Bill C-60 Includes Amendments to Residency Requirements for Financial Institution Board Committees

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On April 8th 2013, we described proposals for the regulation of Canadian financial institutions set out in the 2013 federal budget. The first bill to implement the budget has been introduced in Parliament. Bill C-60, titled the Economic Action Plan 2013 Act, No. 1, includes amendments which would allow Canadian financial institutions greater flexibility to appoint non-residents as members of board committees.

By way of example, this would be achieved in the Bank Act (Canada) by removing references to a “committee of directors” from section 183 which prohibits a bank from transacting business at a meeting of directors or a committee of directors meeting unless a majority of the directors present are resident Canadians. For banks that are subsidiaries of a foreign bank, at least one half of the directors present must be resident Canadians. There are similar amendments proposed for the Insurance Companies Act (Canada), the Cooperative Credit Associations Act (Canada) and the Trust and Loan Companies Act (Canada). In all cases, the residency requirements for board meetings will remain.