Amalgamation of Québec mutual insurance companies
Application
This section applies to the amalgamation of a mutual insurance company constituted under the IA with one or more other mutual insurance companies thus constituted.
Summary
Pursuant to section 325 IA, an amalgamation involving an insurance company requires the filing of:
- A notice of intention to amalgamate as set out in section 149 IA;
- Articles of amalgamation;
- An amalgamation agreement;
- An application for permission to amalgamate.
Section 327 IA stipulates that only a mutual company may amalgamate with another mutual company. Moreover, the section excludes the short-form amalgamation of mutual companies.
Notice of intention
The first paragraph of section 149 IA lists the information that must be contained in a notice of intention. The second paragraph specifies the documents that must be filed with the notice:
The provisions relating to an amalgamation are found in sections 325 to 339 of the Insurers Act (CQLR, c. A-32.1) (the “IA”).
The first paragraph of section 198 IA stipulates that the Business Corporations Act, CQLR, c. S-31.1 (the “BCA”) applies on a suppletive basis, with the necessary modifications, to the amalgamation of insurers. For more information on this subject, refer to Chapter XI on amalgamations (ss. 276 to 287, BCA). Moreover, for the purpose of applying the provisions of the BCA to mutual companies, the AMF is substituted for the enterprise registrar (“REQ”), except as regards maintaining a register (s. 200(1) IA).
- For the legal person resulting from the amalgamation, a document including the same information as that required to be included in an initial application for authorization, as set out in section 30 IA;
- 2The documents that must be filed with such an application and that are listed in section 34 IA.
Under the last paragraph of section 149 IA, in the case of an amalgamation involving more than one authorized insurer, a joint notice may be filed.
Articles of amalgamation
The articles of amalgamation must contain certain elements of the amalgamation agreement (s. 284, 1st par. (1) BCA). For a mutual company, the contents of an amalgamation agreement are provided in section 328 IA (which substitutes for s. 277 BCA). The articles of amalgamation may also set out any provision permitted by the IA to be set out in the by-laws of a mutual company (s. 208 IA).
The second paragraph of section 284 BCA lists, with reference to section 8 BCA, the documents that must be filed with the articles of amalgamation.
Under section 285 BCA, the articles must be signed by the director or officer of each amalgamating corporation who is authorized to sign them and accompanied by the fee prescribed by the Act respecting the legal publicity of enterprises (the “Legal Publicity Act”).
Amalgamation agreement
The contents of an amalgamation agreement between mutual companies are set out in section 328 IA. The agreement must be submitted for approval to the mutual members of each amalgamating corporation by its board of directors (s. 278, 1st par. BCA).
A copy or summary of the amalgamation agreement must be attached to the notices of meeting (s. 278, 2nd par. BCA).
Approval of the amalgamation agreement
The amalgamation agreement must be approved by a separate special resolution of each amalgamating corporation, thus requiring at least two thirds of the votes cast by members at the special general meeting to approve amalgamation (s. 279, 1st par. BCA). By that resolution, a director or an officer of the corporation is authorized to sign the articles of amalgamation (s. 279, 2nd par. BCA).
Application for permission to amalgamation
The contents of an application for permission to amalgamate are set out in paragraphs 1 and 2 of section 329 IA. The third paragraph of section 329 specifies that, in the case of an amalgamation involving more than one insurance company, the application must be a joint one.
The documents to be filed with the application are specified in section 330 IA.
Checklists
The following checklists describe the information to be included in, and documents to be enclosed with, the notice of intention, the articles of amalgamation, the amalgamation agreement and the application for permission to amalgamate.
Notice of intention
The information to be included in, and documents to be enclosed with, the notice of intention are specified in the procedure for the review of the authorization in light of certain operations. Under “Checklists,” refer to subsection A “Amalgamation with another legal person.”
Refer to the procedure « Review in light of certain operations”
Articles of amalgamation
For the items related to the articles of amalgamation, refer to the « Articles of amalgamation of mutual companies” (pdf - 567 KB)
This link will open in a new windowUpdated on February 3, 2021Formulaire de plainte form.
Documents to be enclosed with the articles of amalgamation
| Information/Document | Source | Clarification by the AMF |
|---|---|---|
| 1. The following must be filed with the articles: | s. 285 BCA | n/a |
1.1 A list of the directors of the corporation, containing their names and domiciles; | s. 8(1) BCA | n/a |
1.2 A notice of the address of the corporation's head office; | s. 8(2) BCA | n/a |
1.3 Unless a designating number has been requested, a declaration stating that reasonable means have been taken to ensure that the name chosen is in compliance with the law. | s. 8(3) BCA | This declaration must be attached to the articles form. |
| 2. The fees prescribed by the Legal Publicity Act. | s. 285 BCA | n/a |
Amalgamation agreement
Contents of the amalgamation agreement
| Information/Document | Source | Clarification by the AMF |
|---|---|---|
| 1. An amalgamation agreement entered into by mutual companies must contain the following elements: | s. 328 IA | n/a |
1.1 In respect of the amalgamated mutual company, the provisions that are required to be included in such a company’s articles of constitution; | s. 328(1) IA | Refer to s. 208 IA for the contents of the articles of constitution. |
1.2 The name and domicile of each director of the amalgamated mutual company; | s. 328(2) IA | n/a |
1.3 The members’ rights and obligations referred to in the certificates of participation issued to the members, if applicable; | s. 328(3) IA | n/a |
1.4 The number of shares issued by each of the amalgamating mutual companies, and the amount of the contribution required for their issue, the maximum interest that may be paid on such shares and, if applicable, the manner in which they may be converted; | s. 328(4) IA | n/a |
1.5 The by-laws proposed for the amalgamated mutual company, or a statement that the by-laws of the amalgamated mutual company are to be those of one of the amalgamating mutual companies; | s. 328(5) IA | n/a |
1.6 If applicable, the name of the federation of which the amalgamated mutual company will be a member; | s. 328(6) IA | n/a |
1.7 Details of any arrangements necessary to complete the amalgamation and to provide for the subsequent management and operation of the amalgamated mutual company. | s. 328(7) IA | n/a |
| 2. Optional: A provision under which, if the amalgamation agreement so permits, it may be terminated by the board of directors of an amalgamating corporation. That right may not be exercised once the AMF has issued the amalgamation certificate. | s. 280 BCA | n/a |
Application for permission to amalgamate
Contents of an application for permission to amalgamate
| Information/Document | Source | Clarification by the AMF |
|---|---|---|
| 1. The application must include the information required to be included in a notice of intention to amalgamate under section 149 IA, i.e.: | s. 329, 1st par. IA | The application must be signed by the authorized representatives of each amalgamating corporation. |
1.1 The name and address of each of the legal persons proposing to amalgamate; | s. 149(1) IA | n/a |
1.2 The proposed name of the legal person resulting from the amalgamation; | s. 149(2) IA | n/a |
1.3 The juridical form of the legal person resulting from the amalgamation; | s. 149(3) IA | n/a |
1.4 The classes of activities carried on by all the authorized insurers proposing to amalgamate; | s. 149( 4) IA | n/a |
1.5 A statement specifying that the legal person resulting from the amalgamation will carry on activities in the same classes as the authorized insurers proposing to amalgamate or specifying the classes of activities for which the legal person resulting from the amalgamation intends to apply for the AMF’s authorization or those for which it intends to apply to have the authorization revoked; | s. 149(5) IA | n/a |
1.6 The location of the proposed head office of the legal person resulting from the amalgamation; | s. 149(6) IA | n/a |
1.7 Any other information required by the AMF; | s. 149(7) IA | Include communications informing insureds of the amalgamation; Confirm the composition of the audit and ethics committees for the entity resulting from the amalgamation; Explain any changes made to the insurance policies; Specify the steps taken with the Groupement des assureurs automobiles This link will open in a new window if automobile insurance activities are authorized. |
| 2. The information prescribed by regulation of the AMF. | s. 329, 1st par. IA | n/a |
Documents to be enclosed with the application for permission to amalgamate
| Information/Document | Source | Clarification by the AMF |
|---|---|---|
| 1. The notice of intention; | s. 330, 1st par. IA | n/a |
| 2. The articles of amalgamation; | s. 330, 1st par. (1) IA | Including the articles of the amalgamating corporations. |
| 3. The amalgamation agreement; | s. 330, 1st par. (2) IA | n/a |
| 4. The special resolutions of the mutual members authorizing the amalgamation of each amalgamating company; | s. 330, 1st par. (3) IA | Or an attestation by the secretaries of the amalgamating companies. |
| 5. The resolution of the federation that has undertaken to admit the amalgamated mutual company, if applicable; | s. 330, 1st par. (4) IA | n/a |
| 6. The other documents prescribed by regulation of the Minister; | s. 330, 1st par. (5) IA | n/a |
| 7. The closing agenda, if applicable; | s. 480 IA | n/a |
| 8. The fees prescribed by government regulation. | s. 330, 1st par. (6) IA | Fees and costs are prescribed. |
The AMF's report and the minister's decision
The first paragraph of section 331 IA provides that, on receipt of the application and the required documents and fees, in addition to publishing the notice of intention and reviewing the authorization under section 155 IA, the AMF must prepare a report for the Minister on the reasons for granting or denying the application for permission to amalgamate. Under the second paragraph of section 331 IA, the report must include, in particular, the information from the report the AMF must prepare in accordance with section 216 IA when processing an application to become regulated by Title III. Such information must include the AMF’s assessment of consumer interest and the impact of the decision on the insurance market in Québec.
Once the report is completed, pursuant to section 332 IA, the AMF sends it to the Minister, together with the application for permission to amalgamate and the documents filed with it, unless it determines that the amalgamated company would not be an authorized insurer.
The Minister may, if the Minister considers it advisable, allow the amalgamation (s. 333 IA). The Minister may also require that the articles of amalgamation include any entrenched provision contained in the articles of any of the amalgamating companies (s. 334 IA). The “entrenched provisions” are conditions or restrictions imposed on an insurer by a private Act of Québec and that are not prescribed by the IA (s. 316 IA).
When ruling on an application for permission to amalgamate, the Minister must send the AMF and the amalgamating companies a document attesting the decision (s. 335 IA).
The “entrenched provisions” are conditions or restrictions imposed on an insurer by a private Act of Québec and that are not prescribed by the IA (s. 316 IA).
Processing of articles and insurance of certificate of amalgamation
Section 339 IA provides that, on receipt of a document attesting the permission granted by the Minister for the amalgamation of mutual companies, the AMF processes the articles of amalgamation, issues the certificate of amalgamation in accordance with Chapter XVIII of the BCA (ss. 468 to 484) then sends a copy of the certificate and of the articles to the REQ, who deposits them in the enterprise register.
The first paragraph of section 200 IA provides that, for the purpose of applying the provisions of the BCA to mutual companies, the AMF is substituted for the REQ, except as regards maintaining an enterprise register, and the AMF must send the REQ the documents relating to a corporation that must be filed with the enterprise register under the BCA and the IA.
Therefore, on receiving the Minister’s decision authorizing the amalgamation, the AMF:
- Records the date of receipt of the articles: s. 472(1) BCA;
- The date will be the date of receipt of the final version of the articles;
- Issues the certificate of amalgamation: s. 472(2) BCA;
- Assigns a date to the certificate of amalgamation: s. 472(2) BCA;
- The date will be the date specified in the articles if later than the date of receipt of the articles (s. 473(1) BCA) [which should always be the case]. If not, the date will be the date of receipt of the articles (s. 473(3) BCA).
Under section 474 BCA, the AMF will refuse to issue a certificate of amalgamation if the articles do not meet the requirements referred to in that section.
Once the certificate has been issued, the AMF sends a copy of the certificate and of the articles to the REQ, who deposits them in the enterprise register (s. 339 IA).
The AMF sends the company or its representative a copy of the articles and the certificate (s. 472(4) BCA).
Fees and costs payable
Refer to the complete list of fees and costs payable to the AMF for more information.
Processing time
Except in specific circumstances, the AMF will send its report to the Minister of Finance within 90 days from the date the application is complete.