224. On the application of a company or society duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the incorporating instrument of the company or society.

1991, c. 47, s. 224; 1997, c. 15, s. 214; 2001, c. 9, s. 386.

225. (1) On receipt of an application referred to in section 224, the Minister may issue letters patent to effect the proposal.

(2) Letters patent issued pursuant to subsection (1) become effective on the day stated in the letters patent.

1991, c. 47, s. 225; 2001, c. 9, s. 387.

226. (1) On the application of a company that has common shares but does not have securities that are not convertible into common shares until after, or options or rights to acquire those shares that are not exercisable until after, the time of the application, the Minister may approve a proposal to convert the company into a mutual company by the purchase, or other acquisition, for the purpose of cancellation of those shares, securities, options and rights.

(2) In sections 227 to 236,

“common share” includes

(a) a security currently convertible into a common share, and

(b) a currently exercisable option or a right to acquire a common share or a security referred to in paragraph (a);

“mutualization proposal” means a proposal referred to in subsection (1).

(3) Nothing in this section or sections 227 to 236 limits the powers of companies under subsection 75(1).

227. (1) Every mutualization proposal shall set out the terms and means of effecting the conversion, and, in particular,

(a) the manner in which all issued and outstanding shares of the company, other than shares that may be issued by a mutual company, are to be purchased or otherwise acquired for the purpose of cancellation;

(b) the price to be paid for those shares;

(c) the nature of the consideration to be paid for those shares;

(d) the amount of any dividends to be paid to the holders of those shares after their purchase or other acquisition;

(e) the period within which the company intends to purchase or otherwise acquire those shares;

(f) the anticipated date when the company will become a mutual company; and

(g) the proposed by-laws of the converted company.

(2) The mutualization proposal shall also contain such other information and evidence as the Minister may require.

228. (1) The directors of a company that makes a mutualization proposal shall, before applying to the Minister for approval of the proposal, submit it for approval to a meeting of the shareholders and policyholders entitled to vote and, subject to subsection (3), to the holders of each class or series of shares.

(2) Each share of a company that makes a mutualization proposal carries the right to vote in respect of the proposal whether or not it otherwise carries the right to vote.

(3) The holders of shares of a class or series of shares of a company that makes a mutualization proposal are entitled to vote separately as a class or series in respect of the proposal.

(4) Policyholders who are entitled to vote are entitled to vote separately from shareholders in respect of a mutualization proposal.

(5) Subject to subsections (3) and (4), a mutualization proposal is approved when the shareholders and the policyholders who are entitled to vote have approved the proposal by special resolution.

229. (1) A company shall, within three months after the approval of a mutualization proposal in accordance with section 228, apply to the Minister for approval of the proposal.

(2) In determining whether to approve a mutualization proposal, the Minister shall consider all matters that the Minister considers relevant and may not approve the proposal unless satisfied that

(a) the proposal was approved by the shareholders and policyholders pursuant to section 228;

(b) the conversion of the company into a mutual company may reasonably be expected to be achieved under the terms of the proposal and in accordance with this section and sections 230 to 236;

(c) there are no reasonable grounds for believing that the conversion would cause the company to be in contravention of any regulation referred to in any of subsections 515(1) and (2) and 516(1) and (2) or in any direction made pursuant to subsection 515(3) or 516(4);

(d) the stated capital of the company has ceased to be an important factor in safeguarding the interests of the policyholders of the company, having regard to the quality and amount of the assets of the company, the surplus of the company relative to its liabilities, the nature of the business carried on by the company and any other considerations deemed by the Minister to be relevant;

(e) the price fixed by the directors for the purchase or other acquisition of the common shares of the company under the proposal is fair and reasonable in the circumstances; and

(f) the proposal is in the best interests of the financial system in Canada.

230. (1) Where the Minister approves a mutualization proposal made by a company,

(a) the company may not issue any shares other than a share that may be issued by a mutual company;

(b) the company may solicit offers from the holders of the shares of the company that are to be purchased or otherwise acquired to effect the conversion of the company but shall not purchase or otherwise acquire those shares until the approval of the Superintendent under section 234 is obtained; and

(c) any change in the proposal must be approved by the shareholders and policyholders and by the Minister.

(2) Sections 228 to 230 apply with such modifications as the circumstances require in respect of changes in mutualization proposals.

231. A company shall prepare and maintain a register recording the offers for sale of shares under the terms of a mutualization proposal in the order in which those offers are received by the company, showing, in respect of each offer,

(a) the date of receipt by the company of the offer;

(b) the name and address of the shareholder making the offer;

(c) the number of shares so offered by the shareholder making the offer;

(d) the price at which each of the shares so offered may be purchased or otherwise acquired;

(e) the date of purchase, if any, of each of the shares so offered and the number of shares purchased; and

(f) the date of withdrawal, if any, of the offer and the number of shares affected by the withdrawal.

232. A company that holds binding offers from the holders of at least ninety per cent of each class of shares for the purchase or other acquisition of those shares pursuant to a mutualization proposal shall apply to the Superintendent for approval of the purchase or other acquisition of the shares.

233. The Superintendent shall approve the purchase or other acquisition of shares pursuant to a mutualization proposal if the Superintendent is satisfied that

(a) the purchase or other acquisition of shares would not cause the company to be in contravention of any regulation referred to in any of subsections 515(1) and (2) and 516(1) and (2) or in any direction made pursuant to subsection 515(3) or 516(4); and

(b) the stated capital of the shares has, in the opinion of the Superintendent, ceased to be an important factor in safeguarding the interests of the policyholders of the company, having regard to the quality and amount of the assets of the company, the surplus of the company relative to its liabilities, the nature of the business carried on by the company and any other considerations deemed by the Superintendent to be relevant.

234. Where the Superintendent approves the purchase or other acquisition of shares of a company pursuant to a mutualization proposal, the company

(a) shall, within the period set out in the mutualization proposal, purchase or otherwise acquire the shares for the purchase or other acquisition of which pursuant to the proposal the company holds binding offers; and

(b) may acquire the remaining shares in accordance with Division X, which applies in respect of that acquisition with such modifications as the circumstances require, as if each reference in that Division to

(i) the “offeree company” or the “offeror” were a reference to the “company”,

(ii) a “dissenting offeree” were a reference to a holder of a share of the company who has not offered to sell his or her share under the terms of the mutualization proposal,

(iii) an “offeree who accepted the take-over bid” were a reference to a holder of a share of the company who has offered to sell his or her share under the terms of the mutualization proposal, and

(iv) the “date of the take-over bid” or the “date of termination of the take-over bid” were a reference to the date on which the Superintendent approves the purchase or other acquisition of the shares of the company pursuant to a mutualization proposal.

235. Notwithstanding anything in this Act, a company may, with the approval of the Superintendent, pay for shares purchased or otherwise acquired pursuant to a mutualization proposal by

(a) making a promissory note that is, or issuing debt securities that are, payable at a fixed or determinable future time not later than ten years after the date of its making or their issue; or

(b) issuing shares that a mutual company may issue.

236. (1) Where a company purchases or otherwise acquires all of its common shares pursuant to a mutualization proposal,

(a) the company shall cancel those shares; and

(b) the directors of the company shall apply to the Minister for the issue of letters patent to effect the conversion of the company into a mutual company.

(2) On receipt of an application referred to in subsection (1), the Minister shall issue letters patent to effect the conversion of the company into a mutual company.

(3) Letters patent issued pursuant to subsection (2) become effective on the day stated in the letters patent.

236.1 The definitions in this section apply in sections 237 and 237.1.

“conversion proposal” means a proposal to convert a mutual company into a company with common shares.

“converting company” has the meaning given to that expression by the regulations.

“eligible policyholder” has the meaning given to that expression by the regulations.

“letters patent of conversion” means letters patent issued under paragraph 237(1)(b).

1999, c. 1, s. 4.

237. (1) On the application of a mutual company made in accordance with the regulations, the Minister may, on the recommendation of the Superintendent,

(a) approve a conversion proposal; and

(b) issue letters patent of conversion to effect the conversion proposal.

(1.1) Before an application is made under subsection (1), the directors of the company must call a special meeting of eligible policyholders to obtain

(a) approval of the conversion proposal;

(b) confirmation of any by-law or of any amendment to or repeal of a by-law that is necessary to implement the conversion proposal; and

(c) authorization to make the application.

(1.2) A company shall, in respect of a special meeting,

(a) send, not less than 45 days and not more than 75 days before the meeting, to each eligible policyholder a notice of the time and place of the meeting, describing the conversion proposal in sufficient detail to permit a policyholder to form a reasoned judgment about the terms of the proposal and its impact on both policyholders and the company, together with the prescribed information in respect of the conversion proposal; and

(b) prepare, not less than 45 days before the meeting, a list, which may be in electronic form, of all eligible policyholders.

(1.3) Subsection 149(5) applies, with any modifications that the circumstances require, in respect of the list of eligible policyholders.

(1.4) Only eligible policyholders are entitled to notice of and to vote at a special meeting.

(1.5) Any approval, confirmation or authorization referred to in subsection (1.1) must be given by special resolution of the eligible policyholders.

(2) The Governor in Council may make regulations

(a) respecting the application referred to in subsection (1), including the form of the application and the information to be contained in the application, and authorizing the Superintendent to require additional information in order to make a recommendation;

(a.1) respecting the conversion proposal, including the information to be contained in the conversion proposal, and authorizing the Superintendent to approve the measures to be taken by the converting company in respect of any proposed amendment to the conversion proposal;

(a.2) respecting the value of a converting company for the purposes of the regulations and authorizing the Superintendent to specify a day at which the value shall be estimated by the converting company;

(b) concerning the fair and equitable treatment of policyholders under a conversion proposal;

(c) governing the ownership of shares issued by a mutual company that has been converted into a company with common shares;

(c.1) respecting the authorization by the Superintendent of the sending of a notice of a special meeting referred to in subsection (1.1), including

(i) prescribing the information to be submitted by the converting company in support of an authorization,

(ii) authorizing the Superintendent to consider information in addition to that referred to in subparagraph (i), and

(iii) authorizing the Superintendent to require that information, in addition to the prescribed information referred to in paragraph (1.2)(a), be sent with a notice;

(c.2) authorizing the Superintendent to

(i) require the converting company to hold one or more information sessions for eligible policyholders and to take other measures to assist eligible policyholders in forming a reasoned judgment on the conversion proposal, and

(ii) set the rules under which the information sessions must be held;

(c.3) respecting restrictions on any fee, compensation or other consideration that may be paid, in respect of the conversion of a mutual company into a company with common shares, to any director, officer or employee of the company or to any entity with which a director, officer or employee of the company is associated;

(c.4) prohibiting, during the period set out in the regulations, the issuance or provision of shares, share options or rights to acquire shares, of a company that has been converted from a mutual company into a company with common shares to

(i) any director, officer or employee of the company, or

(ii) any person who was a director, officer or employee of the company during the year preceding the effective date of conversion of the company; and

(d) generally, respecting the conversion of a mutual company into a company with common shares.

(3) A regulation made under subsection (2) may provide that the Superintendent may, on such terms and conditions as the Superintendent considers appropriate, exempt a company from prescribed requirements of that regulation.

(4) The Minister may, on such terms and conditions as the Minister considers appropriate, exempt a company from any requirement of this Act or the regulations if

(a) the company is a mutual company applying for the approval of a proposal to convert the company into a company with common shares; and

(b) the Minister is of the opinion that the company is, or is about to be, in financial difficulty and that the exemption would help to facilitate an improvement in the financial condition of the company.

1991, c. 47, s. 237; 1994, c. 26, s. 38(E); 1997, c. 15, s. 215; 1999, c. 1, s. 5.

237.1 (1) Letters patent of conversion become effective on the day stated in the letters patent of conversion, and on that day

(a) the company ceases to be a mutual company; and

(b) the policyholders of the company cease to have any rights with respect to or any interest in the company as a mutual company.

(2) For the purposes of subsection 69(1) and section 70, shares issued by a company under a conversion proposal are deemed to be fully paid for in money and the amount of consideration received by the company for those shares is deemed to be equal to the book value of the company immediately after the effective date of its conversion, determined in accordance with the accounting principles referred to in subsection 331(4) and calculated without taking into account any amounts remaining at that time in the participating accounts that the company maintains under section 456.

1997, c. 15, s. 216; 1999, c. 1, s. 6.

238. (1) The directors of a company may make, amend or repeal any by-laws, in the manner set out in subsections (2) and (3) and sections 239 to 244, to

(a) change the maximum number, if any, of shares of any class that the company is authorized to issue;

(b) create new classes of shares;

(c) change the designation of any or all of the company’s shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of any or all of the company’s shares, whether issued or unissued;

(d) change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series;

(e) divide a class of shares, whether issued or unissued, into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;

(f) authorize the directors to divide any class of unissued shares into series and fix the maximum number of shares, if any, in each series and the rights, privileges, restrictions and conditions attached thereto;

(g) authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series;

(h) revoke, diminish or enlarge any authority conferred under paragraphs (f) and (g);

(i) change the rights of policyholders to vote at meetings of shareholders or policyholders, subject to subsection 153(1);

(i.1) change the name of the company;

(j) increase or decrease the number of directors, the minimum or maximum number of directors, the number of directors who are to be elected by the shareholders or the number of directors who are to be elected by the policyholders, subject to subsections 167(1) and 173(4) and (4.1) and section 176; or

(k) change the place in Canada where the head office of the company is to be situated.

(2) The directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders and policyholders entitled to vote, and the shareholders and policyholders may, by special resolution, confirm, amend or reject the by-law, amendment or repeal.

(2.1) The by-laws of a company may provide that each participating share, as defined in section 83.01, of a mutual company carries the right to vote on a proposed addition or amendment to the by-laws to do anything referred to in any of paragraphs (1)(a) to (h), (j) and (k). Where that right is provided for in the by-laws, each of those shares carries that right even if they do not otherwise carry the right to vote.

(2.2) The holders of shares who are entitled under subsection (2.1) to vote on a proposed addition or amendment referred to in that subsection are entitled to vote on it separately from policyholders.

(3) A by-law, or an amendment to or a repeal of a by-law, made under subsection (1) is not effective until it is confirmed or confirmed as amended by the shareholders and policyholders under subsection (2) and, in the case of a by-law referred to in paragraph (1)(i.1), approved by the Superintendent.

1991, c. 47, s. 238; 1997, c. 15, s. 217; 2001, c. 9, s. 388.

239. (1) The holders of shares of a class or, subject to subsection (2), of a series are, unless the by-laws otherwise provide in the case of an amendment to the by-laws referred to in paragraph (a), (b) or (e), entitled to vote separately as a class or series on a proposal to amend the by-laws to

(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 company, 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.

(2) The holders of a series of shares of a class are entitled to vote separately as a series under subsection (1) if that series is affected by an addition or amendment to the by-laws in a manner different from other shares of the same class.

(3) Subsections (1) and (2) apply whether or not the shares of a class otherwise carry the right to vote.

240. (1) Participating policyholders are entitled to vote separately on a proposal to amend the by-laws to add to, change or remove the rights of policyholders, other than participating policyholders, to vote at meetings of shareholders or policyholders.

(2) Policyholders who are entitled to vote, other than participating policyholders, are entitled to vote separately on a proposal to amend the by-laws to add to, change or remove the rights of policyholders, other than participating policyholders, to vote at meetings of shareholders or policyholders.

(3) The holders of a class of non-participating policies who are entitled to vote are entitled to vote separately as a class if the right to vote attached to policies of that class is added to, changed or removed by an addition or amendment to the by-laws in a manner different from the right to vote attached to other non-participating policies.

241. (1) A proposed addition or amendment to the by-laws referred to in subsection 239(1) is adopted when the holders of the shares of each class or series entitled to vote separately thereon as a class or series and the policyholders have approved the addition or amendment by a special resolution.

(2) A proposed addition or amendment to the by-laws referred to in section 240 is adopted when the participating policyholders, the non-participating policyholders who are entitled to vote and the holders of each class of non-participating policies entitled to vote separately thereon as a class and the shareholders have approved the addition or amendment by a special resolution.

242. Where a special resolution referred to in subsection 238(2) so states, the directors may, without further approval of the shareholders or policyholders, revoke the special resolution.

243. (1) Subject to subsection (2), a director or a shareholder or policyholder who is entitled to vote at an annual meeting of shareholders and policyholders of a company may, in accordance with sections 147 and 148, make a proposal to make an application referred to in section 224 or to make, amend or repeal the by-laws referred to in subsection 238(1) of the company.

(2) Notice of a meeting of shareholders or policyholders at which a proposal to amend the incorporating instrument or to make, amend or repeal the by-laws of a company to effect any of the changes referred to in subsection 238(1) is to be considered must set out the proposal.

1991, c. 47, s. 243; 2001, c. 9, s. 389.

244. No amendment to the incorporating instrument or by-laws of a company affects an existing cause of action or claim or liability to prosecution in favour of or against the company or its directors or officers, or any civil, criminal or administrative action or proceeding to which the company or any of its directors or officers are a party.