Manulife and TSX Trust Capital Reductions

Summary#

Two companies gave public notice that they intend to apply for permission to reduce the stated capital on their common shares. Manulife Assurance Company of Canada proposes a reduction of up to $12,000,000 (special resolution passed May 15, 2024). TSX Trust Company proposes a reduction of up to $50 million (special resolution passed May 1, 2024). Both will apply to the Superintendent of Financial Institutions (Canada). This notice was published on May 25, 2024 and does not mean approval has been granted.

What it does#

• Manulife Assurance Company of Canada

  • Intends to apply under the Insurance Companies Act for approval to reduce the stated capital of its common shares by up to $12,000,000.
  • The company’s Chief Financial Officer will pick the exact amount within that limit.
  • The reduction would be paid out to the company’s sole shareholder after approval.
  • Special resolution approving this step was passed on May 15, 2024.

• TSX Trust Company

  • Intends to apply under the Trust and Loan Companies Act for approval to reduce the stated capital of its common shares by up to $50 million.
  • The company’s Chief Financial Officer will determine the exact amount within that limit.
  • The reduction would be distributed to the company’s sole shareholder if approved.
  • Special resolution approving this step was passed on May 1, 2024.

• In both cases, officers or directors are authorized to file the application and sign required documents. Publication in the Canada Gazette is a required step but not a guarantee of approval.

Who's affected#

• The sole shareholder of each company is the main party that would receive the money if the reductions are approved.
• Manulife Assurance Company of Canada and TSX Trust Company (the companies themselves) will see their stated capital accounts reduced if approval is granted.
• The Superintendent of Financial Institutions (Canada) will review and decide whether to approve the applications.
• The public impact is not specified in the notice. It’s unclear from the notice whether policyholders, creditors, or other stakeholders would be directly affected.

Why it matters#

• A reduction of stated capital is a way for a company to return money to its shareholder. If approved, up to $12,000,000 and $50 million could be moved out of these companies and paid to their sole shareholders.
• This is part of corporate capital management. It may be of interest to people who watch company finances, such as investors, creditors, or regulators.
• Approval is discretionary; the Superintendent of Financial Institutions (Canada) will review the applications under the applicable federal acts before any payment can occur.