers necessary to enable the actuary to perform the actuary's duties as the company's actuary.

(2) A person who in good faith makes any communication under this section is not liable in a civil action only because of making the communication.

Actuary's valuation

126.23   (1) The actuary of an insurance company must value

(a) the actuarial and other policy liabilities of the company as at the end of a financial year, and

(b) any other matter specified in a direction made by the superintendent.

(2) The actuary's valuation must be in accordance with generally accepted actuarial practice, with such changes as may be specified in an order by the superintendent and any additional directions that may be made by the superintendent.

Special valuation

126.24   (1) The superintendent may appoint an actuary to value the matters referred to in section 126.23 (1) (a) or (b) if the superintendent is of the opinion that the appointment is necessary.

(2) The insurance company must pay remuneration to an actuary appointed under subsection (1), at a rate directed by the superintendent, for carrying out the valuation.

Notice of meeting to actuary

126.25   An insurance company must provide the company's actuary with not less than 21 days' notice of any general meeting of the company, unless the members of the insurance company have waived or reduced the period of notice for the meeting in accordance with section 170 of the Business Corporations Act.

Actuary's report

126.26   (1) The actuary of an insurance company must, not less than 21 days before the date of the annual general meeting of the members of the company, make a report to them on the valuation made under section 126.23 and on any other prescribed matter.

(2) In each report required under subsection (1), the actuary must state whether, in the actuary's opinion, the annual financial statement presents fairly the results of the valuation made under section 126.23.

Report to directors

126.27   (1) The directors or, where the directors so choose, the audit committee of the insurance company must meet with the actuary of the company at least once during each financial year.

(2) At the meeting, the actuary must report, in accordance with generally accepted actuarial practice and any change or direction made by the superintendent under section 126.23,

(a) on the financial position of the insurance company, and

(b) if directed to do so by the superintendent, the expected future financial condition of the company.

Report on matters requiring rectification

126.28   The actuary of an insurance company must report in writing to

(a) the directors, president and treasurer of the insurance company, and

(b) the superintendent

any matters that have come to the actuary's attention in the course of carrying out the actuary's duties that, in the actuary's opinion,

(c) have material adverse effects on the financial condition of the insurance company, and

(d) require rectification.

Actuary's procedures

126.29   (1) The superintendent may, in writing, require that the actuary of an insurance company

(a) report to the superintendent on the actuary's procedures in valuing the actuarially based liability figures contained in the annual return, and

(b) enlarge or extend the scope of that valuation, or perform any other procedure in any particular case,

and the actuary must comply with the superintendent's requirement and report to the superintendent.

(2) The insurance company must pay any additional remuneration, at a rate directed by the superintendent, to the actuary for the work required under subsection (1) by the superintendent.

Qualified privilege

126.3   An oral or written statement or report made under this Act by the actuary or former actuary of an insurance company has qualified privilege.

No liability

126.31   The actuary or former actuary of an insurance company who in good faith makes a statement or report under section 126.2, 126.28 or 126.29 is not liable in a civil action because of making the statement or report or because of anything in it.

Filings

127   (1) Subject to subsection (1.1), within 90 days after the end of its financial year in each year, a financial institution must file with the superintendent a return in the form established by the superintendent outlining its financial condition and affairs during that financial year and must attach to the return

(a) its financial statements for that financial year,

(b) if its financial statements for that financial year are in consolidated form, the unconsolidated statements on which the consolidated financial statements are based,

(c) the report of the auditor required under section 212 of the Business Corporations Act or section 39.57 of the Credit Union Incorporation Act,

(d) a copy of a resolution of the directors showing that the return was approved by them, and

(e) if the financial institution is a subsidiary of another corporation, a copy of the annual financial statements for that financial year and auditor's report of the other corporation.

(1.1) An insurance company must, within 60 days after the end of its financial year in each year, file with the superintendent a return referred to in subsection (1).

(1.2) The actuary of an insurance company must make, and the company must file with its annual return, a report in a form determined by the superintendent on the reserve referred to in section 77.

(2) Within 5 days after a financial institution

(a) files with or delivers to the British Columbia Securities Commission or a similar authority outside British Columbia a statement concerning the financial affairs of the financial institution,

(b) distributes such a statement to the members of the financial institution, or

(c) makes an amendment to the financial institution's investment and lending policy established under section 136 (4),

the financial institution must file a copy of the statement or the amendment with the superintendent.

(3) At intervals specified by the superintendent, a financial institution must file with the superintendent one or more of the following reports as specified, and in the form established, by the superintendent:

(a) a financial affairs report;

(b) a market conduct practices report;

(c) a risk management practices report;

(d) a corporate governance report.

(4) For the purposes of subsection (3), the superintendent may specify different intervals for trust companies, insurance companies and credit unions.

(5) The superintendent may require an insurance company to file with the administrator of a national database of market conduct, with whom the Authority has entered into an agreement under section 219.01, a market conduct practices report

(a) instead of filing such a report with the superintendent under subsection (3), or

(b) if so directed by the superintendent, in addition to filing such a report with the superintendent under subsection (3).

Financial statements

128   (1) [Repealed 2011-29-91.]

(2) A financial institution that is a holding company must include,

(a) in the financial statements to be placed before an annual general meeting, and in each of its comparative interim financial statements, the assets and liabilities, and income and expense, of its subsidiaries, making due provision for minority interests, and indicating in the statement that it is presented in consolidated form, and

(b) in the financial statements to be placed before an annual general meeting,

(i) the names of each corporation that is its subsidiary, and

(ii) if the financial year of any of its subsidiaries does not coincide with the financial year of the financial institution, the date of the financial year end of the subsidiary and the reason why the financial years do not coincide.

(3) It is sufficient compliance with section 39.48 (1) of the Credit Union Incorporation Act if a credit union that otherwise complies with the requirements of that section substitutes for the financial statements referred to in that section condensed financial statements that conform to the requirements of subsection (4) of this section.

(4) The condensed financial statements referred to in subsection (3) must contain

(a) a condensed statement of profit and loss for the relevant financial year,

(b) a condensed balance sheet made up to the end of that financial year, and

(c) a notice in conspicuous type that any member or auxiliary member may obtain a free copy of the full financial statements at any branch of the credit union.

(5) A credit union that sends condensed financial statements to each member and auxiliary member as permitted by subsection (3) must

(a) keep at each of its branches or offices a copy of the full financial statements, and

(b) provide a free copy of the full financial statements to any member or auxiliary member who requests one.

(6) If financial statements are presented in accordance with this section, the auditor must qualify the auditor's report if, in the auditor's opinion, due provision has not been made for minority interests.

Accounting principles

129   A financial institution must prepare its financial statements in accordance with generally accepted accounting principles and with the regulations.

Public access to financial information

130   (1) A financial institution must keep at each branch or office of the financial institution a copy of its most recent annual financial statements and auditor's report.

(2) Every person may examine free of charge during the usual business hours of the financial institution a copy of the financial statements and auditor's report referred to in subsection (1).

(3) At the request of any person, a financial institution must provide that person with a copy of the financial statements and auditor's report on payment of a reasonable amount, if any, for that service that the directors may specify.

Financial year end

131   (1) The financial year end of a financial institution, incorporated on or after September 15, 1990, is December 31.

(2) If, immediately before September 15, 1990, the financial year end of a financial institution is a date other than December 31, the financial institution may change its financial year end to December 31, but not to another date.

(3) If, in any 12 month period, every credit union acting in concert with every other credit union adopts by special resolution the same date other than December 31 as its financial year end, then despite subsections (1) and (2), the financial year end of every credit union is changed to that date.

(4) Despite subsections (1) and (2), a financial institution may change its financial year end to October 31, if approved by the superintendent.

Records filed with registrar

132   The superintendent must file with the registrar a copy of

(a) every business authorization,

(b) any conditions attached to a business authorization or any modification of such conditions,

(c) an order under section 249 revoking a business authorization, and

(d) an order of the Supreme Court under section 251 appointing a receiver, a receiver manager or a trustee,

within 10 days after the business authorization is issued, the conditions are attached or modified or the order is made.

Location of records

133   (1) A financial institution must maintain facilities that the superintendent considers satisfactory by which the superintendent may obtain access to,

(a) if the financial institution is authorized to carry on deposit business, a record of all depositors, their names and addresses as far as is known and the sums deposited by the depositors,

(b) if the financial institution is authorized to carry on trust business, full and adequate records relating to the trust business of the financial institution,

(c) a record of all loans and investments made by the financial institution, and

(d) if the financial institution is authorized to carry on insurance business,

(i) a record of contracts of insurance in which the financial institution is an insurer, and

(ii) a record of all contracts of reinsurance and reinsurance treaties in which the financial institution is an insured or insurer.

(2) and (3) [Repealed 2004-48-65.]

Repealed

134   [Repealed 2004-48-66.]

Investment and loan committee

135   The directors of a financial institution must appoint or elect at the directors' first meeting following each annual general meeting, a committee, to be known as the investment and loan committee, composed of not fewer than 3 individuals, of which

(a) at least one member must be an officer,

(b) a majority of the members must not be officers or employees of the financial institution or of an affiliate of the financial institution, and

(c) in the case of a trust company or insurance company, not less than 1/3 of the members must be unaffiliated directors,

to hold office until the next annual general meeting.

Investment and loan standards

136   (1) For the purposes of this section and section 137, "prudent standards" are those that, in the overall context of an investment and loan portfolio, a prudent person would apply to investments and loans made on behalf of another person to whom there is owed a fiduciary duty to make investments without undue risk of loss and with a reasonable expectation of a fair return on the investments.

(2) A financial institution and any subsidiary of the financial institution must adhere to prudent standards in making investment and lending decisions, in giving guarantees and committing itself to other financial obligations, in writing down the value of investments and loans on its books and in managing its investments and loans.

(3) The investment and loan committee of a financial institution

(a) must recommend to the directors of the financial institution for their approval a written investment and lending policy that, for the financial institution and its subsidiaries, if any, the committee considers to

(i) be consistent with prudent standards,

(ii) comply with the regulations under subsection (5) and with sections 138 to 142,

(iii) be comprehensive in addressing all aspects of risk associated with the investments and loans of the financial institution, and

(iv) include mechanisms for measuring, limiting and managing risk, and

(b) as the committee or the directors consider necessary, and at least annually, must review the investment and lending policy and recommend amendments that the committee considers to be necessary or desirable.

(4) If the directors of the financial institution receive a recommendation under subsection (3), the financial institution must

(a) adopt the recommendation and establish the recommended policy, or the recommended amendments to that policy as part of the investment and lending policy of the financial institution and of its subsidiaries, if any, or

(b) make changes to the proposed policy or to the proposed amended policy that it considers to be necessary or desirable, and establish the policy, with those changes, as the investment and lending policy of the financial institution and of its subsidiaries, if any.

(5) A financial institution must ensure that the investment and lending policy established under subsection (4) contains the prescribed requirements.

(6) A financial institution must file with the superintendent a copy of the investment and lending policy established under subsection (4).

Superintendent's powers over investment and lending policy

137   If the superintendent believes on reasonable grounds that the investment and lending policy established under section 136 (4)

(a) is inconsistent with prudent standards,

(b) is not in compliance with regulations under section 136 (5) and with sections 138 to 142,

(c) is not comprehensive in addressing all aspects of risk associated with the investments and loans of the financial institution, or

(d) does not include mechanisms for measuring, limiting and managing risk,

the superintendent may order the directors of the financial institution to review immediately the investment and lending policy and must specify in the order the grounds under paragraph (a), (b), (c) or (d).

Compliance with investment and lending limits

138   (1) A financial institution and any subsidiary of the financial institution must not make investments or loans other than ones that,

(a) subject to section 140, are within the limits, if any, prescribed for the purpose of this section,

(b) subject to section 140, are in accordance with the conditions, if any, prescribed for the purposes of this section,

(c) are consistent with the investment and loan policy established under section 136 (4) by the financial institution, and

(d) subject to sections 140 and 141 (2), will not result in the financial institution, or any of its subsidiaries, or any combination of the financial institution and its subsidiaries, acquiring, holding or controlling, whether directly or indirectly,

(i) more than 10% of the voting shares in a corporation, or

(ii) more than a 10% interest in any entity.

(2) and (3) [Repealed 2019-39-24.]

Credit unions not permitted to invest in other credit unions

139   A credit union that is not a central credit union must not

(a) make a loan to or guarantee indebtedness of, or

(b) invest in equity shares issued by

another credit union that is not a central credit union.

Credit unions require consent for prescribed transactions

139.1   (1) A credit union must not enter into a prescribed type of transaction without first receiving the consent of the superintendent.

(2) The superintendent must take into consideration the prescribed criteria when deciding whether to consent to a transaction referred to in subsection (1).

Other authorized loans, investments and activities of subsidiaries

140   Section 138 (1) (a), (b) or (d) does not apply in respect of a prescribed type of loan or investment made in accordance with the regulations or a prescribed type of business or activity carried on by a subsidiary of a financial institution.

Investment in a corporation

141   (1) In this section, "venture capital corporation" means a corporation the activities of which are limited to

(a) the provision of financing and loans to entities in circumstances that involve the corporation in the holding of equity and debt security instruments of the entities being financed, and

(b) the provision of financial or management consulting services to entities whose security instruments have been acquired by the corporation that provides the services in a manner described in paragraph (a) or that participates in the provision of those services in contemplation of so acquiring security instruments.

(2) Section 138 (1) (d) does not apply if a financial institution directly or indirectly acquires, holds or controls

(a) more than 10% of the voting shares in a corporation that carries on, or more than a 10% interest in another type of entity that carries on, one or more of a prescribed type of business or activity,

(b) more than 10% of the voting shares in a venture capital corporation, or

(c) subject to first receiving the written consent of the superintendent and to any conditions that the superintendent in giving the consent may impose, more than 10% of the voting shares in a corporation that carries on a business that is reasonably ancillary to the business of a financial institution.

(3) [Repealed 2004-48-70.]

Other authorized investments

142   (1) Subject to subsection (2), a financial institution or a subsidiary of a financial institution may acquire assets that it would not otherwise be permitted to acquire under this Division,

(a) subject to first receiving the consent of the superintendent, in payment or part payment for security instruments sold by the financial institution or the subsidiary,

(b) subject to first receiving the consent of the superintendent, under an arrangement in good faith for the reorganization of a corporation whose security instruments were previously owned by the financial institution or the subsidiary,

(c) subject to first receiving consent of the superintendent, on amalgamation with another corporation of a corporation whose security instruments were previously owned by the financial institution or the subsidiary,

(d) for the purpose in good faith of protecting investments of the financial institution or the subsidiary,

(e) in the case of a trust company or an insurance company, on an amalgamation referred to in section 20 or on the company doing any of those things described in section 21, or

(f) by realizing on the security for a loan if the security is shares in a corporation and the effect of realizing on the security is that the financial institution or the subsidiary will hold, directly or indirectly, more than 10% of the voting shares in a corporation not described in section 141 (2).

(2) If a financial institution has acquired assets in accordance with subsection (1), it must dispose of them within 5 years after their acquisition unless the superintendent extends the time by order made before the time expires.

Disposal of investments

143   The superintendent may order a financial institution to dispose of and realize on, within a period specified by the superintendent, an investment or loan made in contravention of a provision of this Part.

Loans and guarantees prohibited

143.1   (1) A trust company or an insurance company must not give financial assistance to a person, directly or indirectly, by way of loan, guarantee, the provision of security, or otherwise,

(a) if at the time of the giving of financial assistance the trust company or insurance company is insolvent, or

(b) if, in the case of a loan, the giving of the loan would render the trust company or insurance company insolvent.

(2) On the application of a director of a trust company or an insurance company, the court may declare whether the giving of financial assistance by the trust company or insurance company would contravene subsection (1).

Financial assistance restricted

143.2   (1) A trust company or an insurance company must not give financial assistance to a person, directly or indirectly, by way of loan, guarantee, the provision of security, or otherwise,

(a) for the purpose of a purchase or subscription made or to be made by that person of, or for, shares of the trust company or insurance company, or any debt obligations of the trust company or insurance company carrying a right of conversion into or exchange for shares of the trust company or insurance company,

(b) on the security, in whole or in part, of a pledge of or charge on shares of the trust company or insurance company given by that person to the trust company or insurance company, or

(c) in any other case, unless there are reasonable grounds for believing that, or the directors are of the opinion that, the giving of the financial assistance is in the best interests of the trust company or insurance company.

(2) Despite subsection (1), a trust company or an insurance company, if previously authorized by special resolution and if there are reasonable grounds for believing that the giving of the financial assistance is in the best interests of the trust company or insurance company, may

(a) provide money, in accordance with a scheme for the time being in force, for the subscription for or purchase of shares or debt obligations of the trust company or insurance company by trustees, to be held by or for the benefit of a bona fide employee of the trust company or insurance company or of an affiliate of the trust company or insurance company, and

(b) provide financial assistance to bona fide full time employees of the trust company or insurance company, or of an affiliate, to enable the employees to purchase or subscribe for shares or debt obligations of the trust company or insurance company to be held beneficially by the employees.

(3) Despite subsection (1), financial assistance may be given to or for the benefit of

(a) a wholly owned subsidiary by its holding company,

(b) its holding company by a wholly owned subsidiary,

(c) a company by another company, if both companies are wholly owned subsidiaries of the same holding company or are wholly owned by the same person, and

(d) the sole member of a company, by that company.

Contract enforceable

143.3   Despite a contract to which a trust company or an insurance company is a party being made in contravention of section 143.1 or 143.2, a bona fide lender for value without notice, or the trust company or insurance company, may enforce the contract.

Interpretation and designation of related parties

144   (1) In this Part, a "related party" of a financial institution means a person who

(a) is a director or senior officer of the financial institution or of the holding company of the financial institution or is acting in a similar capacity in respect of an unincorporated entity that controls the financial institution,

(b) is a member of a prescribed class of employees of the financial institution or the holding company of the financial institution,

(c) owns directly 10% or more of the non-voting shares in the financial institution, not counting any non-equity shares in the case of a credit union,

(d) owns or controls, directly or indirectly, 10% or more of any class of voting shares in the financial institution,

(e) is a sole practitioner who is an auditor of the financial institution,

(f) is actively engaged in auditing the financial institution and is a partner in a partnership that is an auditor of the financial institution,

(g) is the spouse of an individual who is a related party under paragraph (a), (b), (c), (d) or (j) or under subsection (2),

(h) is a child who is less than 18 years of age of an individual who is a related party under paragraph (a), (b), (c), (d) or (j) or under subsection (2),

(i) is a corporation in which a person who is a related party under paragraph (a), (b), (c), (d) or (j) or under subsection (2) has or controls, directly or indirectly, more than 50% of the votes that are attached to the outstanding voting shares of the corporation and that may be cast in the election of the directors, or

(j) is designated under subsection (3) as a related party,

but does not include,

(k) when used in relation to a credit union, a central credit union or an entity that is designated by regulation, or

(l) when used in relation to a central credit union,

(i) a member of the central credit union,

(ii) a cooperative credit society incorporated under the Cooperative Credit Associations Act (Canada), or

(iii) an entity that is designated by regulation, and a member or shareholder of that entity.

(2) An individual who, having been a related party under subsection (1) (a), (b), (c), (d) or (j) of a financial institution, ceases to be a related party under that subsection nevertheless continues for the purposes of this Part to be a related party of the financial institution for the 12 months commencing on the date the individual ceases to be a related party as defined in subsection (1) (a), (b), (c), (d) or (j).

(3) For the purposes of this Part, the superintendent by order may

(a) designate a person as a related party of a financial institution if in the superintendent's opinion there exists between the person and the financial institution an interest or relationship that might reasonably be expected to affect the exercise of the best judgment of an officer or director of the financial institution with respect to an investment, loan or other transaction, or

(b) designate a person as a related party of the financial institution if in the superintendent's opinion the person is acting in concert with one or more other persons to own or control, directly or indirectly, 10% or more of any class of voting shares in the financial institution.

When related party transactions are permitted

145   A financial institution or a subsidiary of it may enter into the following transactions with related parties:

(a) pay or confer a salary, fee, stock option, pension, benefit or incentive benefit to a director or senior officer of the financial institution, or to a person who is in the class of employees prescribed for the purpose of section 144 (1) (b) or designated under section 144 (3);

(b) provide to related parties of the financial institution, at not less than fair market value, services or products that the financial institution or the subsidiary also provides in the ordinary course of its business to the public or, in the case of a credit union, to its members;

(c) if the aggregate amount outstanding under all loans to an individual who is a related party of the financial institution will not exceed the prescribed amount, counting the amount of the intended loan, make a loan to an individual who is a related party of the financial institution under paragraph (a) or (b) of the definition of "related party" in section 144;

(d) buy from, or sell to, a related party of the financial institution, for a nominal amount, as defined in the regulations, property or services having a fair market value that does not exceed that nominal amount.

Conduct review committee's power to approve other transactions

146   (1) Except for a transaction that is described in section 145 or that is the subject of a consent under section 147, a financial institution or a subsidiary of it must not enter into a transaction with a related party of the financial institution unless the transaction, at the time it is entered into, is

(a) a specific transaction, or

(b) in a class of transactions

approved in writing for the purpose of this section by the conduct review committee of the financial institution.

(2) The conduct review committee of a financial institution must not approve a specific transaction or class of transactions for the purpose of this section unless the specific transaction or class of transactions is in the best interests of the financial institution or, if entered into by a subsidiary of it, in the best interests of both the financial institution and the subsidiary.

(3) The conduct review committee must specify in the written approval referred to in subsection (1) the factors considered by it in determining whether the specific transaction or the class of transactions is in the best interests of the financial institution or the financial institution and its subsidiary, as the case may be, and the factors considered must include

(a) the fair market value of the consideration paid by or received by the financial institution or the subsidiary,

(b) the nature of the transaction in relation to the usual business of the financial institution or the subsidiary,

(c) in the case of a transaction involving a loan by the financial institution or the subsidiary, the nature of the security and its value in relation to the principal amount of the loan, and

(d) prescribed factors.

When superintendent may consent to related party transactions

147   (1) A financial institution or a subsidiary of it may enter into a transaction with a related party of the financial institution if the transaction, at the time it is entered into, is

(a) a specific transaction, or

(b) in a class of transactions

consented to by the superintendent.

(2) The superintendent may give a consent under subsection (1) if satisfied that the specific transaction or that any transaction in the class of transactions, as the case may be,

(a) is not and will not be contrary to the interests of

(i) the financial institution or the subsidiary or both, as the case may be,

(ii) depositors or policy holders of the financial institution,

(iii) any persons for whom the financial institution acts in a fiduciary capacity, or

(iv) the related party, and

(b) does not, will not and is not intended to obscure the financial condition of the financial institution, of the subsidiary or of the related party.

Restrictions on self dealing as a fiduciary

148   (1) Except as provided in this section, a financial institution that holds money as a fiduciary must not

(a) invest that money in securities issued by the financial institution or by a related party of it, or

(b) use that money in any transaction with a related party of the financial institution.