Revocation of authorization - (ss. 169-175 IA)

Application

This procedure applies to an insurer that applies for a full or partial revocation of its authorization. Revocation is full when it has effect with regard to all the classes authorized. It is partial when it applies to only some of the classes authorized (s. 160 IA).

The provisions relating to an application for voluntary revocation are found in sections 169 to 175 of the Insurers Act This link will open in a new window (IA) (CQLR, c. A-32.1) (“IA”).

Application for revocation

The voluntary revocation of an authorization requires the filing of an application with the Autorité des marchés financiers (“AMF”) for that purpose (s. 170, 1st par. IA). An application for revocation must specify whether the revocation is to be full or partial; if a partial revocation is being sought, the application must list the classes to which it would apply (s. 171, 1st par. IA).

The applicant must show that it is covered by one of the situations provided for in section 174 IA. If applicable, the application must describe any arrangements made to have an authorized financial institution or a bank succeed the applicant (s. 171, 2nd par. IA).

A written notice concerning the application must be filed with it (s. 170, 2nd par. IA). The contents of the notice are set out in section 172 IA. The notice will be published in the AMF Bulletin ((s. 173, 1st par. IA).

If an authorized financial institution or a bank is to succeed the applicant, the latter must send this notice to each holder of an insurance contract and to each participant in a group insurance contract as well as to each holder of rights relating to an investment in a segregated fund for which there will be a successor insurer (s. 173, 2nd par. IA).

Full revocation applied for by certain Québec insurers

Additional formalities apply to an insurance company regulated by Title III of the Insurers Act This link will open in a new window that applies for the full revocation of its authorization. The first paragraph of section 196 IA stipulates that insurance companies are either:

Business corporations constituted, continued or amalgamated under the Business Corporations Act, CQLR, c. S-31.1; or
Mutual companies.

These additional formalities are set out in section 342 to 344 IA for business corporations and section 345 IA for mutual companies. They do not apply to other Québec insurers (those covered by paragraphs 2 to 4 of section 6 IA).

Full revocation applied for by a business corporation

Under section 342 IA, a regulated business corporation may apply for a full revocation of the authorization only if it is authorized to do so by its shareholders and the latter have authorized it to change its name for one that does not include a word or expression reserved under section 489 IA.

Shareholder authorization is given by special (s. 343, 1st par. IA). By that resolution, the shareholders also authorize a director or an officer of the business corporation to see to the preparation of the documents necessary for the revocation and of those necessary for the corporation’s change of name, and to sign those documents (s. 343, 2nd par. IA).

Dissolution

If a regulated business corporation plans to dissolve, a consent, declaration or decision referred to in section 304 of the Business Corporations Act and whose object is the dissolution of the corporation will have the effect of granting the authorizations referred to in section 342 IA, until the corporation ceases to be regulated by Title III IA (s. 344 IA).

Application for full revocation by a mutual company

Under paragraph 2 of section 345 IA, a mutual company may apply for a full revocation of the authorization granted to it by the AMF only if the mutual members have consented to its dissolution and appointed a liquidator.

The publication, in accordance with section 173 IA, of a notice of intention to apply for the full revocation of a regulated mutual company’s authorization will have the effect of suspending all proceedings against its property (s. 348 IA).

Checklists

The following checklists describe the information to be included in, and documents to be enclosed with, the application for revocation:

1 – All insurers except Québec insurance companies that apply for full revocation

Information to be include in an application for revocation

Information/Documents	Source	Clarification by the AMF
1. The application for revocation specifies that the revocation is to be full or partial.	s. 171, 1st par. IA	n/a
2. If a partial revocation is being sought, the application must list the classes to which it would apply.	s. 171, 1st par. IA	n/a
3. The applicant must show that: 1°: The insurer is not bound by any contract underwritten in accordance with the authorization whose revocation it is applying for; 2°: The insurer can continue to be bound, until the date of maturity, by the contracts entered into in accordance with the authorization whose revocation it is applying for, while complying with the Act; or 3°: The arrangements made to have an authorized financial institution or a bank succeed the applicant are adequate and ensure the protection of holders of contracts or rights, and that it has sent the latter the notice of application required under the second paragraph of section 173 IA.	s. 174 IA	n/a
4. The application must also describe any arrangements made to have an authorized financial institution or a bank succeed the applicant.	s. 171, 2nd par. IA	Applies if the insurer is covered by one of the situations set out in subparagraph 3 of the 1st paragraph of s. 174 IA.
5. If a financial institution succeeds the applicant, the latter must confirm that the notice that has been or will be sent to insureds contains, at a minimum, the information set out in s. 172 IA.	s. 172 IA	If the notice has already been sent, indicate the date and method of delivery.
6. The application must include any other information determined by regulation of the AMF.	s. 171, 3rd par. IA	No other information prescribed by regulation.

Documents to be enclosed with the application for revocation

Information/Documents	Source	Clarification by the AMF
1. A written notice containing, at a minimum, the information set out in s. 172 IA, i.e.:	s. 170, 2nd par. IA	n/a
1.1 The authorized activities the insurer intends to cease;	s. 172 IA	n/a
1.2 The date on which it intends to do so;	s. 172 IA	n/a
1.3 • The names and addresses of the authorized financial institutions or banks that will succeed it, if applicable.	s. 172 IA	n/a
2. Any document demonstrating one of the situations set out in section 174 IA (signed reinsurance and assumption agreement, contracts for sales of renewal rights, financial statements, actuary’s report, etc.).	s. 174 IA	n/a
3. The documents prescribed by regulation of the AMF.	s. 170, 2nd par. IA	No document prescribed by regulation.
4. The fees and charges prescribed by government regulation.	s. 170, 2nd par. IA	No fees are prescribed by regulation for the time being.

2 - Regulated business corporation that applies for full revocation

Information to be included in an application for full revocation by a regulated business corporation

Information/Documents	Source	Clarification by the AMF
1. The application for revocation specifies that the revocation is to be full.	s. 171, 1st par. IA	n/a
2. The applicant must show that: 1°: The insurer is not bound by any contract underwritten in accordance with the authorization whose revocation it is applying for; 2°: The insurer can continue to be bound, until the date of maturity, by the contracts entered into in accordance with the authorization whose revocation it is applying for, while complying with the Act; or 3°: The arrangements made to have an authorized financial institution or a bank succeed the applicant are adequate and ensure the protection of holders of contracts or rights, and that it has sent the latter the notice of application required under the second paragraph of section 173 IA.	s. 174 IA	n/a
3. The application must also describe any arrangements made to have an authorized financial institution or a bank succeed the applicant.	s. 171, 2nd par. IA	Applies if the insurer is covered by one of situations set out in subparagraph 3 of the 1st paragraph of s. 174 IA.
4. If a financial institution succeeds the applicant, the latter must confirm that the notice that has been or will be sent to insureds contains, at a minimum, the information set out in s. 172 IA.	s. 172 IA	If the notice has already been sent, indicate the date and method of delivery.
5. If the business corporation will not be dissolved, it must specify that shareholders have adopted a special resolution by which they authorize:	s. 343, 1st par. IA	If the corporation will be dissolved, go to section 6.
5.1 The application for a full revocation;	s. 342 IA	n/a
5.2 The corporation to change its name for one that does not include a word or expression reserved under section 489 IA;	s. 342 IA	n/a
5.3 A director or an officer of the business corporation to see to the preparation of the documents necessary for the revocation and of those necessary for the corporation’s change of name, and to sign those documents.	s. 343, 2nd par. IA	n/a
6. In the case of a full revocation owing to the dissolution of the business corporation, it must specify if the dissolution results from a consent, declaration or decision referred to in section 304 of the Business Corporations Act.	s. 344 IA	n/a
7. The application must include any other information determined by regulation of the AMF.	s. 171, 3rd par. IA	No other information prescribed by regulation..

Documents to be enclosed with an application for full revocation by a regulated business corporation

Information/Documenst	Source	Clarification by the AMF
1. A written notice containing, at a minimum, the information set out in s. 172 IA, i.e.:	s. 170, 2nd par. IA	n/a
1.1 The insurer intends to cease all of its authorized insurer activities;	s. 172 IA	n/a
1.2 The date on which it intends to do so;	s. 172 IA	n/a
1.3 The names and addresses of the authorized financial institutions or banks that will succeed it, if applicable.	s. 172 IA	n/a
2. Any document demonstration one of the situations set out in section 174 IA (signed reinsurance and assumption, contracts for sales of renewal right, financial statements, actuary’s report, etc.).	s. 174 IA	n/a
3. If the business corporation will not be dissolved, a certified extract from the special resolution of its shareholders.	s. 343, 1st par. IA	n/a
4. In the case of a full revocation owing to the dissolution of the business corporation, a certified copy of the consent, declaration or decision referred to in section 304 of the Business Corporations Act.	s. 344 IA	n/a
5. The documents prescribed by regulation of the AMF.	s. 170, 2nd par. IA	No document prescribed by regulation.
6. The fees and charges prescribed by government regulation.	s. 170, 2nd par. IA	No fees are prescribed by regulation for the time being.

3 - Regulated mutual company that applies for full revocation

Information to be included in an application for full revocation by a mutual company

Information/Documents	Source	Clarification by the AMF
1. The application for revocation specifies that the revocation is to be full.	s. 171, 1st par. IA	n/a
2. The application specifies that the mutual members have consented to its dissolution and appointed a liquidator.	s. 345 IA	n/a
3. The applicant must show that: 1°: The insurer is not bound by any contract underwritten in accordance with the authorization whose revocation it is applying for; 2°: The insurer can continue to be bound, until the date of maturity, by the contracts entered into in accordance with the authorization whose revocation it is applying for, while complying with the Act; or 3°: The arrangements made to have an authorized financial institution or a bank succeed the applicant are adequate and ensure the protection of holders of contracts or rights, and that it has sent the latter the notice of application required under the second paragraph of section 173 IA.	s. 174 IA	n/a
4. The application must also describe any arrangements made to have an authorized financial institution or a bank succeed the applicant.	s. 171, 2nd par. IA	Applies if the insurer can show that it meets the conditions set out in subparagraph 3 of the 1st paragraph of s. 174 IA.
5. If a financial institution succeeds the applicant, the latter must confirm that the notice that has been or will be sent to insureds contains at least the information set out in s. 172 IA.	s. 172 IA	If the notice has already been sent, indicate the date and method of delivery.
6. The application must include any other information determined by regulation of the AMF.	s. 171, 3rd par. IA	No other information prescribed by regulation.

Documents to be enclosed with an application for full revocation by a regulated mutual company

Information/Documents	Source	Clarification by the AMF
1. A written notice containing at least the information set out in s. 172 IA, i.e.:	s. 170, 2nd par. IA	The publication of this notice by the AMF suspends all proceedings against the property of the mutual company (s. 348 IA)
1.1 The insurer intends to cease all of its authorized insurer activities;	s. 172 IA	n/a
1.2 The date on which it intends to do so;	s. 172 IA	n/a
1.3 The names and addresses of the authorized financial institutions or banks that will succeed it, if applicable.	s. 172 IA	n/a
2. Any document demonstrating one of the situations set out in section 174 IA (signed reinsurance and assumption agreement, contracts for sales of renewal rights, financial statements, actuary’s report, etc.).	s. 174 IA	n/a
3. A certified extract of the resolution of the mutual members authorizing the dissolution and the appointment of a liquidator.	S. 345 IA	n/a
4. The documents prescribed by regulation of the AMF.	s. 170, 2nd par. IA	No document prescribed by regulation.
5. The fees and charges prescribed by government regulation.	s. 170, 2nd par. IA	No fees are prescribed by regulation for the time being.

Decision

The AMF grants an application for revocation only if the applicant shows that it meets the conditions prescribed in subparagraphs 1 to 3 of the 1st paragraph of section 174 IA.

If the applicant is a mutual company that is a member of a federation, the second paragraph of section 174 IA imposes an additional condition: The AMF refuses to grant the application for revocation if, in its opinion, the federation would thereby become unable to meet its obligations, in particular, with respect to compliance with guarantee fund capital requirements.

After making a decision, the AMF must send the insurer a document attesting its decision and publish the document in its Bulletin Bulletin (s. 175 IA).

The revocation of an authorization, even a partial revocation, becomes final when the insurer concerned ceases to be bound by the contracts entered into in accordance with the authorization (s. 161 IA). An insurer continues to be an authorized insurer as long as a revocation is not final. However, it may not bind itself under a contract included in a class to which the revocation applies if the contract is entered into after the revocation date, or offer to enter into a contract or invite a proposal with a view to so bind itself, except to honour a right conferred on a policyholder or participant under a contract in force on that date (s. 162, 1st par. IA).

Full revocation of a Québec insurance company

If the AMF grants a full revocation of the authorization, the effects will vary depending on the nature of the insurance company involved. A business corporation ceases to be regulated by Title III IA when the full revocation becomes final (s. 341 IA). A mutual company the revocation of whose authorization is full and final may continue to carry on its activities only in order to liquidate and dissolve. Its dissolution terminates its being regulated by Title III IA (s. 345 IA).

Fees and costs payable

No fees are prescribed for the time being.

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 revoke an authorization to carry on insurer activities within 90 days following the date the application is complete.

Revocation of authorization (ss. 169-175 IA)