Indemnification and Advances Regulations for Directors and Officers of Crown Corporations (SOR/2011-108)

Interpretation

Marginal note:Definitions

• 1 (1) In these Regulations, “Act” means the Financial Administration Act.

• Marginal note:Definitions

  (2) The following definitions apply for the purposes of section 119 of the Act,

  action or proceeding

  action or proceeding does not include an internal investigation or internal proceeding, including a grievance, staffing, or disciplinary procedure, unless it is likely to have serious financial or other personal consequences for the director or officer. (enquête ou procédure)

  officer

  officer means the president, vice-president, secretary, treasurer, comptroller, general counsel, general manager or managing director of a Crown corporation or any other individual appointed as an officer of a Crown corporation who performs functions similar to those normally performed by an individual holding any of those offices or any other individual appointed as an officer of a Crown corporation by or under an Act of Parliament. (dirigeant)

  party

  party includes an officer or director who participates in, or who reasonably expects to participate in, an action or proceeding as a witness or intervenor or in any other capacity. (partie)

Request

Marginal note:Request

• 2 (1) A request for an indemnification or advance under section 119 of the Act shall be made in writing to the Secretary of the Treasury Board as soon as feasible after the director or officer becomes a party to an action or proceeding or incurs a cost, charge or expense.

• Marginal note:Content

  (2) The request shall

  • (a) specify the capacity and period in which the director or officer has served the Crown corporation;

  • (b) include a description of the nature of the action or proceeding;

  • (c) specify the amount requested and the amount that has already been approved in respect of the action or proceeding;

  • (d) include a copy of any court documents or other documents exchanged by the parties in relation to the action or proceeding that contain a statement of the material facts relied upon and the relief claimed;

  • (e) specify the name of the legal counsel retained or to be retained;

  • (f) provide a detailed accounting of the costs, charges and expenses that have been incurred in respect of the action or proceeding including any amount paid to settle the action or proceeding or satisfy a judgment and an estimate of any such costs, charges or expenses expected to be incurred in respect of the action or proceeding;

  • (g) include a copy of any invoices and other supporting documents that reflect the amounts paid or payable in respect of the action or proceeding;

  • (h) any information that may be used to rebut a presumption referred to in section 3; and

  • (i) in the case of a request related to an internal investigation or internal proceeding, any information that demonstrates that the investigation or proceeding is likely to have or has had serious financial or other personal consequences for the director or officer.

• Marginal note:Additional information

  (3) The individual making the request shall, on the request of the Secretary of the Treasury Board, provide any other information required to assess whether the individual is entitled to an indemnification or advance and the amount of the indemnification or advance.

Presumption

Marginal note:Presumption

3 A director or officer is presumed not to have fulfilled the condition set out in paragraph 119 (1)(a) of the Act if

• (a) the director or officer initiates the action or proceeding, unless it forms part of a legitimate defence to an action or proceeding in respect of which an indemnification or advance is paid to the director or officer under section 119 of the Act; or

• (b) the Crown corporation served by the director or officer commenced the action or proceeding against the director or officer.

Decision

Marginal note:Requests no more than $100,000

• 4 (1) The Secretary of the Treasury Board shall make a decision in relation to a request if the sum of the amount requested and any other amounts already approved in respect of the same action or proceeding is no more than $100,000.

• Marginal note:Notice

  (2) Notification of the decision shall be made in writing within 30 days of receipt of the request.

Marginal note:Requests more than $100,000 and no more than $250,000

• 5 (1) The President of the Treasury Board shall make a decision in relation to a request if the sum of the amount requested and any other amounts already approved in respect of the same action or proceeding exceeds $100,000 but is no more than $250,000.

• Marginal note:Notice

  (2) Notification of the decision shall be made in writing within 30 days of receipt of the request.

Marginal note:Requests more than $250,000

• 6 (1) The Treasury Board shall make a decision in relation to a request if the sum of the amount requested and any other amounts already approved in respect of the same action or proceeding is more than $250,000.

• Marginal note:Notice

  (2) Notification of the decision shall be made in writing within 90 days of receipt of the request.

Marginal note:Reasons

7 If the request is rejected in whole or in part, the notice shall include the reasons for that decision.

Marginal note:Expenses, costs or charges to be approved

8 In determining whether costs, charges or expenses are reasonably incurred, the Secretary or President of the Treasury Board, or the Treasury Board, as the case may be, shall take into consideration, among other things,

• (a) whether it is or was necessary to retain legal counsel before the commencement of an action or proceeding;

• (b) the skill, experience and specialized knowledge of the legal counsel;

• (c) the complexity and novelty of the matter;

• (d) the amount of money or value of any property that is involved;

• (e) the time expended or to be expended by the legal counsel;

• (f) the number of documents prepared; and

• (g) the place where, and the circumstances under which, the services are rendered.

Marginal note:Non-permitted basis for refusal

9 A request for an indemnification or an advance shall not be refused based solely on the fact that

• (a) the director or officer, as the case may be, acted negligently; or

• (b) the director or officer has agreed to a settlement of the action or proceeding.

Conditions

Marginal note:Obligations

10 Any approval of an indemnification or an advance under section 4, 5 or 6 is conditional on the individual

• (a) providing a written undertaking to the Secretary of the Treasury Board in the form required by the Treasury Board to reimburse any amounts to which they are not entitled;

• (b) providing a written authorization to pay to Her Majesty any amounts that the director or officer is to receive or is awarded as costs, charges and expenses;

• (c) notifying the Secretary of the Treasury Board in writing of any substantial changes to the information that is required under subsection 2(2) including the details of any settlement of the action or proceeding;

• (d) providing, on the request of the Secretary or President of the Treasury Board, or the Treasury Board, as the case may be, information with respect to the progress of the action or proceeding, any changes in scope of liability or any other matter relevant to the indemnification or advance that has been approved;

• (e) if the approval is given prior to the conclusion of the action or proceeding, submitting to the Secretary of the Treasury Board, on a monthly basis, any invoice and any other supporting documents that reflect the costs incurred; and

• (f) providing to the Secretary of the Treasury Board at the conclusion of the action or proceeding a final accounting of any amounts advanced and reimbursing any amounts that are not expended.

Obligation to Repay

Marginal note:Repayment

11 Any amounts indemnified or advanced shall be repaid

• (a) if the conditions set out in section 10 are not met;

• (b) if the amounts are approved as a result of a misrepresentation or the concealment of a material fact; or

• (c) if the amounts are paid as the result of an administrative error.

Coming into Force

Marginal note:Registration

12 These Regulations come into force on the day on which they are registered.