A. Introduction

• Author: M.H. Ogilvie
• Profession: LSM, B.A., LL.B., M.A., D.Phil., D.D., F.R.S.C. Of the Bars of Ontario and Nova Scotia Chancellor's Professor and Professor of Law, Carleton University
• Pages: 83-84

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Banks are business corporations, albeit of a specialized nature and regulated to a far greater extent than any other business corporations in Canada. Doubt about their legal nature as business corporations is quelled immediately by perusal of the Bank Act, which is largely devoted to the corporate governance of banks and which is modelled on the Canada Business Corporations Act (CBCA).¹

Section 91(15), "Banking and the Incorporation of Banks," of the Constitution Act, 1867,²clearly identifies Parliament as having exclusive jurisdiction to incorporate and regulate banks, and there is no provincial legislation applicable to banks as business corporations. Perusal of the Bank Act also shows, however, that a "bank" can be one company or a family of interrelated companies involved in financial intermediation; a bank can be owned by a bank holding company; and a bank is permitted to own or control other financial institutions offering financial services beyond the narrow scope of deposit taking, such as trust and loan companies, mutual fund corporations, or brokerages. The evolution of banks into groups of financial institutions has occurred since the 1991 Bank Act, which

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authorized banks to purchase other financial institutions as they move toward universal, or "one-stop," banking. The MacKay Task Force³ap-proved the trend, which was continued in the 2001 and 2007 amendments to the Act.

The purpose of this chapter is to describe and analyze the legal nature of banks as business corporations, while the next chapter (Chapter 5) will discuss the types of businesses in which banks are permitted to engage either directly or indirectly pursuant to the Bank Act.⁴

[1] R.S.C. 1985, c. C-44 as am [CBCA].

[2] Enacted as the British North America Act, 1867 (U.K.) 1867, 30 & 31 Vict., c. 3, reprinted in R.S.C. 1985, App. II, No. 5.

[3] Task Force on the Future of the Canadian Financial Services Sector, Change, Challenge, Opportunity: The Future of the Canadian...