Order Fixing July 11, 2024 as the Day on Which Certain Provisions of An Act to amend certain Acts in relation to financial institutions Come into Force: SI/2024-30
Canada Gazette, Part II, Volume 158, Number 14
Registration
SI/2024-30 July 3, 2024
AN ACT TO AMEND CERTAIN ACTS IN RELATION TO FINANCIAL INSTITUTIONS
Order Fixing July 11, 2024 as the Day on Which Certain Provisions of An Act to amend certain Acts in relation to financial institutions Come into Force
P.C. 2024-804 June 21, 2024
Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 453 of An Act to amend certain Acts in relation to financial institutions, chapter 54 of the Statutes of Canada, 2005, fixes July 11, 2024 as the day on which subsection 27(2), section 102 and subsections 239(2), 322(2) and 392(2) of that Act come into force.
EXPLANATORY NOTE
(This note is not part of the Order.)
Proposal
This Order in Council, pursuant to section 453 of An Act to amend certain Acts in relation to financial institutions, chapter 54 of the Statutes of Canada, 2005, fixes July 11, 2024, as the day on which subsection 27(2), section 102, subsections 239(2), 322(2), and 392(2) of that Act come into force.
Objective
The purpose of this Order is to establish a coming into force date for provisions of An Act to amend certain Acts in relation to financial institutions (the Act), which will update the definitions of “solicit” and “solicitation” in the Bank Act, the Insurance Companies Act, and the Trust and Loan Companies Act. These changes will align the definition of “solicit” and “solicitation” in these statutes with that in the Canada Business Corporations Act (CBCA), clarifying when a communication to shareholders is considered solicitation.
Background
The Bank Act, the Insurance Companies Act, and the Trust and Loan Companies Act (i.e. federal financial institution statutes) each include a corporate governance framework for the financial institutions they respectively govern. Among other things, these frameworks set out the requirements that apply when the management of a financial institution solicits a shareholder’s proxy to act on their behalf at a meeting of shareholders.
In many respects, the corporate governance framework of federal financial institution statutes is modelled after the CBCA. In 2001, the definitions of “solicit” and “solicitation” in the CBCA were changed and, in 2005, the Act amended each of the federal financial institution statutes to align with these changes. Following CBCA amendments in 2011 and 2018, the definition of “solicitation” under the Act required further updating to ensure the definitions in the federal financial institution statutes remain aligned with CBCA model.
The Budget Implementation Act, 2019, No. 1 amended subsection 27(2) of the Act to further update the definition of “solicit” and “solicitation” in the Bank Act to ensure it remained aligned with the CBCA and broadened the authority for regulations that set out the proxy framework in the Bank Act. Comparable amendments to the Insurance Companies Act and the Trust and Loans Companies Act were included in Budget Implementation Act, 2022, No. 1.
The 2019 and 2022 legislative amendments to the definition of “solicit” or “solicitation” were made to improve bijuralism by specifying that, in Quebec, forms of proxy are signed, not executed. The amendments also clarify when certain communications are not considered solicitation. This includes when (1) a shareholder makes a prescribed public announcement of how they intend to vote and the reasons for their decision; (2) when a registered holder or beneficial owner of shares communicates to obtain support for their proposal at an annual shareholders meeting; and (3) when a communication is made to shareholders in prescribed circumstances other than a solicitation by or on behalf of the management of a bank.
The Form of Proxy (Banks and Bank Holding companies) Regulations detail the prescribed circumstances in which (1) and (3) above may be done. The Regulations have out-of-date references to the Canada Business Corporations Regulations, leading to misalignment. The Standing Joint Committee for the Scrutiny of Regulations (SJCSR) has raised concerns with the misalignment and, on February 21, 2019, the Department appeared at the SJCSR and proposed changing the design of the Regulations to ensure a clear approach to the form and context on proxy documents. The SJCSR requested a timely implementation.
Implications
The Order will bring into force the 2005 amendments to the definition of “solicit” and “solicitation” in the Bank Act, the Insurance Companies Act, and the Trust and Loan Companies Act. This will also bring into effect the amendments to the definition of “solicit” and “solicitation” in An Act to amend certain Acts in relation to financial institutions that were made through Budget Implementation Act, 2019, No. 1 and the Budget Implementation Act, 2022, No. 1. These amendments will align the corporate governance frameworks of the federal financial institution statutes with that of the CBCA in accordance with the legislative intentions announced in Budget 2018 and 2019.
This Order will also allow the revisions to the Form of Proxy (Banks and Bank Holding Companies) Regulations to be implemented for the Bank Act.
Currently, there are no similar regulations for the Insurance Companies Act or the Trust and Loan Companies Act. However, the amendments to the definition of “solicit” and “solicitation” for these acts are important to ensure consistency across the federal financial institution statutes. The absence of similar regulations is not anticipated to have any impacts.
The coming into force of the amendments is not expected to have differential impacts on the basis of sex, gender, age, race, ethnicity, sexuality, religion, and/or mental or physical disability.
There are no financial implications for the Government of Canada with this Order.
Consultations
The Department has held targeted consultations on the timing of the coming into force of this measure and stakeholders did not raise concerns. Financial sector stakeholders understand that the corporate governance framework in the federal financial institution statutes is generally modelled on that in the CBCA, and they expect alignment on technical issues like the definition of “solicitation.”
The revised Form of Proxy (Banks and Bank Holding Companies) Regulations for the Bank Act were open for public comment between May 6 to June 5, 2023, following prepublication in the Canada Gazette, Part I. During this period, two comments were received: one from the Canadian Bankers Association, which expressed support for the revised regulations. Minor administrative changes were recommended by another individual; however, it was determined that these changes would not be applicable.
Contact
Barbara Russell
Director
Financial Institutions Division
Financial Sector Policy Branch
Department of Finance Canada
90 Elgin Street
Ottawa, Ontario
K1A 0G5
Email: barbara.russell@fin.gc.ca