Bank of Montreal 2015 Annual Report Download - page 158

Notes
During the year ended October 31, 2013, we redeemed all of our Non-Cumulative Class B Preferred Shares, Series 5, at a redemption price of
$25.00 per share plus declared and unpaid dividends up to but excluding the date fixed for redemption. Dividends declared for the year ended
October 31, 2013 were $0.33 per share and 8 million shares were outstanding at the time of the dividend declaration.
Preferred Share Rights and Privileges
(Canadian $, except as noted)
Redemption
amount
Quarterly non-
cumulative
dividend (1) Reset premiums
Date
redeemable / convertible Convertible to
Class B – Series 14 25.00 $ 0.328125 Does not reset Current (2) Not convertible
Class B – Series 15 25.00 $ 0.3625 Does not reset Current (2) Not convertible
Class B – Series 16 25.00 $ 0.211875 (3) 1.65% August 25, 2018 (4)(5)(6) Class B – Series 17 (7)
Class B – Series 17 25.00 Floating (8) 1.65% August 25, 2018 (4)(5)(6) Class B – Series 16 (7)
Class B – Series 25 25.00 $ 0.24375 (3) 1.15% August 25, 2016 (5)(6) Class B – Series 26 (7)
Class B – Series 27 25.00 $ 0.2500 (3) 2.33% May 25, 2019 (5)(6) Class B – Series 28 (7)
Class B – Series 29 25.00 $ 0.24375 (3) 2.24% August 25, 2019 (5)(6) Class B – Series 30 (7)
Class B – Series 31 25.00 $ 0.2375 (3) 2.22% November 25, 2019 (5)(6) Class B – Series 32 (7)
Class B – Series 33 25.00 $ 0.2375 (3) 2.71% August 25, 2020 (5)(6) Class B – Series 34 (7)
Class B – Series 35 25.00 $ 0.3125 Does not reset August 25, 2020 (2)(6) Not convertible
Class B – Series 36 1,000.00 $14.6250 (3) 4.97% November 25, 2020 (5)(6) Class B – Series 37 (7)
(1) Non-cumulative dividends are payable quarterly as and when declared by the Board of Directors.
(2) Subject to a redemption premium if redeemed prior to November 25, 2016 – Series 14; May 25, 2017 – Series 15; and August 25, 2024 – Series 35.
(3) The dividend rate will reset on the date redeemable and every five years thereafter at a rate equal to the 5-year Government of Canada bond yield plus the reset premium noted. If converted to a
floating rate series, the rate will be set as and when declared to the 3-month Government of Canada treasury bill yield plus the reset premium noted.
(4) On July 22, 2013, we announced that we did not intend to exercise our right to redeem the Non-Cumulative 5-Year Rate Reset Class B Preferred Shares, Series 16 on the initial redemption date. As a
result, subject to certain conditions, the holders of Series 16 Preferred Shares had the right, at their option, to elect to convert all or part of their Series 16 Preferred Shares on a one-for-one basis into
Non-Cumulative Floating Rate Class B Preferred Shares, Series 17, effective August 26, 2013.
(5) Redeemable on the date noted and every five years thereafter.
(6) Convertible on the date noted and every five years thereafter if not redeemed. Series 16, 17, 26, 28, 30, 32, 34 and 37 are floating rate preferred shares.
(7) If converted, the holders have the option to convert back to the original preferred shares on subsequent redemption dates.
(8) Floating rate will be set as and when declared at the 3-month Government of Canada treasury bill yield plus a reset premium of 1.65%.
Non-Viability Contingent Capital
Class B – Series 27, Class B – Series 29, Class B – Series 31, Class B – Series 33, Class B – Series 35 and Class B – Series 36 preferred share issues include
a non-viability contingent capital provision, which is necessary for the shares to qualify as regulatory capital under Basel III. As such, the shares are
convertible into a variable number of our common shares if OSFI announces that the bank is, or is about to become, non-viable or if a federal or
provincial government in Canada publicly announces that the bank has accepted or agreed to accept a capital injection, or equivalent support, to
avoid non-viability.
Common Shares
We are authorized by our shareholders to issue an unlimited number of our common shares without par value, for unlimited consideration. Our
common shares are not redeemable or convertible. Dividends are declared by our Board of Directors on a quarterly basis and the amount can vary
from quarter to quarter.
Normal Course Issuer Bid
On February 1, 2015, we renewed our normal course issuer bid, effective for one year. Under this normal course issuer bid, we may repurchase up to
15 million of our common shares for cancellation. The timing and amount of purchases under the program are subject to management discretion
based on factors such as market conditions and capital adequacy. We will periodically consult with OSFI before making purchases under the bid.
Our previous normal course issuer bid, which allowed us to repurchase for cancellation up to 15 million of our common shares, expired on
January 31, 2015. During the year ended October 31, 2015, we repurchased 8 million of our common shares at an average cost of $77.25 per share.
During the year ended October 31, 2014, we did not make any repurchases under the normal course issuer bid.
Share Redemption and Dividend Restrictions
OSFI must approve any plan to redeem any of our preferred share issues for cash.
We are prohibited from declaring dividends on our preferred or common shares when we would be, as a result of paying such a dividend, in
contravention of the capital adequacy, liquidity or any other regulatory directive issued under the Bank Act. In addition, common share dividends
cannot be paid unless all dividends declared and payable on our preferred shares have been paid or sufficient funds have been set aside to do so.
In addition, we have agreed that if either BMO Capital Trust, a consolidated structured entity, or BMO Capital Trust II, an unconsolidated structured
entity, (collectively, the “Trusts”), fails to pay any required distribution on their capital trust securities, we will not declare dividends of any kind on
any of our preferred or common shares for a period of time following such Trusts’ failure to pay the required distribution (as defined in the applicable
prospectuses) unless such Trusts first pay such distribution to the holders of their capital trust securities (see Note 16).
Currently, these limitations do not restrict the payment of dividends on common or preferred shares.
Shareholder Dividend Reinvestment and Share Purchase Plan
We offer a dividend reinvestment and share purchase plan (“DRIP”) for our shareholders. Participation in the plan is optional. Under the terms of the
DRIP, cash dividends on common shares are reinvested to purchase additional common shares. Shareholders also have the opportunity to make
optional cash payments to acquire additional common shares.
For the dividend paid in the first quarter of 2015, common shares to supply the DRIP were issued from treasury without a discount. Commencing
with the dividend paid in the second quarter of 2015, common shares to supply the DRIP were purchased on the open market. For the dividend paid
in the fourth quarter of 2014, common shares to supply the DRIP were issued from treasury with a two percent discount. For the dividend paid in the
BMO Financial Group 198th Annual Report 2015 171