An Act to incorporate Continental Bank of Canada (S.C. 1976-77, c. 58)

Incorporation and Organization

Marginal note:Incorporation

1 There is hereby incorporated a corporation under the name Continental Bank of Canada, in English, and the name Banque Continentale du Canada, in French, hereinafter called the “Bank”, consisting of such persons as are from time to time shareholders of the Bank.

Marginal note:Provisional directors

• 2 (1) Subject to subsection (2), the persons who are the directors of IAC Limited on the coming into force of this Act are the provisional directors of the Bank, and this subsection constitutes a declaration of the names, addresses and occupations of those persons for purposes of subsection 8(1) of the Bank Act.

• Marginal note:Qualifications

  (2) A director of IAC Limited is not eligible to be a provisional director of the Bank unless he holds, as the absolute and sole owner thereof in his individual right and not as trustee or in the right of another, not less than one hundred common shares of the capital stock of IAC Limited, and the requirement in subsection 10(2) of the Bank Act that a provisional director of a bank be a subscriber for stock of that bank does not apply to a provisional director of the Bank.

Marginal note:Authorized capital

3 The authorized capital stock of the Bank shall be one hundred million dollars, divided into shares having a par value of ten dollars each.

Marginal note:Interpretation

• 4 (1) For purposes of this Act, a corporation is a subsidiary of another corporation (in this subsection called the “parent corporation”) only if it is controlled by

  • (a) the parent corporation,

  • (b) a group of two or more corporations each of which is either

    • (i) the parent corporation,

    • (ii) a corporation controlled by the parent corporation, or

    • (iii) a corporation controlled by one or more corporations that are controlled by the parent corporation, or

  • (c) a corporation described in subpararaph (b)(ii) or (b)(iii).

• Marginal note:Idem

  (2) For purposes of subsection (1), a corporation is controlled by another corporation or by two or more other corporations only if that other corporation owns, or those other corporations own, more than 50% of the issued shares having full voting rights in all circumstances of the capital stock of the first-mentioned corporation.

Marginal note:Head office

5 The head office of the Bank shall be in the Municipality of Metropolitan Toronto, in the Province of Ontario.

Marginal note:Application of Bank Act

6 This Act shall be construed to confer upon the Bank all the powers, privileges and immunities, and to subject it to all the liabilities and provisions set forth in the Bank Act, except as provided in the Bank Act or in this Act.

Marginal note:Exception to Bank Act

• 7 (1) Notwithstanding subsections 11(1) and 12(1) of the Bank Act, the provisional directors of the Bank are not required to give public notice of the opening of stock books of the Bank or of the meeting of subscribers referred to in subsection 12(1) of the Bank Act.

• Marginal note:Meetings of shareholders

  (2) Until the day on which an amalgamation under subsection 10(1) takes effect, the annual general meeting or any other meeting of the shareholders of the Bank is validly constituted notwithstanding that only the holder of a proxy of IAC Limited is present and qualified to vote thereat, and, notwithstanding section 19 of the Bank Act, no public notice of any such meeting is required.

• Marginal note:Temporary exceptions to Bank Act

  (3) During the period commencing on the day this Act comes into force and ending on the expiration of ten years next following that day or on the day on which an amalgamation under subsection 10(1) takes effect, whichever occurs first,

  • (a) IAC Limited may, notwithstanding sections 53 and 54 of the Bank Act,

    • (i) subscribe for shares of the capital stock of the Bank at not less than par value and cause to be registered in the name of IAC Limited the shares issued pursuant to such subscriptions, and

    • (ii) exercise, in person or by proxy, the voting rights pertaining to shares of the capital stock of the Bank registered in the name of IAC Limited;

  • (b) a person is not eligible to be a director of the Bank unless he holds, as the absolute and sole owner thereof in his individual right and not as trustee or in the right of another, not less that one hundred common shares of the capital stock of IAC Limited or such other number of common shares of that capital stock as the Minister of Finance may require, and, notwithstanding subsection 18(2) of the Bank Act, he is not required to hold stock of the Bank;

  • (c) notwithstanding subsection 18(7) of the Bank Act, a person is not ineligible to be elected or appointed a director of the Bank by reason of his being a director of IAC Limited or of a corporation that is a subsidiary of IAC Limited;

  • (d) paragraph 75(2)(g) of the Bank Act does not apply to the Bank; and

  • (e) the total principal amount outstanding, on the expiration of any financial year of the Bank, of all loans and advances that are made by the Bank on the security of real or immovable property of the kind described in subsection 75(4) of the Bank Act, other than loans or advances made or guaranteed under any Act of the Parliament of Canada other than the Bank Act shall not exceed the amount referred to in paragraph 75(4)(a) of that Act but may, notwithstanding that subsection, exceed the amount referred to in paragraph 75(4)(b) of that Act.

Relationship Between the Bank and IAC Limited

Marginal note:Bank as wholly-owned subsidiary

8 Until the day on which an amalgamation under subsection 10(1) takes effect,

• (a) all of the voting shares in the capital stock of the Bank from time to time outstanding shall be held in the name or right of and for the use or benefit of IAC Limited;

• (b) notwithstanding any provision of the Bank Act, IAC Limited shall cause a majority of the persons who are directors of the Bank at any time to be persons who are also directors of IAC Limited.

Marginal note:Restrictions on lending

9 The Bank shall not lend money to IAC Limited and no loan by the Bank to any corporation that is a subsidiary of IAC Limited but is not a subsidiary of the Bank shall be made, or permitted to remain outstanding, at a time when such corporation is carrying on any business, or owns any assets, that could not be carried on or owned by a chartered bank in compliance with the Bank Act, except as contemplated by Section 18.

Marginal note:Amalgamation

• 10 (1) IAC Limited and the Bank shall, within ten years after the coming into force of this Act, amalgamate in accordance with the Bank Act and, subject to subsections (4) to (6), the Bank after the amalgamation is subject in all respects to the Bank Act.

• Marginal note:Issue of shares

  (2) Notwithstanding section 110 of the Bank Act, the Bank resulting from the amalgamation under subsection (1) may issue its shares to the persons who were the registered owners of shares of IAC Limited immediately prior to the amalgamation.

• Marginal note:Application of certain provisions of the Bank Act

  (2.1) Subject to subsection (2.2), section 110.1 of the Bank Act applies to IAC Limited and in respect of the shares of IAC Limited.

• Marginal note:Exception

  (2.2) A person who immediately prior to the amalgamation under subsection (1) of this section was permitted by section 110.1 of the Bank Act to continue to hold or beneficially own shares of IAC Limited that but for subsection (2) of that section would be held or beneficially owned in contravention of paragraph (1)(a) of that section, may hold or beneficially own the shares issued to him under subsection (2) of this section after the amalgamation during the same period of time as he would have been permitted by subsection 110.1(2) of the Bank Act to continue to hold or beneficially own shares of IAC Limited had the amalgamation not occurred.

• Marginal note:Where Bank Act applies

  (3) Prior to an amalgamation under subsection (1), if there are no parties to the amalgamation other than IAC Limited, the Bank or any wholly owned subsidiary of either of them, the Governor in Council may, by order, prescribe that, notwithstanding any provision of the Bank Act, the proposed amalgamation agreement need not be submitted to the shareholders of IAC Limited.

• Marginal note:Outstanding indebtedness

  (4) Subject to subsection (6), if, when an amalgamation under subsection (1) takes effect, there is outstanding any indebtedness of IAC Limited, other that the debentures referred to in subsection (5), that is of a kind that the Bank is not permitted to incur under the Bank Act, then, notwithstanding the Bank Act, any such indebtedness incurred prior to October 28, 1975, remains outstanding after the amalgamation as indebtedness of the Bank and is binding upon and enforceable against the Bank in accordance with its terms, including any terms as to security.

• Marginal note:Exercise of rights of conversion

  (5) Subject to subsection (6), if

  • (a) an amalgamation under subsection (1) takes effect prior to July 15, 1984, and

  • (b) on the day when the amalgamation takes effect there are outstanding any debentures that carry rights of conversion into shares of IAC Limited to be issued on such conversion,

  then, notwithstanding the Bank Act, during the period from the day the amalgamation takes effect until July 15, 1984, the rights of conversion under any of those debentures that were issued prior to October 28, 1975 remain outstanding as rights of conversion into shares of the Bank and shares of the Bank may be validly issued during that period upon the exercise of the rights of conversion except that shares of the Bank may not be so issued to a person from whom a subscription for a share of the capital stock of the Bank could not, by reason of paragraphs 53(4)(a) or (b) or subsection 56(2) of the Bank Act, be accepted by the Bank.

• Marginal note:Application of subsections (4) and (5)

  (6) Subsections (4) and (5) apply to any indebtedness and any debentures referred to therein only if

  • (a) the terms thereof do not permit the debtor, at its option, to discharge the indebtedness or the debentures prior to the amalgamation, whether or not the discharge would require payment by the debtor of a premium or bonus; and

  • (b) the Minister of Finance consents to the application of those subsections to that indebtedness or those debentures upon submission to the Minister made by IAC Limited that it has attempted to arrive at alternative arrangements that would avoid the necessity of relying upon those subsections as to that indebtedness or those debentures.

• Marginal note:Undertaking to discharge indebtedness

  (7) The submission referred to in paragraph (6)(b) shall be accompanied by an undertaking to discharge the indebtedness at the first date upon which it may be discharged at the option of the debtor, whether or not upon payment of a premium or bonus.

• Marginal note:Discharge of indebtedness and debentures

  (8) Any indebtedness referred to in subsection (4) and any debentures referred to in subsection (5) that have not met the conditions set out in subsection (6) shall be discharged prior to an amalgamation under subsection (1).

• Marginal note:Effects of amalgamation

  (9) For greater certainty, all of the provisions of the Bank Act relating to the effects of an amalgamation apply to an amalgamation under subsection (1) except as provided in this section and section 11, but bonds, debentures and other evidences of indebtedness that the Bank is permitted to continue to have issued and outstanding pursuant to an order under paragraph 269(1)(d) of the Bank Act shall not be subject to this section.

• Marginal note:Confirming agreements

  (10) The Bank may enter into such agreements as may be reasonably necessary to confirm that any indebtedness to which subsection (4) applies remains outstanding after the amalgamation as indebtedness of the Bank, and that any debentures to which subsection (5) applies are convertible after the amalgamation into shares of the Bank to be issued on such conversion.