A-32 - Act respecting insurance

Full text
chapter A-32
Act respecting insurance
INSURANCEDecember 31 1977
TITLE I
INTERPRETATION
1. In this Act and in the regulations, unless the context indicates a different meaning, the following expressions mean:
(a)  insurer : any person who directly or indirectly advertises or acts as an insurer, issues or undertakes to issue an insurance contract, receives premiums, assessments or other amounts under such a contract or to pay mutual benefits, or undertakes to pay insurance benefits or mutual benefits, excluding any professional syndicate authorized to exercise the powers provided in subparagraph 1 of section 9 of the Professional Syndicates Act (chapter S‐40) or any person who, in the field of insurance, offers or enters into only contracts of additional warranty under which he binds himself towards another person to assume directly or indirectly, wholly or partly, the cost of repair or replacement of property or part of any property in case of defect or malfunction;
(b)  company or insurance company : a joint stock company constituted to transact insurance business and a mutual insurance company;
(c)  mutual insurance company : a mutual life‐insurance company and a mutual damage‐insurance company;
(d)  mutual insurance association : a legal person constituted under Chapter III.1 of Title III or a legal person resulting from a continuance provided for in the Act to amend the Act respecting insurance and other legislation (1985, chapter 17);
(e)  (paragraph repealed);
(f)  mutual benefit association : a mutual benefit association constituted under this Act or Division VIII of the Insurance Act (Revised Statutes, 1964, chapter 295) replaced by chapter 70 of the statutes of 1974, and a legal person transacting mutual benefits under a special Act of Québec;
(g)  mutual benefits : amounts paid to or benefits conferred upon persons who are members of a group or to or upon members of their families in case of misfortune, sickness, accident or death, out of the premiums, assessments, gifts or subscriptions from persons who are members of that group;
(h)  mutual association : a mutual insurance association and a mutual benefit association;
(i)  insurance representative : an insurance representative within the meaning of the Act respecting the distribution of financial products and services (chapter D‐9.2);
(j)  claims adjuster : a claims adjuster within the meaning of the Act respecting the distribution of financial products and services;
(k)  (paragraph repealed);
(l)  officer : the president, vice-president, treasurer and secretary of a legal person, or the chairman, vice-chairman, treasurer and secretary of its board of directors, their assistants, the managing director and general manager, and any person holding a similar function;
(m)  actuary : a Fellow of the Canadian Institute of Actuaries;
(n)  Inspector General : the Inspector General of Financial Institutions;
(o)  (paragraph repealed);
(p)  licence : every licence issued under this Act;
(q)  (paragraph repealed);
(r)  annual statement : the statement contemplated in section 305;
(s)  regulations : the regulations made under this Act by the Government;
(t)  (paragraph repealed);
(u)  insurance fund : a professional liability insurance fund set up by a professional order governed by the Professional Code (chapter C‐26);
(v)  spouse : a person who is married to and cohabits with another person, or a person who lives with another person of the opposite or the same sex in a conjugal relationship outside marriage and has been living with that person for at least one year;
(w)  register : the register instituted under the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P‐45).
1974, c. 70, s. 1 (part); 1975, c. 76, s. 11; 1981, c. 9, s. 24; 1982, c. 52, s. 56; 1984, c. 22, s. 1; 1984, c. 47, s. 22; 1985, c. 17, s. 1; 1987, c. 54, s. 1; 1990, c. 86, s. 1; 1989, c. 48, s. 225; 1993, c. 48, s. 113; 1994, c. 40, s. 457; 1996, c. 63, s. 80; 1999, c. 14, s. 7; 1998, c. 37, s. 497; 1999, c. 40, s. 33.
1.1. A legal person is controlled by another person where that person is in a position to elect, directly or indirectly, the majority of the directors of the legal person.
1990, c. 86, s. 2; 1996, c. 63, s. 80.
1.2. A legal person is a subsidiary of another legal person if it is controlled directly by that legal person.
1990, c. 86, s. 2; 1996, c. 63, s. 80.
1.3. A legal person is affiliated with another legal person if one is a subsidiary of the other or if both are controlled by the same person or group.
1990, c. 86, s. 2; 1996, c. 63, s. 80.
1.4. A legal person affiliated with another legal person is deemed to be affiliated with every legal person affiliated with that other legal person.
1990, c. 86, s. 2; 1996, c. 63, s. 80.
1.5. A federation of mutual insurance associations and every legal person controlled by the federation are members of the same group.
1990, c. 86, s. 2; 1996, c. 63, s. 80.
1.6. The following persons are associates of a director, officer or any other mandatary:
(1)  his spouse, minor child or the minor child of his spouse;
(2)  his partner, or a partnership in which he is a partner;
(3)  a legal person controlled individually or jointly by him or by his spouse, his minor child or the minor child of his spouse;
(4)  a legal person in which he holds 10% or more of the voting rights attached to the shares issued by it, or 10% or more of such shares;
(5)  a legal person of which he is a director or officer.
1990, c. 86, s. 2; 1996, c. 63, s. 80.
TITLE II
GENERAL PROVISIONS
1982, c. 52, s. 57.
2. (Repealed).
1974, c. 70, s. 3 (part); 1975, c. 76, s. 11; 1977, c. 5, s. 14; 1981, c. 9, s. 24; 1982, c. 52, s. 58.
3. (Repealed).
1974, c. 70, s. 3 (part); 1977, c. 5, s. 14; 1982, c. 52, s. 58.
4. (Repealed).
1974, c. 70, s. 4; 1977, c. 5, s. 14; 1978, c. 15, s. 140; 1982, c. 52, s. 58.
5. The Inspector General shall have supervision of the insurance business in Québec and exercise the duties and powers assigned to or vested in him by law.
1974, c. 70, s. 5; 1982, c. 52, s. 80.
6. (Repealed).
1974, c. 70, s. 6; 1982, c. 52, s. 59.
7. (Repealed).
1974, c. 70, s. 7; 1982, c. 52, s. 59.
8. (Repealed).
1974, c. 70, s. 8; 1979, c. 37, s. 43; 1982, c. 52, s. 59.
9. (Repealed).
1974, c. 70, s. 9; 1979, c. 33, s. 1; 1982, c. 52, s. 59.
10. The Inspector General or the representative designated by him in writing may, for the purposes of an inspection,
(1)  enter, at any reasonable time, the establishment of a person who acts in Québec as an insurer, or the establishment of a professional syndicate authorized to exercise the powers provided for in subparagraph 1 of the second paragraph of section 9 of the Professional Syndicates Act (chapter S‐40) relating to the establishment and administration of special indemnity funds, special funds for assistance and other funds of the same nature;
(2)  examine and make copies of the books, registers, accounts, records and other documents relating to insurance;
(3)  require any information relating to the administration of this Act and the production of any document relating thereto.
Every person having the custody, possession or control of such books, registers, accounts, records and other documents must, if so required, give communication thereof to the Inspector General or his representative and facilitate his examination of the same.
1974, c. 70, s. 10; 1982, c. 52, s. 60, s. 80; 1986, c. 95, s. 23; 1989, c. 48, s. 226; 1998, c. 37, s. 498.
11. The Inspector General may also exercise the powers conferred upon him by section 10 with respect to any person who proposes or enters into a contract or matter which, without being an insurance contract or a matter of insurance, is presented to the public as offering advantages similar to those offered by insurance or having characteristics suggesting that it is a contract of insurance.
1974, c. 70, s. 11; 1982, c. 52, s. 80.
12. The Inspector General or the representative designated by him in writing may, in exercising his powers of inspection and if he believes, on reasonable grounds, that an offence has been committed against this Act or any other Act the administration of which is entrusted to the Inspector General, seize any document relating to the offence, provided that he leaves a copy with the person from whom he seizes such document; the Inspector General shall have custody of the seized document.
The Inspector General shall not keep the document in question for more than 90 days unless proceedings are instituted before the expiry of that period; the chief judge of the Court of Québec or the judge he designates may however order that the period of custody be reduced or extended for another period of 90 days.
1974, c. 70, s. 12; 1982, c. 52, s. 61, s. 80; 1986, c. 95, s. 24; 1988, c. 21, s. 66; 1992, c. 61, s. 71; 1995, c. 42, s. 48.
12.1. The Inspector General or the representative designated by him in writing shall, if so requested when exercising the powers referred to in sections 10 to 12, identify himself and produce a certificate of his capacity.
1986, c. 95, s. 25.
13. Any document which has been the object of an examination by the Inspector General or the person designated by him, or of which he has taken possession or which has been filed with him may be copied or photographed and any copy or photograph of such document, certified true, is admissible in evidence as prima facie proof of the original.
1974, c. 70, s. 13; 1982, c. 52, s. 62.
14. It is forbidden to hinder the work of a person in the exercise of the powers conferred upon him by section 10, or to mislead him or attempt to mislead him.
1974, c. 70, s. 14.
15. The Inspector General may, when he believes the public interest requires it, order a special inquiry to be held into any matter within his competence.
For such an inquiry the Inspector General and any person authorized by him in writing shall have the powers and immunity granted to commissioners appointed under the Act respecting public inquiry commissions (chapter C-37), except the power to order imprisonment.
1974, c. 70, s. 15; 1982, c. 52, s. 80; 1992, c. 61, s. 72.
16. No person employed by the Government or authorized by the Inspector General to exercise the powers conferred by sections 10 to 12 or to make an inquiry shall communicate or allow to be communicated to anyone information obtained under this Act, or allow the examination of a document filed under this Act, unless the person is authorized to do so by the Inspector General.
Notwithstanding sections 9, 23, 24 and 59 of the Act respecting Access to documents held by public bodies and the Protection of personal information (chapter A-2.1), only a person generally or specially authorized by the Inspector General himself may have access to such information or such a document.
No person shall be prosecuted on information he has given in good faith to the Inspector General in accordance with this act.
1974, c. 70, s. 16; 1977, c. 5, s. 14; 1982, c. 52, s. 80; 1987, c. 68, s. 22.
17. The expenses incurred for the application of this act, determined each year by the Government, shall be borne by the insurers who are licence holders.
Such expenses shall be collected from each insurer as follows:
(a)  a minimum share fixed each year by the Government;
(b)  the remainder in the proportion that the premium or assessment income of the insurer for the preceding year in Québec bears to the aggregate of the similar income of all the insurers.
1974, c. 70, s. 17; 1985, c. 17, s. 2.
18. For the application of section 17, the words premium or assessment income in Québec mean,
(a)  in insurance of persons, the gross premium or assessment income from insured persons or members resident in Québec, less the participation in profits or refunds granted them;
(b)  in damage insurance, the gross premium or assessment income respecting property situated in Québec, less the participation in profits or refunds relating to them.
The certificate of the Inspector General issued to that effect shall be a discharge of the amount exigible under section 17.
1974, c. 70, s. 18; 1982, c. 52, s. 79.
19. The Inspector General must:
(a)  keep a register of all licences issued to insurers under this Act, in which must be entered the name of each insurer, the address of its head office in Canada and in Québec, the name and address of its attorney in Canada and in Québec, the name and address of its chief representative in Québec, the kind and classes of insurance which it is authorized to transact in Québec, and any other necessary information;
(b)  keep a register of the securities deposited by insurers with the Minister of Finance, with mention of their designation, par value, date of maturity and market value on the date of deposit;
(c)  keep a register of the activities authorized under section 33.2 or section 93.162;
(d)  keep a duplicate of every licence issued by him;
(e)  keep a duplicate of every power of attorney filed under section 206.
The information contained in the registers and duplicates is public information.
1974, c. 70, s. 19; 1982, c. 52, s. 80; 1987, c. 68, s. 23; 1996, c. 63, s. 1, s. 83.
TITLE III
INSURANCE BUSINESSES
CHAPTER I
FORMATION OF INSURANCE COMPANIES
20. No insurance company shall be constituted in Québec after 20 October 1976 otherwise than by virtue of Part I of the Companies Act (chapter C‐38).
1974, c. 70, s. 20; 1999, c. 40, s. 33.
21. Letters patent constituting an insurance company shall not be issued unless the Minister has consented to it after obtaining the advice of the Inspector General.
The number of applicants must not be less than seven.
The letters patent must state the classes of insurance which the company is authorized to transact.
1974, c. 70, s. 21; 1982, c. 52, s. 80; 1984, c. 22, s. 2; 1999, c. 40, s. 33.
22. The application for constitution of an insurance company must be accompanied with the documents and contain the information prescribed by regulation; the Inspector General may, in addition, request any documents and information he considers necessary for the evaluation of the applicants’ plan.
1974, c. 70, s. 22; 1984, c. 22, s. 3; 1999, c. 40, s. 33.
23. The application must be accompanied with acceptable securities corresponding to fifteen per cent of the capital stock payable under section 27. From the granting of the licence, the securities shall be used to constitute the deposit provided for by this Act.
If the licence is refused, such securities shall be returned to the applicants only on proof considered satisfactory by the Inspector General that the other subscribers have been fully refunded.
1974, c. 70, s. 23; 1982, c. 52, s. 80; 1984, c. 22, s. 4.
24. Where the applicants have transmitted to the Inspector General a notice signed by them indicating their wish to be constituted, accompanied with the fees prescribed by regulation of the Government under the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P‐45), the Inspector General shall deposit the notice in the register and submit the application to the Minister. The application must be submitted within six months following the date of the deposit.
Such notice must mention:
(a)  the name of the company;
(b)  the name and address of each applicant;
(c)  the classes of insurance contemplated;
(d)  the locality in Québec where the company will have its head office;
(e)  the capital stock envisaged and the capital surplus contemplated.
1974, c. 70, s. 24; 1984, c. 22, s. 5; 1993, c. 48, s. 114; 1996, c. 63, s. 83; 1999, c. 40, s. 33.
25. (Repealed).
1974, c. 70, s. 25; 1984, c. 22, s. 6.
26. (Repealed).
1974, c. 70, s. 26; 1984, c. 22, s. 7.
27. Companies constituted after 20 June 1984 shall have a combined paid-up capital and surplus capital of not less than $3 000 000.
1974, c. 70, s. 27; 1984, c. 22, s. 8; 1999, c. 40, s. 33.
28. The capital stock and the surplus capital shall be paid in currency.
1974, c. 70, s. 28; 1984, c. 22, s. 9.
29. Every subscription to the capital stock of an insurance company made before a licence is issued to it must be made with the stipulation that no amount shall be used for commission, organization or constitution expenses in excess of a determined percentage which must not exceed 15 per cent of the amount paid.
The remainder of the amounts so paid must be deposited in a bank or trust company in Québec, or in a savings and credit union that is a registered institution within the meaning of the Deposit Insurance Act (chapter A‐26), for as long as the Inspector General has not issued the licence sought.
1974, c. 70, s. 29; 1982, c. 52, s. 80; 1999, c. 40, s. 33.
30. Every subscription for shares made before a licence has been issued to the company must be made with the stipulation that in case of refusal of a licence the full amounts paid by the subscribers other than the applicants must be returned to them.
1974, c. 70, s. 30.
31. Unless authorized by the Inspector General, no person is entitled to solicit or accept a subscription to the capital stock of a company or instalments relating thereto for as long as such company has not obtained a licence.
Any person soliciting subscriptions to the capital stock of a company being formed must be in possession of a certificate issued by at least two of the applicants, attesting that he is authorized to do so; a certified copy of such certificate must be sent to the Inspector General.
This section shall not have the effect of withdrawing solicitation for subscriptions to the capital stock from the pertinent provisions of the Securities Act (chapter V-1.1).
1974, c. 70, s. 31; 1982, c. 52, s. 80.
32. If the Inspector General becomes aware that a person has contravened any of sections 29 to 31, he may, after having given him the opportunity to present observations, suspend his right to receive subscriptions to the capital of the company being formed or subscriptions relating thereto.
1974, c. 70, s. 32; 1982, c. 52, s. 80; 1997, c. 43, s. 72.
33. The expenses of commission, organization and constitution of an insurance company must be charged to the shareholders and not to the insured persons.
1974, c. 70, s. 33; 1999, c. 40, s. 33.
CHAPTER I.1
ADDITIONAL POWERS
1984, c. 22, s. 10.
33.1. Every insurance company constituted under the laws of Québec may
(a)  carry on, in respect of annuity contracts administered by it and in respect of insured sums kept by it for the benefit of others, the activities that a trust company may carry on under the Act respecting trust companies and savings companies (chapter S‐29.01);
(b)  carry on, in respect of the activities for which it is authorized by another Act, the activities that a trust company may carry on under the Act respecting trust companies and savings companies;
(c)  provide for the financing of insurance premiums and annuity contributions;
(d)  offer custodial and safekeeping services;
(e)  offer for sale the products of a financial institution;
(f)  engage in leasing operations;
(g)  manage immovables.
1984, c. 22, s. 10; 1987, c. 95, s. 402; 1999, c. 40, s. 33.
33.2. The Minister may authorize an insurance company to carry on an activity other than an activity set out in section 33.1.
The Minister shall publish his decision in the Gazette officielle du Québec within 30 days.
1984, c. 22, s. 10; 1996, c. 63, s. 2.
33.3. Where an activity other than insurance generates more than two per cent of the gross revenues of a company, the Minister may require the latter to establish a subsidiary to undertake the activity.
1984, c. 22, s. 10.
CHAPTER II
ADMINISTRATION OF INSURANCE COMPANIES
DIVISION I
GENERAL PROVISIONS
34. This chapter applies to insurance companies constituted under the statutes of Québec.
Sections 43 to 50.5 also apply to legal persons which control such insurance companies.
1974, c. 70, s. 34; 1990, c. 86, s. 3; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
35. In the absence of a special provision in this act, Part I of the Companies Act (chapter C‐38) applies with the necessary modifications to any company constituted under chapter I of this title or under Division I of the Insurance Act (Revised Statutes, 1964, chapter 295) replaced by chapter 70 of the statutes of 1974, subject to the contrary provisions of this act.
In the absence of corresponding provisions in the special Act governing an insurance company, section 88, paragraph 3 of section 89 and sections 89.1 to 89.4 of Part I and the provisions of Part II of the Companies Act, except section 181 and paragraph 3 of section 182, apply, with the necessary modifications, to that company, subject to the contrary provisions of this Act.
For the application of the Act respecting insurance or Part I or II of the Companies Act and in respect of a mutual insurance company, the word shareholder means a member of a mutual insurance company. In addition, where a provision of one of those Acts requires the vote of shareholders representing a fixed proportion of the capital stock of a company, the provision is considered to require the vote of a number of members equal to the proportion determined in value.
1974, c. 70, s. 35; 1984, c. 22, s. 11; 1985, c. 17, s. 3; 1999, c. 40, s. 33.
36. In respect of an insurance company, the Minister is substituted for the Government for the application of sections 18 to 20 of the Act respecting the special powers of legal persons (chapter P-16).
1974, c. 70, s. 36; 1984, c. 22, s. 12.
37. The Minister may authorize the Inspector General to issue letters patent to any insurance company constituted by a special Act of Québec and which applies therefor:
(a)  to replace the provisions of its charter by the corresponding provisions of this act or, to the extent that they are not contrary to the provisions of this act, by those of Part II of the Companies Act (chapter C‐38);
(b)  to strike from its charter any provision for which there is no corresponding provision in this act or in Part II of the Companies Act.
Such amendments by letters patent shall have the same effect as if made by an act.
1974, c. 70, s. 37; 1982, c. 52, s. 63; 1984, c. 22, s. 13; 1999, c. 40, s. 33.
38. The application contemplated in section 37 must be signed by the president or vice-president and the secretary of the company. It shall not be presented to the Inspector General unless
(a)  it is supported by a by-law approved by the vote of at least two-thirds in value of the shares represented by the shareholders present at a meeting called for that purpose and by two-thirds of the insured participating in the profits and who are present;
(b)  a notice summarizing the contents of the by-law is transmitted to him for deposit in the register, accompanied with the fees prescribed by regulation of the Government.
1974, c. 70, s. 38; 1982, c. 52, s. 79; 1993, c. 48, s. 115.
39. The Inspector General shall deposit the letters patent in the register with a notice of the date of their coming into force. The Québec Official Publisher shall insert in each annual volume of the Statutes of Québec a table indicating the dates on which the letters patent issued before the volume was printed come into force and the legislative provisions they repeal.
1974, c. 70, s. 39; 1982, c. 52, s. 79; 1993, c. 48, s. 116.
40. (Repealed).
1974, c. 70, s. 40; 1982, c. 52, s. 80; 1984, c. 22, s. 14.
41. Subject to the other applicable legislative provisions, the charter of any insurance company may be annulled:
(a)  by failure to actually transact insurance for two years from the date of constitution;
(b)  if, after having transacted insurance, the company has ceased to act as such for one year or more;
(c)  if its licence remains suspended for one year or more or if, in case of cancellation, it is not renewed within three months.
The Inspector General shall, before dissolving a company, give it at least 60 days’ notice of the omission and the penalty provided. The Inspector General shall deposit the notice in the register.
He shall transmit a copy by registered mail to the last directors of the company mentioned in the register, at the last address mentioned therein.
The Inspector General shall dissolve an insurance company by drawing up an act of dissolution which he shall deposit in the register. The company is dissolved from the date of the deposit.
However, upon the application of any interested person, the Inspector General may, on the conditions he determines, retroactively revoke the dissolution of the company by drawing up an order to that effect which he shall deposit in the register. Revocation of the dissolution of the company shall cause the company to resume existence on the date of deposit of the order. Subject to the rights acquired by any person, the company is deemed never to have been dissolved.
1974, c. 70, s. 41; 1993, c. 48, s. 117; 1999, c. 40, s. 33.
42. (Repealed).
1974, c. 70, s. 42; 1982, c. 52, s. 80; 1984, c. 22, s. 14.
43. Except with the written authorization of the Minister, no insurance company may allot its voting shares or register a transfer of its voting shares where the allotment or transfer would
(1)  directly or indirectly give to a person and his associates 10 % or more of the voting rights attached to the shares if they do not already control the company;
(2)  directly or indirectly increase the voting rights attached to the shares already held by a person and his associates to at least 10 % or at least a multiple of 10 % if they do not already control the company;
(3)  directly or indirectly give to a person and his associates control of the company.
Where an allotment of voting shares or registration of a transfer of shares by a legal person that controls an insurance company has, in respect of such shares, an effect described in subparagraphs 1 to 3 of the first paragraph, the legal person shall cease to be entitled to exercise the voting rights attached to the shares of the insurance company, unless it obtains written authorization from the Minister.
However, the authorization of the Minister is not required where the voting shares of the insurance company or of the legal person that controls it, as the case may be, are listed on a recognized stock exchange and the allotment or transfer would not directly or indirectly give control to a person and his associates.
1974, c. 70, s. 43; 1982, c. 52, s. 80; 1984, c. 22, s. 15; 1990, c. 86, s. 4; 1996, c. 63, s. 80.
44. Except with the written authorization of the Minister, no insurance company may allot its voting shares or register any transfer of voting shares where the effect of the allotment or transfer is to permit non-residents and their associates to hold, directly or indirectly, any percentage superior to 30 % of the voting rights.
Where an allotment of voting shares or registration of a transfer of voting shares by a legal person that controls an insurance company and which is constituted or continued under an Act of the Parliament of Canada or of a Canadian province has the effect of permitting non-residents and their associates to hold, directly or indirectly, any percentage superior to 30 % of the voting rights, the legal person shall cease to be entitled to exercise the voting rights attached to the shares of the insurance company, unless it obtains written authorization from the Minister.
However, the authorization of the Minister is not required where non-residents and their associates already control the insurance company or the legal person that controls it.
1974, c. 70, s. 44; 1982, c. 52, s. 80; 1984, c. 22, s. 15; 1990, c. 86, s. 4; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
45. Every application for authorization made to the Minister must indicate
(1)  the names, occupations and places of residence, where the persons concerned are natural persons;
(2)  the names, places of constitution or continuance and the name of the shareholder holding a controlling interest, where the persons concerned are legal persons;
(3)  the number and characteristics of the shares in the insurance company or the legal person that controls it held by each person concerned;
(4)  the number and characteristics of the shares being allotted or transferred, together with the name of the acquirer of the shares and, where applicable, the name of the seller.
1974, c. 70, s. 45; 1984, c. 22, s. 15; 1990, c. 86, s. 4; 1996, c. 63, s. 80, s. 83, s. 88; 1999, c. 40, s. 33.
46. The Minister may grant the authorization referred to in section 43 or 44 if he considers it expedient, in particular, in the interest of the insurance company and its development, and in the interest of the insured. The Minister must be satisfied that the financial resources of the persons concerned are sufficient to provide continuous financial support to the insurance company in its operations and development. The Minister must also take account of the effect of the transaction on the insurance industry in Québec.
Where the allotment or registration of the transfer of shares of the insurance company or the legal person that controls it has the effect of giving control of the insurance company or such a legal person, as the case may be, to non-residents and their associates, the Minister may grant the authorization referred to in section 44 only if, in addition, he is satisfied that the transaction is necessary in the circumstances for the maintenance of the financial position of the insurance company.
However, the second paragraph does not apply where the allotment of shares to non-residents and their associates gives them control at the time an insurance company is constituted.
The Minister shall render his decision following a report from the Inspector General. He may impose any conditions he considers appropriate.
1974, c. 70, s. 46; 1984, c. 22, s. 16; 1990, c. 86, s. 4; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
46.1. (Replaced).
1984, c. 22, s. 17; 1990, c. 86, s. 4.
47. For the purposes of sections 44 and 46, a non-resident is a natural person who resides in Canada for fewer than 183 days a year, a legal person constituted or continued elsewhere than in Canada or any legal person controlled by such a natural person or legal person.
A voting share held jointly is deemed to be held by a non-resident if at least one of the joint holders is a non-resident.
1974, c. 70, s. 47; 1984, c. 22, s. 18; 1990, c. 4, s. 85; 1990, c. 86, s. 4; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
48. For the purposes of sections 43 and 44, the Inspector General, after having given the persons concerned an apportunity to present observations, may decree that a person holds voting rights attached to shares in an insurance company or a legal person that controls it if, in his opinion, that person, alone or with an associate, is in a position to influence the vote of persons holding shares in the insurance company or the legal person that controls it.
1974, c. 70, s. 48; 1984, c. 22, s. 19; 1990, c. 86, s. 4; 1996, c. 63, s. 80; 1997, c. 43, s. 73; 1999, c. 40, s. 33.
49. For the purposes of sections 43, 44 and 48, persons are associates where
(1)  one person is the spouse of the other, or is the minor child of either;
(2)  one person is a legal person and the other is a director or officer thereof, or the spouse or minor child of that director, officer or spouse;
(3)  one person is a legal person and the other person, or the spouse or a minor child of the other person or his spouse, or a group consisting of that other person, the spouse of that person or such a child or, in the case of a legal person, a director or officer thereof, holds 10 % or more of the voting rights of that legal person;
(4)  one person is a partnership and the other is one of the partners;
(5)  they are affiliated legal persons;
(6)  they are parties to an agreement with a view to exercising voting rights attached to shares in the same legal person;
(7)  they are associates, within the meaning of paragraphs 1 to 6, of the same person;
(8)  they are controlled by associates within the meaning of paragraphs 1 to 7.
1974, c. 70, s. 49; 1982, c. 17, s. 38; 1984, c. 22, s. 20; 1990, c. 86, s. 4; 1996, c. 63, s. 80.
50. Where an agreement is made with a view to exercising, through a nominee, voting rights attached to shares in an insurance company or in the legal person that controls it, section 50.1 applies. The said section also applies to any changes made to such an agreement.
1974, c. 70, s. 50; 1984, c. 22, s. 21; 1990, c. 86, s. 4; 1996, c. 63, s. 80.
50.1. Where an agreement referred to in section 50 is made with a view to exercising voting rights attached to shares in an insurance company, the nominee shall not be entitled to exercise the voting rights covered by such an agreement except with the written authorization of the Inspector General.
Where an agreement referred to in section 50 is made with a view to exercising voting rights attached to shares in the legal person that controls an insurance company, the legal person shall no longer be entitled to exercise the voting rights attached to the shares in the insurance company except with the written authorization of the Inspector General.
The Inspector General may give his authorization if he considers it expedient in the interest of the insurance company and the persons insured by it. He may impose any conditions he considers appropriate.
1990, c. 86, s. 4; 1996, c. 63, s. 80.
50.2. The application for authorization made to the Inspector General must, in addition to the information required under paragraphs 1 to 3 of section 45, indicate the number and characteristics of the shares to which the agreement applies, and the name of the holder of such shares.
1990, c. 86, s. 4.
50.3. The Inspector General may require any relevant information or document for the purposes of sections 43, 44 and 50.1.
Every person who is requested to furnish information shall comply with the request.
1990, c. 86, s. 4.
50.4. Where shares in an insurance company are allotted or the transfer thereof is registered contrary to section 43 or 44, each person to or in favour of whom such shares are allotted or transferred shall not be entitled to exercise a number of voting rights attached to shares in the insurance company equivalent to the number of voting rights attached to the shares that were allotted or transferred and registered unlawfully.
1990, c. 86, s. 4.
50.5. Where the authorization referred to in section 43 or 44 has not been obtained, the voting right may again be exercised if the Minister grants his authorization. Such authorization shall have effect on any date, even a prior date, determined by the Minister.
Such authorization may be granted for any allotment or transfer of shares effected before 15 March 1991 contrary to section 43 of the Act as it read before 15 March 1991.
Section 46 applies, adapted as required, to the exercise of the power of authorization.
1990, c. 86, s. 4.
DIVISION II
CAPITAL STOCK
51. (Repealed).
1974, c. 70, s. 51; 1982, c. 52, s. 64; 1984, c. 22, s. 22.
52. (Repealed).
1974, c. 70, s. 52; 1979, c. 33, s. 2; 1984, c. 22, s. 22.
52.1. Insurance companies are prohibited from issuing any bearer share certificate.
1990, c. 86, s. 5.
52.2. An application for letters patent which affects the voting rights held by shareholders in an insurance company shall be accompanied with a list indicating
(1)  the name, occupation and place of residence of every natural person who, if the letters patent were granted, would hold, alone or with his associates within the meaning of section 49, 10 % or more of the voting rights attached to the shares of the insurance company;
(2)  the name and the place of constitution or continuance of every legal person which, if the letters patent were granted, would hold, alone or with its associates within the meaning of section 49, 10 % or more of the voting rights attached to the shares of the insurance company, and the name of the shareholder holding a controlling interest in the legal person.
1990, c. 86, s. 5; 1996, c. 63, s. 80, s. 83, s. 88; 1999, c. 40, s. 33.
53. The shares of insurance companies shall be issued only when they are fully paid up.
1974, c. 70, s. 53.
DIVISION III
DIRECTORS
54. The company may, by by-law, determine the minimum and maximum number of directors. In no case, however, may the minimum number of directors be less than seven.
The by-law must be approved by the vote of not less than two-thirds in value of the shares represented by the shareholders present at a special meeting.
Three-quarters of the directors must be Canadian citizens and the majority of them must reside in Québec.
1974, c. 70, s. 54; 1984, c. 22, s. 23.
55. In a life insurance company that transacts insurance with participation in the profits, at least one-third of the members of the board of directors must be elected, each person having one vote, by the participating policyholders present at the general meeting for election of the directors.
Notwithstanding any other provision of law, this section applies to every insurance company transacting insurance with participation in profits on 20 October 1976.
1974, c. 70, s. 55.
56. An insurance company shall assume the defence of its directors or officers prosecuted by a third person for an act done in the exercise of their duties and shall pay any damages awarded as compensation for any injury resulting from that act, unless they have committed a grievous offence or a personal offence separable from the exercise of their duties.
Notwithstanding the foregoing, in a penal or criminal proceeding the company shall assume only the payment of the expenses of its directors or officers if they had reasonable grounds to believe that their conduct was in conformity with the law, or the payment of the expenses of its directors or officers if they have been freed or acquitted.
A company shall assume the expenses of its directors and officers if, having prosecuted them for an act done in the exercise of their duties, it loses its case and the court so decides.
If the company wins its case only in part, the court may determine the amount of the expenses it shall assume.
A company shall assume the obligations contemplated in this section in respect of any person who acted at its request as director or officer for a legal person of which it is a shareholder or creditor.
1974, c. 70, s. 56; 1984, c. 22, s. 24; 1996, c. 63, s. 80, s. 86.
56.1. Every insurance company shall adopt a by-law to fix the aggregate amount of remuneration which may be paid to directors for a given period. No director may receive any remuneration as such before the by-law is adopted.
The by-law must be approved by the vote of not less than two-thirds in value of the shares represented by the shareholders present at a special meeting.
1984, c. 22, s. 25.
57. Insurance representatives and claims adjusters dealing as such with an insurance company and directors or officers of a legal person dealing as such with an insurance company are ineligible to the office of director of such company.
Natural persons to whom or in favour of whom shares have been allotted or a registration of transfer has been made without obtaining the authorization provided for in section 43 or 44, and directors or officials of a legal person which is in the same situation, and natural persons bound by an agreement without obtaining the authorization provided for in section 50.1, and directors or officials of a legal person which is bound in this way, are also ineligible. Ineligibility lasts as long as the sanctions provided for in sections 43, 44, 50.1 and 50.4 remain applicable.
1974, c. 70, s. 57; 1990, c. 86, s. 6; 1989, c. 48, s. 227; 1996, c. 63, s. 80; 1998, c. 37, s. 499.
58. (Repealed).
1974, c. 70, s. 58; 1984, c. 22, s. 26; 1990, c. 86, s. 7.
59. Not more than one-third of the board of directors or the executive committee of an insurance company may be composed of remunerated officers and employees of that company or of a legal person with which it is affiliated, including persons who have been employed by either the company or the legal person in the preceding two years.
1974, c. 70, s. 59; 1990, c. 86, s. 8; 1996, c. 63, s. 80.
60. The presence of the majority of the directors constitutes a quorum at meetings of the board.
1974, c. 70, s. 60.
61. (Repealed).
1974, c. 70, s. 61; 1990, c. 86, s. 9.
62. No insurer may grant security on his property except
(1)  security for a short-term loan to meet its liquidity needs;
(2)  security on landed property.
1974, c. 70, s. 62; 1979, c. 33, s. 3; 1984, c. 22, s. 27; 1999, c. 40, s. 33.
62.1. Except in the case of a short-term loan to meet its liquidity needs, no insurer may issue bonds or other evidences of indebtedness unless
(1)  they are unsecured;
(2)  they stipulate that the indebtedness evidenced by them will, in the event of the insolvency or winding-up of the insurer, rank
(a)  after the other debts;
(b)  equally with the other unsecured evidences of indebtedness issued by it;
(c)  before the subordinated shareholder loans;
(3)  they comply with the terms and conditions prescribed by regulation.
1984, c. 22, s. 27.
62.2. No insurer may borrow by the acceptance of subordinated loans unless
(1)  they are granted by the shareholders for a fixed term;
(2)  the evidence of indebtedness stipulates that the loan will, in the event of the insolvency or winding-up of the insurer, rank with the other similar loans but after all the other debts;
(3)  the evidence of indebtedness complies with the terms and conditions prescribed by regulation.
1984, c. 22, s. 27.
DIVISION IV
SHAREHOLDERS AND PARTICIPATING POLICYHOLDERS
63. A notice of every general meeting of the shareholders of a company must be sent at least fifteen days before the date fixed for the meeting to each shareholder and each participating policyholder, and published in three daily newspapers at least one of which circulates in the locality where the company has its head office.
The notice shall indicate the place, date and time of the meeting.
1974, c. 70, s. 63; 1984, c. 22, s. 28.
64. Notices of annual meetings to be sent to participating policyholders may be replaced by an indication in prominent and conspicuous type on the premium notices and premium receipts, specifying the date, time and place of the meetings.
1974, c. 70, s. 64.
65. Every power of attorney naming a proxy to vote at a general meeting of the shareholders of an insurance company must, to be valid, be given within one year preceding the meeting and delivered to the secretary of the company at least ten days before the meeting.
Such power of attorney shall be used only at the meeting in question or in the case of adjournment.
1974, c. 70, s. 65.
66. Participating policyholders are entitled to attend all general meetings of the company.
The holders of participating policies issued by a company transacting life insurance are entitled to share in that portion of the profits set apart that has been distinguished as having been derived from such class of policies to the extent of at least:
(a)  90% of such profits in any year in which the average of the participating fund does not exceed $250,000,000;
(b)  92 1/2% of such profits in any year in which the average of the participating fund exceeds $250,000,000 but does not exceed $500,000,000;
(c)  95% of such profits in any year in which the average of the participating fund exceeds $500,000,000 but does not exceed $1,000,000,000; and
(d)  97 1/2% of such profits in any year in which the average of the participating fund exceeds $1,000,000,000.
1974, c. 70, s. 66.
CHAPTER III
MUTUAL INSURANCE COMPANIES
1985, c. 17, s. 4.
DIVISION I
APPLICATION
67. Notwithstanding any contrary provision, this chapter applies to the conversion into a mutual company of life insurance companies constituted under the statutes of Québec and to the administration of the companies of such kind constituted or converted under the provisions of this chapter or a special Act of Québec.
Division III of this chapter also applies to the administration of mutual damage-insurance companies.
Subject to the provisions of this chapter, the other provisions of this Act apply to such companies.
1974, c. 70, s. 67; 1985, c. 17, s. 5; 1999, c. 40, s. 33.
DIVISION II
CONVERSION INTO A MUTUAL COMPANY
68. Every insurance company constituted under the statutes of Québec transacting life insurance may with the authorization of the Minister convert itself into a mutual life-insurance company by redeeming its shares in accordance with this chapter. Before giving its approval, the Minister shall obtain the opinion of the Inspector General.
1974, c. 70, s. 68; 1982, c. 52, s. 65; 1984, c. 22, s. 29; 1999, c. 40, s. 33.
69. Conversion into a mutual company shall be ordered by a by-law that must be approved by the vote of at least the majority in value of the shares represented by the shareholders present at a meeting called for that purpose and by the vote of the majority of the participating policyholders attending such meeting.
Such by-law must establish the terms and conditions of the conversion and in particular indicate the price the company offers its shareholders for the purchase of their shares.
1974, c. 70, s. 69.
70. Conversion into a mutual company shall be authorized by the Minister only if:
(a)  the paid-up capital of the company is no longer required to protect the insured, having regard to the financial condition of the company and its volume of business;
(b)  the shareholders have offered to sell to the company at least 50 per cent of its issued and allotted shares at the price fixed by the by-law;
(c)  the offer contemplated in paragraph b is irrevocable for a period of at least six months;
(d)  the company has at its disposal the sums required to purchase at least 25 per cent of all its issued and allotted shares immediately upon the authorization of the Minister contemplated in section 68;
(e)  the price fixed for the purchase of the shares is reasonable in the opinion of the Minister.
1974, c. 70, s. 70; 1984, c. 22, s. 29.
71. The sums that the company may apply to the purchase of its shares for the purposes of conversion into a mutual company shall not exceed the excess of its assets over its liabilities less the sums already paid to purchase shares under the by-law contemplated in section 69 and 10 per cent of the assets of the company, or a lesser percentage established by the Minister.
1974, c. 70, s. 71; 1984, c. 22, s. 29.
72. The company shall within ninety days of the authorization contemplated in section 68, purchase and pay for all the shares offered for sale to it up to the date of the authorization.
It shall thereafter purchase and pay for shares offered for sale to it within ten days of the offer.
1974, c. 70, s. 72.
73. If by reason of the application of section 71 the company cannot pay for all the shares offered to it, it shall, notwithstanding section 72, apportion its purchases pro rata to the shares offered, excluding any fraction of a share; it must thereafter purchase other shares in the same manner as soon as it has at its disposal the sums contemplated in section 71.
1974, c. 70, s. 73.
74. Immediately upon the authorization contemplated in section 68, every previous or subsequent offer of shares is irrevocable notwithstanding any stipulation of time.
1974, c. 70, s. 74; 1999, c. 40, s. 33.
75. When a company purchases shares in accordance with this chapter it must annually pay dividends to its shareholders for as long as its capital stock has not been cancelled, at a rate equal to at least that paid in the three years preceding the authorization of the Minister, unless its financial condition prevents it and the Inspector General authorizes a lower rate.
1974, c. 70, s. 75; 1982, c. 52, s. 80; 1984, c. 22, s. 29.
76. As soon as the company has received offers for sale of at least 75 per cent of its issued and allotted shares, has purchased all those offered to it for sale and has at its disposal the sums required to purchase the remainder, it must give notice in writing to the Inspector General and each registered holder of the remaining shares and reserve the sums required to purchase them, and such purchase must be effected upon receipt of the corresponding certificates.
1974, c. 70, s. 76; 1982, c. 52, s. 80.
77. The Inspector General shall, if the company has complied with this Act, deposit a notice in the register setting forth the facts notified to him in accordance with section 76.
From the date of deposit of the notice, the capital stock of the company is cancelled and the company is converted into a mutual life insurance company governed by Division III of this chapter.
1974, c. 70, s. 77; 1982, c. 52, s. 80; 1993, c. 48, s. 118.
78. The company shall keep a register indicating:
(a)  the names and addresses of all shareholders who have offered it shares for sale and, for each offer, the date when it was received and the number of shares;
(b)  for each shareholder, the date and price of purchase.
1974, c. 70, s. 78.
79. So long as its capital stock is not cancelled under section 77, the company shall, in the annual statement it must file with the Inspector General, enter under assets an amount equal to the par value of each share purchased.
1974, c. 70, s. 79; 1977, c. 5, s. 14; 1982, c. 52, s. 78.
80. In the annual statement it must file with the Inspector General, the company may enter under assets an amount equal to the excess of the price of each share purchased over its par value, less however, each year, at least one-fifth of the said excess for each full year from purchase.
The shares respecting which the reserve provided for in section 76 has been made are deemed to have been purchased.
1974, c. 70, s. 80; 1977, c. 5, s. 14; 1982, c. 52, s. 78.
81. At each annual meeting following the authorization of the Minister contemplated in section 68, the insured are entitled to elect that proportion of the directors that equals the ratio between the number of shares redeemed by the company and the total shares issued at that date, any fractional remainder counting for the insured, or at least one-third of the directors.
1974, c. 70, s. 81; 1984, c. 22, s. 29.
82. At any annual or special general meeting held in the course of the purchase of shares and before the cancellation of the capital stock, the directors elected by the insured are entitled, in addition to their votes as shareholders, to a number of additional votes equal to the number of shares purchased by the company; these additional votes shall be apportioned as equally as possible among these directors, and any remainder shall be allotted to that director among them designated by the board of directors.
1974, c. 70, s. 82.
83. Upon the authorization provided for in section 68, the company shall lose all rights to issue new shares.
1974, c. 70, s. 83.
84. The purchase by the company of shares of its capital stock shall prohibit it from reissuing or otherwise disposing of them.
1974, c. 70, s. 84.
85. So long as its capital stock is not cancelled under section 77 and subject to any contrary provision of this Act, the company shall remain governed by its charter.
1974, c. 70, s. 85.
86. The amounts paid by the company for the purchase of the issued and allotted shares of its capital stock in accordance with this Act shall not be a distribution of surplus earnings contemplated by any fiscal law within the meaning of the Act respecting the Ministère du Revenu (chapter M-31).
1974, c. 70, s. 86.
DIVISION III
ADMINISTRATION
87. The members of a company to which this division applies are the persons who own insurance contracts it has made.
Only the following are deemed owners:
(a)  in a contract designating several insured, the insured first named;
(b)  in a group contract, the policyholder and the participants if so stipulated in the contract.
1974, c. 70, s. 87.
88. Subject to the regulations made to that effect by the Government, all members, except those who are not of full age, are qualified to vote at the general meetings.
1974, c. 70, s. 88.
88.1. Subject to the regulations contemplated in section 88, any group of not less than 100 members is entitled to bring forward proposals for discussion at a general meeting; one per cent of the members or 500 members, whichever is less, may request the convening of a special meeting.
1984, c. 22, s. 30.
89. A member may vote in person or, if the charter of the company so provides, by proxy; he is entitled to only one vote, regardless of the number or amount of the contracts he owns.
Every power of attorney authorizing a proxy to vote at a general meeting must, to be valid, be given within the year preceding the meeting in question and be deposited with the secretary of the company at least ten days before the meeting. The company shall make blank power of attorney forms available to the members.
Such power of attorney shall be used only at that meeting or at its adjournments.
1974, c. 70, s. 89; 1984, c. 22, s. 31.
90. Notice of every general or special meeting of the company shall be given to the members at least fifteen days before that fixed for the meeting, by an advertisement in three daily newspapers at least one of which circulates in the locality where the company has its head office.
1974, c. 70, s. 90; 1984, c. 22, s. 32.
90.1. There is no quorum at an annual general meeting or special meeting if more than one-half of the members and proxies present are directors, other mandataries or employees of the company.
1990, c. 86, s. 10.
91. The company may, by by-law, determine the minimum or maximum number of directors. In no case, however, may the minimum number of directors be less than seven.
The by-law must be approved by the vote of not less than two-thirds of the members present at a special meeting.
Three-quarters of the directors must be Canadian citizens and the majority of them must reside in Québec.
1974, c. 70, s. 91; 1984, c. 22, s. 33.
92. The directors shall be elected at the annual general meeting for a term of office not exceeding three years fixed by by-law.
If the terms of office are of two or three years, the by-laws must provide the procedures necessary to obtain that the number of those expiring annually is as constant as possible.
1974, c. 70, s. 92.
93. The directors shall remain in office after the expiry of their terms, until replaced or reelected.
1974, c. 70, s. 93.
93.1. The board of directors may, if so authorized by a by-law of the company and with the prior approval of the Inspector General, issue preferred equity shares to the amount by which the assets exceed the liabilities of the company.
The by-law must indicate the number of shares that the company is authorized to issue, the amount of the issue and the privileges, rights and restrictions applicable to the shares.
The by-law must be approved by the vote of not less than two-thirds of the members present at a special meeting and be subsequently ratified by the Inspector General.
No preferred equity share may be reimbursed or redeemed before the expiry of a five-year period from its issuance nor may it entitle its holder to be present or vote at meetings.
Sections 146, 156 and 157 of the Companies Act (chapter C-38) apply, with the necessary changes, to preferred equity shares, to the extent to which those sections are consistent with this section.
1984, c. 22, s. 34.
CHAPTER III.1
MUTUAL INSURANCE ASSOCIATIONS
1985, c. 17, s. 6.
DIVISION I
APPLICATION
1985, c. 17, s. 6.
93.2. Sections 62 and 62.1 apply to mutual insurance associations as does section 145, adapted as required.
1985, c. 17, s. 6.
DIVISION II
OBJECT AND POWERS
1985, c. 17, s. 6.
93.3. The object of a mutual insurance association is to transact damage insurance business for its members.
1985, c. 17, s. 6.
93.4. A mutual insurance association may, with the authorization of the federation of which it is a member,
(1)  provide the financing of insurance premiums to its members;
(2)  offer to its members the products of a financial institution;
(3)  manage immovables;
(4)  carry on any other activity authorized by the Minister in accordance with section 93.162.
1985, c. 17, s. 6.
DIVISION III
AFFILIATION WITH A FEDERATION
1985, c. 17, s. 6.
93.5. Every mutual insurance association shall be a member of a federation of mutual insurance associations.
1985, c. 17, s. 6.
93.6. No mutual insurance association may be constituted unless a federation undertakes to admit it as a member.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.7. The decision to cease to be a member of a federation shall be made by way of a resolution of the board of directors of the mutual insurance association, confirmed by the vote of not less than two-thirds of the members present at a special meeting held for that purpose.
The mutual insurance association shall transmit as soon as possible to the Inspector General a certified copy of the resolution of the board of directors and proof of the confirmation thereof.
1985, c. 17, s. 6.
93.8. A mutual insurance association which voluntarily ceases to be a member of a federation or is expelled by the federation shall, within sixty days following the confirmation of the resolution or following its expulsion by the federation, pass a by-law or resolution, as the case may be, to affiliate with another federation, apply for the constitution of a new federation, amalgamate with a mutual insurance association, convert into a mutual damage-insurance company or wind up.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.9. Where a federation is wound up or dissolved, every mutual insurance association that is a member of the federation shall, within 60 days of the deposit of the notice of winding-up or dissolution in the register, pass a by-law or resolution, as the case may be, to affiliate with another federation, apply for the constitution of a new federation, amalgamate with a mutual insurance association, convert into a mutual damage-insurance company or wind up.
1985, c. 17, s. 6; 1993, c. 48, s. 119; 1999, c. 40, s. 33.
93.10. A mutual insurance association shall remain a member of a federation
(1)  until another federation has undertaken to admit it as a member and the association has furnished proof thereof to the Inspector General or until the constitution of the new federation whose constitution it is seeking;
(2)  until it has amalgamated with a mutual insurance association;
(3)  until it has converted into a mutual damage-insurance company;
(4)  until it is dissolved.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
DIVISION IV
REPRESENTATION OF THE MUTUAL INSURANCE ASSOCIATION BEFORE ITS CONSTITUTION
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.11. Every mutual insurance association is bound by any deed performed in its interest before its constitution if it confirms the deed within ninety days of its constitution.
The confirmation transfers to the association the rights and obligations of the person who performed the deed but does not of itself effect novation. The person who performed the deed has the same rights and is bound by the same obligations as a mandatary of the association.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.12. The person who performs a deed in the interest of a mutual insurance association before its constitution is bound by that deed unless the contract entered into for the association includes a clause excluding or limiting his liability and a statement to the effect that the association might not be constituted or might not assume its obligations.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
DIVISION V
CONSTITUTION
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.13. A minimum of 200 founders is required to apply for the constitution of a mutual insurance association.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.14. Any natural person may be a founder of a mutual insurance association, except
(1)  a minor;
(2)  a person of full age under protective supervision or a person deprived wholly or in part of the right to exercise his civil rights by a court of another jurisdiction;
(3)  an undischarged bankrupt;
(4)  a person not included in the group described in the articles of the mutual insurance association, where such is the case.
1985, c. 17, s. 6; 1989, c. 54, s. 156; 1996, c. 63, s. 3.
93.15. The articles of the mutual insurance association shall set out
(1)  its name;
(2)  the judicial district in which its head office in Québec is located;
(3)  the classes of damage insurance contemplated;
(4)  where such is the case, the group from which it may recruit members;
(5)  the surnames, names and addresses of the founders.
1985, c. 17, s. 6; 1993, c. 48, s. 120; 1996, c. 63, s. 83, s. 88.
93.16. The articles may set out, in addition to the provisions that may be included therein under this Act, any other provision this Act permits a mutual insurance association to pass by by-law.
1985, c. 17, s. 6.
93.17. The articles of the mutual insurance association, signed by each founder, shall be transmitted in duplicate to the Inspector General.
1985, c. 17, s. 6.
93.18. The following documents shall accompany the articles:
(1)  an application, signed by two founders, requesting the Minister to order the constitution of the mutual insurance association;
(2)  a notice of the surname, name and address of the person designated as provisional secretary of the mutual insurance association;
(3)  a notice of the mode of and time limit for calling the organizing meeting;
(4)  a notice of the address of the head office;
(5)  a certified copy of the resolution of the federation that has undertaken to admit the mutual insurance association as a member;
(6)  an affidavit from the applicants establishing
(a)  the capital needed to finance the operations of the association and maintain an excess amount of assets over liabilities equal to or greater than the minimum amount required under section 275;
(b)  the amount subscribed and paid for common shares by the founders;
(c)  the amount that the guarantee fund related to the federation of which the association is to be a member has undertaken, for the association’s first three years of operation, to pay if necessary to make up the difference between the capital contemplated in subparagraph a and the amount contemplated in subparagraph b;
(7)  a certified copy of the resolution of the guarantee fund setting out the undertaking contemplated in paragraph 6, where such is the case;
(8)  the budgeted statements of the assets and liabilities and the earnings forecasts for the first three years of operation of the mutual insurance association;
(9)  any other document required by regulation of the Government.
1985, c. 17, s. 6; 1996, c. 63, s. 82, s. 88; 1999, c. 40, s. 33.
93.19. On receiving the articles, the documents accompanying them and the fees prescribed by regulation of the Government, the Inspector General shall present a report and submit his advice to the Minister.
1985, c. 17, s. 6.
93.20. The Minister may, if he considers it expedient and after obtaining the advice of the Inspector General, order him to constitute the mutual insurance association.
To constitute the association, the Inspector General shall
(1)  enter, on each duplicate of the articles, the words “constituted mutual insurance association”;
(2)  draw up in duplicate a certificate attesting the constitution of the mutual insurance association and indicating the date of constitution, and attach to each duplicate of the certificate a duplicate of the articles;
(3)  deposit in the register a copy of the certificate and of the articles as well as the accompanying documents referred to in paragraphs 2 and 4 of section 93.18;
(4)  send the other duplicate of the certificate and articles to the mutual insurance association or to its representative;
(5)  send a copy of the certificate, articles and required accompanying documents to the federation that has undertaken to accept the mutual insurance association as a member;
(6)  (subparagraph repealed).
The Minister shall refuse to order the constitution of an association where the articles of the association contain a name not in conformity with the requirements of sections 93.23 and 93.24 or the requirements of any of paragraphs 1 to 6 of section 93.22.
1985, c. 17, s. 6; 1993, c. 48, s. 121; 1996, c. 63, s. 83; 1999, c. 40, s. 33.
93.21. From the date appearing on the certificate of constitution, the mutual insurance association is a legal person.
1985, c. 17, s. 6; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
DIVISION VI
NAME
1985, c. 17, s. 6; 1996, c. 63, s. 83.
93.22. The name of a mutual insurance association shall not
(1)  contravene the Charter of the French language (chapter C-11);
(2)  include an expression which the law or the regulations reserve for another person or prohibit the association from using;
(3)  include an expression that evokes an immoral, obscene or offensive notion;
(4)  incorrectly indicate the association’s juridical form or fail to indicate such form where so required by law;
(5)  falsely suggest that the association is a non-profit group;
(6)  falsely suggest that the association is, or is related to, a public authority mentioned in the regulation;
(7)  falsely suggest that the association is related to another person, partnership or group, in particular in the cases and taking into account the criteria determined by regulation;
(8)  lead to confusion with a name used by another person, partnership or group in Québec, taking into account, in particular, the criteria determined by regulation;
(9)  be liable, in whatever manner, to mislead third persons.
1985, c. 17, s. 6; 1993, c. 48, s. 122; 1996, c. 63, s. 83.
93.23. The name of a mutual insurance association shall include the words “mutual insurance association” as well as a term identical to that used by the federation of which it is a member, chosen among the following: “damage”, “general”, “fire” or “I.A.R.D.”.
No name of a mutual insurance association may include the word “company”.
1985, c. 17, s. 6; 1996, c. 63, s. 83.
93.24. Only a mutual insurance association, a federation of mutual insurance associations, a guarantee fund or a mutual damage-insurance company, may include in its name the word “mutual” in combination with the words “damage insurance”, “general insurance”, “fire” or “I.A.R.D.”.
1985, c. 17, s. 6; 1996, c. 63, s. 82, s. 83.
93.25. Any interested person may, upon payment of the fees prescribed by regulation, petition the Inspector General to order a mutual insurance association to change its name if the name is not in conformity with section 93.22.
1985, c. 17, s. 6; 1993, c. 48, s. 123; 1996, c. 63, s. 83.
93.26. Before rendering a decision, the Inspector General shall allow all interested parties to submit their observations.
1985, c. 17, s. 6; 1993, c. 48, s. 123.
93.27. Every decision of the Inspector General shall be in writing, give reasons, be signed and be deposited in the register. A copy of the decision shall be transmitted without delay to each of the parties.
The decision is executory on the expiry of the time limit for bringing a proceeding that is set out in section 123.145 of the Companies Act (chapter C-38).
1985, c. 17, s. 6; 1993, c. 48, s. 123; 1997, c. 43, s. 74.
93.27.1. On the expiry of the time limit for bringing a proceeding, the Inspector General may, at the request of an interested party, change the name of a mutual insurance association that does not respect the order.
The Inspector General may also, of his own initiative, change the name of a mutual insurance association that does not respect the order issued by the Inspector General, on the ground that the association’s name is not in conformity with any of paragraphs 1 to 6 of section 93.22.
1993, c. 48, s. 123; 1996, c. 63, s. 83; 1997, c. 43, s. 75.
93.27.2. Where the Inspector General assigns a name to the association, he shall issue a certificate in duplicate establishing the change and deposit one duplicate in the register.
The Inspector General shall transmit the other duplicate of the certificate to the mutual insurance association and send a copy to the federation of which it is a member.
The change takes effect from the date appearing on the certificate.
1993, c. 48, s. 123; 1996, c. 63, s. 83.
93.27.3. The Inspector General may delegate to a member of his personnel the powers conferred upon him by this chapter.
1993, c. 48, s. 123.
93.27.4. Any person aggrieved by a decision of the Inspector General rendered under section 93.27 may, within 30 days of notification of the decision, contest the decision before the Administrative Tribunal of Québec.
1993, c. 48, s. 123; 1997, c. 43, s. 76.
93.28. (Repealed).
1985, c. 17, s. 6; 1996, c. 63, s. 4.
93.29. A change in the name of a mutual insurance association does not affect its rights and obligations and it may pursue any action to which it is a party under its new name without continuance of suit.
1985, c. 17, s. 6; 1996, c. 63, s. 83.
DIVISION VII
GENERAL ORGANIZING MEETING
1985, c. 17, s. 6.
93.30. Within sixty days of the constitution of the mutual insurance association, the founders shall hold a general organizing meeting.
The Inspector General may grant an extension or, if it has expired, set a new time limit.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.31. The meeting shall be called by the provisional secretary.
If the provisional secretary is absent or unable to act, the meeting may be called by two founders.
1985, c. 17, s. 6; 1996, c. 63, s. 5.
93.32. In addition to the founders whose names are mentioned in the articles, every natural person who, on the date of calling of the general organizing meeting, has subscribed and paid an amount as membership share is deemed to be a founder.
1985, c. 17, s. 6; 1996, c. 63, s. 6.
93.33. At the meeting, the founders shall
(1)  pass the internal management by-laws;
(2)  elect the directors;
(3)  issue common shares for the amount subscribed and paid for that purpose;
(4)  pass a resolution confirming the affiliation of the mutual insurance association with the federation that has undertaken to accept it as a member.
In addition, the founders may pass any other by-law or take any measure relating to the affairs of the mutual insurance association.
1985, c. 17, s. 6.
93.34. Within 30 days after the meeting, the mutual insurance association shall transmit to the Inspector General
(1)  a list of its directors containing their surnames, names, addresses and occupations;
(2)  a certified copy of the resolution provided for in subparagraph 4 of the first paragraph of section 93.33.
1985, c. 17, s. 6; 1996, c. 63, s. 88.
DIVISION VIII
HEAD OFFICE
1985, c. 17, s. 6.
93.35. The head office of a mutual insurance association shall be located in the judicial district specified in its articles.
1985, c. 17, s. 6.
93.35.1. From 11 September 1985, the indication, in the articles of a mutual insurance association, of Laval or Longueuil as the judicial district in which it establishes its head office in Québec is valid.
1987, c. 4, s. 1.
93.36. A mutual insurance association may, by resolution of the board of directors, change the address of its head office within the same locality.
The association shall, within 10 days of the adoption of the resolution, give notice of the change by filing a declaration to that effect in accordance with the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P-45).
1985, c. 17, s. 6; 1993, c. 48, s. 124.
93.37. A mutual insurance association may transfer its head office to another locality by a by-law approved by not less than two-thirds of the members present.
A notice of the new address shall accompany every application for an amendment to the articles for the purpose of transferring the head office.
1985, c. 17, s. 6.
93.38. (Repealed).
1985, c. 17, s. 6; 1993, c. 48, s. 125.
DIVISION IX
CAPITAL STOCK
1985, c. 17, s. 6.
§ 1.  — General provisions
1985, c. 17, s. 6.
93.39. The capital stock of a mutual insurance association shall consist of common shares and preferred shares.
The capital stock is variable.
1985, c. 17, s. 6.
93.40. The shares shall be paid in cash. Only those shares that are fully paid up may be issued, except in the case of shares issued in accordance with an amalgamation agreement.
1985, c. 17, s. 6.
§ 2.  — Common shares
1985, c. 17, s. 6.
93.41. The common shares are registered and may be issued only to the members. No common share may be transferred except in accordance with the conditions and modalities prescribed in the by-laws of the mutual insurance association.
1985, c. 17, s. 6; 1996, c. 63, s. 7.
93.42. (Repealed).
1985, c. 17, s. 6; 1996, c. 63, s. 8.
93.43. The mutual insurance association shall determine by by-law the price of a membership share which shall not be less than $5. The interest that may be paid on such shares and the number of shares that may be issued must be limited by the by-laws.
1985, c. 17, s. 6; 1996, c. 63, s. 9.
93.44. A mutual insurance association shall issue certificates attesting the issue of membership shares.
1985, c. 17, s. 6; 1996, c. 63, s. 10.
93.45. In case of the death or expulsion of a member, a mutual insurance association shall repay the sums that have been paid to obtain common shares to his name.
At the request of a member, and on the conditions prescribed in the by-laws of the association, a mutual insurance association may repay to the member the sums paid to obtain common shares to his name.
1985, c. 17, s. 6; 1996, c. 63, s. 11.
93.46. No mutual insurance association may repay a common share if the repayment would result in reducing the excess amount of assets over liabilities to a lesser amount than the minimum amount required under section 275 or in reducing its liquid assets to a lesser amount than that established pursuant to the written directives of the Inspector General.
The directors who authorize the repayment of a common share contrary to the first paragraph are jointly and severally liable for the sums thus repaid and not recovered.
1985, c. 17, s. 6.
93.47. A mutual insurance association may by by-law determine the order in which common shares are to be repaid.
1985, c. 17, s. 6.
§ 3.  — Preferred shares
1985, c. 17, s. 6.
93.48. The board of directors, if so authorized by a by-law of the mutual insurance association, may issue preferred shares.
The by-law shall provide for the amount of and the preferences, rights and restrictions attached to the shares and the conditions of their redemption or repayment. The interest payable on preferred shares shall be limited by the by-law.
The mutual insurance association shall transmit a copy of the by-law to the Inspector General.
1985, c. 17, s. 6.
93.49. Subject to section 93.244, no mutual insurance association may issue preferred shares if the excess amount of assets over liabilities is not equal to or greater than the minimum amount required under section 275.
1985, c. 17, s. 6.
93.50. A mutual insurance association shall issue certificates establishing the issue of preferred shares. They shall indicate the amount of, the interest payable on and the preferences, rights and restrictions attached to the shares and the conditions of their redemption or repayment.
1985, c. 17, s. 6.
93.51. No preferred share may entitle its holder to be repaid, in the event of the winding-up or dissolution of the mutual insurance association before the debts of the association are repaid. However, preferred shares take precedence over common shares.
1985, c. 17, s. 6.
93.52. No preferred share may entitle its holder to a repayment before the expiry of five years after its issue.
1985, c. 17, s. 6.
93.53. No mutual insurance association may redeem or repay a preferred share if the redemption or repayment would result in reducing the excess amount of assets over liabilities to a lesser amount than the minimum amount required under section 275 or in reducing its liquid assets to a lesser amount than that established according to the written directives of the Inspector General.
The directors who authorize the redemption or repayment of a preferred share contrary to the first paragraph are jointly and severally liable for the sums involved and not recovered.
1985, c. 17, s. 6.
93.54. The preferred shares shall be registered. No preferred share may be transferred except in accordance with the conditions and modalities prescribed in the by-laws of the mutual insurance association.
1985, c. 17, s. 6.
93.55. No preferred share may entitle its holder to receive notice of a general meeting, to attend such a meeting, to vote thereat or to be eligible for any office in the mutual insurance association.
1985, c. 17, s. 6.
DIVISION X
MEMBERS
1985, c. 17, s. 6.
§ 1.  — General provisions
1985, c. 17, s. 6.
93.56. To be a member of a mutual insurance association, a person, partnership or association shall meet the following conditions:
(1)  (paragraph repealed);
(2)  belong to the group described in the articles, where such is the case;
(3)  undertake insurance with the mutual insurance association;
(4)  undertake to comply with the by-laws of the mutual insurance association;
(5)  (paragraph repealed).
Subparagraph 3 of the first paragraph applies with respect to a founder only after the expiry of one year after the date on which the licence is issued to the association by the Inspector General. The founder is, during that period, a member in good standing of the mutual insurance association.
1985, c. 17, s. 6; 1996, c. 63, s. 12.
§ 2.  — Suspension and expulsion
1985, c. 17, s. 6; 1996, c. 63, s. 13.
93.57. Any member who ceases to be a policyholder under a valid insurance contract undertaken with the mutual insurance association shall be excluded from the association.
The same applies in the case of a founder who fails to undertake an insurance contract with the mutual insurance association within one year after the date on which the licence of the association is issued.
1985, c. 17, s. 6; 1996, c. 63, s. 14.
93.58. The board of directors, after informing a member in writing of the reasons invoked for his suspension or expulsion and giving him the opportunity to present his submissions, may suspend or expel him for either of the following reasons:
(1)  his failure to comply with the by-laws of the mutual insurance association;
(2)  his failure to discharge his undertakings toward the mutual insurance association.
1985, c. 17, s. 6.
93.59. The minutes of the meeting of the board of directors at which a member is suspended or expelled shall set out the facts that gave rise to the decision.
Within fifteen days of the decision, the mutual insurance association shall send to the member a notice setting out the reasons for the suspension or expulsion, by registered or certified mail.
1985, c. 17, s. 6.
93.60. No member may be suspended for more than six months.
1985, c. 17, s. 6.
93.61. A member who has been suspended or excluded loses the right to receive notice of the meetings of the mutual insurance association, to attend such meetings and to vote thereat, as well as the right to hold any office in the association.
No insurance policy of a member is cancelled by reason only of his suspension or exclusion.
Notwithstanding the foregoing, in the case of exclusion, no insurance policy may be renewed and no notice of non-renewal is required.
1985, c. 17, s. 6; 1996, c. 63, s. 15.
93.62. The suspension or expulsion of a member shall take effect from the passing of the resolution of the board of directors.
1985, c. 17, s. 6.
DIVISION XI
MEETING OF THE MEMBERS
1985, c. 17, s. 6.
§ 1.  — General meeting
1985, c. 17, s. 6.
93.63. The members of a mutual insurance association, whether convened at an annual or special meeting, shall constitute the general meeting of the association.
1985, c. 17, s. 6.
93.64. Unless the internal management by-laws provide for a greater number, twenty-five members are a quorum at a general meeting.
There is no quorum at a meeting where more than one-half of the members and representatives present are directors, other mandataries or paid members of the staff of the mutual insurance association.
Any meeting that has been called twice and which has not been held due to a lack of quorum may be called again.
On that occasion, the members present shall constitute the quorum.
1985, c. 17, s. 6.
93.65. Every notice calling a general meeting shall be given at least fifteen and not more than forty-five days before it is held, by regular mail, or in a daily or weekly newspaper circulated in the territory of the mutual insurance association. Where the members of a mutual insurance association constitute a group that is specified in its articles, the notice shall be given by regular mail.
The notice shall indicate the place, date and time of the meeting and, where such is the case, give a summary of any draft by-law submitted for adoption or of any amendment proposed to the by-laws of the mutual insurance association.
The mutual insurance association shall also indicate the formalities mentioned above for calling a meeting in prominent and conspicuous type on all premium notices it sends its members.
1985, c. 17, s. 6.
93.66. A member may waive a notice calling a meeting of the members. His mere presence at a meeting is a waiver except where he attends a meeting for the express purpose of objecting to the holding of the meeting on the ground of irregularity in the calling.
1985, c. 17, s. 6.
93.67. A member shall have only one vote.
If the internal management by-laws of the mutual insurance association so provide, a member’s vote may be cast by a representative holding a power of attorney, whether or not he is a member of the association. To be valid, the power of attorney must have been given in the year preceding the meeting and presented to the secretary at least 10 days before the meeting. The power of attorney may be used only at that meeting or its adjournments.
1985, c. 17, s. 6; 1996, c. 63, s. 16.
93.68. A legal person, partnership or association that is a member of a mutual insurance association may be represented at a general meeting.
No person may, however, represent more than one legal person, partnership or association.
1985, c. 17, s. 6; 1996, c. 63, s. 80.
93.69. No member having been a member for less than ninety days is eligible to any office in a mutual insurance association, unless he is a founder, nor may he vote at a general meeting of the mutual insurance association, except at the general organizing meeting.
1985, c. 17, s. 6.
93.70. Decisions shall be made by a majority of the votes cast by the members or representatives present.
In case of a tie, the chairman of the meeting has a casting vote.
1985, c. 17, s. 6.
§ 2.  — Annual meeting
1985, c. 17, s. 6.
93.71. The annual meeting of a mutual insurance association shall be held within three months after the end of its fiscal year. The members shall be convened to
(1)  examine the annual report;
(2)  (paragraph repealed);
(3)  elect the directors;
(4)  make any other decision reserved to the general meeting.
1985, c. 17, s. 6; 1996, c. 63, s. 17.
§ 3.  — Special meeting
1985, c. 17, s. 6.
93.72. The board of directors, the president or vice-president of a mutual insurance association or the board of directors of the federation of which the mutual insurance association is a member, may order that a special meeting be held whenever he or it considers it necessary.
1985, c. 17, s. 6.
93.73. The board of directors of a mutual insurance association shall order that a special meeting be held to make any decision requiring the vote of not less than two-thirds of the members present.
Any amendment to the internal management by-laws requires confirmation by the vote of not less than two-thirds of the members present.
1985, c. 17, s. 6.
93.74. The board of directors shall order that a special meeting be held at the request of 300 members if the mutual insurance association has 3,000 members or more, or of not less than one-tenth of the members, if the association has fewer than 3,000 members.
1985, c. 17, s. 6.
93.75. The secretary of a mutual insurance association shall call every special meeting.
If the secretary fails to act, the president of the mutual insurance association shall call the meeting.
1985, c. 17, s. 6.
93.76. If the meeting is not held within thirty days of the request made by the federation or the members, the federation or two signatories of the request, as the case may be, may call the meeting.
The mutual insurance association shall reimburse the persons who called the meeting for any reasonable expenses they incurred to hold the meeting, unless the members object thereto by resolution at the meeting thus called.
1985, c. 17, s. 6.
93.77. At a special meeting, nothing may be considered or decided except the matters mentioned in the notice calling the meeting.
1985, c. 17, s. 6.
DIVISION XII
DIRECTORS
1985, c. 17, s. 6.
§ 1.  — General provisions
1985, c. 17, s. 6.
93.78. The board of directors of a mutual insurance association shall consist of not fewer than five directors.
The number of directors is determined by the internal management by-laws of the mutual insurance association.
1985, c. 17, s. 6.
93.79. The following persons may be directors of a mutual insurance association:
(1)  any natural person who is a member of the mutual insurance association and the holder of an insurance policy with the association for a minimum amount determined by the internal management by-laws;
(2)  any natural person who represents a legal person or an association which is a member of the mutual insurance association and the holder of an insurance policy with the association for a minimum amount determined by the internal management by-laws.
In no case may the following persons be directors of a mutual insurance association:
(1)  an employee of the mutual insurance association or of another mutual insurance association, or an employee of the federation with which the mutual insurance association is affiliated, of the guarantee fund associated with the federation or of a legal person belonging to the same group as the federation;
(2)  an insurance representative, a claims adjuster, and, a director or officer of another legal person dealing as such with the mutual insurance association;
(3)  an undischarged bankrupt;
(4)  a minor;
(5)  a person of full age under protective supervision or who has been totally or partially deprived of the right to exercise his civil rights by a court of another jurisdiction.
1985, c. 17, s. 6; 1989, c. 54, s. 156; 1990, c. 86, s. 11; 1989, c. 48, s. 228; 1996, c. 63, s. 80, s. 82, s. 87; 1998, c. 37, s. 500.
93.80. The term of office of a director shall be three years.
A mode of rotation providing that one-third of the directors, to the nearest whole number, be replaced each year shall be provided in the internal management by-laws.
For that purpose, the mutual insurance association may shorten the term of office of the directors elected at the general organizing meeting or elected following an increase in the number of directors.
1985, c. 17, s. 6.
93.81. In case of vacancy, the directors may appoint a member for the unexpired portion of the term of office. If they fail to act before the next general meeting, the general meeting may fill the vacancy.
Where the directors remaining in office do not constitute a quorum, one member of the board of directors or two members of the mutual insurance association, or the board of directors of the federation of which the association is a member, may order the secretary to call a special meeting to fill the vacancy. If the secretary fails to act, those who may order that the meeting be held may call it.
The mutual insurance association shall reimburse the persons who called the meeting for any reasonable expenses they incurred to hold the meeting, unless the members object thereto by resolution at the meeting thus called.
1985, c. 17, s. 6.
93.82. Notwithstanding the expiry of his term of office, every director shall remain in office until he is re-elected or replaced.
1985, c. 17, s. 6.
93.83. The board of directors of a mutual insurance association shall pass a by-law to determine the total amount of remuneration that may be paid to the directors for a specified period. No director may receive any remuneration in his capacity before the by-law is passed.
The by-law must be approved by a vote of at least two-thirds of the members present at a meeting called for that purpose.
1985, c. 17, s. 6; 1996, c. 63, s. 18.
93.84. (Repealed).
1985, c. 17, s. 6; 1990, c. 86, s. 12.
93.85. A mutual insurance association shall assume the defence of its directors or officers prosecuted by a third person for an act done in the performance of their duties and shall pay any damages awarded as compensation for any injury resulting from that act, unless they have committed a grievous offence or a personal offence separable from the performance of their duties.
Notwithstanding the foregoing, in a penal or criminal proceeding the association shall assume only the payment of the expenses of its directors or officers if they had reasonable grounds to believe that their conduct was in conformity with the law or if they have been freed or acquitted.
An association shall assume the expenses of its directors and officers if, having prosecuted them for an act done in the performance of their duties, it loses its case and the court so decides.
If the association wins its case only in part, the court may determine the amount of the expenses it shall assume.
1985, c. 17, s. 6; 1996, c. 63, s. 86.
93.86. No mutual insurance association may hire or maintain in its employ a general manager having a direct or indirect interest in a firm or independent partnership, within the meaning of the Act respecting the distribution of financial products and services (chapter D-9.2), registered to act in a sector of insurance with which it does or proposes to do business.
1985, c. 17, s. 6; 1989, c. 48, s. 229; 1998, c. 37, s. 501.
§ 2.  — Powers and duties
1985, c. 17, s. 6.
93.87. The board of directors shall administer the affairs of the mutual insurance association.
The board shall exercise all the powers of the association, except those the general meeting reserves to itself by by-law.
1985, c. 17, s. 6.
93.88. The board of directors shall in particular
(1)  comply with the by-laws and standards adopted by the federation of which the mutual insurance association is a member and see that they are complied with;
(2)  furnish the Inspector General, at his request, with a certified copy of the by-laws of the mutual insurance association;
(3)  see to it that the registers are kept and preserved;
(4)  determine the rate of interest on membership shares and on preferred shares within the limit prescribed by by-law of the mutual insurance association;
(5)  see to it that the investments of the mutual insurance association are made in accordance with its investment policy;
(6)  between 31 December and 1 March of each year, rule on the distribution of the yearly surplus among the members;
(7)  designate the persons authorized to sign contracts or other documents on behalf of the mutual insurance association;
(8)  at the annual meeting, give an account of its management and submit the annual report;
(9)  facilitate the work of the persons in charge of inspecting the mutual insurance association, supervising its operations or auditing its books and accounts.
1985, c. 17, s. 6; 1996, c. 63, s. 19.
93.89. The board of directors shall reinsure risks assumed by the mutual insurance association only with an insurer who is the holder of a licence issued by the Inspector General and is designated by the federation.
1985, c. 17, s. 6.
§ 3.  — Meetings
1985, c. 17, s. 6.
93.90. Subject to the internal management by-laws, the meetings of the board of directors shall be called on at least five days’ notice.
The board of directors of the federation of which the mutual insurance association is a member may call a meeting of the board of directors of the mutual insurance association. A representative of the federation may attend the meeting and be heard.
1985, c. 17, s. 6.
93.91. The general manager of the mutual insurance association may attend the meetings of the board of directors and be heard.
1985, c. 17, s. 6.
93.92. A director may in writing waive a notice calling a meeting of the board of directors.
His mere presence at a meeting is a waiver except where he attends a meeting for the express purpose of objecting to the holding of the meeting on the ground of irregularity in the calling.
1985, c. 17, s. 6.
93.93. A majority of the directors are a quorum at meetings of the board of directors.
1985, c. 17, s. 6.
93.94. The decisions of the board of directors are made by a majority of the directors present. In case of a tie, the chairman of the meeting has a casting vote.
1985, c. 17, s. 6.
93.95. Subject to the internal management by-laws, the directors may, if all agree, participate in a meeting of the board by using means enabling all participants to communicate with one another orally, particularly by telephone. They are then deemed to have attended the meeting.
1985, c. 17, s. 6.
93.96. A resolution in writing signed by all the directors is as valid as if it had been passed at a meeting of the board.
A duplicate of the resolution is kept with the minutes of the proceedings of the board.
1985, c. 17, s. 6.
93.97. A director present at a meeting of the board is deemed to have acquiesced in every resolution passed or in every measure taken while he is present at the meeting, except
(1)  if at the meeting he requests that his dissent be recorded in the minutes;
(2)  if, before the adjournment or closing of the meeting, he informs the secretary of the meeting in writing of his dissent.
1985, c. 17, s. 6.
93.98. A director absent from a meeting of the board is presumed not to have approved any resolution or participated in any measure taken in his absence.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
§ 4.  — Dismissal of a director
1985, c. 17, s. 6.
93.99. A director may be dismissed at a special meeting called for that purpose.
1985, c. 17, s. 6.
93.100. A vacancy resulting from the dismissal of a director may be filled at the meeting where the dismissal takes place.
1985, c. 17, s. 6.
93.101. In no case may a director be dismissed at the meeting unless he has been informed in writing of the grounds invoked for his dismissal and of the place, date and time of the meeting within the same time limit as that prescribed for calling the meeting.
The director may be heard at the meeting or, in a written statement read by the chairman of the meeting, state the grounds on which he opposes his dismissal.
1985, c. 17, s. 6.
93.102. The minutes of the meeting at which a director is dismissed shall record the facts on which the decision is based.
The mutual insurance association shall transmit to the director a substantiated notice of his dismissal, by registered or certified mail, within fifteen days of the decision.
The association shall also transmit, as soon as possible, a notice of the dismissal by filing a declaration to that effect in accordance with the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P-45).
1985, c. 17, s. 6; 1993, c. 48, s. 126.
DIVISION XIII
EXECUTIVE COMMITTEE
1985, c. 17, s. 6.
93.103. If the board of directors of a mutual insurance association consists of more than six directors it may, if so authorized by the internal management by-laws, establish an executive committee consisting of not fewer than three directors including the chairman and vice-chairman.
In no case may the number of members of the executive committee exceed one-half of the number of directors.
1985, c. 17, s. 6.
93.104. The executive committee shall exercise the powers of the board of directors to the extent provided in the internal management by-laws.
1985, c. 17, s. 6.
93.105. The board of directors may replace any member of the executive committee.
1985, c. 17, s. 6.
93.106. Sections 93.90 to 93.98, adapted as required, apply to the executive committee.
1985, c. 17, s. 6; 1996, c. 63, s. 20.
DIVISION XIV
AMENDMENTS TO ARTICLES
1985, c. 17, s. 6.
93.107. The articles of a mutual insurance association shall only be amended by by-law passed by the vote of not less than two-thirds of the members present at a special meeting called for that purpose.
If the proposed amendment concerns the group from which the mutual insurance association may recruit members, the calling of a special meeting for that purpose shall first be authorized by a resolution of the federation of which the association is a member.
Every by-law to amend the articles shall authorize one of the directors to sign the articles of amendment.
1985, c. 17, s. 6.
93.108. The articles of amendment, signed by the authorized director, shall be transmitted in duplicate to the Inspector General.
1985, c. 17, s. 6.
93.109. The following documents shall accompany the articles of amendment:
(1)  an application for the amendment of the articles, signed by the director authorized to sign the articles of amendment;
(2)  a certified copy of the by-law approving the amendments to the articles;
(3)  a certified copy of the resolution of the federation authorizing the calling of a special meeting for the adoption of a by-law to change the group from which the mutual insurance association may recruit its members, where such is the case;
(4)  any other document prescribed by regulation of the Government.
1985, c. 17, s. 6.
93.110. On receiving the articles of amendment, the accompanying documents and the fees prescribed by regulation of the Government, the Inspector General may, if he considers it advisable, amend the articles.
For that purpose, the Inspector General shall, in addition to following the procedure provided for in subparagraphs 3 to 5 of the second paragraph of section 93.20, enter on each duplicate of the articles of amendment the words “amended articles” and draw up in duplicate a certificate setting out the amendment and indicating the date on which it was made.
The amendment takes effect on the date indicated in the certificate of amendment.
1985, c. 17, s. 6; 1993, c. 48, s. 127.
DIVISION XV
UPDATING OF ARTICLES
1985, c. 17, s. 6.
93.111. The Inspector General may issue updated articles to any mutual insurance association applying therefor.
For that purpose, the Inspector General shall, in addition to following the procedure provided for in subparagraphs 3 to 5 of the second paragraph of section 93.20, enter on each duplicate of the articles the words “updated articles” and draw up in duplicate a certificate evidencing the updating of the articles and indicating the date of issue.
1985, c. 17, s. 6.
93.112. From the date indicated in the certificate, the updated articles shall replace the initial articles of the mutual insurance association and any amendment thereto.
1985, c. 17, s. 6.
93.113. In case of discrepancy between the updated and the replaced articles, the updated articles prevail over the replaced articles for any event having occurred from the date indicated in the certificate but the replaced articles prevail over the updated articles for any event having occurred before that date.
1985, c. 17, s. 6.
DIVISION XVI
DISSOLUTION
1985, c. 17, s. 6.
93.114. The Minister may, if he considers it advisable and after obtaining the advice of the Inspector General, order him to dissolve a mutual insurance association if
(1)  the number of members is reduced to less than 200;
(2)  the organizing meeting is not held within the time limit specified in section 93.30;
(3)  the association is not dissolved within one year following the passing of the resolution requiring its winding-up contemplated in section 93.8.
1985, c. 17, s. 6.
93.115. The Minister may order the Inspector General to dissolve a mutual insurance association if
(1)  within 60 days of the confirmation of the resolution provided for in section 93.7 or of its expulsion from a federation, the association has failed to pass a resolution or by-law, as the case may be, to affiliate with another federation, apply for the constitution of a new federation, amalgamate with a mutual insurance association, convert into a mutual damage-insurance company or wind up;
(2)  within 120 days of the confirmation of the resolution provided for in section 93.7 or of its expulsion from a federation, the association has failed to affiliate with another federation, constitute a new federation, submit to the Minister an amalgamation agreement with a mutual insurance association or a by-law providing for its conversion into a mutual damage-insurance company or, failing that, to pass a resolution for its winding-up;
(3)  within 60 days of the deposit in the register of the notice of winding-up or dissolution of the federation of which it is a member, the association has failed to pass a by-law or resolution, as the case may be, to affiliate with another federation, apply for the constitution of a new federation, amalgamate with a mutual insurance association, convert into a mutual damage-insurance company, or wind up;
(4)  within 120 days of the deposit in the register of the notice of winding-up or dissolution of the federation of which it is a member, the association has failed to affiliate with another federation, obtain the constitution of a new federation, amalgamate with a mutual insurance association, convert into a mutual damage-insurance company or, if it has failed to pass a resolution for its winding-up.
1985, c. 17, s. 6; 1993, c. 48, s. 128; 1999, c. 40, s. 33.
93.116. The Minister shall, before ordering the Inspector General to dissolve a mutual insurance association, give the association or its liquidator, as the case may be, notice of the alleged default and of the penalty to which the association is liable and give him or it the opportunity to present written submissions within thirty days of the date of the notice.
If, after examining the submissions, the Minister maintains the notice of default, and the default is not remedied within thirty days after the expiry of the time limit provided in the first paragraph, the Minister shall order the Inspector General to dissolve the mutual insurance association.
1985, c. 17, s. 6.
93.117. The Inspector General shall dissolve the association by drawing up a notice to that effect which he shall deposit in the register; the association is dissolved from the date of the deposit.
1985, c. 17, s. 6; 1993, c. 48, s. 129.
93.118. The Public Curator is, ex officio, the curator to property of the dissolved mutual insurance association. He shall be accountable to the Inspector General.
1985, c. 17, s. 6.
93.119. Sections 399 to 401, 404 and 405 apply to the liquidation of the property of a mutual insurance association dissolved under this division.
1985, c. 17, s. 6.
93.120. Any interested person may, within three years of the dissolution, apply to the Minister for the revocation of the dissolution.
The Minister may, if he considers it advisable and after obtaining the advice of the Inspector General, order him to revoke the dissolution retroactively to the date on which it takes effect. The Inspector General shall revoke the dissolution by drawing up an order to that effect which he shall deposit in the register.
The Minister shall determine the conditions of the revocation of the dissolution. However, in no case may the revocation of a dissolution impair the rights acquired by any person after the dissolution.
1985, c. 17, s. 6; 1993, c. 48, s. 130.
CHAPTER III.2
FEDERATIONS OF MUTUAL INSURANCE ASSOCIATIONS
1985, c. 17, s. 6.
DIVISION I
SCOPE
1985, c. 17, s. 6.
93.121. The following provisions, adapted as required, apply to federations of mutual insurance associations: sections 93.11 and 93.12, subparagraphs 1, 2 and 5 of the first paragraph of section 93.15, sections 93.16 and 93.17, subparagraphs 1, 2, 3, 4 and 9 of the first paragraph of section 93.18, section 93.19, the first paragraph and subparagraphs 1, 2, 3 and 4 of the second paragraph of section 93.20, sections 93.21 and 93.25 to 93.32, subparagraphs 1 and 2 of the first paragraph and the second paragraph of section 93.33, paragraph 1 of section 93.34 and sections 93.35 to 93.37, the first paragraph of section 93.90, sections 93.92, 93.94 to 93.102, 93.107 to 93.113 and 298.1, and sections 379 to 386, in which any reference to section 378 shall be read as a reference to section 93.192.
1985, c. 17, s. 6; 1993, c. 48, s. 131.
DIVISION II
OBJECTS
1985, c. 17, s. 6.
93.122. The objects of a federation are
(1)  to protect the interests of its members, favour the attainment of their object and promote their development;
(2)  to act as a supervisory and governing body in respect of its members, to the extent provided under this Act;
(3)  to provide its members with training, promotion, advisory or technical assistance services or other similar services relating to the practice of insurance or any permitted diversification of the insurance business;
(4)  to propagate and promote the principles of mutualism in insurance.
1985, c. 17, s. 6.
DIVISION III
CONSTITUTION AND NAME
1985, c. 17, s. 6; 1996, c. 63, s. 83; 1999, c. 40, s. 33.
93.123. Only a mutual insurance association may be a founder of a federation.
A minimum of 12 mutual insurance associations is required to apply for the constitution of a federation.
In no case may a federation be constituted unless a guarantee fund is constituted at the same time.
1985, c. 17, s. 6; 1996, c. 63, s. 82; 1999, c. 40, s. 33.
93.124. To be a founder, a mutual insurance association requires prior authorization by way of a resolution of its board of directors indicating the name of its representative for the purposes of the constitution of the federation. The resolution requires confirmation by the vote of not less than two-thirds of the members present at a special meeting called for that purpose.
The mutual insurance association shall notify the federation of which it is a member of the holding of the meeting. A representative of the federation may attend and be heard at the meeting.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.125. On receiving the articles, the accompanying documents and the fees prescribed by regulation of the Government, the Inspector General shall, as soon as possible, send to the federation of which the petitioning mutual insurance associations are members and to the associations, a notice of the time within which they may present written submissions to the Minister.
After the submissions are presented or after the expiry of the time prescribed in the first paragraph, the Minister may, if he considers it advisable and after obtaining the advice of the Inspector General, order him to constitute the federation.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.126. The name of a federation shall include the words “federation of mutual insurance associations” accompanied with one of the following terms: “damage”, “general”, “fire” or “I.A.R.D.”.
The name shall be in conformity with section 93.22.
The Inspector General may, if he considers it necessary, change the name of a federation.
1985, c. 17, s. 6; 1993, c. 48, s. 132; 1996, c. 63, s. 83.
DIVISION IV
MEMBERS
1985, c. 17, s. 6.
93.127. Only a mutual insurance association may be a member of a federation.
1985, c. 17, s. 6.
93.128. To be a member of a federation, a mutual insurance association shall
(1)  apply for membership, except in the case of a founding mutual insurance association;
(2)  undertake to comply with the by-laws of the federation;
(3)  be admitted by the board of directors of the federation, except in the case of a founding mutual insurance association.
The application for membership of a mutual insurance association requires the authorization by way of a resolution of its board of directors indicating the name of its representative who is authorized to sign the application, and confirmation by the general meeting in accordance with the terms and conditions set out in section 93.124.
1985, c. 17, s. 6.
93.129. A federation may accept a membership application submitted by the founding members of a mutual insurance association.
Admission is effective as soon as the mutual insurance association is constituted.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.130. A federation may, by a by-law approved by the Inspector General, establish membership requirements, define the rights and obligations of members and determine the conditions governing the dismissal or expulsion of members.
1985, c. 17, s. 6.
93.131. Every decision of a federation regarding the admission or expulsion of a mutual insurance association shall be sent to it by registered or certified mail. The federation shall send a copy of the decision to the Inspector General as soon as possible.
1985, c. 17, s. 6.
93.132. Every mutual insurance association which believes itself wronged by a decision of the federation regarding its admission or its expulsion may, within fifteen days of the sending of the decision, request in writing the Inspector General to review the decision.
The mutual insurance association and the federation shall have access to the file relating to the request for review.
A request for review made by the association shall suspend the decision of the federation.
1985, c. 17, s. 6.
93.133. The decision of the Inspector General shall be substantiated and sent to the mutual insurance association and to the federation by registered or certified mail. The decision of the Inspector General is final.
1985, c. 17, s. 6.
DIVISION V
MEETING OF THE MEMBERS
1985, c. 17, s. 6.
§ 1.  — General meeting
1985, c. 17, s. 6.
93.134. The general meeting of a federation shall consist of the directors who represent the mutual insurance associations that are members thereof.
The general organizing meeting shall, however, consist of the persons who have signed the articles in their capacity as representatives. At that meeting the representatives shall appoint the first auditor of the federation.
1985, c. 17, s. 6.
93.135. All mutual insurance associations represented at the general meeting shall have an equal number of representatives in accordance with the internal management by-laws of the federation.
Each representative shall have only one vote.
Decisions shall be made by a majority of the votes cast by the representatives present.
1985, c. 17, s. 6.
93.136. Every notice calling a meeting shall be given in the manner prescribed by the internal management by-laws of the federation.
Subject to the internal management by-laws, every notice calling a meeting shall be given to the members not less than fifteen nor more than forty-five days before the date fixed for the meeting.
The notice shall indicate the place, date and time of the meeting and, where such is the case, give a summary of any draft by-law submitted for adoption or of any proposed amendment to the by-laws of the federation.
1985, c. 17, s. 6.
93.137. A representative of a mutual insurance association may waive the calling notice. His mere presence at the meeting is a waiver except where he attends for the sole purpose of objecting to the holding of the meeting on the ground of irregularity in the calling.
1985, c. 17, s. 6.
93.138. Unless the internal management by-laws provide for a greater number, 20% of the representatives of the mutual insurance associations that are members of the federation are a quorum.
There is no quorum at a meeting where more than one-half of the representatives present are directors, other mandataries or paid members of the staff of the federation.
Any meeting that has been called twice and which has not been held due to a lack of quorum may be called again. On that occasion, the members present shall constitute the quorum.
1985, c. 17, s. 6.
93.139. The general meeting shall pass a by-law to fix the total remuneration that may be paid to the directors for a specified period. No director may receive any remuneration as such before such a by-law is passed.
1985, c. 17, s. 6.
§ 2.  — Annual meeting
1985, c. 17, s. 6.
93.140. The annual meeting of a federation shall be held within four months from the end of its fiscal year. The members shall be convened to
(1)  examine the annual report of the federation and that of the guarantee fund which is related to it;
(2)  appoint the auditor;
(3)  elect the directors;
(4)  make any other decision reserved to the general meeting.
1985, c. 17, s. 6; 1996, c. 63, s. 21, s. 82.
§ 3.  — Special meeting
1985, c. 17, s. 6.
93.141. The board of directors, the president or, if the president is absent or unable to act, the vice-president of a federation may order that a special meeting be held whenever it or he considers it necessary.
1985, c. 17, s. 6; 1996, c. 63, s. 22.
93.142. The board of directors of a federation shall order a special meeting to make any decision requiring the vote of not less than two-thirds of the members present.
Every amendment to the internal management by-laws requires confirmation by the vote of not less than two-thirds of the members present.
1985, c. 17, s. 6.
93.143. The board of directors shall order that a special meeting be held if requested by not less than one-third of the members.
1985, c. 17, s. 6.
93.144. The secretary of a federation shall call every special meeting.
If the secretary fails to act, the president of the federation shall call the meeting.
1985, c. 17, s. 6.
93.145. If the meeting is not held within 30 days of the request made by the members, two members who have signed the request may call the meeting.
The federation shall reimburse the persons who have called the meeting for any reasonable expenses they have incurred to hold the meeting unless the members object thereto by resolution at the meeting thus called.
1985, c. 17, s. 6.
93.146. At a special meeting, nothing may be considered or decided except the matters mentioned in the notice calling the meeting.
1985, c. 17, s. 6.
DIVISION VI
DIRECTORS AND SENIOR OFFICERS
1985, c. 17, s. 6.
93.147. The directors of a federation shall be elected from among the directors of member mutual insurance associations unless the internal management by-laws allow the election of paid members of the staff of the federation or of mutual insurance associations that are members thereof.
However, in no case may more than one-third of the board of directors be composed of employees of the federation and of the mutual insurance associations that are members of it, employees of the guarantee fund associated with the federation and of a legal person belonging to the same group as the federation.
In no case may an undischarged bankrupt, a minor, a person of full age under protective supervision or who has been totally or partially deprived of the right to exercise his civil rights by a court of another jurisdiction, act as a director of a federation.
1985, c. 17, s. 6; 1989, c. 54, s. 156; 1990, c. 86, s. 13; 1996, c. 63, s. 80, s. 82, s. 87.
93.148. The internal management by-laws of a federation shall establish, in particular,
(1)  the number of directors, which shall not be less than seven;
(2)  the mode of election of the directors at the annual meeting;
(3)  the quorum of the board of directors and of the executive committee, where such is the case.
1985, c. 17, s. 6.
93.149. The chairman, the vice-chairman and the secretary of the board of directors shall be the president, the vice-president and the secretary of the federation, respectively.
The internal management by-laws of a federation may provide, however, that the chairman and the secretary of its board of directors are not the president and the secretary of the federation. In that case, the president shall be chosen by the general meeting from among the other directors and the secretary of the federation who may, however, not be a director shall be appointed by the board of directors.
The internal management by-laws also provide that the president of the federation remain in office until the expiry of his term as director.
1985, c. 17, s. 6.
93.150. The term of office of a director is three years.
A mode of rotation providing that one-third of the directors, to the nearest whole number, be replaced each year shall be provided in the internal management by-laws.
For that purpose, the federation may shorten the term of office of the directors elected at the general organizing meeting or elected following an increase in the number of directors.
1985, c. 17, s. 6.
93.151. In case of vacancy, the directors may appoint a member for the unexpired portion of the term of office. If they fail to act before the next general meeting, the vacancy may be filled by the general meeting.
Where the directors remaining in office do not constitute a quorum, one member of the board of directors of the federation or two members of the federation may order the secretary to call a special meeting to fill the vacancy. If the secretary fails to act, those who may order that the meeting be held may call it.
The federation shall reimburse the persons who have called the meeting for any reasonable expense they incurred to hold the meeting, unless the members object thereto by resolution at the meeting thus called.
1985, c. 17, s. 6.
93.152. Notwithstanding the expiry of his term of office, every director shall remain in office until he is re-elected or replaced.
1985, c. 17, s. 6.
93.153. In no case may the general manager of a federation or of a mutual insurance association that is a member thereof be the president or the vice-president of the federation or the chairman of its board of directors.
1985, c. 17, s. 6.
93.154. Every director who has an interest that is in conflict with the interest of the federation must, on pain of removal from office, disclose his interest, abstain from voting on any matter connected with it and avoid influencing any decision relating to it. He must also withdraw from the meeting while any such matter is being discussed or voted upon.
Any other person carrying on the duties of an officer and who has such an interest shall, on pain of removal from office, disclose his interest in writing to the federation. He shall in no way attempt to influence the decision of the directors.
1985, c. 17, s. 6; 1990, c. 86, s. 14.
93.154.1. A director or officer is deemed to have the same interest as a person associated with him.
1990, c. 86, s. 14.
93.154.2. Any person who is removed from office for having contravened section 93.154 or who resigns after having contravened that section is disqualified from sitting as a director of any federation for a period of five years from his removal or resignation.
1990, c. 86, s. 14.
93.154.3. The court, at the request of the federation or of a mutual insurance association that is a member of the federation or at the request of the Inspector General may, among other measures, order a director or officer who has contravened section 93.154 to render account and, where applicable, to remit any profit gained to the federation.
1990, c. 86, s. 14.
93.154.4. Every director or officer of a federation must, within three months of his appointment or election and, subsequently, every year, disclose in writing and under oath to the board of directors of the federation any interest held by him in any undertaking.
No director or officer may discharge the duties of his office until he has fulfilled his obligations under this section. The vote of a director who discharges his duties in contravention of this section shall not be decisive.
However, no disclosure of interest is required where the holding amounts to less than 10% of the shares issued by a legal person or of the voting rights attached to such shares.
1990, c. 86, s. 14; 1996, c. 63, s. 80.
93.155. A federation shall assume the defence of its directors or officers prosecuted by a third person for an act done in the performance of their duties and shall pay any damages awarded as compensation for any injury resulting from that act, unless they have committed a grievous offence or a personal offence separable from the performance of their duties.
Notwithstanding the foregoing, in a penal or criminal proceeding the federation shall assume only the payment of the expenses of its directors or officers if they had reasonable grounds to believe that their conduct was in conformity with the law or if they have been freed or acquitted.
A federation shall assume the expenses of its directors and officers if, having prosecuted them for an act done in the performance of their duties, it loses its case and the court so decides.
If the federation wins its case only in part, the court may determine the amount of the expenses it shall assume.
1985, c. 17, s. 6; 1996, c. 63, s. 86.
DIVISION VII
EXECUTIVE COMMITTEE
1985, c. 17, s. 6.
93.156. If the board of directors of a federation consists of 10 or more directors, it may, if so authorized by the internal management by-laws, establish an executive committee consisting of not fewer than five directors, including the chairman and the vice-chairman.
In no case may the number of members of the executive committee exceed one-half of the number of directors.
Not more than one-third of the executive committee may be composed of persons referred to in the second paragraph of section 93.147.
1985, c. 17, s. 6; 1990, c. 86, s. 15; 1996, c. 63, s. 23.
93.157. The executive committee shall exercise the powers of the board of directors to the extent provided in the internal management by-laws.
1985, c. 17, s. 6.
93.158. The board of directors may replace any member of the executive committee.
1985, c. 17, s. 6.
93.159. Sections 93.90 to 93.98, adapted as required, apply to this division.
1985, c. 17, s. 6.
DIVISION VIII
POWERS AND DUTIES
1985, c. 17, s. 6.
93.160. A federation may, in particular,
(1)  devise policies on any matter conducive to the attainment of the objects of its members;
(2)  examine the books and accounts of its members;
(3)  require from its members that they submit to it an annual report and periodical financial statements, and a copy of their by-laws or any other pertinent information;
(4)  make conventions with its members for the supervision, administration or management of their affairs for a specified period;
(5)  favour the creation and establishment of mutual insurance associations;
(6)  provide interested persons with services in view of the constitution of a mutual insurance association;
(7)  designate, from among insurers holding a licence issued by the Inspector General, those with whom its members may make contracts of reinsurance;
(8)  negotiate, on behalf of its members, reinsurance agreements with insurers holding a licence issued by the Inspector General;
(9)  act as the provisional administrator of a member for the purposes of Chapter X of Title IV;
(10)  act as the liquidator or sequestrator of a member;
(11)  act as the auditor of its members.
1985, c. 17, s. 6; 1999, c. 40, s. 33.
93.160.1. A federation may register one of its members as a firm for an insurance sector in accordance with the Act respecting the distribution of financial products and services (chapter D‐9.2).
At the request of the member, the federation may also register it for any other sector.
1998, c. 37, s. 502.
93.161. A federation may, by resolution of its board of directors, designate from among its members those who may
(1)  provide the financing of insurance premiums to its members;
(2)  offer to its members the products of a financial institution;
(3)  manage immovables;
(4)  carry on any other activity authorized by the Minister in accordance with section 93.162.
The federation shall also determine the terms and conditions governing the exercise of the powers provided in subparagraphs 2 and 4 of the first paragraph.
1985, c. 17, s. 6.
93.162. The Minister may authorize a federation to empower its members to carry on any other activity he determines.
The Minister shall publish his decision in the Gazette officielle du Québec within 30 days.
1985, c. 17, s. 6; 1996, c. 63, s. 24.
93.163. Every federation shall establish, by a by-law approved by the vote of not less than three-quarters of the members present, the territory in which each of its members carries on its activities.
However, no change in the territory of a mutual insurance association shall affect the status of a member.
1985, c. 17, s. 6.
93.164. A federation may, by by-law, adopt norms applicable to its members in respect of
(1)  their accounting system;
(2)  the risks and the retention limit;
(3)  any financial or administrative matter.
1985, c. 17, s. 6.
93.165. Every federation shall, every year, audit the books and accounts of its members. The audit may be carried out by employees of the federation or by a person appointed for that purpose by the federation.
1985, c. 17, s. 6.
93.165.1. A federation may, by agreement with the Bureau des services financiers established by section 158 of the Act respecting the distribution of financial products and services (chapter D-9.2), inspect those of its members that are registered as firms, in accordance with the terms of the agreement.
Sections 107 and 113 of the said Act, adapted as required, apply to inspections performed under this section.
An agreement may specify
(1)  the manner in which the federation is required to report to the Bureau;
(2)  the powers of inspection that the Bureau may exercise in respect of the federation;
(3)  any other measure that the Bureau considers appropriate.
1998, c. 37, s. 503.
93.166. Every federation shall carry out or commission the inspection of the affairs of its members once every other year or whenever it considers that an inspection is necessary for the protection of the insured.
1985, c. 17, s. 6.
93.167. The inspection of a mutual insurance association is carried out for the purposes, in particular, of evaluating its administrative structure and the measures taken by its board of directors in view of ensuring the orderly and efficient conduct of its affairs, the protection of its property, the reliability of its books and accounting records, the availability of reliable financial information and the compliance with this Act, the regulations hereunder and the written directives of the Inspector General.
1985, c. 17, s. 6.
93.168. The federation shall account for its inspection to the Inspector General. It shall also account for its inspection to the board of directors of the mutual insurance association and, for that purpose, it may convene the members of the board to submit and explain its inspection report.
1985, c. 17, s. 6.
93.169. The federation may, following an inspection of a mutual insurance association, order that a special meeting of the members of the association be called to communicate to them any information considered to be relevant.
1985, c. 17, s. 6.
93.170. A federation shall have access, at all times, to the books, registers, accounts and other records of its members and every person having custody of them shall facilitate its examination thereof. It may make a copy of all the documents.
A federation may also require from the directors and employees of its members any information and explanation necessary for the carrying out of its duties.
1985, c. 17, s. 6.
93.171. A federation may fix, for each fiscal year, a basic assessment and any other assessment it considers necessary.
Every mutual insurance association that is a member of the federation is bound to pay the assessments.
1985, c. 17, s. 6.
93.172. A federation may also fix an assessment in respect of a member who agrees to avail himself of special services offered by the federation.
1985, c. 17, s. 6.
93.173. The federation may require from its members the reports that are necessary to fix the amount of the assessments.
The form and tenor of the reports and the time when they are to be made and transmitted shall be determined by the federation.
1985, c. 17, s. 6.
DIVISION IX
INVESTMENT FUND
1985, c. 17, s. 6.
93.174. Every federation may establish and manage an investment fund.
1985, c. 17, s. 6.
93.175. The fund shall be made up of the sums entrusted to the federation by its members for investment purposes.
The sums entrusted to the federation under this section shall constitute, for each mutual insurance association, a participation in the net asset and net income of the fund and the participating association shall share the net income thereof pro rata to their participation on the dates determined by the by-laws of the federation.
1985, c. 17, s. 6.
93.176. The federation shall also determine by by-law the terms and conditions governing the participation of a member in the fund.
1985, c. 17, s. 6.
93.177. The assets of the fund shall be separate from those of the federation.
The participation of a member shall constitute against the federation a claim for the net value of the participation.
No other creditor of the federation has any right to the assets of the fund.
1985, c. 17, s. 6.
93.178. The assets of the fund shall be reported as separate items in the books, registers and accounts of the federation.
1985, c. 17, s. 6.
93.179. The Government shall determine by regulation the investments that may be made out of the investment fund, the intervals and mode of valuation of the fund and the norms governing financial disclosure to participating members.
1985, c. 17, s. 6.
DIVISION X
BOOKS, AUDIT AND ANNUAL REPORT
1985, c. 17, s. 6.
93.180. A federation shall keep and maintain at its head office
(1)  its articles and the accompanying certificates of the Inspector General;
(2)  its by-laws;
(3)  the minutes of the meetings of its members;
(4)  the minutes of the meetings of the board of directors and of the executive committee, where that is the case;
(5)  a register of the surnames, names, addresses and occupations of the directors.
The members of the federation may consult the register and the documents referred to in subparagraphs 1 to 3 and 5 of the first paragraph at the head office of the federation during regular office hours.
1985, c. 17, s. 6; 1996, c. 63, s. 88.
93.181. A federation shall keep the books recording the nature of its operations in accordance with generally accepted accounting principles.
1985, c. 17, s. 6.
93.182. The accounts of a federation shall be cut off at the close of the fiscal year and, within the two ensuing months, the board of directors shall prepare an annual report containing, in particular,
(1)  the surnames, names, addresses and occupations of the directors;
(2)  the balance sheet, the income statement and the statement of changes in financial position;
(3)  the auditor’s report.
The federation shall, within 90 days after the close of its fiscal year, forward a copy of its annual report to its members.
1985, c. 17, s. 6; 1996, c. 63, s. 88.
93.183. A federation shall cause its books and accounts to be audited every year by an external auditor.
1985, c. 17, s. 6.
93.184. If a federation fails to cause its books and accounts to be audited, the Inspector General may appoint an auditor and fix the remuneration that the federation is required to pay to the appointed auditor.
1985, c. 17, s. 6.
93.185. The auditor shall have access to all the books, registers, accounts and other records of a federation and any person having custody thereof shall facilitate his examination of them.
The auditor may also require from the directors and employees any information and explanation necessary for the carrying out of his duties.
1985, c. 17, s. 6.
DIVISION XI
STATEMENT OF OPERATIONS AND INSPECTION
1985, c. 17, s. 6.
93.186. Every federation shall, before 1 March each year, transmit to the Inspector General, in such form as he may determine, a statement of operations for the last fiscal year.
1985, c. 17, s. 6.
93.187. The statement of operations shall show the financial position of the federation and include the information and documents that must appear in the annual report and any information required by the Inspector General.
The statement of operations shall also contain any other information required by the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P-45) for the annual updating of information relating to a registered legal person.
1985, c. 17, s. 6; 1993, c. 48, s. 133.
93.188. The statement of operations shall be certified under oath by at least two directors of the federation and be accompanied with the report of the auditor to the Inspector General indicating the scope of his audit and stating his opinion on the financial position of the federation.
1985, c. 17, s. 6.
93.189. The Inspector General shall inspect or commission the inspection of the affairs of a federation at least once every three years or whenever he considers such an inspection to be necessary for the protection of its members.
1985, c. 17, s. 6.
93.190. Every person carrying out the inspection of a federation shall have access, at all times, to all its books, registers, accounts and other records, and every person having the custody thereof shall facilitate his examination of the documents. He may make a copy of all the documents.
The person is also entitled to require from the directors and employees the information and explanations necessary for the carrying out of his duties.
1985, c. 17, s. 6.
93.191. The Inspector General may require, at all times, the filing of any report or statement from a federation.
1985, c. 17, s. 6.
DIVISION XII
PROVISIONAL ADMINISTRATION AND WINDING-UP
1985, c. 17, s. 6.
§ 1.  — Provisional administration
1985, c. 17, s. 6.
93.192. The Inspector General or, if he is absent or unable to act, or at his request, any person designated by the Minister may, following an inspection made in accordance with this Act or the filing of any report or statement or pursuant to the request of one-third of the members of a federation provisionally assume the administration thereof for a period of seven working days if he has reason to believe
(1)  that the assets of the investment fund of the federation have been misappropriated or if he finds that there is an inexplicable deficiency in the assets;
(2)  that there has been a grievous offence especially malfeasance or breach of trust by one or more directors, or that the board has been seriously remiss in the performance of the obligations imposed on it by this Act or engages in financial or administrative practices which endanger the rights of the members;
(3)  that the federation has shown negligence in the exercise of its powers and the carrying out of its duties as regards the supervision and control of its members.
The provisional administrator may authorize the persons he designates to exercise such duties as he may determine.
1985, c. 17, s. 6; 1996, c. 63, s. 25.
93.193. The provisional administration of a federation entails the provisional administration of its investment fund and of the guarantee fund to which it is related.
The provisional administrator shall also assume the administration of the investment fund and of the guarantee fund.
1985, c. 17, s. 6; 1996, c. 63, s. 82.
93.194. After receiving the report provided for in section 386, the Government may in respect of both the federation and the guarantee fund decide to
(1)  cancel the suspension of the members of the board of directors;
(2)  maintain the suspension of the members of the board of directors until the holding of a special meeting of the members, and order the holding of the election of the members of the board;
(3)  order, on the conditions it determines, their winding-up and appoint a liquidator;
(4)  order the provisional administrator to extend his administration for the period determined by the Minister;
(5)  terminate the provisional administration.
Any order made under this section must be the subject of a notice published as soon as possible in the Gazette officielle du Québec.
1985, c. 17, s. 6; 1996, c. 63, s. 82.
93.195. The members of a federation shall be notified by the liquidator, within ten days, of the decision of the Government ordering its winding-up.
1985, c. 17, s. 6.
93.196. The winding-up of a federation entails the winding-up of its investment fund and of the guarantee fund to which it is related.
The liquidator of the federation shall also proceed to the winding-up of the investment fund and guarantee fund, according to the same rules.
1985, c. 17, s. 6; 1996, c. 63, s. 82.
93.197. The decision of the Government ordering the winding-up of a federation shall have the same effect as an order made by a judge of the Superior Court under section 25 of the Winding-up Act (chapter L-4).
No appeal lies from the decision of the Government.
If the interest of the members of a federation so justifies, the Minister may terminate the winding-up by transmitting an order to that effect to the Inspector General, who shall deposit it in the register.
1985, c. 17, s. 6; 1993, c. 48, s. 134.
93.198. The decision of the Government ordering the winding-up of a federation shall take effect 60 days after the deposit in the register of the notice contemplated in the second paragraph of section 93.194.
1985, c. 17, s. 6; 1993, c. 48, s. 135.
§ 2.  — Voluntary winding-up
1985, c. 17, s. 6.
93.199. Subject to this Act, Divisions II and III of the Winding-up Act (chapter L-4), adapted as required, apply to a federation and to the guarantee fund related to it.
1985, c. 17, s. 6; 1996, c. 63, s. 82.
93.200. A federation may decide to wind up its affairs and to dissolve by a resolution passed by at least three-fourths of the votes cast by the members present at a special meeting called for that purpose.
The meeting shall, by a resolution passed by the majority of the votes cast by the members present, appoint one or more liquidators empowered to take possession of the property of the federation when the winding-up is in effect.
1985, c. 17, s. 6.
93.201. Once the winding-up is in effect, every action or suit against the property of the federation in particular, by seizure by garnishment, seizure before judgment or seizure in execution, shall be suspended.
The costs incurred by a creditor, after he has become aware of the winding-up, personally or through his attorney, shall not be collocated out of the proceeds of the property of the federation which are distributed in consequence of the winding-up.
A judge of the Superior Court for the district in which the head office of the federation is situated may, however, on the conditions that he considers suitable, authorize the instituting of an action or the continuance of any suit commenced.
1985, c. 17, s. 6; 1996, c. 63, s. 26.
93.202. Every federation shall, within 10 days, give notice of the winding-up to the Inspector General, who shall deposit it in the register, and forward to him a certified copy of the winding-up resolution passed in accordance with section 93.200. A similar notice shall also be sent, within 10 days, by registered or certified mail, to each member and published in a daily newspaper circulating in the locality where the federation has its head office.
The notice shall indicate that the winding-up of the federation entails that of the guarantee fund related to it; it also indicates the name and address of the liquidator or liquidators and the postal address where interested persons may send their claims.
1985, c. 17, s. 6; 1993, c. 48, s. 136; 1996, c. 63, s. 82.
93.203. The winding-up of the federation takes effect 60 days from the date of the deposit of the winding-up notice in the register. The federation exists and operates thenceforth only with a view to winding up its affairs.
1985, c. 17, s. 6; 1993, c. 48, s. 137.
93.204. Before taking possession of the property of the federation, the liquidator shall give sufficient security to guarantee performance of his duties. At the request of the Inspector General or of any other interested person, the judge of the Superior Court may determine the amount and nature of that security and increase it according to circumstances.
1985, c. 17, s. 6.
93.205. The liquidator shall act under the control and direction of the Inspector General who may, even if he alleges no particular interest, act before the courts in all matters respecting the winding-up and exercise, on behalf of any member or creditor of the federation, the rights that they have against the federation.
1985, c. 17, s. 6.
93.206. The assets of the investment fund shall be distributed to the participating members pro rata to their participation.
1985, c. 17, s. 6.
93.207. The following claims shall have, by preference over the other claims, priority in the following order:
(1)  costs and charges of winding-up;
(2)  salaries and wages of the paid members of the staff of the federation, up to three months of unpaid salary.
1985, c. 17, s. 6.
93.208. The liquidator shall, within seven days after the end of every three-month period, make to the Inspector General a summary report of his activities for that period. The report shall indicate the receipts and expenses of the winding-up and a statement of its assets and liabilities at the end of that period.
1985, c. 17, s. 6.
93.209. The voluntary winding-up of a federation entails the winding-up of its investment fund and of the guarantee fund to which it is related.
The guarantee fund shall be in the process of winding up 60 days from the date of the deposit of the winding-up notice of the federation in the register. It exists and operates thenceforth only with a view to winding up its affairs.
The liquidator of a federation shall also proceed to the winding-up of the investment fund and of the guarantee fund.
Sections 93.201, 93.204, 93.205, 93.207 and 93.208, adapted as required, apply to the winding-up of the guarantee fund.
1985, c. 17, s. 6; 1993, c. 48, s. 138; 1996, c. 63, s. 81, s. 82.
DIVISION XIII
DISSOLUTION
1985, c. 17, s. 6.
93.210. The Minister may, if he considers it advisable and after obtaining the advice of the Inspector General, order the dissolution of a federation in the following cases:
(1)  if the number of its members is reduced to fewer than 12;
(2)  if the organizing meeting is not held within the time limits provided in section 93.30;
(3)  if, for two consecutive years, it failed to hold an annual meeting.
1985, c. 17, s. 6.
93.211. Before ordering the Inspector General to dissolve a federation, the Minister shall give the federation a notice of its alleged default and of the penalty to which it is liable and give it an opportunity to present written submissions within thirty days of the date of the notice.
If, after examining the submissions, the Minister maintains the notice of default and it is not remedied within thirty days following the time limit prescribed in the first paragraph, the Minister may order the Inspector General to dissolve the federation.
1985, c. 17, s. 6.
93.212. The notice of default contemplated in the first paragraph of section 93.211 shall be transmitted to the Inspector General, who shall deposit it in the register.
1985, c. 17, s. 6; 1993, c. 48, s. 139.
93.213. The dissolution of a federation entails the dissolution of the guarantee fund to which it is related.
1985, c. 17, s. 6; 1996, c. 63, s. 82.
93.214. The Inspector General shall dissolve the federation and the guarantee fund related to it by drawing up an act of dissolution to that effect which he shall deposit in the register; the federation and the guarantee fund are dissolved 60 days after the date of the deposit.
1985, c. 17, s. 6; 1993, c. 48, s. 140; 1996, c. 63, s. 82; 1998, c. 37, s. 504.
93.215. The Public Curator is ex officio, the curator to property of the federation and investment fund and of the guarantee fund. He shall render account to the Inspector General.
1985, c. 17, s. 6; 1996, c. 63, s. 82.
93.216. The balance of the assets of the dissolved federation and that of the dissolved guarantee fund shall devolve to their members.
The assets of the investment fund shall devolve to the participating members, pro rata to their participation.
1985, c. 17, s. 6; 1996, c. 63, s. 82.
93.217. Any interested person may, within three years of a dissolution, apply to the Minister for a revocation.
The Minister may, if he considers it advisable and after obtaining the advice of the Inspector General, order him to revoke the dissolution, retroactively to the effective date. The Inspector General shall revoke the dissolution by drawing up an order to that effect which he shall deposit in the register.
The Minister shall establish the conditions of the revocation of the dissolution. In no case, however, may such a revocation impair the rights acquired by any person after the dissolution.
1985, c. 17, s. 6; 1993, c. 48, s. 141.
CHAPTER III.3
GUARANTEE FUND
1985, c. 17, s. 6; 1996, c. 63, s. 27.
DIVISION I
APPLICATION
1985, c. 17, s. 6.
93.218. The following provisions, adapted as required, apply to the guarantee fund: sections 93.11 and 93.12, subparagraphs 1, 2 and 5 of the first paragraph of section 93.15, sections 93.16 and 93.17, subparagraphs 1, 2, 4 and 9 of the first paragraph of section 93.18, section 93.19, the first paragraph and subparagraphs 1 to 4 of the second paragraph of section 93.20, sections 93.21, 93.22, 93.25 to 93.27.4, 93.35 to 93.37, 93.92 to 93.98, 93.108 to 93.113 and 93.156 to 93.159 and sections 379 to 386, in which every reference to section 378 shall be read as a reference to section 93.269.
1985, c. 17, s. 6; 1993, c. 48, s. 142; 1996, c. 63, s. 82.
DIVISION II
CONSTITUTION, NAME AND ARTICLES
1985, c. 17, s. 6; 1996, c. 63, s. 83; 1999, c. 40, s. 33.
93.219. The mutual insurance associations that are the founders of a federation shall apply for the constitution of a guarantee fund having the following objects:
(1)  establishing and managing a guarantee fund, a cash reserve fund, or a mutual aid fund for the benefit of its members;
(2)  providing financial assistance with regard to losses sustained by the members of a mutual insurance association that is a member of the guarantee fund, on the winding-up or dissolution of the association.
1985, c. 17, s. 6; 1996, c. 63, s. 82; 1999, c. 40, s. 33.
93.220. No guarantee fund may be constituted unless the mutual insurance associations that are the founders of the federation have subscribed and paid an amount determined by the Inspector General to establish its capital.
1985, c. 17, s. 6; 1996, c. 63, s. 81; 1999, c. 40, s. 33.
93.221. The name of a guarantee fund shall include the words “guarantee fund”; it shall also include the name of the federation to which its members are affiliated or a sign identifying the federation.
1985, c. 17, s. 6; 1996, c. 63, s. 82, s. 83.
93.222. No legal person other than a legal person constituted under this division may include the expression guarantee fund in its name.
1985, c. 17, s. 6; 1996, c. 63, s. 28.
93.223. In no case may the articles of a guarantee fund be amended except by a resolution passed by two-thirds of the votes cast by the directors present at a meeting called for that purpose. The resolution must authorize one of the directors to sign the articles of amendment.
1985, c. 17, s. 6; 1996, c. 63, s. 82.
DIVISION III
CAPITAL
1985, c. 17, s. 6.
93.224. The capital of a guarantee fund shall consist of the amounts paid by each member as its participation in the capital.
The capital shall be equal to or greater than the amount determined by the Inspector General at the time of constitution of the guarantee fund or any other amount determined by the Inspector General whenever he considers it necessary.
In no case may the capital be touched except in case of the winding-up or dissolution of a member of the guarantee fund.
1985, c. 17, s. 6; 1996, c. 63, s. 81; 1999, c. 40, s. 33.
93.225. A guarantee fund shall, where its capital is reduced below the amount determined by the Inspector General, require any other additional amount from its members which is payable by them to bring the capital of the guarantee fund to an amount at least equal to the amount determined by the Inspector General.
The directors shall determine, by resolution, the criteria for fixing the amount of any such additional sum and the terms and conditions of its payment.
The resolution requires the approval of the Inspector General.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.226. Every guarantee fund shall transmit to each member, each year, a certificate indicating the total amounts paid as participation since becoming a member thereof and the percentage of his participation in the capital.
1985, c. 17, s. 6; 1996, c. 63, s. 81; 1998, c. 37, s. 505.
93.227. In the case of the winding-up, dissolution, resignation of a member or of its expulsion from the federation to which the guarantee fund is related, the member may apply for the reimbursement of his participation in the capital.
Except in the case of the winding-up or dissolution of a guarantee fund, the reimbursement of the participation of a member in the capital shall correspond to the lesser of the following amounts:
(1)  the total amount paid as participation;
(2)  the amount obtained by multiplying the surplus of the assets of the guarantee fund over its liabilities by the percentage of the participation of the member in the capital.
The application for the reimbursement of a member shall be made by means of a written notice transmitted to the guarantee fund not later than 90 days before 31 December of the current year.
No reimbursement may be made before the following 1 January.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
DIVISION IV
MEMBERS
1985, c. 17, s. 6.
93.228. The mutual insurance associations that are members of a federation are members of the guarantee fund to which the federation is related. They shall remain members of the guarantee fund as long as they remain members of the federation.
1985, c. 17, s. 6; 1996, c. 63, s. 81, s. 82.
DIVISION V
BOARD OF DIRECTORS
1985, c. 17, s. 6.
93.229. A guarantee fund shall be administered by a board of directors consisting of not fewer than seven persons appointed by the board of directors of the federation to which the guarantee fund is related.
In no case may the following persons act as directors:
(1)  a minor;
(2)  a person of full age under protective supervision or who has been totally or partially deprived of the right to exercise his civil rights by a court of another jurisdiction;
(3)  an undischarged bankrupt.
1985, c. 17, s. 6; 1989, c. 54, s. 156; 1996, c. 63, s. 82, s. 87; 1998, c. 37, s. 506.
93.230. The first directors shall be appointed at the first meeting of the first board of directors of the federation.
Within 30 days of the meeting, the federation shall transmit to the Inspector General a list of the appointed directors containing their surnames, names, addresses and occupations.
1985, c. 17, s. 6; 1996, c. 63, s. 88.
93.231. The president of the federation shall fix the date of the first meeting of the board of directors.
At its first meeting, the board of directors shall adopt the internal management by-laws of the guarantee fund and shall appoint the first auditor.
Within 30 days of the meeting, the guarantee fund shall transmit the name and address of the auditor to the Inspector General.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.232. The directors shall elect the president and vice-president of the guarantee fund and any other senior officer whose election is provided for in the internal management by-laws.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.233. The board of directors shall meet at such intervals and according to such modalities as may be provided in the internal management by-laws of the guarantee fund. Subject to the internal management by-laws, every meeting shall be called by a notice given at least five days before the date fixed for the holding of the meeting.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.234. The term of office of a director is three years unless he is replaced before the expiry of his term by the board of directors of the federation.
1985, c. 17, s. 6.
93.235. Notwithstanding the expiry of his term, a director shall remain in office until he is reappointed or replaced by the board of directors of the federation.
1985, c. 17, s. 6.
93.236. Any vacancy occurring during the term of office of a director shall be filled by the board of directors of the federation for the remainder of his term.
1985, c. 17, s. 6.
93.237. The total amount of remuneration that may be paid to the directors for a specified period shall be fixed by the board of directors of the federation. No director may be remunerated as such before a resolution to that effect is passed by the board.
1985, c. 17, s. 6.
93.238. Every director who has an interest that is in conflict with the interest of the guarantee fund must, on pain of removal from office, disclose his interest, abstain from voting on any matter connected with it and avoid influencing any decision relating to it. He must also withdraw from the meeting while any such matter is being discussed or voted upon.
Any other person discharging the duties of an officer and who has such an interest shall, on pain of removal from office, disclose his interest to the guarantee fund. In addition, he shall in no way attempt to influence the decision of the directors.
1985, c. 17, s. 6; 1990, c. 86, s. 16; 1996, c. 63, s. 81.
93.238.1. A director or officer is deemed to have the same interest as a person associated with him.
1990, c. 86, s. 16.
93.238.2. Any person who is removed from office for having contravened section 93.238 or who resigns after having contravened that section is disqualified from sitting as a director of any guarantee fund for a period of five years from his removal or resignation.
1990, c. 86, s. 16; 1996, c. 63, s. 82.
93.238.3. The court, at the request of the guarantee fund, of a federation associated with the guarantee fund or of a mutual insurance association that is a member of the federation or at the request of the Inspector General, may, among other measures, order a director or officer who has contravened section 93.238 to render account and, where applicable, to remit any profit gained to the guarantee fund.
1990, c. 86, s. 16; 1996, c. 63, s. 81.
93.238.4. Every director or officer of a guarantee fund must, within three months of his appointment or election and, subsequently, every year, disclose in writing and under oath to the board of directors of the guarantee fund any interest held by him in any undertaking.
No director or officer may discharge the duties of his office until he has fulfilled his obligations under this section. The vote of a director who discharges his duties in contravention of this section shall not be decisive.
However, no disclosure of interest is required where the holding amounts to less than 10% of the shares issued by a legal person or of the voting rights attached to such shares.
1990, c. 86, s. 16; 1996, c. 63, s. 80, s. 81, s. 82.
93.239. A guarantee fund shall assume the defence of its directors or officers prosecuted by a third person for an act done in the performance of their duties and shall pay any damages awarded as compensation for any injury resulting from that act, unless they have committed a grievous offence or a personal offence separable from the performance of their duties.
Notwithstanding the foregoing, in a penal or criminal proceeding the guarantee fund shall assume only the payment of the expenses of its directors or officers if they had reasonable grounds to believe that their conduct was in conformity with the law or if they have been freed or acquitted.
A guarantee fund shall assume the expenses of its directors and officers if, having prosecuted them for an act done in the performance of their duties, it loses its case and the court so decides.
If the guarantee fund wins its case only in part, the court may determine the amount of the expenses it shall assume.
1985, c. 17, s. 6; 1996, c. 63, s. 81, s. 82.
DIVISION VI
ASSESSMENT
1985, c. 17, s. 6.
93.240. A guarantee fund may, for each fiscal year, fix and collect from its members an assessment which the members are required to pay.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.241. The amount of the assessment shall be established for each member on the basis of reports that each of them is required to submit to the guarantee fund in the form and tenor and at the intervals that the guarantee fund may determine by by-law.
A guarantee fund may also provide by by-law the terms and conditions governing the payment of the assessment.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
DIVISION VII
POWERS AND DUTIES
1985, c. 17, s. 6.
93.242. A guarantee fund may, in the pursuit of its objects,
(1)  make loans and grants to its members;
(2)  guarantee the repayment of an advance or a loan granted to a member;
(3)  enter into an agreement with a member to manage its affairs during a specified period;
(4)  act as the provisional administrator of a member for the purposes of Chapter X of Title IV;
(5)  acquire the assets of a member;
(6)  act as the liquidator or sequestrator of a member;
(7)  pay rebates to the members out of its accumulated surplus, in proportion to their participation in the capital.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.243. Every guarantee fund shall guarantee to the insured persons of a mutual insurance association which is a member thereof and the assets of which have been liquidated the payment, on presentation of the proper documents, of the balance
(1)  on any debt dependent upon the realization, before the winding-up or dissolution, of the risk assumed by the member;
(2)  on any debt of the insured person for the recovery of the value of its policies or for the repayment of premiums paid in respect of risks no longer covered following the winding-up or dissolution of the member.
The guarantee fund is bound by that obligation only towards an insured person who has filed a valid claim with the liquidator or, as the case may be, the Public Curator.
Every claim by an insured person shall be filed within three years after the liquidation of the assets of a member.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.244. A guarantee fund may, to provide assistance to a member, acquire from the latter preferred shares that the mutual insurance association may redeem. Notwithstanding section 93.52, the guarantee fund may at all times, obtain the repayment of its preferred shares.
The amount of the shares so repaid or redeemed in a year shall, however, be limited to one of the following amounts, whichever is less:
(1)  the balance of the non-redeemed preferred shares;
(2)  50% of the net profit of the member in the fiscal year;
(3)  the amount greater than the amount by which the assets of the member exceeds its liabilities, required under section 275.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.245. A guarantee fund may, when making a loan or grant to a member or when purchasing the preferred shares of a member, determine the measures that the member will be required to take to correct certain of its financial and administrative practices.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
DIVISION VIII
INVESTMENTS
1985, c. 17, s. 6.
93.246. Subject to section 93.244, no guarantee fund may make investments other than those contemplated in this division.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.247. A guarantee fund may acquire and hold bonds or other evidences of indebtedness
(1)  issued or guaranteed by Québec or Canada;
(2)  issued by a legal person, commission or association of which at least 90 % of the shares, capital or property are owned by Québec;
(3)  issued by a municipality, by a school board of Québec or by the Conseil scolaire de l’île de Montréal;
(4)  secured by the assignment to a trustee of an undertaking of Québec to pay sufficient annual subsidies for the payment of interest and capital on their respective maturity dates;
(5)  issued by a public authority having as its object the operation of a public service and empowered to impose a tariff for the service.
1985, c. 17, s. 6; 1988, c. 84, s. 545; 1996, c. 2, s. 78; 1996, c. 63, s. 29, s. 80, s. 81.
93.248. A guarantee fund may acquire and hold bonds or other evidences of indebtedness issued by a legal person constituted in Canada and carrying on business in Québec
(1)  if they are secured by first hypothec on landed property or equipment or by hypothec on evidences of indebtedness admissible as investments under this division;
(2)  if they are secured by first hypothec on equipment and if the legal person has paid in full the interest on its other debts during the 10 years preceding the acquisition; or
(3)  if the common shares of the legal person are listed on a recognized Canadian Stock Exchange and if the legal person, during each of the five years preceding the acquisition, has earned and paid on its common shares a dividend at least equal to 4% of their book value.
1985, c. 17, s. 6; 1992, c. 57, s. 439; 1996, c. 63, s. 80, s. 81; 1999, c. 40, s. 33.
93.249. A guarantee fund may acquire and hold fully paid preferred shares issued by a legal person constituted in Canada and carrying on business in Québec
(1)  if the legal person which issued the shares has, in each of the five years preceding the acquisition, earned and paid on the issued and non-redeemed preferred shares a dividend at least equal to the rate specified for the shares;
(2)  if the legal person has, in each of the five years preceding the acquisition, earned and paid on its common shares a dividend of at least 4% of their book value; and
(3)  if the preferred shares are listed on a recognized Canadian Stock Exchange.
1985, c. 17, s. 6; 1996, c. 63, s. 80, s. 81; 1999, c. 40, s. 33.
93.250. A guarantee fund may acquire and hold fully paid common shares issued by a legal person constituted in Canada and carrying on business in Québec if the shares are listed on a recognized Canadian Stock Exchange and if the legal person which issued the shares has, in each of the five years preceding the acquisition, earned and paid on its common shares a dividend of at least 4% of their book value.
1985, c. 17, s. 6; 1996, c. 63, s. 80, s. 81; 1999, c. 40, s. 33.
93.251. A guarantee fund may acquire claims secured by hypothec or grant a hypothecary loan on landed property situated in Québec
(1)  if payment of the capital and interest on the claims is guaranteed or insured by Québec or Canada;
(2)  if the hypothec is a first hypothec and if the amount of the claim does not exceed 75 % of the value of the landed property which secures payment thereof; or
(3)  if the hypothec is a first hypothec and if the amount by which the value of the landed property securing the payment of the claim exceeds 75 % of such value, is guaranteed or insured by Québec, Canada, the Canada Mortgage and Housing Corporation, the Société d’habitation du Québec or a hypothecary insurance policy issued by an insurance company holding a licence issued under this Act.
It may also grant a loan that causes the amount of the hypothec on an immovable referred to in subparagraph 2 of the first paragraph to exceed 75 % of the value of the immovable if the corresponding hypothecary claim is endangered or if the immovable has been repossessed.
1985, c. 17, s. 6; 1996, c. 63, s. 30, s. 81; 1999, c. 40, s. 33.
93.252. A guarantee fund may, to secure payment in whole or in part of any sum payable to it, acquire the landed property securing the payment thereof. However, the guarantee fund shall dispose of the landed property so acquired within seven years unless the Inspector General grants it an extension.
1985, c. 17, s. 6; 1996, c. 63, s. 81; 1999, c. 40, s. 33.
93.253. A guarantee fund may make deposits with a bank or a registered institution within the meaning of the Deposit Insurance Act (chapter A-26).
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.254. No guarantee fund may, in exercising the powers conferred on it by this division,
(1)  invest more than 25% of its assets in investments contemplated in sections 93.249 and 93.250;
(2)  acquire more than 5% of the shares of the same legal person.
Furthermore, no guarantee fund may acquire shares, bonds or other evidences of indebtedness of a legal person which has failed to pay the prescribed dividends on its shares or the interest on its bonds or other evidences of indebtedness except in the case of preferred shares issued by one of its members.
1985, c. 17, s. 6; 1996, c. 63, s. 80, s. 81.
DIVISION IX
BOOKS, AUDIT AND ANNUAL REPORT
1985, c. 17, s. 6.
93.255. A guarantee fund shall keep and maintain at its head office
(1)  its articles and by-laws;
(2)  the minutes of the meetings of the board of directors and of the executive committee, where such is the case; and
(3)  a register containing the surnames, names, addresses and occupations of the directors.
The members of the guarantee fund may consult the articles and by-laws of the guarantee fund and the register at the head office of the guarantee fund during regular business hours.
1985, c. 17, s. 6; 1996, c. 63, s. 81, s. 84, s. 88.
93.256. Every guarantee fund shall keep the books recording the nature of its operations in accordance with generally recognized accounting principles.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.257. The fiscal year of a guarantee fund shall correspond to that of the federation to which it is related.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.258. Every guarantee fund shall cause its books and accounts to be audited every year by an external auditor.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.259. If a guarantee fund fails to cause its books and accounts to be audited, the Inspector General may appoint an auditor and fix the remuneration that the guarantee fund is required to pay to the appointed auditor.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.260. The auditor shall have access to all the books, registers, accounts and other records of the guarantee fund, and every person having the custody thereof shall facilitate his examination of them.
He may also require from the directors and employees the information and explanations necessary for the carrying out of his duties.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.261. The accounts of a guarantee fund shall be cut off at the close of the fiscal year and the board of directors shall prepare, within the two ensuing months, an annual report showing, in particular,
(1)  the participation of each member in the capital;
(2)  the surnames, names, addresses and occupations of the directors;
(3)  the balance sheet, the income statement, the statement of changes in financial position and the statement of surplus;
(4)  the auditor’s report.
The guarantee fund shall, within 90 days after the close of its fiscal year, transmit to its members a copy of the annual report.
1985, c. 17, s. 6; 1996, c. 63, s. 81, s. 88.
93.262. The guarantee fund shall, within 90 days after the close of its fiscal year, transmit a copy of its annual report to the federation to which it is related.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
DIVISION X
STATEMENT OF OPERATIONS AND INSPECTIONS
1985, c. 17, s. 6.
93.263. Every guarantee fund shall, before 1 March each year, file with the Inspector General, in such form as he may determine, a statement of operations for the last fiscal year.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.264. The statement of operations shall show the financial position of the guarantee fund and include the information and documents which must accompany the annual report and any information required by the Inspector General.
The statement of operations shall also contain any other information required by the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P-45) for the annual updating of information relating to a registered legal person.
1985, c. 17, s. 6; 1993, c. 48, s. 143; 1996, c. 63, s. 81.
93.265. The statement of operations shall be certified under oath by at least two directors of the guarantee fund and be accompanied with the report of the auditor to the Inspector General indicating the scope of his audit and stating his opinion on the financial position of the guarantee fund.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.266. The Inspector General shall inspect or cause to be inspected the affairs of a guarantee fund at least once every three years or whenever he considers such an inspection necessary for the protection of the members.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.267. Every person who inspects the affairs of a guarantee fund shall, at any reasonable time, have access to its books, registers, accounts and other records, and every person having the custody thereof shall facilitate his examination of them. The person may make copies of all the documents.
He may also require from the directors and the employees the information and explanations necessary for the carrying out of his duties.
1985, c. 17, s. 6; 1986, c. 95, s. 26; 1996, c. 63, s. 81.
93.268. The Inspector General may, at all times, require the filing by the guarantee fund of any report or statement.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
DIVISION XI
PROVISIONAL ADMINISTRATION AND WINDING-UP
1985, c. 17, s. 6.
93.269. The Inspector General or, if he is absent or unable to act, or at his request, any person designated by the Minister may, following an inspection made in accordance with this Act or the filing of any report or statement or pursuant to the request of one-third of the members of a guarantee fund, provisionally assume the administration thereof for a period of seven working days if he has reason to believe
(1)  that the assets have been misappropriated or if he finds that there is an inexplicable deficiency in the assets;
(2)  that the assets are insufficient to provide effective protection of the members;
(3)  that the capital has been broken into otherwise than in the case of the winding-up or dissolution of a member;
(4)  that there has been a grievous offence, especially malfeasance or breach of trust by one or more directors, or that the board has been seriously remiss in the performance of the obligations imposed on it by this Act or engages in administrative practices which endanger the rights of the members.
The provisional administrator may authorize the persons he designates to exercise such duties as he may determine.
1985, c. 17, s. 6; 1996, c. 63, s. 31, s. 81.
93.270. The provisional administration of a guarantee fund shall entail the provisional administration of the federation to which it is related and that of its investment fund.
The provisional administrator of the guarantee fund shall assume the administration of the federation and that of its investment fund.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.271. After receiving the report provided for in section 386, the Government may, in respect of both the guarantee fund and the federation, decide to
(1)  cancel the suspension of the directors;
(2)  order the board of directors of the federation to replace the directors of the guarantee fund;
(3)  order the winding-up, on the conditions it determines, and appoint a liquidator;
(4)  order the provisional administrator to prolong his administration for the period determined by the Minister;
(5)  terminate the provisional administration.
Every order made under this section shall be the object of a notice transmitted to the Inspector General, who shall deposit it in the register.
1985, c. 17, s. 6; 1993, c. 48, s. 144; 1996, c. 63, s. 81, s. 82.
93.272. The members of a guarantee fund shall be notified by the liquidator, within 10 days, of the Government’s decision to order the winding-up of the guarantee fund.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
93.273. The winding-up of a guarantee fund shall entail the winding-up of the federation to which it is related and of the investment fund of that federation.
The liquidator of the guarantee fund shall assume the winding-up of the federation to which it is related as well as the winding-up of the investment fund of that federation and according to the same rules.
1985, c. 17, s. 6; 1996, c. 63, s. 81.
CHAPTER IV
CONSTITUTION AND ADMINISTRATION OF MUTUAL BENEFIT ASSOCIATIONS
1985, c. 17, s. 7; 1999, c. 40, s. 33.
DIVISION I
CONSTITUTION
1985, c. 17, s. 8; 1999, c. 40, s. 33.
94. No legal person shall be constituted in Québec to transact mutual benefit business except under this division.
1974, c. 70, s. 94; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
95. The Minister may, after obtaining the advice of the Inspector General, authorize the constitution of a mutual benefit association.
1974, c. 70, s. 95; 1982, c. 52, s. 80; 1985, c. 17, s. 9; 1999, c. 40, s. 33.
96. A minimum of 500 persons are required to sign a memorandum of constitution of a mutual benefit association, in duplicate and before witnesses.
1974, c. 70, s. 96; 1985, c. 17, s. 9; 1999, c. 40, s. 33.
97. (Repealed).
1974, c. 70, s. 97; 1985, c. 17, s. 10.
98. The memorandum of constitution shall give all the information prescribed by regulation of the Government and specify the name of the contemplated association, the place of its head office, the surnames, names, occupations and residences of the signatories and of the person provisionally designated as secretary for the filing of copies of the memorandum with the Inspector General and the calling of the organizing meeting provided for in section 104, the mode and procedure of calling such meeting, and the fields of activity in which it is to provide coverage.
The memorandum shall be accompanied with the documents prescribed by regulation of the Government.
In addition, the memorandum shall be accompanied with specifications regarding the tariffs to be applied and the indemnities to be paid, and such specifications shall, moreover, be certified to conform to actuarial principles in a certificate bearing the signature of an actuary.
1974, c. 70, s. 98; 1982, c. 52, s. 79; 1985, c. 17, s. 11; 1996, c. 63, s. 83, s. 88; 1999, c. 40, s. 33.
99. The memorandum may not be presented to the Inspector General unless the provisional secretary has signed and sent a notice to the Inspector General that the declarers intend to be constituted, accompanied with the fees prescribed by regulation of the Government in accordance with the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P‐45). The Inspector General shall deposit the notice in the register. The application must be presented within six months of the date of such deposit.
The notice shall contain the particulars provided for in section 98.
1974, c. 70, s. 99; 1982, c. 52, s. 79; 1993, c. 48, s. 145; 1999, c. 40, s. 33.
100. The memorandum shall not be presented unless the sum of $20 000 is deposited in the hands of the Minister of Finance in securities acceptable as a deposit for the purposes of this act, such sum to be used for such purpose if the application of the association for a licence is accepted.
1974, c. 70, s. 100.
100.1. The Inspector General may assign to the association a name different from the name proposed by the applicants if the name is not in conformity with the requirements of sections 106, 107 and 108 and the requirements of any of paragraphs 1 to 6 of section 93.22.
1993, c. 48, s. 146; 1996, c. 63, s. 83.
101. The two copies of the memorandum must be sent to the Inspector General. If the constitution of the association is authorized, the Inspector General shall so indicate by affixing his signature to each copy.
1974, c. 70, s. 101; 1982, c. 52, s. 79; 1985, c. 17, s. 12; 1993, c. 48, s. 147; 1999, c. 40, s. 33.
102. The Inspector General shall deposit one copy of the declaration in the register and return the other copy to the provisional secretary of the association.
From the date of deposit, the mutual benefit association shall be a legal person.
1974, c. 70, s. 102; 1975, c. 76, s. 11; 1977, c. 5, s. 14; 1981, c. 9, s. 24; 1982, c. 52, s. 66; 1985, c. 17, s. 13; 1993, c. 48, s. 148; 1996, c. 63, s. 80.
103. Deposit in the register is proof of the constitution and existence of the association.
1974, c. 70, s. 103; 1985, c. 17, s. 14; 1993, c. 48, s. 149; 1999, c. 40, s. 33.
DIVISION II
ORGANIZING MEETING
104. The first or organizing meeting of the association must be held within sixty days of the notice provided for in the second paragraph of section 101. The provisional secretary shall call the founders to the meeting in the manner determined in the memorandum of constitution.
If the provisional secretary is absent or unable to act, the meeting may be called by two founders.
1974, c. 70, s. 104; 1999, c. 40, s. 33.
105. The order of business at the organizing meeting shall be as follows:
(a)  election of the chairman and the secretary of the meeting;
(b)  reading of the memorandum of constitution and of the notice provided for in section 101;
(c)  consideration and adoption of the internal by-laws;
(d)  election of the members of the board of directors;
(e)  appointment of an auditor;
(f)  opening of the register of policies issued and of undertakings of subscription by future members.
1974, c. 70, s. 105; 1999, c. 40, s. 33.
DIVISION III
NAME
1996, c. 63, s. 83.
106. The name of a mutual benefit association must be in conformity with section 93.22.
It must always include the words “mutual benefit association”.
Paragraphs 7 and 8 of section 93.22 do not apply to legal persons constituted before 20 October 1976.
1974, c. 70, s. 106; 1985, c. 17, s. 15; 1993, c. 48, s. 150; 1996, c. 63, s. 80, s. 83; 1999, c. 40, s. 33.
107. Only mutual benefit associations may use in their names or in carrying on their activities the words “mutual benefit association”, except to the extent determined by regulation of the Government.
1974, c. 70, s. 107; 1985, c. 17, s. 15; 1996, c. 63, s. 83.
108. (Repealed).
1974, c. 70, s. 108; 1985, c. 17, s. 15; 1996, c. 63, s. 33.
109. After requesting the advice of the Inspector General, the Minister may change any name in accordance with sections 93.25 to 93.27.4, adapted as required.
1974, c. 70, s. 109; 1982, c. 52, s. 79, s. 80; 1983, c. 54, s. 11; 1993, c. 48, s. 151; 1996, c. 63, s. 83.
DIVISION IV
MEMBERS
110. (Repealed).
1974, c. 70, s. 110; 1985, c. 17, s. 16.
111. The members of a mutual benefit association are the founders and any other person who:
(a)  signs an application for membership;
(b)  subscribes to the premiums, assessments or gifts provided for by the by-laws of the association; and
(c)  undertakes to comply with the by-laws of the association.
1974, c. 70, s. 111.
112. (Repealed).
1974, c. 70, s. 112; 1985, c. 17, s. 16.
DIVISION V
GENERAL MEETING
113. The members of the association shall constitute its general meeting when convened at an annual or special meeting.
1974, c. 70, s. 113.
114. At a general meeting no member shall be entitled to more than one vote.
Such vote may be given by a proxy holding a power of attorney whether or not he is a member of the association.
1974, c. 70, s. 114.
115. To be valid, the power of attorney must have been given within the three months preceding the meeting and presented to the secretary at least ten days before such meeting.
The power of attorney shall be valid only for the meeting contemplated and any resumptions of such meeting.
1974, c. 70, s. 115.
116. Any power of attorney may be revoked before the contemplated meeting is held.
1974, c. 70, s. 116.
117. Every member whose assessments are in arrears is forbidden to vote.
1974, c. 70, s. 117.
118. (Repealed).
1974, c. 70, s. 118; 1990, c. 86, s. 17.
119. Unless otherwise provided by by-law, 25 members in good standing shall be a quorum.
There is no quorum if more than one-half of the members or proxies present are directors, other mandataries or employees of the association.
1974, c. 70, s. 119; 1990, c. 86, s. 18.
120. The general meeting may amend the internal by-laws.
1974, c. 70, s. 120.
121. The general meeting may, by special by-law, change the head office or the name of the association.
Such by-law shall not come into force until the Inspector General approves it and deposits a notice to that effect in the register.
1974, c. 70, s. 121; 1982, c. 52, s. 67; 1993, c. 48, s. 152; 1996, c. 63, s. 83.
122. Decisions at a general meeting are taken by a majority vote of the members or delegates present, the chairman having a casting vote.
However, a special by-law must, to be adopted, receive the approval of at least two-thirds of the votes.
1974, c. 70, s. 122.
123. The members must meet for the annual meeting before 31 March each year to approve the annual report, elect the directors, ratify the remuneration fixed for the secretary, appoint the auditor and pronounce upon the assessments and any other matter concerning the association.
1974, c. 70, s. 123.
124. The board of directors as well as the chairman or the vice-chairman may order the holding of a special meeting when they consider it expedient.
Furthermore, the board of directors must order the holding of a special meeting if one-fifth of the members so request.
1974, c. 70, s. 124.
125. Every notice calling a general meeting shall be given at least seven days before it is held, by regular mail, or, at least fifteen days before it is held, in a daily newspaper circulating in the locality where the association has its head office.
The notice must indicate the place, date and time of the meeting and, where such is the case, give a summary of any amendment proposed to the by-laws of the association.
The association shall also indicate the date, time and place of its annual meeting in prominent and conspicuous type on all premium or assessment notices it sends its members.
1974, c. 70, s. 125; 1985, c. 17, s. 17.
126. Any meeting requested in accordance with the second paragraph of section 124 that has not been held within twenty-one days of the request may be called by two signatories thereof.
1974, c. 70, s. 126.
127. A special meeting may make decisions only in regard to the matters mentioned in the notice calling the meeting.
Any special meeting called for that purpose may remove a director from office provided that the prior approval of the Inspector General has been received.
1974, c. 70, s. 127; 1982, c. 52, s. 80.
DIVISION VI
BOARD OF DIRECTORS
128. The board of directors of any association shall be composed of five directors chosen from among the members at the annual meeting.
The by-laws, however, may provide for a greater number of directors, not to exceed fifteen.
1974, c. 70, s. 128.
129. (Repealed).
1974, c. 70, s. 129; 1985, c. 17, s. 18.
130. The following persons shall not be directors of the association:
(1)  employees of the association;
(2)  insurance representatives, claims adjusters and directors or officers of another legal person dealing in a similar capacity with the association.
1974, c. 70, s. 130; 1990, c. 86, s. 19; 1990, c. 86, s. 62; 1996, c. 63, s. 80; 1998, c. 37, s. 507.
131. The directors shall remain in office until their successors are elected and they shall be re-eligible.
1974, c. 70, s. 131.
132. The term of office of the directors is one year; it may be extended to two years or three years by a special by-law. In that case, a certain number of directors shall be replaced each year in the order of rotation the by-law shall fix. The by-law must provide for replacement of as constant a number of directors as possible each year.
1974, c. 70, s. 132.
133. No member shall be eligible for the office of director while any assessment he owes the association remains unpaid.
1974, c. 70, s. 133.
134. The board of directors shall manage the affairs of the association and shall exercise, in accordance with the by-laws, the powers generally or specially delegated to it by the general meeting.
1974, c. 70, s. 134.
135. The board of directors shall in particular:
(a)  require of any person entrusted with the management or safekeeping of funds of the association a deposit of an amount of at least $5,000 and determine the nature of it;
(b)  fix the insurance rates or, as the case may be, the amount of assessments and the amounts for which insurance may be contracted or benefits granted;
(c)  at the annual meeting, give an account of its operations and submit the annual report;
(d)  forward a certified copy of the annual statement according to the requirements of section 305.
1974, c. 70, s. 135.
136. An absolute majority of the directors shall constitute a quorum of the board of directors.
Decisions of the board of directors shall be taken by a majority vote of the directors present. The chairman shall have a casting vote.
1974, c. 70, s. 136.
137. The board of directors shall meet at least once quarterly and whenever convened in writing by the president, the vice-president or two directors. Notice of this meeting must be given to the directors at least two days before it is to be held or within the time provided for by by-law.
The meeting shall be held at the place indicated in the notice of meeting or specified at adjournment.
1974, c. 70, s. 137; 1999, c. 40, s. 33.
138. In accordance with the by-laws of the association, the directors may be remunerated and are entitled to the reimbursement of justifiable expenses incurred by them in the performance of their duties.
1974, c. 70, s. 138; 1979, c. 33, s. 4.
139. Vacancies occurring on the board of directors during term shall not entail elections, but the directors shall provisionally appoint qualified members to fill the vacancies; however, where a vacancy results in the want of a quorum, one director or two members may order the secretary to call a special meeting of the members to fill it.
1974, c. 70, s. 139.
DIVISION VII
MANAGEMENT
140. At its first meeting following the organizing meeting or annual meeting, the board of directors shall choose a chairman and a vice-chairman from among the directors. Provided there is a quorum, such meeting may be held without prior notice, during or immediately after the organizing meeting or annual meeting.
1974, c. 70, s. 140.
141. The chairman and vice-chairman of the board of directors shall be the president and vice-president respectively of the association.
The vice-chairman shall exercise the duties of the chairman if the latter is absent or unable to act.
1974, c. 70, s. 141.
142. The board of directors shall appoint a secretary and, subject to section 123, shall fix his remuneration.
1974, c. 70, s. 142.
143. The by-laws shall determine the powers and duties of the president, the vice-president, the secretary and any other staff member of the association.
1974, c. 70, s. 143.
DIVISION VIII
REGISTERS AND CONTRACTS
144. The board of directors may designate the persons authorized to sign any contract, policy or other document on behalf of the association.
1974, c. 70, s. 144.
145. Each association must keep at its head office:
(a)  a register containing its by-laws and the minutes of the general meetings and meetings of the board of directors;
(b)  a register of all the policies issued by the association including the surname, name, address and age of each member;
(c)  (subparagraph replaced).
The members of the association may examine the registers at the head office of the association on working days during regular office hours.
1974, c. 70, s. 145; 1985, c. 17, s. 19; 1996, c. 63, s. 88.
DIVISION IX
Repealed, 1985, c. 17, s. 20.
1985, c. 17, s. 20.
146. (Repealed).
1974, c. 70, s. 146; 1979, c. 33, s. 5; 1985, c. 17, s. 20.
147. (Repealed).
1974, c. 70, s. 147; 1985, c. 17, s. 20.
148. (Repealed).
1974, c. 70, s. 148; 1985, c. 17, s. 20.
149. (Repealed).
1974, c. 70, s. 149; 1979, c. 33, s. 6; 1985, c. 17, s. 20.
150. (Repealed).
1974, c. 70, s. 150; 1985, c. 17, s. 20.
151. (Repealed).
1974, c. 70, s. 151; 1985, c. 17, s. 20.
152. (Repealed).
1974, c. 70, s. 152; 1985, c. 17, s. 20.
153. (Repealed).
1974, c. 70, s. 153; 1985, c. 17, s. 20.
154. (Repealed).
1974, c. 70, s. 154; 1985, c. 17, s. 20.
155. (Repealed).
1974, c. 70, s. 155; 1985, c. 17, s. 20.
156. (Repealed).
1974, c. 70, s. 156; 1985, c. 17, s. 20.
157. (Repealed).
1974, c. 70, s. 157; 1985, c. 17, s. 20.
158. (Repealed).
1974, c. 70, s. 158; 1985, c. 17, s. 20.
159. (Repealed).
1974, c. 70, s. 159; 1985, c. 17, s. 20.
160. (Repealed).
1974, c. 70, s. 160; 1985, c. 17, s. 20.
161. (Repealed).
1974, c. 70, s. 161; 1985, c. 17, s. 20.
162. (Repealed).
1974, c. 70, s. 162; 1985, c. 17, s. 20.
163. (Repealed).
1974, c. 70, s. 163; 1985, c. 17, s. 20.
DIVISION X
OPERATION OF A MUTUAL BENEFIT ASSOCIATION
164. In this division “mutual benefit association” also means any legal person transacting mutual benefits and constituted under an Act other than an Act of Québec, but only in respect of its activities in Québec.
1974, c. 70, s. 164; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
165. Amounts paid or benefits conferred by a mutual benefit association must not exceed the amount levied for that purpose less the administrative costs incurred in that respect according to the standards prescribed by the regulations made by the Government, and must also exceed the amounts authorized by the regulations for the classes of benefits contemplated.
1974, c. 70, s. 165.
166. Every association shall set up its accounts so that each kind of benefit or indemnity paid to the members may be separately managed and be the object of a separate fund.
1974, c. 70, s. 166.
167. In addition to the benefit or indemnity funds, a fund for general expenditures shall be established; all such funds must be self-sufficient by way of premiums or assessments collected for that purpose without ever drawing from other funds.
1974, c. 70, s. 167; 1979, c. 33, s. 7.
168. Whenever a separate fund ceases to be adequate to the purposes for which it was established, the association may liquidate it.
1974, c. 70, s. 168.
169. The by-laws of the association may allow its members to subscribe to any, several or all of the special funds contemplated by section 166, and subscribe to any given fund without thereby being deprived of their vested rights.
1974, c. 70, s. 169.
170. With respect to and between the members, each fund is liable for only its own debts, except in the case of a general winding-up, in which case all the funds are liable for the general debts after payment by each fund of its own debts.
1974, c. 70, s. 170.
171. The association may, with prior authorization of the Inspector General, pay into a separate fund any amount from another fund, or return to the fund from which it came any amount that has been so paid.
1974, c. 70, s. 171; 1982, c. 52, s. 80.
172. The directors of the association are held jointly and severally liable for any payment made in contravention of section 165. If the association fails to take against them the necessary measures, any member of the association is deemed to have a sufficient interest to sue, on behalf and at the expense of the association, for reimbursement of the amounts so paid.
1974, c. 70, s. 172.
173. The fiscal year of the associations corresponds to the calendar year.
1974, c. 70, s. 173.
DIVISION XI
ANNULMENT OF CHARTER
174. Subject to the other applicable provisions, the charter of a mutual association may be annulled in accordance with the formalities provided in section 41, after
(a)  two years of non-user dating from constitution;
(b)  one year of non-user following a period of activity;
(c)  its licence has been suspended for one year or has remained cancelled for three months, without issue of a new licence.
1974, c. 70, s. 174; 1993, c. 48, s. 153; 1999, c. 40, s. 33.
CHAPTER IV.1
PROFESSIONAL ORDER
1987, c. 54, s. 2; 1994, c. 40, s. 457.
DIVISION I
AUTHORIZATION TO INSURE THE MEMBERS OF THE ORDER
1987, c. 54, s. 2; 1994, c. 40, s. 457.
174.1. A professional order governed by the Professional Code (chapter C-26) may, if authorized by the Minister and if the holder of a licence issued by the Inspector General, insure its members in respect of professional liability. Such insurance shall be valid whether claims are brought against the insured personally or against a partnership of which the insured is or was a member.
1987, c. 54, s. 2; 1994, c. 40, s. 457; 1996, c. 63, s. 35.
174.2. To obtain the Minister’s authorization, the professional order shall transmit to the Inspector General an application signed by its president and stating
(1)  that a by-law was passed to impose on its members, or certain classes of them, the obligation to contribute to a professional liability insurance fund;
(2)  that it has passed a resolution for the creation of such an insurance fund;
(3)  that the sums which will be payable by its members will be sufficient to provide for the financing of its insurance transactions and to maintain a surplus of assets over liabilities equal to or greater than the minimum amount required pursuant to section 275.
1987, c. 54, s. 2; 1994, c. 40, s. 457.
174.3. The application must be accompanied with the following documents:
(1)  a development plan supported by a budgeted statement of the balance sheet, operating account and surplus account over a period of not less than three years, showing the calculation assumptions used;
(2)  a plan of operation stating the name and address of the administrator, if any, who will be entrusted with the administration of the insurance fund;
(3)  a certified true copy of the resolution of the Bureau of the professional order creating the insurance fund.
1987, c. 54, s. 2; 1994, c. 40, s. 457.
174.4. The Inspector General may require any additional information and document he deems necessary for the consideration of the application.
1987, c. 54, s. 2.
174.5. The Minister may, if he considers it expedient and after obtaining the opinion of the Inspector General, grant to the professional order the authorization to insure its members in respect of professional liability.
1987, c. 54, s. 2; 1994, c. 40, s. 457.
DIVISION II
ADMINISTRATION OF THE INSURANCE FUND
1987, c. 54, s. 2.
174.6. The insurance fund shall be administered by a board of directors consisting of not less than 5 members appointed by the Bureau of the professional order.
A reference to the directors and officers of an insurer is, for the purposes of the application of this Act and the regulations thereunder to a professional order, a reference to the directors and officers of its insurance fund. A reference to the officers of an insurer is also a reference to the administrators of an insurance fund and, where the administrators are legal persons, to the directors thereof.
1987, c. 54, s. 2; 1990, c. 86, s. 20; 1994, c. 40, s. 457; 1996, c. 63, s. 80.
174.7. A member of the board of directors of the insurance fund of a professional order need not be a member of that professional order.
1987, c. 54, s. 2; 1994, c. 40, s. 457.
174.8. The following persons are disqualified from office as director of the insurance fund:
(1)  an insurance representative, a claims adjuster and a director or an officer of another legal person dealing as such with the professional order;
(2)  an undischarged bankrupt;
(3)  a minor;
(4)  a person of full age under protective supervision or who has been totally or partially deprived of the right to exercise his civil rights by a court of another jurisdiction;
(5)  an employee of a professional order whose main duty is concerned with the administration of the insurance fund;
(6)  a director, officer or employee of the administrator entrusted with the day-to-day operation of the fund.
1987, c. 54, s. 2; 1989, c. 54, s. 156; 1990, c. 86, s. 21; 1989, c. 48, s. 230; 1994, c. 40, s. 457; 1996, c. 63, s. 80, s. 87; 1998, c. 37, s. 508.
174.9. The total remuneration that may be paid to the directors for a given period must be determined by the Bureau of the professional order. No director may receive any remuneration in his capacity as such before a resolution to that effect is passed.
1987, c. 54, s. 2; 1994, c. 40, s. 457.
174.10. The professional order shall assume the defence of its directors who are prosecuted by a third person for an act done in the performance of their duties and shall pay any damages awarded as compensation for any injury resulting from that act, unless they have committed a grievous offence or a personal offence separable from their duties.
Notwithstanding the foregoing, in a penal or criminal proceeding the professional order shall assume only the payment of the expenses of its directors if they had reasonable grounds to believe that their conduct was in conformity with the law or if they have been freed or acquitted.
The professional order shall assume the expenses of its directors if, having prosecuted them for an act done in the performance of their duties, it loses its case and the court so decides.
If the professional order wins its case only in part, the court may determine the amount of the expenses it shall assume.
1987, c. 54, s. 2; 1994, c. 40, s. 457; 1996, c. 63, s. 86.
174.11. The board of directors of the insurance fund may entrust an administrator with the current operations of the insurance fund of the professional order, which include the collection of premiums, the issuance of policies, the payment of indemnities, the ceded reinsurance and the investment of the assets of the insurance fund.
1987, c. 54, s. 2; 1994, c. 40, s. 457.
DIVISION III
ASSETS OF THE INSURANCE FUND
1987, c. 54, s. 2.
174.12. The insurance fund shall be made up of the premiums and the other sums fixed pursuant to subparagraph p of the first paragraph of section 86 of the Professional Code (chapter C-26), and of the income generated thereby.
1987, c. 54, s. 2.
174.13. The assets of the insurance fund shall constitute a patrimony separate from the other assets of the professional order and shall be appropriated exclusively to its professional liability insurance transactions.
The assets of the fund shall be reported as separate items in the books, registers and accounts of the professional order.
1987, c. 54, s. 2; 1994, c. 40, s. 457.
174.14. The fiscal year of the insurance fund is the calendar year.
1987, c. 54, s. 2.
174.15. No creditor of the professional order has any right in the assets of the insurance fund unless his claim results from the professional liability insurance transactions of the order.
Similarly, no creditor of the insurance fund has any right in the other assets of the professional order.
1987, c. 54, s. 2; 1994, c. 40, s. 457.
174.16. All costs relating to the operations of the insurance fund shall be paid out of its assets.
1987, c. 54, s. 2.
174.17. If the Inspector General is of opinion that the sums which the members or certain classes of members of a professional order are required to pay into its insurance fund are no longer sufficient, in view of its obligations, to maintain an excess amount of assets over liabilities equal to or greater than the minimum amount required under section 275, he may order the professional order, after giving it the opportunity to present observations, to increase such sums up to the amount and for the period he determines, so as to cover operating costs of the insurance fund.
1987, c. 54, s. 2; 1994, c. 40, s. 457; 1997, c. 43, s. 77.
174.18. If the professional order fails to comply with the order of the Inspector General, he may apply by motion to a judge of the Superior Court for an injunction enjoining it to comply.
The motion for injunction institutes the proceedings.
The procedure provided in the Code of Civil Procedure (chapter C-25) applies. However, the Inspector General is not required to give security.
1987, c. 54, s. 2; 1994, c. 40, s. 457.
CHAPTER V
AMALGAMATION AND CONVERSION
DIVISION I
PREREQUISITES
175. The following may amalgamate with an insurance company constituted under this Act:
(a)  any other company so constituted;
(b)  any insurance company constituted by an Act of Québec;
(c)  any insurance company constituted under Division I of the Insurance Act (Revised Statutes, 1964, chapter 295) replaced by chapter 70 of the statutes of 1974.
1974, c. 70, s. 175; 1999, c. 40, s. 33.
176. Every insurance company contemplated in paragraphs b and c of section 175 may be converted into an insurance company governed by this act.
Several insurance companies contemplated in paragraphs b and c of section 175 may also amalgamate if they are at the same time converted into an insurance company governed by this act.
In no case, however, may a mutual life-insurance company avail itself of the provisions of this chapter for converting into a capital stock company.
1974, c. 70, s. 176; 1984, c. 22, s. 35.
177. An insurance company resulting from amalgamation or conversion shall fulfil the same conditions as those prescribed by this Act for constitution of an insurance company.
1974, c. 70, s. 177; 1999, c. 40, s. 33.
178. Mutual insurance associations may amalgamate. The same applies to mutual damage-insurance companies.
1974, c. 70, s. 178; 1985, c. 17, s. 21.
179. Mutual insurance associations may be converted into mutual damage-insurance companies and conversely.
1974, c. 70, s. 179; 1985, c. 17, s. 21.
180. (Repealed).
1974, c. 70, s. 180; 1985, c. 17, s. 22.
181. The following may amalgamate with a mutual benefit association governed by this Act:
(a)  any other association so constituted;
(b)  any mutual benefit association constituted under Division VIII of the Insurance Act (Revised Statutes, 1964, chapter 295) replaced by chapter 70 of the statutes of 1974;
(c)  any other legal person transacting mutual benefits.
1974, c. 70, s. 181; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
182. Every mutual benefit association contemplated in paragraphs b and c of section 181 may also be converted into a mutual benefit association governed by this Act.
1974, c. 70, s. 182.
183. Several mutual benefit associations contemplated in paragraphs b and c of section 181 may also amalgamate if they are converted at the same time into a mutual benefit association governed by this Act.
1974, c. 70, s. 183.
184. Every mutual benefit association resulting from an amalgamation or conversion must comply with the conditions of constitution prescribed by this act for mutual benefit associations.
1974, c. 70, s. 184; 1999, c. 40, s. 33.
DIVISION II
AMALGAMATION
185. Legal persons amalgamating under this Act may make the contracts and agreements necessary for that purpose.
1974, c. 70, s. 185; 1996, c. 63, s. 80.
186. Legal persons proposing to amalgamate shall draw up an agreement in duplicate prescribing:
(a)  the conditions of the amalgamation and the mode of carrying it out;
(b)  the name of the legal person resulting from the amalgamation;
(c)  the head office of the legal person resulting from the amalgamation;
(d)  the classes of insurance to be transacted;
(e)  the names, occupations and domiciles of its first directors;
(f)  the mode of election of its directors;
(g)  in the case of joint stock companies, the number of shares constituting the capital of each amalgamating company, the par value of each share, and the mode of conversion of the capital stock;
(g.1)  in the case of joint stock companies, the name, occupation and place of residence of every natural person who, from amalgamation, would hold, alone or with his associates within the meaning of section 49, 10% or more of the voting rights attached to the shares in the company, and the name and place of constitution or continuance of every legal person that, from amalgamation, would hold, alone or with its associates within the meaning of section 49, 10% or more of the voting rights attached to the shares in the company, and the name of the shareholder who holds a controlling interest in the legal person;
(h)  in the case of mutual insurance companies and mutual benefit associations, the number of members of each and the amounts and kind of insurance they have contracted with each or, as the case may be, the payments or other guaranteed benefits;
(h.1)  in the case of mutual insurance associations, the name of the federation with which the mutual insurance association resulting from the amalgamation shall be affiliated, the number of common shares subscribed in each amalgamating mutual insurance association, the price of each share and the modalities of their conversion into common shares of the mutual insurance association resulting from the amalgamation;
(i)  any other measure necessary to the amalgamation and to the administration and operation of the new legal person.
Each interested legal person shall call its general meeting and submit the agreement to it for approval.
1974, c. 70, s. 186; 1985, c. 17, s. 23; 1990, c. 86, s. 22; 1996, c. 63, s. 80, s. 83, s. 88; 1999, c. 40, s. 33.
187. The agreement must be approved by the general meeting of each party, by a two-thirds majority of the votes recorded, and the secretaries of the legal persons shall thereupon certify such approval on the duplicates of the agreement.
In the case of a company, the majority required by the first paragraph must be expressed in terms of the value of the shares represented by the shareholders present.
1974, c. 70, s. 187; 1996, c. 63, s. 80.
188. A notice of the agreement, accompanied with the fees prescribed by regulation of the Government under the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P-45), shall be transmitted to the Inspector General, who shall deposit it in the register. The notice shall be published in a daily newspaper circulating in every locality in which the head office of any of the legal persons is situated, for four consecutive weeks.
1974, c. 70, s. 188; 1993, c. 48, s. 154; 1996, c. 63, s. 80.
189. The amalgamating legal persons shall then, by a joint petition, request the Minister to confirm the agreement and, in the case of companies, to authorize the issuance of letters patent for such purpose.
The petition must be accompanied with the two copies of the amalgamation agreement.
1974, c. 70, s. 189; 1984, c. 22, s. 36; 1993, c. 48, s. 155; 1996, c. 63, s. 80.
190. The Minister shall accept the petition only after obtaining the advice of the Inspector General, and if he considers it not contrary to the interests of the insured or the public.
1974, c. 70, s. 190; 1982, c. 52, s. 80; 1984, c. 22, s. 37.
191. If the Minister accepts the petition, the Inspector General shall confirm the agreement by letters patent in the case of a company or, in other cases, by simply affixing his signature to the duplicates of the amalgamation agreement.
The Inspector General shall deposit in the register the letters patent or one copy of the amalgamation agreement, as the case may be.
1974, c. 70, s. 191; 1982, c. 52, s. 79; 1984, c. 22, s. 38; 1993, c. 48, s. 156.
192. In the case of mutual associations, one of the copies of the amalgamation agreement shall be sent after the deposit in the register referred to in section 191 to the secretary of the legal person formed by the amalgamation, who shall keep it in the records of the latter.
Upon the date of deposit in the register referred to in section 191 or, in the case of companies, upon the date of the letters patent but subject to their deposit in the register, the amalgamation shall be effected and the legal persons subject thereto shall form one legal person, recognized by the name established by the agreement.
1974, c. 70, s. 192; 1975, c. 76, s. 11; 1977, c. 5, s. 14; 1981, c. 9, s. 24; 1982, c. 52, s. 68; 1993, c. 48, s. 157; 1996, c. 63, s. 80, s. 83.
193. The legal person resulting from the amalgamation shall enjoy all the rights and assume all the obligations of the original legal persons and suits to which they are party may be continued by or against it without continuance of suit.
1974, c. 70, s. 193; 1996, c. 63, s. 80.
DIVISION III
CONVERSION
194. A legal person may be converted in accordance with this Act into another legal person by by-law of the legal person seeking the conversion.
Such by-law shall set forth:
(a)  the name of the new legal person;
(b)  the head office of the new legal person;
(c)  the classes of insurance to be transacted;
(d)  the names, occupations and domiciles of its first directors;
(e)  the mode of election of subsequent directors;
(f)  if the new legal person is to be a joint stock company, the number of shares constituting its capital, the par value of each share, where such is the case, and the mode of conversion of the capital stock;
(f.1)  where the new legal person is to be a joint stock company, the name, occupation and place of residence of every natural person who, from conversion, would hold, alone or with his associates within the meaning of section 49, 10 % or more of the voting rights attached to the shares in the company, and the name and place of constitution or continuance of every legal person that, from conversion, would hold, alone or with its associates within the meaning of section 49, 10 % or more of the voting rights attached to the shares in the company, and the name of the shareholder who holds a controlling interest in the legal person;
(g)  if the new legal person is to be a mutual insurance company or a mutual benefit association, the number of members of the legal person and the amount of insurance they are to subscribe to the legal person or, as the case may be, the payments or other guaranteed benefits;
(h)  if the new legal person is to be a mutual insurance association, the number of members, the amount of the capital stock necessary to finance the operations of the association and to maintain an excess amount of assets over liabilities equal to or greater than the amount required under section 275, and the name of the federation that has undertaken to admit the association as a member.
1974, c. 70, s. 194; 1985, c. 17, s. 24; 1990, c. 86, s. 23; 1996, c. 63, s. 80, s. 83, s. 88; 1999, c. 40, s. 33.
195. The conversion by-law must be submitted for approval to a general meeting of the interested legal person specially called for that purpose.
1974, c. 70, s. 195; 1996, c. 63, s. 80.
196. The by-law must be approved by the general meeting by a two-thirds majority of the votes recorded.
In the case of a joint stock company, the majority required by the first paragraph must be expressed in terms of the value of the shares represented by the shareholders present.
1974, c. 70, s. 196; 1985, c. 17, s. 25.
197. A notice of the by-law, accompanied with the fees prescribed by regulation of the Government under the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P-45), shall be transmitted to the Inspector General, who shall deposit it in the register. The notice shall be published in a daily newspaper circulating in the locality in which the legal person has its head office, for four consecutive weeks.
1974, c. 70, s. 197; 1993, c. 48, s. 158; 1996, c. 63, s. 80.
198. The legal person shall then, by petition, request the Minister to confirm the conversion by-law and, in the case of companies, to authorize the issuance of letters patent for such purpose.
The petition must be accompanied with the conversion by-law.
The Minister shall confirm the by-law only after obtaining the advice of the Inspector General.
1974, c. 70, s. 198; 1982, c. 52, s. 80; 1984, c. 22, s. 39; 1993, c. 48, s. 159; 1996, c. 63, s. 80.
199. If the Minister accepts the petition, he shall send the conversion by-law to the Inspector General who shall deposit it in the register. In the case of companies, the Inspector General shall issue letters patent, which he shall deposit in the register.
1974, c. 70, s. 199; 1982, c. 52, s. 79; 1984, c. 22, s. 40; 1993, c. 48, s. 160.
200. Upon the date of the deposit in the register prescribed in section 199 or, in the case of companies, upon the date of the letters patent but subject to their deposit in the register, the legal person that applied for the conversion shall cease to exist; the new legal person, under the name assigned it, shall then enjoy all the rights and assume all the obligations of the legal person that applied for the conversion and suits to which it is a party may be continued by or against it without continuance of suit.
1974, c. 70, s. 200; 1993, c. 48, s. 161; 1996, c. 63, s. 80, s. 83.
CHAPTER V.1
CONTINUANCE
1984, c. 22, s. 41.
200.1. Every insurance company constituted under an Act of the Parliament of Canada or of another province may be continued as an insurance company governed by this Act if so authorized under the Act that governs it.
1984, c. 22, s. 41; 1999, c. 40, s. 33.
200.2. An insurance company that has been continued must meet the same conditions as those imposed by this Act for the constitution of an insurance company.
1984, c. 22, s. 41; 1999, c. 40, s. 33.
200.3. Every insurance company wishing to continue its existence must pass a by-law to that effect.
The continuance by-law shall indicate
(a)  the name of the company continued;
(b)  its head office;
(c)  the classes of insurance to be transacted;
(d)  the surname, name, occupation and domicile of each of the members of its board of directors;
(e)  the mode of election of the directors;
(f)  in the case of a joint-stock company, the number of shares composing its capital, the par value of each share, where such is the case, and the mode of conversion of the capital stock;
(f.1)  in the case of a joint stock company, the name occupation and place of residence of every natural person who, from continuance, would hold, alone or with his associates within the meaning of section 49, 10% or more of the voting rights attached to the shares in the company, and the name and place of constitution or continuance of every legal person that, from continuance, would hold, alone or with its associates within the meaning of section 49, 10% or more of the voting rights attached to the shares in the company, and the name of the shareholder who holds a controlling interest in the legal person;
(g)  in the case of a mutual insurance company, the number of members of the company and the amount of insurance, payments or other guaranteed benefits.
1984, c. 22, s. 41; 1985, c. 17, s. 26; 1990, c. 86, s. 24; 1996, c. 63, s. 80, s. 83; 1999, c. 40, s. 33.
200.4. Sections 195, 196 and 197 apply, with the necessary changes, to the continuance by-law.
1984, c. 22, s. 41.
200.5. The company shall, by petition, request the Minister to confirm the continuance by-law and to issue letters patent for such purpose.
The Minister shall confirm the by-law only after obtaining the advice of the Inspector General.
1984, c. 22, s. 41.
200.6. If the Minister confirms the by-law, the Inspector General shall issue the letters patent and deposit them in the register.
1984, c. 22, s. 41; 1993, c. 48, s. 162.
200.7. The continued insurance company is deemed to be an insurance company constituted under the statutes of Québec.
1984, c. 22, s. 41; 1999, c. 40, s. 33.
200.8. Subject to the deposit in the register prescribed in section 200.6, this Act applies to a company that has been continued from the date of its letters patent.
1984, c. 22, s. 41; 1993, c. 48, s. 163.
200.9. No rights, obligations or acts of a company or of its shareholders or members are affected by continuance.
1984, c. 22, s. 41.
TITLE IV
CONTROL OF PRIVATE INSURANCE
CHAPTER I
INSURER’S LICENCE
201. Only the legal persons authorized for that purpose by law and holding licences issued by the Inspector General shall act as insurers in Québec.
Lloyd’s may obtain such a licence; this Act applies to them with the necessary modifications as if they were constituted as an insurance company. The same applies to insurers issuing reciprocal insurance contracts who are constituted under laws other than those of Québec.
1974, c. 70, s. 201; 1982, c. 52, s. 80; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
202. Every licence must mention the classes of insurance in which it authorizes transacting.
1974, c. 70, s. 202.
203. No insurer shall transact both damage insurance and insurance of persons unless it was constituted before 22 June 1979 and was then authorized to do so by its charter.
However, companies authorized to transact damage insurance may also, to the extent provided for by the regulations, transact insurance of persons when it is related to contracts of damage insurance.
1974, c. 70, s. 203; 1979, c. 33, s. 8; 1999, c. 40, s. 33.
204. Damage insurers having no establishment in Québec may nevertheless issue insurance contracts there without a licence, provided such contracts are issued through a firm acting through a special broker referred to in the Act respecting the distribution of financial products and services (chapter D-9.2).
Such insurers may not, however, advertise or publicize their business in Québec.
1974, c. 70, s. 204; 1989, c. 48, s. 231; 1996, c. 63, s. 85; 1998, c. 37, s. 509.
205. Every legal person applying for a licence shall deliver to or furnish the Inspector General with the following documents and information:
(a)  the name and head office of the legal person;
(b)  the names, domiciles and occupations of the directors and officers of the legal person;
(c)  the classes of insurance that the legal person proposes to transact;
(d)  the place in Québec where the legal person is to have its head office or chief place of business;
(e)  the amount of the capital stock of the legal person, if any, the number of shares constituting it and their par value, where such is the case, the number of shares subscribed and the calls paid on these shares;
(f)  a copy of the constituting act of the legal person and of its by-laws, except if it is a professional order;
(g)  copies of its policies, endorsements and tariffs in accordance with the regulations;
(h)  to the extent provided for by the regulations, copies of the certificates of registration, licences or other certificates issued to the legal person by the superintendents, insurance commissioners or other competent federal, provincial or foreign authorities of the province, state or country in which the legal person was constituted, with a certificate of any deposit the legal person has with any such authority;
(i)  to the extent and in the manner provided for by the regulations, a statement of the affairs of the legal person or, where such is the case, of its insurance fund as they stood at the close of the last fiscal year preceding its application for a licence; if the legal person is required to file a statement with a superintendent, insurance commissioner or other federal, provincial or foreign authority of a province, state or country in which it was constituted, it shall to the same extent and in the same manner, file a copy of that statement;
(j)  the list of its branch offices;
(k)  a copy of general agents’ contracts, of portfolio managers’ contracts or of wholesalers’ contracts granted by it to Québec residents;
(l)  the amount and number of subscribed and paid common shares and preferred shares, if any;
(m)  if it is a professional order, its plan of operation and, where such is the case, the name and address of the administrator to whom it has entrusted the management of its insurance fund and a copy of the management contract;
(n)  the name of the actuary designated to carry out the duties referred to in the second paragraph of section 309.
The legal person shall subsequently keep up to date the documents and information it is required to furnish under the first paragraph. In addition, every legal person not subject to Chapter IV of Title IV must transmit without delay any written statement of the actuary designated to carry out the duties referred to in the second paragraph of section 309 concerning his resignation or the revocation of his appointment together with the resolution ordering the revocation of the actuary’s appointment.
1974, c. 70, s. 205; 1982, c. 52, s. 69; 1984, c. 22, s. 42; 1985, c. 17, s. 27; 1987, c. 54, s. 3; 1994, c. 40, s. 457; 1996, c. 63, s. 36, s. 80, s. 83; 1999, c. 40, s. 33.
206. Every legal person not constituted under an Act of Québec has, in respect of the activities it carries on in Québec, the rights and obligations of an insurance company or mutual association constituted under Acts of Québec as the case may be. It is also bound to comply with its constituting Act if it is more restrictive.
1974, c. 70, s. 206; 1982, c. 52, s. 80; 1984, c. 22, s. 43; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
207. Every legal person not constituted under an Act of Québec which does not have its head office in Québec shall, when applying for a licence, appoint a chief representative in Québec.
The representative must be a person in authority who is resident in Québec.
The representative shall also act as the attorney authorized to be served with the proceedings addressed to the legal person. However, where the representative is a legal person, any individual holding a managerial position with the legal person may be designated as attorney.
1974, c. 70, s. 207; 1984, c. 22, s. 43; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
208. The power of attorney designating the chief representative shall
(1)  indicate his powers and their extent, in particular in respect of the other mandataries and intermediaries of the legal person in Québec;
(2)  mention the address of his establishment in Québec where proceedings addressed to the legal person may be served.
The power of attorney shall be conferred pursuant to a resolution of the board of directors of the legal person.
1974, c. 70, s. 208; 1984, c. 22, s. 43; 1996, c. 63, s. 80, s. 85.
209. Every legal person shall transmit to the Inspector General a copy of the power of attorney and of the amendments to it, if any, and a copy of the resolution authorizing them.
1974, c. 70, s. 209; 1984, c. 22, s. 43; 1996, c. 63, s. 80.
210. Every legal person, other than a mutual insurance association or a professional order, that applies for a licence shall meet the requirements for the constitution of an insurance company in Québec.
Notwithstanding the first paragraph, minimum capitalization requirements are exigible only from legal persons applying for their first licence after 20 June 1984.
1974, c. 70, s. 210; 1982, c. 52, s. 70, s. 80; 1984, c. 22, s. 43; 1985, c. 17, s. 28; 1987, c. 54, s. 4; 1994, c. 40, s. 457; 1996, c. 63, s. 80; 1999, c. 40, s. 33.
211. The Inspector General shall issue the licence if the legal person
(a)  furnishes all required documents and information;
(b)  meets the conditions prescribed under this Act and the regulations thereunder;
(c)  has complied with this Act and any Act of another province or of the Parliament of Canada or any other Act governing the activities of the legal person, and the regulations thereunder;
(d)  adheres to sound commercial and financial practices;
(e)  has sufficient assets;
(f)  has directors and officers who possess the administrative and technical knowledge and competence required to administer the legal person or, where such is the case, its insurance fund in a manner to command public confidence in transacting the classes of insurance contemplated.
1974, c. 70, s. 211; 1982, c. 52, s. 80; 1984, c. 22, s. 43; 1987, c. 54, s. 5; 1996, c. 63, s. 80.
212. The licence may be issued for a period of less than one year and include such restrictions or conditions as the Inspector General may consider necessary to give effect to this Act.
1974, c. 70, s. 212; 1982, c. 52, s. 80; 1984, c. 22, s. 43.
213. (Repealed).
1974, c. 70, s. 213; 1982, c. 52, s. 80; 1984, c. 22, s. 44.
214. (Repealed).
1974, c. 70, s. 214; 1982, c. 52, s. 80; 1984, c. 22, s. 44.
215. (Repealed).
1974, c. 70, s. 215; 1982, c. 52, s. 80; 1984, c. 22, s. 44.
216. (Repealed).
1974, c. 70, s. 216; 1975, c. 83, s. 84; 1982, c. 52, s. 80; 1984, c. 22, s. 44.
217. (Repealed).
1974, c. 70, s. 217; 1982, c. 52, s. 80; 1984, c. 22, s. 44.
218. The Inspector General may refuse to issue a licence to a legal person having a name identical to that of another legal person transacting in Québec or that so resembles that of another that there is a danger of confusing or misleading the public as to the nature of the business transacted.
1974, c. 70, s. 218; 1982, c. 52, s. 80; 1996, c. 63, s. 80, s. 83.
219. The Inspector General shall on refusing to issue a licence give notice of it in writing to the applicant specifying the reasons for refusal.
1974, c. 70, s. 219; 1982, c. 52, s. 80.
219.1. The Inspector General may, at any time after the issuance of a licence,
(a)  reduce the period of its validity;
(b)  impose, in relation to the operations of the legal person, such conditions or restrictions as he may consider necessary to give effect to this Act;
(c)  change or cancel the conditions or restrictions to which the licence is subject.
Before exercising the powers provided under this section, the Inspector General shall, however, notify the legal person in writing as prescribed by section 5 of the Act respecting administrative justice (chapter J-3) and allow the legal person at least 10 days to present observations.
The Inspector General shall also notify his substantiated decision to the legal person.
1984, c. 22, s. 45; 1987, c. 54, s. 6; 1996, c. 63, s. 80; 1997, c. 43, s. 78.
220. Subject to section 203, the Inspector General may, at the request of any legal person holding a licence other than a professional order, amend such licence to include other classes of insurance in the business that such legal person is authorized to transact.
In such case, the formalities to be followed are those for the issue of a licence, with the necessary modifications.
1974, c. 70, s. 220; 1982, c. 52, s. 80; 1987, c. 54, s. 7; 1994, c. 40, s. 457; 1996, c. 63, s. 80.
221. Unless a date of expiration is indicated on the licence, it expires on 30 June each year.
Licences may be renewed in accordance with this Act and the regulations.
1974, c. 70, s. 221; 1982, c. 52, s. 80; 1984, c. 22, s. 46.
222. The Inspector General shall on issuing a licence publish a notice in the Gazette officielle du Québec indicating the name and address of the head office or chief establishment of the legal person to which the licence is issued, the amount of the deposit it has offered in accordance with this Act and the classes of insurance contemplated by the licence.
The Inspector General shall also publish each year in the Gazette officielle du Québec a list of the insurers holding licences, their head offices or establishments and the amounts of the deposits made by them under this Act.
1974, c. 70, s. 222; 1982, c. 52, s. 80; 1996, c. 63, s. 80, s. 83; 1998, c. 37, s. 510.
223. No insurer, other than a mutual insurance association, may assume liability for a fire risk unless it reinsures with another insurer any fraction of it exceeding 10% of its capital and surplus.
1974, c. 70, s. 223; 1985, c. 17, s. 29.
CHAPTER II
DEPOSITS REQUIRED OF INSURERS
224. Every insurer, other than a mutual insurance association or a professional order, applying for a licence or the renewal of a licence shall deposit with the Minister of Finance the amount provided for in this division as security for the carrying out of the insurance contracts issued by him in Québec.
1974, c. 70, s. 224; 1985, c. 17, s. 30; 1987, c. 54, s. 8; 1994, c. 40, s. 457.
225. Such deposit may be made in currency. It may also be constituted of bonds or other securities issued or guaranteed by Québec, any other province of Canada, Canada, the United Kingdom, the United States of America or a state of that country, by any other country where the insurer transacts insurance or by any municipality or school board of Québec or by the Conseil scolaire de l’Île de Montréal.
1974, c. 70, s. 225; 1984, c. 22, s. 47; 1988, c. 84, s. 701; 1996, c. 2, s. 79.
226. The value of the bonds and other securities given as a deposit by an insurer is established each year according to their market value on the preceding 31 December.
If that market value decreases by 10 per cent or more, the Inspector General may require the insurer to make up the deficit.
1974, c. 70, s. 226; 1982, c. 52, s. 80.
227. For any insurer other than a mutual association, the amount of the deposit is established in accordance with the regulations.
1974, c. 70, s. 227.
228. (Repealed).
1974, c. 70, s. 228; 1979, c. 33, s. 9; 1985, c. 17, s. 31.
229. For a mutual benefit association, the amount of the deposit shall be equal to 10 per cent of the assessments it has collected in Québec during the preceding year, less the premiums paid by it for reinsurance. The deposit shall not however be less than $20 000 in the case of an association constituted under this act or $2 000 in the case of any other mutual benefit association; nor shall it in any case exceed $100 000.
1974, c. 70, s. 229; 1999, c. 40, s. 33.
230. The Minister may, after obtaining the advice of the Inspector General, relieve any insurer of his obligation to make a deposit under this act if the insurer has made with the Minister of Finance of Canada a deposit which the Minister considers equivalent to that required by this act.
1974, c. 70, s. 230; 1982, c. 52, s. 80.
231. Any insurer extending his business to additional classes of insurance shall, at the request of the Inspector General, increase his deposit in accordance with the standards prescribed for that purpose by regulation.
1974, c. 70, s. 231; 1982, c. 52, s. 80.
232. When any licence is renewed, the amount of the deposit shall be revalued in accordance with the standards prescribed for that purpose by regulations.
1974, c. 70, s. 232.
233. Any insurer may, with the authorization of the Inspector General, withdraw or replace the bonds and other securities constituting his deposit provided that the deposit continues to be in conformity with this Act.
1974, c. 70, s. 233; 1982, c. 52, s. 80.
234. Any fraction of a deposit exceeding the amount required under this act, may be withdrawn in whole or in part if the Inspector General is of the opinion that the insured persons will not suffer any prejudice thereby.
1974, c. 70, s. 234; 1982, c. 52, s. 80.
235. The Minister of Finance shall be entrusted with the custody of the deposit which he shall use to compensate insured persons for losses sustained by them through the insurer’s failure to pay amounts he owed them.
However, interest on the deposit shall remain payable to the insurer or credited to his account except when the deposit is seized or a distribution is made pursuant to a judgment rendered on a motion by the Inspector General in accordance with section 239.
1974, c. 70, s. 235; 1982, c. 52, s. 80.
236. Any insurer ceasing to transact insurance in Québec shall be entitled to the reimbursement of its deposit when all its obligations towards the insured, third persons and beneficiaries have been fully discharged, assumed by another insurer or reinsured with an insurer licenced to transact insurance in Québec.
1974, c. 70, s. 236.
237. Before an insurer may obtain reimbursement of its deposit, it must cause to be published in the Gazette officielle du Québec a notice indicating the date on which it ceased to transact insurance in Québec or the date on which it intends to do so.
The deposit is recoverable three months after such publication provided that no creditor objects thereto to the Inspector General in a writing giving the reasons for his objection and that the Inspector General believes that the insurer has sufficient assets to discharge all debts that may arise from the contracts it has established.
1974, c. 70, s. 237; 1982, c. 52, s. 80.
238. Any amount due by an insurer to an insured or beneficiary under a policy issued in Québec may form the object of a claim with the Inspector General if it remains unpaid for more than sixty days and if the insured or beneficiary has offered the insurer a discharge for payment.
On receiving such claim, the Inspector General shall investigate the reasons for non-payment and, if there is no justification, put the insurer in default to make the payment within ten days.
1974, c. 70, s. 238; 1982, c. 52, s. 80; 1999, c. 40, s. 33.
239. If the insurer fails to comply with the putting in default within the time allotted in section 238, the Inspector General may make a motion to the Superior Court of the district in which the insurer has its head office or principal place of business in Québec to be granted the seizure of the deposit of such insurer by a liquidator ad hoc in order to discharge the debt.
1974, c. 70, s. 239; 1982, c. 52, s. 80; 1999, c. 40, s. 33.
240. The winding-up of any insurer authorized to transact insurance in Québec entails ipso facto seizure of its deposit by the appointed liquidator; the deposit is then distributed in accordance with this act.
1974, c. 70, s. 240.
241. In the case of distribution of the deposit, the amounts due for unsettled claims under contracts established by the insurer in Québec shall be paid before repayment of any unearned premium or part of a premium. The distribution shall be made pro rata to the applications for indemnities.
Only holders or beneficiaries of insurance policies resident or having their head offices in Québec may benefit from the distribution of the deposit of an insurer.
1974, c. 70, s. 241.
242. The Minister of Finance may, on the recommendation of the Inspector General, and when the interest of the insured requires it, use all or part of an insurer’s deposit to reinsure its insurance contracts, provided that the insurer can meet the obligations contracted by it towards its insured and not assumed by the reinsurer.
1974, c. 70, s. 242; 1982, c. 52, s. 80.
CHAPTER III
INVESTMENTS, ASSETS, PROVISIONS, RESERVES AND SEPARATE FUNDS
1996, c. 63, s. 37.
DIVISION I
APPLICATION
243. This chapter applies to each insurer constituted under an Act of Québec; sections 244 to 272 apply to such an insurer notwithstanding any provision of its charter inconsistent herewith.
1974, c. 70, s. 243; 1996, c. 63, s. 38; 1999, c. 40, s. 33.
DIVISION II
INVESTMENTS
244. Every insurer shall invest or lend its funds as would, in similar circumstances, a prudent and reasonable person and act with honesty and loyalty in the best interest of its insured, shareholders or members.
1974, c. 70, s. 244; 1976, c. 39, s. 14; 1977, c. 5, s. 14; 1984, c. 22, s. 48; 1987, c. 54, s. 9.
245. No insurer may,
(a)  for each of the following classes, make an investment in the same legal person other than a subsidiary or in the same cooperative if that would cause the book value of the aggregate of such investments in each of such classes to exceed 4 % of its assets: common shares, preferred shares, membership shares, permanent shares or preferred shares, preferred equity shares or bonds or other evidences of indebtedness;
(b)  make an investment in the form of a loan, other than a hypothecary loan, that would cause the book value of its investment in respect of a single borrower to exceed 4 % of its assets or, for the aggregate of such loans, 15 % of its assets;
(c)  make an investment in income property that would cause the book value of such investments in respect of a single such property to exceed 4 % of its assets or, for the aggregate of such property, 15 % of its assets;
(d)  control legal persons other than those mentioned in subparagraphs d.1 and e, or, notwithstanding subparagraph b, invest in companies that engage in activities other than those mentioned in subparagraphs d.1 and e;
(d.1)  make an investment in a subsidiary or association whose principal activity is the purchase, management, sale or rental of immovables, the offering of participation in investment portfolios, the making of loans and investments, factoring, leasing or the offering of computer services, actuarial advisory services or travel assistance services, or any other principal activity determined by regulation that would cause the book value of such investments in the subsidiary or association to exceed 4 % of its assets or, for the aggregate of such subsidiaries and associations, 15 % of its assets;
(e)  make an investment in a subsidiary that is an insurer, a bank, a trust company, a savings company or a securities dealer or adviser that would cause the book value of the aggregate of its investments in such a subsidiary to exceed 15 % of its assets;
(f)  make an investment in common shares other than shares of subsidiaries that would cause the book value of its investment in such shares to exceed 25 % of its assets or that would cause the insurer to hold more than 30 % of the shares of the same legal person, except if the legal person is a legal person referred to in subparagraph d.1 or e, whether or not it is a subsidiary of the insurer;
(g)  for all of the classes mentioned in subparagraphs a and b, make an investment in the same legal person other than a subsidiary or the same cooperative, in any form whatsoever, that would cause the book value of the aggregate of such investments to exceed 15 % of its assets;
(h)  make an investment that would cause the book value of the aggregate of its investments under subparagraphs c, d.1, e and f of this paragraph, the first paragraph of section 245.1 and section 247 to exceed 50 % of its assets or the book value of the aggregate of its investments under subparagraphs d.1 and e of this paragraph and section 247 to exceed 25 % of its assets.
Any investment made contrary to subparagraph d of the first paragraph is null of absolute nullity.
However, an insurer that, on 14 March 1991, holds investments which comply with subparagraph d of the first paragraph as it read before 15 March 1991 may continue to hold them notwithstanding subparagraphs d and d.1 of the first paragraph. It may continue to invest in a subsidiary or association other than those referred to in subparagraphs d.1 and e of the first paragraph provided that its total investment in that subsidiary or association does not exceed 4 % of its assets. In addition, such investments must be taken into account in computing the 15 % and 25 % limits prescribed in subparagraphs d.1 and h of the first paragraph.
However, a mutual association or an insurance fund may not control a legal person or invest in an association referred to in subparagraph d.1.
1974, c. 70, s. 245; 1984, c. 22, s. 48; 1985, c. 17, s. 32; 1987, c. 54, s. 10; 1987, c. 95, s. 402; 1988, c. 64, s. 554; 1990, c. 86, s. 25; 1994, c. 40, s. 457; 1996, c. 63, s. 39.
245.0.1. The limit provided for in subparagraphs a and g of the first paragraph of section 245 shall not apply
(a)  to securities guaranteed by the Government of Canada or a government of a Canadian province or territory, or to securities issued or guaranteed by any of their agencies or by a municipality in Canada;
(b)  to securities on which payment in principal and interest is guaranteed by the grant of a subsidy by the Gouvernement du Québec payable out of the sums voted each year for that purpose by the National Assembly;
(c)  to bank deposits and debt securities the payment of which is guaranteed by a bank;
(d)  to debt securities issued or secured by an institution that is registered with the Régie de l’assurance-dépôts du Québec or that is a member of the Canada Deposit Insurance Corporation, and to deposits with those institutions;
(e)  to any other investments determined by regulation.
1990, c. 86, s. 26; 1996, c. 2, s. 80; 1996, c. 63, s. 40.
245.1. A mutual insurance association may invest in an investment fund of the federation of which it is a member provided the investment does not cause the book value of the aggregate of its investments in that fund to exceed 25 % of its assets. In addition, the mutual insurance association may invest in the capital of a mutual reinsurance association of which the law provides it is a member.
In no case may an investment made under the first paragraph result in reducing the liquid assets of the association to an amount that is below the amount established in accordance with the written directives of the Inspector General.
The participation of a mutual insurance association in a guarantee fund constitutes an investment for an amount equal to the lesser of the two amounts contemplated in subparagraphs 1 and 2 of the second paragraph of section 93.227.
1985, c. 17, s. 33; 1996, c. 63, s. 41, s. 82.
246. No insurer may acquire claims secured by hypothec or grant a hypothecary loan of an amount exceeding 75 % of the value of the immovable which secures payment thereof, less any other claims secured thereby and ranking equally with or ahead of the insurer’s claim except where the excess amount is guaranteed or assured by the government of Québec, of a Canadian province, of Canada or of a country where the insurer carries on business, by the Canada Mortgage and Housing Corporation, the Société d’habitation du Québec or an hypothecary insurance policy issued by an insurance company holding a licence issued under this Act.
However, the said amount may be exceeded in respect of an immovable on which the insurer holds security if the corresponding hypothecary claim is endangered or in respect of an immovable that has been repossessed.
1974, c. 70, s. 246; 1979, c. 33, s. 10; 1982, c. 26, s. 284; 1984, c. 22, s. 48; 1987, c. 54, s. 11; 1994, c. 40, s. 457; 1996, c. 63, s. 42.
247. Notwithstanding subparagraph d of section 245, an insurer, other than a mutual association or a professional order, may invest in a downstream holding provided the investment does not cause the book value of the aggregate of its investments in that holding to exceed 25 % of its assets.
The downstream holding is required to invest or lend its funds in accordance with this Chapter and Chapter III.1, except subparagraph h of section 245, as if it were an insurer. The subsidiary’s directors have the same duties and responsibilities as the insurer.
The investments of the downstream holding must be entered in the accounts with those of the insurer in proportion to the shares held by the insurer in the downstream holding in computing the percentages contemplated in section 245.
A downstream holding is a subsidiary.
An insurer who, on 15 March 1991, has invested more than 25 % of his assets in a downstream holding may keep that investment.
1974, c. 70, s. 247; 1979, c. 33, s. 11; 1982, c. 26, s. 285; 1984, c. 22, s. 48; 1987, c. 54, s. 12; 1990, c. 86, s. 27; 1994, c. 40, s. 457; 1996, c. 63, s. 43.
247.1. Every insurer, other than a mutual association or a professional order, shall, within 15 days following the date of an investment, file with the Inspector General an engagement signed by the newly-acquired subsidiary to comply with the conditions prescribed by regulation for as long as the insurer holds its shares.
1984, c. 22, s. 48; 1987, c. 54, s. 13; 1994, c. 40, s. 457.
248. Every insurer shall adopt an investment policy approved by its board of directors. The policy must include, in particular, the matching of the maturities of its investments with its financial commitments, the diversification of investments and a precise description of the types of investments that may be made in the form of hypothecary loans and the limits applicable thereto.
Every insurer shall state in its annual report the name of each legal person in which it holds 10% or more of the voting shares.
1974, c. 70, s. 248; 1979, c. 33, s. 12; 1982, c. 26, s. 286; 1984, c. 22, s. 48; 1990, c. 86, s. 28; 1996, c. 63, s. 44, s. 80, s. 83.
249. (Repealed).
1974, c. 70, s. 249; 1979, c. 33, s. 13; 1982, c. 52, s. 80; 1984, c. 22, s. 48; 1990, c. 86, s. 29.
249.1. Any insurer that transacts insurance other than life insurance may contribute to the development fund of the Groupement des assureurs automobiles established by the Automobile Insurance Act (chapter A-25).
1977, c. 68, s. 223; 1996, c. 63, s. 45.
250. (Repealed).
1974, c. 70, s. 250; 1982, c. 52, s. 80; 1984, c. 22, s. 49.
251. (Repealed).
1974, c. 70, s. 251; 1984, c. 22, s. 49.
252. (Repealed).
1974, c. 70, s. 252; 1977, c. 5, s. 14; 1979, c. 33, s. 14; S. C. 1978-79, c. 16, s. 12; 1984, c. 22, s. 49.
253. (Repealed).
1974, c. 70, s. 253; 1979, c. 33, s. 15; 1984, c. 22, s. 49.
254. (Repealed).
1974, c. 70, s. 254; 1982, c. 52, s. 80; 1984, c. 22, s. 49.
255. (Repealed).
1974, c. 70, s. 255; 1979, c. 33, s. 16; 1982, c. 26, s. 287; 1984, c. 22, s. 49.
256. (Repealed).
1974, c. 70, s. 256; 1984, c. 22, s. 49.
257. When the insurer must, under section 280, maintain separate groups of assets, the percentage limits fixed in this chapter do not apply to the investments and loans which constitute this group and, in the application of such limits to the aggregate of its assets, no account shall be taken of such groups of assets.
1974, c. 70, s. 257; 1984, c. 22, s. 50.
258. (Repealed).
1974, c. 70, s. 258; 1979, c. 33, s. 17; 1982, c. 26, s. 288; 1984, c. 22, s. 51.
259. (Repealed).
1974, c. 70, s. 259; 1979, c. 33, s. 18; 1984, c. 22, s. 52; 1987, c. 54, s. 14; 1990, c. 86, s. 30.
260. (Repealed).
1974, c. 70, s. 260; 1990, c. 86, s. 30.
261. (Repealed).
1974, c. 70, s. 261; 1990, c. 86, s. 30.
262. (Repealed).
1974, c. 70, s. 262; 1979, c. 33, s. 19; 1982, c. 52, s. 80; 1990, c. 86, s. 30.
263. (Repealed).
1974, c. 70, s. 263; 1979, c. 33, s. 20; 1984, c. 22, s. 53; 1990, c. 86, s. 30.
264. (Repealed).
1974, c. 70, s. 264; 1990, c. 86, s. 30.
265. (Repealed).
1974, c. 70, s. 265; 1990, c. 86, s. 30.
266. (Repealed).
1974, c. 70, s. 266; 1984, c. 22, s. 54.
267. (Repealed).
1974, c. 70, s. 267; 1984, c. 22, s. 54.
268. If, following the reorganization or winding-up of a legal person or the amalgamation of legal persons, securities held by an insurer are replaced by other securities, the insurer is required to comply with the investment rules prescribed by this Act within five years from the date of reorganization, winding-up or amalgamation.
1974, c. 70, s. 268; 1984, c. 22, s. 55; 1990, c. 86, s. 31; 1996, c. 63, s. 80.
269. Every insurer shall at all times keep in Canada and under its own control assets of a value equal to at least the real value of its liabilities to its insured in Canada; such assets, up to at least two-thirds of the real value of such liabilities, shall be invested in Canada.
Every insurer shall invest in Québec part of its assets in the proportion determined by the regulations.
1974, c. 70, s. 269.
270. An insurer shall effect its deposits, loans and investments in its name, unless it does so through a clearing house recognized by the Inspector General or unless, at the request of the insurer, the Inspector General exempts it from the obligation to do so in such cases and on such conditions as he may determine according to the circumstances.
1974, c. 70, s. 270; 1984, c. 22, s. 56; 1990, c. 86, s. 32; 1996, c. 63, s. 83.
271. The directors or officers of an insurer who agree to a loan or investment which contravenes this Act shall be held jointly and severally liable for any losses resulting therefrom for the insurer.
1974, c. 70, s. 271; 1990, c. 86, s. 33.
272. The sole fact that the loans or investments made by an insurer comply with this Act does not exempt the directors and officers of that insurer from liability.
1974, c. 70, s. 272; 1990, c. 86, s. 34.
273. (Repealed).
1974, c. 70, s. 273; 1982, c. 52, s. 71; 1984, c. 22, s. 57; 1990, c. 86, s. 35; 1996, c. 63, s. 46.
274. Every insurer constituted elsewhere than in Québec and holding a licence may, in accordance with its charter and by-laws, acquire, hold and alienate landed property in Québec and debts secured by it and also encumber it with real charges.
1974, c. 70, s. 274; 1999, c. 40, s. 33.
DIVISION III
ASSETS
275. Every insurer shall maintain assets that exceed its liabilities in accordance with the valuation standards established by regulation.
The Government may fix, by regulation, a method for determining the minimum excess amount of assets over liabilities that every insurer is required to maintain to continue its operations without restrictions or conditions.
Notwithstanding any regulation made under the second paragraph, the Inspector General may give written directives to an insurer to require it to maintain a greater excess amount than the amount determined according to the method fixed by regulation, taking into account the particular composition of its assets or liabilities; the insurer shall comply with the directives within the time limit fixed by the Inspector General.
1974, c. 70, s. 275; 1979, c. 33, s. 21; 1984, c. 22, s. 58.
275.0.1. The directors shall be held jointly and severally liable for any amount paid to a shareholder or to a director where the insurer, due to payment of that amount, contravenes the provisions of section 275.
1990, c. 86, s. 36.
275.1. (Repealed).
1979, c. 33, s. 22; 1982, c. 52, s. 80; 1984, c. 22, s. 59.
275.2. No insurer may declare dividends or interest, as the case may be, or distribute its yearly surpluses if a payment made for that purpose causes its assets to cease to meet the requirements of section 275.
1979, c. 33, s. 22; 1984, c. 22, s. 60; 1985, c. 17, s. 34; 1990, c. 86, s. 37.
275.3. Every mutual insurance association shall maintain sufficient liquid assets to meet the liquidity ratio established in accordance with the written directives of the Inspector General.
1985, c. 17, s. 35.
DIVISION III.1
SALE OF THE ENTERPRISE
1990, c. 86, s. 38.
275.4. No insurer may sell all or part of its enterprise unless it gives prior notice of 45 days to the Inspector General. The prior notice shall indicate the name and the address of the head office of the parties. It shall also be accompanied with a draft copy of the contract the parties intend to sign.
1990, c. 86, s. 38; 1996, c. 63, s. 83.
275.5. The Inspector General may prohibit the transaction or impose certain conditions on it if he considers it expedient in the interest of the insured or of one of the parties.
The Inspector General may, by way of a notice sent before the expiry of a period of 45 days, inform the insurer that he does not object to the sale. Upon receiving the notice, the insurer may proceed with the sale.
Where the Inspector General considers that insufficient time is available to him to carry out an adequate examination of the transaction, he may extend the period by an additional 45 days.
The Inspector General shall inform the parties of any such extension not less than five days before the expiry of any period of 45 days.
1990, c. 86, s. 38; 1996, c. 63, s. 47.
DIVISION IV
PROVISIONS AND RESERVES
1996, c. 63, s. 48.
276. (Repealed).
1974, c. 70, s. 276; 1979, c. 33, s. 23; 1982, c. 52, s. 80; 1996, c. 63, s. 49.
277. Every insurer, other than a mutual benefit association, must establish provisions and reserves that are good and sufficient having regard to its obligations to the insured, and that conform to the following provisions:
(a)  the assumptions used to establish the provisions and reserves must be the assumptions that the actuary designated in accordance with Division III.1 of Chapter IV of this Title considers good and sufficient having regard to the insurer’s position and the insurance contracts, and considered appropriate by the Inspector General;
(b)  the computation methods used must be consistent with the regulations.
1974, c. 70, s. 277; 1979, c. 33, s. 24; 1984, c. 22, s. 61; 1996, c. 63, s. 50.
278. (Repealed).
1974, c. 70, s. 278; 1985, c. 17, s. 36.
279. Every mutual benefit association constituted under the laws of Québec must establish provisions and reserves that are good and sufficient having regard to the payment at maturity of the obligations of each of the funds established by the association in accordance with this Act, according to the methods established by the regulations.
1974, c. 70, s. 279; 1996, c. 63, s. 51.
DIVISION V
SEPARATE FUNDS
1996, c. 63, s. 52.
280. Every insurer constituted under the laws of Québec, transacting life insurance and contracting liabilities that vary according to the market value of a specified group of assets must maintain these assets in one or more groups which are separate from its other property; it must use these assets only to meet those liabilities, until they have been fully discharged.
1974, c. 70, s. 280; 1999, c. 40, s. 33.
281. The insurer may by by-law, in order to constitute any separate group of assets contemplated in section 280, pay into it any amount or security derived from its surplus which it has at its disposal for payment of dividends.
1974, c. 70, s. 281.
282. The insurer may also, in the same manner, pay into such separate group of assets amounts or securities from other separate groups of assets assigned to its life insurance business; however,
(a)  the amounts from the same group of assets must not, without the authorization of the Inspector General, be greater than the amount by which 25 per cent of the surplus of that group of assets exceeds all the amounts derived from that group which have been paid into the groups of assets contemplated in section 280 less the amounts withdrawn from them in accordance with section 284;
(b)  the amounts from all those other groups of assets must not, without the authorization of the Inspector General, be greater than the amount by which 10 per cent of the surplus of those groups of assets or $2 000 000, whichever is the lesser, exceeds all the amounts from such groups of assets which have been paid into the groups of assets contemplated in section 280 less the amounts withdrawn from them in accordance with section 284.
Every amount contemplated by this section shall be computed at the market value of the assets concerned.
1974, c. 70, s. 282; 1982, c. 52, s. 80.
283. The Inspector General shall grant the authorization contemplated in section 282 only if the insurer establishes to his satisfaction that the property included in a group of assets contemplated in section 280 is insufficient to meet the obligations relating thereto and that such authorization will promote the proper running of the company’s business.
1974, c. 70, s. 283; 1982, c. 52, s. 80.
284. The insurer may, with the authorization of the Inspector General, withdraw any amount paid into a group of assets contemplated in section 280 to return it to the groups of assets from which it derives; if the amount returned is only partial, it must be made to each group in proportion to the amounts derived from each.
In the case of securities, they shall be returned for the amount represented by their market value when returned.
1974, c. 70, s. 284; 1982, c. 52, s. 80.
285. Any surplus, for the purposes of sections 281 and 282, shall be that shown in the last annual statement of the insurer.
1974, c. 70, s. 285.
CHAPTER III.1
ETHICS AND CONFLICTS OF INTEREST
1990, c. 86, s. 39.
DIVISION I
APPLICATION
1990, c. 86, s. 39.
285.1. This chapter applies to every insurer constituted in Québec, notwithstanding any provision of its charter that is inconsistent herewith.
However, Division IV of this chapter does not apply to mutual benefit associations which do not issue policies or certificates guaranteeing, for their duration, the amount of mutual benefits and assessments fixed therein, nor to funeral insurance companies.
1990, c. 86, s. 39; 1999, c. 40, s. 33.
DIVISION II
DIRECTORS AND OFFICERS
1990, c. 86, s. 39.
285.2. A director or officer of an insurer shall exercise the care, prudence, diligence and skill that a reasonable person would exercise in similar circumstances.
He shall also act with honesty and fairness in the best interest of the insurer. In doing so, he shall take into account the interests of the insured, the shareholders or the members, and shall avoid placing himself in situations where his personal interest is in conflict with his obligations.
1990, c. 86, s. 39.
285.3. A director or officer is presumed to have exercised the care, prudence, diligence and skill that a reasonable person would have exercised if he acted in good faith and based his decisions on an expert’s opinion or report.
1990, c. 86, s. 39.
285.4. No director or officer of an insurer may be a director of another insurer unless one of the insurers transacts insurance of persons and the other transacts damage insurance, or unless they are affiliated.
1990, c. 86, s. 39.
285.5. The vote of a director who does not possess the qualifications required by this Act shall not be decisive.
1990, c. 86, s. 39.
285.6. A director or officer of an insurer shall, when communicating information concerning the insurer or the persons insured by it, comply with the regulations and, where applicable, with the rules adopted by the ethics committee.
1990, c. 86, s. 39.
285.7. Every director who resigns for reasons relating to the conduct of the affairs of the insurer shall declare his reasons to the insurer and to the Inspector General,
(1)  where he has grounds to believe that such conduct is contrary to a provision of this Act or the regulations, a provision of any other Act, an order of the Inspector General or the Criminal Code (Revised Statutes of Canada, 1985, chapter C-46);
(2)  where he has grounds to believe that such conduct may have an adverse effect on the financial position of the insurer.
A director who makes such a declaration in good faith shall not incur any civil liability by doing so.
1990, c. 86, s. 39.
DIVISION III
DISCLOSURE REQUIREMENTS
1990, c. 86, s. 39.
285.8. Every director of an insurer who has an interest that is in conflict with the interest of the insurer must, on pain of removal from office, disclose his interest, abstain from voting on any matter connected with it and avoid influencing any decision relating to it. He must also withdraw from the meeting while any such matter is being discussed or voted upon.
Any other person discharging the duties of an officer and who has such an interest shall, on pain of removal from office, disclose his interest to the insurer. He shall in no way attempt to influence the decision of the directors.
1990, c. 86, s. 39.
285.9. A director or officer is deemed to have the same interest as a person associated with him.
1990, c. 86, s. 39.
285.10. Any person who is removed from office for having contravened section 285.8 or who resigns after having contravened that section is disqualified from sitting as a director of any insurer for a period of five years from his removal or resignation.
1990, c. 86, s. 39.
285.11. The court, at the request of the insurer or of a shareholder, member, insured person or the Inspector General, may, among other measures, order a director or officer who has contravened section 285.8 to render account and, where applicable, to remit any profit gained to the insurer.
1990, c. 86, s. 39.
285.12. Every director or officer of an insurer must, within three months of his appointment or election and, subsequently, every year, disclose in writing and under oath to the board of directors of the insurer any interest held by him in any undertaking.
No director or officer may discharge the duties of his office until he has fulfilled his obligations under this section. The vote of a director who discharges his duties in contravention of this section shall not be decisive.
However, no disclosure of interest is required where the holding of a person and his associates within the meaning of section 49 amounts to less than 10 % of the shares issued by a legal person or of the voting rights attached to such shares.
1990, c. 86, s. 39; 1996, c. 63, s. 80.
DIVISION IV
ETHICS COMMITTEE
1990, c. 86, s. 39.
285.13. Every insurer shall appoint an ethics committee from among the members of the board of directors.
The committee shall be composed of not less than three directors, a majority of whom shall be persons who are not
(1)  officers and employees of the insurer;
(2)  members of another committee of the board of directors;
(3)  directors, officers, other mandataries and employees of a legal person affiliated with the insurer;
(4)  directors, officers and other mandataries, where the insurer is a mutual insurance association, of the federation with which that association is affiliated, of the guarantee fund of which it is a member or of a legal person belonging to the same group as the federation;
(5)  shareholders holding 10 % or more of the voting rights attached to shares issued by the insurer or by a legal person affiliated with it, or 10 % or more of such shares.
Where the Inspector General considers that circumstances justify it, he may authorize the appointment of a committee composed in a way which does not comply with the requirements of the second paragraph.
1990, c. 86, s. 39; 1996, c. 63, s. 80, s. 82.
285.14. The ethics committee shall adopt rules for the application of the provisions of this chapter to the insurer. It shall see that the rules are complied with, and shall advise the board of directors without delay of any serious breach thereof.
The rules shall concern, in particular, the conduct of the insurer with respect to restricted parties or associates of its directors or officers, the formalities and conditions governing contracts with restricted parties and the protection of confidential information held by the insurer in respect of persons insured by it.
In addition, the ethics committee shall carry out any mandate assigned to it by the board of directors.
However, the ethics committee shall not, without the authorization of the Inspector General, exercise responsibilities normally assigned to another committee.
1990, c. 86, s. 39.
285.15. The rules adopted by the ethics committee shall be transmitted to the board of directors of the insurer which is bound by them. A copy shall also be transmitted to the Inspector General.
1990, c. 86, s. 39.
285.16. Each year, the ethics committee shall transmit to the Inspector General, within two months of the closing date of the fiscal year of the insurer, a report on its activities to the closing date.
The report shall set out, in particular,
(1)  the name, address and occupation of every member of the committee;
(2)  any change among the members of the committee;
(3)  the nature of the mandates assigned to the committee by the board of directors;
(4)  the list of cases of conflict of interest and self-dealing which have come to the notice of the committee;
(5)  the cases where the rules adopted by the committee have not been complied with.
1990, c. 86, s. 39; 1996, c. 63, s. 88.
DIVISION V
TRANSACTIONS WITH RESTRICTED PARTIES AND WITH ASSOCIATES OF DIRECTORS OR OFFICERS
1990, c. 86, s. 39.
285.17. An insurer or any subsidiary thereof shall, in respect of restricted parties and associates of the directors or officers of the insurer with whom it does business, act in the same manner as when it is dealing at arm’s length.
In cases of contestation, the onus is on the insurer or its subsidiary to show that it acted in this manner.
However, notwithstanding the first paragraph, a contract may be entered into, where the parties thereto include an insurer or its subsidiary and an affiliated legal person whose principal activity is an activity referred to in subparagraph d.1 or e of the first paragraph of section 245, provided such a contract is authorized by the Inspector General. The same applies to a contract between a mutual insurance association and a legal person belonging to the same group as its federation, where the principal activity of the legal person is an activity referred to in subparagraph d.1 or e of the first paragraph of section 245.
In addition, the first paragraph does not apply to contracts concerning the conditions of employment, pension funds, insurance schemes and any other matter connected with contracts of employment of an employee or an officer.
1990, c. 86, s. 39; 1996, c. 63, s. 80.
285.18. The following are restricted parties with respect to an insurer:
(1)  the directors and officers of the insurer;
(2)  in the case of a joint stock company, the directors and officers of the legal person that controls it;
(3)  in the case of a mutual insurance association, the directors and officers of the federation with which it is affiliated or of the guarantee fund of which it is a member;
(4)  in the case of a professional order, the members of its Bureau and the directors and employees of the administrator entrusted with the day-to-day operation of the fund;
(5)  the spouse and minor children of any of the persons described in subparagraphs 1 to 4, and the minor children of the spouse;
(6)  any person who holds, directly or indirectly, 10 % or more of the voting rights attached to shares issued by the insurer, or 10 % or more of such shares and, in the case of a natural person, his spouse and minor children and the minor children of his spouse or, in the case of a legal person, any director or officer thereof, his spouse and minor children and the minor children of his spouse;
(7)  a shareholder of the insurer, his spouse and their minor children, if they jointly hold, directly or indirectly, 10 % or more of the voting rights attached to shares issued by the insurer, or 10 % or more of such shares;
(8)  a legal person in which 10 % or more of the voting rights attached to the shares, or 10 % or more of such shares, are held by a person described in subparagraphs 1 to 5;
(9)  a legal person in which a majority of the directors or officers are directors or officers of the insurer or of the legal person that controls it;
(10)  the employees of the insurer;
(11)  an auditor and the actuary designated in accordance with Division III.1 of Chapter IV of Title IV;
(12)  a legal person affiliated with the insurer, other than a subsidiary of the insurer;
(13)  a legal person controlled by a federation of mutual insurance associations with which the insurer is affiliated;
(14)  any person determined by regulation;
(15)  any other person who, in the opinion of the Inspector General, might receive preferential treatment to the detriment of the interests of the insurer or the persons insured.
For the purposes of this section, any shareholder of a legal person that is itself a shareholder of an insurer is deemed to hold a percentage of the voting rights attached to shares issued by the insurer or a percentage of such shares equal to the product of the percentage of the voting rights or shares he holds in the legal person and the percentage of the voting rights or shares held by the legal person in the insurer.
1990, c. 86, s. 39; 1994, c. 40, s. 457; 1996, c. 63, s. 53, s. 80.
285.19. The Inspector General shall notify any person he designates as being a restricted party in accordance with subparagraph 15 of the first paragraph of section 285.18, and the insurer concerned by that decision.
The Inspector General may revise his decision at the request of the person so designated or the insurer concerned.
Before rendering his decision or refusing to revise it, the Inspector General shall give the person and the insurer concerned an opportunity to present observations.
1990, c. 86, s. 39; 1997, c. 43, s. 79.
285.20. All transactions of an insurer with restricted parties or with associates of its directors or officers must comply with the provisions of this Act, the regulations and, where applicable, the rules adopted by the ethics committee.
1990, c. 86, s. 39.
285.21. No insurer may invest in
(1)  a legal person that controls it;
(2)  a legal person affiliated with it that carries out activities other than those mentioned in subparagraphs d.1 and e of the first paragraph of section 245, except in the case of a downstream holding;
(3)  a legal person holding, directly or indirectly, 10 % or more of the voting rights attached to the shares of the insurer, or 10 % or more of such shares;
(4)  a legal person holding, directly or indirectly, 10 % or more of the voting rights attached to the shares of the legal person that controls the insurer, or 10 % or more of such shares;
(5)  a legal person that controls the legal person referred to in subparagraph 3;
(6)  a legal person controlled by a person holding, directly or indirectly, 10 % or more of the voting rights attached to the shares of the insurer, or 10 % or more of such shares, and, where applicable, the spouse or minor child of such a shareholder and the minor child of the spouse.
The prohibition contained in subparagraphs 3 and 4 of the first paragraph also applies to a natural person, his spouse and minor child and the minor child of his spouse.
1990, c. 86, s. 39; 1996, c. 63, s. 80.
285.22. Every transaction by an insurer to acquire securities issued by a restricted party or to transfer assets between them must, in addition, be approved by the board of directors of the insurer, which shall, where applicable, obtain the opinion of the ethics committee.
No bad debts, unproductive assets or assets repossessed from a debtor in default may be transferred to an insurer, except in the case of a transfer of assets en bloc authorized by the Inspector General as part of a reorganization.
1990, c. 86, s. 39.
285.23. Every service contract between an insurer and a restricted party must be made on favourable terms for the insurer, or at least on competitive terms.
Every such contract, except where the amounts involved are minimal, must also be approved by the board of directors of the insurer, which shall, where applicable, obtain the opinion of the ethics committee.
The ethics committee is responsible for determining whether the amounts involved are minimal.
In cases of contestation, the onus is on the insurer to show that the service contract to which it is a party meets the prescribed requirements.
However, notwithstanding the first paragraph, a service contract may be entered into, where the parties thereto include an insurer and an affiliated legal person whose principal activity is an activity referred to in subparagraph d.1 or e of the first paragraph of section 245, provided such a contract is authorized by the Inspector General. The same applies to a contract between a mutual insurance association and a legal person belonging to the same group as its federation, where the principal activity of the legal person is an activity referred to in subparagraph d.1 or e of the first paragraph of section 245.
1990, c. 86, s. 39; 1996, c. 63, s. 80.
285.24. No insurer may grant a loan to a restricted party or an associate of any of its directors or officers on more favourable terms than those applicable in the ordinary course of its operations, except where that party or associate is one of its employees.
1990, c. 86, s. 39.
285.25. No insurer may grant a loan to any of its directors or officers or their associates for a total amount exceeding the annual remuneration paid by the insurer to the director or officer concerned if he is remunerated, or if not, the amount determined according to the rules of the ethics committee, unless the loan is secured by a first hypothec on the principal residence of the borrower.
1990, c. 86, s. 39.
285.26. An insurer must, where applicable, disclose to the ethics committee any loans granted by it to restricted parties or associates of its directors or officers.
The disclosure shall indicate the name of the restricted party or associate, the amount of the loan, the maturity date, the rate of interest and the security offered.
1990, c. 86, s. 39.
CHAPTER IV
BOOKS, ACCOUNTS AND REPORTS
DIVISION I
APPLICATION
286. This chapter applies to every insurer constituted under the laws of Québec.
1974, c. 70, s. 286; 1999, c. 40, s. 33