Bank Act (S.C. 1991, c. 46)

Marginal note:Duty of replacement auditor

• 322 (1) Where an auditor of a bank has resigned or the appointment of an auditor has been revoked, no firm of accountants shall accept an appointment as auditor of the bank or consent to be an auditor of the bank until the firm of accountants has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.

• Marginal note:Exception

  (2) Notwithstanding subsection (1), a firm of accountants may accept an appointment or consent to be appointed as auditor of a bank if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.

• Marginal note:Effect of non-compliance

  (3) Unless subsection (2) applies, an appointment as auditor of a bank is void if subsection (1) has not been complied with.

Marginal note:Auditors’ examination

• 323 (1) The auditor or auditors of a bank must make any examination that the auditor or auditors consider necessary to enable the auditor or auditors to report on the annual statement and on other financial statements required by this Act to be placed before the shareholders or, if the bank is a federal credit union, the members, except any annual statements or parts of those statements that relate to the period referred to in subparagraph 308(1)(a)(ii).

• Marginal note:Auditing standards

  (2) The examination of the auditor or auditors referred to in subsection (1) shall, except as otherwise specified by the Superintendent, be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Chartered Professional Accountants of Canada.

Marginal note:Right to information

• 324 (1) On the request of the auditor or auditors of a bank, the present or former directors, officers, employees or agents of the bank shall, to the extent that such persons are reasonably able to do so,

  • (a) permit access to such records, assets and security held by the bank or any entity in which the bank has a substantial investment, and

  • (b) provide such information and explanations

  as are, in the opinion of the auditor or auditors, necessary to enable the auditor or auditors to perform the duties of the auditor or auditors of the bank.

• Marginal note:Directors to provide information

  (2) On the request of the auditor or auditors of a bank, the directors of the bank shall, to the extent that they are reasonably able to do so,

  • (a) obtain from the present or former directors, officers, employees and agents of any entity in which the bank has a substantial investment the information and explanations that such persons are reasonably able to provide and that are, in the opinion of the auditor or auditors, necessary to enable them to perform the duties of the auditor or auditors of the bank; and

  • (b) provide the auditor or auditors with the information and explanations so obtained.

• Marginal note:No civil liability

  (3) A person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.

Marginal note:Auditors’ report and extended examination

• 325 (1) The Superintendent may, in writing, require that the auditor or auditors of a bank report to the Superintendent on the extent of the procedures of the auditor or auditors in the examination of the annual statement and may, in writing, require that the auditor or auditors enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor or auditors shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.

• Marginal note:Special examination

  (2) The Superintendent may, in writing, require that the auditor or auditors of a bank make a particular examination relating to the adequacy of the procedures adopted by the bank for the safety of its creditors and shareholders and, if the bank is a federal credit union, for the safety of its members, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent.

• Marginal note:Idem

  (3) The Superintendent may direct that a special audit of a bank be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose a firm of accountants qualified pursuant to subsection 315(1) to be an auditor of the bank.

• Marginal note:Expenses payable by bank

  (4) The expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the bank on being approved in writing by the Superintendent.

Marginal note:Auditors’ report

• 326 (1) The auditor or auditors must, not less than 21 days before the date of the annual meeting of the shareholders of the bank or, if the bank is a federal credit union, of the annual meeting of the members, make a report in writing to the shareholders or members, as the case may be, on the annual statement referred to in subsection 308(1).

• Marginal note:Audit for shareholders

  (2) In each report required under subsection (1), the auditor or auditors shall state whether, in the opinion of the auditor or auditors, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the bank as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank for that financial year.

• Marginal note:Auditors’ remarks

  (3) In each report referred to in subsection (2), the auditor or auditors shall include such remarks as the auditor or auditors consider necessary when

  • (a) the examination has not been made in accordance with the auditing standards referred to in subsection 323(2);

  • (b) the annual statement has not been prepared on a basis consistent with that of the preceding financial year; or

  • (c) the annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the bank as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the bank for that financial year.

Marginal note:Report on directors’ statement

• 327 (1) The auditor or auditors of a bank must, if required by the shareholders or, if the bank is a federal credit union, by the members or shareholders, if any, audit and report to the shareholders or members, as the case may be, on any financial statement submitted by the directors to the shareholders or members, and the report must state whether, in their opinion, the financial statement presents fairly the information required by the shareholders or members.

• Marginal note:Making of report

  (2) A report of the auditor or auditors made under subsection (1) must be attached to the financial statement to which it relates and a copy of the statement and report must be sent by the directors to the Superintendent, to every shareholder and, if the bank is a federal credit union, to every member and shareholder, if any.

Marginal note:Report to officers

• 328 (1) It is the duty of the auditor or auditors of a bank to report in writing to the chief executive officer and chief financial officer of the bank any transactions or conditions that have come to the attention of the auditor or auditors affecting the well-being of the bank that in the opinion of the auditor or auditors are not satisfactory and require rectification and, without restricting the generality of the foregoing, the auditor or auditors shall, as occasion requires, make a report to those officers in respect of

  • (a) transactions of the bank that have come to the attention of the auditor or auditors and that in the opinion of the auditor or auditors have not been within the powers of the bank, and

  • (b) loans owing to the bank by any person the aggregate amount of which exceeds one half of one per cent of the regulatory capital of the bank and in respect of which, in the opinion of the auditor or auditors, loss to the bank is likely to occur,

  but when a report required under paragraph (b) has been made in respect of loans to any person, it is not necessary to report again in respect of loans to that person unless, in the opinion of the auditor or auditors, the amount of the loss likely to occur has increased.

• Marginal note:Transmission of report

  (2) Where the auditor or auditors of a bank make a report under subsection (1),

  • (a) the auditor or auditors shall transmit the report, in writing, to the chief executive officer and chief financial officer of the bank;

  • (b) the report shall be presented to the first meeting of the directors following its receipt;

  • (c) the report shall be incorporated in the minutes of that meeting; and

  • (d) the auditor or auditors shall, at the time of transmitting the report to the chief executive officer and chief financial officer, provide the audit committee of the bank and the Superintendent with a copy.

Marginal note:Auditors of subsidiaries

• 329 (1) A bank shall take all necessary steps to ensure that each of its subsidiaries has as its auditor the auditor or one of the auditors of the bank.

• Marginal note:Subsidiary outside Canada

  (2) Subsection (1) applies in the case of a subsidiary that carries on its operations in a country other than Canada unless the laws of that country do not permit the appointment of an auditor of the bank as the auditor of that subsidiary.

• Marginal note:Exception

  (3) Subsection (1) does not apply in respect of any particular subsidiary where the bank, after having consulted its auditor or auditors, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the bank.

Marginal note:Auditors’ attendance

• 330 (1) The auditors of a bank are entitled to receive notice of every meeting of the committee designated under paragraph 157(2)(e), if that committee is to perform the duties set out in section 195.1 in that meeting, of the audit committee and of the conduct review committee and, at the expense of the bank, to attend and be heard at that meeting.

• Marginal note:Attendance

  (2) If so requested by a member of the audit committee, the auditor or auditors shall attend every meeting of the audit committee held during the member’s term of office.

Marginal note:Calling meeting

• 331 (1) The auditor or auditors of a bank or a member of the audit committee may call a meeting of the audit committee.

• Marginal note:Right to interview

  (2) The chief internal auditor of a bank or any officer or employee of the bank acting in a similar capacity shall, at the request of the auditor or auditors of the bank and on receipt of reasonable notice, meet with the auditor or auditors.

Marginal note:Notice of errors

• 332 (1) A director or an officer of a bank shall forthwith notify the audit committee and the auditor or auditors of the bank of any error or misstatement of which the director or officer becomes aware in an annual statement or other financial statement on which the auditor or auditors or any former auditor or auditors have reported.

• Marginal note:Error noted by auditors

  (2) If the auditor or auditors or former auditor or auditors of a bank are notified or become aware of an error or misstatement in an annual statement or other financial statement on which the auditor or auditors reported and in the opinion of the auditor or auditors the error or misstatement is material, the auditor or auditors or former auditor or auditors shall inform each director of the bank accordingly.

• Marginal note:Duty of directors

  (3) When under subsection (2) the auditor or auditors or former auditor or auditors of a bank inform the directors of an error or misstatement in an annual statement or other financial statement, the directors shall

  • (a) prepare and issue a revised annual statement or financial statement; or

  • (b) otherwise inform the shareholders, and, if the bank is a federal credit union, its members, and the Superintendent of the error or misstatement.

Marginal note:Qualified privilege for statements

333 Any oral or written statement or report made under this Act by the auditor or auditors or former auditor or auditors of a bank has qualified privilege.

Remedial Actions

Marginal note:Derivative action

• 334 (1) Subject to subsection (2), a complainant or the Superintendent may apply to a court for leave to bring an action under this Act in the name and on behalf of a bank or any of its subsidiaries, or to intervene in an action under this Act to which the bank or a subsidiary of the bank is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the bank or the subsidiary.

• Marginal note:Conditions precedent

  (2) No action may be brought and no intervention in an action may be made under subsection (1) by a complainant unless the court is satisfied that

  • (a) the complainant has, not less than 14 days before bringing the application or as otherwise ordered by the court, given notice to the directors of the bank or the bank’s subsidiary of the complainant’s intention to apply to the court under subsection (1) if the directors of the bank or the bank’s subsidiary do not bring, diligently prosecute or defend or discontinue the action;

  • (b) the complainant is acting in good faith; and

  • (c) it appears to be in the interests of the bank or the subsidiary that the action be brought, prosecuted, defended or discontinued.

• Marginal note:Notice to Superintendent

  (3) A complainant under subsection (1) shall give the Superintendent notice of the application and the Superintendent may appear and be heard in person or by counsel at the hearing of the application.

Marginal note:Powers of court

• 335 (1) In connection with an action brought or intervened in under subsection 334(1), the court may at any time make any order it thinks fit including, without limiting the generality of the foregoing,

  • (a) an order authorizing the Superintendent, the complainant or any other person to control the conduct of the action;

  • (b) an order giving directions for the conduct of the action;

  • (c) an order directing that any amount adjudged payable by a defendant in the action be paid, in whole or in part, directly to the following instead of to the bank or the subsidiary:

    • (i) if the bank is not a federal credit union, former and present security holders of the bank or subsidiary, or

    • (ii) if the bank is a federal credit union, former and present members or security holders of the federal credit union or former and present security holders of the subsidiary; and

  • (d) an order requiring the bank or the subsidiary to pay reasonable legal fees incurred by the Superintendent or the complainant in connection with the action.

• Marginal note:Jurisdiction

  (2) Notwithstanding subsection (1), the court may not make any order in relation to any matter that would, under this Act, require the approval of the Minister or the Superintendent.