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

Marginal note:Continuing bank

11 The Bank shall be the continuing corporation resulting from the amalgamation of the Bank and IAC Limited referred to in subsection 10(1) so that, without limiting the generality of the foregoing,

• (a) for purposes of clause 75(4)(b)(i)(B) of the Bank Act, the Bank after the amalgamation shall be considered to have been permitted under section 13 of the Bank Act to commence business when the Bank was originally permitted under that section to commence business;

• (b) for purposes of subsections 76(3), (4) and (6) of the Bank Act, the Bank after the amalgamation shall be considered to have acquired any shares owned by IAC Limited or the Bank prior to the amalgamation, on the date when those shares were acquired by IAC Limited or the Bank, as the case may be;

• (c) for purposes of paragraph 77(6)(b) of the Bank Act, financial years of the Bank prior to the amalgamation shall be included after the amalgamation in determining the number of financial years of the Bank completed after the 31st day of October, 1965; and

• (d) except as provided in section 10, provisions of this Act applicable to IAC Limited or to the securities of IAC Limited are not applicable to the Bank or its securities after the amalgamation.

Application of the Bank Act to IAC Limited

Marginal note:Application of Bank Act

• 12 (1) Subject to section 15 of this Act, the provisions of sections 18 to 24 and 38 to 56 and subsections 158(1) and (2) of the Bank Act apply to IAC Limited and sections 38 to 56 of the Bank Act apply to the shares of IAC Limited, and for the purpose of the application of those provisions,

  • (a) references to “a bank” or “the bank” shall be construed as references to IAC Limited;

  • (b) the references in paragraph 18(2)(c) of the Bank Act to shares on which five thousand dollars, or such greater amount as the by-laws require, have been paid up, shall be construed as a reference to one hundred paid-up common shares of the capital stock of IAC Limited or such other number of those shares as the Minister of Finance may require pursuant to paragraph 7(3)(b); and

  • (c) the common shares without par value of the capital stock of IAC Limited shall be deemed to have a par value of twenty dollars or such other amount as the Minister of Finance may require.

• Marginal note:Application of other Acts

  (2) Sections 39 to 43 and 86 to 92 of the Canada Corporations Act and Part VI and sections 97, 100 to 104 and 116 of the Canada Business Corporations Act do not apply to IAC Limited, and sections 39 to 43 of the Canada Corporations Act and Part VI of the Canada Business Corporations Act to not apply to the shares of IAC Limited.

• Marginal note:By-laws of IAC Limited

  (3) By-laws of IAC Limited affecting the interpretation or application of the provisions of the Bank Act made applicable to IAC Limited and its shares by subsection (1) are properly made if made in accordance with sections 17 and 27 of the Bank Act.

• Marginal note:Investment Companies Act

  (4) To the extent that the requirements of sections 11 to 13 of the Investment Companies Act differ from those of sections 53 to 56 of the Bank Act, those sections of the Investment Companies Act do not apply to IAC Limited or to its shares but IAC Limited shall be considered for purposes of all other sections of the Investment Companies Act to be a sales finance company to or in respect of which sections 11 to 13 of the Act apply.

Marginal note:Issue of shares

13 IAC Limited shall not issue any additional shares of its capital stock unless

• (a) concurrently with the receipt by IAC Limited of the proceeds of the issue of shares, it applies an amount equal to the net cash proceeds to the purchase of shares in the capital stock of the Bank or as a contribution to the rest account of the Bank, or allocates that amount between the two applications; and

• (b) the shares are issued in accordance with the procedures, and subject to the requirements, set out in sections 33 to 35 of the Bank Act, and for that purpose references therein to “a bank” or “the bank” shall be construed as references to IAC Limited and subsection 33(1) shall be read without reference to the words “not less than par” therein;

and compliance with the procedures referred to in paragraph (b) constitutes compliance with the requirements of the Canada Corporations Act and the Canada Business Corporations Act as to the issue of shares by IAC Limited and the shares issued in compliance with those procedures constitute validly issued shares.

Marginal note:Certain investments

14 Subsections 76(6) and (7) of the Bank Act apply to the shares owned by IAC Limited in the capital stock of Sovereign Life Assurance Company of Canada and of Sovereign General Insurance Company as if IAC Limited were a bank that had acquired those shares on the day on which this Act comes into force, and a transfer of those shares to any corporation that is a subsidiary of IAC Limited does not constitute a sale or disposal for purposes of those subsections, but the ownership by IAC Limited of those shares in the capital stock of those corporations does not make section 16 applicable to those corporations.

Marginal note:Securities of IAC Limited

• 15 (1) Neither the preferred shares of IAC Limited outstanding on October 28, 1975, nor the debentures of IAC Limited outstanding on that date and carrying a right of conversion into common shares of IAC Limited, shall be considered to have been issued or to be outstanding in contravention of the Bank Act or of this Act, and shares of IAC Limited may be validly issued upon the exercise of such conversion rights notwithstanding anything contained in the Bank Act or this Act, except that shares of IAC Limited may not be so issued to a person from whom a subscription for a share could not, by reason of paragraph 53(4)(a) or (b) or subsection 56(2) of the Bank Act, be accepted by IAC Limited.

• Marginal note:Directors and officers

  (2) The persons who are the directors and officers of IAC Limited on the coming into force of this Act shall be considered to have been duly elected or appointed in accordance with sections 19 and 21 of the Bank Act.

Business of IAC Limited Pending Amalgamation

Marginal note:Prohibited activities

• 16 (1) After the effective day as defined in subsection (2), IAC Limited shall not permit any corporation, other than the Bank or a subsidiary of the Bank, while that corporation is a subsidiary of IAC Limited (any such corporation being hereinafter in this section and in sections 17 to 19 called a “restricted corporation”), to carry on any business or acquire any asset, nor shall IAC Limited carry on any business or acquire any asset, except as permitted by sections 17 and 18.

• Marginal note:Interpretation

  (2) In this section and in sections 17 and 18, effective day means

  • (a) as to a business that could be carried on or an asset that could be acquired by the Bank without contravention of the Bank Act or this Act, the day on which the Bank first carries on any of the activities referred to in subsection 75(1) of the Bank Act, or the day that is twelve months after the Bank obtains the approval of the Governor in Council to commence the business of banking, whichever occurs first; and

  • (b) as to any other business or asset, the day on which this Act comes into force.

Marginal note:Permitted activities

• 17 (1) Notwithstanding subsection 16(1), but subject to subsections (2) and (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 acquire, and may permit any restricted corporation to acquire,

    • (i) assets from the Bank previously acquired by the Bank as permitted by the Bank Act (such assets and other assets which the Bank is permitted to acquire under the Bank Act being hereinafter in this section called “eligible assets”), and

    • (ii) eligible assets from IAC Limited or any restricted corporation,

  but the prior consent of the Inspector General of Banks shall be required for the acquisition of any eligible assets that consist of shares in the capital stock of a corporation, other than a corporation that is a subsidiary of IAC Limited when this Act comes into force;

  • (b) IAC Limited may acquire, and may permit any restricted corporation to acquire, assets for the purpose of leasing such assets to its customers, and IAC Limited may enter into leases of any such assets and may permit any restricted corporation to enter into leases of any such assets; and

  • (c) IAC Limited may lend money or make advances, and may permit any restricted corporation to lend money or make advances, upon the security of real or immovable property in Canada or of an equity of redemption therein or of an assignment of or mortgage on the interest of a lessee thereof where such loans or advances would not be permissible for the Bank by reason of the restrictions contained in subsections 75(3) or (4) of the Bank Act (the said loans and advances, and leases of assets referred to in paragraph (b), being hereinafter in this section referred to as “non-eligible assets”); and

  • (d) IAC Limited may acquire, and may permit any restricted corporation to acquire, non-eligible assets from any other of those corporations.

• Marginal note:Exception as to eligible assets

  (2) At no time after the effective day defined in paragraph 16(2)(a) shall the aggregate value, determined in a manner acceptable to the Inspector General of Banks, of the eligible assets held by IAC Limited and every restricted corporation be in excess of the aggregate value, so determined, of the eligible assets held by them on the effective day defined in paragraph 16(2)(a).

• Marginal note:Exceptions as to non-eligible assets

  (3) At no time after the effective day defined in paragraph 16(2)(b) shall the aggregate value, determined in a manner acceptable to the Inspector General of Banks, of the non-eligible assets held by IAC Limited and every restricted corporation, excluding those non-eligible assets that are leases, loans or advances entered into subsequent to that date pursuant to commitments with the lessees or borrowers in effect on that date, be in excess of the aggregate value, so determined, of the non-eligible assets held by them on the effective day defined in paragraph 16(2)(b).

Marginal note:Exceptions

18 For purposes of subsection 16(1), the following shall be considered not to constitute carrying on business or the acquisition of assets:

• (a) the continued ownership of assets held prior to the effective day;

• (b) the taking of all actions and the doing or executing of all deeds or documents that may be reasonably necessary in connection with the assets referred to in paragraph (a) and any other assets acquired without contravention of the Bank Act or this Act;

• (c) the deposit or temporary investment of money derived from the recovery upon or sale of assets acquired without contravention of the Bank Act or this Act, if the deposit or investment is for the purpose of preserving the money for future investments not in contravention of the Bank Act or this Act;

• (d) the making of investments, whether by way of purchase of shares or indebtedness, by IAC Limited or any restricted corporation in any other of those corporations or, subject to paragraph 8(a), in the Bank;

• (e) subject to section 9, the borrowing of money; and

• (f) matters reasonably necessary to facilitate the effective performance of the activities referred to in paragraphs (a) to (e) or otherwise permitted under this Act.

Marginal note:Protection of customers

19 A customer or other person dealing with IAC Limited or any restricted corporation is under no obligation to inquire into compliance by that corporation with sections 16 and 17, and a contravention of those sections does not affect any right or remedy otherwise available to that person.

Sanctions

Marginal note:Withdrawal of exemptions

20 If the Bank or IAC Limited or a director of the Bank or IAC Limited is, in the opinion of the Minister of Finance, in contravention of any requirement of sections 8, 9, 12, 13, 15 or 16, then the Minister may, unless that contravention is cured to his satisfaction not later than ninety days after written notice describing the contravention has been sent by prepaid registered mail by or on behalf of the Minister to the Bank, withdraw any or all of the exceptions to the Bank Act set out in subsection 7(3) of this Act or continue all or any of them on such terms and conditions as he may require.