Part 2 — Provincial Companies Subpart 1 Status and Powers of Provincial Companies
400 Ceasing to hold office
vacant when
(a) the actuary resigns,
(b) if the actuary is an in dividual, the individual dies,
(c) if the actuary is not an individual, the actuary is dissolved,
(d) the appointment of the actuary is revoked, or
(e) the office of actuary is decl ared to be vacant under section
399.
(2) The resignation of an actuary becomes effective at the time a
written resignation is sent to the provincial company or at the time
specified in the resignation, whichever is later.
1999 cI-5.1 s400
Filling vacancy
401 When a vacancy occurs in the office of actuary of a
provincial company, the directors must forthwith
(a) submit a written statement to the Minister of the
circumstances and reasons why, in the directors' opinion,
the office of actuary became vacant, and
(b) fill the vacancy.
1999 cI-5.1 s401
Statement of actuary
402 An actuary of a provincial company who resigns or whose
appointment is revoked must submit a written statement of the
circumstances and reasons why the actuary resigned or why, in the
actuary's opinion, the actuary's appointment was revoked to
(a) the directors of the company,
(b) the Minister, and
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(c) the replacement actuary of the company when a request for
the statement is made by the replacement actuary.
1999 cI-5.1 s402
Duty of replacement actuary
403(1) If an actuary of a provincial company has resigned or the
appointment of an actuary has been revoked, the replacement
actuary must promptly after being appointed request the previous
actuary to provide the replacement actuary with a copy of the
statement referred to in section 402.
(2) If the replacement actuary does not receive the statement
within 15 days after making the request, the replacement actuary
must promptly notify the Minister that the statement has not been
received and, if the Minister has received the statement, the
Minister must provide it to the actuary.
1999 cI-5.1 s403
Right to information
404(1) On the request of the actuary of a provincial company, the
present or former directors, officers, employees or representatives
of the company, any former actuary of the company and of any of
the company's subsidiaries and holding bodies corporate must, to
the extent that they are reasonably able to do so,
(a) obtain or permit access to such records held by the company
or any of its subsidiaries or holding bodies corporate, and
(b) provide such inform ation and explanations
as are, in the opinion of the actuary, necessary to enable the actuary
to perform the duties of actuary of the company.
(2) A person who in good faith makes an oral or written
communication under subsection (1) is not liable in any civil action
arising from having made the communication.
1999 cI-5.1 s404
Actuary's valuation
405(1) The actuary of a provincial company must value
(a) the actuarial and other policy liabilities of the company as at
the end of a financial year, and
(b) any other matter specified in any direction made by the
Minister.
(2) An actuary who is a Fellow of the Canadian Institute of
Actuaries must ensure that the valuation is in accordance with
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generally accepted actuarial practices with any modification
established by the Minister under section 219.
1999 cI-5.1 s405
Special valuation
406(1) The Minister may appoint an individual as an actuary to
value the matters referred to in section 405(1)(a) or (b) in relation
to a provincial company if the Minister is of the opinion that the
appointment is necessary.
(2) The remuneration and expenses incurred in carrying out a
valuation under subsection (1) are payable by the provincial
company on being approved by the Minister.
1999 cI-5.1 s406
Actuary's report
407(1) The actuary of a provincial company must, not less than 21
days before the date of the annual meeting of the participating
policyholders and shareholders of the company, make a report to
them on the valuation made under section 405 and on any other
matter that is prescribed.
(2) In each report required under subsection (1), the actuary must
state whether, in the actuary's opinion, the annual statement
presents fairly the results of the valuation made under section 405.
1999 cI-5.1 s407
Report to directors
408(1) The directors of the company or, where the directors so
choose, the audit committee of the company must meet with the
actuary of a provincial company at least once during each financial
year.
(2) The actuary must report at the meeting
(a) on the financial position of the provincial company, and
(b) if directed to do so by the Minister, the expected future
financial condition of the company.
1999 cI-5.1 s408
Report on matters requiring rectification
409 The actuary of a provincial company must report in writing
to the directors, chief executive officer and chief financial officer
of the company and to the Minister any matters that have come to
the actuary's attention in the course of carrying out the actuary's
duties and that in the actuary's opinion have material adverse
effects on the financial condition of the company and require
rectification.
1999 cI-5.1 s409
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Actuary's procedures
410(1) The Minister may, in writing, require that the actuary of a
provincial company report to the Minister on the extent of the
actuary's procedures used in valuing the actuarially based liability
figures contained in the annual return and may, in writing, require
that the actuary enlarge or extend the scope of that valuation or
direct that any other particular procedure be performed in any
particular case, and the actuary must comply with the requirement
of the Minister and report to the Minister.
(2) The expenses incurred as a result of the actuary's performing
duties under subsection (1) are payable by the provincial company
on being approved by the Minister.
1999 cI-5.1 s410
Protection from liability
411(1) An oral or written statement or report made under this Act
by the actuary or former actuary of a provincial company has
qualified privilege.
(2) The actuary or former actuary of a company who in good faith
makes an oral or written statement or report under section 402 or
409 is not liable in any civil action for damages attributable to the
actuary's or former actuary's having made the statement or report.
1999 cI-5.1 s411
Regulations
412 The Lieutenant Governor in Council may make regulations
providing for matters to be included in an actuary's report under
section 407.
1999 cI-5.1 s412
Subpart 10
Adequacy of Assets, Capital
and Liquidity
413 Repealed RSA 2000 cI-3 s873.
Capital and liquidity
414(1) This section comes into force when section 413 is
repealed.
(NOTE: Section 413 proclaimed repealed November 26, 2003.)
(2) A provincial company must, in relation to its operations,
(a) maintain adequate capital and adequate and appropriate
forms of liquidity, and
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(b) comply with any regulations in relation to capital and
liquidity.
(3) The Lieutenant Governor in Council may make regulations
respecting the maintenance by provincial companies of
(a) adequate capital, and
(b) adequate and appropriate forms of liquidity.
(4) The regulations may specify different requirements for
different classes of provincial companies.
(5) Even though a provincial company is complying with
regulations made under subsection (3), the Minister may, by order,
direct the company
(a) to increase its capital, or
(b) to provide additional liquidity in the forms and amounts that
the Minister requires.
(6) A provincial company must comply with an order made under
subsection (5) within the time the Minister specifies in the order.
1999 cI-5.1 s414
Subpart 11
Investments
Definitions
415 In this Subpart,
(a) "commercial loan" means
(i) any loan other than
(A) loans to an individual in an aggregate prescribed
amount or less,
(B) a loan to the government of Canada or a province or
territory, a municipality or any of their agencies, or
to the government of a foreign country or any of its
agencies, or to a prescribed international agency,
(C) a loan that is guarant eed by, or fully secured by
securities issued by, a government, a municipality or
an agency referred to in paragraph (B),
(D) a loan that is secured by a mortgage on real property
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(I) where the mortgage is on residential property and
the amount of the loan, together with the amount
then outstanding of any mortgage having an equal
or prior claim against the property, does not
exceed 75% of the value of the property at the
time the loan is made, or
(II) where the mortgage is on real property other than
residential property and the amount of the loan,
together with the amount then outstanding of any
mortgage having an equal or prior claim against
the property, does not exceed 75% of the value of
the property at the time the loan is made and the
property provides an annual income sufficient to
pay all annual expenses related to the property,
including the payments owing under the
mortgage and the mortgages having an equal or
prior claim against the property,
(E) a loan that is secured by a mortgage on real property
where the amount of the loan, together with the
amount then outstanding of any mortgage having an
equal or prior claim against the property, exceeds
75% of the value of the property at the time the loan
is made if repayment of the amount of the loan that
exceeds 75% of the value of the property is
guaranteed or insured by an insurer approved by the
Minister or a government agency, or
(F) a loan that
(I) is fully secured by a deposit with any
deposit-taking institution,
(II) is fully secured by debt obligations that are
guaranteed by any financial institution other than
the provincial company or an affiliate of the
company, or
(III) is fully secured by a guarantee of a financial
institution other than the provincial company or
an affiliate of the company,
o r
(G) an advance on the secur ity of or against the cash
surrender value of a policy,
(ii) an investment in debt obligations, other than
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(A) debt obligations that are
(I) guaranteed by any financial institution other than
the provincial company or an affiliate of the
company,
(II) fully secured by deposits with any deposit-taking
institution, or
(III) fully secured by debt obligations that are
guaranteed by any financial institution other than
the provincial company or an affiliate of the
company,
(B) debt obligations that are issued by the government of
Canada or a province or territory, a municipality or
any of their agencies, or by the government of a
foreign country or any of its agencies, or by a
prescribed international agency,
(C) debt obligations that are guaranteed by, or fully
secured by securities issued by, a government, a
municipality or an agency referred to in paragraph
(B), or
(D) debt obligations that are widely distributed,
(iii) an investment in shares of a body corporate or ownership
interests in an unincorporated body, other than
(A) shares or ownership interests that are widely
distributed, or
(B) participating shares,
and
(iv) any other prescribed form of financing,
but does not include a deposit with a deposit-taking
institution;
(v) repealed 2003 c19 s34;
(b) "connected" means connected as defined in the regulations;
(c) "debt obligation" means a bond, debenture, note or other
evidence of indebtedness, whether secured or unsecured;
(d) "investment" includes a loan to a person;
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(e) "loan" includes an acceptance, an advance on the security of
or against the cash surrender value of a policy, endorsement,
letter of credit or other guarantee, a financial lease, a
conditional sales contract, a repurchase agreement and any
other similar arrangement for obtaining funds or credit, but
does not include investments in securities;
(f) "participating share" means a share of a body corporate that
carries the right to participate in the earnings of the body
corporate to an unlimited degree and to participate in a
distribution of the remaining property of the body corporate
on dissolution;
(g) "widely distributed" with respect to securities of a body
corporate means
(i) securities issued by way of a prospectus and traded on a
recognized stock exchange, or
(ii) securities issued to more than 25 investors within a
6-month period, no one of which holds more than 10%
of the total amount of the securities issued and of which,
on an ongoing basis, the body corporate does not own
more than 10% of the securities outstanding.
RSA 2000 cI-3 s415;2003 c19 s34
Prudent investment standards
416(1) A provincial company must adhere to prudent investment
standards in making investment decisions and in managing its total
investments.
(2) For the purposes of this Act, prudent investment standards are
those which, in the overall context of an investment portfolio, a
reasonable and prudent person would apply to investments made on
behalf of another person with whom there exists a fiduciary
relationship to make such investments without undue risk of loss or
impairment and with a reasonable expectation of fair return or
appreciation.
(3) The fact that a provincial company is in compliance with the
other provisions of this Act relating to investments does not of
itself mean that the company is in compliance with subsection (1).
1999 cI-5.1 s416
Policies and procedures
417(1) The directors of a provincial company must establish
policies and procedures to ensure that the company applies prudent
investment standards in making investment decisions and in
managing its total investments.
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(2) The directors must review the procedures established under
subsection (1) at least once each year.
1999 cI-5.1 s417
Prohibited investments
418(1) No provincial company may directly or indirectly make
loans to or other investments in
(a) any person, or
(b) any 2 or more persons that to the knowledge of the company
are connected,
if the outstanding balance of principal and interest of loans for the
person or the connected persons, together with the market value of
investments in the person or connected persons, would exceed
$500 000 or the prescribed percentage of the company's assets,
whichever is greater.
(2) This section does not apply so as to restrict a provincial
company from acquiring or making investments in
(a) a security issued or guar anteed by the government of
Canada or any province or territory,
(b) a mortgage that is
(i) insured under the National Housing Act (Canada) or
through an agency of the government of Canada or a
province or territory, or
(ii) insured by an insurer approved by the Minister,
(c) an unincorporated body referred to in section 420(2),
(d) a body corporate referred to in section 421(3), or
(e) other prescribed investments.
RSA 2000 cI-3 s418;2013 c18 s27
Restriction on residential mortgages
419(1) No provincial company may make a loan in Canada on the
security of residential property in Canada for the purpose of
purchasing, renovating or improving that property, or refinance
such a loan, if the amount of the loan, together with the amount
then outstanding of mortgages having an equal or prior claim
against the property, would exceed 75% of the value of the
property at the time of the loan.
(2) Subsection (1) does not apply in respect of
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(a) a loan if repayment of the amount of the loan that exceeds
the maximum set out in subsection (1) is guaranteed or
insured by the Government of Alberta, the Government of
Canada, the government of another province or territory, an
agency of any of those governments or an insurance policy
issued by a licensed insurer;
(b) the acquisition by the company 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 company to the
entity against the issue of such securities, or
(c) a loan secured by a mortgage where
(i) the mortgage is taken back by the company on a
property disposed of by the company, including where
the disposition is by way of a realization of a security
interest, and
(ii) the mortgage secures payment of an amount payable to
the company for the property.
1999 cI-5.1 s419
Limitation on ownership of unincorporated body
420(1) Subject to subsections (2) and (4), no provincial company
may beneficially own more than a 10% interest in an
unincorporated body.
(2) Subsection (1) does not apply where the unincorporated body
is carrying on a business that may be carried on by a body
corporate referred to in section 421(3) and is carrying on that
business in the same way as if it were such a body corporate.
(3) For the purposes of subsection (1), an interest beneficially
owned by a subsidiary of a provincial company is deemed to be
beneficially owned by the company.
(4) Despite subsection (1), a provincial company may, through
realization of a security interest held by the company or, subject to
the approval of the Minister, by means of a loan workout
procedure, beneficially own more than a 10% interest in an
unincorporated body, but the company must dispose of the excess
interest within
(a) two years after acquiring the excess interest, or
(b) any longer period the Minister allows.
1999 cI-5.1 s420
RSA 2000
Limitation on shareholding
421(1) Subject to this section and except as otherwise prescribed,
no provincial company may have a substantial investment in a
body corporate.
(2) Despite subsection (1), a provincial company may, through
realization of a security interest held by the company or, subject to
the approval of the Minister, by means of a loan workout
procedure, have a substantial investment in a body corporate, but
the company must dispose of the excess shares that give the
company a substantial investment within
(a) two years after acquiring the excess shares, or
(b) any longer period the Minister allows.
(3) Despite subsections (1) and (2) and except as otherwise
prescribed, a provincial company may have a substantial
investment in any of the following bodies corporate:
(a) a bank;
(b) a loan corporation or trust corporation incorporated by or
under an Act of Canada or a province or territory;
(c) with the approval of the Minister, an extra-provincial
company or an insurer formed by or under an Act of
Canada;
(d) with the approval of the Minister, a foreign financial
institution;
(e) a prescribed body corporate.
(4) A provincial company must not have a substantial investment
in a body corporate referred to in subsection (3) if that body
corporate has a substantial investment in another body corporate
that is not a body corporate referred to in subsection (3).
1999 cI-5.1 s421
Duty to provide information
422 If a provincial company acquires control of an
unincorporated body referred to in section 420(2), or of a body
corporate referred to in section 421(3), the provincial company
must provide the Minister with any information respecting the
unincorporated body or body corporate that the Minister requires.
1999 cI-5.1 s422
RSA 2000
Divestment order
423(1) If a provincial company beneficially owns an interest in an
unincorporated body referred to in section 420(2) and
(a) the unincorporated body is carrying on business in an
unsound manner that may imperil the company's investment
if continued, or
(b) in the case of an unincorporated body that is controlled by
the company, the company fails to provide information to
the Minister under section 422,
the Minister may, by order, direct the company to divest itself of all
or part of its beneficial ownership within the time specified in the
order.
(2) If a provincial company beneficially owns shares in a body
corporate referred to in section 421(3) and
(a) the body corporate is carrying on business in an unsound
manner that may imperil the company's investment if
continued, or
(b) in the case of a body corp orate that is a subsidiary, the
company fails to provide information to the Minister under
section 422,
the Minister may, by order, direct the company to divest itself of all
or part of its beneficial ownership within the time specified in the
order.
1999 cI-5.1 s423
Portfolio Limits
Exclusion from portfolio limits
424(1) Subject to subsection (3), the value of all investments
acquired by a provincial company and any of its subsidiaries as a
result of a realization of a security interest must not be included in
calculating the value of the investments of the company and its
subsidiaries under sections 425 to 430
(a) for a period of 7 years following the day on which the
interest was acquired, in the case of an interest in real
property, and
(b) for a period of 2 years following the day on which the
investment was acquired, in the case of an investment other
than an interest in real property.
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(2) The Minister may, in the case of any particular provincial
company, extend any period referred to in subsection (1) for such
further period or periods, and on such terms and conditions, as the
Minister considers necessary.
(3) Subsection (1) does not apply to interests in real property that
are prescribed for the purposes of this subsection.
1999 cI-5.1 s424
Lending limit - life companies
425(1) Subject to subsection (2), a provincial life company must
not, and must not permit its subsidiaries to,
(a) make or acquire a commercial loan, or
(b) acquire control of a body corporate referred to in section
421(3) that holds commercial loans,
if the aggregate value of all commercial loans held by the company
and its subsidiaries exceeds, or if the making or acquisition of the
commercial loan or the acquisition of control of the body corporate
would cause the aggregate value of all commercial loans held by
the company and its subsidiaries to exceed, 5% of the total assets of
the company.
(2) A provincial life company that has more than $15 000 000 of
base capital may, with the prior approval of the Minister, make or
acquire a commercial loan or acquire control of a body corporate
referred to in section 421(3) that holds commercial loans where the
aggregate value of all commercial loans held by the company and
its subsidiaries would as a result exceed the limit set out in
subsection (1).
RSA 2000 cI-3 s425;2008 c19 s22
Lending limit - property and casualty companies
426 A provincial property and casualty company must not, and
must not permit its prescribed subsidiaries to,
(a) make or acquire a commercial loan or a loan to an
individual, or
(b) acquire control of a body corporate referred to in section
421(3) that holds commercial loans or loans to individuals
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if the aggregate value of all such loans held by the company and its
prescribed subsidiaries exceeds, or if the making or acquisition of
the loan or the acquisition of control of the body corporate would
cause the aggregate value of all such loans held by the company
and its prescribed subsidiaries to exceed, 5% of the total assets of
the company.
1999 cI-5.1 s426
Limit on real property interest
427 A provincial company must not, and must not permit its
prescribed subsidiaries to,
(a) purchase or otherwise acquire an interest in real property, or
(b) make an improvement to an y real property in which the
company or any of its prescribed subsidiaries has an interest,
if the aggregate value of all of the company's interests in real
property exceeds, or if the acquisition of the interest or the making
of the improvement would cause that aggregate value to exceed,
10% of the total assets of the company and its prescribed
subsidiaries.
1999 cI-5.1 s427
Limits on equity acquisitions
428 A provincial company must not, and must not permit its
prescribed subsidiaries to,
(a) purchase or otherwise acquire any participating shares of
any body corporate or any ownership interests in any
unincorporated body, other than those in which the company
has, or by virtue of the acquisition would have, a substantial
investment, or
(b) acquire control of a body corporate that holds shares or
ownership interests referred to in clause (a),
if the aggregate value of
(c) all participating shares, ex cluding participating shares of
bodies corporate referred to in section 421(3) in which the
company has a substantial investment, and
(d) all ownership interests in unincorporated bodies
beneficially owned by the company and its prescribed subsidiaries
exceeds, or if the purchase or acquisition would cause that
aggregate value to exceed, the prescribed percentage of the total
assets of the company and its prescribed subsidiaries.
1999 cI-5.1 s428
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Aggregate limit
429 A provincial company must not, and must not permit its
prescribed subsidiaries to,
(a) purchase or otherwise acquire
(i) participating shares of a body corporate, other than those
of a body corporate referred to in section 421(3) in
which the company has, or by virtue of the acquisition
would have, a substantial investment,
(ii) ownership interests in an unincorporated body, or
(iii) interests in real property,
or
(b) make an improvement to real property in which the
company or any of its prescribed subsidiaries has an interest
if the aggregate value of
(c) all participating shares and ownership interests referred to in
clause (a)(i) and (ii) that are beneficially owned by the
company and its prescribed subsidiaries, and
(d) all of the company's interests in real property referred to in
clause (a)(iii)
exceeds, or if the acquisition of the shares or interests or the
making of the improvement would cause that aggregate value to
exceed, 35% of the total assets of the company and its prescribed
subsidiaries.
RSA 2000 cI-3 s429;2022 c11 s6
Assets transactions
430 A provincial company must not, without the approval of the
Minister, in any transaction or series of transactions with the same
party during a period of 12 months, acquire or dispose of assets,
directly or indirectly, other than assets that are debt obligations
referred to in section 415(a)(ii)(A) to (D), having a value in excess
of 10% of the total assets of the company as at the beginning of the
12-month period.
1999 cI-5.1 s430
Retaining investments
431(1) If a provincial company has acquired on or before
December 31, 1996 an investment that was allowed under the
Insurance Act in force at the time of acquisition, but that is not
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permitted under this Act and the regulations, the company may
retain the investment.
(2) A provincial company that has an investment referred to in
subsection (1) must not increase the amount of or renew or extend
the investment without the prior consent of the Minister.
1999 cI-5.1 s431
Regulations
432 The Lieutenant Governor in Council may make regulations
(a) defining terms that are specified in section 415 as being
defined in the regulations;
(b) defining interests in real property for the purposes of one or
more provisions of this Subpart and determining the method
of valuating those interests;
(c) prescribing quantitative limits on investments that may be
made by a provincial company or its subsidiary, including
quantitative limits on investments referred to in section
421(3) and, where a limit has been imposed by this Act,
prescribing limits that are more restrictive;
(d) imposing terms and conditions subject to which a provincial
company or its subsidiary may make investments or enter
into other transactions, and imposing restrictions on the
manner in which investments and other transactions may be
made, given or entered into;
(e) prescribing investments and other transactions that a
provincial company or its subsidiary must not make, give or
enter into;
(f) respecting the method to be used to value the assets of a
provincial company for the purposes of this Act;
(f.1) respecting the protection and maintenance of assets of a
provincial company, including regulations respecting the
bonding of directors, officers and employees of a provincial
company;
(g) respecting any matter that is to be prescribed under this
Subpart.
RSA 2000 cI-3 s432;2008 c19 s23
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Subpart 12
Transactions with Related Parties
Interpretation
433(1) In this Subpart,
(a) "fundamentally reinsure" wi th respect to a contract of
insurance means
(i) that the insurer under the contract transfers or assigns all
rights and obligations under the contract to another
insurer, or
(ii) that the contract is replaced by novation and the insurer
under the replacement contract is different from the
insurer under the original contract;
(b) "loan" includes a deposit, a financial lease, a conditional
sales contract, a repurchase agreement and any other similar
arrangement for obtaining funds or credit, but does not
include investments in securities or the making of an
acceptance, endorsement or other guarantee;
(c) "senior official" of a body corporate means an individual
who
(i) is a director and a fu ll-time employee of the body
corporate,
(ii) is an officer or the chief operating officer, chief financial
officer, chief accountant, chief auditor or chief actuary
of the body corporate,
(iii) performs functions for the body corporate similar to
those performed by an official referred to in subclause
(ii),
(iv) is the head of the strategic planning unit of the body
corporate,
(v) is the head of the unit of the body corporate that provides
legal services or human resources services to the body
corporate,
(vi) is an official who reports directly to the body corporate's
board of directors, chief executive officer or chief
operating officer, or
(vii) is prescribed.
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(2) A transaction, guarantee or investment is made or entered into
if an existing transaction, guarantee or investment, including one
made or entered into before the coming into force of this section, is
modified, added to, extended or renewed.
(3) Where a transaction is required by or under this Subpart to be
at fair market rate, that requirement is satisfied, subject to
subsection (4), if the transaction is not at fair market rate but is at a
rate and terms that are more financially advantageous to the
provincial company or subsidiary than actual fair market rate.
(4) Subsection (3) does not apply where the transaction is between
(a) a provincial company and its affiliate, or
(b) a subsidiary of a provincial company and an affiliate of the
provincial company.
1999 cI-5.1 s433
Meaning of related party
434(1) For the purposes of this Subpart, a person is a related party
of a provincial company if the person
(a) has a significant interest in a class of shares of the company,
(b) is a director or senior official of the company or of a body
corporate that controls the company or is acting in a similar
capacity in respect of an unincorporated body that controls
the company,
(c) is the spouse or adult interdependent partner, or a child who
is less than 18 years of age, of a person described in clause
(a) or (b),
(d) is an entity that is controlled by a person referred to in any
of clauses (a) to (c),
(e) is an unincorporated body in which the company
beneficially owns more than a 10% interest,
(f) is a body corporate in whic h the company has a substantial
investment,
(g) is an entity in which a person who controls the company has
a substantial investment,
(h) is an entity in which the spouse or adult interdependent
partner, or a child who is less than 18 years of age, of a
person who controls the company has a substantial
investment, or
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(i) is designated under section 435 as a related party.
(2) Unless the regulations provide otherwise, the following are not
a related party of a provincial company:
(a) a financial institution that wholly owns the company;
(b) a wholly owned subsidiary of the company.
(3) Where the Minister is satisfied that a subsidiary of a provincial
company that is not a wholly owned subsidiary of the company
functions primarily for the purpose of providing a service, other
than a financial service, to the company or the company's
subsidiaries, the Minister may, on application, exempt the
subsidiary from the status of related party of the company, subject
to any terms and conditions the Minister considers appropriate.
RSA 2000 cI-3 s434;2002 cA-4.5 s45
Designated related party
435 For the purposes of this Subpart, the Minister may designate
any person as a related party of a provincial company if the
Minister is of the opinion that
(a) the person is acting or has acted jointly or in concert with a
related party of the company with respect to entering into a
transaction that would be prohibited or restricted under this
Subpart if entered into by or with respect to that related
party,
(b) there exists or has existed between the person and the
company an interest or relationship that might reasonably be
expected to affect or that has affected the exercise by the
company of its best judgment with respect to a transaction,
or
(c) the person is acting in concert with one or more other
persons to own or control, directly or indirectly, 10% or
more of any class of voting shares of the company.
1999 cI-5.1 s435
Transactions contemplating related party status
436 If a person who, but for this section, is not a related party
enters into a transaction with a provincial company or its subsidiary
knowing that the person is going to become a related party of the
company, the person is a related party of the company with respect
to that transaction.
1999 cI-5.1 s436
Prohibited transactions, guarantees and investments
437 Except as provided in this Subpart,
RSA 2000
(a) no provincial company or subsidiary of a provincial
company may, directly or indirectly, enter into any
transaction with a related party of the company,
(b) no related party of a provincial company may, directly or
indirectly, enter into any transaction with the company or its
subsidiary,
(c) no provincial company or subsidiary of a provincial
company may, directly or indirectly, enter into any
guarantee on behalf of a related party of the company, and
(d) no provincial company or subsidiary of a provincial
company may, directly or indirectly, make an investment in
or take a security interest in any securities of a related party
of the company.
1999 cI-5.1 s437
Exceptions to the prohibition
438 This Subpart does not apply in respect of
(a) the granting of indemnification in accordance with section
365,
(b) the issue by the provincial company of shares of any class
when fully paid for in money or when issued
(i) in accordance with any pr ovisions for the conversion of
other issued and outstanding securities of the company
into shares of that class,
(ii) as a share dividend,
(iii) in exchange for shares of a body corporate that has been
continued as a provincial company under Subpart 2,
(iv) in accordance with the terms of an amalgamation under
Subpart 2,
(v) by way of consideration in accordance with the terms of
an agreement referred to in Subpart 2, Division 10 in
which the provincial company agrees to sell all or
substantially all of its assets, or
(vi) with the approval of the Minister, in exchange for shares
of another body corporate,
(c) the payment of dividends or policy dividends or bonuses, or
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(d) transactions that consist of the payment or provision by a
provincial company of salaries, fees, stock options, policy
premiums, pension benefits, incentive benefits or other
benefits or remuneration to persons who are related parties
of the company in their capacity as directors, officers or
employees of the company.
1999 cI-5.1 s438
Permitted transactions
439(1) A provincial company or a subsidiary of a provincial
company may
(a) enter into a transaction with a related party that involves
minor or general expenditures by the company or the
subsidiary,
(b) enter into a transaction with a related party for
(i) the sale of goods, or
(ii) the provision of financial services
that are normally sold or provided to the public by the
company or the subsidiary in the ordinary course of
business, so long as the prices and rates charged by the
company or subsidiary are at fair market rate,
(c) enter into a transaction with a related party that is a financial
institution if
(i) the transaction consists of a deposit made at fair market
rate and for a prescribed purpose, or
(ii) the transaction consists of the acquisition at fair market
rate of prescribed securities from a securities dealer who
is not an underwriter, within the meaning of that term in
the Securities Act, in the distribution of those securities
and is not selling them as their principal,
and
(d) make a loan or give a guarantee on behalf of a senior official
of the company or subsidiary if the aggregate of the
outstanding principal and interest owing on all such loans
and the contracted amount of all outstanding guarantees to
or on behalf of that senior official does not exceed the lesser
of
(i) $100 000, and
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(ii) twice the annual salary of that senior official.
(2) The conduct review committee of a provincial company must,
subject to any prescribed limits, develop criteria as to what
constitutes minor or general expenditures for the purposes of
subsection (1)(a).
(3) A provincial company may, subject to Subpart 2,
fundamentally reinsure its contracts of insurance with a related
party of the company.
(4) A related party of a provincial company may, subject to
Subpart 2, fundamentally reinsure its contracts of insurance with
the company.
(5) A provincial company may reinsure a contract of insurance in
the ordinary course of its business with a related party of the
company in accordance with section 62.
(6) A provincial company may accept or retain on the direction of
a policyholder or beneficiary who is a related party amounts that
are payable as
(a) policy dividends or bonuses, or
(b) policy proceeds on the surrende r or maturity of the policy or
on the death of the person whose life is insured
where the liabilities of the company in respect of the amount vary
in amount depending on the market value of a specified group of
assets.
1999 cI-5.1 s439
Transactions requiring directors' approval
440 A provincial company or its subsidiary may with the prior
approval of the directors of the company
(a) enter into a written contract with a related party for the
provision of management services to or by the company or
subsidiary if it is reasonable that the company or subsidiary
obtain or supply the services and so long as the
consideration is reasonable for the services provided and is
at fair market rate,
(b) enter into a written lease of real estate or personal property
with a related party so long as
(i) the rent is at fair market rate,
(ii) the term of the lease an d all renewals does not exceed
RSA 2000
(A) 5 years in the case of a lease of personal property, or
(B) 20 years in the case of a lease of real estate,
a n d
(iii) the terms of the leas e are otherwise competitive and
reasonable,
(c) enter into a written contract with a related party at fair
market rate for pension and benefit plans, stock options,
incentive benefits and other reasonable commitments
incidental to employment,
(d) enter into a written contract with a related party respecting
the provision of goods or services, or providing for a
networking arrangement for the provision of goods and
services, other than management services, so long as the
price paid for those goods or services is at fair market rate
and the term of the contract and all renewals does not
exceed 5 years in total,
(e) acquire from or sell to a related party prescribed securities,
other than securities issued by the related party, so long as
the transaction is at fair market rate,
(f) acquire beneficial ownership of shares of a body corporate
as permitted by section 421(3),
(g) make a loan to or guarantee the obligations of an entity,
other than a financial institution, in which the company
beneficially owns shares as permitted by section 421(3) if
the loan or guarantee is at fair market rate and meets
prescribed conditions,
(h) make a loan to
(i) a director or senior official of the company,
(ii) an employee of a prescr ibed class of the company, or
(iii) the spouse or adult interd ependent partner of a director
or senior official of the company or of an employee
referred to in subclause (ii)
on the security of the residence of the person to whom the
loan is made, and the loan must be at fair market rate except
in the case of a loan to an employee of the prescribed class,
to a senior official or to a director who is a senior official or
who is an employee of the prescribed class,
RSA 2000
(i) make a personal loan to
(i) a senior official of the company,
(ii) an employee of a prescr ibed class of the company, or
(iii) the spouse or adult inte rdependent partner of a senior
official of the company or of an employee referred to in
subclause (ii)
that is fully secured other than by promissory note, and the
loan must be at fair market rate except in the case of a loan
to a senior official or to an employee of the prescribed class,
(j) make a loan to a related party that is a financial institution in
which the company beneficially owns shares as permitted
under section 421(3), if the loan is at fair market rate, is
fully secured by securities that meet prescribed
qualifications and is for prescribed purposes,
(k) enter into a transaction with a related party that is a financial
institution if the transaction consists of a disposition by the
company or subsidiary of assets for which the consideration
is fully paid in money and is at fair market rate,
(l) guarantee the obligations of a related party that is a financial
institution, and
(m) enter into any other transaction with a related party that the
regulations permit it to enter into with the prior approval of
the directors of the company.
RSA 2000 cI-3 s440;2002 cA-4.5 s45
Procedures for approvals by directors
441(1) Where this Subpart requires that a transaction have the
prior approval of the directors of a provincial company, the
approval must be given in writing and in accordance with
procedures established under section 445, and the approval may be
given with respect to a specific transaction or with respect to a class
of transactions.
(2) Where this Subpart requires that a transaction have prior
approval of the directors of a provincial company and the
transaction will be reviewed by the directors of a subsidiary of the
company and the subsidiary is a financial institution, the directors
of the company are not required to review the transaction.
1999 cI-5.1 s441
RSA 2000
Disclosure
442(1) A person who knows or has reason to believe that the
person is a related party of a provincial company and who proposes
to enter into a transaction or guarantee with the company or its
subsidiary for which the approval of the directors of the company is
required must disclose in writing to the company the nature of the
person's interest in the proposed transaction or guarantee forthwith
after becoming aware of the facts that make the person a related
party of the company.
(2) Where the related party is a director or senior official of a
provincial company, disclosure must be made in accordance with
section 354.
(3) Where, with respect to a proposed transaction or guarantee
referred to in subsection (1), a provincial company knows or has
reason to believe that a party is a related party of the company, the
company must take all reasonable steps to obtain from that other
party full disclosure in writing of any interest or relationship, direct
or indirect, that would make that other party a related party of the
company.
(4) The directors of the provincial company must ensure that a
disclosure under subsection (1) or (3) is entered in the minutes of
the first directors' meeting held after the making of the disclosure.
(5) A related party must not
(a) vote or attempt in any way to influence the voting on any
resolution to approve the transaction or guarantee, or
(b) be present while the subject-matter of the transaction or
guarantee is being discussed or the vote is being conducted.
(6) Where a provincial company does not receive full disclosure as
required by this section in respect of a proposed transaction or
guarantee, the company or its subsidiary, as the case may be, must
not enter into the transaction or guarantee.
1999 cI-5.1 s442
RSA 2000
Transactions requiring Ministerial approval
443 A provincial company or its subsidiary may with the prior
approval of the Minister enter into a transaction, guarantee or
investment or a class of transaction, guarantee or investment with a
related party of the company that would otherwise be prohibited or
restricted by this Act or the regulations if the Minister is satisfied
that the transaction, guarantee or investment is in the best interests
of the company and is not prejudicial to the interests of the
shareholders and policyholders.
1999 cI-5.1 s443
Limits on permitted transactions
444 No provincial company or subsidiary of a provincial
company may enter into a transaction with a related party of the
company that is permitted under this Subpart if the transaction
exceeds the prescribed limits.
1999 cI-5.1 s444
Review and approval procedures
445(1) The conduct review committee of a provincial company
must establish written review and approval procedures to be
followed by the company to ensure compliance with this Subpart.
(2) The procedures referred to in subsection (1) must be reviewed
at least once each year by the conduct review committee.
(3) The conduct review committee must report on its review under
subsection (1) and must give its recommendations, if any, with
respect to the procedures to the board of directors.
(4) The procedures referred to in subsection (1) must deal with at
least the following matters:
(a) the formalities governing transactions, guarantees and
investments in respect of a related party;
(b) the obligations of the provincial company, its subsidiaries
and the related party to disclose information;
(c) the protection of confidential information held by the
provincial company or its subsidiaries relating to its
business associates, and the conduct of the company or
subsidiary in cases where the interests of the company or
subsidiary or of a person affiliated with either of them may
be in conflict with the interests of its business associates.
(5) The procedures referred to in subsection (1) are subject to the
approval of the directors and the directors, on receipt of any
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recommendation from the conduct review committee, must review
the procedures and make any changes they consider necessary.
1999 cI-5.1 s445
Duty to report contraventions
446(1) The auditor of a provincial company must promptly report
to the directors and the Minister any breach of this Subpart of
which the auditor is aware or is made aware under subsection (2).
(2) Any person undertaking professional services for a provincial
company who, in providing the professional services, becomes
aware of a breach of this Subpart must promptly report the breach
to the directors and the auditor of the company, unless the breach
has already been reported under subsection (1).
(3) Nothing in this section abrogates any privilege that may exist
between a solicitor and a client.
(4) A person who in good faith makes a report under subsection
(1) or (2) is not liable in any civil action arising from it.
(5) Where a provincial company or its subsidiary has entered into a
transaction
(a) that is prohibited under this Subpart, or
(b) without the approvals required under this Subpart,
the company must, on becoming aware of that fact, forthwith notify
the auditor and the Minister of that fact.
1999 cI-5.1 s446
Reliance on information
447 A provincial company and any person who is a director,
officer, employee or agent of the company may rely on any
information received under section 442 regarding disclosure or any
information otherwise acquired in respect of any matter that might
be the subject of such a disclosure, and the company and person are
not liable in any civil action for anything done or omitted to be
done in good faith in reliance on any such information.
1999 cI-5.1 s447
Onus of proof
448 For the purposes of this Subpart, the onus is on the related
party and the provincial company or its subsidiary to establish that
a transaction, guarantee or investment between the company or
subsidiary and the related party is permitted under this Subpart.
1999 cI-5.1 s448
RSA 2000
Personal information
448.1(1) In this section, "personal information" means personal
information as defined in the Personal Information Protection Act
other than business contact information to which that Act does not
apply by virtue of section 4(3)(d) of that Act.
(2) For the purposes of complying with this Subpart and any
regulations made under this Act respecting related parties, a
provincial company may collect and use personal information
about persons who are related parties without obtaining their
consent.
(3) Persons who are not related parties must provide personal
information as is necessary for the provincial company to comply
with this Subpart.
2003 cP-6.5 s69
Applications to Court
449(1) Where a transaction, guarantee or investment that is
prohibited under this Subpart takes place, any interested person,
including the Minister, may apply to the Court for an order
(a) setting aside the transaction, guarantee or investment and
directing that the related party account to the provincial
company for any profit or gain realized, and
(b) that each person who par ticipated in or facilitated the
transaction, guarantee or investment pay to the company on
a joint and several basis
(i) the damages suffered,
(ii) the face value of the transaction, guarantee or
investment, or
(iii) the amount expended by the company in the transaction,
guarantee or investment,
and on the application the Court may so order or make any other
order it thinks fit, including an order for compensation for the loss
or damage suffered by the company and punitive or exemplary
damages from the related party.
(2) A person who is not a director is not liable under subsection
(1)(b) unless the person knew or ought reasonably to have known
that the transaction, guarantee or investment contravened this
Subpart.
RSA 2000
(3) An application under subsection (1) in respect of a transaction,
guarantee or investment, may only be made within 3 months of the
transaction, guarantee or investments having been entered into.
1999 cI-5.1 s449
Regulations
450 The Lieutenant Governor in Council may make regulations
(a) respecting exceptions to section 434(2);
(b) specifying transactions for the purposes of section 440(m)
that may be entered into with a related party with the prior
approval of the directors of the provincial company;
(c) respecting any matter that is to be prescribed under this
Subpart.
1999 cI-5.1 s450
Subpart 13
Reinsurance
Definitions
450.1 In this Subpart, "partnership agreement" means a
partnership agreement between the general partner and all limited
partners in a limited partnership as referred to in section 450.2.
2022 c11 s7
Limited partnership
450.2(1) A provincial company that restricts its business to the
business of reinsurance may participate as a general partner in a
limited partnership in accordance with this Subpart.
(2) The provincial company may participate as a general partner in
a limited partnership formed under the Partnership Act only if
(a) there is only one general partner in the limited partnership,
(b) the general partner enters into a partnership agreement with
all limited partners in accordance with the guidelines issued
under this section,
(c) the business of the limited partnership is restricted to
enabling the general partner to underwrite reinsurance, and
(d) the general partner submits the information, documents,
records, statements or other things and complies with any
other requirements contained in the guidelines established
by the Superintendent.
(3) The Superintendent may issue guidelines respecting
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(a) the contents of a partnership agreement referred to in
subsection (2)(b), including the ability to specify clauses
that must be incorporated into the partnership agreement,
and
(b) the information, documents, records, statements, things or
requirements referred to in subsection (2)(d),
and shall publish the guidelines in the manner the Superintendent
considers appropriate.
(4) The provincial company must provide to the Superintendent
(a) a copy of the partnership agreement referred to in subsection
(2)(b),
(b) the financial statements and audited annual financial
statements of the limited partnership, and
(c) the information, documents, records, statements or other
things required by the guidelines issued under subsection
(3)(b).
(5) The Minister may, where the Minister is satisfied that the
requirements of this section have been met, issue a licence under
section 32 that restricts the business of a provincial company to the
business of reinsurance, and impose such additional terms or
conditions, consistent with this Act and the regulations, that the
Minister considers appropriate.
2022 c11 s7
Duties of provincial company
450.3(1) A provincial company shall not amend the partnership
agreement referred to in section 450.2(2)(b) unless the provincial
company
(a) submits the amended agreement to the Superintendent, and
(b) obtains the prior approval of the Superintendent.
(2) A provincial company must forthwith notify the
Superintendent regarding any material change
(a) impacting the information, documents, records, statements
or other things submitted under section 450.2, and
(b) that may affect its ability to carry on the business of
reinsurance or to comply with this Act.
2022 c11 s7
RSA 2000
Application re compliance
450.4(1) The Superintendent may apply to the Court for an Order
directing that one or more partners of a limited partnership comply
with the following:
(a) a partnership agreement referred to in section 450.2(2)(b)
and (4)(a) or 450.3(1);
(b) this Act.
(2) For the purposes of an application under subsection (1), except
as otherwise provided by an Order of the Court, the Superintendent
is subrogated as against any or all partners of the limited
partnership agreement to all rights of the partners under the
partnership agreement, and may enforce any or all provisions of the
partnership agreement in the same manner and to the same extent
as a partner of the limited partnership agreement.
2022 c11 s7