540. (1) In this Part,

“by-law” includes the incorporating instrument of a society;

“permitted entity” means an entity in which a society is permitted to acquire a substantial investment under section 554;

“subordinate branch” means a division of a society as described in the by-laws of the society;

“supreme governing body” means a board of directors or any other group within a society having ultimate authority for managing the business and affairs of the society.

(2) For the purpose of section 554, a member of a society’s group is any of the following:

(a) a subsidiary of the society;

(b) an entity in which the society has a substantial investment; or

(c) a prescribed entity in relation to the society.

(3) Words and expressions that are defined for the purposes of Part IX and referred to in this Part, other than “permitted entity”, have, for the purposes of this Part, the meanings assigned to them by that Part with any modifications that the circumstances require.

1991, c. 47, s. 540; 2001, c. 9, s. 432.

541. No by-law of a society shall empower or purport to empower any subordinate branch of the society to grant sickness benefits to any member of the branch unless the by-law makes adequate provision to secure on an actuarial basis the solvency of the sick benefit fund of the branch.

542. (1) Except as otherwise permitted by this Act, a society shall not carry on a business that does not relate to the business of the insuring of risks in respect of its members or the spouses, common-law partners or children of its members.

(2) A society may

(a) with the consent of the Minister, engage in activities that are reasonably ancillary to the society’s insurance business;

(b) engage in fraternal, benevolent or religious activities;

(c) hold, manage and otherwise deal with real property;

(d) act as an agent for a person, or enter into any other arrangement with a person, in respect of the provision of a service by

(i) a financial institution that is primarily engaged in an insurance business, or

(ii) a body corporate in which a society is permitted by section 554 to have a substantial investment; and

(e) refer persons to a financial institution or body corporate described in paragraph (d).

(3) A society shall not carry on the business of insuring risks unless it is authorized to do so by a by-law of the society passed on the recommendation of the society’s actuary and approved by the Superintendent.

(4) A society shall not insure a risk that is not within a class of insurance that is specified in the order of the Superintendent approving the commencement and carrying on of business by the society. The classes that may be specified in that order are the class of life insurance, the class of accident and sickness insurance or both of those classes.

(5) A society shall not engage in Canada in any financial leasing of personal property.

1991, c. 47, s. 542; 1996, c. 6, s. 167; 1997, c. 15, s. 285; 2000, c. 12, s. 156.

542.01 A society shall maintain a separate account in respect of each class of insurance in which it is authorized to insure risks.

1997, c. 15, s. 285.

542.02 A society’s actuary shall certify whether the society’s rates of benefit are reasonable, and whether the amounts of insurance to be issued by the society are reasonable, having regard to

(a) the conditions and circumstances for the issuance of policies by the society;

(b) the sufficiency of the rates of contribution to provide for those benefits and those amounts of insurance; and

(c) the reasonableness of the loan values, cash values and other equities that may be provided under the policies.

1997, c. 15, s. 285.

542.03 (1) Only a society that is authorized to insure risks within the class of life insurance may

(a) issue policies where the liabilities of the society in respect of the policies vary in amount depending on the market value of a fund consisting of a specified group of assets; or

(b) accept or retain, on the direction of a policyholder or beneficiary, policy dividends or bonuses or policy proceeds that are payable on the surrender or maturity of the policy or on the death of the person whose life is insured, where the liabilities of the society in respect of the amounts accepted or retained vary in amount depending on the market value of a fund consisting of a specified group of assets.

(2) A society that issues policies described in paragraph (1)(a) or accepts or retains amounts described in paragraph (1)(b) shall

(a) maintain separate accounts in respect of those policies or amounts; and

(b) establish and maintain one or more funds consisting of assets that are segregated from the other assets of the society and that are specified as the assets on the market value of which the liabilities of the society in respect of those policies or amounts depend.

(3) For the purpose of establishing or maintaining a segregated fund required by subsection (2), a society may, subject to the regulations, transfer an amount to the separate account maintained in respect of the segregated fund.

(4) A society may, with the approval of the Superintendent, return the current value of an amount transferred under subsection (3) to the account from which the amount was transferred.

(5) A claim against a segregated fund maintained under subsection (2) under a policy, or for an amount in respect of which the fund is maintained, has priority over any other claim against the assets of that fund, including the claims referred to in section 161 of the Winding-up and Restructuring Act, except to the extent that the payment of that other claim is secured by a security interest in or on a specific, identifiable asset of the segregated fund.

(6) The liability of a society under a policy or for an amount in respect of which a segregated fund is maintained under subsection (2) does not, except to the extent that the assets of the fund are insufficient to satisfy a claim for any minimum amount that the society agrees to pay under the policy or in respect of the amount, give rise to a claim against any assets of the society, other than the assets of that fund.

(7) To the extent that the assets of the fund are insufficient to satisfy the liability of a society under a policy or for an amount in respect of which a segregated fund is maintained under subsection (2), that liability gives rise to a claim against the assets of the society, other than the assets of that fund, and that claim has the priority referred to in subsection 161(2) of the Winding-up and Restructuring Act.

1997, c. 15, s. 285.

542.04 (1) The Governor in Council may make regulations limiting the extent to which a society may cause itself to be reinsured against risks undertaken by it.

(2) A regulation made under subsection (1) may provide that the Superintendent may, by order, determine the matters or exercise the discretion that the regulation specifies.

1997, c. 15, s. 285.

542.05 A society may issue annuities in Canada only if it is authorized to insure risks within the class of life insurance.

1997, c. 15, s. 285.

542.06 (1) A society shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving the property, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed seventy-five per cent of the value of the property at the time of the loan.

(2) Subsection (1) does not apply in respect of

(a) a loan made or guaranteed under the National Housing Act or any other Act of Parliament by or under which a different limit on the value of property on the security of which the society may make a loan is established;

(b) a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or private insurer approved by the Superintendent;

(c) the acquisition by the society from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the society to the entity against the issue of those securities; or

(d) a loan secured by a mortgage where

(i) the mortgage is taken back by the society on a property disposed of by the society, including where the disposition is by way of the realization of a security interest, and

(ii) the mortgage secures payment of an amount payable to the society for the property.

1997, c. 15, s. 285.

542.07 (1) The directors of a society shall establish and the society shall adhere to policies regarding the creation of security interests in property of the society to secure obligations of the society and the acquisition by the society of beneficial interests in property that is subject to security interests.

(2) The Superintendent may, by order, direct a society to amend its policies as specified in the order.

(3) A society shall comply with an order made under subsection (2) within the time specified in the order.

1997, c. 15, s. 285; 2001, c. 9, s. 433.

542.071 The Governor in Council may make regulations and the Superintendent may make guidelines respecting the creation by a society of security interests in its property to secure obligations of the society and the acquisition by the society of beneficial interests in property that is subject to security interests.

2001, c. 9, s. 433.

542.08 A society shall not grant to a person the right to appoint a receiver or a receiver and manager of the property or business of the society.

1997, c. 15, s. 285.

542.09 Except with the approval of the Superintendent, a society may not be a general partner in a limited partnership or a partner in any partnership other than a limited partnership.

1997, c. 15, s. 285; 2001, c. 9, s. 434.

542.1 (1) A society shall not, and shall not permit its prescribed subsidiaries to, enter into any debt obligation, within the meaning assigned to that expression by the regulations, or permit its prescribed subsidiaries to issue any share, other than a common share, if as a result the aggregate of the total debt obligations of the society, determined in the prescribed manner, and the stated capital of the society would exceed the prescribed percentage of the total assets of the society.

(2) A society need not include in the aggregate amount calculated for the purpose of subsection (1) the value of any debt obligation or the stated capital of any shares if the value of the debt obligation or the stated capital of the shares is included as part of the regulatory capital of the society.

1997, c. 15, s. 285.

542.11 (1) A society shall not guarantee on behalf of any person the payment or repayment of any sum of money unless

(a) the sum of money is a fixed sum of money with or without interest on it; and

(b) the person on whose behalf the society has undertaken to guarantee the payment or repayment has an unqualified obligation to reimburse the society for the full amount of the payment or repayment to be guaranteed.

(2) Paragraph (1)(a) does not apply where the person on whose behalf the society has undertaken to guarantee a payment or repayment is a subsidiary of the society.

(3) The Governor in Council may make regulations imposing terms and conditions in respect of guarantees permitted by this section.

1997, c. 15, s. 285; 2001, c. 9, s. 435.

542.12 (1) A society shall not make a loan to a natural person if the loan would be repayable in Canada and the terms would prohibit prepayment of the money advanced or any instalment of that money before its due date.

(2) Subsection (1) does not apply in respect of a loan

(a) that is secured by a mortgage on real property; or

(b) that is made for business purposes and the principal amount of which is more than $100,000 or such other amount as may be prescribed.

1997, c. 15, s. 285.

543. A majority of the members of the supreme governing body of every society shall at the time of their election or appointment be individuals who are resident in Canada.

544. (1) A society shall at all times have a head office in the place within Canada specified in its incorporating instrument or by-laws.

(2) Notwithstanding anything contained in its incorporating instrument, any society may, by by-law passed and approved by the votes of at least two thirds of the members entitled to vote by the by-laws of the society who are present or represented at a special meeting duly called for considering the by-law, change the head office of the society from any place in Canada to any other place in Canada.

(2.1) The supreme governing body of a society may, by resolution passed and approved by at least two-thirds of the votes cast at a meeting, change the address of the head office within the place specified in the society’s by-laws.

(2.2) If there is a change of address of the head office of a society, the society shall send a notice of the change to the Superintendent within fifteen days after the change.

(3) A society shall establish by by-law the maximum period of time within which meetings of the society shall be held.

1991, c. 47, s. 544; 1997, c. 15, s. 286.

544.1 (1) Despite anything contained in its incorporating instrument, a society may, by by-law passed and approved by the votes of at least two thirds of the members entitled to vote by the by-laws of the society who are present or represented at a special meeting duly called for considering the by-law, change the name of the society.

(2) A by-law referred to in subsection (1) is not effective until the Superintendent approves it.

2001, c. 9, s. 436.

545. (1) A member who is entitled to vote by by-law of a society may, if the by-laws of the society so provide, by executing an instrument of proxy, appoint a proxyholder or one or more alternate proxyholders, who are not required to be members of the society, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy.

(2) An instrument of proxy is not valid at a meeting of a society unless it is filed with the secretary of the society at least ten days before the date of the meeting and it may be revoked at any time.

(3) A society for which an order approving the commencement and carrying on of business of life insurance has been made under this Act that has members who are entitled to vote at meetings of the society shall advise each of those members at least once a year by means of a statement printed in prominent type on a premium notice, premium receipt or dividend notice or otherwise, of the rights of the member to attend and to vote in person or by proxy at those meetings and to obtain a blank instrument of proxy on request therefor in writing to the secretary of the society, but in the case of a member who is not in receipt of a regular annual premium notice from the society, notice of the rights of the member to attend and to vote at meetings of the society may be given only at least once every five years.

546. Every society for which an order approving the commencement and carrying on of business has been made under this Act shall, not later than June 1 in each year, mail to each member of the society a copy of the valuation balance sheet in the prescribed form and an explanation of the facts concerning the condition of the society or, in lieu thereof, shall publish in its official paper that balance sheet and explanation and mail a copy of the issue of the paper containing the balance sheet and explanation to each of the society’s members.

547. (1) Divisions XIII and XIV of Part VI apply to societies with such modifications as the circumstances require.

(2) The directors of a former-Act society shall, forthwith after the coming into force of this Part, appoint the actuary of the society.

548. (1) Unless this Act otherwise provides, the supreme governing body of a society may by resolution make, amend or repeal any by-law that regulates the business or affairs of the society.

(2) Any matter provided for in the incorporating instrument of a former-Act society on the coming into force of this Part that, under this Act, would be provided for in the by-laws of a society is deemed to be provided for in the by-laws of the society.

(3) Within thirty days after a by-law of a society comes into effect or is amended, the society shall send a copy of the by-law or the amendment to the Superintendent. A society shall send to the Superintendent, within six months after the coming into force of this subsection, its by-laws that are in effect on the coming into force of this subsection.

1991, c. 47, s. 548; 1997, c. 15, s. 287.

549. (1) Every society shall, each year before June 30 of that year, provide the Superintendent with a return showing

(a) the name, residence and citizenship of each director of the society;

(b) the mailing address of each director;

(c) the bodies corporate of which each director referred to in paragraph (a) is an officer or director and the firms of which each director is a member;

(d) the names of the directors referred to in paragraph (a) who are officers or employees of the society, and the positions they occupy;

(e) the date of expiration of the term of each director referred to in paragraph (a); and

(f) the name, address and date of appointment of the auditor of the society.

(2) Where

(a) any information relating to a director or auditor of a society shown in the latest return made to the Superintendent under subsection (1), other than information referred to in paragraph (1)(c), becomes inaccurate or incomplete,

(b) a vacancy in the position of auditor of the society occurs or is filled by another person, or

(c) a vacancy on the supreme governing body of the society occurs or is filled,

the society shall forthwith provide the Superintendent with such information as is required to maintain the return in a complete and accurate form.

1991, c. 47, s. 549; 1997, c. 15, s. 288.