TIDM32SS
RNS Number : 4493V
National Bank of Canada
01 December 2023
Regulatory Announcement
National Bank of Canada
December 1(st) , 2023
2023 Annual Information Form
National Bank of Canada (the "Bank") announces publication of
its 2023 Annual Information Form. The 2023 Annual Information Form
has been uploaded to the National Storage Mechanism and will
shortly be available at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism and is
available on the Bank's website at
https://www.nbc.ca/about-us/investors.html
To view the full PDF of the 2023 Annual Information Form, please
click on the following link:
http://www.rns-pdf.londonstockexchange.com/rns/4493V_1-2023-12-1.pdf
Annual Information Form
NOVEMBER 30, 2023
Distribution Notice of this Annual Information Form
This annual information form (the "Annual Information Form")
must be accompanied by copies of all documents incorporated herein
by reference when it is provided to security holders or other
interested parties.
Parts of the Annual Information Form are presented in the Annual
Report to Shareholders and in the Management's Discussion and
Analysis ("MD&A") for the fiscal year ended October 31, 2023
(the "Annual Report") and are incorporated herein by reference.
The information contained in the various booklets or reports
published by National Bank of Canada (the "Bank") or available on
the Bank's website and mentioned in the Annual Information Form is
not, and shall not be deemed to be, incorporated by reference in
the Annual Information Form, unless expressly stated otherwise.
The Annual Report is available on the Bank's website ( nbc.ca )
and SEDAR+ ( sedarplus.ca ).
Explanatory Note
In this Annual Information Form, unless otherwise indicated,
information is presented as at October 31, 2023.
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this document are forward-looking
statements. All such statements are made in accordance with
applicable securities legislation in Canada and the United States.
The forward-looking statements in this document may include, but
are not limited to, statements made in the Message From the
President and Chief Executive Officer and other statements about
the economy, market changes, the Bank's objectives, outlook, and
priorities for fiscal year 2024 and beyond, the strategies or
actions that will be taken to achieve them, expectations for the
Bank's financial condition, its activities, the regulatory
environment in which it operates, its environmental, social, and
governance targets and commitments, and certain risks to which the
Bank is exposed. These forward-looking statements are typically
identified by verbs or words such as "outlook", "believe",
"foresee", "forecast", "anticipate", "estimate", "project",
"expect", "intend" and "plan", in their future or conditional
forms, notably verbs such as "will", "may", "should", "could" or
"would" as well as similar terms and expressions.
Such forward-looking statements are made for the purpose of
assisting the holders of the Bank's securities in understanding the
Bank's financial position and results of operations as at and for
the periods ended on the dates presented, as well as the Bank's
vision, strategic objectives, and performance targets, and may not
be appropriate for other purposes. These forward-looking statements
are based on current expectations, estimates, assumptions and
intentions and are subject to uncertainty and inherent risks, many
of which are beyond the Bank's control. There is a strong
possibility that the Bank's express or implied predictions,
forecasts, projections, expectations, or conclusions will not prove
to be accurate, that its assumptions may not be confirmed and that
its vision, strategic objectives, and performance targets will not
be achieved. The Bank cautions investors that these forward-looking
statements are not guarantees of future performance and that actual
events or results may differ significantly from these statements
due to a number of factors. Thus, the Bank recommends that readers
not place undue reliance on these forward-looking statements, as a
number of factors could cause actual results to differ
significantly from the expectations, estimates, or intentions
expressed in these forward-looking statements. Investors and others
who rely on the Bank's forward-looking statements should carefully
consider the factors listed below as well as the uncertainties they
represent and the risk they entail. Except as required by law, the
Bank does not undertake to update any forward-looking statements,
whether written or oral, that may be made from time to time, by it
or on its behalf.
Assumptions about the performance of the Canadian and U.S.
economies in 2024 and how that performance will affect the Bank's
business are among the factors considered in setting the Bank's
strategic priorities and objectives, including provisions for
credit losses. These assumptions appear in the Economic Review and
Outlook section and, for each business segment, in the Economic and
Market Review sections, and may be updated in the quarterly reports
to shareholders.
The forward-looking statements made in this document are based
on a number of assumptions and are subject to risk factors, many of
which are beyond the Bank's control and the impacts of which are
difficult to predict. These risk factors include, among others, the
general economic environment and financial market conditions in
Canada, the United States, and the other countries where the Bank
operates; the impact of upheavals in the U.S. banking industry;
exchange rate and interest rate fluctuations; inflation; global
supply chain disruptions; higher funding costs and greater market
volatility; changes made to fiscal, monetary, and other public
policies; changes made to regulations that affect the Bank's
business; geopolitical and sociopolitical uncertainty; climate
change, including physical risks and those related to the
transition to a low-carbon economy, and the Bank's ability to
satisfy stakeholder expectations on environmental and social
issues; significant changes in consumer behaviour; the housing
situation, real estate market, and household indebtedness in
Canada; the Bank's ability to achieve its key short-term priorities
and long-term strategies; the timely development and launch of new
products and services; the Bank's ability to recruit and retain key
personnel; technological innovation, including advances in
artificial intelligence and the open banking system, and heightened
competition from established companies and from competitors
offering non-traditional services; changes in the performance and
creditworthiness of the Bank's clients and counterparties; the
Bank's exposure to significant regulatory matters or litigation;
changes made to the accounting policies used by the Bank to report
financial information, including the uncertainty inherent to
assumptions and critical accounting estimates; changes to tax
legislation in the countries where the Bank operates; changes made
to capital and liquidity guidelines as well as to the presentation
and interpretation thereof; changes to the credit ratings assigned
to the Bank by financial and extra-financial rating agencies;
potential disruptions to key suppliers of goods and services to the
Bank; the potential impacts of disruptions to the Bank's
information technology systems, including cyberattacks as well as
identity theft and theft of personal information; the risk of
fraudulent activity; and possible impacts of major events affecting
the economy, market conditions, or the Bank's outlook, including
international conflicts, natural disasters, public health crises,
and the measures taken in response to these events.
The foregoing list of risk factors is not exhaustive, and the
forward-looking statements made in this document are also subject
to credit risk, market risk, liquidity and funding risk,
operational risk, regulatory compliance risk, reputation risk,
strategic risk, and social and environmental risk as well as
certain emerging risks or risks deemed significant. Additional
information about these risk factors is provided in the Risk
Management section beginning on page 62 of the 2023 Annual Report
and may be updated in the quarterly shareholder's reports
subsequently published.
Table of contents and list of information incorporated by
reference
Annual Information Form 2023 Annual Report
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Distribution Notice of this Annual Information
Form 2
Explanatory Note 2
Caution Regarding Forward-Looking Statements 2
Abbreviations Used 5
Corporate Structure 5
Name, Address and Incorporation 5
Bank Subsidiaries (Intercorporate 5 Note 28 (p. 223 AND 224)
Relationships)
General Development of the Business 6
Three-Year History 6 P. 14 TO 19
Description of the Business 7
Business 7 p. 21 TO 23 and 28 TO 46
Products and Services 7 p. 28 TO 45
Specialized Skills and Knowledge 7 p. 20 TO 24, 28 TO 45 AND 51 TO 113
Competitive Conditions 7 p. 23, 26 TO 51 AND 72 TO 73
New Products 8 p. 28 TO 46
Intangible Assets 8 p. 110, 151, 152 AND Note 11 (p. 188 AND 189)
Environmental Protection 8 p. 105 AND 106
Number of Employees 8 p. C2, 21, 114 AND 235
Assets under Administration and Assets 8 p. C2, 21 AND 34 TO 36
under Management
Loans by Borrower Category 8 p. 23, 32, 48, TABLE 9, p. 121 AND
Note 7 ( p. 173 TO 184)
Investment Policies and Lending and 8 p. 53 TO 106, Note 20 (P. 205 ET 206) AND
Investment Restrictions NOTE 29 (P. 224 TO 228)
Provision for Credit Losses 8 p. 23, 27, 109, 110,tABLE 11, p. 123, 147,
148 AND Note 7 (p. 173 TO 184)
Co rporate Responsibility 8 P. 104 TO 105
Risk Factors 8 p. 62 TO 106, note 3 (p. 158 TO 168) ,
Note 7 ( p. 173 TO 184), note 16 (p. 192 TO
195) AND note 23 (p. 210 TO 213)
Asset-Backed Securities Outstanding 8 p. 48 TO 51, NOte 6 (P. 171 AND 172) AND
note 26 (p. 217 TO 219)
Dividends 8 p. 1, 2, 23, 57, 114, 115, 135,
note 18 (p. 201 TO 204) AND P. 235
Capital Structure 8 p. 57, Note 15 (P. 191) AND
NOTE 18 (p. 201 TO 204)
Common Shares 9
First Preferred Shares 9
Automatic Conversion of Non-Viability
Contingent Capital (NVCC) 11
Second Preferred Shares 11
Restrictions on Bank Shares under the
Act 12
Notes 12
Credit Ratings 14
Market for Securities 15
Prior Sales 15 p. 48 TO 52, 57 AND NOTE 18 (P. 201 TO 204)
Escrowed Securities and Securities Subject to 16 P. 204
Contractual Restriction on Transfer
Normal Course Issuer Bid of the Bank 16 P. 50, 57 AND 231
Directors and Executive Officers 17 P. 7
Directors 17
Executive Officers 18
Shareholdings of Directors and Executive
Officers 19
Cease-trading, Bankruptcies, Fines or
Sanctions 19
Conflicts of Interest 19 NOTE 28 (p. 223 AND 224)
Legal Proceedings and Regulatory Actions 19 p. 100 TO 106, 112 AND 219
Transfer Agent and Registrar 19
Interests of Experts 19
Information on the Audit Committee 20
Composition of the Audit Committee and
Financial Literacy of Members 20
Guidelines for the Management of Services
Provided by the Independent Auditor and Fees
Paid 21
Additional Information 22 P. 12 AND 234
Appendix A - Explanation of Ratings 23
Appendix B - Audit Committee Mandate 26
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Abbreviations Used
AC: Audit Committee of the Board
Act: Bank Act , S.C. 1991, c. 46
Annual Information This annual information form
Form:
Annual Report The Bank's Annual Report to shareholders, including
Management's Discussion and Analysis and the consolidated
audited annual financial statements for the fiscal
year ended October 31, 2023
Bank: National Bank of Canada
Board: Board of Directors of the Bank
Circular: Management Proxy Circular in respect of the most
recent annual meeting of holders of Common Shares
that involved the election of directors
CPA: Charted Professional Accountants
CRCGC: Conduct Review and Corporate Governance Committee
of the Board
CPA: Chartered Professional Accountants
CSA: Canadian Securities Administrators
DBRS: DBRS Morningstar
Deloitte: Deloitte LLP
Fitch: Fitch Ratings Canada Inc.
HRC: H uman Resources Committee of the Board
IFRS: International Financial Reporting Standards
MD&A: Management's Discussion and Analysis of the Bank's
consolidated annual financial statements for the
fiscal year ended October 31, 2022
Meeting: Annual Meeting of the Holders of Common Shares of
National Bank of Canada to be held on April 19, 2024
Moody's: Moody's Investors Service Inc.
NVCC: Non-Viability Contingent Capital
OSFI: Office of the Superintendent of Institutions (Canada)
RMC: Risk Management Committee of the Board
SEDAR+: System for Electronic Document Analysis and Retrieval+
S&P: Standard & Poor's Financial Services LLC
TC: Technology Committee of the Board
TSX: Toronto Stock Exchange
------------------- -----------------------------------------------------------
CORPORATE STRUCTURE
Name, Address and Incorporation
The Bank is a Canadian bank governed by the Act and its head
office is located at 600 De La Gauchetière Street West, 4(th)
Floor, Montreal, Quebec, Canada H3B 4L2. In fiscal year 2024, the
Bank will move to its new offices located at Place Banque
Nationale, 800 Saint-Jacques Street, Montreal, Quebec, Canada, H3C
1A3.
The Bank's roots date back to 1859 with the founding of Banque
Nationale in Quebec City. The Bank's current charter is the result
of a series of amalgamations, first with Banque d'Hochelaga in 1924
to form Bank Canadian National, which then merged with The
Provincial Bank of Canada in 1979 to form National Bank of Canada.
In 1985, the Bank acquired The Mercantile Bank of Canada. In 1992,
the Bank merged with National Bank Leasing Inc., its wholly owned
subsidiary.
Bank Subsidiaries (Intercorporate Relationships)
A list of the main Bank subsidiaries with a description of
intercorporate relationships can be found in the pages of the
Annual Report specified in the Table of Contents of the Annual
Information Form and is incorporated herein by reference.
GENERAL DEVELOPMENT OF THE BUSINESS
Three-Year History
Fiscal 2023: The Bank's net income for fiscal 2023 was $3,335
million compared to $3,383 million for the corresponding period of
2022, a decrease of 1%. Diluted earnings per share were $9.38,
against $9.61 for fiscal 2022. Revenue growth in all business
segments was offset by higher noninterest expenses, which was
attributable in part to specific items recorded in fiscal 2023 and
by the significant increase in provisions for credit losses. Income
before provisions for credit losses and income taxes remained
relatively stable year over year. Total revenues for fiscal 2023
were $10,170 million against $9,652 million for fiscal 2022, an
increase of $518 million, or 5%, stemming from revenue growth in
all of the Bank's business segments.
Return on equity (ROE) was 16.5% for fiscal 2023 compared to
18.8% in 2022.
The Bank's Common Equity Tier 1 (CET1), Tier 1 and total capital
ratios were, respectively, 13.5%, 16.0% and 16.8% as at October 31,
2023, compared to ratios of 12.7%, 15.4% and 16.9%, respectively,
as at October 31, 2022. All equity ratios increased compared to
October 31, 2022, essentially because of net income, net of
dividends, issuance of common shares pursuant to the Stock Option
Plan, and the positive impact of applying the Basel III reforms to
the credit and operational risk frameworks. These factors were
tempered by the growth of risk-weighted assets and the end of the
transitional measure for the provisioning of expected credit losses
introduced by OSFI at the start of the COVID-19 pandemic. The
increase in the total capital ratio was mitigated by the redemption
of $750 million in medium-term notes on February 1, 2023. Lastly,
the dividend payout ratio was 42.0% in 2023 compared to 36.8% in
2022.
In the Personal and Commercial Banking segment, total revenues
were up by $482 million, driven mainly by higher net interest
income of $456 million, which was attributable chiefly to the
increase in deposit margins (partly offset by a lower margin on
loans) in connection with higher interest rates in 2023. This
increase had a favourable impact on the net interest margin which
reached 2.35%, versus 2.15% in 2022. Moreover, the increase in net
interest income was generated by the growth in personal and
commercial loans and deposits.
Total revenues in the Wealth Management segment rose to $2,521
million in fiscal 2023, an increase of 6% compared to $2,375
million in fiscal 2022. Net interest income was up $184 million, or
31%, owing to interest rate increases in 2023 and 2022. Fee-based
revenues stood relatively stable as against fiscal 2022. Moreover,
transaction-based revenues and other revenues were down 12% from
2022 owing to lower commissions on transactions in 2023.
In the Financial Markets sector, total revenues rose by $188
million to $2,656 million in 2023, an increase of 8% year over
year. Revenues from global markets were down 1% owing to an 8%
decrease in revenues from equities while revenues from fixed-income
securities and commodities and currencies rose by 14% and 11%,
respectively. Moreover, Corporate and Investment Banking revenues
rose 20% from fiscal 2022 owing to growth in revenues from banking
services, higher revenues from capital market activities, as well
as revenues from merger and acquisition activities.
Total revenues in the U.S. Specialty Finance and International
segment were up 9% from $1,110 million in 2022 to $1,209 million in
2023, driven by revenues from the Credigy and ABA Bank
subsidiaries, which rose $44 million and $57 million,
respectively.
Fiscal 2022: The Bank's net income for fiscal 2022 was $3,383
million compared to $3,140 million for the corresponding period of
2021, an increase of 8%. Diluted earnings per share were $9.61 for
the fiscal year ended October 31, 2022, versus $8.85 in 2021. The
excellent performance turned in by all business segments, achieved
through revenue growth, contributed to higher net income, which was
tempered by the increase in provisions for credit losses due in
part to a deterioration in the macroeconomic outlook in the second
half of 2022. Income before provisions for credit losses and income
taxes was $4,422 million for the fiscal year ended October 31,
2022, an increase of 10% from 2021, owing to revenue growth in all
business segments, which more than offset higher noninterest
expenses. Total revenues for fiscal 2022 were $9,652 million as
against $8,927 million for fiscal 2021, an increase of $725
million, or 8%, stemming mainly from loan and deposit growth, but
also from a higher net interest margin as a result of the recent
interest rate increases. Return on equity (ROE) was 18.8% for
fiscal 2022 compared to 20.7% in 2021. The Bank's Common Equity
Tier 1 (CET1), Tier 1 and total capital ratios were, respectively,
12.7%, 15.4% and 16.9% as at October 31, 2022, compared to ratios
of 12.4%, 15.0% and 15.9%, respectively, as at October 31, 2021.
[1] All equity ratios increased compared to October 31, 2021,
essentially because of net income, net of dividends, and issuance
of common shares pursuant to the Stock Option Plan. These factors
were tempered by the growth of risk-weighted assets, share
buybacks, and the impact of the transitional measure for the
provisioning of expected credit losses, for which the scaling
factor decreased from 50% to 25%. Lastly, the dividend payout ratio
was 36.8% in 2022 compared to 31.7% in 2021. In the Personal and
Commercial Banking segment, total revenues were up by $419 million
driven by personal and commercial loan and deposit growth.
Moreover, the interest rate increases in fiscal 2022 had a
favourable impact on the net interest margin which reached 2.14%,
as against 2.11% in 2021, an increase attributable mainly to
margins on deposits. Total revenues in the Wealth Management
segment increased 10%. Net interest income rose $148 million, or
33%, owing to interest rate increases, loan and deposit volume
growth, and deposit margins. Fee-based revenues increased 8% given
growth in average assets under administration and assets under
management generated by net inflows in various solutions and by
stronger stock market performance in the first half of 2022
compared to fiscal 2021. Revenues in the Financial Markets segment
increased 11% owing to revenues from global markets which rose 28%
year over year owing to growth across every revenue category,
notably revenues from equities as market conditions favoured
greater client activity. Moreover, Corporate and Investment Banking
revenues decreased from fiscal 2021, mainly because of lower
revenues from capital market activities tempered by revenues from
favourable merger and acquisition activities, as well as by loan
volume growth. In the U.S. Specialty Finance and International
segment, revenues were up 11% year over year, driven by the
revenues from the Advanced Bank of Asia Limited subsidiary, which
is experiencing sustained growth.
Fiscal 2021 : The Bank's net income for fiscal 2021 was $3,140
million, compared to $2,031 million for the corresponding period of
2020, a 55% increase. Diluted earnings per share were $8.85 for the
fiscal year ended October 31, 2021, as against $5.54 in 2020. These
increases are due to the significant decrease in provisions for
credit losses on non-impaired loans resulting from the improvement
in macroeconomic and credit conditions compared to fiscal 2020, as
well as a significant decrease in provisions for credit losses on
non-impaired loans. Moreover, the excellent performance of all
business segments attributable in particular to strong revenue
growth contributed to higher net income and net and diluted
earnings per share. Income before provisions for credit losses and
income taxes was $4,024 million for the fiscal year ended October
31, 2021, an increase of 22% from 2020, owing to higher revenues
from all business segments. Total revenues were $8,927 million for
the fiscal year ended October 31, 2021, as against $7,927 million
for fiscal 2020, an increase of $1.0 billion, or 13%, stemming
mainly from the growth in loans and deposits, the growth in assets
under administration and assets under management resulting from net
inflows and the strong stock market performance in 2021, the higher
volume of transactions in the Wealth Management segment, and an
increase in revenues from commercial banking services and
investment banking services. Return on equity (ROE) was 20.7% for
fiscal 2021 compared to 14.6% in 2020. The Bank's Common Equity
Tier 1 (CET1), Tier 1 and total capital ratios were, respectively,
12.4%, 15.0% and 15.9% as at October 31, 2021, i.e., above the
regulatory requirements, compared to ratios of 11.8%, 14.9% and
16.0%, respectively, as at October 31, 2020. [2] The Bank's Common
Equity Tier 1 (CET1) increased compared to October 31, 2020,
essentially because of net income, net of dividends, issuance of
common shares pursuant to the Stock Option Plan and remeasurements
of pension plans and other post-employment benefit plans. These
factors were mitigated by the organic growth of risk-weighted
assets. Lastly, the dividend payout ratio was 31.7% in 2021
compared to 47% in 2020. In the Personal and Commercial Banking
segment, total revenues were up by $223 million, essentially due to
growth in loan and deposit volumes mitigated by a lower net
interest margin which reached 2.11% in 2021, versus 2.19% in 2020.
In the Wealth Management segment, total revenues were up 17% year
over year, due to the increase in fee-based revenues, in connection
with net inflows in all solutions and a stronger stock market
performance as well as higher transaction-based revenues. Revenues
in the Financial Markets segment increased 5%, with the decline in
global market revenues being more than offset by higher revenues
from commercial banking financial services and investment banking
services. In the U.S. Specialty Finance and International segment,
revenues were up 22% year over year, driven by the revenues from
the Advanced Bank of Asia Limited subsidiary, which are
experiencing sustained growth.
DESCRIPTION OF THE BUSINESS
Business
The description of the Bank's business can be found in the pages
of the Annual Report specified in the Table of Contents of the
Annual Information Form and is incorporated herein by
reference.
Products and Services
Information on the Bank's products and services can be found in
the pages of the Annual Report specified in the Table of Contents
of the Annual Information Form and is incorporated herein by
reference.
Specialized Skills and Knowledge
Information on the required specialized skills and knowledge can
be found in the pages of the Annual Report specified in the Table
of Contents of the Annual Information Form and is incorporated
herein by reference.
Competitive Conditions
A summary of the competitive conditions in the main markets and
geographic areas in which the Bank conducts its business can be
found in the pages of the Annual Report specified in the Table of
Contents of the Annual Information Form and is incorporated herein
by reference.
New Products
Information on new products can be found in the pages of the
Annual Report specified in the Table of Contents of the Annual
Information Form and is incorporated herein by reference.
Intangible Assets
Information on the Bank's intangible assets can be found in the
pages of the Annual Report specified in the Table of Contents of
the Annual Information Form and is incorporated herein by
reference.
Environmental Protection
Information on the management of the Bank's current activities
related to environmental protection can be found in the pages of
the Annual Report specified in the Table of Contents of the Annual
Information Form and is incorporated herein by reference. For
further details, consult the 2022 Report on Environmental, Social
and Governance (ESG) Advances as well as the 2022 Task Force on
Climate-related Financial Disclosure (TCFD) Report, available on
the nbc.ca website or via the direct link
https://www.nbc.ca/about-us/esg.html .
Number of Employees
The Bank had 31,243 employees at the end of the fiscal year on
October 31, 2023. The number of employees includes employees of the
Bank's subsidiaries.
Assets under Administration and Assets under Management
Information on the Bank's assets under administration and assets
under management can be found in the pages of the Annual Report
specified in the Table of Contents of the Annual Information Form
and is incorporated herein by reference.
Loans by Borrower Category
The distribution of gross loans by borrower category can be
found in the pages of the Annual Report specified in the Table of
Contents of the Annual Information Form and is incorporated herein
by reference.
Investment Policies and Lending and Investment Restrictions
Information on investment policies and lending and investment
restrictions can be found in the pages of the Annual Report
specified in the Table of Contents of the Annual Information Form
and is incorporated herein by reference.
Provision for Credit Losses
Information on the provision for credit losses can be found in
the pages of the Annual Report specified in the Table of Contents
of the Annual Information Form and is incorporated herein by
reference.
Corporate Responsibility
The description of the social and environmental policies
implemented by the Bank can be found in the 2022 Report on
Environmental, Social and Governance (ESG) Advances as well as the
2022 Task Force on Climate-related Financial Disclosure (TCFD)
Report, available on the nbc.ca website or via the direct link
https://www.nbc.ca/about-us/esg.html .
.
Risk Factors
Information on the main risk factors for the Bank can be found
in the pages of the Annual Report specified in the Table of
Contents of the Annual Information Form and is incorporated herein
by reference.
Asset-Backed Securities Outstanding
Information on the Bank's asset-backed securities outstanding
can be found in the pages of the Annual Report specified in the
Table of Contents of the Annual Information Form and is
incorporated herein by reference.
Dividends
Information on the dividends declared and paid during the last
three fiscal years can be found in the pages of the Annual Report
specified in the Table of Contents of the Annual Information Form
and is incorporated herein by reference.
CAPITAL STRUCTURE
As at October 31, 2023, the Bank's authorized share capital
consists of an unlimited number of common shares without par value,
that may be issued for a consideration determined by the Board, and
an unlimited number of first-preferred shares without par value,
which may be issued for a maximum aggregate consideration of
$5,000,000,000, or the equivalent thereof in foreign currencies,
which may be issued in series. The Bank's authorized share capital
also consisted of 15,000,000 second-preferred shares without par
value, which may be issued for a maximum aggregate consideration of
$300,000,000, or the equivalent in foreign currency. The main
features of each of these classes and series are described below.
The Bank's by-laws and the actual terms and conditions of such
shares take precedence over the following summary of share
capital.
Details on the Bank's capital structure can be found in the
pages of the Annual Report specified in the Table of Contents of
the Annual Information Form and is incorporated herein by
reference.
Common Shares
As at October 31, 2023, there were 19,881 registered holders of
common shares of the Bank.
The common shares carry and are subject to the rights,
privileges, restrictions and conditions set out below:
Dividends:
Holders of common shares are entitled to receive dividends, in
such amounts and payable at such times as the Board determines.
Liquidation, Dissolution or Winding Up:
In the event of the liquidation, dissolution or winding up of
the Bank, after payment to the holders of first preferred shares
and to the holders of second preferred shares of the amounts
described under "First Preferred Shares" and under " Second
Preferred Shares" or to holders of any class of shares ranking
ahead of common shares, respectively, the remaining property of the
Bank will be distributed equally among the holders of common shares
in proportion to the number of ordinary shares they hold.
Voting Rights:
Subject to certain restrictions, holders of common shares are
entitled to cast one vote per share at all meetings of shareholders
of the Bank, except meetings at which only holders of a specified
class or series of shares are entitled to vote.
First-Preferred Shares
As at October 31, 2023, the First-Preferred Shares, Series 30,
31, 32, 33, 38, 39, 40, 41, 42, 43, 44, 45, and 46
("First-Preferred Shares") are part of the Bank's authorized share
capital, but only Series 30, 32, 38, 40, 42, 44, 45, and 46 have
been issued and are outstanding ("issued and outstanding
series").
The first preferred shares carry and are subject to the rights,
privileges, restrictions and conditions set out below:
Rank:
First-preferred shares of each series rank equally with first-
preferred shares of all series and have priority over common shares
and over any other Bank shares ranking lower than the
first-preferred shares with respect to the payment of dividends and
the distribution of assets in the event of a liquidation,
dissolution or winding up of the Bank.
Issuance in Series:
First-preferred shares may be issued, subject to the provisions
of the Act, in one or more series. The Board may, by resolution,
establish the number of shares in, and determine the respective
designations, rights, privileges, restrictions and conditions of
each series (other than series already issued and outstanding),
including the rate, amount or calculation method and terms of
payment of dividends and terms and conditions of redemption,
purchase or conversion and sinking fund or purchase fund
provisions.
Creation or Issue of Superior or Equal-Ranking Shares:
The Bank may not, without the prior approval of the holders of
first preferred shares in addition to such approval as may be
required by the Bank Act or any other legal requirement, create or
issue any shares ranking in priority to or pari passu with the
first-preferred shares; or create or issue any additional series of
first-preferred shares, unless at the date of such creation or
issuance of all cumulative dividends up to and including the
dividend payment for the last completed period for which such
cumulative dividends are payable, have been declared and paid or
set aside for payment in respect of each series of cumulative
first-preferred shares then issued and outstanding, and all
declared and unpaid non-cumulative dividends have been paid or set
aside for payment in respect of each series of non-cumulative first
preferred shares then issued and outstanding.
Changes to Series:
The Bank may not, without prior approval of the holders of first
preferred shares of the series concerned, and subject to the
approvals required by the Act, or any other legal requirement,
delete or change the relevant provisions of the first preferred
shares. Holders of first preferred shares of the series concerned
may give their approval by resolution adopted through the
affirmative vote of at least 662/3% of the votes cast at a meeting
of the holders of the shares of the series concerned, where the
majority of shares outstanding in the series concerned is
represented or, if such a quorum is not obtained at this meeting,
any rescheduled meeting where the shareholders are present or
represented by proxy would constitute the quorum needed.
Dividends:
Holders of all series of first-preferred shares are entitled to
receive dividends in such amounts and payable at such times as the
Board determines, in accordance with the conditions of the series.
Holders of any series of first-preferred shares are entitled to
preference over the holders of common shares, second preferred
shares and shares of any other class of Bank shares ranking junior
to the first preferred shares. In the case of cumulative dividends,
the priority will cover all dividends accrued (which for such
purpose will be calculated as if such dividends were accruing from
day to day) and unpaid. In the case of non-cumulative dividends,
the priority will cover all declared and unpaid dividends. Holders
of any series of first-preferred shares are not entitled to any
dividends other than those expressly provided for in the rights,
privileges, restrictions and conditions attached to such series of
first-preferred shares.
Liquidation, Dissolution or Winding Up:
In the event of the liquidation, dissolution or winding up of
the Bank, before any amount is paid or any property distributed to
the holders of common shares, second preferred shares, or shares of
any other class of Bank shares ranking lower than the first
preferred shares, the holders of each series of first-preferred
shares are entitled to receive (i) an amount equal to the price at
which such shares were issued, (ii) such premium, if any, as has
been provided for with respect to such series, and (iii) in the
case of cumulative first preferred shares, all cumulative accrued
and unpaid dividends and, in the case of non-cumulative first
preferred shares, all non-cumulative dividends declared and
remaining unpaid on and including the date of distribution. After
payment to the holders of first preferred shares of the amounts so
payable to them, they may not participate in any further
distribution of the property or assets of the Bank.
Voting Rights:
Subject to the provisions of the Act and except as otherwise
provided in the rights, privileges, restrictions and conditions
attaching to any series of first-preferred shares, the holders of
first preferred shares do not, as such, have any voting rights for
the election of directors of the Bank, the appointment of the
independent auditor, or for any other purpose nor are they entitled
to receive any notice of or attend shareholders' meetings.
Redemption:
Subject to the consent of the OSFI and the provisions of the
Act, the Bank may, at its discretion, redeem for cash the first
preferred shares, in whole or in part, on the dates and at the
amounts set out in the conditions of the series.
Conversion:
Subject to certain conditions, holders of first preferred shares
will have the right, at their discretion, to convert all or part of
their shares into the corresponding number of first-preferred
shares of another series, on a fixed date, if applicable, in
accordance with the series conditions.
First Preferred Shares, Series 44:
Non-Cumulative 5-Year Rate-Reset Series 44 First Preferred
Shares ("Preferred Shares, Series 44") are part of the Bank's
authorized share capital and of the assets of the NBC LRCN Limited
Recourse Trust (the "LRCN Trust"). As of September 9, 2020, and
concurrently with the issuance of 4.300% Limited Recourse Capital
Notes, Series 1 ("LRCN, Series 1"), 500,000 Preferred Shares,
Series 44, were issued at a price of $1,000 each in favour of the
Computershare Trust Company of Canada as trustee for the LRCN
Trust.
Each LRCN, Series 1, gives the holder a proportionate share of
the assets of the LRCN Trust in case of: i) non-payment of interest
on one of the interest-payment dates; ii) non-payment of the
redemption amount in the event the LRCN, Series 1, are redeemed;
iii) non-payment of principal of the LRCN, Series 1, when due or;
iv) a case of default regarding the LRCN, Series 1.
Under such circumstances, the holders of LRCN, Series 1, would
be entitled to receive Preferred Shares, Series 44, which would pay
a fixed rate non-cumulative preferential cash dividends, redeemable
at the Bank's option as of October 15, 2025, except in the case of
a redemption of LRCN, Series 1 or a special event, and subject to
the provisions of the law and prior consent from OSFI.
As long as Preferred Shares, Series 44, are held by
Computershare Trust Company of Canada as trustee of the LRCN Trust,
they do not pay dividends.
First Preferred Shares, Series 45:
Non-Cumulative 5-Year Rate-Reset Series 45 First Preferred
Shares ("Preferred Shares, Series 45") are part of the Bank's
authorized share capital and of the assets of the NBC LRCN Trust.
As at April 21, 2021, and concurrently with the issuance of 4.05%
Limited Recourse Capital Notes, Series 2 ("LRCN, Series 2"),
500,000 Preferred Shares, Series 45, were issued at a price of
$1,000 each in favour of the Computershare Trust Company of Canada
as trustee for the LRCN Trust.
Each LRCN, Series 2, gives the holder a proportionate share of
the assets of the LRCN Trust in case of: i) non-payment of interest
on one of the interest-payment dates; ii) non-payment of the
redemption amount in the event the LRCN, Series 2, are redeemed;
iii) non-payment of principal of the LRCN, Series 2, when due, or;
iv) a case of default regarding the LRCN, Series 2.
Under such circumstances, the holders of LRCN, Series 2, would
be entitled to receive Preferred Shares, Series 45, which would pay
a fixed rate non-cumulative preferential cash dividends, redeemable
at the Bank's option as of July 15, 2026, except in the case of a
redemption of LRCN, Series 2, or a special event, and subject to
the provisions of the law and prior consent from OSFI.
As long as Preferred Shares, Series 45, are held by
Computershare Trust Company of Canada as trustee of the LRCN Trust,
they do not pay dividends.
First Preferred Shares, Series 46:
Non-Cumulative 5-Year Rate-Reset Series 46 First Preferred
Shares ("Preferred Shares, Series 46") are part of the Bank's
authorized share capital and of the assets of the NBC LRCN Trust.
As at September 8, 2022, and concurrently with the issuance of
7.500% Limited Recourse Capital Notes, Series 3 ("LRCN, Series 3"),
500,000 Preferred Shares, Series 46, were issued at a price of
$1,000 each in favour of Computershare Trust Company of Canada as
trustee for the LRCN Trust.
Each LRCN, Series 3, gives the holder a proportionate share of
the assets of the LRCN Trust in case of: i) non-payment of interest
on one of the interest-payment dates; ii) non-payment of the
redemption amount in the event of the LRCN, Series 3, are redeemed;
iii) non-payment of principal of the LRCN, Series 3, when due, or;
iv) a case of default regarding the LRCN, Series 3.
Under such circumstances, the holders of LRCN, Series 3, would
be entitled to receive Preferred Shares, Series 46, which would pay
fixed rate non-cumulative preferential cash dividends, redeemable
at the Bank's option as of November 16, 2027, except in the case of
a redemption of LRCN, Series 3, or a special event, and subject to
provisions of the law and prior consent from OSFI.
If Preferred Shares, Series 46, are held by Computershare Trust
Company of Canada as trustee of the LRCN Trust, they do not pay
dividends.
Automatic Conversion of Non-Viability Contingent Capital
(NVCC)
In accordance with the capital adequacy requirements adopted by
OSFI, non-common capital instruments issued after January 1, 2013,
including subordinated debt securities and first preferred shares,
must include terms providing for the full and permanent conversion
of such securities into common shares upon the occurrence of
certain trigger events relating to financial viability to qualify
as regulatory capital.
The conditions of the first preferred shares provide that these
shares will automatically and immediately be converted, on a full
and permanent basis, into a specified number of common shares of
the Bank as determined using an automatic conversion formula (value
of the share, which is $25.00 or $1,000 based on the conditions set
out for each series, plus all declared and unpaid dividends for
these shares, divided by the conversion price, which for first
preferred shares is the greater of a floor price of $5.00 (subject
to certain adjustments) and the market price of the Bank's common
shares or, in the absence of such a market price, their fair value)
upon the occurrence of a trigger event.
A trigger event is defined as follows: (i) OSFI publicly
announces that the Bank has been advised, in writing, that OSFI is
of the opinion that the Bank has ceased, or is about to cease to be
viable and that, after the conversion of all preferred shares and
all other contingent instruments issued by the Bank, and taking
into account any other factors or circumstances that are considered
relevant or appropriate, it is reasonably likely that the viability
of the Bank will be restored or maintained or (ii) a federal or
provincial government in Canada publicly announces that the Bank
has accepted or agreed to accept a capital injection, or equivalent
support, from the federal government or any provincial government
or political subdivision or agent or agency thereof without which
the Bank would have been determined by OSFI to be non-viable.
Second Preferred Shares
Second preferred shares are part of the Bank's authorized share
capital, but no shares in this category had been issued as at
October 31, 2023. Second preferred shares carry and are subject to
the rights, privileges, restrictions and conditions set out
below:
Rank:
Second preferred shares rank senior to the common shares and the
shares of any other class of Bank shares that rank junior to the
second preferred shares, but rank lower than the first preferred
shares with regard to dividends and return of capital in the event
of the liquidation, dissolution or winding up of the Bank.
Issuance in Series:
Second preferred shares may be issued from time to time in one
or more series. The Board may, by resolution, subject to the
provisions of the Act, set the number of shares in, and determine
the respective designations, rights, privileges, restrictions and
conditions of each series, including the rate, amount or
calculation method and terms of payment of dividends and terms and
conditions of redemption, purchase or conversion and sinking fund
or purchase fund provisions.
Creation or Issue of Superior or Equal Ranking Shares:
The Bank may not, without the prior approval of the holders of
second preferred shares in addition to such approval as may be
required by the Bank Act or any other legal requirement, create or
issue any shares ranking in priority to or pari passu with the
second-preferred shares; or create or issue any additional series
of second-preferred shares, unless at the date of such creation or
issuance of all cumulative dividends up to and including the
dividend payment for the last completed period for which such
cumulative dividends are payable, have been declared and paid or
set aside for payment in respect of each series of cumulative
second preferred shares then issued and outstanding, and all
declared and unpaid non-cumulative dividends have been paid or set
aside for payment in respect of each series of non-cumulative
second preferred shares then issued and outstanding.
Changes to Series:
The Bank may not, without prior approval of the holders of
second preferred shares of the series concerned, and subject to the
approvals required by the Act, or any other legal requirement,
delete or change the relevant provisions of the second preferred
shares. Holders of first preferred shares of the series concerned
may give their approval by resolution adopted through the
affirmative vote of at least 662/3% of the votes cast at a meeting
of the holders of the shares of the series concerned, where the
majority of shares outstanding in the series concerned is
represented or, if such a quorum is not obtained at this meeting,
any rescheduled meeting where the shareholders are present or
represented by proxy would constitute the quorum needed.
Dividends:
Holders of second preferred shares are entitled to receive
dividends in such amounts and payable at such times as the Board
determines. With respect to dividends, holders of any series of
second-preferred shares have priority over the holders of common
shares or any other class of Bank shares ranking junior to the
second preferred shares. In the case of cumulative dividends, the
priority will cover all dividends accrued (which for such purpose
will be calculated as if such dividends were accruing from day to
day) and unpaid. In the case of non-cumulative dividends, the
priority will cover all declared and unpaid dividends. The holders
of any series of second-preferred shares are not entitled to any
dividends other than those expressly provided for in the rights,
privileges, restrictions and conditions attached to such series of
second-preferred shares.
Liquidation, Dissolution or Winding Up:
In the event of the liquidation, dissolution or winding up of
the Bank, before any amount is paid or any property distributed to
the holders of common shares or shares of any other class of Bank
shares ranking junior to the second preferred shares, the holders
of each series of second-preferred shares are entitled to receive
(i) an amount equal to the price at which such shares were issued,
(ii) such premium, if any, as has been provided for with respect to
such series, and (iii) in the case of cumulative second preferred
shares, all cumulative accrued and unpaid dividends, and in the
case of non-cumulative second preferred shares, all non-cumulative
dividends declared and remaining unpaid up to and including the
date of distribution. After payment to the holders of second
preferred shares of the amounts so payable to them, they may not
participate in any further distribution of the property or assets
of the Bank.
Voting Rights:
Subject to the provisions of the Act and except as otherwise
provided in the rights, privileges, restrictions and conditions
attaching to any series of second-preferred shares, the holders of
second preferred shares do not, as such, have any voting rights for
the election of directors of the Bank, the appointment of the
independent auditor, or for any other purpose nor are they entitled
to receive any notice of or attend shareholders' meetings.
Restrictions on Bank Shares under the Act
The Act contains restrictions on the issue, transfer,
acquisition, beneficial ownership and voting of all shares of a
chartered bank. The following is a summary of such
restrictions.
Subject to certain exceptions specified in the Act, no person
may be a major shareholder of a bank if the bank has equity of $12
billion or more. In the event that the equity of the Bank is less
than $12 billion and the Act would otherwise permit a person to own
up to 65% of any class of shares of the Bank, the Bank is deemed to
be a bank to which the ownership restrictions for banks with equity
of $12 billion or more apply until the Minister of Finance (Canada)
specifies, on application by the Bank, that these restrictions no
longer apply to the Bank.
A person is a major shareholder of a bank where a) the aggregate
of shares of any class of voting shares of a bank beneficially
owned by that person, by entities controlled by that person and by
any person acting jointly or in concert with that person is more
than 20% of all of the outstanding shares of that class of shares;
or b) the aggregate of shares of any class of non-voting shares of
a bank beneficially owned by that person, by entities controlled by
that person and by any person acting jointly or in concert with
that person is more than 30% of all of the outstanding shares of
that class of non-voting shares.
Furthermore, no person may have a significant interest in any
class of shares of a bank, without approval under the Act. A person
has a significant interest in a class of shares of a bank where the
aggregate of any shares of the class beneficially owned by that
person, by entities controlled by that person and by any person
acting jointly or in concert with that person exceeds 10% of all of
the outstanding shares of that class of shares of such bank.
Subject to certain exceptions, the Act also prohibits the
registration of a transfer or issue of any shares of the Bank to
Her Majesty in right of Canada or of a province or any agent or
agency of Her Majesty, in either of those rights, or to the
government of a foreign country or any political subdivision, agent
or agency of any of them.
Notes
As at October 31, 2023, the Bank currently has outstanding $750
million 5.426% Medium Term Notes due August 16, 2032 (Non-Viability
Contingent Capital (NVCC)) (the "Subordinated Notes") which form
part of the Bank's regulatory capital. The Bank also currently has
outstanding $500 million LRCN, Series 1, $500 million LRCN, Series
2, and $500 million LRCN, Series 3 (collectively, the "LRCNs")
which are classified as equity and form part of the Bank's
additional tier 1 non-viability contingent capital.
The Subordinated Notes and the LRCNs carry and are subject to
the rights, privileges, restrictions and conditions set out
below:
Voting Rights:
T he holders of Subordinated Notes do not, as such, have any
voting rights for the election of directors of the Bank, the
appointment of the independent auditor, or for any other purpose
nor are they entitled to receive any notice of or attend
shareholders' meetings. If the Subordinated Notes are converted
into common shares of the Bank under NVCC requirements, holders of
the Subordinated Notes will become holders of the Bank's common
shares and will only have rights as holders of common shares.
The holders of the LRCNs do not, as such, have any voting rights
for the election of directors of the Bank, the appointment of the
independent auditor, or for any other purpose nor are they entitled
to receive any notice of or attend shareholders' meetings. If the
Preferred Shares, Series 44, the Preferred Shares, Series 45, or
the Preferred Shares, Series 46 are converted into common shares of
the Bank, holders of the LCRNs will become holders of the Bank's
common shares and will only have rights as holders of common
shares.
Liquidation, Dissolution or Winding Up:
T he Subordinated Notes are direct unsecured obligations of the
Bank, constituting subordinated indebtedness for the purposes of
the Act, ranking at least equally with other subordinated
indebtedness of the Bank. In the event of the insolvency or winding
up of the Bank, the indebtedness evidenced by the Subordinated
Notes, including, if a trigger event, as defined in the section
Automatic Conversion of Non-Viability Contingent Capital (NVCC),
has not occurred, the Subordinated Notes will be subordinate in
right of payment to the prior payment in full of the deposit
liabilities of the Bank and all other liabilities of the Bank
except liabilities which by their terms rank in right of payment
equally with or subordinate to indebtedness evidenced by the
Subordinated Notes (including, but not limited to, the LRCNs, the
First Preferred Shares, the Bank's second preferred shares and the
Bank's common shares). Upon the occurrence of a trigger event, the
subordination provisions of the Subordinated Notes will not be
relevant since the Notes will be converted into Bank's common
shares which will rank equally with all other common shares of the
Bank.
The LRCNs are direct unsecured obligations of the Bank
constituting subordinated indebtedness for the purpose of the Act
which, if the Bank becomes insolvent or is wound-up (prior to the
occurrence of a trigger event, as defined in the section Automatic
Conversion of Non-Viability Contingent Capital (NVCC)), will rank:
(a) subordinate in right of payment to the prior payment in full of
all indebtedness, including certain subordinated indebtedness
(including but not limited to the Subordinated Notes) and (b) in
right of payment, equally with and not prior to indebtedness which
by its terms ranks equally in right of payment with, or is
subordinate to, the LRCNs (other than indebtedness which by its
terms ranks subordinate to the LRCNs) in each case, from time to
time outstanding, and will be subordinate in right of payment to
the claims of the Bank's depositors and other unsubordinated
creditors. In the event of the Bank's insolvency or winding up, the
LRCNs will rank ahead of the Bank's common shares and First
Preferred Shares and the Bank's second preferred shares.
Purchase for Cancellation:
The Bank may at any time, with the prior consent of OSFI and
subject to any applicable law, purchase for cancellation any
Subordinated Notes at any price in the open market.
The Bank may at any time, with the prior written consent of
OSFI, purchase for cancellation any LRCNs at any price in the open
market. Prior to any such cancellation, the Bank shall, subject to
the prior consent of OSFI, redeem a corresponding number of
Preferred Shares, Series 44, Preferred Shares, Series 45, or
Preferred Shares, Series 46, as applicable (the aggregate face
amount of which shall equal the aggregate principal amount of the
LRCNs to be cancelled) then held by the LRCN Trust for
cancellation.
Distributions and Restrictions on Dividend, Maturity and
Redemption, Conversion and Other Information:
Additional information on the Bank's Subordinate d Notes and the
LRCNs, including with respect to their redemption, conversion and
the payment of interests, can be found in the pages of the Annual
Report specified in the Table of Contents of the Annual Information
Form and is incorporated herein by reference.
Credit Ratings
The table below details the ratings assigned to the Bank's
outstanding securities by the following credit rating agencies as
of October 31, 2023. Credit ratings must not be construed as
recommendations to purchase, sell or hold securities of the Bank.
The credit ratings assigned by ratings agencies represent their
assessment of the Bank's credit quality based on qualitative
information provided to them. Credit ratings may be revised at any
time based on macro-economic factors or on the current and
projected financial condition of the Bank.
The Bank has made customary payments to each of the ratings
agencies in connection with the assignment of ratings and/or may
have made such payments in respect of other services during the
past two years.
Credit ratings are one of the main factors that influence the
Bank's ability to access financial markets at a reasonable cost. A
downgrade in the Bank's credit ratings could adversely affect the
cost, size and term of future funding.
Funding and liquidity levels remained sound and robust, and the
Bank continues to enjoy excellent access to the market for its
funding needs. Refer to Appendix A for additional information on
credit ratings.
Moody's S&P DBRS Fitch
============ ============= ============= =======
Short-Term Debt
P-1 A-1 R-1 (high) F1+
-------------------- ------------ ------------- ------------- -------
Canadian Commercial --- --- ---
Paper A-1 (mid)
-------------------- ------------ ------------- ------------- -------
Long-Term Deposits Aa3 --- AA AA-
-------------------- ------------ ------------- ------------- -------
Long-Term Non Aa3 A AA-
Bail-inable Senior AA
Debt ( [3] )
-------------------- ------------ ------------- ------------- -------
Senior Debt (
[4] ) A3 BBB+ AA (low) A+
-------------------- ------------ ------------- ------------- -------
Subordinated A (high)
Debt Baa2 BBB+ A-
-------------------- ------------ ------------- ------------- -------
Subordinated Baa2 (hyb) BBB A (low) ---
Debt (NVCC)
-------------------- ------------ ------------- ------------- -------
Limited Recourse Ba1 (hyb) BB+ BBB (high) BBB
Capital Notes
(NVCC)
-------------------- ------------ ------------- ------------- -------
Preferred Shares ---
(NVCC) Ba1 (hyb) P-3 (high) Pfd-2
-------------------- ------------ ------------- ------------- -------
Counterparty Aa3/P-1 --- --- AA-
Risk (3)
-------------------- ------------ ------------- ------------- -------
Covered Bonds Aaa --- AAA AAA
Program
-------------------- ------------ ------------- ------------- -------
Outlook Positive Stable Stable Stable
-------------------- ------------ ------------- ------------- -------
MARKET FOR SECURITIES
Trading Price and Volume
As at October 31, 2023, the common shares and the First
Preferred Shares, Series 30, 32, 38, 40 and 42 of the Bank were
listed in Canada on the TSX. As at the same date, Preferred Shares,
Series 44, 45, and 46 of the Bank, issued in favour of a limited
recourse trust to be held as assets in trust as part of the LRCN
structure, were outstanding but not listed on the TSX. The First
Preferred Shares, Series 31, 33, 39, 41 and 43 and the second
preferred shares are part of the Bank's authorized share capital,
although no shares of these series or of that class had been issued
as at October 31, 2023.
The following table shows the monthly price ranges and trading
volumes of each of the Bank's securities listed on the TSX for the
fiscal year ended October 31, 2023.
2022/11 2022/12 2023/01 2023/02 2023/03 2023/04 2023/05 2023/06 2023/07 2023/08 2023/09 2023/10
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
High
Common ($) 99,55 96,69 99,96 101,96 104,83 101,14 103,25 100,08 103,59 103,65 95,90 90.52
Low
shares ($) 91,21 90,76 91,21 97,79 91,96 95,80 97,08 94,21 96,87 93,98 88,45 84,27
23 17 67 25 23 49 25 25 25
22 067 40 305 808 888 851 687 856 660 200 972 51 016 914
(NA) Volume 208 158 375 245 237 150 613 053 140 974 370 405
-------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Series
30
(NA.PR High
.P) ($) 18,70 17,96 18,89 19,10 18,75 18,02 17,83 18,04 18,45 18,17 18,65 18,37
(NA.PR Low
.S) ($) 16,85 17,22 17,69 18,21 16,60 16,94 16,70 17,10 17,30 17,34 17,00 17,53
395 294 165 277 156 254 106 117 374 365 252 155
Volume 429 777 000 567 138 352 309 156 152 011 324 514
----------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Series High
32 ($) 18,52 17,50 18,23 18,02 17,64 17,22 17,15 17,00 17,28 17,08 16,98 17,08
(NA.PR Low
.W) ($) 16,53 16,26 16,80 17,30 15,75 16,29 15,85 16,25 16,41 15,81 15,79 15,75
179 151 97 92 123 212 145 187 110 317 175 135
Volume 012 929 028 369 168 370 959 077 401 405 909 883
----------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Series High
38 ($) 25,97 25,91 26,16 25,90 25,99 25,73 25,50 25,42 25,26 25,18 24,80 24,55
(NA.PR Low
.C) ($) 25,11 25,30 25,55 25,56 25,15 25,05 25,15 25,10 25,00 24,42 24,21 23,51
441 178 149 235 307 461 285 215 376 168 122 133
Volume 237 106 637 334 848 874 023 821 969 367 622 865
----------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Series High
40 ($) 21,20 20,84 21,58 21,85 22,10 21,70 21,46 20,97 20,75 20,67 20,40 20,38
(NA.PR Low
.E) ($) 20,26 18,65 20,10 20,75 19,81 19,46 20,30 20,30 19,89 20,10 19,66 18,73
259 275 120 161 125 249 131 131 131 94 126 107
Volume 736 273 358 334 692 543 982 246 698 443 422 166
----------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Series High
42 ($) 21,67 21,50 22,78 22,50 22,38 21,53 21,62 21,95 21,99 22,00 22,55 22,79
(NA.PR Low
.G) ($) 20,11 20,45 21,56 21,70 20,10 20,27 21,01 21,35 21,30 21,36 20,91 21,65
192 95 90 92 118 73 70 92 185 583 231
Volume 87 601 619 875 198 614 171 701 791 142 424 147 836
----------------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Prior Sales
Information concerning prior sales can be found in the pages of
the Annual Report specified in the Table of Contents of the Annual
Information Form and is incorporated herein by reference.
Escrowed Securities and Securities Subject to Contractual
Restriction on Transfer
As at October 31, 2023, the securities listed in the table below
were, to the Bank's knowledge, all the securities of the Bank held
in escrow or securities subject to restrictions on transfer.
Designation of class Number of securities Percentage of class
held in escrow
------------------------------- -------------------- -------------------
Preferred Shares, Series 44 (1) 500,000 100% of Preferred
Shares, Series 44
------------------------------- -------------------- -------------------
Preferred Shares, Series 45 (1) 500,000 100% of Preferred
Shares, Series 45
------------------------------- -------------------- -------------------
Preferred Shares, Series 46 (1) 500,000 100% of Preferred
Shares, Series 46
------------------------------- -------------------- -------------------
(1) Preferred Shares, Series 44, Preferred Shares, Series 45,
and Preferred Shares, Series 46 are held by LRCN Trust, a limited
recourse trust, as part of the issuance of LRCN, Series 1, LRCN,
Series 2, and LRCN, Series 3. These shares may only be transferred
or distributed to the holders of LRCN in certain circumstances.
Please refer to the "Capital Structure - First Preferred Shares"
section.
Additional information can be found in the page of the Annual
Report specified in the Table of Contents of the Annual Information
Form and is incorporated herein by reference.
Normal Course Issuer Bid of the Bank
The description of the Bank's normal course issuer bid ("NCIB")
can be found in the pages of the Annual Report specified in the
Table of Contents of the Annual Information Form and is
incorporated herein by reference.
Shareholders can obtain, free of charge, a copy of the Bank's
notice of intent regarding this NCIB, approved by the Toronto Stock
Exchange, by writing to the Bank's Senior Vice-President - Legal
Affairs and Corporate Secretary at 600 De La Gauchetière Street
West, 4th Floor, Montreal, Quebec, Canada H3B 4L2. In fiscal year
2024, the Bank will move to its new offices located at Place Banque
Nationale, 800 Saint-Jacques Street, Montreal, Quebec, Canada, H3C
1A3.
DIRECTORS AND EXECUTIVE OFFICERS
Directors
As at October 31, 2023, the following were members of the Board.
The main positions they have held since November 1, 2018, are also
specified. All directors elected at the Meeting will hold office
until their resignation, the election or appointment of their
replacement, or until the close of the subsequent annual meeting of
holders of Common Shares of the Bank. For further information,
please consult the Circular available on the nbc.ca website and
SEDAR + .
BERTRAND, Maryse Corporate director. Bank director since April 2012.
(1) (4) (5)
(Quebec, Canada)
-------------------- ---------------------------------------------------------------
BLOUIN, Pierre Corporate director. Bank director since September 2016.
(1) (4) (5)*
(Quebec, Canada)
-------------------- ---------------------------------------------------------------
BOIVIN, Pierre President and Chief Executive Officer of Claridge Inc.
(4)* since September 2011. Bank director since April 2013.
(Quebec, Canada)
-------------------- ---------------------------------------------------------------
CHAREST, Yvon Corporate director. Special Advisor to Infrastructure
(2) (3)* (4) Canada since August 2019. President and Chief Executive
Officer of Industrial Alliance, Insurance and Financial
Services Inc., from May 2000 to September 2018. Bank director
since April 2020.
(Quebec, Canada)
-------------------- ---------------------------------------------------------------
CURADEAU-GROU, Corporate director. Bank director since April 2019.
Patricia (1) (2)*
(3)
(Quebec, Canada)
-------------------- ---------------------------------------------------------------
FERREIRA, Laurent President and Chief Executive Officer of the Bank since
(Quebec, Canada) November 2021. Chief Operating Officer of the Bank from
February 2021 to October 2021. Executive Vice-President
and Co-Head - Financial Markets of the Bank from November
2018 to January 2021. Executive Vice-President and Managing
Director - Equity Derivatives, National Bank Financial
Inc. from January 2015 to November 2018. Bank director
since February 2021.
-------------------- ---------------------------------------------------------------
GUÉRARD, Annick President and Chief Executive Officer of Transat A.T.
(2) Inc. since September 2021. Chief Operating Officer of
Transat A.T. Inc. from November 2017 to May 2021. Bank
director since April 2023.
(Quebec, Canada)
-------------------- ---------------------------------------------------------------
KINSLEY, Karen Corporate director. Bank director since December 2014.
(2) (3)
(Ontario, Canada)
-------------------- ---------------------------------------------------------------
LOEWEN, Lynn (1)* Corporate director. President of Minogue Medical Inc.
(5) from December 2015 to July 2019. Bank director since April
2022.
(Quebec, Canada)
-------------------- ---------------------------------------------------------------
MCKILLICAN, Rebecca Chief Executive Officer of McKesson Corporation Canada
(4) (5) since August 2020. President, Retail Solutions at McKesson
Corporation Canada from October 2019 to August 2020. President
and Chief Executive Officer of Well.ca from March 2013
to October 2019. Bank director since October 2017.
(Ontario, Canada)
-------------------- ---------------------------------------------------------------
PARÉ, Robert Chair of the Board of Directors of the Bank since April
(3) 2023. Strategic Advisor for the law firm Fasken Martineau
DuMoulin LLP from February 2018 to December 2022. Senior
Partner at Fasken Martineau DuMoulin LLP from February
1984 to January 2018. Bank director since April 2018.
(Quebec, Canada)
-------------------- ---------------------------------------------------------------
POMERLEAU, Pierre Executive Chair of the Board of Directors of Pomerleau
(2) Inc. since March 2023. President and Chief Executive Officer
of Pomerleau Inc. from 1997 to March 2023. Bank director
since April 2023.
(Quebec, Canada)
-------------------- ---------------------------------------------------------------
SAPUTO, Lino A. President since January 2022 and Chief Executive Officer
(2) since March 2004 of Saputo Inc. Chair of the Board of
Directors of Saputo Inc. since August 2017. Bank director
since April 2012.
(Quebec, Canada)
-------------------- ---------------------------------------------------------------
TALL, Macky (2) Partner and Chair of the Infrastructure Group of The Carlyle
(3) Group since September 2021. Co-Chair of the Infrastructure
Group of The Carlyle Group from April 2021 to September
2021. President and Chief Executive Officer of CDPQ Infra
from July 2015 to December 2020. Bank director since April
2021.
(Florida, United
States)
-------------------- ---------------------------------------------------------------
(1) Member of the AC
(2) Member of the RMC
(3) Member of the CRCGC
(4) Member of the HRC
(5) Member of the TC
*Chair of the committee
Executive Officers
The following are the Bank's executive officers, as defined in
subsection 1.1(1) of Regulation 51-102 Continuous Disclosure
Obligation (Quebec), as at October 31, 2023. The positions they
have held both at the Bank and outside the Bank since November 1,
2018, are also specified:
BLANCHET, Lucie Executive Vice-President - Personal Banking and Client Experience
(Quebec, Canada) since June 2019
From June 2018 to June 2019, Executive Vice-President - Personal
Banking and Marketing, National Bank of Canada.
------------------- ------------------------------------------------------------------------
BONNELL, William Executive Vice-President - Risk Management since June 2012
(Quebec, Canada)
------------------- ------------------------------------------------------------------------
DENHAM, Michael Executive Vice-President - Commercial and Private Banking
(Quebec, Canada) since June 2023
From September 2021 to May 30, 2023, Vice-Chairman, Commercial
Banking and Financial Markets, National Bank of Canada. From
August 2015 to July 2021, President and Chief Executive Officer
of Business Development Bank of Canada (BDC).
------------------- ------------------------------------------------------------------------
DUBUC, Étienne Executive Vice-President - Financial Markets since November
(Quebec, Canada) 2022
From November to April 2023, Executive Vice-President and
Co-Head - Financial Markets, National Bank of Canada. From
November 2020 to October 2022, Executive Vice-President, Managing
Director and Head of Equities, National Bank of Canada. From
January 2020 to November 2020, Executive Vice-President, Managing
Director and Head of Equities, Currencies and Commodities,
and Co-Head of Risk Management Solutions, Financial Markets
, National Bank Financial Inc. From November 2018 to January
2020, Vice-President and Managing Director, Equities, National
Bank Financial Inc.
------------------- ------------------------------------------------------------------------
FERREIRA, Laurent President and Chief Executive Officer since November 2021
(Quebec, Canada) From February 2021 to October 2021, Chief Operating Officer,
National Bank of Canada. From November 2018 to January 2021,
Executive Vice-President - Financial Markets, National Bank
of Canada. From January 2015 to November 2018, Executive Vice-President
and Managing Director - Equity Derivatives, National Bank
Financial Inc.
------------------- ------------------------------------------------------------------------
GINGRAS, Chief Financial Officer and Executive Vice-President - Finance
Marie Chantal since April 2022
(Quebec, Canada) From April 2021 to March 2022, Senior Vice-President - Financial
Accounting, National Bank of Canada. From November 2016 to
March 2021, Head of Internal Audit, National Bank of Canada.
------------------- ------------------------------------------------------------------------
GIROUARD, Denis Executive Vice-President - Wealth Management and Co-President
(Quebec, Canada) and Co-Chief Executive Officer, National Bank Financial from
April 2023 to November 2023
From November 2020 to April 2023, Executive Vice-President
and Co-Head - Financial Markets, National Bank of Canada.
From February 2021 to October 2022, Executive Vice-President
- Financial Markets, National Bank of Canada. From November
2018 to February 2021, Executive Vice-President and Co-Head
- Financial Markets, National Bank of Canada since November
2018. From June 2016 to November 2018, Executive Vice-President
- Financial Markets, National Bank of Canada.
------------------- ------------------------------------------------------------------------
HÉBERT, Executive Vice-President - Employee Experience since November
Brigitte 2019
(Quebec, Canada) From January 2019 to October 2019, Executive Vice-President
- Employee Experience and Operations, National Bank of Canada.
From June 2018 to January 2019, Executive Vice-President -
Human Resources, Corporate Affairs and Operations, National
Bank of Canada.
------------------- ------------------------------------------------------------------------
LÉVESQUE, Executive Vice-President - Technology and Operations since
Julie January 2022
(Quebec, Canada) From June 2020 to January 2022, Executive Vice-President -
Information Technology, National Bank of Canada. From February
2020 to June 2020, Senior Vice-President - IT Delivery Strategy,
National Bank of Canada. From November 2016 to February 2020,
Managing Director and Head of System and Data Delivery, Canada
Pension Plan Investment Board.
------------------- ------------------------------------------------------------------------
PAQUET, Nancy Executive Vice-President - Wealth Management and Co-President
(Quebec, Canada) and Co-chief Executive Officer, National Bank Financial since
November 2023
From August 2022 to November 2023, Senior Vice-President -
Personal Banking, National Bank of Canada. From April 2019
to August 2022, Senior Vice-President - Savings and Investment
Strategy, Personal Banking, National Bank of Canada. From
October 2016 to April 2019, Vice-President - Investments,
National Bank of Canada.
------------------- ------------------------------------------------------------------------
Shareholdings of Directors and Executive Officers
As at October 31, 2023, all the directors and executive officers
of the Bank, as a group, directly or beneficially owned or
controlled 310 101 common shares, i.e., 0.09% of the Bank's issued
and outstanding common shares.
Cease-trading, Bankruptcies, Fines or Sanctions
To the knowledge of the Bank, no director or executive officer
was, as of the date of the Annual Information Form, or has been,
during the 10 years prior to this date, a director or executive
officer of a company, including the Bank, which, while they were
acting in such capacity or within a year of their ceasing to act in
such capacity, became bankrupt, made a proposal under legislation
relating to bankruptcy or insolvency, or became subject to, or
instituted any proceedings, arrangement or compromise with
creditors, or had a receiver, receiver manager or trustee appointed
to hold their assets.
CONFLICTS OF INTEREST
To the knowledge of the Bank, no director or officer of the Bank
has an existing or potential material conflict of interest with the
Bank or any of its subsidiaries. Information on related party
transactions can be found in the pages of the Annual Report
specified in the Table of Contents of the Annual Information Form
and is incorporated herein by reference.
Legal Proceedings and Regulatory Actions
Information on litigation to which the Bank is a party can be
found in the pages of the Annual Report specified in the Table of
Contents of the Annual Information Form and is incorporated herein
by reference.
TRANSFER AGENT AND REGISTRAR
The Bank's registers are maintained in Montreal by:
Computershare Trust Company of Canada
1500 Robert-Bourassa Boulevard, 7(th) Floor
Montreal, Quebec, Canada H3A 3S8
Telephone: 1-888-838-1407
Fax: 1-888-453-0330
Email: service@computershare.com
Website: computershare.com
Mailing address:
Computershare Trust Company of Canada
100 University Avenue, 8(th) Floor
Toronto, Ontario, Canada M5J 2Y1
INTERESTS OF EXPERTS
Deloitte is the Bank's auditor and is independent within the
meaning of the Code of Ethics of the Ordre des comptables
professionnels agréés du Québec. This firm has prepared the
Independent Auditor's Report to shareholders in respect of the
Bank's consolidated financial statements.
INFORMATION ON THE AUDIT COMMITTEE
The mandate of the Audit Committee appears in Appendix B.
Composition of the Audit Committee and Financial Literacy of
Members
The Audit Committee is made up entirely of independent
directors, as defined by the CSA. As at October 31, 2023, the
members of this committee were Lynn Lowen, Chair of this committee,
Maryse Bertrand, Pierre Blouin, Patricia Curadeau-Grou.
The Board has determined that all the Audit Committee members
are "financially literate" within the meaning of CSA rules relating
to audit committees. All the Audit Committee members have acquired
the experience and knowledge required to adequately fulfill their
duties as Audit Committee members, from having served as chief
executive officers or directors of other corporations or through
their education. Several of them serve or have served on the audit
committees of various corporations. The text below summarizes the
education and experience of each Audit Committee member that are
relevant to the performance of their responsibilities.
Maryse Bertrand holds a Bachelor of civil law degree from McGill
University and a Master's degree in Risk Management from the Stern
School of Business at New York University.She was admitted to the
Quebec Bar in 1981. She has been a director and member of the Audit
and Finance Committee of Gildan Activewear Inc. since May 2018 as
well as a director of Canam Group Inc. since January 2021 and Chair
of its Audit Committee since March 2021. She has also been a
director of the Public Sector Pension Investment Board and its
Investment and Risk Committee since September 2018, having chaired
this committee from September 2020 to March 2022. She has also been
a director of Metro Inc. since January 2015 and a member of its
Audit Committee from January 2018 to January 2022. From September
2016 to January 2017, she was a strategic advisor and counsel for
the law firm Borden Ladner Gervais LLP. Maryse Bertrand has been a
member of the Audit Committee since April 2019.
Pierre Blouin holds a Bachelor of Business Administration
degree, with a major in Finance and Marketing from HEC Montréal and
is a Fellow Supply Chain Management Professional (FSCMP). He has
been a director of Fortis Inc. since May 2015 and a member of its
Governance and Sustainability Committee since May 2016 which he has
chaired since January 2020. He has also been a director of Telecon
Inc. since February 2019. He was also Chief Executive Officer of
Manitoba Telecom Services Inc. from December 2005 to December 2014
and served on its Board of Directors from March 2006 to December
2014. He also held positions of increasing responsibility at BCE,
including President and Chief Executive Officer of Bell Mobility
Inc. from 2000 to 2002, Chief Executive Officer of BCE Emergis Inc.
from 2002 to 2003, and Group President, Consumer Markets of Bell
Canada from 2003 to 2005. Pierre Blouin has been a member of the
Audit Committee since April 2017.
Patricia Curadeau-Grou holds a Bachelor of Commerce (Finance and
Marketing option) degree from McGill University and has received
the Institute of Corporate Directors, Director designation. She has
been a director of Cogeco Communications Inc. and a member of its
Audit Committee since January 2020 and a member of the Audit
Committee of the Pointe-à-Callière, Montreal Museum of Archeology
and History since February 2015 which she has chaired since August
2016. She was also a director of Cogeco Communications Inc. and a
member of its Audit Committee from January 2012 to January 2020.
Patricia Curadeau-Grou has held a number of positions at the Bank
from 1991 to 2012, including Chief Financial Officer and Executive
Vice-President - Finance, Risk and Treasury from 2007 to 2011 and
Executive Vice-President - Risk Management from 2011 to 2012. She
then became an advisor to the President until her retirement in
October 2015. Patricia Curadeau-Grou has been a member of the Audit
Committee since April 2023.
Lynn Loewen holds a Bachelor of Commerce degree from Mount
Allison University, is a Fellow of the Chartered Professional
Accountants of Nova Scotia and has received the Institute of
Corporate Directors, Director designation. She has also been a
director of Emera Incorporated and a member of its Audit Committee
since February 2013. She was also a director of Xplornet
Communications Inc. and a member of its Audit Committee from
January 2021 to August 2023. She was a member of the Public Sector
Pension Investment Board from 2001 to 2007, where she served on the
Audit Committee from 2003 to 2006 and chaired that committee from
2006 to 2007. During her career, she held the position of President
at Minogue Medical Inc. from December 2015 to July 2019, served as
President of Expertech Network Installation Inc. from 2008 to 2011,
and was Vice-President of Financial Controls from 2003 to 2005, and
Vice-President of Finance Operations at BCE Inc. from 2005 to 2008.
Lynn Loewen has been a member of the Audit Committee since April
2022 and has chaired it since April 2023.
Guidelines for the Management of Services Provided by the
Independent Auditor and Fees Paid
The Bank's Audit Committee has put in place guidelines
restricting the services that may be provided by the independent
auditor to maintain its independence, which is essential to
ensuring the smooth functioning of the Bank's operations and
maintaining the confidence of its shareholders, investors and the
general public. The Bank acknowledges that the audit work gives the
independent auditor knowledge of the Bank that enables it to carry
out other work more effectively and therefore deems it desirable,
in certain circumstances, to entrust other work to it besides the
annual audit in compliance with the regulatory framework governing
the Bank and the independent auditor.
These guidelines state that a mandate may be assigned to the
independent auditor for non-audit services provided the following
conditions are met: the services are not on the list of prohibited
services set out in the guidelines; the specific expertise of the
independent auditor or its intrinsic knowledge of the Bank's
activities allows it to carry out the mandate more effectively; the
accepted mandate or the services rendered do not compromise the
independence of the independent auditor within the prevailing
regulatory framework; and the mandate is authorized as per the
guidelines. The guidelines stipulate that the services must be
preapproved by the Audit Committee in accordance with the following
conditions: pre-approval policies and procedures are detailed; the
Audit Committee is informed of each non-audit service; and
procedures do not include delegation of the Audit Committee's
responsibilities to Bank management. The Audit Committee has
delegated responsibility for approving the awarding of specific
mandates to its Chair. Consequently, whenever a specific
pre-approval is required under these guidelines, Bank management
must consult the Chair of the Audit Committee in the event of
ambiguity, to determine whether a service is included in the
pre-approved services.
Each year, the Audit Committee recommends to the Board that it
approve the fees to be paid to the independent auditor and the
envelopes established under the Guidelines for the Management of
Services Provided by the Independent Auditor. The following table
details fees billed by Deloitte to the Bank and to its subsidiaries
for various services rendered during the past two fiscal years.
2023 2022
($) ($)
-------------------- ----------- -----------
Audit fees 6,198,167 5,700,000
-------------------- ----------- -----------
Audit-related
fees 4,697,537 4,170,087
-------------------- ----------- -----------
Subtotal 10,895,704 9,870,087
-------------------- ----------- -----------
Tax fees 177,936 295,579
-------------------- ----------- -----------
Other fees 535,625 759,241
-------------------- ----------- -----------
Total 11,609,265 10,924,907
-------------------- ----------- -----------
The audit fees include fees for services related to the audit of
the consolidated financial statements of the Bank and the financial
statements of its subsidiaries or other services normally provided
by the independent auditor in connection with statutory or
regulatory filings or engagements required by applicable
legislation. They also include fees for examining the Bank's
interim condensed consolidated financial statements.
The fees for audit-related services include fees for comfort
letters, statutory audits, certification services, consents and
assistance with the preparation and review of documents filed with
regulators, the interpretation of accounting and financial
reporting standards and the translation of reports to shareholders
and related services performed by the Bank's independent auditor.
They also include fees for accounting consultations in connection
with acquisitions and divestitures and internal control
reviews.
Tax fees include fees for assistance in tax planning, during
restructurings, and when taking a tax position, as well as the
preparation and review of income and other tax returns and tax
opinions.
Other fees include fees for consulting services for projects,
risk management services and statutory and/or regulatory compliance
services.
ADDITIONAL INFORMATION
Additional information on the Bank is available on its nbc.ca
website and on SEDAR + . The Bank's financial information is
published in the consolidated financial statements and the
MD&A, both of which are part of the Annual Report. The Annual
Report can also be obtained on SEDAR + .
The Bank will provide to any shareholder, free of charge and
upon request, a copy of the Annual Information Form together with a
copy of any document incorporated therein by reference, a copy of
the annual consolidated financial statements together with the
accompanying auditor's report and MD&A, a copy of any
subsequent interim report, a copy of the Circular in respect of its
most recent annual meeting of holders of common shares that
involved the election of directors, and a copy of any document that
is incorporated by reference into a prospectus, short form or
other, whenever the securities of the Bank are part of a
distribution.
The Circular contains additional information, such as the
compensation and indebtedness of the directors and executive
officers of the Bank and the securities authorized for issuance
under equity compensation plans. Copies of these documents may be
obtained upon request from the Legal Affairs Office of the Bank,
600 De La Gauchetière Street West, 4(th) Floor, Montreal, Quebec,
Canada H3B 4L2. In fiscal year 2024, the Bank will move to its new
offices located at Place Banque Nationale, 800 Saint-Jacques
Street, Montreal, Quebec, Canada, H3C 1A3.
As part of the Canadian bank resolution powers, certain
provisions of, and regulations under the Bank Act (Canada), the
Canada Deposit Insurance Corporation Act and certain other Canadian
federal statutes pertaining to banks, provide for a bank
recapitalization regime for banks designated by OSFI as domestic
systemically important banks, which include the Bank.
A description of Canadian bank resolution powers and resulting
risk factors for certain elements of the Bank's liabilities can be
found in the pages of the Annual Report specified in the Table of
Contents of the Annual Information Form and is incorporated herein
by reference, and at:
https://www.nbc.ca/content/dam/bnc/a-propos-de-nous/relations-investisseurs/fonds-propres-et-dette/bail-in_senior_debt_en.pdf
The information available on the Bank's website is not
incorporated herein by reference as part of this Annual Information
Form.
APPIX A - Explanation of credit Ratings
The following descriptions of the ratings categories assigned by
each of the rating agencies are provided in accordance with
legislation and were taken from the agencies' respective websites.
They do not constitute an endorsement by the Bank of the categories
or of the application by the respective rating agencies of their
criteria and analyses. More information can be obtained from the
respective rating agencies.
Moody's
Short-Term Debt: P-1
A "P-1" rating indicates a superior ability to repay short-term
debt obligations.
Long-Term Debt: Aa3
An "Aa" is judged to be of high quality and subject to very low
credit risk.
Long-Term Non Bail-inable Senior Debt: Aa3
An "Aa" is judged to be of high quality and subject to very low
credit risk.
Senior Debt: A3
An "A" rating is considered upper-medium-grade and is subject to
low credit risk.
Subordinated Debt: Baa2
A "Baa" rating is considered to be medium grade, but subject to
moderate credit risk and as such may possess certain speculative
characteristics.
NVCC Subordinated Debt: Baa2 (hyb)
A "Baa" rating is considered to be medium grade, but subject to
moderate credit risk and as such may possess certain speculative
characteristics.
NVCC Limited Recourse Capital Notes: Ba1 (hyb)
A "Ba" rating is considered to have speculative elements and
subject to substantial credit risk.
NVCC Preferred Shares: Ba1 (hyb)
A "Ba" rating is considered to have speculative elements and
subject to substantial credit risk.
Counterparty Risk: Aa3/P-1
An "Aa" is judged to be of high quality and subject to very low
credit risk. A "P-1" rating indicates a superior ability to repay
short-term debt obligations.
Covered Bonds Program: Aaa
An "Aaa" rating is judged to be of the highest quality, with the
lowest credit risk.
Other Information
Moody's assigns ratings of between "P-1" and "NP" to short- term
obligations with initial maturities of 13 months or less, which
reflect both the probability of default and the expected financial
loss in the event of default.
Moody's assigns ratings of between "Aaa" and "C" to long- term
financial instruments, to issuers or to obligations with initial
maturities of one year or more, which reflect both the probability
of default and the expected financial loss in the event of
default.
Moody's appends numerical modifiers "1," "2" and "3" to each
generic rating classification from "Aa" through "Caa." The modifier
"1" indicates that the obligation ranks in the higher end of its
generic rating classification; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates a ranking in the
lower end of that generic rating classification. Moreover, the
addition of "(hyb)" after the rating indicates a hybrid
security.
S&P
Short-Term Senior Debt: A-1
An "A-1" rating is in the highest category and it indicates that
the obligor's capacity to meet its financial commitment on the
obligation is strong.
Canadian Commercial Paper: A-1 (Mid)
An obligation rated "A-1 (Mid)" on the Canadian commercial paper
rating scale corresponds to an "A-1" rating on Standard &
Poor's global short-term rating scale. This rating reflects a
strong capacity for the obligor to meet its financial commitment on
the obligation.
Long-Term Non Bail-inable Senior Debt: A
An "A" rating is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's
capacity to meet its financial commitment is still strong.
Senior Debt: BBB+
A "BBB" rating exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
Subordinated Debt: BBB+
A "BBB" rating exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
NVCC Subordinated Debt: BBB
A "BBB" rating exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.
NVCC Limited Recourse Capital Notes: BB+
A "BB" rating is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties
and exposure to adverse business, financial, or economic conditions
that could lead to the obligor's inadequate capacity to meet its
financial commitments.
NVCC Preferred Shares: P-3 (High)
A "P-3 (High)" rating corresponds to a "BB+" rating on Standard
& Poor's Global Scale Preferred Share Rating. A "BB" rating is
considered less vulnerable in the near term than other lower-rated
obligors. However, it faces major ongoing uncertainties and
exposure to adverse business, financial, or economic conditions
that could lead to the obligor's inadequate capacity to meet its
financial commitments.
Other Information
The ratings from "AAA" to "CCC" may be modified by adding a plus
or minus sign to show relative standing within the major rating
categories.
DBRS
Short-Term Debt: R-1 (high)
An "R-1 (high)" rating indicates the highest credit quality, and
the capacity for the payment of short-term financial obligations is
exceptionally high. It is unlikely that securities rated "R-1
(high)" will be vulnerable to future events.
Long-Term Debt: AA
An "AA" rating indicates superior credit quality, and the
capacity for the payment of financial obligations is considered
high. The "AA" rating only differs slightly from "AAA," and it
corresponds to securities that are unlikely to be significantly
vulnerable to future events.
Long-Term Non Bail-inable Senior Debt: AA
An "AA" rating indicates superior credit quality, and the
capacity for the payment of financial obligations is considered
high. The "AA" rating only differs slightly from "AAA," and it
corresponds to securities that are unlikely to be significantly
vulnerable to future events.
Senior Debt: AA (low)
An "AA" rating indicates superior credit quality, and the
capacity for the payment of financial obligations is considered
high. The "AA" rating only differs slightly from "AAA," and it
corresponds to securities that are unlikely to be significantly
vulnerable to future events.
Subordinated Debt: A (high)
An "A" rating indicates good credit quality and a substantial
capacity for the payment of financial obligations, but of lesser
strength than securities rated "AA." May be vulnerable to future
events, but negative factors are considered manageable.
NVCC Subordinated Debt: A (low)
An "A" rating indicates good credit quality and a substantial
capacity for the payment of financial obligations, but of lesser
strength than securities rated "AA." May be vulnerable to future
events, but negative factors are considered manageable.
NVCC Limited Recourse Capital Notes: BBB (high)
A "BBB" rating indicates adequate credit quality, and the
capacity for the payment of financial obligations is considered
acceptable. Securities rated "BBB" may be vulnerable to future
events.
NVCC Preferred Shares: Pfd-2
A "Pfd-2" rating indicates satisfactory credit quality.
Protection of dividends and principal is still substantial, but
earnings, the balance sheet, and coverage ratios are not as strong
as "Pfd-1" rated securities. Generally, "Pfd-2" ratings correspond
with companies whose senior bonds are rated in the "A"
category.
Covered Bonds Program: AAA
An "AAA" rating is of the highest credit quality. The capacity
for the payment of financial obligations is exceptionally high and
unlikely to be adversely affected by future events.
Other Information
The "R-1" and "R-2" rating categories can be further qualified
with the subcategories "high," "middle" and "low." All long-term
rating categories other than AAA and D also contain the
subcategories "high" and "low." The absence of either designation
indicates that the rating is in the middle of the category.
Fitch
Short-Term Debt: F1+
An "F1" rating indicates the lowest default risk and the
strongest capacity for timely payment of financial commitments. A
"+" is added to the rating to indicate a particularly strong
liquidity profile.
Long-Term Debt: AA-
An "AA" rating denotes expectations of very low default risk.
The capacity for payment of financial commitments is considered
very strong. This capacity is not significantly vulnerable to
foreseeable events.
Long-Term Non Bail-inable Senior Debt: AA-
An "AA" rating denotes expectations of very low default risk.
The capacity for payment of financial commitments is considered
very strong. This capacity is not significantly vulnerable to
foreseeable events.
Senior Debt: A+
An "A" rating denotes expectations of low default risk. The
capacity for payment of financial commitments is considered strong.
This capacity may, nevertheless, be more vulnerable to adverse
business or economic conditions than is the case for higher
ratings.
Subordinated Debt: A-
An "A" rating denotes expectations of low default risk. The
capacity for payment of financial commitments is considered strong.
This capacity may, nevertheless, be more vulnerable to adverse
business or economic conditions than is the case for higher
ratings.
NVCC Limited Recourse Capital Notes: BBB
A "BBB" rating denotes good prospects for ongoing viability.
There is a moderate level of default risk relative to other issuers
or obligations in the same country or monetary union.
Derivative Counterparty Rating: AA-
An "AA" rating denotes expectations of very low default risk.
The capacity for payment of financial commitments is considered
very strong. This capacity is not significantly vulnerable to
foreseeable events.
Covered Bonds Program: AAA
An "AAA" rating denotes the lowest expectations of default risk.
It is assigned only in cases of exceptionally strong capacity for
the payment of financial commitments. It is very unlikely that this
capacity will be adversely affected by foreseeable events.
Other Information
The modifiers "+" or "-" may be appended to a rating to specify
relative status within major rating categories.
APPIX B - AUDIT COMMITTEE MANDATE
Audit Committee
The Bank's Board of Directors ("Board") delegates some of its
powers to several committees. This document describes the mandate
of the Audit Committee ("Committee"). The Committee oversees the
Bank's financial soundness and ensures that practices to this
effect are robust and that they comply with the Bank's One Mission
as well with legislation. It performs its activities in accordance
with the Bank's environmental, social and governance practices and
strategies.
Among the activities it performs as part of its mandate, the
Committee:
-- Obtains reports on the Bank's management and financial
position, the effectiveness and efficiency of the main governance
processes and systems, the management of risks and internal
controls and the financial risks it faces.
-- Reviews the recommendations for addressing such risks and
follows up on the recommendations implemented.
-- Ensures that Management has implemented the appropriate internal controls.
-- Recommends to the Board the independent auditor candidate who
will be proposed to shareholders.
The Committee delegates certain responsibilities to Bank
resources or independent third parties, such as to the Finance and
Internal Audit oversight functions and to the independent
auditor:
-- The Finance oversight function : Reporting to the Chief
Financial Officer and Executive Vice-President, Finance, the
Finance oversight function oversees the management of financial
resources and the governance of financial information. It helps the
Bank sectors manage their financial performance, ensures compliance
with regulatory requirements and is responsible for presenting the
Bank's information to shareholders.
-- The Internal Audit oversight function : The Senior
Vice-President, Internal Audit is responsible for objectively
providing independent assurance and advice to the Committee, the
Board and Bank Management on the efficiency of the main governance
processes and systems and on the management of risks and internal
controls, as well as offering recommendations and advice for
promoting the Bank's long-term strength.
-- The independent auditor : The independent auditor expresses
an opinion on the consolidated financial statements and provides
reports. It makes recommendations for improving the Bank's internal
controls.
Moreover, the Committee:
-- Oversees their performance and independence.
-- Ensures that Management has implemented the measures and
procedures to provide quality financial information.
-- Obtains information about any situation that could jeopardize
the Bank's financial soundness.
-- Examines any document under its responsibility by law,
regulation or submitted by any regulatory authority.
1 Role and responsibilities
1.1 Appointment and Mandate of Oversight Functions and the Independent Auditor
Independent auditor
Appointment
-- The Committee evaluates the independent auditor candidates.
It periodically considers whether it is appropriate to launch a
call for tenders in order to select a candidate firm to act as
independent auditor.
-- It proposes the appointment of the independent auditor. It
recommends the appointment to the Board, which submits it to a
shareholder vote.
-- The Committee also makes recommendations concerning the independent auditor's compensation.
-- The Committee can recommend the removal of the independent auditor.
Mandate and annual plan
-- The Committee approves the annual plan and the engagement
letter which sets out the conditions and scope of services provided
by the independent auditor.
-- It ensures that the scope of the plan is appropriate, namely
that it is based on financial and other material risks.
-- In the event of any substantial change to the annual plan,
the Committee assesses, with the support of the independent
auditor, whether the change could adversely affect the quality of
the audit engagement.
-- The Committee must preapprove the audit and any other
mandates of the independent auditor and put in place clear
procedures and conditions for assigning those and any other
mandates:
o Guideline: Each year, the Committee recommends to the Board of
Directors that it approve the guidelines concerning the management
of the services provided by the independent auditor.
o Delegation: The Committee delegates to its Chairman the power
to approve these mandates.
Oversight function heads
Appointment of the Chief Financial Officer and Executive
Vice-President, Finance and of the Senior Vice-President, Internal
Audit
-- The Committee reads over the recommendations of the President
and Chief Executive Officer of the Bank concerning the appointment
or replacement of the Senior Vice-President, Internal Audit and the
Chief Financial Officer and Executive Vice-President, Finance. The
Committee then makes its recommendations to the Board.
-- Once a year, the Committee reads over the succession plans
for the Senior Vice-President, Internal Audit and the Chief
Financial Officer and Executive Vice-President, Finance. The
Committee then makes its recommendations to the Board.
Mandate and annual plan
-- Each year, the Committee reviews and approves the Internal
Audit Charter and the mandate of the Finance oversight
function.
-- Each year, the Committee reviews and approves the Annual
Internal Audit Plan and makes recommendations as necessary.
-- The Committee ensures that the oversight functions have the
necessary and appropriate resources and structure to fulfill their
mandate.
-- The Committee approves the budgets of the oversight functions annually.
1.2 Performance, Oversight and Independence of the Oversight
Functions and the Independent Auditor
Independent auditor
Self-assessment
At least once a year, the independent auditor presents a report
outlining:
-- Its internal practices concerning the quality control of its services.
-- Important matters arising from its most recent quality
control and peer reviews or following investigations by
professional or government authorities in the previous five years
regarding its engagement and the measures taken to settle such
matters.
-- Its assessment and internal procedures for ensuring its independence.
-- Its business relationship with the Bank.
Annual assessment by the Bank
-- Before the independent auditor tables its report on the
annual consolidated financial statements, the Committee formally
assesses the effectiveness of the contribution of the independent
auditor, as well as its competencies, resources, independence,
support and communication skills.
-- The Committee reports to the Board on the effectiveness of the independent auditor.
Periodic assessment by the Bank
-- The Committee periodically assesses the overall performance
of the independent auditor for all provided services. It is
supported by Management and the recommendation of the Bank's Senior
Vice-President, Internal Audit.
-- At least once every five years, the Committee conducts a full
assessment of the independent auditor in accordance with the
recommendations of CPA Canada and the Canadian Public
Accountability Board.
Rotation of partners responsible for the engagement
-- The Committee reviews the competencies, performance and
independence of the partner responsible for the audit and the audit
team.
-- The Committee discusses the appropriate time and procedure
for rotating each of its partners.
Chief Financial Officer and Executive Vice-President, Finance
and Senior Vice-President, Internal Audit
Assessment of independence
-- The Committee ensures the independence and effectiveness of
Internal Audit and the Finance oversight functions. To fulfill this
role, it ensures that these oversight functions are free of any
influence that could adversely affect their ability to carry out
their responsibilities objectively. The Committee also ensures that
these oversight functions have sufficient stature and authority
within the Bank.
-- The Chief Financial Officer and Executive Vice-President,
Finance reports to the President and Chief Executive Officer of the
Bank and has direct access to the Committee Chair.
-- To ensure the independence of the Internal Audit oversight function, the Committee ensures:
o That he reports in an administrative capacity to the President
and Chief Executive Officer.
o That he has direct access to the Committee Chair and the
President and Chief Executive Officer of the Bank.
o That he has access to the required information.
o That he regularly meets with the Chair of the Committee
without Management presence in order to review matters raised
concerning relations with the Bank's Management and access to
required information.
Performance assessment, compensation and oversight
-- The Committee periodically assesses the effectiveness of the
Finance and Internal Audit oversight functions, as well as their
oversight processes. To fulfill this role, with the assistance of
independent external consultants, it benchmarks the Finance and
Internal Audit's oversight functions and processes.
-- The Committee annually reviews the performance of the Senior
Vice-President, Internal Audit and the Chief Executive Officer and
Executive Vice-President, Finance, and helps determine their
compensation. The Committee then makes its recommendations to the
Board.
1.3 Financial Information
Integrity of financial information
-- The Committee reviews, together with the independent auditor,
the consolidated financial statements, the Annual Report and the
Annual Information Form, and ensures that they accurately present
the Bank's financial performance and cash flows.
o Approval : It recommends that the Board approve them before
they are published, after looking over the independent auditor's
conclusions.
-- The Committee continuously oversees the independent auditor's
work, which may include conclusions regarding the financial
statements, reviews, certifications and other services.
-- In the event of disagreements between the independent auditor
and Management regarding financial information, the Committee may
intervene to reach an agreement.
-- The Committee, the independent auditor and Management discuss
documents related to the integrity of financial information and any
other concerns the independent auditor may have.
-- The Committee and the independent auditor discuss the quality
and acceptability of the accounting principles applied in preparing
the consolidated financial statements.
-- The Committee reviews the annual management letter from the
independent auditor and follows up on the corrective action taken
by Management.
-- The Committee obtains all important correspondence between
the independent auditor and Management regarding audit
findings.
Financial reporting
-- The Committee reviews the press releases concerning financial
information, audit processes and management information systems. It
ensures their integrity, the effectiveness of processes, and
compliance with applicable accounting standards.
-- It reviews the process where the President and Chief
Executive Officer and the Chief Financial Officer certify the
integrity of the financial statements.
-- It reviews disclosures on environmental, social and
governance factors, including climate-related disclosures contained
in financial reports.
-- The Committee ensures that adequate procedures are in place
for publicly disclosing information derived from the financial
statements.
1.4 Review of the Bank's Financial Soundness
Annual budget and financial plan
-- The Committee reviews and recommends to the Board the Bank's
operating budget, which contains information on economic outlooks,
consolidated and sectorial financial objectives, operating expenses
and the capital budget.
Investments and transactions
-- The Committee is made aware of any investment or transaction
having a material effect on the Bank's financial position brought
to its attention by Internal Audit, the independent auditor or a
member of Management.
Disputes and claims
-- The Committee looks over all reports from Management
regarding any dispute, notice of assessment or claim that could
adversely affect the Bank's financial position.
-- It ensures that material claims are properly disclosed in the financial statements.
Taxation
-- The Committee reads over any reports relating to tax planning and risks.
Dividends
The Committee reviews the declaration of dividends and makes
recommendations to the Board.
1.5 Control Mechanisms and Reporting
Internal Audit reports
-- Reviews the report of the Senior Vice-President, Internal
Audit, discusses the main audit reports, and ensures that the
necessary steps are taken to follow up on important report
recommendations.
Reporting of irregularities related to accounting, auditing or
internal controls
-- The Committee reviews and reports to the Board any accounting
or financial irregularities reported anonymously by employees or
directors.
-- It ensures that the policy on reporting irregularities and
adequate procedures are implemented for the receipt, retention and
handling of irregularities reported and the confidential submission
of concerns relating to accounting or auditing matters. This policy
is reviewed periodically.
-- It reviews the Corporate Compliance report on matters
reported to the Ombudsman as well as investigation results.
1.6 Continued Education
-- The Committee is informed of changes to accounting standards
that could have an impact on the Bank or its consolidated financial
statement's disclosure.
-- The Committee also stays informed of legislative, auditing and financial reporting changes.
-- It informs the Board of such changes or new developments.
-- To stay informed on matters relating to its mandate, the
Committee attends information sessions on matters that fall under
its expertise.
1.7 Banks' Subsidiaries
-- The Committee acts as an Audit Committee for Natcan Trust
Company in accordance with the Trust and Loan Companies Act
(Canada), notably for the approval of the consolidated financial
statements and the appointment of the independent auditor.
-- The Committee may also act as Audit Committee for any other
subsidiary of the Bank where permitted under its incorporating act.
As such, it fulfills all the duties falling upon such committee, in
accordance with legislation.
2 Powers
2.1 Hiring Independent External Consultants
-- The Committee may hire legal advisors or other independent
external consultants to assist it in fulfilling its
responsibilities.
-- The Committee sets and pays its consultants' compensation.
The Bank provides the funds necessary to pay for the services
provided by these consultants.
2.2 Investigating and Having Access to the Books, Registries, Premises, Officers and Employees
-- The Committee may investigate any issue it deems relevant. To
conduct its investigation, it may have full access to the Bank's
books, registries, premises, officers and employees.
2.3 Delegating Powers to a Sub-committee
-- The Committee may, at its discretion, designate a
sub-committee to review any issue raised by the current
mandate.
2.4 Contacting Officers and Employees Directly
-- The Committee may contact the independent auditor, the Senior
Vice-President - Internal Audit, the Chief Financial Officer and
Executive Vice-President - Finance, the Chief Accounting Officer
and Senior Vice-President - Accounting, Consolidation and
Disclosure, the Chief Compliance Officer and any other Bank officer
or employee directly.
2.5 Performing any Duties Assigned to it or Stipulated by Law
-- The Committee performs any duty required by the legislation
in effect or any duty assigned to it by the Board from time to
time.
-- The Committee submits to the Board all recommendations it
deems appropriate with respect to matters that fall within its
purview.
3 Composition
3.1 Composition of the Committee
-- Appointed by the Board and composed of Board directors
-- Minimum of three members
-- A majority of the members consists of directors who are not
affiliated with the Bank; no employee or officer of the Bank or one
of its subsidiaries may therefore be part of it.
-- Members appointed by the Board upon recommendation from the Committee
-- One Chair, appointed by the Board from among the Committee members
-- One secretary, who is the secretary of the Bank, an assistant
secretary or any other person designated by the secretary of the
Bank
-- The composition of the Committee is reviewed each year
Overboarding
-- Members of the Committee will not serve on more than three
public corporation audit committees, including the Bank's, without
the approval of the Board.
3.2 Chair of the Committee
-- The duties of the Committee Chair are set out in the mandate
of the Chairs. The Committee Chair may ask the Chair of the Board
to have certain matters for which the Committee is responsible
submitted to the Board.
3.3 Selection Criteria for Committee members
Have the required skills and knowledge
-- Each of the Committee members is "financially literate"
within the meaning of Regulation 52-110 respecting Audit Committees
or is able to become financially literate within a reasonable
period of time following his appointment.
Be independent
-- Every member must be independent as defined by the Canadian Securities Administrators.
3.4 Term of Mandate for Committee Members
Duration
All members carry out their duties until a successor is
appointed, or until they:
-- resign
-- are relieved of their duties
-- no longer sit as Board directors
Replacing a member after their departure during the year
(vacancy)
-- A vacancy on the Committee is filled by the Board as it deems appropriate.
-- If it does not appoint a new member and the Committee has the
required minimum number of members, the Committee's decisions will
be valid.
4 Meetings
4.1 Dates of Meetings
Regular meetings scheduled in advance
-- At least one meeting per quarter
-- Dates, times, goals and locations of meetings are set in
advance by the Board for the entire year. This information is sent
to members at the beginning of the year. No other notice is
sent.
Unscheduled meetings called during the year (as needed)
Who may call them?
-- Unscheduled meetings may be called by:
o The Chair of the Committee
o Any other Committee member
o The Chair of the Board
o The President and Chief Executive Officer
o The Chief Financial Officer and Executive Vice-President,
Finance
o The Senior Vice-President, Internal Audit
Date, time and location of such a meeting
The date, time, goal and location of the meeting are sent by any
means of communication, without any required additional notice. The
notice also states the purpose of the meeting.
Notice of meeting required unless exception:
-- 24-hour notice: Members must be advised about an unscheduled
meeting no less than 24 hours before the time and date set for the
meeting.
-- Waiver of notice: The presence of a member at a meeting
constitutes a waiver of this notice of meeting, except if this
member is present to specifically oppose the review of any issue,
claiming that the meeting was not called in due form.
-- Exception No. 1 - Two-hour notice: The notice may be sent two
hours in advance if there is an emergency called by the Chair of
the Board, the Chair of the Committee or the President and Chief
Executive Officer.
-- Exception No. 2 - Without notice: An unscheduled Committee
meeting may be held without notice when all Committee members are
present or when the absent members provide a written waiver of
notice of the meeting.
Exceptional meetings of the Board to review matters of interest
to the Committee
-- The Committee Chair may call a meeting of the Board to
discuss matters of interest to the Committee.
4.2 Attendance: in person or remotely
-- Meetings may be held by telephone or via any other means that
enable all members to communicate with each other adequately and
simultaneously. The person participating remotely is presumed to be
in attendance.
4.3 Individuals who may be Invited to Meetings
President and Chief Executive Officer
-- He or she may attend every meeting of the Committee.
Independent Auditor
-- He or she is entitled to receive the notices for Committee
meetings, attend discussions involving related parties and express
their opinion.
Any other person invited by the Committee
-- They can attend part of or the entire meeting, based on what
has been agreed with the Committee.
In camera meeting
-- Part of the meeting must always take place in the absence of
the President and Chief Executive Officer or any other Bank
officer.
4.4 Minimum Number of Members to hold a Meeting of the Committee
(quorum)
-- A majority of the Committee members must be present: If a
member is temporarily absent from a meeting because the topic
discussed puts them in a conflict of interest, they will be
considered to be present for the meeting (subsection 182(3) of the
Bank Act).
-- Not enough members present for quorum? The Committee Chair
can ask the Chair of the Board to act as a member of the Committee
for this meeting and give them voting rights unless the Chair of
the Board is already a member of the Committee.
-- Is the Chair unavailable to attend? The Committee selects a
Chair from members present at the meeting or asks the Chair of the
Board to chair the meeting.
4.5 Vote
-- All decisions to be made by the Committee must be voted on.
-- Majority vote: The decisions voted on by the Committee must
be approved by a majority vote of the members present.
-- Unanimous vote if the meeting only includes two members: If
the Committee is composed of three members and only two members
attend a meeting, the decisions to be voted on must be passed
unanimously.
4.6 Minutes of the Meeting
-- Minutes: The secretary is responsible for drafting the
minutes after each Committee meeting. These must be approved by
Committee members before being filed with the records of minutes.
These minutes are provided to all directors at the next Board
meeting for information purposes.
-- Oral report of the Chair to the Board: The Committee Chair must present an oral report on the deliberations and recommendations of the Committee at the next Board meeting.
([1]) The information on capital management measures can be
found in the pages of the Annual Report specified in the Table of
Contents of the Annual Information Form and is incorporated herein
by reference.
([2]) For more information, refer to pages 18 to 21 of the 2021
Annual Report incorporated herein by reference and available on
nbc.ca and SEDAR + .
(1) Includes Senior debt issued prior to September 23, 2018, and
Senior debt issued on or after September 23, 2018, which is
excluded from the Bank Recapitalization (Bail-in) Regime.
(2) Subject to conversion under the Bank Recapitalization
(Bail-in) Regime.
(3) Moody's terminology is "Counterparty Risk Rating" while
Fitch's terminology is "Derivative Counterparty Rating.".
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END
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