Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs
Issue 7 - Evidence for December 1, 2011
OTTAWA, Thursday, December 1, 2011
The Standing Senate Committee on Legal and Constitutional Affairs, to which was referred Bill S-1002, An Act to authorize the Industrial Alliance Pacific General Insurance Corporation to apply to be continued as a body corporate under the laws of Quebec, met this day at 10:34 a.m. to give consideration to the bill.
Senator John D. Wallace (Chair) in the chair.
The Chair: Good morning and welcome, Senate colleagues, our invited guest, whom I will introduce in a moment, and members of the general public who are viewing today's proceedings on the CPAC television network..
I am John Wallace, a senator from New Brunswick and chair of the Standing Senate Committee on Legal and Constitutional Affairs.
We are meeting here today to review and consider Bill S-1002, An Act to authorize the Industrial Alliance Pacific General Insurance Corporation to be continued as a body corporate under the laws of Quebec. Bill S-1002 is a private bill that was introduced in the Senate on November 23, 2011, and was referred to this committee for study on November 27, 2011.
Unlike public bills, private bills are bills that confer specific powers or rights on particular persons or groups of persons. Most incorporations or changes in existing acts of incorporation can be accomplished through administrative action — for example, letters patent or supplementary letters patent — and do not require parliamentary intervention. There are, however, certain matters relating to companies and certain amendments to original acts of incorporation that can only be accomplished through parliamentary action.
Under the rules of both houses, every application to Parliament for a private bill must comply with certain conditions. Under the Rules of the Senate, the director of committees is the Examiner of Petitions for Private Bills, and a private bill cannot be introduced in the Senate until it has been favourably reported on by the examiner.
Last week, on November 23, the report from the Examiner of Petitions for Private Bills was presented in the Senate, indicating compliance with all of the requirements of our rules.
The petitioner for this particular private bill is Industrial Alliance Pacific General Insurance Corporation, which is currently incorporated under the federal Insurance Companies Act. With the enactment of Bill S-1002, Industrial Alliance is seeking to apply to be continued as a body corporate under the laws of the Province of Quebec.
In order to explain to us in greater detail the reasons for this application, I am pleased to welcome before this committee Ms. Azmina Karim-Bondy, Chief Legal Counsel representing the Industrial Alliance Pacific General Insurance Corporation.
Ms. Karim-Bondy obtained her law degree in 1988 from Osgoode Law School in Toronto. She was called to the British Columbia bar in 1989 and subsequently practised commercial litigation, injury law, and acted as in-house counsel with several firms in Western Canada and the United States. In 2002 she rejoined Industrial Alliance Pacific Insurance and Financial Services Inc. and in 2005 she was promoted to the position of chief legal counsel.
Before I call upon Ms. Karim-Bondy to present to us, there is a matter that I would turn to Senator Joyal to bring to your attention.
Senator Joyal: Thank you, Mr. Chair, for recognizing me at the outset of the study of this bill. Pursuant to the Conflict of Interest Code for Senators, I would like to inform the honourable members of our committee and our witness that I prefer to withdraw from the study of this bill. I might have a conflict with the object and scope of this bill. I would request you to have my declaration printed in the minutes of the committee according to the standing rules under conflict of interest.
The Chair: We will certainly do that, Senator Joyal, and thank you for bringing that to our attention.
Senator Joyal: I exclude myself from the witness and from my honourable colleagues.
The Chair: Ms. Karim-Bondy, we will begin with your opening statement, and following that we will have questions from our senators.
Azmina Karim-Bondy, Chief Legal Counsel, Industrial Alliance Pacific General Insurance Corporation: Thank you. As you have mentioned, Senator Wallace, I am chief legal counsel for Industrial Alliance Pacific General Insurance Corporation, which is the petitioner in this matter.
The petitioner is requesting that the members of the committee consider adoption of Bill S-1002, An Act to authorize the Industrial Alliance Pacific General Insurance Corporation to apply to be continued as a corporation under the laws of Quebec.
This is not a controversial bill, but simply a private bill requested by a private company to allow it to apply to move from a federal charter to a provincial insurance company as if it had been incorporated under the laws of Quebec.
Industrial Alliance Pacific General Insurance Corporation, and I will refer to it as IAPG because it is a rather lengthy name, is part of the Industrial Alliance group of companies. It was initially a Saskatchewan-based company, purchased in 2002 by Industrial Alliance Pacific Insurance and Financial Services Inc., which I will refer to as IAP. IAP is a federally regulated company based out of the city of Vancouver and has its head office based there. In order to have the same regulator as its parent, at that time, in 2007, IAPG moved from a Saskatchewan company to a federally regulated company under the Insurance Companies Act of Canada.
IAP is owned by Industrial Alliance Insurance and Financial Services Inc., which I will refer to as IA, which is a life insurance company incorporated under the laws of Quebec. IA is Canada's fourth largest life insurance company, has assets under management of about $71.5 billion and employs more than 3,900 people who serve about 3 million Canadians.
IAP is in the process of selling its tiny subsidiary IAPG to the parent company in Quebec, IA. In order for IAPG to have the same regulator as the mother company, which is IA, it must be continued or essentially transferred to a Quebec charter from a federal charter. To take a company from a federal charter to provincial charter, we have to have before us a private bill, as there is no provision within the Insurance Companies Act of Canada to move from a federal charter to a provincial charter.
IAP is selling IAPG to the parent company for economic reasons, for regulatory efficiency and just to maximize the scales between the companies. IAPG does not have any employees of its own. It is simply a virtual subsidiary that is served by the employees of IAP. Therefore, moving it from a regulator that is federal to provincial will have no impact at all on any jobs, any head offices or any other matters, because it has no employees of its own. This is simply an administrative measure for us to be able to allow the members of one corporate family to have similar regulatory authorities and so that there is no duplication of filings and legal proceedings and all of the things that go with dealing with one particular regulator.
IAPG has undergone all the required prerequisites for the introduction of this bill, as was mentioned by Senator Wallace. We have had the publication in the Canada Gazette and certification of the petition. It has been through the Senate's Examiner of Petitions and has gone to first and second reading.
It is also important to note that both the Office of the Superintendent of Financial Institutions in Ottawa, which is the current regulator of IAPG, and the Autorité des marchés financiers in Quebec, who will be the new regulator for this company, have no objection to this process, and both have produced confirmation letters of their support, of which I have copies if anyone would like to see them.
I should also mention that this bill does not create a precedent. Indeed, since 1994, three such initiatives have been undertaken by life insurance companies that have moved from federal charters to provincial charters in Quebec. The first was Bill S-3 in 1994, and that was the General Securities Insurance Company of Canada that moved to a provincial charter in Quebec. The second was Bill S-27, which dealt with Imperial Life. The third was Bill S-28, which dealt with Certas. All of these companies moved to provincial charters in Quebec. The other two bills were passed in the year 2001, so it has been a while.
Honourable senators, I respectfully submit that Bill S-1002 be adopted by this committee, and I would be pleased to answer any questions that you might have.
The Chair: Thank you very much, Ms. Karim-Bondy. Before turning to questions, you had mentioned that you have written letters from both the Quebec provincial regulator and the federal regulator confirming they have no objections to this petition. Could you provide those to us so we could have that on record? Would you just identify the date of each of those letters and from whom and to whom it was forwarded?
Ms. Karim-Bondy: I have sufficient copies for all members here. I will pass them along.
Senator Dawson: I move that the documents be tabled officially in front of the clerk.
Ms. Karim-Bondy: As for the dates, the letter from the Autorité des marchés financiers was dated November 4, 2011, and it was addressed to me as the corporate secretary of Industrial Alliance Pacific General Insurance Corporation. The letter from the Office of the Superintendent of Financial Institutions is dated November 23, 2011, and it was addressed to the Honourable Michael Meighen, senator.
The Chair: Thank you very much.
Senator Dawson: I am very happy to be a member of the prestigious justice committee, being a humble member of the Transport Committee. You are recognized as being the most important committee in the Senate. Transport is the oldest, but justice is the most important.
The Chair: You must come back more often.
Senator Dawson: I wanted to get the letters on the record because they had been forwarded to me. I was the critic for the opposition on this bill, and I had asked Senator Meighen to be sure that we had as much confirmation on the fact that not only were we happy to give the permission, but that the Province of Quebec was in accordance with accepting it, so I appreciate the letters.
The only question that was debated this week in the Senate chamber was the notion of why the urgency. Why do it now and why do it fast? I will be proposing, chair, in the near future that we probably have legislation that would cover the fact that the witness says there is no provision within the Insurance Companies Act of Canada to continue a company from a federal charter to a provincial charter. Since this is the fourth or fifth time it has happened in the last few years, and it has always been the equivalent of rubber-stamping legislation, because it is just common sense, I would hope we could look at the fact that we might be modifying the Insurance Companies Act of Canada. I know how precious this committee's time is, and I know you have an important agenda over the next few weeks. Using this time in a more profitable way, and I am very happy to cooperate, would probably be a useful change to the law.
That being said, could you explain to the committee members, and Senator Meighen explained to me, the notion of the why we need to do it now and why we need to do it as quickly as possible?
Ms. Karim-Bondy: As I mentioned, IAP is selling this subsidiary to the parent IA. The Office of the Superintendent of Financial Institutions has to approve that. That will be completed very shortly.
The second reason is that the fiscal year-end for IAPG is December 31. Essentially, we would like to ensure it is accomplished prior to the end of the year. Otherwise, if we go over into the next year, financial statements have to be filed with both regulators, the AMF and with OSFI, and not just financial statements but a number of filings that are made for year-end, which would cause a huge problem if we end up into the following year.
The other issue is that if bill should pass and it does pass, the AMF will have to get ministerial approval from the Minister of Finance in Quebec. I understand from the AMF that the national assembly will be sitting only until December 9. Therefore, in order to get the ministerial approval, which can only be done subsequent to the passing of this bill, we need to get it expedited.
Senator Dawson: I think in the Senate chamber we proved this week that we can be very efficient and quick. Do you have any commitment? If it is agreed by this committee that it is adopted and sent back to the chamber, do you have assurances that the other place, as we call it here, will be passing this legislation in respect of that timetable that you have in front of you?
Ms. Karim-Bondy: The House of Commons? Yes, we have been meeting with members of the House of Commons in order to ensure they understand this is an administrative bill and does not have any public impact. We have been meeting with members to ascertain that they understand the bill, and there are no issues as far as they are concerned, yes.
Senator Dawson: As I mentioned in the chamber, as the opposition critic on this bill, I will be more than happy to cooperate in trying to get it through. I hope the members on this side will do the same and then we will have the chair do the next steps.
Senator Fraser: Good morning. Thank you for being here.
I will raise a question that was raised in the Senate chamber by Senator Champagne who looked at the listing on the Senate Order Paper, which gives the title of the bill in two official languages. As she read it, she said the English and French versions say opposite things. I suspect she was zeroing in on the phrase "apply to be continued" versus the phrase "demander sa prorogation." She is a long time parliamentarian and prorogation means the opposite of continuance. It means discontinuance: Everyone stop work and go home.
Am I to understand that in corporate law purposes, prorogation would mean continuance?
Ms. Karim-Bondy: That is correct. I was about to indicate that there are two interpretations to the word prorogation. This matter was referred to the parliamentary law clerk subsequent to the honourable senator's question. The translator for the parliamentary law clerk has confirmed it is the correct interpretation.
Prorogation is correct in the way that it has been phrased.
Senator Fraser: Prorogation in French, and continuance in English.
Ms. Karim-Bondy: Those are also the words in French and English that are used in the Insurance Companies Act of Canada.
Senator Fraser: I was sure that was case, but I wanted it to be on the record since the Journals of the Senate are on the record.
Senator Boisvenu: As a matter of fact, I was asking myself the same question and I used our new tools to check. In a legal context, "to prorogate" means to maintain a situation. In the political world, the word means the opposite, when we say that we "prorogate" Parliament, we end a session. But in the case at hand, the word means to prolong. It's weird.
Senator Fraser: This proves that we do learn things in this committee.
Senator Boisvenu: I have learned something this morning.
Ms. Karim-Bondy: The former statutes also used the same terms.
Senator Fraser: My second question is a bit related to Senator Dawson's question about the process and the timing.
Ms. Karim-Bondy: Yes.
Senator Fraser: We are putting on a special rush. We have suspended part of our rules to get this done for you as fast as possible.
In an ideal world, one would not be faced with a situation where one was being asked to suspend the rules. I assume the company knew it would be a cumbersome process. You would have to do the business of filing the petition and having the Examiner of Petitions of the Senate certify. Do not you have to pay $200, a vast sum of money? It is not a simple thing, but you knew this process existed.
How come it is all coming at us so late?
Ms. Karim-Bondy: Yes, and that is a great question.
Senator Fraser: The bill was only tabled last week.
Ms. Karim-Bondy: What happened is that we had to have board meetings in July to approve this process to take place. They did take place and materials were prepared and submitted at the end of August or the beginning of September to the parliamentary law clerk. However, it took some time for the parliamentary law clerk to approve all the matters because it has been some time since a bill like this has come before the Senate. I did not get approval from the parliamentary law clerk to do my publication — which takes four weeks — until pretty much the end of October. Then we had to have four weeks of publication before it could be tabled.
Senator Fraser: November 23 was the first day on which it could be done, going back to initiating the whole thing in July.
I really like the sound of Senator Dawson's proposed legislation.
The Chair: Thank you for drawing that point out. The impression a number of us had was it had been left by the company until the last minute. Obviously, it was not. It has been six months since you initiated the process. Thank you for clarifying that.
Senator Lang: It would be interesting to see an amendment to the Insurance Companies Act to see the implications, why that particular section is there, and the pros and cons in a general context from the point of view of the industry and the provinces. Having a study of it would be very worthwhile.
I want to go back to a comment that was made during your presentation that has to do with the process. My understanding is we are expediting it through the Senate, if everyone agrees. The House of Commons has tentatively agreed that they will expedite it. You commented that it then goes to the Minister of Finance in Quebec, but you also stated that it is very urgent it get there because the legislative's assembly in Quebec is sitting until December 9. Are you saying a bill is required to go through the legislative assembly in Quebec?
Ms. Karim-Bondy: No and pardon me if I made that impression. The reason is it needs ministerial approval in Quebec. It does not have to go before the assembly. They will be rising for their holidays and it may be difficult to track the minister down.
The Chair: We are moving quickly, and we are pleased whenever the need arises to show we can move quickly to accommodate. As you pointed out in your presentation, this is a matter that involves inter-company issues between a parent and subsidiary company. As you pointed out — and so everyone is absolutely clear — in moving quickly on this, we do not have employees of any of the companies at stake. There will be no impact on jobs or no economic matters beyond the inter-company issues that relate to the parent and subsidiary?
Ms. Karim-Bondy: That is absolutely correct. As I mentioned, IAPG does not have any employees. It is a general insurance company that is run by IAP, the life insurance company. The employees are essentially all IAP employees. It will continue to be run from there. It will just have a different regulator, but no jobs or head offices move.
Senator Dawson: Would it be proper that we propose the adoption at this time?
The Chair: No, we will proceed to clause-by-clause consideration.
Senator Dawson: In the spirit of Senator Joyal's comment about conflict of interest, Industrial Alliance is one of the bigger employers in Quebec, but I have not had any discussion with anyone there. As you know, the former president was a Liberal member of Parliament named Raymond Garneau. In that spirit — and to be sure it is on the record — the only discussions I had were with Senator Meighen asking me to be the critic.
Senator Baker: I wanted to add my congratulations to Industrial Alliance Pacific General Insurance Corporation on their appointment of their chief legal counsel, who is appearing before us today. She has a wonderful history and is a magnificent lawyer. We are reading one of her cases dating back to 1992 from the Supreme Court of British Columbia. The company should be congratulated on appointing her.
Ms. Karim-Bondy: Thank you very much. I appreciate it.
Senator Raine: I am from British Columbia and I am curious. We have spoken about the head office of IAP remaining in British Columbia and all their employees. I wanted to ask about the policyholders. Are the policyholders in any way affected by this move of their policy company from Vancouver to Quebec?
Ms. Karim-Bondy: No, not at all. IAPG is a general insurance company. Its policyholders are people who have extended warranties on vehicles. That is who the policyholders are. That business carries on. The company carries on. It simply has a different regulator; that is all. There is no impact.
The Chair: Ms. Karim-Bondy, that concludes our questions. We thank you for appearing here today. You have clarified any outstanding issues that the senators had.
Ms. Karim-Bondy: Thank you, honourable senators.
The Chair: Honourable senators, we will continue with our consideration of Bill S-1002.
Is it agreed that the committee proceed to clause-by-clause consideration of Bill S-1002?
Hon. Senators: Agreed.
The Chair: Agreed. Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Agreed. Shall the preamble stand postponed?
Hon. Senators: Agreed.
The Chair: Agreed. Shall clause 1 carry?
Hon. Senators: Agreed.
The Chair: Carried. Shall clause 2 carry?
Hon. Senators: Agreed.
The Chair: Carried. Shall the preamble carry?
Hon. Senators: Agreed.
The Chair: Carried. Shall the title carry?
Hon. Senators: Agreed.
The Chair: Carried. Shall the bill carry?
Hon. Senators: Agreed.
The Chair: Carried. Does the committee wish to discuss appending observations to the report?
Is it agreed that this bill be reported to the Senate?
Hon. Senators: Agreed.
The Chair: Thank you. It is good to get through that as expeditiously as we did. I will adjourn the meeting, but if you could remain for a moment, there are several matters I will raise with you.
(The committee adjourned.)