Law:Canada Pension Plan Investment Board Act

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S.c. 1997, c. 40

Assented to 1997-12-18

An Act to establish the Canada Pension Plan Investment Board and to amend the Canada Pension Plan and the Old Age Security Act and to make consequential amendments to other Acts

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:


Contents

Short Title

Short title

1. This Act may be cited as the Canada Pension Plan Investment Board Act.


Interpretation

Definitions

2. The definitions in this section apply in this Act.

“appropriate provincial Minister”

« ministre provincial compétent »

“appropriate provincial Minister”, in respect of a province, means the province’s minister of the Crown who has primary responsibility for that province’s finances.

“Board”

« Office »

“Board” means the Canada Pension Plan Investment Board established by section 3.

“by-law”

Version anglaise seulement“by-law” means a by-law of the Board.

“court”

« tribunal »

“court” means

(a) in the Province of Ontario, the Ontario Court (General Division);

(b) in the Province of Quebec, the Superior Court of the Province;

(c) in the Provinces of Nova Scotia and British Columbia, the Supreme Court of the Province;

(d) in the Provinces of New Brunswick, Manitoba, Saskatchewan and Alberta, the Court of Queen’s Bench for the Province;

(e) in the Provinces of Prince Edward Island and Newfoundland, the trial division of the Supreme Court of the Province; and

(f) the Supreme Court of Yukon, the Supreme Court of the Northwest Territories and the Nunavut Court of Justice.

“designated security”

« titre désigné »

“designated security” means

(a) an obligation

(i) that, before April 1, 1998, was held to the credit of the Canada Pension Plan Investment Fund, as established under subsection 109(1) of the Canada Pension Plan,

(ii) that, as applied to Canada, is an obligation of the Government of Canada and, as applied to a province, is an obligation of the government of the province or an obligation of any agent of Her Majesty in right of the province that is guaranteed as to principal and interest by that government, and

(iii) that complies with the conditions that were set out in section 111 of the Canada Pension Plan as that section read immediately before April 1, 1998; or

(b) an obligation that

(i) on or after April 1, 1998, was purchased by the Minister of Finance under section 110 of the Canada Pension Plan or is purchased by the Board under section 6.1, and

(ii) is an obligation of the government of a province or an obligation of any agent of Her Majesty in right of a province that is guaranteed as torincipal and interest by that government.

“entity”

« entité »

“entity” means a body corporate, a trust, a partnership, a fund, an unincorporated association or organization, Her Majesty in right of Canada or of a province or an agency of Her Majesty in right of Canada or of a province and the government of a foreign country or any political subdivision or agency of the government of a foreign country.

“Minister”

« ministre »

“Minister” means the Minister of Finance.

“participating province”

« province participante »

“participating province” means a province other than

(a) a territory; and

(b) a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan.

“subsidiary”

« filiale »

“subsidiary” means a corporation that is wholly owned by the Board directly or indirectly through any number of subsidiaries each of which is wholly owned directly or indirectly by the Board.

1997, c. 40, s. 2; 1999, c. 3, s. 19; 2002, c. 7, s. 112(E); 2003, c. 5, s. 12.

Previous Version

Constitution Of The Board

Board established

3. (1) There is established a corporation to be known as the Canada Pension Plan Investment Board.

Not agent of Her Majesty

(2) The Board is not an agent of Her Majesty.

Not part of federal public administration

(3) Directors, officers, employees and agents of the Board are not part of the federal public administration.

Canada Corporations Act

(4) The Canada Corporations Act, chapter C-32 of the Revised Statutes of Canada, 1970, does not apply to the Board.

1997, c. 40, s. 3; 2003, c. 22, s. 224(E).

Previous Version

Capital And Shares

Capital

4. (1) The capital of the Board is $100. The Minister shall pay the capital of the Board out of the Consolidated Revenue Fund.

Shares

(2) The capital is divided into 10 shares having a par value of $10 each. The shares shall be issued to the Minister to be held on behalf of Her Majesty in right of Canada.

Registration

(3) The shares issued to the Minister shall be registered by the Board in the name of the Minister.


Objects And Powers

Objects

5. The objects of the Board are

(a) to assist the Canada Pension Plan in meeting its obligations to contributors and beneficiaries under the Canada Pension Plan;

(b) to manage any amounts transferred to it under section 108.1 of the Canada Pension Plan, and its right, title or interest in any designated securities, in the best interests of the contributors and beneficiaries under that Act; and

(c) to invest its assets with a view to achieving a maximum rate of return, without undue risk of loss, having regard to the factors that may affect the funding of the Canada Pension Plan and the ability of the Canada Pension Plan to meet its financial obligations on any given business day.

1997, c. 40, s. 5; 2003, c. 5, s. 13.

Previous VersionPowers of Board

6. (1) The Board has the capacity and, subject to this Act, the rights, powers and privileges of a natural person.

No inconsistent business or activity

(2) The Board and its subsidiaries shall not, directly or indirectly, carry on any business or activity or exercise any power that is inconsistent with the Board’s objects, or that the Board is restricted by this Act from carrying on or exercising, and shall not, directly or indirectly, exercise any of its powers in a manner contrary to this Act.

No invalidity

(3) No act of the Board, including a transfer of property, is invalid by reason only that the Board was without the capacity or power to so act.


Designated Securities

Replacement security

6.1 (1) On the maturity of a designated security of a province that was issued before January 1, 1998, the Board shall purchase another security issued by that province if the Board is requested to do so, in writing, by the appropriate provincial Minister of that province at least 30 days before the date of maturity.

Principal amount

(2) The principal amount of the replacement security shall be not more than the principal outstanding under the maturing designated security.

Term to maturity

(3) The replacement security shall be for a term of 20 years.

Interest

(4) The replacement security shall bear interest at a rate fixed by the Board, in accordance with any agreement entered into between the Board and the Minister. The rate shall be substantially the same as the interest rate that the province would be required to pay if it were to borrow the same amount for the same term through the issuance of a security on the public capital market.

Features of replacement security

(5) The replacement security shall be issued to or payable to the Board and shall be expressed to be not negotiable and not transferable or assignable.

Redemption at request of province

(6) The Board shall redeem a designated security in whole or in part before maturity if

(a) the Board is requested to do so, in writing, by the appropriate provincial Minister of a province at least 30 days before the proposed redemption date; and

(b) the appropriate provincial Minister has agreed to pay on the proposed redemption date

(i) any payments of principal or interest due on or before the proposed redemption date but not yet paid,

(ii) interest on the principal amount being redeemed accrued to the proposed redemption date, and

(iii) an amount equal to the present value of the remaining instalments of principal being redeemed and interest on that principal.

Calculation of present value

(7) For the purposes of subparagraph (6)(b)(iii), the present value shall be calculated by discounting the instalments of principal being redeemed and interest on that principal using an interest rate fixed by the Board, in accordance with any agreement entered into between the Board and the Minister of Finance. In fixing that rate, the Board shall choose a rate that

(a) if the designated security to be redeemed was issued before January 1, 1998, is substantially the same as the rate that the Government of Canada would be required to pay if it were to borrow the principal amount being redeemed for a term equal to the remaining term of that designated security through the issuance of a security on the public capital market; or

(b) if the designated security to be redeemed was issued on or after January 1, 1998, is substantially the same as the rate that the province would be required to pay if it were to borrow the principal amount being redeemed for a term equal to the remaining term of that designated security through the issuance of a security on the public capital market.

Consolidation of securities

(8) At the request of the provincial treasurer or other similar officer of a province, the Board may accept in the place of any series of designated securities of that province acquired during any consecutive period of not more than twelve months, on payment of anynterest then accrued on the securities, another security of that province that is in an amount equal to the aggregate amount then outstanding of the designated securities of that series, and that bears interest at a rate determined by the Board.

Obligation guaranteed by the provincial government

(9) Any security purchased by the Board under this section must be an obligation of the government of a province or an obligation of an agent of Her Majesty in right of a province that is guaranteed as to principal and interest by that government.

2003, c. 5, s. 14.


Management

Board of Directors

Board of directors

7. The Board shall be managed by a board of directors of 12 directors, including the Chairperson.

Principal duties

8. (1) Subject to this Act, the board of directors shall manage or supervise the management of the business and affairs of the Board.

Specific duties

(2) Without limiting the generality of subsection (1), the board of directors shall

(a) establish written investment policies, standards and procedures in accordance with section 35;

(b) establish procedures for the identification of potential conflicts of interest and procedures to resolve those conflicts;

(c) establish a code of conduct for officers and employees of the Board; and

(d) designate a committee of the board of directors to monitor application of the conflict of interest procedures and the code of conduct.

Power to delegate

9. (1) Subject to subsection (2) and the by-laws, the board of directors may delegate to the Chairperson, to a committee of the board of directors or to any officer of the Board any of the powers or duties of the board of directors.

Limits on power

(2) The board of directors may not delegate the power to

(a) adopt, amend or repeal by-laws;

(b) establish the Board’s investment policies, standards and procedures;

(c) fill a vacancy in a committee of directors or in the office of auditor of the Board;

(d) appoint officers to the Board or fix their remuneration; or

(e) approve the annual financial statements of the Board and any other financial statements issued by the Board.


Directors

Appointment of directors

10. (1) Each director shall be appointed by the Governor in Council, on the recommendation of the Minister, to hold office during good behaviour for such term, not exceeding three years, as will ensure, as far as possible, the expiration in any one year of the terms of office of not more than one half of the directors.

Committee to advise Minister

(2) The Minister may establish a committee to advise the Minister on the appointment of directors. The committee shall consist of a representative designated by the Minister and a representative of each participating province designated by the appropriate provincial Minister for that province.

Consultation with participating provinces

(3) The Minister shall consult with the appropriate provincial Ministers of the participating provinces before making any recommendation to the Governor in Council with respect to the appointment of directors and before making an appointment under subsection (8).

Factors for consideration in appointments

(4) Before making any recommendation to the Governor in Council with respect to the appointment of directors, and before making an appointment under subsection (8), the Minister shall have regard to the desirability of having directors who are representative of the various regions of Canada and having on the board of directors a sufficient number of directors with proven financial ability or relevant work experience such that the Board will be able to effectively achieve its objects.

Reappointment

(5) A director is eligible for reappointment for one or more additional terms of office.

Removal

(6) The Governor in Council may remove a director for cause.

Continuation in office

(7) If no person is appointed to take office as a director on the expiration of the term of an incumbent director, the incumbent director continues in office until a successor is appointed.

Vacancy

(8) Where a person ceases to be a director during the term for which the person was appointed, the Minister shall appoint a qualified person to hold office as a director for the remainder of the term.

Disqualified persons

(9) The following persons are disqualified from being directors:

(a) a person who is less than 18 years of age;

(b) a person who is of unsound mind and has been so found by a court in Canada or elsewhere;

(c) a person who has the status of a bankrupt;

(d) a person who is not a natural person;

(e) a person who is an agent or employee of Her Majesty in right of Canada or in right of a province;

(f) a person who is a member of the Senate or House of Commons of Canada or a member of a provincial legislature;

(g) a person who is an agent or employee of the government of a foreign country or any political subdivision of a foreign country; and

(h) a person who is not a resident of Canada.

Remuneration and benefits of directors

(10) A director is entitled to receive from the Board such remuneration and benefits as may be fixed by the by-laws, which remuneration and benefits shall be fixed having regard to the remuneration and benefits received by persons having similar responsibilities and engaged in similar ativities.

Resignation

11. (1) The resignation of a director becomes effective at the time the Board receives a written resignation or at the time specified in the resignation, whichever is later.

Copy of resignation

(2) The Board shall send a copy of a director’s resignation to the Clerk of the Privy Council within 15 days after receiving it.


Chairperson

Chairperson

12. (1) The Governor in Council shall, on the recommendation of the Minister made after the Minister has consulted with the board of directors and the appropriate provincial Ministers of the participating provinces, designate one of the directors as Chairperson to hold office during good behaviour for such term as the Governor in Council deems appropriate.

Removal

(2) The Governor in Council may remove the Chairperson for cause.

Presiding at meetings

(3) The Chairperson shall preside at all meetings of the board of directors and may exercise such powers and perform such duties and functions as are specified by the board of directors.

Replacement of Chairperson

(4) Where the Chairperson is absent at any meeting of the board of directors, one of the directors present who is chosen to so act by the directors present shall preside and have all the powers, duties and functions of the Chairperson.

Remuneration of Chairperson

(5) The Chairperson is entitled to receive from the Board such remuneration and benefits as may be fixed by the by-laws, which remuneration and benefits shall be fixed having regard to the remuneration and benefits received by persons having similar responsibilities and engaged in similar activities.


Officers

Appointment of officers

13. (1) The board of directors may, subject to the by-laws, designate the offices of the Board, appoint officers of the Board and specify their duties.

Directors not officers

(2) A director is not eligible to be appointed an officer of the Board.

Two or more offices

(3) A person may hold two or more offices of the Board.


Duty of Care

Duty of care

14. (1) Every director and officer of the Board in exercising any of the powers of a director or an officer and in discharging any of the duties of a director or an officer shall

(a) act honestly and in good faith with a view to the best interests of the Board; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Special knowledge or skill

(2) A director or officer of the Board who in fact possesses, or by reason of profession or business ought to possess, a particular level of knowledge or skill relevant to the director’s or officer’s powers or duties shall employ that particular level of knowledge or skill in the exercise of those powers or the discharge of those duties.

Reliance on statements

(3) A director or an officer of the Board is deemed to comply with subsections (1) and (2) if they rely in good faith on

(a) financial statements of the Board represented by an officer of the Board, or represented in a written report of the Board’s auditor, to be a fair reflection of the financial condition of the Board; or

(b) a report of an accountant, lawyer, notary or other professional person whose profession lends credibility to a statement made by the person.

Duty to comply

15. (1) Every director, officer and employee of the Board shall comply with this Act and the by-laws.

No exculpation

(2) No provision in any contract, in any resolution of the Board or in the by-laws relieves any director, officer or employee of the Board from the duty to act in accordance with this Act or relieves a director, officer or employee from liability for a breach of the Act.


Indemnification

Indemnification

16. (1) Except in respect of an action by or on behalf of the Board to procure a judgment in its favour, the Board may indemnify a director or officer of the Board, a former director or officer of the Board, or any person who acts or acted at the Board’s request as a director or officer of an entity of which the Board is or was a shareholder or in which the Board has or had a financial interest, against all costs and expenses reasonably incurred by the person, including amounts paid in settlement or to satisfy a judgment, in respect of any civil, criminal or administrative action or proceeding to which the person is made a party by reason of being or having been such a person, if

(a) the person acted honestly and in good faith with a view to the best interests of the Board or the entity; and

(b) in the case of a criminal or administrative action or proceeding enforced by a monetary penalty, the person had reasonable grounds for believing that the impugned conduct was lawful.

Indemnification in derivative action

(2) The Board may, with the approval of a court, indemnify a person referred to in subsection (1), in respect of an action by or on behalf of the Board or an entity referred to in that subsection to procure a judgment in its favour to which the person is made a party by reason of being or having been a director or an officer of the Board or entity, against all costs and expenses reasonably incurred by the person, including an amount paid in settlement or to satisfy a judgment, in respect of that action if the person fulfils the conditions set out in paragraphs (1)(a) and (b).

Right to indemnity

(3) Notwithstanding the other subsections of this section, a person referred to in subsection (1) is entitled to indemnity from the Board in respect of all costs and expenses, including an amount paid in settlement or to satisfy a judgment, reasonably incurred by the person in respect of the defence of any civil, criminal or administrative action or proceeding to which the person is made a party by reason of being or having been a director or an officer of the Board or of an entity referred to in that subsection, if the person seeking indemnity

(a) was substantially successful on the merits in the defence of the action or proceeding; and

(b) fulfils the conditions set out in paragraphs (1)(a) and (b).

Personal representatives

(4) Where the Board could indemnify a person under any of subsections (1) to (3), the Board may to the same extent indemnify the heirs or personal representatives of the person.

Definition of “proceeding”

(5) For the purposes of this section, “proceeding” includes an investigation that

(a) pertains to the administration or enforcement of an Act of Parliament or of the legislature of a province;

(b) is authorized by or pursuant to an Act of Parliament or of the legislature of a province; or

(c) is within a class of investigations prescribed in the regulations.

Directors’ and officers’ insurance

17. The Board may purchase and maintain insurance for the benefit of any person referred to in subsection 16(1) and the personal representatives of that person against any liability incurred by the person

(a) in the capacity of a director or officer of the Board, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the Board; or

(b) in the capacity of a director or officer of another entity where the person acts or acted in that capacity at the Board’s request, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the entity.

Application to court for indemnification

18. (1) A court may order an indemnity under section 16 on the application of the Board or a person referred to in subsection 16(1) or (4) and may make any further order that it thinks fit.

Notice of application

(2) Where an application is made for an order under subsection (1), the court may order notice to be given to any interested person, and that person is entitled to appear and be heard in person or by counsel.


Meetings

Resolution in lieu of meeting

19. (1) A resolution in writing, signed by all the directors entitled to vote on that resolution at a meeting of the board of directors or of one of its committees, is as valid as if it had been passed at a meeting of the board of directors or of one of its committees.

Filing resolution

(2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the board of directors or its committees.

Participation by telephone

20. A director may, subject to the by-laws, participate in a meeting of the board of directors or of one of its committees by means of any telephone or other communications facilities that permit all persons participating in the meeting to communicate with each other, and a director who participates in that way is deemed for the purposes of this Act to be present at the meeting.

Dissent

21. (1) A director who is present at a meeting of the board of directors or of one of its committees is deemed to have consented to any resolution passed or action taken at the meeting unless

(a) the director’s dissent is entered in the minutes of the meeting or the director requests that the director’s dissent be entered in the minutes of the meeting;

(b) the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; or

(c) the director sends a dissent by registered mail or delivers it to the head office of the Board immediately after the meeting is adjourned.

Loss of right to dissent

(2) A director who votes for or consents to a resolution is not entitled to dissent under subsection (1).

Dissent of absent director

(3) A director who was not present at a meeting at which a resolution was passed or an action was taken is deemed to have consented to the resolution or the action unless, within seven days after becoming aware of the resolution or the action, the director

(a) causes a dissent to be placed with the minutes of the meeting; or

(b) sends a dissent by registered mail or delivers it to the head office of the Board.


Conflicts of Interest

Disclosure of director’s interest

22. (1) A director or officer of the Board shall disclose in writing to the Board or request to have entered in the minutes of a meeting of the board of directors or one of its committees the nature and extent of the director’s or officer’s interest

(a) as a party to a transaction or proposed transaction with the Board; or

(b) as a director or an officer of any entity that is a party to a transaction or proposed transaction with the Board or as a person who holds a material interest in any such entity.

Time of disclosure for director

(2) The disclosure must be made, in the case of a director,

(a) at the meeting at which a proposed transaction is first considered;

(b) if the director was not at the time of that meeting interested in a proposed transaction, at the first meeting after the director becomes so interested;

(c) if the director becomes interested after a transaction is made, at the first meeting after the director becomes so interested; or

(d) if a person who is interested in a transaction later becomes a director, at the first meeting after the person becomes a director.

Time of disclosure for officer

(3) The disclosure must be made, in the case of an officer,

(a) without delay after the officer becomes aware that the transaction or proposed transaction is to be considered or has been considered at a meeting of the board of directors or one of its committees;

(b) if the officer becomes interested after a transaction is made, without delay after the officer becomes so interested; or

(c) if a person who is interested in a transaction later becomes an officer, without delay after the person becomes an officer.

Time of disclosure for director or officer

(4) If a transaction or proposed transaction is one that, in the ordinary course of the Board’s business, would not require approval by the board of directors, a director or officer shall disclose in writing to the Board or request to have entered in the minutes of a meeting of the board of directors or one of its committees the nature and extent of the interest of the director or officer without delay after the director or officer becomes aware of the transaction or proposed transaction.

Voting

(5) A director referred to in subsection (1) shall not vote on a resolution or participate in a discussion to approve the transaction mentioned in that subsection unless the transaction is

(a) one relating primarily to the director’s remuneration as a director of the Board or one of its subsidiaries;

(b) one for indemnity or insurance under section 16 or 17; or

(c) one with a subsidiary.

Continuing disclosure

(6) For the purposes of this section, a general notice to the board of directors or to one of its committees by a director or officer, declaring that the director or officer is a director or officer of, or has a material interest in, an entity and is to be regarded as interested in any transaction made with that entity, is a sufficient declaration of interest in relation to any transaction so made.

Avoidance standards

(7) A transaction between the Board and one or more of its directors or officers or between the Board and another entity of which a director or officer of the Board is a director or officer or in which a director or officer of the Board has a material interest, is neither void nor voidable by reason only of that relationship or by reason only that a director with an interest in the transaction is present at or is counted to determine the presence of a quorum at a meeting of the board of directors or on one its committees that authorized the transaction, if

(a) the director or officer disclosed the interest in accordance with subsection (2), (3), (4) or (6), as the case may be;

(b) the transaction was approved by the directors; and

(c) the transaction was reasonable and fair to the Board at the time it was approved.

Application to court

(8) Where a director or officer of the Board fails to disclose an interest in a transaction in accordance with this section, a court may, on the application of the Board, set aside the transaction on any terms that it thinks fit.

Meaning of “transaction”

(9) In this section, “transaction” includes a contract, a guarantee and an investment.


General

No constructive notice

23. No person dealing with the Board or with any person who has acquired rights from the Board is deemed to have notice or knowledge of the contents of a document, other than an Act of Parliament or any instrument required to be published in the Canada Gazette pursuant to the Statutory Instruments Act, concerning the Board by reason only that the document is available at the head office of the Board or has been made public.

Validity of acts

24. An act of the Chairperson or other director of the Board, or of the chief executive officer or other officer of the Board, is not invalid by reason only of an irregularity in that person’s appointment or a defect in that person’s qualifications.

Assertions

25. The Board may not assert against a person dealing with the Board or with any person who has acquired rights from the Board

(a) that this Act or the by-laws have not been complied with, or

(b) that a document issued by any director, officer or agent of the Board having apparent authority to issue the document is not valid or genuine by reason only that the person who issued the document lacked actual authority to issue the document,

except where the person has knowledge that the facts asserted are true.

Corporate seal

26. The Board may, but need not, have a corporate seal, and an instrument or agreement executed on behalf of the Board is not invalid merely because a corporate seal is not affixed to it.


By-laws

By-laws

27. (1) The board of directors may make by-laws that are consistent with this Act to govern the conduct and management of the Board’s business and affairs, including by-laws

(a) for the administration, management and control of the Board’s property;

(b) governing the calling of meetings of the board of directors and its committees, the time and place of those meetings and the quorum and procedure in all matters relating to those meetings;

(c) respecting the functions, duties and remuneration of the officers and employees of the Board; and

(d) respecting the establishment of committees of the board of directors and the appointment of members to those committees.

Effective date

(2) A by-law is effective as soon as it is made or on such later date as may be stated in the by-law to be its effective date.

Copy to Minister

28. (1) The board of directors shall provide a copy of every by-law and every amendment to or repeal of any by-law to the Minister and the appropriate provincial Ministers within 14 days after its effective date.

By-laws available to the public

(2) A copy of every by-law shall be kept at the head office of the Board. Anyone is entitled, during the usual business hours of the Board, to examine the by-laws and, on payment of a reasonable fee, to make copies of or take extracts from them.

Statutory Instruments Act does not apply

29. The Statutory Instruments Act does not apply in respect of by-laws.


Committees

Establishment

Audit and investment committees

30. (1) The board of directors shall establish an audit committee and an investment committee.

Other committees

(2) The board of directors may establish other committees as it deems necessary and assign to them such duties as it considers appropriate.


Audit Committee

Duties of audit committee

31. The audit committee shall

(a) require the Board’s management to implement and maintain appropriate internal control procedures;

(b) review, evaluate and approve those internal control procedures;

(c) review and approve the Board’s annual financial statements and report to the board of directors before those statements are approved by the board of directors;

(d) meet with the Board’s auditor to discuss the Board’s annual financial statements and the auditor’s report;

(e) review all investments and transactions that could adversely affect the return on the Board’s investments that are brought to the committee’s attention by the Board’s auditor or officers; and

(f) meet with the chief internal auditor of the Board, or with the person acting in any similar capacity, and with the Board’s management, to discuss the effectiveness of the internal control procedures.

Meeting of audit committee

32. (1) The Board’s auditor or any member of the audit committee may call a meeting of the committee.

Meeting of directors

(2) The audit committee may call a meeting of the board of directors to consider any matter of concern to the committee.

Auditor’s right to attend meetings

33. (1) The Board’s auditor is entitled to receive notice of and to attend meetings of the board of directors and meetings of the audit committee, at the Board’s expense, and to be heard at those meetings on matters relating to the auditor’s duties.

Requiring auditor’s attendance

(2) The Board’s auditor shall attend meetings of the audit committee, if requested to do so by a member of the audit committee, at the Board’s expense, and shall attend meetings of the board of directors, if requested to do so by a director.


Investment Committee

Duties of investment committee

34. The investment committee shall

(a) perform the duties that are delegated to it by the board of directors;

(b) approve the engagement of investment managers empowered with discretionary authority to invest the assets of the Board;

(c) meet with the officers and employees of the Board to discuss the effectiveness of the Board’s investment policies and the achievement of the Board’s objects;

(d) require management to implement and maintain appropriate procedures to

(i) monitor the application of the Board’s investment policies, standards and procedures, and

(ii) ensure that the Board’s agents comply with this Act and the Board’s investment policies, standards and procedures; and

(e) review, evaluate and approve management’s procedures referred to in paragraph (d).


Investments

Investment policies, standards and procedures

35. Subject to the regulations, the board of directors shall establish, and the Board and its subsidiaries shall adhere to, investment policies, standards and procedures that a person of ordinary prudence would exercise in dealing with the property of others.

Duty of investment managers

36. Every investment manager who invests the assets of the Board shall do so in accordance with this Act and the Board’s investment policies, standards and procedures.

Income Tax Act

37. The Board and its subsidiaries shall invest their assets in such a way that tax would not be payable by the Board under subsection 206(2) of the Income Tax Act if

(a) Part XI of that Act applied to the Board; and

(b) each subsidiary were a corporation that had made a valid election under section 259 of that Act.

1997, c. 40, s. 37; 2003, c. 5, s. 15.

Previous Version

Financial Management

Financial Year

Financial year

38. The financial year of the Board is the period beginning on April 1 in one calendar year and ending on March 31 in the next calendar year.


Financial Statements

Books and systems

39. (1) The Board shall, in respect of itself and each of its subsidiaries, cause

(a) books of account and records to be kept;

(b) financial and management control and information systems and management practices to be maintained; and

(c) a record of the investments held during the financial year to be kept, showing

(i) the book value of each investment,

(ii) the market value of each investment and such information as will permit the verification of that value, and

(iii) such information as will permit the determination of whether the requirements of this Act and the investment policies, standards and procedures have been met.

Manner in which books, etc., to be kept

(2) The books, records, systems and practices required by subsection (1) shall be kept and maintained in such manner as will provide reasonable assurance that

(a) the Board’s assets and those of its subsidiaries are safeguarded and controlled;

(b) the Board’s transactions and those of its subsidiaries are in accordance with this Act and the by-laws, or the by-laws of the subsidiaries, as the case may be; and

(c) the Board’s financial, human and physical resources and those of its subsidiaries are managed economically and efficiently and that the Board’s operations and those of its subsidiaries are carried out effectively.

Internal audit

(3) The Board shall cause internal audits to be conducted, in respect of itself and each of its subsidiaries, to assess compliance with subsections (1) and (2).

Annual financial statements

(4) The Board shall cause financial statements to be prepared annually, in respect of itself and each of its subsidiaries, including, with respect to the financial year to which it relates,

(a) a balance sheet as at the end of the financial year;

(b) a statement of income for the financial year;

(c) a statement of change in net assets for the financial year; and

(d) a statement of investment portfolio.

Contents of statements

(5) The annual financial statements shall show such information and particulars as in the opinion of the directors are necessary to present fairly, in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants, the Board’s financial position as at the end of the financial year to which it relates.

Quarterly financial statements

(6) During each financial year, the Board shall cause quarterly financial statements to be prepared for each three month period of the year. The quarterly statements shall

(a) show the same information for the most recent three month period as is required to be set out in the Board’s annual financial statements, except that a balance sheet is not required; and

(b) show the same information in respect of the part of the year up to the date of the statements in relation to the corresponding period in the preceding financial year.

Approval by board of directors

(7) The board of directors shall approve the annual financial statements of the Board and of each of its subidiaries and that approval shall be evidenced by the signature of at least one director of the Board.


Auditor’s Report

Annual auditor’s report

40. (1) The Board shall cause an annual auditor’s report to be prepared, in respect of itself and each of its subsidiaries, on

(a) the annual financial statements referred to in section 39;

(b) any revised financial statement referred to in subsection 41(3); and

(c) the record of investments referred to in paragraph 39(1)(c).

Contents

(2) A report under subsection (1) shall be addressed to the Board and shall

(a) include separate statements indicating whether, in the auditor’s opinion,

(i) the financial statements are presented fairly in accordance with generally accepted accounting principles applied on a basis consistent with that of the preceding year,

(ii) the Board’s transactions and those of its subsidiaries that have come to the auditor’s notice in the course of the auditor’s examination for the report were in accordance with this Act and the by-laws, and the by-laws of the subsidiaries, as the case may be, and

(iii) the record of investments kept in accordance with paragraph 39(1)(c) fairly presents the information required by that paragraph; and

(b) call attention to any other matter falling within the scope of the auditor’s examination for the report that, in the auditor’s opinion, should be brought to the attention of the Board.

Examination

(3) An auditor preparing a report under subsection (1) shall make such examination as the auditor considers necessary for the purpose.

Auditing standards

(4) An auditor’s examination shall be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants.

Reliance on internal audit

(5) In conducting an audit under this Act, an auditor shall rely on any internal audit conducted under subsection 39(3), to the extent that the auditor considers that reliance to be practicable.

Notice of errors and omissions

41. (1) A director or officer of the Board shall without delay notify the Board’s auditor and the audit committee of any error or omission of which the director or officer becomes aware in a financial statement that the auditor or a former auditor has reported on or in a report prepared by the auditor or a former auditor under section 40.

Duty of auditor

(2) Where the Board’s auditor, or a former auditor of the Board, is notified or becomes aware of any error or omission in a financial statement that the auditor or former auditor has reported on or in a report prepared by the auditor or former auditor under section 40, the auditor or former auditor shall without delay notify each director of the Board of the error or omission if the auditor or former auditor is of the opinion that the error or omission is material.

Correction

(3) Where the directors receive a notification under subsection (2) of an error or omission in a financial statement or a report, the Board shall prepare a revised financial statement or the auditor or former auditor shall issue a correction to the report, as the case may be, and a copy of it shall be given to the Minister and the appropriate provincial Ministers.


Auditor

Appointment of auditor

42. (1) The auditor of the Board shall be appointed annually by the board of directors, and may be removed at any time by the board of directors.

Re-appointment

(2) On the expiration of the appointment of the auditor of the Board, the auditor is eligible for re-appointment.

Continuation in office

(3) Notwithstanding subsection (1), if an auditor of the Board is not appointed to take office on the expiration of the appointment of an incumbent auditor, the incumbent auditor continues in office until a successor is appointed.

Definition of “firm of accountants”

43. (1) In this section, “firm of accountants” means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting.

Qualification of auditor

(2) A natural person or firm of accountants is qualified to be the auditor of the Board if

(a) in the case of a natural person, the person is an accountant who

(i) is a member in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,

(ii) has at least five years experience at a senior level in performing audits of a financial institution,

(iii) is ordinarily resident in Canada, and

(iv) is independent of the Board, each of its subsidiaries, and the directors and officers of the Board and those of each of its subsidiaries; and

(b) in the case of a firm of accountants, the member or officer of the firm jointly designated by the firm and the Board to conduct the audit of the Board on behalf of the firm meets the qualifications described in paragraph (a).

Independence

(3) For the purposes of this section,

(a) independence is a question of fact; and

(b) a person is deemed not to be independent if that person or any of that person’s business partners

(i) is a business partner, director, officer or employee of the Board or of any of its subsidiaries, or a business partner of any director, officer or employee of the Board or of any of its subsidiaries, or

(ii) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any of the Board’s subsidiaries within the two years before the natural person’s or the firm of accountants’ proposed appointment, as the case may be, as the Board’s auditor.

Joint designation

(4) Within 15 days after appointing a firm of accountants as its auditor, the Board and the firm shall jointly designate a member or officer of the firm who has the qualifications described in paragraph (2)(a) to conduct the audit of the Board on behalf of the firm.

Resignation

(5) An auditor of the Board who becomes disqualified under this section shall resign without delay after becoming aware of the disqualification.

When resignation becomes effective

(6) A resignation of an auditor of the Board becomes effective at the time the Board receives a written resignation from the auditor or at the time specified in the resignation, whichever is later.

Statement of auditor

(7) Where the Board’s auditor resigns or receives a notice or otherwise learns of a meeting of the board of directors at which another auditor is to be appointed in place of the auditor and the auditor objects to being replaced, the auditor shall submit to the Board a written statement giving the reasons for the resignation or the reasons why the auditor objects to being replaced.

Statement to be sent to Ministers

(8) Where the Board receives a written statement referred to in subsection (7) that relates to a resignation of its auditor as a result of a disagreement with the directors or officers of the Board or that relates to a replacement or proposed replacement of the auditor, the Boar shall without delay send a copy of the statement to the Minister and to the appropriate provincial Ministers of the participating provinces.


Right to Information

Right to information

44. (1) On the request of the Board’s auditor, the present or former directors, officers, employees or agents of the Board shall provide to the auditor all information and explanations, and all access to records, documents, books, accounts and vouchers of the Board and its subsidiaries, that the auditor considers necessary to prepare any report required by this Act and that they are reasonably able to furnish.

Directors’ duties

(2) On the request of the Board’s auditor, the directors shall

(a) obtain from the present or former directors, officers, employees or agents of any of its subsidiaries all information and explanations that

(i) the auditor considers necessary to enable the auditor to prepare any report required by this Act, and

(ii) the present or former directors, officers, employees or agents are reasonably able to furnish; and

(b) furnish the auditor with the information and explanations so obtained.

Reliance on reports

(3) The Board’s auditor may reasonably rely on any report of any other auditor of the Board.

No civil liability

(4) A person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.


Qualified Privilege

Qualified privilege

45. Any oral or written statement or report made under this Act by the Board’s auditor or a former auditor of the Board has qualified privilege.


Special Audit

Special audit

46. (1) The Minister may, if the Minister considers it necessary, appoint an auditor to conduct a special audit of the Board or any of its subsidiaries.

Costs of audit

(2) The costs of a special audit are payable by the Board.

Other sections to apply

(3) Sections 43 to 45 apply in respect of a special auditor, with any modifications that the circumstances require.


Special Examination

Special examination

47. (1) The Minister shall cause a special examination to be carried out at least once every six years in respect of the Board or any of its subsidiaries to determine if the systems and practices referred to in paragraph 39(1)(b) were, in the period under examination, maintained in a manner that provided reasonable assurance that they met the requirements of paragraphs 39(2)(a) and (c).

Consultation required

(2) Before causing a special examination to be carried out, the Minister shall consult with the appropriate provincial Ministers of the participating provinces.

Plan

(3) Before an examiner commences a special examination, the examiner shall survey the systems and practices of the Board or of the subsidiary being examined, as the case may be, and submit a plan to the audit committee for the examination, including a statement of the criteria to be applied in the examination.

Resolution of disagreements

(4) Disagreements, if any, between the examiner and the audit committee with respect to a plan referred to in subsection (3) may be resolved by the Minister.

Reliance on internal audit

(5) An examiner shall rely on any internal audit conducted under subsection 39(3), to the extent that the examiner considers that reliance to be practicable.

Report

48. (1) An examiner shall, on completion of the special examination, submit a report on the examiner’s findings to the Minister and the appropriate provincial Ministers.

Contents

(2) The report of an examiner shall include

(a) a statement indicating whether, in the examiner’s opinion, with respect to the criteria established under subsection 47(3), there is reasonable assurance that there are no significant deficiencies in the systems and practices examined; and

(b) a statement of the extent to which the examiner relied on internal audits.

Who conducts examination

49. (1) Subject to subsection (2), a special examination referred to in section 47 shall be carried out by the Board’s auditor or, where the Minister has consulted the board of directors and is of the opinion that it is necessary, by an auditor appointed by the Minister.

Sections 43 to 45 apply

(2) Sections 43 to 45 apply in respect of an examiner as though the references in that section to an auditor were references to an examiner.


Reporting

Quarterly Statements

Statements to go to Ministers

50. (1) The Board shall send copies of the financial statements for the first, second and third quarters of the financial year, prepared in accordance with subsection 39(6), to the Minister and the appropriate provincial Ministers within 45 days after the end of the three-month period to which they relate.

Statements to be made public

(2) Within seven days after the financial statements are sent as required under subsection (1), the Board shall make the statements available to the public.

1997, c. 40, s. 50; 2003, c. 5, s. 16.

Previous Version

Annual Report

Annual report required

51. (1) The Board shall as soon as possible, but in any case within 60 days, after the end of each financial year provide the Minister and the appropriate provincial Ministers with an annual report on the operations of the Board in that year and the Board shall make copies of the report available to the public.

Tabling in Parliament

(2) After receiving the annual report, the Minister shall cause it to be laid before each House of Parliament on any of the next 15 days during which that House is sitting.

Contents

(3) The annual report shall contain

(a) the financial statements for the previous year prepared as required under section 39;

(b) the Board’s auditor’s report for that year prepared as required under section 40;

(c) a certificate, signed by a director on behalf of the board of directors, stating that the investments of the Board held during that year were in accordance with this Act and the Board’s investment policies, standards and procedures;

(d) a statement of the Board’s objectives for that year and a statement on the extent to which the Board met those objectives;

(e) a statement of the Board’s objectives for the next year and for the foreseeable future;

(f) a statement of the Board’s investment policies, standards and procedures; and

(g) such other information as is required by the regulations.

1997, c. 40, s. 51; 2003, c. 5, s. 17.

Previous Version

Public Meetings

Public meetings

52. (1) The Board shall hold a public meeting once every two years in each participating province to discuss the Board’s most recent annual report and to give interested persons an opportunity to comment on it.

Notice of meeting

(2) The Board shall publish a notice of each meeting at least 10 days before the date of the meeting in at least one newspaper of general circulation in the province where the meeting will take place. The notice shall indicate the date, time and place of the meeting and where copies of the Board’s most recent annual report can be obtained.

Directors and officers to attend

(3) The Board shall require one or more directors or officers of the Board to be at the meeting to answer questions from the public and shall have copies of the Board’s most recent annual report available for distribution at the meeting.


Regulations

Regulations

53. (1) The Governor in Council may make regulations

(a) specifying which provisions of the Pension Benefits Standards Act, 1985 and any regulations made under that Act apply to the Board and its subsidiaries and adapting those provisions in the manner that the Governor in Council considers appropriate for the purpose of applying them to the Board and its subsidiaries;

(b) respecting the investments the Board and its subsidiaries may make; and

(c) prescribing anything that this Act provides is to be prescribed or is to be determined by regulation.

Application

(2) A regulation made under subsection (1) has no force or effect until the appropriate provincial Minister of each of at least two thirds of the participating provinces having in total not less than two thirds of the population of all of the participating provinces has approved the regulation.

Approval of proposed regulation

(2.1) For the purpose of subsection (2), the approval of a proposed regulation published in the Canada Gazette is deemed to be the approval of the regulation if the regulation is the same or substantially the same as the proposed regulation.

Determination of population

(3) For the purposes of subsection (2), the population of a province at any time in a year in respect of which the determination of the province’s population is relevant means the province’s population on June 1 of that year, as estimated by the Chief Statistician of Canada.

1997, c. 40, s. 53; 2009, c. 31, s. 45.

Previous Version

Offence

False statements

54. (1) Every director, officer, employee, agent or auditor of the Board or of any of its subsidiaries who, in carrying out a duty under this Act or the by-laws, prepares, signs, approves or concurs in any statement, report or other document respecting the affairs of the Board or the subsidiary that contains any false or deceptive information is guilty of an offence.

Punishment

(2) Every person who commits an offence under subsection (1) is liable on summary conviction

(a) in the case of a natural person, to a fine not exceeding $100,000 or to imprisonment for a term not exceeding 12 months, or to both; or

(b) in any other case, to a fine not exceeding $500,000.


Winding-up

Insolvency and winding-up

55. No Act relating to the insolvency or winding-up of any corporation applies to the Board and in no case shall the affairs of the Board be wound up unless Parliament so provides.


Canada Pension Plan Account

Duty of Board

56. (1) The Board shall pay into the Consolidated Revenue Fund, for credit to the Canada Pension Plan Account established under subsection 108(1) of the Canada Pension Plan, any amount required under subsection 108.1(2) or 113(1.1) of that Act.

Transfer of securities

(2) The Board shall transfer to the Minister any designated securities of a province or of Canada that the Minister requires under subsection 113(1.1) of the Canada Pension Plan.

1997, c. 40, s. 56; 2003, c. 5, s. 18.

Previous VersionCosts

57. Where the Minister is of the opinion that the Board cannot pay its administration costs, the Minister shall pay those costs out of the Consolidated Revenue Fund and any such payment shall be charged to the Canada Pension Plan Account established under subsection 108(1) of the Canada Pension Plan.


Amendments To The Canada Pension Plan

58. to 99. (Amendments)


Amendments To The Old Age Security Act

100. to 107. (Amendments)


Consequential Amendments

108. and 109. (Amendments)


Coming Into Force

Coming into force

Coming into force

(2) Section 84, subsection 90(3) of the Canada Pension Plan as enacted by section 86, section 90.1 of the Canada Pension Plan as enacted by section 87, sections 100 and 101, subsection 44(4) of the Old Age Security Act as enacted by section 106 and section 44.1 of the Old Age Security Act as enacted by section 107 come into force on a day or days to be fixed by order of the Governor in Council.

Schedule

(Amendment)


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