An Act to amend certain Acts in relation to financial institutions (S.C. 2005, c. 54)
Full Document:
Assented to 2005-11-25
171. The Act is amended by adding the following after section 172:
Marginal note:Election or appointment as director
172.1 The election or appointment of a person as a director is subject to the following:
(a) the person was present at the meeting when the election or appointment took place and did not refuse to hold office as a director; or
(b) the person was not present at the meeting when the election or appointment took place but
(i) consented in writing to hold office as a director before the election or appointment or within 10 days after it, or
(ii) acted as a director after the election or appointment.
172. Paragraph 183(3)(a) of the Act is replaced by the following:
(a) the remaining directors appointed or elected by those persons may fill the vacancy except one resulting from an increase in the number or the minimum or maximum number of directors who are to be appointed or elected by that class or from a failure to appoint or elect the number or minimum number of directors who are to be appointed or elected by that class;
173. Subsection 187(3) of the Act is replaced by the following:
Marginal note:Director continues to be present
(3) A director who is present at a meeting of directors or of a committee of directors but is not, in accordance with subsection 207(1), present at any particular time during the meeting is considered to be present for the purposes of this section.
174. Section 189.1 of the Act is amended by adding the following after subsection (4):
Marginal note:Evidence
(5) Unless a ballot is demanded, an entry in the minutes of a meeting that the chairperson declared a resolution to be carried or defeated is in the absence of evidence to the contrary proof of that fact without proof of the number or proportion of votes recorded in favour of or against the resolution.
175. Paragraphs 202(c) and (d) of the Act are replaced by the following:
(c) fill a vacancy among the directors, on a committee of directors or in the office of auditor, or appoint additional directors;
(d) issue or cause to be issued securities, including an issue of shares of a series that is authorized in accordance with section 71, except in accordance with any authorization made by the directors;
176. Section 206 of the Act is replaced by the following:
Marginal note:Disclosure of interest
206. (1) A director or officer of an association shall disclose to the association, in writing or by requesting to have it entered in the minutes of a meeting of directors or a meeting of a committee of directors, the nature and extent of any interest they have in a material contract or material transaction with the association, whether entered into or proposed, if they
(a) are a party to the contract or transaction;
(b) are a director or officer of a party, other than a member, to the contract or transaction or a person acting in a similar capacity; or
(c) have a material interest in a party to the contract or transaction.
Marginal note:Time of disclosure — director
(2) The disclosure shall be made in the case of a director
(a) at the meeting of directors, or of a committee of directors, at which the proposed contract or transaction is first considered;
(b) if at the time of the meeting referred to in paragraph (a) the director was not interested in the proposed contract or transaction, at the first one after they become interested in it;
(c) if the director becomes interested after a contract or transaction is entered into, at the first one after they become interested; or
(d) if a person who is interested in a contract or transaction becomes a director, at the first one after they become a director.
Marginal note:Time of disclosure — officer
(3) The disclosure shall be made in the case of an officer who is not a director
(a) immediately after they become aware that the contract, transaction, proposed contract or proposed transaction is to be considered or has been considered at a meeting of directors or of a committee of directors;
(b) if they become interested after the contract or transaction is entered into, immediately after they become interested; or
(c) if a person who is interested in a contract or transaction becomes an officer, immediately after they become an officer.
Marginal note:Time of disclosure — contract not requiring approval
(4) If the material contract or material transaction, whether entered into or proposed, is one that in the ordinary course of the association’s business would not require approval by the directors or shareholders, the director or officer shall disclose to the association, in writing or by requesting to have it entered in the minutes of a meeting of directors or of a committee of directors, the nature and extent of their interest immediately after they become aware of the contract or transaction.
Marginal note:1997, c. 15, s. 129(1)
177. Subsection 207(1) of the Act is replaced by the following:
Marginal note:Director to abstain
207. (1) A director who is required to make a disclosure under subsection 206(1) shall not be present at any meeting of directors, or of a committee of directors, while the contract or transaction is being considered or vote on any resolution to approve it unless the contract or transaction
(a) relates primarily to their remuneration as a director, officer, employee or agent of the association, an entity controlled by the association or an entity in which the association has a substantial investment;
(b) is for indemnity under section 216 or insurance under section 217; or
(c) is with an affiliate of the association.
178. Sections 208 to 210 of the Act are replaced by the following:
Marginal note:General notice
208. (1) For the purposes of subsection 206(1), a general notice to the directors declaring that a director or officer is to be regarded as interested for any of the following reasons in a contract or transaction entered into with a party is a sufficient declaration of interest in relation to any contract or transaction with that party:
(a) the director or officer is a director or officer of a party referred to in paragraph 206(1)(b) or (c) or a person acting in a similar capacity;
(b) the director or officer has a material interest in the party; or
(c) there has been a material change in the nature of the director’s or officer’s interest in the party.
Marginal note:Access to disclosures
(2) The members or shareholders of the association may examine the portions of any minutes of meetings of directors or committees of directors that contain disclosures under subsection 206(1), or the portions of any other documents that contain those disclosures, during the usual business hours of the association.
Marginal note:Avoidance standards
209. (1) A contract or transaction for which disclosure is required under subsection 206(1) is not invalid and a director or officer is not accountable to the association or its members or shareholders for any profit realized from it by reason only of the director’s or officer’s interest in the contract or transaction or the fact that the director was present or was counted to determine whether a quorum existed at the meeting of directors, or of a committee of directors, that considered it if
(a) the director or officer disclosed their interest in accordance with section 206 and subsection 208(1);
(b) the directors approved the contract or transaction; and
(c) the contract or transaction was reasonable and fair to the association at the time that it was approved.
Marginal note:Confirmation by members
(2) Even if the conditions set out in subsection (1) are not met, a director or officer acting honestly and in good faith is not accountable to the association or its members or shareholders for any profit realized from a contract or transaction for which disclosure was required and the contract or transaction is not invalid by reason only of the director’s or officer’s interest in it if
(a) the contract or transaction is approved or confirmed by special resolution at a meeting of members;
(b) disclosure of the interest was made to the members in a manner sufficient to indicate its nature before the contract or transaction was approved or confirmed; and
(c) the contract or transaction was reasonable and fair to the association at the time that it was approved or confirmed.
Marginal note:Court may set aside or require accounting
210. If a director or officer of an association fails to comply with any of sections 206 to 209, a court, on application of the association or any of its members or shareholders, may set aside the contract or transaction on any terms that the court thinks fit and may require the director or officer to account to the association for any profit or gain realized on it.
179. Section 211 of the English version of the Act is replaced by the following:
Marginal note:Director liability
211. (1) Directors of an association who vote for or consent to a resolution of the directors authorizing the issue of a membership share or a share contrary to subsection 74(1) or the issue of subordinated indebtedness contrary to section 87 for a consideration other than money are jointly and severally, or solidarily, liable to the association to make good any amount by which the consideration received is less than the fair equivalent of the money that the association would have received if the membership share or share or subordinated indebtedness had been issued for money on the date of the resolution.
Marginal note:Further liability
(2) Directors of an association who vote for or consent to a resolution of the directors authorizing any of the following are jointly and severally, or solidarily, liable to restore to the association any amounts so distributed or paid and not otherwise recovered by the association and any amounts in relation to any loss suffered by the association:
(a) a redemption or purchase of membership shares or shares contrary to section 79;
(b) a reduction of capital contrary to section 82;
(c) a payment of a dividend contrary to section 86;
(d) a payment of an indemnity contrary to section 216; or
(e) any transaction contrary to Part XII.
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