Bank Holding Company Proposal Regulations

Link to law: http://laws-lois.justice.gc.ca/eng/regulations/SOR-2004-199/FullText.html

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Bank Holding Company Proposal Regulations

SOR/2004-199BANK ACT
Registration 2004-09-23
Bank Holding Company Proposal Regulations
P.C. 2004-1014 2004-09-23Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 678Footnote a of the Bank ActFootnote b, hereby makes the annexed Bank Holding Company Proposal Regulations.

Return to footnote aS.C. 2001, c. 9, s. 183
Return to footnote bS.C. 1991, c. 46
Interpretation

1 The following definitions apply in these Regulations.

Act
Act means the Bank Act. (Loi)
bank
bank means a bank that is widely held, within the meaning of section 2.3 of the Act, and that makes an application under subsection 678(1) of the Act. (banque)
proposal
proposal means a proposal described in subsection 678(1) of the Act. (proposition)

Contents of a Proposal

2 A proposal shall contain

(a) a description of the transactions and any actions that would require approval within the meaning of section 973 of the Act, by which the bank proposes to establish a bank holding company;
(b) a description of the transactions and any actions that would require approval within the meaning of section 973 of the Act, by which shares of the bank holding company are proposed to be exchanged for shares of the bank;
(c) a description of any other transactions and any actions that would require approval within the meaning of section 973 of the Act, that the bank or the bank holding company proposes to undertake in relation to the proposal;
(d) the proposed timing of the transactions and actions referred to in paragraphs (a) to (c); and
(e) a description of the manner and circumstances in which the bank would seek the approval of shareholders with respect to any amendments to the proposal.

SOR/2010-70, s. 1.
Previous Version

Distribution of Proposal

3 The bank shall send the proposal and the independent advisor’s report described in paragraph 11(1)(d) to all of its shareholders, together with information about the proposed transactions and actions referred to in section 2 in sufficient detail to permit a shareholder of the bank to form a reasoned judgment about the proposal.

Special Meeting and Approval by Bank’s Shareholders

4 The bank shall hold a special meeting of the shareholders of the bank in order to obtain their approval of the proposal.

5 Each share of a bank entitles the shareholder to one vote at the special meeting, whether or not the share otherwise carries the right to vote.

6 Subject to section 9, the holders of shares of a class are entitled to vote separately as a class, if the proposal would

(a) increase or decrease any maximum number of authorized shares of that class, or increase any maximum number of authorized shares of a class having rights or privileges equal or superior to the shares of that class;
(b) effect an exchange, reclassification or cancellation of all or part of the shares of that class;

(c) add, change or remove the rights, privileges, restrictions or conditions attached to the shares of that class and, without limiting the generality of the foregoing,

(i) remove or change prejudicially rights to accrued dividends or rights to cumulative dividends,
(ii) add, remove or change prejudicially redemption rights,
(iii) reduce or remove a dividend preference or a liquidation preference, or
(iv) add, remove or change prejudicially conversion privileges, options, voting, transfer or pre-emptive rights, or rights to acquire securities of the bank, or sinking fund provisions;

(d) increase the rights or privileges of any class of shares having rights or privileges equal or superior to the shares of that class;
(e) create a new class of shares equal or superior to the shares of that class;
(f) make any class of shares having rights or privileges inferior to the shares of that class equal or superior to the shares of that class; or
(g) effect an exchange or create a right of exchange of all or part of the shares of another class into the shares of that class.

7 Subject to section 9, the holders of a series of shares of a class are entitled to vote separately as a series if the proposal includes anything described in section 6 that would affect the series in a manner different from other shares of the same class.

8 In addition to the right to vote separately that is described in sections 6 and 7, the holders of shares of a class or series are entitled to vote separately as a class or series, as the case may be, if the proposal involves the bank selling all or substantially all of its assets, and the shares of the particular class or series are affected by the sale in a manner different from the shares of another class or series.

9 (1) If the by-laws of a bank provide that, in the case of an amendment to the by-laws referred to in paragraph 218(1)(a), (b) or (e) of the Act, the holders of shares of a class or series are not entitled to vote separately as a class or series on the amendment, and if the proposal deals exclusively with matters in the corresponding provision of these Regulations and does not deal with other matters referred to in section 6, the holders of shares of a class or series are not entitled to vote separately as a class or series on the proposal.
(2) In this section, corresponding provision means paragraph 6(a), (b) or (e) of these Regulations in relation to paragraph 218(1)(a), (b) or (e), respectively, of the Act.

10 The proposal is approved by the shareholders of the bank when the shareholders, and the holders of each class or series of shares who are entitled to vote separately as a class or series, have approved the proposal by special resolution.

Application to Minister

11 (1) Subject to section 13, an application to the Minister to give effect to a proposal shall include

(a) a copy of the proposal referred to in section 2;
(b) the resolution of the bank’s board of directors instructing the management of the bank to prepare the proposal;
(c) the notice of the special meeting referred to in section 4 and the form of proxy and the management proxy circular sent with the notice;
(d) an independent advisor’s report that states that, with respect to the bank’s shareholders, the consideration, or lack thereof, provided in the proposal is fair from a financial point of view;
(e) pro forma financial statements and capital adequacy calculations of the bank holding company and all its subsidiaries that are Canadian financial institutions that are referred to in any of paragraphs (a) to (d) of the definition financial institution in section 2 of the Act;
(f) a business plan of the bank holding company and all its subsidiaries that are referred to in paragraph (e); and
(g) the special resolution referred to in section 10, accompanied by a certificate of the bank indicating the results of the votes held in respect of the resolution.

(2) The application shall also include an explanation of the reasons why the transactions or other actions referred to in section 2 that would require an approval within the meaning of section 973 of the Act are necessary or desirable to give effect to the proposal.
(3) The application shall also include a list of any provisions referred to in section 14 despite which the bank seeks approval in order to give effect to the proposal and, with respect to any of those provisions that are referred to in paragraph 14(b), an explanation of the reasons why the bank seeks to proceed despite that provision.

SOR/2010-70, s. 1.
Previous Version

12 The Minister may request, in relation to an application made in accordance with section 11, any additional information that the Minister considers necessary for considering the application.

13 No application made in accordance with section 11 is valid unless

(a) a notice of intention to make an application under that section has been published at least once a week for a period of four consecutive weeks before the application in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the bank holding company is to be situated; and
(b) the application is made to the Minister within three months after approval of the proposal by the bank’s shareholders.

14 For the purposes of paragraph 678(1)(b) of the Act, the provisions of the Act are

(a) subsections 12(3) and 25(2), section 30, subsection 34(1) as it applies to subsection 25(2), subsections 37(2), 56(1) to (3), 75(5), 228(2), 229(3) and 236(2), section 679 and subsections 686(2), 808(2) and 809(3); and
(b) subsections 34(2) and (3) and 61(2) and (3), sections 70, 215, and 225, subsections 226(1) to (5), 228(1) and 232(1) to (3), section 233, subsections 234(1) to (4), section 235, subsections 236(1), (3) and (4), 398(1) and (2), 399(1) to (4), 400(1) and (2) and 401(1) and (2), section 401.1, subsections 683(2) and (3) and 705(2) and (3), section 714, section 802 as it applies to section 215, section 805, subsections 806(1) to (5), 808(1), 813(1) to (7), 908(1) and (2), 909(1) to (4), 910(1) and (2) and 911(1) and (2), section 912 and subsections 976(2) to (5).

15 After the Minister has given effect to a proposal under section 678 of the Act, the Superintendent shall cause a notice to that effect to be published in the Canada Gazette.

Amendment

16 Any amendment to a proposal must be submitted to the Minister for approval.

Completion of Transactions

17 Subject to section 18, all transactions and actions referred to in section 2 in relation to a proposal shall be done within two years after the day on which the first transaction or action is completed.

Extension

18 (1) The Minister may, on request, before the end of the period specified in section 17, extend that period on any terms and conditions that the Minister considers necessary.
(2) In a request for an extension, there shall be a description of why it is impracticable to complete all transactions and actions referred to in section 2 in relation to a proposal within the period referred to in section 17.

Coming into Force

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