18. Shareholders' Audit (Section 56, all new).

Shareholders of a bank shall, at each annual general meeting, appoint and fix the remuneration of an auditor or auditors, chosen from a panel of not less than forty selected by the general managers of the banks and approved by the Minister of Finance. Full provision is made for filling the vacancy caused by the death of an auditor or the failure of the shareholders to appoint an auditor. Written notice of the intention to nominate any auditor other than a retiring auditor must be given at least twenty-one days before the annual meeting; the bank must cause a copy of such notice to be delivered to the retiring auditor, and particulars of the nomination must be forwarded to each shareholder at least fourteen days before the meeting.

Every auditor of a bank shall have right of access to the books, cash, securities and records of the bank, and is entitled to require from the directors and officers such information and explanation as may be necessary for the performance of his duties.

An auditor is not required to visit any branch for the purpose of examining the books, cash, securities and records, but he may do so if he considers it advisable. It is sufficient for the purposes of the audit if he has access to the returns, statements, and the like, which are sent to the head office in the ordinary way. He must, at least once during the year, check the cash, securities, etc., at the chief office of the bank and at those branches at which he may consider it advisable. The auditors shall make a report to the shareholders :

(a) On the accounts examined by them;

(b) On the checking of the cash and securities;

(c) On the statement of the affairs of the bank submitted at the meeting;

The report must also state:

(a) Whether or not they have obtained all the information and explanation they have required;

(b) Whether, in their opinion, the transactions of the bank which have come under their notice have been within the powers of the bank;

(c) Whether the cash and securities agreed with the books of the bank; and

(d) Whether, in their opinion, the statement referred to in the report is properly drawn up so as to exhibit a true and correct view of the state of the bank's affairs, according to the best of their information and the explanations given to them, and as shown by the books of the bank.

This report must accompany the statement submitted to the shareholders at the annual general meeting.

19. Special report to the Minister of Finance (Section 56a, new).

The Minister may require any duly appointed auditor, or any auditor whom he may select, to examine and inquire specially into the affairs and business of a bank, and the auditor so selected shall, at the conclusion of his examination, report fully to the Minister the results thereof.

20. Dividends (Sections 57-59)

These sections deal with dividends and the method of their payment. The directors are permitted to declare quarterly or half-yearly dividends, but no dividend or bonus shall be declared which will impair the paid-up capital of the bank, or which exceeds a rate of eight per cent, unless, after paying the same and providing for all bad and doubtful debts, the bank has a rest or reserve fund equal to at least 30 per cent of its paid-up capital.

Previous to the payment of any dividend or bonus the directors must give public notice for at least four weeks prior to the date fixed for payment.

21. Cash Reserve (Section 60)

The bank must hold in Dominion of Canada notes not less than 40 per cent of the cash reserves which it has in Canada. Arrangements for issuing Dominion notes in exchange for gold, and for redeeming them, are made at the branch offices of the Department of Finance, namely: Toronto, Montreal, Halifax, St. John, Winnipeg, Victoria, Charlottetown, Regina and Calgary.

22. General Note Issue And Circulation Of Notes (Section 61)

A bank may issue and reissue its notes payable to bearer on demand and intended for circulation to the amount of its unimpaired paid-up capital. No such note, however, shall be for a sum less than five dollars or for any sum which is not a multiple of five dollars.

23. Additional issue for moving crops (Section 61, sub-sec. 15-20).

During the usual season of moving crops - that is to say, from and including the first day of September in any year to the last day of February next ensuing - a bank is allowed to issue additional notes to an amount not exceeding 15 per cent of its combined unimpaired paid-up capital and rest or reserve fund, as stated in the monthly return to the government for the month immediately preceding that in which the additional amount is issued. While such excess notes are in circulation the banks must pay to the Minister of Finance interest on the excess at a rate not exceeding 5 per cent per annum, the interest to be calculated on the amount of notes in circulation for each day during the month, as shown in a return to be sent monthly to the Minister. This feature was added to the Bank Act in 1908 in the form of an amendment to the Act of 1901.

24. Central gold reserve issue ( Section 61, sub-sec. 3-13).

In addition to this special provision for emergency circulation during the crop-moving period, the new act provides for an increase of circulation at any time against the deposit of current gold or Dominion notes, in what is termed the central gold reserves. These central gold reserves are under the control of four trustees, three appointed by the Canadian Bankers' Association, and one by the Minister of Finance. It is the duty of the trustees to receive gold coin and Dominion notes that any bank may desire to deposit with them, and the bank may then issue extra circulation up to, but not exceeding, the amount of such deposit. When any part of the amount deposited in the central gold reserves is not required for the purpose of issuing notes, the surplus may be returned to the bank by the trustees upon formal application. The central gold reserves are subject to frequent inspection and audit by the Department of Finance.

25. Note Issue In British Colonies (Section 62)

Provision is made for issuing notes in pounds sterling or in dollars at agencies of a bank in any British colony or possession other than Canada. The denominations of such notes are limited to one pound sterling or any multiples of that sum, or five dollars or multiples thereof, and the amount issued in this way must be treated as a part of the general circulation of the bank.

26. Pledge Of Notes Prohibited (Section 63)

A bank shall not pledge, assign or hypothecate its own notes, and no loan thereon shall be recoverable from the bank or its assets.