OSFI exchanges with insurers and financial institutions not confidential

The Quebec Court of Appeal upheld a lower court ruling that could have a chilling effect on the flow and quality of confidential information financial institutions disclose to regulatory authorities, and even potentially undermine the “safety and soundness” of Canada’s financial system, according to business lawyers.

In a majority decision in line with two Ontario Superior Court decisions, the Quebec Court of Appeal held that documents and exchanges between federally regulated firms such as banks and insurance companies with the Office of the Superintendent of Financial Institutions (OSFI) are protected by statutory confidentiality provisions imposed by Regulations under the Insurance Companies Act, with some exceptions. While the regulations were enacted to limit the communication of supervisory information, the appeal court found that sections 2 and 3 of the Regulations did not create an absolute prohibition on disclosure and could be subject to production in civil proceedings.

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Shareholder advocacy group wins battle against one of Canada’s powerful giants

A Quebec shareholder advocacy group won yet another legal battle against one of Canada’s most powerful giants after it swayed the Quebec Court of Appeal that shareholders should have the right to ask to examine the financial statements of the corporation’s subsidiaries.

In a precedent-setting ruling, the appeal court held that section 157 of the Canada Business Corporations Act (Act) legally allows corporations to consolidate their financial statements, as recommended by the Canadian Institute of Chartered Accountants’ Handbook, as well as permits “curious and sophisticated” shareholders to have free access to the financial statements of a corporation’s operating segments.

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