Regulation by title III and organization of business corporation (ss. 201-232 IA)
Application
This procedure applies to business corporations constituted, continued or amalgamated under the Business Corporations Act, CQLR, c. S-31.1 (the “BCA”), that wish to become regulated by Title III in order to carry on insurer activities in Québec.
Summary
Under section 201 IA, business corporations that are constituted, continued or amalgamated under the BCA may apply to become regulated by Title III. This section also provides that the regulation of business corporations is a result of a decision to that effect by the Minister, following the filing of an application for that purpose with the AMF and the publication of a notice of intention to apply to become regulated by Title III.
Section 202 IA states that a business corporation may apply to become regulated by Title III only if it is authorized to do so by its shareholders.
The corporation then prepares the following required documents and submits them to the AMF (s. 214 IA):
- Notice of intention to apply to become regulated by Title III;
- Application to become regulated by Title III.
The provisions pertaining to a business corporation’s application to become regulated by Title III and its organization are found in sections 201 to 232 of the Insurers Act 
This link will open in a new window CQLR, c. A-32.1 (the “Act” or “IA”).
The BCA applies to those provisions on a suppletive basis (s. 198 IA).
Shareholders' authorization
The application to become regulated by Title III must be authorized by a special resolution of the corporation’s shareholders (s. 203, 1st par. IA), i.e., a resolution that requires at least two thirds of the votes cast at a shareholders meeting by the shareholders entitled to vote on the resolution or a resolution that requires the signature of all such shareholders (s. 2 BCA).
The resolution must also authorize a director or an officer of the business corporation to see to the preparation of the documents necessary for it to become regulated by Title III and of those necessary for its change of name, and to sign those documents (s. 203, 2nd par. IA).
Under the first paragraph of section 204 IA, the adoption of the special resolution confers on shareholders the right to demand the repurchase of their shares. Under the second paragraph, that right is exercised in accordance with Chapter XIV of the BCA (ss. 372 to 397), as if it were provided for in section 372 of that Act.
Under the 3rd paragraph of section 204 IA, the adoption of such a resolution confers on shareholders who do not own shares with voting rights the right to demand, in the same manner, that the corporation repurchase all their shares.
The right to demand a repurchase is subject to the corporation carrying out the action to become regulated by Title III (s. 374 BCA).
If a shareholders meeting is held to authorize the application to become regulated by Title III, the notice of meeting must mention that shareholders may exercise the right to demand the repurchase of their shares (s. 375, 1st par. BCA). The corporation also notifies the shareholders whose shares do not carry voting rights of the possible adoption of a resolution that could give rise to the right to demand a repurchase of shares (s. 375, 3rd par. BCA).
Notice of intention
The information to be stated in a notice of intention to apply to become regulated by Title III is set out in subparagraphs 1, 2, 4 and 5 of the first paragraph of section 209 IA.
The notice of intention must accompany the application to become regulated by Title III to be filed with the AMF (s. 209, 2nd par. IA), which will publish it in its Bulletin (s. 215 IA).
Application to become regulated by Title III
The information to be included in a business corporation’s application to become regulated by Title III is set out in sections 210 and 211 IA.
The application must include the information prescribed by regulation of the Minister in addition to the information stated in the notice of intention (s. 210, 1st par. IA). It may also include the date and, if applicable, the time as of which the business corporation wishes to become regulated by Title III, if later than the date and time of the Minister’s decision (s. 210, 2nd par. IA). The application must also state the name and address of each holder of a significant interest in the business corporation (s. 211 IA).
The documents that must be filed with the application are set out in section 213 IA. These documents must be filed with the AMF together with the application and prescribed fees (s. 214 IA).
Checklists
The checklists below describe the information to be included in the following documents:
- Special resolution of the shareholders authorizing the corporation to apply to become regulated by Title III
- Notice of intention to apply to become regulated by Title III
- Application to become regulated by Title III
Special resolution of the shareholders authorizing the corporation to apply to become regulated by Title III
Information to be included in the special resolution and formalities for its adoption
| Information/Documents | Source | Clarification by the AMF |
|---|---|---|
| 1. The special resolution must authorize: | s. 203, 1st par. IA | n/a |
1.1 The regulation of the business corporation by Title III of the Insurers Act; | ss. 202 and 203, 1st par. IA | n/a |
1.2 • A director or an officer of the business corporation to see to the preparation of the documents necessary for it to become regulated by Title III and of those necessary for its change of name; | s. 203, 2nd par. IA | n/a |
1.3 A director or an officer of the business corporation to sign those documents. | s. 203, 2nd par. IA | n/a |
| 2. If a meeting is called: | n/a | n/a |
2.1 The notice of meeting must mention the right to demand a repurchase of shares; | s. 375 BCA | n/a |
2.2 The resolution requires at least two thirds of the votes cast at the meeting by the shareholders entitled to vote on the resolution. | s. 203, 1st par. IA and s. 2 BCA | n/a |
| 3. If there is no meeting: | n/a | n/a |
3.1 The resolution must be signed by all shareholders entitled to vote on the resolution. | s. 203, 1st par. IA and s. 2 BCA | n/a |
Notice of intention to apply to become regulated by Title III
Information to be included in the notice of intention
| Information/Documents | Source | Clarification by the AMF |
|---|---|---|
| 1. The notice of intention to apply to become regulated by Title III must state: | s. 209, 1st par. IA | n/a |
1.1 The proposed name of the insurance company and its name at the time the notice is sent, if different; | s. 209, 1st par. (1) IA | n/a |
1.2 The juridical form of the insurance company, namely, that it is a business corporation; | s. 209, 1st par. (2) IA | n/a |
1.3 The classes of activities for which the corporation is applying for the AMF’s authorization; | s. 209, 1st par. (4) IA | n/a |
1.4 The location of the proposed head office of the insurance company and the location of its head office at the time the notice is sent, if different. | s. 209, 1st par. (5) IA | n/a |
Application to become regulated by Title III
Information to be included in the application to become regulated by Title III
| Information/Documents | Source | Clarification by the AMF |
|---|---|---|
| 1. The information included in the notice of intention, i.e.: | s. 210, 1st par. IA | n/a |
1.1 The proposed name of the insurance company and its name at the time the notice is sent, if different; | s. 209, 1st par. (1) IA | Provide proof that the name has been reserved with the REQ. |
1.2 • The juridical form of the insurance company, namely, that it is a business corporation; | s. 209, 1st par. (2) IA | n/a |
1.3 The classes of activities for which the corporation is applying for the AMF’s authorization; | s. 209, 1st par. (4) IA | n/a |
1.4 The location of the proposed head office of the insurance company and the location of its head office at the time the notice is sent, if different. | s. 209, 1st par. (5) IA | n/a |
| 2. If later than the date and time of the Minister’s decision: The date and, if applicable, the time as of which the applicant wishes to become regulated by Title III. | s. 210, 2nd par. IA | n/a |
| 3. The name and address of each holder of a significant interest in the corporation, as defined in s. 10, s. 11 2nd par. and s. 14 (1) IA; | s. 211 IA | n/a |
| 4. The information prescribed by regulation of the Minister. | s. 210, 1st par. IA | n/a |
Documents to be enclosed with the application to become regulated by Title III
| Information/Documents | Source | Clarification by the AMF |
|---|---|---|
| 1. The notice of intention; | s. 209, 2nd par. IA | n/a |
| 2. The articles of the business corporation; | s. 213, 1st par. (1) IA | n/a |
| s. 213, 1st par. (2) IA | Refer to the authorization procedure (all insurers except SROs and RUs ), list of documents to be enclosed, for the contents of the business plan. An opening balance sheet must also be provided. | |
| 4. A certified copy of the special resolution authorizing the business corporation to apply to become regulated by Title III; | s. 213, 1st par. (4) IA | n/a |
| 5. The other documents prescribed by regulation of the Minister; | s. 213, 1st par. (5) IA | n/a |
| 6. A description of the composition and operation of the committee on ethics, the audit committee and any other proposed committee. | s. 1, 1st par. (3) RARI | Refer to ss. 98 to 114 IA. Enclose the duly completed table “Composition of the Board of Directors (pdf - 23 KB)This link will open in a new windowUpdated on January 8, 2021Composition of the Board of Directors - Insurers”. |
| 7. The proposed policies and riders. | s. 1, 1st par. (7) RARI | n/a |
| 8. The fees prescribed by government regulation. | s. 213, 1st par. (6) IA | The fees prescribed in s. 88 RARI are $5,575. |
The AMF's report and the minister's decision
Section 215 IA provides that, on receipt of the application and the required documents and fees, the AMF will publish the notice of intention in its Bulletin.
Under section 216 IA, the AMF must then prepare a report for the Minister on the reasons for granting or denying the application to become regulated by Title III in which it assesses, among other things, consumer interest and the impact of the decision on the insurance market in Québec.
Under section 218 IA, the Minister may, if the Minister considers it advisable, make the business corporation subject to regulation by Title III (ss. 196 to 376 IA). When doing so, the Minister sends a document attesting that decision to the corporation and to the AMF (s. 210, 1st par. IA). The document must include the date and time of the Minister’s decision and, if different, the date and time specified in the application for becoming regulated by Title III (s. 219, 2nd par. IA).
Organization
The organization of the corporation is provided for in sections 222 to 232 IA.
As of the time it becomes regulated by Title III, the corporation must, pursuant to section 222 IA, take the actions in order to obtain the AMF’s authorization. To obtain its authorization, the corporation must file an application pursuant to section 30 IA.
The application for authorization can be made concurrently with the application to become regulated by Title III, which may facilitate and expedite processing.
Since the organization period is when the corporation will be able to issue shares to raise the $5 million in capital required to obtain its authorization (s. 23 IA), the consideration paid in money for those shares must be deposited with a bank or with an authorized deposit institution (s. 223 IA).
The organization concludes when the AMF grants or refuses to grant its authorization or when such authorization has not been obtained on the expiry of a one-year period after the corporation became regulated (s. 229, 1st par. IA). The Minister may, on the corporation’s application, extend its organization for a period not exceeding one year (s. 229, 2nd par. IA).
Under section 230 IA, a corporation whose organization ends without its having obtained the AMF’s authorization must repurchase the shares it issued for consideration paid in money, unless the shareholder refuses. This section also provides for the terms of repurchase.
Under section 231, the corporation ceases to be regulated by Title III IA, except for section 230, once it has repurchased all the shares for which a shareholder has not refused the repurchase.
Fees and costs payable
The complete list of fees and costs payable to the AMF is published on the AMF’s website.
Processing time
Except in specific circumstances, the AMF will send its report to the Minister of Finance within 180 days from the date the application is complete.