Financial Consumer Agency of Canada Act

Link to law: http://laws-lois.justice.gc.ca/eng/AnnualStatutes/2001_9/FullText.html

Financial Consumer Agency of Canada Act

S.C. 2001, c. 9

Assented to 2001-06-14

An Act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to financial institutions

SUMMARY

This enactment establishes the Financial Consumer Agency of Canada responsible for the administration of the consumer provisions governing federal financial institutions. It also amends a number of Acts governing financial institutions and amends legislation related to the regulation of financial institutions. Notable among the amendments are the following:

(a) amendments to the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act, and the Trust and Loan Companies Act dealing with business powers and investments, regulatory and Ministerial approvals, and consumer protection provisions;

(b) amendments to the Bank Act and the Insurance Companies Act dealing with the ownership regime and the establishment of holding company regimes;

(c) amendments to the Office of the Superintendent of Financial Institutions Act, including the establishment of an administrative monetary penalties regime;

(d) amendments to the Canadian Payments Association Act respecting corporate governance, eligibility for membership, and the designation of payments systems; and

(e) technical amendments to the Bank of Canada Act and the Canada Deposit Insurance Corporation Act.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

Marginal note:Short title

1. This Act may be cited as the Financial Consumer Agency of Canada Act.

INTERPRETATION

Marginal note:Definitions

2. The following definitions apply in this section and in sections 3 to 34.

“Agency”

« Agence »

“Agency” means the Financial Consumer Agency of Canada established under section 3.

“bank holding company”

« société de portefeuille bancaire »

“bank holding company” means a bank holding company as defined in section 2 of the Bank Act;

“Commissioner”

« commissaire »

“Commissioner” means the Commissioner of the Agency appointed under section 4.

“consumer provision”

« disposition visant les consomma­teurs »

“consumer provision” means

(a) paragraphs 157(2)(e) and (f), sections 413.1, 439.1 to 459.5, subsections 540(2) and (3) and 545(4) and (5), paragraphs 545(6)(b) and (c) and sections 559 to 576.2 of the Bank Act together with any regulations made under or for the purposes of those provisions;

(b) paragraphs 167(2)(f) and (g) and sections 385.05 to 385.28 of the Cooperative Credit Associations Act together with any regulations made under or for the purposes of those provisions;

(c) paragraphs 165(2)(f) and (g) and sections 479 to 489.2 and 598 to 607.1 of the Insurance Companies Act together with any regulations made under or for the purposes of those provisions;

(d) paragraphs 161(2)(e) and (f) and sections 425.1 to 444.3 of the Trust and Loan Companies Act together with any regulations made under or for the purposes of those provisions; and

(e) the provisions referred to in paragraph 17(1)(f.1) of the Green Shield Canada Act as they apply to Green Shield Canada in accordance with section 17 of that Act together with any regulations made under or for the purposes of those provisions.

“Deputy Commissioner”

« commissaire adjoint »

“Deputy Commissioner” means a Deputy Commissioner appointed under section 8.

“financial institution”

« institution financière »

“financial institution” means

(a) a bank as defined in section 2 of the Bank Act;

(b) an authorized foreign bank as defined in section 2 of the Bank Act;

(c) a company to which the Trust and Loan Companies Act applies;

(d) a retail association as defined in section 2 of the Cooperative Credit Associations Act;

(e) a company or foreign company to which the Insurance Companies Act applies; and

(f) Green Shield Canada.

“governing statute”

« loi d’application »

“governing statute” means

(a) in relation to a bank or authorized foreign bank as defined in the Bank Act, that Act;

(b) in relation to a retail association to which the Cooperative Credit Associations Act applies, that Act;

(c) in relation to a company or foreign company to which the Insurance Companies Act applies, that Act;

(d) in relation to a company to which the Trust and Loan Companies Act applies, that Act; and

(e) in relation to Green Shield Canada, the Green Shield Canada Act.

“prescribed”

Version anglaise seulement

“prescribed” means prescribed by regulation.

“insurance holding company”

« société de portefeuille d’assurances »

“insurance holding company” means an insurance holding company as defined in subsection 2(1) of the Insurance Companies Act.

“Minister”

« ministre »

“Minister” means the Minister of Finance.

“penalty”

« pénalité »

“penalty” means an administrative monetary penalty.

ESTABLISHMENT OF AGENCY

Marginal note:Establishment

3. (1) There is hereby established an agency of the Government of Canada called the Financial Consumer Agency of Canada over which the Minister shall preside and for which the Minister shall be responsible.

Marginal note:Objects

(2) The objects of the Agency are to

(a) supervise financial institutions to determine whether they are in compliance with the consumer provisions applicable to them;

(b) promote the adoption by financial institutions of policies and procedures designed to implement consumer provisions applicable to them;

(c) monitor the implementation of voluntary codes of conduct that are designed to protect the interests of customers of financial institutions, that have been adopted by financial institutions and that are publicly available and to monitor any public commitments made by financial institutions that are designed to protect the interests of their customers;

(d) promote consumer awareness about the obligations of financial institutions under consumer provisions applicable to them; and

(e) foster, in co-operation with any department, agency or agent corporation of the Government of Canada or of a province, financial institutions and consumer and other organizations, an understanding of financial services and issues relating to financial services.

COMMISSIONER OF AGENCY

Marginal note:Appointment of Commissioner

4. (1) The Governor in Council shall appoint an officer to be called the Commissioner of the Financial Consumer Agency of Canada. The Commissioner has the rank and all the powers of a deputy head of a department.

Marginal note:Tenure of office and removal

(2) The Commissioner holds office during good behaviour for a term of not more than five years, but may be removed for cause by the Governor in Council.

Marginal note:Further terms

(3) The Commissioner, on the expiration of any term of office, is eligible to be re-appointed for a further term of office.

Marginal note:Absence or incapacity

(4) In the event of the absence or incapacity of the Commissioner, or if the office of Commissioner is vacant, the Minister may appoint a qualified person to exercise the powers and perform the duties and functions of the Commissioner, but no person may be so appointed for a term of more than 90 days without the approval of the Governor in Council.

Marginal note:Remuneration

(5) The Commissioner shall be paid the remuneration fixed by the Governor in Council.

Marginal note:Expenses

(6) The Commissioner and any person appointed under subsection (4) are entitled to be paid reasonable travel and living expenses incurred in the course of performing their duties while absent from their ordinary place of work.

Marginal note:Deemed employment

(7) The Commissioner and any person appointed under subsection (4) are deemed to be employed in the Public Service for the purposes of the Public Service Superannuation Act and to be employed in the public service of Canada for the purposes of the Government Employees Compensation Act and any regulations made under section 9 of the Aeronautics Act.

POWERS, DUTIES AND FUNCTIONS OF THE COMMISSIONER

Marginal note:Powers, duties and functions of the Commissioner

5. (1) The Commissioner has the powers, duties and functions assigned to the Commissioner by this Act and by the Acts listed in Schedule 1 and shall examine and inquire into, and report to the Minister from time to time on, all matters connected with the administration of this Act and of the consumer provisions of those other Acts.

Marginal note:Personal information

(2) The Commissioner may collect any personal information that he or she considers necessary in furtherance of the object described in paragraph 3(2)(a).

Marginal note:Review re voluntary codes of conduct

(3) The Commissioner, if a financial institution has adopted a voluntary code of conduct referred to in paragraph 3(2)(c) or made a commitment designed to protect the interests of its customers, may make or cause to be made any review that he or she considers necessary to monitor compliance with the code or the commitment, as the case may be.

Marginal note:Respect for other monitors

(4) When acting under subsection (3), the Commissioner shall have due regard for the role of any department, agency or agent corporation of the Government of Canada or of a province or any organization that has a role in monitoring compliance by financial institutions with voluntary codes of conduct or commitments.

Marginal note:Consumer awareness

(5) The Commissioner may carry on any activity that he or she considers necessary in furtherance of an object described in paragraph 3(2)(d) or (e).

Marginal note:Duties and functions generally

6. (1) The Commissioner shall engage exclusively in the duties and functions of the Commissioner under section 5 and as deputy head of the Agency.

Marginal note:Other duties

(2) Despite subsection (1), the Commissioner may hold any other office under Her Majesty or perform any other duties for Her Majesty, but not for reward.

AGREEMENTS

Marginal note:Agreements

7. The Agency, in order to carry out its objects, may enter into an agreement or arrangement with a department or agency of the Government of Canada or of a province or with any other person or body in the name of Her Majesty in right of Canada or in its own name. An agreement or arrangement with a department or agency of a province must be made with the approval of the Governor in Council.

DEPUTY COMMISSIONERS

Marginal note:Appointment of Deputy Commissioner

8. The Commissioner may appoint one or more officers each to be called a Deputy Commissioner of the Financial Consumer Agency of Canada who shall act under the instructions of the Commissioner.

EXERCISE OF POWERS, DUTIES AND FUNCTIONS

Marginal note:Exercise by personnel

9. Except as otherwise provided by the Commissioner and subject to any terms and conditions that may be specified by the Commissioner, a person who is an officer or employee of the Agency may exercise any of the powers and perform any of the duties and functions of the Commissioner under this Act if the person is appointed to serve in the Agency in a capacity appropriate to the exercise of the power or performance of the duty or function.

STAFF OF AGENCY

Marginal note:Employees

10. The employees that are necessary to enable the Commissioner to perform the duties of the Commissioner shall be appointed in accordance with the Public Service Employment Act.

Marginal note:Responsibility for personnel management

11. (1) In respect of persons appointed under sections 8 and 10, the Commissioner is authorized to exercise the powers and perform the duties and functions of the Treasury Board under paragraphs 7(1)(b) and (e) and section 11 of the Financial Administration Act that relate to personnel management, including the determination of terms and conditions of employment and the responsibility for employer and employee relations.

Marginal note:Delegation of powers

(2) The Commissioner may authorize any person employed in the public service of Canada to exercise and perform, in such manner and subject to such terms and conditions as the Commissioner directs, any of the powers and functions of the Commissioner in relation to personnel management in the public service and may, from time to time as the Commissioner sees fit, revise or rescind and reinstate the authority so granted.

Marginal note:Sub-delegation of such powers

(3) Any person authorized under subsection (2) to exercise and perform any of the powers and functions of the Commissioner may, subject to and in accordance with the authorization, authorize one or more persons under their jurisdiction or any other person to exercise or perform any such power or function.

Marginal note:Official Languages Act

12. For greater certainty, the Official Languages Act applies to the Agency.

APPROPRIATION

Marginal note:Expenditures out of C.R.F.

13. (1) Subject to subsection (2), the Minister may, in any fiscal year on terms and conditions — including the rate of interest, if any — that are determined by the Minister, advance amounts out of the Consolidated Revenue Fund to the Agency to permit it to defray its costs of operation.

Marginal note:Spending authority

(2) In carrying out its responsibilities, the Agency may spend assessments and other revenues received through the conduct of its operations in the fiscal year in which they are received or, unless an appropriation Act provides otherwise, in the next fiscal year. The amount of those assessments or other revenues shall be paid out of the Consolidated Revenue Fund.

CONFLICT OF INTEREST

Marginal note:Ownership

14. No Commissioner, person appointed under subsection 4(4) or Deputy Commissioner shall beneficially own, directly or indirectly, any shares of any financial institution, bank holding company, insurance holding company or of any other body corporate, however created, carrying on any business in Canada that is substantially similar to any business carried on by any financial institution.

Marginal note:Borrowing

15. No Commissioner, person appointed under subsection 4(4) or Deputy Commissioner shall borrow money from any financial institution or from any member institution as defined in the Canada Deposit Insurance Corporation Act unless the Minister is first informed in writing of the intention of the Commissioner, person or Deputy Commissioner to do so.

Marginal note:No grant or gratuity to be made

16. (1) The Commissioner, a person appointed under subsection 4(4), a Deputy Commissioner and any person appointed under section 10 shall not accept or receive, directly or indirectly, any grant or gratuity from a financial institution, bank holding company, insurance holding company, or from a director, officer or employee of any of them, and no such financial institution, bank holding company, insurance holding company, director, officer or employee shall make or give any such grant or gratuity.

Marginal note:Offence and punishment

(2) Every person, financial institution, bank holding company or insurance holding company that contravenes subsection (1) is guilty of an offence and liable

(a) on summary conviction, to a fine of not more than $2000 or to imprisonment for a term of not more than six months or to both; or

(b) on conviction on indictment, to a fine of not more than $10,000 or to imprisonment for a term of not more than five years or to both.

CONFIDENTIALITY

Marginal note:Confidential information

17. (1) Subject to subsection (2) and except as otherwise provided in this Act, information regarding the business or affairs of a financial institution or regarding persons dealing with one that is obtained by the Commissioner or by any person acting under the direction of the Commissioner, in the course of the exercise or performance of powers, duties and functions referred to in subsections 5(1) and (2) and any information prepared from that information, is confidential and shall be treated accordingly.

Marginal note:Disclosure permitted

(2) If the Commissioner is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed, subsection (1) does not prevent the Commissioner from disclosing it

(a) to any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;

(b) to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;

(c) to the Canada Deposit Insurance Corporation or any compensation association designated by order of the Minister pursuant to subsection 449(1) or 591(1) of the Insurance Companies Act, for purposes related to its operation; and

(d) to the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions.

ASSESSMENTS

Marginal note:Commissioner to ascertain expenses

18. (1) The Commissioner shall, before December 31 in each year, ascertain the total amount of expenses incurred during the immediately preceding fiscal year for or in connection with the administration of this Act and the consumer provisions, and the amounts of any prescribed categories of those expenses in relation to any prescribed group of financial institutions.

Marginal note:Amount conclusive

(2) The amounts ascertained under subsection (1) are final and conclusive for the purposes of this section.

Marginal note:Assessment

(3) As soon as possible after ascertaining the amounts under subsection (1), the Commissioner shall assess a portion of the total amount of expenses against each financial institution to the extent and in the manner that the Governor in Council may, by regulation, prescribe.

Marginal note:Interim assessment

(4) The Commissioner may, during each fiscal year, prepare an interim assessment against any financial institution.

Marginal note:Assessment is binding

(5) Every assessment and interim assessment is final and conclusive and binding on the financial institution against which it is made.

Marginal note:Recovery

(6) Every assessment and interim assessment constitutes a debt due to Her Majesty, is immediately payable and may be recovered as a debt in any court of competent jurisdiction.

Marginal note:Interest

(7) Interest may be charged on the unpaid amount of an assessment or interim assessment at a rate equal to the rate prescribed under the Income Tax Act for amounts payable by the Minister of National Revenue as refunds of overpayments of tax under that Act in effect from time to time plus 2 %.

ADMINISTRATIVE MONETARY PENALTIES

Violations

Marginal note:Regulations

19. (1) The Governor in Council may make regulations

(a) designating, as a violation that may be proceeded with under sections 20 to 31, the contravention of a specified consumer provision, or the non-compliance with a compliance agreement entered into under an Act listed in Schedule 1;

(b) fixing, in accordance with subsection (2), a penalty, or a range of penalties, in respect of any violation;

(c) respecting the service of documents required or authorized to be served under sections 20 to 31, including the manner and proof of service and the circumstances under which documents are deemed to be served; and

(d) generally, for carrying out the purposes and provisions of this section and sections 20 to 31.

Marginal note:Maximum penalties

(2) The maximum penalty for a violation is $50,000 in the case of a violation that is committed by a natural person, and $100,000 in the case of a violation that is committed by a financial institution.

Marginal note:Criteria for penalty

20. Except if a penalty is fixed under paragraph 19(1)(b), the amount of a penalty shall, in each case, be determined taking into account

(a) the degree of intention or negligence on the part of the person who committed the violation;

(b) the harm done by the violation;

(c) the history of the person who committed the violation with respect to any prior violation or conviction under an Act listed in Schedule 1 within the five-year period immediately before the violation; and

(d) any other criteria that may be prescribed.

Marginal note:How act or omission may be proceeded with

21. If a contravention or non-compliance that is designated under paragraph 19(1)(a) can be proceeded with either as a violation or as an offence, proceeding in one manner precludes proceeding in the other.

Proceedings

Marginal note:Commission of violation

22. (1) Every contravention or non-compliance that is designated under paragraph 19(1)(a) constitutes a violation and the person who commits the violation is liable to a penalty determined in accordance with sections 19 and 20.

Marginal note:Notice of violation

(2) If the Commissioner believes on reasonable grounds that a person has committed a violation, he or she may issue, and shall cause to be served on the person, a notice of violation.

Marginal note:Contents of notice

(3) A notice of violation shall name the person believed to have committed a violation, identify the violation and set out

(a) the penalty that the Commissioner proposes to impose;

(b) the right of the person, within 30 days after the notice is served, or within any longer period that the Commissioner specifies, to pay the penalty or to make representations to the Commissioner with respect to the violation and the proposed penalty, and the manner for doing so; and

(c) the fact that, if the person does not pay the penalty or make representations in accordance with the notice, the person will be deemed to have committed the violation and the Commissioner may impose a penalty in respect of it.

Determination of Responsibility and Penalty

Marginal note:Payment of penalty

23. (1) If the person pays the penalty proposed in the notice of violation, the person is deemed to have committed the violation and proceedings in respect of it are ended.

Marginal note:Representations to Commissioner

(2) If the person makes representations in accordance with the notice, the Commissioner shall decide, on a balance of probabilities, whether the person committed the violation and, if so, may, subject to any regulations made under paragraph 19(1)(b), impose the penalty proposed, a lesser penalty or no penalty.

Marginal note:Failure to pay or make representations

(3) A person who neither pays the penalty nor makes representations in accordance with the notice is deemed to have committed the violation and the Commissioner may, subject to any regulations made under paragraph 19(1)(b), impose the penalty proposed, a lesser penalty or no penalty.

Marginal note:Notice of decision and right of appeal

(4) The Commissioner shall cause notice of any decision made under subsection (2) or (3) to be issued and served on the person together with notice of the right of appeal under section 24.

Appeal to Federal Court

Marginal note:Right of appeal

24. (1) A person on whom a notice under subsection 23(4) is served may, within 30 days after the notice is served, or within any longer period that the Court allows, appeal the decision to the Federal Court.

Marginal note:Court to take precautions against disclosing

(2) In an appeal, the Court shall take every reasonable precaution, including, when appropriate, conducting hearings in private, to avoid the disclosure by the Court or any person of confidential information referred to in subsection 17(1).

Marginal note:Powers of Court

(3) On an appeal, the Court may confirm, set aside or, subject to any regulations made under paragraph 19(1)(b), vary the decision of the Commissioner.

Enforcement

Marginal note:Debts to Her Majesty

25. (1) A penalty constitutes a debt due to Her Majesty in right of Canada that may be recovered as such in the Federal Court.

Marginal note:Time limit

(2) No proceedings to recover a debt referred to in subsection (1) may be commenced later than five years after the debt became payable.

Marginal note:Proceeds payable to Receiver General

(3) A penalty paid or recovered under sections 19 to 24, this section and sections 26 to 31 is payable to and shall be remitted to the Receiver General.

Marginal note:Certificate of default

26. (1) The unpaid amount of any debt referred to in subsection 25(1) may be certified by the Commissioner.

Marginal note:Registration in Federal Court

(2) Registration in the Federal Court of a certificate made under subsection (1) has the same effect as a judgment of that Court for a debt of the amount specified in the certificate and all related registration costs.

Rules about Violations

Marginal note:Violations not offences

27. For greater certainty, a violation is not an offence and, accordingly, section 126 of the Criminal Code does not apply in respect of one.

Marginal note:Due diligence available

28. (1) Due diligence is a defence in a proceeding in relation to a violation.

Marginal note:Common law principles

(2) Every rule and principle of the common law that renders any circumstance a justification or excuse in relation to a charge for an offence in relation to a consumer provision applies in respect of a violation to the extent that it is not inconsistent with this Act.

General Provisions

Marginal note:Evidence

29. In a proceeding in respect of a violation or a prosecution for an offence, a notice purporting to be issued under subsection 22(2) or 23(4) or a certificate purporting to be made under subsection 26(1) is admissible in evidence without proof of the signature or official character of the person appearing to have signed it.

Marginal note:Time limit

30. (1) No proceedings in respect of a violation may be commenced later than two years after the subject-matter of the proceedings became known to the Commissioner.

Marginal note:Certificate of Commissioner

(2) A document appearing to have been issued by the Commissioner, certifying the day on which the subject-matter of any proceedings became known to the Commissioner, is admissible in evidence without proof of the signature or official character of the person appearing to have signed the document and is, in the absence of evidence to the contrary, proof of the matter asserted in it.

Marginal note:Publication

31. The Commissioner may make public the nature of a violation, the name of the person who committed it, and the amount of the penalty imposed.

REGULATIONS

Marginal note:Regulations

32. The Governor in Council may make regulations prescribing

(a) anything that is required or authorized by this Act to be prescribed; and

(b) the way in which anything that is required or authorized by this Act to be prescribed shall be determined.

NO LIABILITY

Marginal note:No liability

33. No action lies against Her Majesty, the Minister, the Commissioner, any Deputy Commissioner, any officer or employee of the Agency or any person acting under the direction of the Commissioner for anything done or omitted to be done in good faith in the administration or discharge of any powers or duties that under any Act of Parliament are intended or authorized to be executed or performed.

ANNUAL REPORT

Marginal note:Annual report

34. The Minister shall cause to be laid before each House of Parliament, not later than the fifth sitting day of that House after September 30 next following the end of each fiscal year, a report showing the operations of the Agency for that year and describing in aggregate form its conclusions on the compliance of financial institutions with the consumer provisions applicable to them in that year.

AMENDMENTS TO ACTS IN RELATION TO FINANCIAL INSTITUTIONS

1991, c. 46Bank Act

35. (1) The definition “foreign bank subsidiary” in section 2 of the Bank Act is repealed.

Marginal note:1999, c. 28, s. 1(2)

(2) The definitions “affairs”, “annual statement”, “central securities register” or “securities register”, “head office”, “incorporator”, “recorded address”, “regulatory capital” and “subsidiary” in section 2 of the Act are replaced by the following:

“affairs”

« affaires internes »

“affairs”, with respect to a bank, an authorized foreign bank or a bank holding company, means the relationships among the bank, authorized foreign bank or bank holding company and its affiliates and the shareholders, directors and officers of the bank, authorized foreign bank or bank holding company and its affiliates, but does not include the business of the bank, authorized foreign bank or bank holding company or any of its affiliates;

“annual statement”

« rapport annuel »

“annual statement”, in relation to a bank, means the annual financial statement of the bank within the meaning of paragraph 308(1)(a) and, in relation to a bank holding company, means the annual financial statement of the bank holding company within the meaning of paragraph 840(1)(a);

“central securities register” or “securities register”

« registre central des valeurs mobilières »ou« registre des valeurs mobilières »

“central securities register” or “securities register”, in relation to a bank, means the register referred to in section 248 and, in relation to a bank holding company, means the register referred to in section 825;

“head office”

« siège »

“head office”, in relation to a bank, means the office required to be maintained under section 237 and, in relation to a bank holding company, means the office required to be maintained under section 814;

“incorporator”

« fondateur »

“incorporator”, in relation to a bank or a bank holding company, means a person who applied for letters patent to incorporate the bank or bank holding company, as the case may be;

“recorded address”

« adresse enregistrée »

“recorded address” means

(a) in relation to a person who is a shareholder of a bank or a bank holding company, the latest postal address of the person according to its central securities register, and

(b) in relation to a person in any other respect in relation to a bank, the latest postal address of the person according to the records of the branch concerned;

“regulatory capital”

« capital réglementaire »

“regulatory capital”, in respect of a bank or a bank holding company, has the meaning given that expression by the regulations;

“subsidiary”

« filiale »

“subsidiary” means an entity that is a subsidiary of another entity as defined in section 5;

Marginal note:1999, c. 28, s. 1(3)

(3) Paragraph (c) of the definition “complainant” in section 2 of the Act is replaced by the following:

(c) any other person who, in the discretion of a court, is a proper person to make an application under section 334, 338 or 989;

Marginal note:1991, c. 47, par. 756(1)(a), c. 48, par. 494(a)

(4) Paragraphs (c) and (d) of the definition “financial institution” in section 2 of the Act are replaced by the following:

(c) an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act,

(d) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act,

(5) The portion of the definition “foreign bank” in section 2 of the Act after paragraph (f) is replaced by the following:

(g) is a foreign institution, other than a foreign bank within the meaning of any of paragraphs (a) to (f), that controls a bank incorporated or formed under this Act,

but does not include a subsidiary of a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, unless the Minister has specified that subsection 378(1) no longer applies to the bank;

(6) Paragraph (a) of the definition “foreign institution” in section 2 of the Act is replaced by the following:

(a) engaged in the business of banking, the trust, loan or insurance business, the business of a cooperative credit society or the business of dealing in securities or is otherwise engaged primarily in the business of providing financial services, and

(7) Section 2 of the Act is amended by adding the following in alphabetical order:

“Agency”

« Agence »

“Agency” means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act;

“bank holding company”

« société de portefeuille bancaire »

“bank holding company” means a body corporate that is incorporated or formed under Part XV;

“Commissioner”

« commissaire »

“Commissioner” means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act;

“consumer provision”

« disposition visant les consomma­teurs »

“consumer provision” means a provision referred to in paragraph (a) of the definition “consumer provision” in section 2 of the Financial Consumer Agency of Canada Act;

“equity”

« capitaux propres »

“equity”, in respect of a bank or a bank holding company, means its equity as determined in accordance with the regulations;

“federal financial institution”

« institution financière fédérale »

“federal financial institution” means

(a) a bank,

(b) a body corporate to which the Trust and Loan Companies Act applies,

(c) an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act, or

(d) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act;

“insurance holding company”

« société de portefeuille d’assurances »

“insurance holding company” means a body corporate that is incorporated or formed under Part XVII of the Insurance Companies Act;

36. The Act is amended by adding the following after section 2.1:

Marginal note:Major shareholder

2.2 For the purposes of this Act, a person is a major shareholder of a body corporate if

(a) the aggregate of the shares of any class of voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the body corporate; or

(b) the aggregate of the shares of any class of non-voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the body corporate.

Marginal note:Widely held

2.3 For the purposes of this Act, an entity is widely held if it is

(a) a body corporate that has no major shareholder;

(b) an insurance company incorporated or formed under a mutual plan;

(c) an association to which the Cooperative Credit Associations Act applies; or

(d) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province.

37. (1) Paragraph 3(1)(d) of the French version of the Act is replaced by the following:

d) dans tous les cas, la personne dont l’influence directe ou indirecte auprès de l’entité est telle que son exercice aurait pour résultat le contrôle de fait de celle-ci.

(2) The portion of subsection 3(3) of the Act before paragraph (a) is replaced by the following:

Marginal note:Deemed control

(3) A person is deemed to control, within the meaning of paragraph (1)(a) or (b), an entity if the aggregate of

(3) Section 3 of the Act is amended by adding the following after subsection (3):

Marginal note:Guidelines

(4) The Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(d), make guidelines respecting what constitutes such control, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(d) in that provision shall be interpreted in accordance with the guidelines.

38. Sections 4 and 5 of the Act are replaced by the following:

Marginal note:Holding body corporate

4. A body corporate is the holding body corporate of any entity that is its subsidiary.

Marginal note:Subsidiary

5. An entity is a subsidiary of another entity if it is controlled by the other entity.

39. Subsection 6(2) of the Act is replaced by the following:

Marginal note:Affiliated entities

(2) Despite subsection (1), for the purposes of subsections 265(1) and 283(1), one entity is affiliated with another entity if one of them is controlled, determined without regard to paragraph 3(1)(d), by the other or both are controlled, determined without regard to paragraph 3(1)(d), by the same person.

40. Section 8 of the Act is replaced by the following:

Marginal note:Significant interest

8. (1) A person has a significant interest in a class of shares of a bank or a bank holding company if the aggregate of

(a) any shares of that class beneficially owned by the person, and

(b) any shares of that class beneficially owned by entities controlled by the person

exceeds 10 per cent of all of the outstanding shares of that class of shares of the bank or bank holding company.

Marginal note:Increasing significant interest

(2) A person who has a significant interest in a class of shares of a bank or bank holding company increases that significant interest in the class of shares if the person or any entity controlled by the person

(a) acquires beneficial ownership of additional shares of that class, or

(b) acquires control of any entity that beneficially owns shares of that class,

in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.

41. Subsections 9(1) and (2) of the Act are replaced by the following:

Marginal note:Acting in concert

9. (1) For the purposes of Part VII and Division 7 of Part XV, if two or more persons have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of

(a) shares of a bank or of a bank holding company that they beneficially own,

(b) shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a bank or of a bank holding company, or

(c) shares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of a bank or bank holding company,

those persons are deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the bank or bank holding company or shares or ownership interests of the entity that are beneficially owned by them.

Marginal note:Acting in concert

(2) Without limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of a bank or bank holding company or shares or ownership interests of any entity referred to in paragraph (1)(b) or (c),

(a) whereby any of them or their nominees may veto any proposal put before the board of directors of the bank or bank holding company, or

(b) under which no proposal put before the board of directors of the bank or bank holding company may be approved except with the consent of any of them or their nominees,

is deemed to be an agreement, commitment or understanding referred to in subsection (1).

42. Subsections 11(2) and (3) of the Act are replaced by the following:

Marginal note:Exemption

(2) On application by a bank or bank holding company, the Superintendent may determine that a security of the bank or bank holding company is not or was not part of a distribution to the public if the Superintendent is satisfied that the determination would not prejudice any security holder of the bank or bank holding company.

Marginal note:Securities deemed part of distribution

(3) For the purposes of this Act, securities of a bank or bank holding company issued on the conversion of other securities or issued in exchange for other securities are deemed to be securities that are part of a distribution to the public if those other securities were part of a distribution to the public.

42.1 Subsection 12(1) of the Act is replaced by the following:

Marginal note:Exemption from foreign bank status

12. (1) The Minister may, by order, and subject to such terms and conditions as the Minister considers appropriate, exempt for the purposes of any provision of this Act any entity from being a foreign bank that, but for that order, would be a foreign bank.

Marginal note:1999, c. 28, s. 4

43. Sections 13 and 14 of the Act are replaced by the following:

Marginal note:Application of Act

13. This Act is the charter of and applies to each bank.

Marginal note:Schedule I and Schedule II banks

14. (1) Subject to this Act,

(a) there shall be set out in Schedule I

(i) the name of every bank named in Schedules I and II as those Schedules read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force that was not a subsidiary of a foreign bank,

(ii) the name of every bank incorporated or formed under this Act that is not a subsidiary of a foreign bank, and

(iii) the place in Canada where the head office of the bank is situated; and

(b) there shall be set out in Schedule II

(i) the name of every bank named in Schedule II as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force that was a subsidiary of a foreign bank,

(ii) the name of every bank incorporated or formed under this Act that is a subsidiary of a foreign bank, and

(iii) the place in Canada where the head office of the bank is situated.

Marginal note:Amending the schedules

(2) Where

(a) a bank is incorporated,

(b) a body corporate is continued as a bank,

(c) one or more bodies corporate are amalgamated as a bank,

(d) the name of a bank is changed,

(e) the head office of a bank is changed,

(f) a bank becomes, or ceases to be, a subsidiary of a foreign bank, or

(g) a bank is dissolved,

Schedules I and II shall be amended accordingly.

Marginal note:Notice of amendments

(3) If in any year either Schedule I or II is amended, the Superintendent shall, within sixty days after the end of the year, cause a notice to be published in the Canada Gazette showing Schedule I or II in its complete amended form as at the end of the year.

43.1 The Act is amended by adding the following after section 14.1:

Marginal note:Exemption of foreign banks

14.2 The Governor in Council may make regulations exempting any class of foreign banks from the application of any provision of this Act.

Marginal note:1997, c. 15, s. 2; 1999, c. 28, s. 9

44. Section 21 of the Act is replaced by the following:

Marginal note:Sunset provision

21. (1) Subject to subsection (2), banks shall not carry on business and authorized foreign banks shall not carry on business in Canada after the day that is five years after this section comes into force, except that, if Parliament dissolves on that day or at any time within the three-month period before that day, banks may continue to carry on business, and authorized foreign banks may continue to carry on business in Canada, respectively, until the day that is one hundred and eighty days after the first day of the first session of the next Parliament.

Marginal note:Extension

(2) The Governor in Council may, by order, extend by up to six months the time during which banks may continue to carry on business and authorized foreign banks may continue to carry on business in Canada. No more than one order may be made under this subsection.

45. Paragraph 23(d) of the Act is replaced by the following:

(d) an entity that is controlled by the government of a foreign country or any political subdivision thereof, other than an entity that is a foreign bank, a foreign institution or a subsidiary of a foreign bank or foreign institution.

Marginal note:1999, c. 28, s. 10

46. Section 24 of the Act is replaced by the following:

Marginal note:Subsidiary of foreign bank

24. If a proposed bank would be a subsidiary of a foreign bank, within the meaning of paragraphs (a) to (f) of the definition “foreign bank” in section 2, and the application for letters patent to incorporate the bank is made by a non-WTO Member foreign bank, letters patent to incorporate the bank may not be issued unless the Minister is satisfied that treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.

47. Section 27 of the Act is replaced by the following:

Marginal note:Matters for consideration

27. Before issuing letters patent to incorporate a bank, the Minister shall take into account all matters that the Minister considers relevant to the application, including

(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;

(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;

(c) the business record and experience of the applicant or applicants;

(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;

(g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard to

(i) the nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, and

(ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank; and

(h) the best interests of the financial system in Canada.

Marginal note:1991, c. 47, s. 756(2)

48. (1) Subsection 29(1) of the Act is replaced by the following:

Marginal note:Letters patent of incorporation on application of certain companies

29. (1) If the Minister issues letters patent, under section 22, incorporating a bank on the application of a company to which the Trust and Loan Companies Act or the Insurance Companies Act applies and the paid-in capital of the bank immediately following its incorporation will be not less than five million dollars or any greater amount that the Minister may specify under subsection 46(1), there may, on the request of the company and with the approval of the Minister, be included in the letters patent a provision deeming shares of the bank to be issued, on a share for share basis, to all shareholders of the company in exchange for all the issued and outstanding shares of the company.

(2) Subsection 29(9) of the Act is repealed.

Marginal note:1994, c. 24, par. 34(1)(b)(F)

49. Subsection 33(1) of the Act is replaced by the following:

Marginal note:Federal corporations

33. (1) A body corporate incorporated under the Canada Business Corporations Actor any other Act of Parliament, including a bank holding company, may apply to the Minister for letters patent continuing the body corporate as a bank under this Act.

Marginal note:1997, c. 15, s. 4; 1999, c. 28, s. 11

50. Sections 39.1 and 39.2 of the Act are replaced by the following:

Marginal note:This Act ceases to apply

39.1 If section 39.2 or 402.1 applies in respect of a bank, on the day specified in the letters patent continuing the bank as a company under subsection 33(1) or 234(1) of the Trust and Loan Companies Act, this Act ceases to apply to the bank and that Act applies to the company so continued under that Act.

Marginal note:Other transfer

39.2 A bank may apply for letters patent continuing the bank as a company under subsection 33(1) of the Trust and Loan Companies Act or amalgamating and continuing the bank as a company under section 228 and subsection 234(1) of that Act.

Marginal note:1999, c. 28, s. 12

51. Paragraph 40(e) of the Act is replaced by the following:

(e) that is reserved under section 43 for another bank or an authorized foreign bank or a proposed bank or a proposed authorized foreign bank or under section 697 for a bank holding company or a proposed bank holding company.

Marginal note:1996, c. 6, s. 1

52. Section 41 of the Act is replaced by the following:

Marginal note:Affiliated bank

41. Despite section 40, a bank that is affiliated with another entity may, with the consent of that entity and the approval of the Superintendent, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.

Marginal note:1996, c. 6, s. 3

53. Subsection 44(2) of the Act is replaced by the following:

Marginal note:Revoking name

(2) If a bank has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Act, the Superintendent may revoke the name of the bank and assign to it a name and, until changed in accordance with section 215 or 217, the name of the bank is thereafter the name so assigned.

54. Subsection 46(1) of the Act is replaced by the following:

Marginal note:Calling shareholders’ meeting

46. (1) If at least five million dollars, or any greater amount that the Minister may specify, has been received by a bank in respect of which letters patent were issued under section 22 from the issue of its shares, the directors of the bank shall without delay call a meeting of the shareholders of the bank.

55. Subsection 48(2) of the Act is replaced by the following:

Marginal note:Deeming

(2) If, on the day this subsection comes into force, an order approving the commencement and carrying on of business by a bank named in Schedule I or II as those Schedules read immediately before that day, has not been made, such an order is deemed to have been made in respect of the bank on that day.

56. Paragraph 52(1)(b) of the Act is replaced by the following:

(b) the bank has paid-in capital of at least five million dollars or any greater amount that is specified by the Minister under subsection 46(1);

57. The Act is amended by adding the following after section 54:

Marginal note:Limit on assets

54.1 (1) The Minister may, by order, require a bank not to have average total assets in any three month period ending on the last day of a month subsequent to the month specified in the order exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order if the Minister is of the opinion that it is in the best interests of the financial system in Canada to do so, after having considered the Superintendent’s opinion on

(a) the nature and extent of the financial services activities carried out by entities affiliated with the bank; and

(b) the impact that the nature and degree of supervision and regulation of those financial services activities have on the supervision and regulation of the bank.

Marginal note:Revocation of order

(2) If the Minister is of the opinion that the circumstances giving rise to the order have ceased to exist or have changed substantially, the Minister may, by further order, revoke the order.

Marginal note:Average total assets

(3) For the purposes of subsection (1), the average total assets of a bank in a three month period shall be computed by adding the total assets of the bank as calculated for the month end of each of the three months in the period and by dividing the sum by three.

Definition of “total assets”

(4) For the purposes of subsections (1) and (3), “total assets”, in respect of a bank, has the meaning given that expression by the regulations.

Marginal note:1997, c. 15, s. 6(1); 1999, c. 31, s. 9

58. Subsection 55(1) of the Act is replaced by the following:

Marginal note:Permission to subsidiary of foreign bank

55. (1) On the recommendation of the Superintendent, the Minister may, at the same time that an order is made approving the commencement and carrying on of business by a bank that is the subsidiary of a foreign bank, by further order, grant the subsidiary permission to

(a) hold assets that banks are not otherwise permitted by this Act to hold if those assets consist of shares of a body corporate incorporated by or under an Act of Parliament or of the legislature of a province that, at the time application for letters patent incorporating the subsidiary was made, were held by the eligible foreign institution, as defined in subsection 370(1), that is the holding body corporate of the subsidiary or any affiliate of that eligible foreign institution; and

(b) hold assets that banks are not otherwise permitted by this Act to hold if, at the time application for letters patent incorporating the subsidiary was made, the assets were held by an affiliate of the eligible foreign institution, as defined in subsection 370(1), that is the holding body corporate of the subsidiary.

Despite any other provision of this Act or the regulations, the subsidiary may act in accordance with that permission.

59. Subsection 59(5) of the Act is replaced by the following:

Marginal note:Deemed share conditions

(5) If a right, other than a voting right, of a holder of a share with nominal or par value of a bank referred to in subsection (3) or a body corporate continued as a bank under this Act was stated or expressed in terms of the nominal or par value of the share immediately before the coming into force of this subsection or the continuance under this Act, as the case may be, that right is deemed, after the coming into force of this Part or the continuance, as the case may be, to be the same right stated or expressed without reference to the nominal or par value of the share.

60. Subsection 61(3) of the Act is replaced by the following:

Marginal note:Effective date

(3) A by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders at the meeting referred to in subsection (2).

61. (1) Subsection 79(1) of the Act is replaced by the following:

Marginal note:Declaration of dividend

79. (1) The directors of a bank may declare and a bank may pay a dividend by issuing fully paid shares of the bank or options or rights to acquire fully paid shares of the bank and, subject to subsections (4) and (5), the directors of a bank may declare and a bank may pay a dividend in money or property, and where a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.

(2) Section 79 of the Act is amended by adding the following after subsection (4):

Marginal note:When dividend not to be declared

(5) The directors of a bank shall not declare and a bank shall not pay a dividend in any financial year without the approval of the Superintendent if, on the day the dividend is declared, the total of all dividends declared by the bank in that year would exceed the aggregate of the bank’s net income up to that day in that year and of its retained net income for the preceding two financial years.

62. Subsection 93(1) of the French version of the Act is replaced by the following:

Marginal note:Relations avec le détenteur inscrit

93. (1) La banque ou le fiduciaire visé à l’article 294 peut, sous réserve des paragraphes 137(2) à (5) et des articles 138 à 141 et 145, considérer le détenteur inscrit d’une valeur mobilière comme la seule personne ayant qualité pour voter, recevoir des avis ainsi que les intérêts, dividendes ou autres paiements et exercer tous les droits et pouvoirs du propriétaire de la valeur mobilière.

63. Section 138 of the Act is amended by adding the following after subsection (1):

Marginal note:Number of eligible votes

(1.1) A bank with equity of five billion dollars or more shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 156.09(1), that may be cast at the meeting as of the record date for determining those shareholders entitled to receive the notice of meeting or, if there are to be separate votes of shareholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.

64. Subsection 142(2) of the French version of the Act is replaced by the following:

Marginal note:Renonciation à l’avis

(2) La présence à l’assemblée équivaut à une renonciation de l’avis de convocation, sauf lorsque la personne y assiste spécialement pour s’opposer aux délibérations au motif que l’assemblée n’est pas régulièrement convoquée.

65. The portion of subsection 145(1) of the Act before paragraph (a) is replaced by the following:

Marginal note:Shareholder list

145. (1) A bank shall prepare a list, which may be in electronic form, of its shareholders entitled to receive notice of a meeting under paragraph 138(1)(a), arranged in alphabetical order and showing the number of shares held by each shareholder, which list must be prepared

66. Section 148 of the Act is replaced by the following:

Marginal note:One share — one vote

148. Subject to section 156.09, if a share of a bank entitles the holder of the share to vote at a meeting of shareholders, that share entitles the shareholder to one vote at the meeting.

67. The Act is amended by adding the following after section 156.08:

Restrictions on Voting

Meaning of “eligible votes”

156.09 (1) In this section, “eligible votes” means the total number of votes that may be cast by or on behalf of shareholders on a vote of shareholders or a vote of holders of a class or series of shares, as the case may be, in respect of any particular matter, calculated without regard to subsection (2).

Marginal note:Restriction

(2) At a meeting of shareholders of a bank with equity of five billion dollars or more, no person and no entity controlled by any person may, in respect of any vote of shareholders or holders of any class or series of shares of the bank, cast votes in respect of any shares beneficially owned by the person or the entity that are, in aggregate, more than 20 per cent of the eligible votes that may be cast in respect of that vote.

Marginal note:Proxyholders

(3) No person who is a proxyholder for a person or for an entity controlled by a person may cast votes to which the proxy relates that the person or entity may not cast by reason of subsection (2).

Marginal note:Exception

(4) If a person is, with respect to a bank, a person referred to in subsection 375(1), subsections (2) and (3) do not apply with respect to votes cast by or on behalf of the person during any period that the person is entitled under section 375 to remain a major shareholder of the bank.

Marginal note:Exception

(5) Subsections (2) and (3) do not apply in respect of votes cast by or on behalf of any entity that controls the bank or any entity that is controlled by an entity that controls the bank.

Marginal note:Exception

(6) Subsection (2) does not apply in respect of a vote held under section 218.

Marginal note:Validity of vote

(7) A vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).

Marginal note:Disposition of shareholdings

(8) If, with respect to any bank, a person contravenes subsection (2) or (3), the Minister may, by order, direct the shareholder of the shares to which the contravention relates or any person controlled by that shareholder to dispose of any number of shares of the bank beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the shareholder and the persons controlled by that shareholder that is specified in the order.

Marginal note:Restriction on voting rights

(9) If the Minister makes an order under subsection (8), the person to whom the order relates may not, in person or by proxy, exercise any voting rights that are attached to shares of the bank beneficially owned by the person.

Marginal note:Subsection (9) ceases to apply

(10) Subsection (9) ceases to apply in respect of a person when the shares to which the order relates have been disposed of.

Marginal note:Reliance on number in notice

(11) For the purpose of this section, a person is entitled to rely on the number of eligible votes set out in a notice of a meeting under subsection 138(1.1).

Marginal note:Designation of persons

(12) For the purpose of this section, the Minister may, with respect to a particular bank, designate two or more persons who are parties to an agreement, commitment or understanding referred to in section 9 to be a single person.

68. Paragraph 157(2)(f) of the French version of the Act is replaced by the following:

f) désigner l’un des comités du conseil d’administration pour surveiller l’application des mécanismes et procédures visés à l’alinéa e) et s’assurer que ces mécanismes et procédures soient respectés par la banque;

69. Subsection 159(2) of the Act is replaced by the following:

Marginal note:Residency requirement

(2) At least one half of the directors of a bank that is a subsidiary of a foreign bank and at least two thirds of the directors of any other bank must be, at the time of each director’s election or appointment, resident Canadians.

Marginal note:1997, c. 15, s. 12

70. Paragraphs 160(e) and (f) of the Act are replaced by the following:

(e) a person who is prohibited by section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;

(f) a person who is an officer, director or full time employee of an entity that is prohibited by section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;

71. The Act is amended by adding the following after section 160:

Marginal note:Exception

160.1 Paragraph 160(g) does not apply to a person if

(a) the person is employed in a department or agency of the Government of Canada that is not involved in the regulation or supervision of financial institutions;

(b) the person’s duties do not involve financial institutions; and

(c) the bank is controlled by a local cooperative credit society, as defined in section 2 of the Cooperative Credit Associations Act, in which the following persons, in aggregate, hold more than 50 per cent or, if a percentage has been prescribed for the purpose of this paragraph, the prescribed percentage, of the ownership interests in the local cooperative credit society, namely,

(i) employees of Her Majesty in right of Canada or of a province,

(ii) former employees of Her Majesty in right of Canada or of a province,

(iii) the spouse or common-law partner of a person referred to in subparagraph (i) or (ii), and

(iv) a child who is less than eighteen years of age of a person referred to in subparagraph (i) or (ii).

72. Subsection 163(2) of the Act, as amended by section 13 of An Act to amend certain laws relating to financial institutions, being chapter 15 of the Statutes of Canada, 1997, is repealed.

73. Section 168 of the Act is amended by adding the following after subsection (3):

Marginal note:Exception

(3.1) Subsection (2) does not apply to a widely held bank with equity of five billion dollars or more or to a bank in respect of which subsection 378(1) applies.

74. Subsection 172(1) of the Act is amended by striking out the word “or” at the end of paragraph (c), by adding the word “or” at the end of paragraph (d) and by adding the following after paragraph (d):

(e) when the director is removed from office under section 647 or 647.1.

75. Paragraph 183(1)(a) of the Act is replaced by the following:

(a) in the case of a bank that is a subsidiary of a foreign bank, at least one half of the directors present are resident Canadians; or

76. The Act is amended by adding the following after section 183:

Marginal note:Presence of unaffiliated director

183.1 (1) The directors of a bank shall not transact business at a meeting of directors unless at least one of the directors who is not affiliated with the bank is present.

Marginal note:Exception

(2) Despite subsection (1), the directors of a bank may transact business at a meeting of directors if a director who is not affiliated with the bank and who is not able to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting.

Marginal note:Exception

(3) Subsection (1) does not apply if all the voting shares of the bank, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.

Marginal note:1997, c. 15, s. 23(1)

77. Paragraph 195(3)(b) of the Act is replaced by the following:

(b) review those procedures and their effectiveness in ensuring that the bank is complying with Part XI;

(b.1) if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of the bank,

(i) establish policies for entering into transactions referred to in subsection 495.1(1), and

(ii) review transactions referred to in subsection 495.3(1); and

77.1 Section 204 of the French version of the Act is replaced by the following:

Marginal note:Déclaration suffisante d’intérêt

204. Pour l’application du paragraphe 202(1), quiconque donne au conseil un avis général lui faisant savoir qu’il est administrateur ou dirigeant d’une entité ou possède un intérêt important dans une personne, et doit être considéré comme ayant un intérêt dans tout contrat conclu avec cette entité ou personne, s’acquitte de son obligation de déclaration d’intérêt.

78. The portion of section 211 of the Act before paragraph (a) is replaced by the following:

Marginal note:Reliance on statement

211. A director, an officer or an employee of a bank is not liable under subsection 158(1) or (2), section 207 or 210 or subsection 506(1) if the director, officer or employee relies in good faith on

79. The portion of subsection 212(1) of the French version of the Act before paragraph (a) is replaced by the following:

Marginal note:Indemnisation

212. (1) La banque peut indemniser ses administrateurs ou ses dirigeants — ou leurs prédécesseurs —, ainsi que les personnes qui, à sa demande, agissent ou ont agi en cette qualité pour une entité dont elle est ou a été actionnaire ou créancière, de tous leurs frais, y compris les montants versés en règlement d’une action ou pour satisfaire à un jugement, entraînés par des procédures civiles, pénales ou administratives auxquelles ils étaient parties en cette qualité, sauf à l’occasion d’actions intentées par la banque ou pour son compte en vue d’obtenir un jugement favorable, si :

80. Section 215 of the Act is replaced by the following:

Marginal note:Incorporating instrument

215. On the application of a bank duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the bank’s incorporating instrument.

81. Subsection 216(1) of the Act is replaced by the following:

Marginal note:Letters patent to amend

216. (1) On receipt of an application referred to in section 215, the Minister may issue letters patent to effect the proposal.

82. (1) Subsection 217(1) of the Act is amended by striking out the word “or” at the end of paragraph (i) and by adding the following after paragraph (i):

(i.1) change the name of the bank; or

(2) Subsection 217(3) of the Act is replaced by the following:

Marginal note:Effective date of by-law

(3) A by-law, or an amendment to or a repeal of a by-law, made under subsection (1) is not effective until it is confirmed or confirmed as amended by the shareholders under subsection (2) and, in the case of a by-law referred to in paragraph (1)(i.1), approved by the Superintendent.

83. Subsection 221(1) of the Act is replaced by the following:

Marginal note:Proposal to amend

221. (1) Subject to subsection (2), a director or a shareholder who is entitled to vote at an annual meeting of shareholders of a bank may, in accordance with sections 143 and 144, make a proposal to make an application referred to in section 215 or to make, amend or repeal the by-laws referred to in subsection 217(1) of the bank.

84. Section 223 of the Act is replaced by the following:

Marginal note:Application to amalgamate

223. (1) On the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including banks and bank holding companies, the Minister may issue letters patent amalgamating and continuing the applicants as one bank.

Marginal note:Restriction

(2) Despite subsection (1), if one of the applicants is a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies, the Minister shall not issue letters patent referred to in subsection (1) unless

(a) the amalgamated bank would be a widely held bank; or

(b) the amalgamated bank would be controlled by a widely held bank holding company that, at the time the application was made, controlled

(i) the applicant, or

(ii) any other applicant that is a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies.

Marginal note:Restriction

(3) Despite subsection (1), if the amalgamated bank would be a bank with equity of five billion dollars or more, the Minister shall not issue letters patent referred to in that subsection unless the amalgamated bank is

(a) widely held;

(b) controlled, within the meaning of paragraphs 3(1)(a) and (d), by a widely held bank, or by a widely held bank holding company, that controlled one of the applicants at the time the application was made; or

(c) controlled, within the meaning of paragraph 3(1)(d), by a widely held insurance holding company, or by an eligible Canadian financial institution, as defined in subsection 370(1), other than a bank, or by an eligible foreign institution, as defined in subsection 370(1), that controlled one of the applicants at the time the application was made.

85. Subsection 228(3) of the Act is replaced by the following:

Marginal note:Application of sections 23 to 26

(3) If two or more bodies corporate, none of which is a bank, apply for letters patent under subsection (1), sections 23 to 26 apply in respect of the application with any modifications that the circumstances require.

Marginal note:Matters for consideration

(4) Before issuing letters patent of amalgamation continuing the applicants as one bank, the Minister shall take into account all matters that the Minister considers relevant to the application, including

(a) the sources of continuing financial support for the amalgamated bank;

(b) the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of the amalgamated bank;

(c) the business record and experience of the applicants;

(d) the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the amalgamated bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;

(g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated bank and its affiliates may affect the supervision and regulation of the amalgamated bank, having regard to

(i) the nature and extent of the proposed financial services activities to be carried out by the amalgamated bank and its affiliates, and

(ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the amalgamated bank; and

(h) the best interests of the financial system in Canada.

86. The Act is amended by adding the following after section 229:

Marginal note:Court enforcement

229.1 (1) If a bank or any director, officer, employee or agent of a bank is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the bank or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.

Marginal note:Appeal

(2) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.

Marginal note:1999, c. 28, s. 14

87. Subsection 230(1) of the Act is amended by adding the word “and” at the end of paragraph (g) and by repealing paragraph (h).

88. (1) Section 239 of the Act is amended by adding the following after subsection (5):

Marginal note:Electronic access

(5.1) A bank may make the information contained in records referred to in subsection 238(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.

(2) Subsection 239(6) of the French version of the Act is replaced by the following:

Marginal note:Exemplaires

(6) Les actionnaires peuvent sur demande et sans frais, une fois par année civile, obtenir un exemplaire des règlements administratifs de la banque.

89. Subsection 245(1) of the Act is replaced by the following:

Marginal note:Location and processing of information

245. (1) Subject to subsection (3), a bank shall maintain and process in Canada any information or data relating to the preparation and maintenance of the records referred to in section 238 unless the Superintendent has, subject to any terms and conditions that the Superintendent considers appropriate, exempted the bank from the application of this section.

90. Subsection 248(3) of the Act is replaced by the following:

Marginal note:Application of certain provisions

(3) Subsections 239(5) and (5.1) and sections 240 and 242 to 245 apply, with any modifications that the circumstances require, in respect of a central securities register.

91. Section 307 of the Act is replaced by the following:

Marginal note:Financial year

307. (1) The financial year of a bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in each year.

Marginal note:First financial year

(2) If a bank, after the first day of July in any year, obtains an order approving the commencement and carrying on of business, the first financial year of the bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.

Marginal note:Exception

(3) Despite subsection (1), the financial year of a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force ends on the expiration of the thirty-first day of October in each year unless the bank elects in its by-laws to have its financial year end on the thirty-first day of December in each year.

92. (1) The portion of paragraph 308(3)(a) of the Act before subparagraph (i) is replaced by the following:

(a) a list of the subsidiaries of the bank, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 472 or pursuant to a realization of security in accordance with section 473 and which the bank would not otherwise be permitted to hold, showing, with respect to each subsidiary,

(2) Section 308 of the Act is amended by adding the following after subsection (4):

Marginal note:Regulations

(5) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).

Marginal note:1997, c. 15, s. 35

93. Section 312 of the Act is replaced by the following:

Marginal note:Copy to Superintendent

312. (1) Subject to subsection (2), a bank shall send to the Superintendent a copy of the documents referred to in subsections 308(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the bank.

Marginal note:Later filing

(2) If a bank’s shareholders sign a resolution under paragraph 152(1)(b) in lieu of an annual meeting, the bank shall send a copy of the documents referred to in subsections 308(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.

94. (1) Subsection 315(3) of the Act is replaced by the following:

Marginal note:Notice of designation

(3) Within fifteen days after appointing a firm of accountants as auditor of a bank, the bank and the firm of accountants shall jointly designate a member of the firm who has the qualifications described in subsection (1) to conduct the audit of the bank on behalf of the firm and the bank shall forthwith notify the Superintendent in writing of the designation.

(2) Subsection 315(4) of the French version of the Act is replaced by the following:

Marginal note:Remplacement d’un membre désigné

(4) Si, pour une raison quelconque, le membre désigné cesse de remplir ses fonctions, la banque et le cabinet de comptables peuvent désigner conjointement un autre membre qui remplit les conditions du paragraphe (1); la banque en avise sans délai par écrit le surintendant.

95. Subsection 369(2) of the Act is replaced by the following:

Marginal note:Priority not affected

(2) Nothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of a bank.

96. (1) The definitions “eligible Canadian financial institution” and “eligible foreign institution” in subsection 370(1) of the Act are replaced by the following:

“eligible Canadian financial institution”

« institution financière canadienne admissible »

“eligible Canadian financial institution” means a Canadian financial institution that is a body corporate and that is widely held;

“eligible foreign institution”

« institution étrangère admissible »

“eligible foreign institution” means

(a) a foreign bank that, in the opinion of the Minister, after consultation with the Superintendent, is regulated as or like a bank, according to the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business, or

(b) a foreign institution that, in the opinion of the Minister,

(i) is, with respect to its provision of financial services, regulated in the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business, and

(ii) is widely held;

Marginal note:1991, c. 48, par. 494(b)

(2) Subsections 370(2) to (4) of the Act are repealed.

97. Subsection 371(1) of the Act is replaced by the following:

Marginal note:Associates

371. (1) For the purpose of determining ownership of a bank, where two persons who each beneficially own shares of a bank are associated with each other, those persons are deemed to be a single person who beneficially owns the aggregate number of shares of the bank beneficially owned by them.

Marginal note:1991, c. 46, s. 578; 1991, c. 48, par. 494(c); 1994, c. 47, ss. 17 to 21; 1997, c. 15, ss. 36 to 41; 1999, c. 28, ss. 18 to 20

98. Sections 372 to 400 of the Act are replaced by the following:

Constraints on Ownership

Marginal note:Significant interest

372. Except as permitted by this Part, no person shall have a significant interest in any class of shares of a bank.

Marginal note:Acquisition of significant interest

373. (1) Subject to this Part, no person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of a bank or purchase or otherwise acquire control of any entity that holds any share of a bank if

(a) the acquisition would cause the person to have a significant interest in any class of shares of the bank; or

(b) where the person has a significant interest in a class of shares of the bank, the acquisition would increase the significant interest of the person in that class of shares.

Marginal note:Amalgamation, etc., constitutes acquisition

(2) If, as a result of an amalgamation, merger or reorganization, the entity that results would have a significant interest in a class of shares of a bank, that entity is deemed to be acquiring a significant interest in that class of shares of the bank through an acquisition for which the approval of the Minister is required.

Marginal note:Limitations on share holdings

374. (1) No person may be a major shareholder of a bank with equity of five billion dollars or more.

Marginal note:Exception — widely held bank

(2) Subsection (1) does not apply to a widely held bank that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of five billion dollars or more if it controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day.

Marginal note:Exception — widely held bank holding company

(3) Subsection (1) does not apply to a widely held bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of five billion dollars or more if

(a) the bank holding company controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day;

(b) the bank holding company acquired control, within the meaning of those paragraphs, of the bank under section 677 or 678 and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day the bank holding company acquired control; or

(c) the bank was a subsidiary of another bank that was continued under section 684 as the bank holding company and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day it came into existence as a bank holding company.

Marginal note:Exception — insurance holding companies and certain institutions

(4) Subsection (1) does not apply to any of the following that controls, within the meaning of paragraph 3(1)(d), the bank with equity of five billion dollars or more if it controlled, within the meaning of that paragraph, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of that paragraph, the bank since that day:

(a) a widely held insurance holding company;

(b) an eligible Canadian financial institution, other than a bank; or

(c) an eligible foreign institution.

Marginal note:Exception — other entities

(5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of five billion dollars or more if the entity is controlled, within the meaning of those paragraphs, by a widely held bank to which subsection (2) applies, or a widely held bank holding company to which subsection (3) applies, that controls the bank.

Marginal note:Exception — other entities

(6) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the bank with equity of five billion dollars or more if the entity is controlled, within the meaning of that paragraph, by

(a) a widely held insurance holding company to which subsection (4) applies that controls the bank;

(b) an eligible Canadian financial institution to which subsection (4) applies, other than a bank, that controls the bank; or

(c) an eligible foreign institution to which subsection (4) applies that controls the bank.

Marginal note:Exception

374.1 (1) Despite section 374, if a bank with equity of five billion dollars or more was formed as the result of an amalgamation, a person who is a major shareholder of the bank on the effective date of the letters patent of amalgamation shall do all things necessary to ensure that the person is no longer a major shareholder of the bank on the day that is one year after that day or on the day that is after any shorter period specified by the Minister.

Marginal note:Exception — widely held banks and bank holding companies

(2) Subsection (1) does not apply to a widely held bank or a widely held bank holding company that controlled, within the meaning of paragraphs 3(1)(a) and (d), one of the applicants for the letters patent of amalgamation and that has controlled, within the meaning of those paragraphs, the amalgamated bank since the effective date of those letters patent.

Marginal note:Exception — insurance holding companies and certain institutions

(3) Subsection (1) does not apply to any of the following that controlled, within the meaning of paragraph 3(1)(d), one of the applicants for the letters patent of amalgamation if it has controlled, within the meaning of that paragraph, the amalgamated bank since the effective date of those letters patent:

(a) a widely held insurance holding company;

(b) an eligible Canadian financial institution, other than a bank; or

(c) an eligible foreign institution.

Marginal note:Exception — other entities

(4) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the amalgamated bank if the entity is controlled, within the meaning of those paragraphs, by a widely held bank or widely held bank holding company to which subsection (2) applies that controls the amalgamated bank.

Marginal note:Exception — other entities

(5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the amalgamated bank if the entity is controlled, within the meaning of that paragraph, by any of the following:

(a) a widely held insurance holding company to which subsection (3) applies that controls the amalgamated bank;

(b) an eligible Canadian financial institution to which subsection (3) applies, other than a bank, that controls the amalgamated bank; or

(c) an eligible foreign institution to which subsection (3) applies that controls the amalgamated bank.

Marginal note:Extension

(6) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.

Marginal note:Limitation on share holdings

375. (1) If a person is a major shareholder of a bank with equity of less than five billion dollars and the bank’s equity reaches five billion dollars or more, the person shall do all things necessary to ensure that the person is not a major shareholder of the bank on the day that is three years after the day the bank’s equity reached five billion dollars.

Marginal note:Exception

(2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.

Marginal note:Extension

(3) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.

Marginal note:Obligation of widely held bank

376. (1) If a widely held bank with equity of five billion dollars or more controls another bank and a person becomes a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the other bank or entity that controls the other bank,

(a) the widely held bank no longer controls the other bank; or

(b) the other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.

Marginal note:Exception

(2) Subsection (1) does not apply in respect of a bank with equity of less than two hundred and fifty million dollars or any other amount that is prescribed.

Marginal note:Extension

(3) If general market conditions so warrant and the Minister is satisfied that the widely held bank has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Obligation of widely held bank

376.01 (1) Despite subsection 376(1), if a widely held bank with equity of five billion dollars or more controls a bank (in this subsection referred to as the “other bank”) in respect of which that subsection does not apply by reason of subsection 376(2) and the equity of the other bank reaches two hundred and fifty million dollars or more or any other amount that is prescribed and on the day the equity of the other bank reaches two hundred and fifty million dollars or more, or the prescribed amount, as the case may be, a person is a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is three years after that day,

(a) the widely held bank no longer controls the other bank; or

(b) the other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.

Marginal note:Extension

(2) If general market conditions so warrant and the Minister is satisfied that the widely held bank has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Prohibition against significant interest

376.1 No person who has a significant interest in any class of shares of a widely held bank with equity of five billion dollars or more may have a significant interest in any class of shares of a subsidiary of the widely held bank that is a bank or a bank holding company.

Marginal note:Prohibition against significant interest

376.2 No person who has a significant interest in any class of shares of a bank may have a significant interest in any class of shares of any widely held bank with equity of five billion dollars or more, or of any widely held bank holding company with equity of five billion dollars or more, that controls the bank.

Marginal note:Prohibition against control

377. (1) No person shall control, within the meaning of paragraph 3(1)(d), a bank with equity of five billion dollars or more.

Marginal note:Exception

(2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.

Marginal note:Restriction on control

377.1 No person shall, without the prior approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank with equity of less than five billion dollars.

Marginal note:Former Schedule I banks with equity of less than five billion dollars

378. (1) A bank that was named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force and that had equity of less than five billion dollars on that day is deemed, for the purposes of sections 138, 156.09, 374, 376, 376.01, 376.1, 376.2, 377, 380 and 382, subsection 383(2), section 385 and subsection 396(2), to be a bank with equity of five billion dollars or more.

Marginal note:Non-application of subsection (1)

(2) Subsection (1) ceases to apply to a bank that continues to have equity of less than five billion dollars if the Minister specifies that it no longer applies to the bank.

Marginal note:Prohibition

378.1 No person may control or be a major shareholder of a bank if the person or an entity affiliated with the person

(a) has control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or

(b) engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

Marginal note:Prohibition

378.2 No person who controls a bank or who is a major shareholder of a bank, and no entity affiliated with that person, may

(a) control or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or

(b) engage in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

Marginal note:Constraint on registration

379. No bank shall, unless the acquisition of the share has been approved by the Minister, record in its securities register a transfer or issue of any share of the bank to any person or to any entity controlled by a person if

(a) the transfer or issue of the share would cause the person to have a significant interest in any class of shares of the bank; or

(b) where the person has a significant interest in a class of shares of the bank, the transfer or issue of the share would increase the significant interest of the person in that class of shares.

Marginal note:Exemption

380. On application by a bank, other than a bank with equity of five billion dollars or more, the Superintendent may exempt any class of non-voting shares of the bank the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares of the bank from the application of sections 373 and 379.

Marginal note:Exception for small holdings

381. Despite section 379, if, as a result of a transfer or issue of shares of a class of shares of a bank to a person, the total number of shares of that class registered in the securities register of the bank in the name of that person would not exceed five thousand and would not exceed 0.1 per cent of the outstanding shares of that class, the bank is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the bank as a result of that issue or transfer of shares.

Marginal note:When approval not required

382. (1) Despite sections 373 and 379, the approval of the Minister is not required in respect of a bank with equity of less than five billion dollars if a person with a significant interest in a class of shares of the bank, or an entity controlled by a person with a significant interest in a class of shares of the bank, purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the bank to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.

Marginal note:Percentage

(2) Subject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.

Marginal note:Percentage

(3) If a person has a significant interest in a class of shares of a bank and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of

(a) 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, and

(b) 10 percentage points in excess of the lowest significant interest of the person in that class of shares of the bank at any time after the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.

Marginal note:Exception

(4) Subsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection would

(a) result in the acquisition of control of the bank by the person referred to in that subsection;

(b) if the person controls the bank but the voting rights attached to the aggregate of any voting shares of the bank beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank;

(c) result in the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; or

(d) result in an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.

Marginal note:Regulations

(5) The Governor in Council may make regulations

(a) exempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person; and

(b) exempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.

Marginal note:When approval not required

383. (1) Despite sections 373 and 379, the approval of the Minister is not required if

(a) the Superintendent has, by order, directed the bank to increase its capital and shares of the bank are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or

(b) a person who controls, within the meaning of paragraph 3(1)(a), the bank acquires additional shares of the bank.

Marginal note:Exception

(2) Paragraph (1)(a) does not apply in respect of a bank with equity of five billion dollars or more.

Marginal note:Pre-approval

384. For the purposes of sections 373 and 379, the Minister may approve

(a) the purchase or other acquisition of any number or percentage of shares of a bank that may be required in a particular transaction or series of transactions; or

(b) the purchase or other acquisition of up to a specified number or percentage of shares of a bank within a specified period.

Marginal note:Public holding requirement

385. (1) Every bank with equity of one billion dollars or more but less than five billion dollars shall, from and after the day determined under this section in respect of that bank, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that are

(a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

(b) shares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.

Marginal note:Determination of day

(2) The day referred to in subsection (1) is

(a) if the bank had equity of one billion dollars or more but less than five billion dollars on the day the bank came into existence, the day that is three years after that day; and

(b) in any other case, the day that is three years after the day of the first annual meeting of the shareholders of the bank held after the equity of the bank first reaches one billion dollars.

Marginal note:Extension

(3) If general market conditions so warrant and the Minister is satisfied that a bank has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the bank must comply with subsection (1).

Marginal note:Public holding requirement

385.1 If a bank to which section 385 applies becomes a bank with equity of five billion dollars or more, that section continues to apply to the bank until no person is a major shareholder of the bank, other than a person to whom subsections 374(2) to (6) apply.

Marginal note:Limit on assets

386. (1) Unless an exemption order with respect to the bank is granted under section 388, if a bank fails to comply with section 385 in any month, the Minister may, by order, require the bank not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.

Marginal note:Average total assets

(2) For the purposes of subsection (1), the average total assets of a bank in a three month period is to be computed by adding the total assets of the bank as calculated for the month end of each of the three months in the period and by dividing the sum by three.

Definition of “total assets”

(3) For the purposes of subsections (1) and (2), “total assets”, in respect of a bank, has the meaning given that expression by the regulations.

Marginal note:Increase of capital

387. If the Superintendent has, by order, directed a bank with equity of one billion dollars or more but less than five billion dollars to increase its capital and shares of the bank are issued and acquired in accordance with any terms and conditions that may be specified in the order, section 385 does not apply in respect of the bank until the time that the Superintendent may, by order, specify.

Marginal note:Exemption by order of the Minister

388. (1) On application by a bank, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank from the requirements of section 385, subject to any terms and conditions that the Minister considers appropriate.

Marginal note:Compliance with section 385

(2) If an exemption order granted under this section in respect of a bank expires, the bank shall comply with section 385 as of the day the exemption order expires.

Marginal note:Limit on assets

(3) If a bank fails to comply with section 385 on the day referred to in subsection (2), the bank shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the day referred to in subsection (2) or any later day that the Minister may, by order, specify.

Marginal note:Application of ss. 386(2) and (3)

(4) Subsections 386(2) and (3) apply for the purposes of subsection (3).

Marginal note:Exception

389. (1) If a bank fails to comply with section 385 as the result of any of the following, section 386 does not apply in respect of the bank until the expiration of six months after the day it failed to comply with section 385:

(a) a distribution to the public of voting shares of the bank;

(b) a redemption or purchase of voting shares of the bank;

(c) the exercise of any option to acquire voting shares of the bank; or

(d) the conversion of any convertible securities into voting shares of the bank.

Marginal note:Shares acquiring voting rights

(2) If, as the result of an event that has occurred and is continuing, shares of a bank acquire voting rights in such number as to cause the bank to no longer be in compliance with section 385, section 386 does not apply in respect of that bank until the expiration of six months after the day the bank ceased to be in compliance with section 385 or any later day that the Minister may, by order, specify.

Marginal note:Acquisition of control permitted

390. (1) Subject to subsection (2) and sections 379 and 391, section 385 does not apply in respect of a bank if a person acquires control of the bank through the purchase or other acquisition of all or any number of the shares of the bank by the person or by any entity controlled by the person.

Marginal note:Undertaking required

(2) Subsection (1) applies only if the person referred to in that subsection provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the bank has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that are

(a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

(b) shares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.

Marginal note:Application of section 385

391. At the expiration of the period for compliance with an undertaking referred to in subsection 390(2), section 385 shall apply in respect of the bank to which the undertaking relates.

Marginal note:Restriction on voting rights

392. (1) If, with respect to any bank, a particular person contravenes section 372, subsection 373(1), 374(1) or 375(1), section 376.1 or 376.2, subsection 377(1) or section 377.1 or fails to comply with an undertaking referred to in subsection 390(2) or with any term or condition imposed under section 397, no person, and no entity controlled by the particular person, shall, in person or by proxy, exercise any voting rights

(a) that are attached to shares of the bank beneficially owned by the particular person or any entity controlled by the particular person; or

(b) that are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.

Marginal note:Subsection (1) ceases to apply

(2) Subsection (1) ceases to apply in respect of a person when, as the case may be,

(a) the shares to which the contravention relates have been disposed of;

(b) the person ceases to control the bank within the meaning of paragraph 3(1)(d);

(c) if the person failed to comply with an undertaking referred to in subsection 390(2), the bank complies with section 385; or

(d) if the person failed to comply with a term or condition imposed under section 397, the person complies with the term or condition.

Marginal note:Saving

(3) Despite subsection (1), if a person contravenes subsection 374(1) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the bank beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the bank, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the bank beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.

Marginal note:Loss of control — banks and bank holding companies

393. (1) Despite sections 374 and 377, a widely held bank or a widely held bank holding company may be a major shareholder of a bank with equity of five billion dollars or more and cease to control, within the meaning of paragraphs 3(1)(a) and (d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.

Marginal note:Extension

(2) If general market conditions so warrant and the Minister is satisfied that the bank or the bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Loss of control — other entities

393.1 (1) Despite sections 374 and 377, an eligible foreign institution, an eligible Canadian financial institution, other than a bank, or a widely held insurance holding company may be a major shareholder of a bank with equity of five billion dollars or more and cease to control, within the meaning of paragraph 3(1)(d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.

Marginal note:Extension

(2) If general market conditions so warrant and the Minister is satisfied that the institution or insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Change in status

394. (1) If a body corporate that is an eligible financial institution other than a bank controls, within the meaning of paragraph 3(1)(d), a bank with equity of five billion dollars or more and the body corporate subsequently ceases to be an eligible financial institution, the body corporate must do all things necessary to ensure that, on the day that is one year after the day it ceased to be an eligible financial institution,

(a) it does not control, within the meaning of paragraph 3(1)(d), the bank; and

(b) it is not a major shareholder of the bank.

Marginal note:Extension

(2) If general market conditions so warrant and the Minister is satisfied that the body corporate has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Approval Process

Marginal note:Application for approval

395. (1) An application for an approval of the Minister required under this Part must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.

Marginal note:Applicant

(2) If, with respect to any particular transaction, this Part applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.

Marginal note:Matters for consideration

396. (1) Subject to subsection (2), if an application for an approval under section 373 is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, including

(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;

(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;

(c) the business record and experience of the applicant or applicants;

(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;

(g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard to

(i) the nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, and

(ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank; and

(h) the best interests of the financial system in Canada.

Marginal note:Exception

(2) Subject to subsection 377(1), the Minister shall take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holding

(a) more than 10 per cent but no more than 20 per cent of any class of the outstanding voting shares of a widely held bank with equity of five billion dollars or more; or

(b) more than 10 per cent but no more than 30 per cent of any class of the outstanding non-voting shares of such a bank.

Marginal note:Favourable treatment

(3) The Minister shall not approve a transaction that would cause a bank to become a subsidiary of a foreign bank within the meaning of any of paragraphs (a) to (f) of the definition “foreign bank” in section 2 that is a non-WTO Member foreign bank unless the Minister is satisfied that treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.

Marginal note:Terms and conditions

397. The Minister may impose any terms and conditions in respect of an approval given under this Part that the Minister considers necessary to ensure compliance with any provision of this Act.

Marginal note:Certifying receipt of application

398. (1) If, in the opinion of the Superintendent, an application filed under this Part contains all the required information, the Superintendent shall without delay refer the application to the Minister and send a receipt to the applicant certifying the date on which the completed application was received by the Superintendent.

Marginal note:Incomplete application

(2) If, in the opinion of the Superintendent, an application filed under this Part is incomplete, the Superintendent shall send a notice to the applicant specifying the information required by the Superintendent to complete the application.

Marginal note:Notice of decision

399. (1) Subject to subsections (2) and (3) and 400(1), the Minister shall, within a period of thirty days after the certified date referred to in subsection 398(1), send to the applicant

(a) a notice approving the transaction to which the application relates; or

(b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

Marginal note:Notice of decision

(2) Subject to subsections (4) and 400(2), if an application involves the acquisition of control of a bank, the Minister shall, within a period of forty-five days after the certified date referred to in subsection 398(1), send to the applicant

(a) a notice approving the transaction to which the application relates; or

(b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

Marginal note:Extension of period for notice

(3) If the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall

(a) within that period, send a notice to that effect to the applicant; and

(b) within a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within any other further period that may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.

Marginal note:Further extensions

(4) If the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.

Marginal note:Reasonable opportunity to make representations

400. (1) If, after receipt of the notice referred to in paragraph 399(1)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of thirty days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

Marginal note:Reasonable opportunity to make representations

(2) If, after receipt of the notice referred to in paragraph 399(2)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of forty-five days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

Marginal note:Notice of decision

401. (1) Within a period of thirty days after the expiration of the period for making representations referred to in subsection 400(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

Marginal note:Notice of decision

(2) Within a period of forty-five days after the expiration of the period for making representations referred to in subsection 400(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

Marginal note:Deemed approval

401.1 If the Minister does not send a notice under subsection 399(1) or (3) or 401(1) within the period provided for in those subsections, the Minister is deemed to have approved the transaction to which the application relates.

Marginal note:Constraining registration: Crown and foreign governments

401.2 (1) No bank shall record in its securities register a transfer or issue of any share of the bank to

(a) Her Majesty in right of Canada or of a province or any agent or agency of Her Majesty in either of those rights; or

(b) the government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government.

Marginal note:Exception

(2) Despite subsection (1), a bank may record in its securities register a transfer or issue of any share of the bank to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country or any agent or agency of a foreign country if the bank is a subsidiary of the foreign bank or foreign institution.

Marginal note:Suspension of voting rights held by governments

401.3 (1) Despite section 148, no person shall, in person or by proxy, exercise any voting rights attached to any share of a bank that is beneficially owned by

(a) Her Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights; or

(b) the government of a foreign country or any political subdivision thereof, or any agency thereof.

Marginal note:Exception

(2) Subsection (1) does not apply to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country or any agent or agency of a foreign country and that has a significant interest in a class of shares of a bank that is a subsidiary of the foreign bank or foreign institution.

99. (1) Subsection 402(1) of the Act is replaced by the following:

Marginal note:Disposition of shareholdings

402. (1) If, with respect to any bank, a person contravenes section 372 or subsection 373(1), 374(1) or 375(1) or section 376.1 or 376.2, subsection 377(1) or section 377.1 or fails to comply with an undertaking referred to in subsection 390(2) or with any terms and conditions imposed under section 397, the Minister may, if the Minister deems it in the public interest to do so, by order, direct that person and any person controlled by that person to dispose of any number of shares of the bank beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the person and the persons controlled by that person that is specified in the order.

Marginal note:1999, c. 28, s. 21

(2) Subsections 402(3) and (4) of the Act are replaced by the following:

Marginal note:Appeal

(3) Any person with respect to whom a direction has been made under subsection (1) may, within thirty days after the date of the direction, appeal the matter in accordance with section 977.

Marginal note:1997, c. 15, ss. 42(1) and (2)

100. (1) The portion of subsection 410(1) of the Act before paragraph (d) is replaced by the following:

Marginal note:Additional activities

410. (1) In addition, a bank may

(a) hold, manage and otherwise deal with real property;

(b) provide prescribed bank-related data processing services;

(c) outside Canada or, with the prior written approval of the Minister, in Canada, engage in any of the following activities, namely,

(i) collecting, manipulating and transmitting

(A) information that is primarily financial or economic in nature,

(B) information that relates to the business of a permitted entity, as defined in subsection 464(1), or

(C) any other information that the Minister may, by order, specify,

(ii) providing advisory or other services in the design, development or implementation of information management systems,

(iii) designing, developing or marketing computer software, and

(iv) designing, developing, manufacturing or selling, as an ancillary activity to any activity referred to in any of subparagraphs (i) to (iii) that the bank is engaging in, computer equipment integral to the provision of information services related to the business of financial institutions or to the provision of financial services;

(c.1) with the prior written approval of the Minister, develop, design, hold, manage, manufacture, sell or otherwise deal with data transmission systems, information sites, communication devices or information platforms or portals that are used

(i) to provide information that is primarily financial or economic in nature,

(ii) to provide information that relates to the business of a permitted entity, as defined in subsection 464(1), or

(iii) for a prescribed purpose or in prescribed circumstances;

(c.2) engage, under prescribed terms and conditions, if any are prescribed, in specialized business management or advisory services;

Marginal note:1997, c. 15, s. 42(3)

(2) Paragraphs 410(3)(a) and (b) of the Act are replaced by the following:

(a) respecting what a bank may or may not do with respect to the carrying on of the activities referred to in paragraphs (1)(c) to (c.2);

(b) imposing terms and conditions in respect of

(i) the provision of financial services referred to in paragraph 409(2)(a) that are financial planning services,

(ii) the provision of services referred to in paragraph 409(2)(c), and

(iii) the carrying on of the activities referred to in any of paragraphs (1)(c) to (c.2); and

(c) respecting the circumstances in which banks may be exempted from the requirement to obtain the approval of the Minister before carrying on a particular activity referred to in paragraph (1)(c) or (c.1).

101. Paragraphs 411(1)(a) and (b) of the Act are replaced by the following:

(a) act as agent for any person in respect of the provision of any service that is provided by a financial institution, a permitted entity as defined in subsection 464(1) or a prescribed entity and may enter into an arrangement with any person in respect of the provision of that service; or

(b) refer any person to any such financial institution or entity.

Marginal note:1997, c. 15, s. 43

102. Subsection 413(2) of the Act is repealed.

Marginal note:1997, c. 15, s. 43

103. (1) Subsection 413.1(1) of the Act is replaced by the following:

Marginal note:Notice before opening account

413.1 (1) Before a bank to which paragraph 413(1)(b) applies opens a deposit account in Canada, the bank shall give the person requesting the opening of the account, in the prescribed manner,

(a) a notice in writing that the deposit will not be insured by the Canada Deposit Insurance Corporation; and

(b) any other information that may be prescribed.

Marginal note:1997, c. 15, s. 43

(2) Subsection 413.1(3) of the Act is replaced by the following:

Marginal note:Regulations

(3) The Governor in Council may make regulations

(a) prescribing the manner in which notices referred to in subsection (1) are to be given and the additional information to be contained in the notices; and

(b) respecting notices for the purpose of subsection (2).

104. The Act is amended by adding the following after section 413.1:

Marginal note:Deposits less than $150,000

413.2 (1) Subject to the regulations, a bank to which paragraph 413(1)(b) applies may not, in respect of its business in Canada, act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.

Meaning of “deposit”

(2) In this section, “deposit” has the meaning assigned to that term by subsection 413(5).

Marginal note:Regulations

(3) The Governor in Council may make regulations respecting the circumstances in which, and the conditions under which, a bank referred to in subsection (1) may act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.

Marginal note:Shared premises

413.3 (1) Subject to the regulations, no bank to which paragraph 413(1)(b) applies shall carry on business in Canada on premises that are shared with those of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the bank.

Marginal note:Limitation

(2) Subsection (1) only applies in respect of premises or any portion of premises on which both the bank and the member institution carry on business with the public and to which the public has access.

Marginal note:Adjacent premises

(3) Subject to the regulations, no bank to which paragraph 413(1)(b) applies shall carry on business in Canada on premises that are adjacent to a branch or office of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the bank, unless the bank clearly indicates to its customers that its business and the premises on which it is carried on are separate and distinct from the business and premises of the affiliated member institution.

Marginal note:Regulations

(4) The Governor in Council may make regulations

(a) respecting the circumstances in which, and the conditions under which, a bank to which paragraph 413(1)(b) applies may carry on business in Canada on premises that are shared with those of a member institution referred to in subsection (1); and

(b) respecting the circumstances in which, and the conditions under which, a bank to which paragraph 413(1)(b) applies may carry on business in Canada on premises that are adjacent to a branch or office of a member institution referred to in subsection (3).

105. (1) The portion of subsection 414(1) of the Act before paragraph (a) is replaced by the following:

Marginal note:Restriction on guarantees

414. (1) A bank shall not guarantee on behalf of any person the payment or repayment of any sum of money unless

Marginal note:1997, c. 15, s. 44

(2) Subsection 414(2) of the French version of the Act is replaced by the following:

Marginal note:Exception

(2) Dans les cas où la personne visée au paragraphe (1) est une filiale de la banque garante, celle-ci peut garantir une somme qui n’est pas fixe.

106. Section 417 of the Act is replaced by the following:

Marginal note:Restriction on leasing

417. A bank shall not engage in Canada in any personal property leasing activity in which a financial leasing entity, as defined in subsection 464(1), is not permitted to engage.

107. Section 419 of the Act is replaced by the following:

Marginal note:Policies re security interests

419. (1) The directors of a bank shall establish and the bank shall adhere to policies regarding the creation of security interests in property of the bank to secure obligations of the bank and the acquisition by the bank of beneficial interests in property that is subject to security interests.

Marginal note:Order to amend policies

(2) The Superintendent may, by order, direct a bank to amend its policies as specified in the order.

Marginal note:Compliance

(3) A bank shall comply with an order made under subsection (2) within the time specified in the order.

Marginal note:Regulations and guidelines

419.1 The Governor in Council may make regulations and the Superintendent may make guidelines respecting the creation by a bank of security interests in its property to secure obligations of the bank and the acquisition by the bank of beneficial interests in property that is subject to security interests.

Marginal note:Exception

419.2 Sections 419 and 419.1 do not apply in respect of a security interest created by a bank to secure an obligation of the bank to the Bank of Canada or the Canada Deposit Insurance Corporation.

108. Subsection 421(1) of the Act is replaced by the following:

Marginal note:Restriction on partnerships

421. (1) Except with the approval of the Superintendent, a bank may not be a general partner in a limited partnership or a partner in a general partnership.

109. Subsection 422(1) of the Act is repealed.

Marginal note:1999, c. 28, s. 22

110. Section 422.1 of the Act is replaced by the following:

Definition of “non-WTO Member bank subsidiary”

422.1 In section 422.2, “non-WTO Member bank subsidiary” means a bank that is a subsidiary of a foreign bank and that is not controlled by a WTO Member resident.

111. Subsection 437(3) of the Act is replaced by the following:

Marginal note:Execution of trust

(3) A bank is not bound to see to the execution of any trust to which any deposit made under the authority of this Act is subject.

Marginal note:Payment when bank has notice of trust

(4) Subsection (3) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the bank has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.

112. The heading “Interest and Charges” before section 440 of the Act is repealed.

113. The Act is amended by adding the following before section 440 of the Act:

Marginal note:Definitions

439.1 The following definitions apply in this section and in sections 445 to 448.2, 458.1, 459.2 and 459.4.

“low-fee retail deposit account”

« compte de dépôt de détail à frais modiques »

“low-fee retail deposit account” means a retail deposit account that has the prescribed characteristics.

“member bank”

« banque membre »

“member bank” means a bank that is a member institution as defined in section 2 of the Canada Deposit Insurance Corporation Act.

“personal deposit account”

« compte de dépôt personnel »

“personal deposit account” means a deposit account in the name of one or more natural persons that is kept by that person or those persons for a purpose other than that of carrying on business.

“retail deposit account”

« compte de dépôt de détail »

“retail deposit account” means a personal deposit account that is opened with a deposit of less than $150,000 or any greater amount that may be prescribed.

114. Subsection 441(2) of the Act is replaced by the following:

Marginal note:Exception

(2) Subsection (1) does not apply in respect of an interest-bearing deposit account that is opened with a deposit in excess of $150,000 or any greater amount that may be prescribed.

115. Section 444 of the Act is repealed.

Marginal note:1997, c. 15, s. 48

116. (1) The portion of subsection 445(1) of the Act before paragraph (a) is replaced by the following:

Marginal note:Disclosure required on opening a deposit account

445. (1) Subject to subsections (2) to (4), a bank shall not open a deposit account in the name of a customer unless, at or before the time the account is opened, the bank provides in writing to the individual who requests the opening of the account

Marginal note:1997, c. 15, s. 48

(2) Subsections 445(2) to (5) of the Act are replaced by the following:

Marginal note:Exception

(2) If a deposit account is not a personal deposit account and the amount of a charge applicable to the account cannot be established at or before the time the account is opened, the bank shall, as soon as is practicable after the amount is established, provide the customer in whose name the account is kept with a notice in writing of the amount of the charge.

Marginal note:Exception

(3) If a bank has a deposit account in the name of a customer and the customer by telephone requests the opening of another deposit account in the name of the customer and the bank has not complied with subsection (1) in respect of the opening of that other account, the bank shall not open the account unless it provides the customer orally with any information prescribed at or before the time the account is opened.

Marginal note:Disclosure in writing

(4) If a bank opens an account under subsection (3), it shall, not later than seven business days after the account is opened, provide to the customer in writing the agreement and information referred to in subsection (1).

Marginal note:Right to close account

(5) A customer may, within 14 business days after a deposit account is opened under subsection (3), close the account without charge and in such case is entitled to a refund of any charges related to the operation of the account, other than interest charges, incurred while the account was open.

Marginal note:Regulations

(6) For the purposes of subsection (4), the Governor in Council may make regulations prescribing circumstances in which, and the time when, the agreement and information will be deemed to have been provided to the customer.

117. Section 448 of the Act is replaced by the following:

Marginal note:Application

448. Sections 445 to 447 apply only in respect of charges applicable to deposit accounts with the bank in Canada and services provided by the bank in Canada.

Marginal note:Retail deposit accounts

448.1 (1) Subject to regulations made under subsection (3), a member bank shall, at any prescribed point of service in Canada or any branch in Canada at which it opens retail deposit accounts through a natural person, open a retail deposit account for an individual who meets the prescribed conditions at his or her request made there in person.

Marginal note:No minimum deposit or balance requirements

(2) A member bank shall not require that, in the case of an account opened under subsection (1), the individual make an initial minimum deposit or maintain a minimum balance.

Marginal note:Regulations

(3) The Governor in Council may make regulations

(a) for the purposes of subsection (1), defining “point of service” and prescribing points of service;

(b) respecting circumstances in which subsection (1) does not apply; and

(c) prescribing conditions to be met by an individual for the purposes of subsection (1).

Marginal note:Low-fee retail deposit accounts — regulations

448.2 The Governor in Council may make regulations

(a) requiring a member bank, at any prescribed point of service in Canada or any branch referred to in subsection 448.1(1), to open a low-fee retail deposit account for an individual who meets the prescribed conditions at his or her request made there in person;

(b) for the purposes of paragraph (a), defining “point of service” and prescribing points of service;

(c) prescribing the characteristics, including the name, of a low-fee retail deposit account;

(d) respecting circumstances in which a regulation made under paragraph (a) does not apply; and

(e) prescribing conditions to be met by an individual for the purposes of paragraph (a).

118. Section 449 of the Act, as enacted by section 49 of An Act to amend certain laws relating to financial institutions, being chapter 15 of the Statutes of Canada, 1997, is replaced by the following:

Definition of “cost of borrowing”

449. For the purposes of this section and sections 449.1 to 456, “cost of borrowing” means, in respect of a loan made by a bank,

(a) the interest or discount applicable to the loan;

(b) any amount charged in connection with the loan that is payable by the borrower to the bank; and

(c) any charge prescribed to be included in the cost of borrowing.

For those purposes, however, “cost of borrowing” does not include any charge prescribed to be excluded from the cost of borrowing.

119. The Act is amended by adding the following before section 455:

Complaints

120. (1) Paragraph 455(1)(a) of the Act is replaced by the following:

(a) establish procedures for dealing with complaints made by persons having requested or received products or services in Canada from a bank;

(2) If this section comes into force before paragraph 455(1)(a) of the Act, as enacted by section 52 of An Act to amend certain laws relating to financial institutions, being chapter 15 of the Statutes of Canada, 1997, comes into force, then section 52 of that Act is repealed.

(3) Subsection 455(2) of the Act is replaced by the following:

Marginal note:Procedures to be filed with Commissioner

(2) A bank shall file with the Commissioner a copy of its procedures established under paragraph (1)(a).

121. The Act is amended by adding the following after section 455:

Marginal note:Designation of complaints body

455.1 (1) The Minister may, for the purposes of this section, designate a body corporate incorporated under Part II of the Canada Corporations Act whose purpose, in the view of the Minister, under its letters patent is dealing with complaints, made by persons having requested or received products or services from its member financial institutions, that have not been resolved to the satisfaction of those persons under procedures established by those financial institutions under paragraph 455(1)(a).

Marginal note:Obligation to be member

(2) A bank shall be a member of any body corporate that is designated under subsection (1).

Marginal note:Directors

(3) The Minister may, in accordance with the letters patent and by-laws of the body corporate designated under subsection (1), appoint the majority of its directors.

Marginal note:Not an agent

(4) A body corporate designated under subsection (1) is not an agent of Her Majesty.

Marginal note:Designation to be published

(5) A designation under subsection (1) shall be published in the Canada Gazette.

122. (1) Section 456 of the Act is replaced by the following:

Marginal note:Information on contacting Agency

456. (1) A bank shall, in the prescribed manner, provide a person requesting or receiving a product or service from it with prescribed information on how to contact the Agency if the person has a complaint about a deposit account, an arrangement referred to in subsection 452(3), a payment, credit or charge card, the disclosure of or manner of calculating the cost of borrowing in respect of a loan or about any other obligation of the bank under a consumer provision.

Marginal note:Report

(2) The Commissioner shall prepare a report, to be included in the report referred to in section 34 of the Financial Consumer Agency of Canada Act, respecting

(a) procedures for dealing with complaints established by banks pursuant to paragraph 455(1)(a); and

(b) the number and nature of complaints that have been brought to the attention of the Agency by persons who have requested or received a product or service from a bank.

(2) If this section comes into force before subsection 456(1) of the Act, as enacted by section 53 of An Act to amend certain laws relating to financial institutions, being chapter 15 of the Statutes of Canada, 1997, comes into force, then section 53 of that Act is repealed.

123. The Act is amended by adding the following after section 458:

Marginal note:Cashing of government cheques

458.1 (1) Subject to regulations made under subsection (2), a member bank shall, at any branch in Canada at which it, through a natural person, opens retail deposit accounts and disburses cash to customers, cash a cheque or other instrument for an individual who is considered not to be a customer of the bank under the regulations, if

(a) the cheque or other instrument is drawn on the Receiver General or on the Receiver General’s account in the Bank of Canada, or in any bank or other deposit-taking Canadian financial institution incorporated by or under an Act of Parliament, or is any other instrument issued as authority for the payment of money out of the Consolidated Revenue Fund;

(b) the individual makes the request to cash it in person and meets the prescribed conditions; and

(c) the amount of the cheque or other instrument is not more than the prescribed amount.

Marginal note:Regulations

(2) The Governor in Council may make regulations

(a) respecting circumstances in which subsection (1) does not apply;

(b) for the purposes of subsection (1), prescribing the maximum amount of a cheque or other instrument;

(c) prescribing conditions to be met by an individual referred to in subsection (1); and

(d) prescribing circumstances in which an individual referred to in subsection (1) is considered not to be a customer of the bank.

Marginal note:1997, c. 15, s. 55; 1999, c. 28, s. 24.1(1) (F)

124. (1) Subsections 459.1(1) to (3) of the Act are replaced by the following:

Marginal note:Restriction on tied selling

459.1 (1) A bank shall not impose undue pressure on, or coerce, a person to obtain a product or service from a particular person, including the bank and any of its affiliates, as a condition for obtaining another product or service from the bank.

Marginal note:Favourable bank product or service tied to other sale

(2) For greater certainty, a bank may offer a product or service to a person on more favourable terms or conditions than the bank would otherwise offer, where the more favourable terms and conditions are offered on the condition that the person obtain another product or service from any particular person.

Marginal note:Favourable other sale tied to bank product or service

(3) For greater certainty, an affiliate of a bank may offer a product or service to a person on more favourable terms or conditions than the affiliate would otherwise offer, where the more favourable terms and conditions are offered on the condition that the person obtain another product or service from the bank.

(2) Section 459.1 of the Act is amended by adding the following after subsection (4):

Marginal note:Disclosure

(4.1) A bank shall disclose the prohibition on coercive tied selling set out in subsection (1) in a statement in plain language that is clear and concise, displayed and available to customers and the public at all of its branches and at all prescribed points of service in Canada.

Marginal note:Regulations

(4.2) The Governor in Council may make regulations for the purposes of subsection (4.1) defining “point of service” and prescribing points of service.

125. The Act is amended by adding the following after section 459.1:

Marginal note:Notice of branch closure

459.2 (1) Subject to regulations made under subsection (5), a member bank with a branch in Canada at which it, through a natural person, opens retail deposit accounts and disburses cash to customers, shall give notice in accordance with those regulations before closing that branch or having it cease to carry on either of those activities.

Marginal note:Pre-closure meeting

(2) After notice is given but before the branch is closed or ceases to carry on the activities, the Commissioner may, in prescribed situations, require the bank to convene and hold a meeting between representatives of the bank, representatives of the Agency and interested parties in the vicinity of the branch in order to exchange views about the closing or cessation of activities.

Marginal note:Meeting details

(3) The Commissioner may establish rules for convening a meeting referred to in subsection (2) and for its conduct.

Marginal note:Not statutory instruments

(4) The Statutory Instruments Act does not apply in respect of rules established under subsection (3).

Marginal note:Regulations

(5) The Governor in Council may make regulations prescribing

(a) the manner and time, which may vary according to circumstances specified in the regulations, in which notice shall be given under subsection (1), to whom it shall be given and the information to be included;

(b) circumstances in which a member bank is not required to give notice under subsection (1), circumstances in which the Commissioner may exempt a member bank from the requirement to give notice under that subsection, and circumstances in which the Commissioner may vary the manner and time in which notice is required to be given under any regulation made under paragraph (a); and

(c) circumstances in which a meeting may be convened under subsection (2).

Marginal note:Public accountability statements

459.3 (1) A bank with equity of one billion dollars or more shall, in accordance with regulations made under subsection (4), annually publish a statement describing the contribution of the bank and its prescribed affiliates to the Canadian economy and society.

Marginal note:Filing

(2) A bank shall, in the manner and at the time prescribed, file a copy of the statement with the Commissioner.

Marginal note:Provision of statement to public

(3) A bank shall, in the manner and at the time prescribed, disclose the statement to its customers and to the public.

Marginal note:Regulations

(4) The Governor in Council may make regulations prescribing

(a) the name, contents and form of the statement referred to in subsection (1) and the time within which it must be prepared;

(b) affiliates of a bank referred to in subsection (1);

(c) the manner and time in which a statement must be filed under subsection (2); and

(d) the manner and time in which a statement mentioned in subsection (3) is to be disclosed, respectively, to a bank’s customers and to the public.

Marginal note:Regulations re disclosure

459.4 The Governor in Council may, subject to any other provisions of this Act relating to the disclosure of information, make regulations respecting the disclosure of information by banks or any prescribed class of banks, including regulations respecting

(a) the information that must be disclosed, including information relating to

(i) any product or service or prescribed class of products or services offered by them,

(ii) any of their policies, procedures or practices relating to the offer by them of any product or service or prescribed class of products or services,

(iii) anything they are required to do or to refrain from doing under a consumer provision, and

(iv) any other matter that may affect their dealings with customers or the public;

(b) the manner, place and time in which and the persons to whom information is to be disclosed; and

(c) the content and form of any advertisement by banks or any prescribed class of banks relating to any matter referred to in paragraph (a).

Marginal note:Affiliates

459.5 A bank shall not enter into any arrangement or otherwise cooperate with any of its affiliates that is controlled by a bank or a bank holding company and that is a finance entity as defined in subsection 464(1) or other prescribed entity to sell or further the sale of a product or service of the bank or the affiliate unless

(a) the affiliate complies, with respect to the product or service, with the following provisions as if it were a bank, namely,

(i) sections 449 to 455, subsections 458(1) and (3) and section 459.1, and

(ii) section 456, to the extent that it is applicable to the activities of the affiliate; and

(b) the persons who request or receive the product or service have access to complaint handling by the body corporate designated under subsection 455.1(1).

126. Section 462 of the Act is replaced by the following:

Marginal note:Effect of writ, etc.

462. (1) Subject to subsections (3) and (4), the following documents are binding on property belonging to a person and in the possession of a bank, or on money owing to a person by reason of a deposit account in a bank, only if the document or a notice of it is served at the branch of the bank that has possession of the property or that is the branch of account in respect of the deposit account, as the case may be:

(a) a writ or process originating a legal proceeding or issued in or pursuant to a legal proceeding;

(b) an order or injunction made by a court;

(c) an instrument purporting to assign, perfect or otherwise dispose of an interest in the property or the deposit account; or

(d) an enforcement notice in respect of a support order or support provision.

Marginal note:Notices

(2) Any notification sent to a bank with respect to a customer of the bank, other than a document referred to in subsection (1) or (3), constitutes notice to the bank and fixes the bank with knowledge of its contents only if sent to and received at the branch of the bank that is the branch of account of an account held in the name of that customer.

Marginal note:Exception

(3) Subsections (1) and (2) do not apply in respect of an enforcement notice in respect of a support order or support provision if

(a) the enforcement notice, accompanied by a written statement containing the information required by the regulations, is served at an office of a bank designated in accordance with the regulations in respect of a province; and

(b) the order or provision can be enforced under the laws of that province.

Marginal note:Time of application

(4) Subsection (3) does not apply in respect of an enforcement notice in respect of a support order or support provision until the second business day following the day of service referred to in that subsection.

Marginal note:Regulations

(5) The Governor in Council may make regulations

(a) respecting the designation by a bank, for the purpose of subsection (3), of a place in any province for the service of enforcement notices in respect of support orders and support provisions;

(b) prescribing the manner in which a bank shall publicize the locations of designated offices of the bank; and

(c) respecting the information that must accompany enforcement notices in respect of support orders and support provisions.

Marginal note:Definitions

(6) The following definitions apply in this section.

“designated office”

« bureau désigné »

“designated office” means a place designated in accordance with regulations made for the purpose of subsection (3).

“enforcement notice”

« avis d’exécution »

“enforcement notice”, in respect of a support order or support provision, means a garnishee summons or other instrument issued under the laws of a province for the enforcement of the support order or support provision.

“support order”

« ordonnance alimentaire »

“support order” means an order or judgment or interim order or judgment for family financial support.

“support provision”

« disposition alimentaire »

“support provision” means a provision of an agreement relating to the payment of maintenance or family financial support.

Marginal note:1991, c. 46, s. 603; 1993, c. 34, s. 9(F); 1997, c. 15, ss. 56 to 66; 1999, c. 28, s. 26

127. Sections 464 to 484 of the Act are replaced by the following:

Marginal note:Definitions

464. (1) The following definitions apply in this Part.

“factoring entity”

« entité s’occupant d’affacturage »

“factoring entity” means a factoring entity as defined in the regulations.

“finance entity”

« entité s’occupant de financement »

“finance entity” means a finance entity as defined in the regulations.

“financial leasing entity”

« entité s’occupant de crédit-bail »

“financial leasing entity” means an entity

(a) the activities of which are limited to the financial leasing of personal property and such related activities as are prescribed and whose activities conform to such restrictions and limitations thereon as are prescribed; and

(b) that, in conducting the activities referred to in paragraph (a) in Canada, does not

(i) direct its customers or potential customers to particular dealers in the leased property or the property to be leased,

(ii) enter into lease agreements with persons in respect of any motor vehicle having a gross vehicle weight, as that expression is defined by the regulations, of less than twenty-one tonnes, or

(iii) enter into lease agreements with natural persons in respect of personal household property, as that expression is defined by the regulations.

“loan”

« prêt »ou« emprunt »

“loan” includes an acceptance, endorsement or other guarantee, a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit but does not include investments in securities.

“motor vehicle”

« véhicule à moteur »

“motor vehicle” means a motorized vehicle designed to be used primarily on a public highway for the transportation of persons or things, but does not include

(a) a fire-engine, bus, ambulance or utility truck; or

(b) any other special purpose motorized vehicle that contains significant special features that make it suitable for a specific purpose.

“mutual fund distribution entity”

« courtier de fonds mutuels »

“mutual fund distribution entity” means an entity whose principal activity is acting as a selling agent of units, shares or other interests in a mutual fund and acting as a collecting agent in the collection of payments for any such interests if

(a) the proceeds of the sales of any such interests, less any sales commissions and service fees, are paid to the mutual fund; and

(b) the existence of a sales commission and service fee in respect of the sale of any such interest is disclosed to the purchaser of the interest before the purchase of the interest.

“mutual fund entity”

« entité s’occupant de fonds mutuels »

“mutual fund entity” means an entity

(a) whose activities are limited to the investing of the funds of the entity so as to provide investment diversification and professional investment management to the holders of its securities; and

(b) whose securities entitle their holders to receive, on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in a part of its net assets, including a separate fund or trust account of the entity.

“participating share”

« action participante »

“participating share” means a share of a body corporate that carries the right to participate in the earnings of the body corporate to an unlimited degree and to participate in a distribution of the remaining property of the body corporate on dissolution.

“permitted entity”

« entité admissible »

“permitted entity” means an entity in which a bank is permitted to acquire a substantial investment under section 468.

“prescribed subsidiary”

« filiale réglementaire »

“prescribed subsidiary” means a subsidiary that is one of a prescribed class of subsidiaries.

“real property brokerage entity”

« courtier immobilier »

“real property brokerage entity” means an entity that is primarily engaged in

(a) acting as an agent for vendors, purchasers, mortgagors, mortgagees, lessors or lessees of real property; and

(b) the provision of consulting or appraisal services in respect of real property.

“specialized financing entity”

« entité s’occupant de financement spécial »

“specialized financing entity” means a specialized financing entity as defined in the regulations.

Marginal note:Members of a bank’s group

(2) For the purpose of this Part, a member of a bank’s group is any of the following:

(a) an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank;

(b) a subsidiary of the bank or of an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank;

(c) an entity in which the bank, or an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank, has a substantial investment; or

(d) a prescribed entity in relation to the bank.

Marginal note:Non-application of Part

(3) This Part does not apply in respect of

(a) the holding of a security interest in real property, unless the security interest is prescribed under paragraph 479(a) to be an interest in real property; or

(b) the holding of a security interest in securities of an entity.

General Constraints on Investments

Marginal note:Investment standards

465. The directors of a bank shall establish and the bank shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.

Marginal note:Restriction on control and substantial investments

466. (1) Subject to subsections (2) to (4), no bank shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.

Marginal note:Exception: indirect investments

(2) A bank may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way of

(a) an acquisition of control of an entity referred to in any of paragraphs 468(1)(a) to (j), or of a prescribed entity, that controls or has a substantial investment in the entity; or

(b) an acquisition of shares or ownership interests in the entity by

(i) an entity referred to in any of paragraphs 468(1)(a) to (j), or a prescribed entity, that is controlled by the bank, or

(ii) an entity controlled by an entity referred to in any of paragraphs 468(1)(a) to (j), or a prescribed entity, that is controlled by the bank.

Marginal note:Exception: temporary investments, realizations and loan workouts

(3) A bank may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity by way of

(a) a temporary investment permitted by section 471;

(b) an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 472; or

(c) a realization of security permitted by section 473.

Marginal note:Exception: specialized financing regulations

(4) A bank may, subject to Part XI, acquire control of, or hold, acquire or increase a substantial investment in, an entity other than a permitted entity if it does so in accordance with regulations made under paragraph 467(d) concerning specialized financing.

Marginal note:Exception: uncontrolled event

(5) A bank is deemed not to contravene subsection (1) if the bank acquires control of, or acquires or increases a substantial investment in, an entity solely as the result of an event not within the control of the bank.

Marginal note:Regulations re limits

467. The Governor in Council may make regulations

(a) respecting the determination of the amount or value of loans, investments and interests for the purposes of this Part;

(b) respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by a bank and its prescribed subsidiaries to or in a person and any persons connected with that person;

(c) specifying the classes of persons who are connected with any person for the purposes of paragraph (b); and

(d) concerning specialized financing for the purposes of subsection 466(4).

Subsidiaries and Equity Investments

Marginal note:Permitted investments

468. (1) Subject to subsections (4) to (6) and Part XI, a bank may acquire control of, or acquire or increase a substantial investment in

(a) a bank;

(b) a bank holding company;

(c) a body corporate to which the Trust and Loan Companies Act applies;

(d) an association to which the Cooperative Credit Associations Act applies;

(e) an insurance company or a fraternal benefit society incorporated or formed by or under the Insurance Companies Act;

(f) an insurance holding company;

(g) a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;

(h) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;

(i) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; or

(j) an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.

Marginal note:Permitted investments

(2) Subject to subsections (3) to (6) and Part XI, a bank may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:

(a) engaging in any financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d) or any other activity that a bank is permitted to engage in under section 410 or 411;

(b) acquiring or holding shares of, or ownership interests in, entities in which a bank is permitted under this Part to hold or acquire;

(c) engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the bank or any member of the bank’s group, namely,

(i) the bank,

(ii) any member of the bank’s group,

(iii) any entity that is primarily engaged in the business of providing financial services,

(iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or

(v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

(d) engaging in any activity that a bank is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to

(i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by the bank or any member of the bank’s group, or

(ii) if a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;

(e) engaging in the activities referred to in the definition “mutual fund entity”, “mutual fund distribution entity” or “real property brokerage entity” in subsection 464(1); and

(f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

Marginal note:Restriction

(3) A bank may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include

(a) activities that a bank is not permitted to engage in under any of sections 412, 417 and 418;

(b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a bank under paragraph 409(2)(c);

(c) activities that a bank is not permitted to engage in under section 416 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;

(d) acquiring control of or acquiring or holding a substantial investment in another entity unless

(i) in the case of an entity that is controlled by the bank, the bank itself would be permitted under this Part to acquire a substantial investment in the other entity, or

(ii) in the case of an entity that is not controlled by the bank, the bank itself would be permitted to acquire a substantial investment in the other entity under subsection (1) or (2), subsection 466(2), paragraph 466(3)(b) or (c) or subsection 466(4); or

(e) any prescribed activity.

Marginal note:Control

(4) Subject to subsection (8) and the regulations, a bank may not acquire control of, or acquire or increase a substantial investment in,

(a) an entity referred to in paragraph (1)(a) or (b), unless

(i) the bank controls, within the meaning of paragraphs 3(1)(a) and (d), the entity or would thereby acquire control, within the meaning of those paragraphs, of the entity, or

(ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment;

(b) an entity referred to in any of paragraphs (1)(c) to (j), unless

(i) the bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

(ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment;

(c) an entity whose business includes one or more of the activities referred to in paragraph (2)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the entity to material market or credit risk, including a finance entity, a factoring entity and a financial leasing entity, unless

(i) the bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

(ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment; or

(d) an entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unless

(i) the bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,

(ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment, or

(iii) subject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in any of paragraphs (a) to (c) or an entity that is not a permitted entity.

Marginal note:Minister’s approval

(5) Subject to the regulations, a bank may not, without the prior written approval of the Minister,

(a) acquire control of an entity referred to in any of paragraphs (1)(g) to (i) from a person who is not a member of the bank’s group;

(b) acquire control of an entity referred to in paragraph (1)(j) or (4)(c), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (f) that is not a member of the bank’s group:

(i) a factoring entity, or

(ii) a financial leasing entity;

(c) acquire control of, or acquire or increase a substantial investment in, an entity whose business includes one or more of the activities referred to in paragraph (2)(d);

(d) acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 410(1)(c) or (c.1); or

(e) acquire control of, or acquire or increase a substantial investment in, an entity engaging in an activity prescribed for the purposes of paragraph (2)(f).

Marginal note:Superintendent’s approval

(6) Subject to subsection (7) and the regulations, a bank may not acquire control of, or acquire or increase a substantial investment in, an entity referred to in any of paragraphs (1)(g) to (j) and (4)(c) and (d), unless the bank obtains the approval of the Superintendent.

Marginal note:Exception

(7) Subsection (6) does not apply in respect of a particular transaction if

(a) the bank is acquiring control of an entity whose business includes an activity referred to in paragraph (2)(b), other than a specialized financing entity;

(b) the bank is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity; or

(c) the Minister has approved the transaction under subsection (5) or is deemed to have approved it under subsection 469(1).

Marginal note:Control not required

(8) A bank need not control an entity referred to in paragraph (1)(j), or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province, if the laws or customary business practices of the country under the laws of which the entity was incorporated or formed do not permit the bank to control the entity.

Marginal note:Giving up control prohibited

(9) A bank that controls, within the meaning of paragraphs 3(1)(a) and (d), an entity referred to in paragraph (1)(a) or (b) may not give up control, within the meaning of paragraph 3(1)(a) or (d), of the entity while continuing to control, within the meaning of the other paragraph, the entity.

Marginal note:Prohibition on giving up control in fact

(10) A bank that, under paragraph (4)(b), (c) or (d), controls an entity may not, without the prior written approval of the Minister, give up control, within the meaning of paragraph 3(1)(d), of the entity while it continues to control the entity.

Marginal note:Giving up control

(11) A bank that, under subsection (4), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity if

(a) the bank is permitted to do so by regulations made under paragraph 474(c); or

(b) the entity meets the conditions referred to in subparagraph (4)(d)(iii).

Marginal note:Subsections do not apply

(12) If a bank controls, within the meaning of paragraph 3(1)(a), (b) or (c), an entity, subsections (5) and (6) do not apply in respect of any subsequent increases by the bank of its substantial investment in the entity so long as the bank continues to control the entity.

Marginal note:Approval for indirect investments

469. (1) If a bank obtains the approval of the Minister under subsection 468(5) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the bank indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 468(5) or the Superintendent under subsection 468(6) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the bank is deemed to have obtained the approval of the Minister or the Superintendent for that indirect acquisition or increase.

Marginal note:Approval for indirect investments

(2) If a bank obtains the approval of the Superintendent under subsection 468(6) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase the bank indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Superintendent under that subsection and that indirect acquisition or increase is disclosed to the Superintendent in writing before the approval is obtained, the bank is deemed to have obtained the approval of the Superintendent for that indirect acquisition or increase.

Marginal note:Undertakings

470. (1) If a bank controls a permitted entity, other than an entity referred to in any of paragraphs 468(1)(a) to (f), the bank shall provide the Superintendent with any undertakings that the Superintendent may require regarding

(a) the activities of the entity; and

(b) access to information about the entity.

Marginal note:Undertakings

(2) If a bank acquires control of an entity referred to in any of paragraphs 468(1)(g) to (j), the bank shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.

Marginal note:Agreements with other jurisdictions

(3) The Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of an entity referred to in any of paragraphs 468(1)(g) to (j) in each province or in any other jurisdiction concerning any matters referred to in paragraphs (1)(a) and (b) or any other matter the Superintendent considers appropriate.

Marginal note:Access to records

(4) Despite any other provision of this Part, a bank shall not control a permitted entity, other than an entity referred to in any of paragraphs 468(1)(a) to (f), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the bank obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.

Exceptions and Exclusions

Marginal note:Temporary investments in entity

471. (1) Subject to subsection (4), a bank may, by way of a temporary investment, acquire control of, or acquire or increase a substantial investment in, an entity but, within two years, or any other period that may be specified or approved by the Superintendent, after acquiring control or after acquiring or increasing the substantial investment, as the case may be, it shall do all things necessary to ensure that it no longer controls the entity or has a substantial investment in the entity.

Marginal note:Transitional

(2) Despite subsection (1), if a bank that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the bank subsequently increases that substantial investment by way of a temporary investment, the bank shall, within two years, or any other period that is specified or approved by the Superintendent, after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

Marginal note:Extension

(3) The Superintendent may, in the case of any particular bank that makes an application under this subsection, extend the period of two years, or the other period specified or approved by the Superintendent, that is referred to in subsection (1) or (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Temporary investment

(4) If a bank, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Minister under subsection 468(5) is required, the bank must, within 90 days after acquiring control or after acquiring or increasing the substantial investment,

(a) apply to the Minister for approval to retain control of the entity or to continue to hold the substantial investment in the entity for a period specified by the Minister or for an indeterminate period on any terms and conditions that the Minister considers appropriate; or

(b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the entity or does not have a substantial investment in the entity.

Marginal note:Indeterminate extension

(5) If a bank, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Superintendent under subsection 468(6) is required, the Superintendent may, in the case of any particular bank that makes an application under this subsection, permit the bank to retain control of the entity or to continue to hold the substantial investment in the entity for an indeterminate period, on any terms and conditions that the Superintendent considers necessary.

Marginal note:Loan workouts

472. (1) Despite anything in this Part, if a bank or any of its subsidiaries has made a loan to an entity and, under the terms of the agreement between the bank, or any of its subsidiaries, and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the bank may acquire

(a) if the entity is a body corporate, all or any of the shares of the body corporate;

(b) if the entity is an unincorporated entity, all or any of the ownership interests in the entity;

(c) all or any of the shares or all or any of the ownership interests in any entity that is an affiliate of the entity; or

(d) all or any of the shares of a body corporate that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity or any of its affiliates.

Marginal note:Obligation of bank

(2) If a bank acquires shares or ownership interests in an entity under subsection (1), the bank shall, within five years after acquiring them, do all things necessary to ensure that the bank does not control the entity or have a substantial investment in the entity.

Marginal note:Transitional

(3) Despite subsection (1), if a bank that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the bank later increases that substantial investment by way of an investment made under subsection (1), the bank shall, within five years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

Marginal note:Extension

(4) The Superintendent may, in the case of any particular bank that makes an application under this subsection, extend the period referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Exception — entities controlled by foreign governments

(5) Despite anything in this Part, if a bank has made a loan to, or holds a debt obligation of, the government of a foreign country or an entity controlled by the government of a foreign country and, under the terms of the agreement between the bank and that government or the entity, as the case may be, and any other documents governing the terms of the loan or debt obligation, a default has occurred, the bank may acquire all or any of the shares of, or ownership interests in, that entity or in any other entity designated by that government, if the acquisition is part of a debt restructuring program of that government.

Marginal note:Time for holding shares

(6) If a bank acquires any shares or ownership interests under subsection (5), the bank may, on any terms and conditions that the Superintendent considers appropriate, hold those shares or ownership interests for an indeterminate period or for any other period that the Superintendent may specify.

Marginal note:Exception

(7) If, under subsection (1), a bank acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 468, the bank may retain control of the entity or continue to hold the substantial investment for an indeterminate period, if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2) or (3), including any extension of it granted under subsection (4).

Marginal note:Realizations

473. (1) Despite anything in this Act, a bank may acquire

(a) an investment in a body corporate,

(b) an interest in an unincorporated entity, or

(c) an interest in real property

if the investment or interest is acquired through the realization of a security interest held by the bank or any of its subsidiaries.

Marginal note:Disposition

(2) Subject to subsection 73(2), if a bank acquires control of, or acquires a substantial investment in, an entity by way of the realization of a security interest held by the bank or any of its subsidiaries, the bank shall, within five years after the day on which control or the substantial investment is acquired, do all things necessary, or cause its subsidiary to do all things necessary, as the case may be, to ensure that the bank no longer controls the entity or has a substantial investment in the entity.

Marginal note:Transitional

(3) Despite subsection (2), if a bank that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the bank later increases that substantial investment by way of a realization of a security interest under subsection (1), the bank shall, within five years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

Marginal note:Extension

(4) The Superintendent may, in the case of any particular bank that makes an application under this subsection, extend the period referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Exception

(5) If, under subsection (1), a bank acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 468, the bank may retain control of the entity or continue to hold the substantial investment for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2) or (3), including any extension of it granted under subsection (4).

Marginal note:Regulations restricting ownership

474. The Governor in Council may make regulations

(a) for the purposes of subsection 468(4), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which that subsection does not apply or the banks or other entities in respect of which that subsection does not apply, including prescribing banks or other entities on the basis of the activities they engage in;

(b) for the purposes of subsection 468(5) or (6), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the banks or other entities in respect of which either of those subsections does not apply, including prescribing banks or other entities on the basis of the activities they engage in;

(c) for the purposes of subsection 468(11), permitting a bank to give up control of an entity; and

(d) restricting the ownership by a bank of shares of a body corporate or of ownership interests in an unincorporated entity under sections 468 to 473 and imposing terms and conditions applicable to banks that own such shares or interests.

Portfolio Limits

Marginal note:Exclusion from portfolio limits

475. (1) Subject to subsection (3), the value of all loans, investments and interests acquired by a bank and any of its prescribed subsidiaries under section 472 or as a result of a realization of a security interest is not to be included in calculating the value of loans, investments and interests of the bank and its prescribed subsidiaries under sections 476 to 478

(a) for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; and

(b) for a period of five years after the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.

Marginal note:Extension

(2) The Superintendent may, in the case of any particular bank, extend any period referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Exception

(3) Subsection (1) does not apply to an investment or interest described in that subsection if the investment or interest is defined by a regulation made under section 479 to be an interest in real property and

(a) the bank or the subsidiary acquired the investment or interest as a result of the realization of a security interest securing a loan that was defined by a regulation made under section 479 to be an interest in real property; or

(b) the bank or the subsidiary acquired the investment or interest under section 472 as a result of a default referred to in that section in respect of a loan that was defined by a regulation made under section 479 to be an interest in real property.

Real Property

Marginal note:Limit on total property interest

476. A bank shall not, and shall not permit its prescribed subsidiaries to, purchase or otherwise acquire an interest in real property or make an improvement to any real property in which the bank or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the bank in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.

Equities

Marginal note:Limits on equity acquisitions

477. A bank shall not, and shall not permit its prescribed subsidiaries to,

(a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment, or

(b) acquire control of an entity that holds shares or ownership interests referred to in paragraph (a),

if the aggregate value of

(c) all participating shares, excluding participating shares of permitted entities in which the bank has a substantial investment, and

(d) all ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the bank has a substantial investment,

beneficially owned by the bank and its prescribed subsidiaries, exceeds, or the purchase or acquisition would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.

Aggregate Limit

Marginal note:Aggregate limit

478. A bank shall not, and shall not permit its prescribed subsidiaries to,

(a) purchase or otherwise acquire

(i) participating shares of a body corporate, other than those of a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment,

(ii) ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment, or

(iii) interests in real property, or

(b) make an improvement to real property in which the bank or any of its prescribed subsidiaries has an interest

if the aggregate value of

(c) all participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the bank and its prescribed subsidiaries, and

(d) all interests of the bank in real property referred to in subparagraph (a)(iii)

exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.

Miscellaneous

Marginal note:Regulations

479. For the purposes of this Part, the Governor in Council may make regulations

(a) defining the interests of a bank in real property;

(b) determining the method of valuing those interests; or

(c) exempting classes of banks from the application of sections 475 to 478.

Marginal note:Divestment order

480. (1) The Superintendent may, by order, direct a bank to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Part.

Marginal note:Divestment order

(2) If, in the opinion of the Superintendent,

(a) an investment by a bank or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the bank to control the body corporate or the unincorporated entity, or

(b) the bank or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put before

(i) the board of directors of a body corporate, or

(ii) a similar group or committee of an unincorporated entity,

or whereby no proposal may be approved except with the consent of the bank, the entity it controls or the nominee,

the Superintendent may, by order, require the bank, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).

Marginal note:Divestment order

(3) If

(a) a bank

(i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 470(1), (2) or (4), or

(ii) is in default of an undertaking referred to in subsection 470(1) or (2) and the default is not remedied within ninety days after the day of receipt by the bank of a notice from the Superintendent of the default, or

(b) a permitted entity referred to in subsection 470(4) is in default of an undertaking referred to in that subsection and the default is not remedied within ninety days after the day of receipt by the bank of a notice from the Superintendent of the default,

the Superintendent may, by order, require the bank, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank no longer has a substantial investment in the entity to which the undertaking relates.

Marginal note:Exception

(4) Subsection (2) does not apply in respect of an entity in which a bank has a substantial investment permitted by this Part.

Marginal note:Deemed temporary investment

481. If a bank controls or has a substantial investment in an entity as permitted by this Part and the bank becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 468(5) or (6), the bank is deemed to have acquired, on the day the bank becomes aware of the change, a temporary investment in respect of which section 471 applies.

Marginal note:Asset transactions

482. (1) A bank shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person if

A + B > C

where


is the value of the assets;


is the total value of all assets that the bank and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; and


is ten per cent of the total value of the assets of the bank, as shown in the last annual statement of the bank prepared before the acquisition or transfer.

Marginal note:Exception

(2) The prohibition in subsection (1) does not apply in respect of

(a) assets that are debt obligations that are

(i) guaranteed by any financial institution other than the bank,

(ii) fully secured by deposits with any financial institution, including the bank, or

(iii) fully secured by debt obligations that are guaranteed by any financial institution other than the bank;

(b) assets that are debt obligations issued

(i) by, or by any agency of,

(A) the Government of Canada,

(B) the government of a province,

(C) a municipality, or

(D) the government of a foreign country or any political subdivision of a foreign country, or

(ii) by a prescribed international agency;

(c) assets that are debt obligations that are guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in paragraph (b);

(d) assets that are debt obligations that are widely distributed, as that expression is defined by the regulations;

(e) assets that are debt obligations of an entity controlled by the bank; or

(f) a transaction or series of transactions by the bank with another financial institution as a result of the bank’s participation in one or more syndicated loans with that financial institution.

Marginal note:Exception

(3) The approval of the Superintendent is not required if

(a) the bank sells assets under a sale agreement that is approved by the Minister under section 236;

(b) the bank or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 468(5) is required or the approval of the Superintendent under subsection 468(6) is required; or

(c) the transaction has been approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act.

Marginal note:Value of assets

(4) For the purposes of “A” in subsection (1), the value of the assets is

(a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the bank after the acquisition, the fair market value of the assets; and

(b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets as stated in the annual statement.

Marginal note:Total value of all assets

(5) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the bank, the fair market value of the assets of the entity at the date of the acquisition.

Marginal note:Total value of all assets

(6) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets of the entity as stated in the annual statement.

Marginal note:Transitional

483. Nothing in this Part requires

(a) the termination of a loan made before February 7, 2001;

(b) the termination of a loan made after that date as a result of a commitment made before that date;

(c) the disposal of an investment made before that date; or

(d) the disposal of an investment made after that date as a result of a commitment made before that date.

But if the loan or investment would be precluded or limited by this Part, the amount of the loan or investment may not, except as provided in subsections 471(2), 472(3) and 473(3), be increased after that date.

Marginal note:Saving

484. A loan or investment referred to in section 483 is deemed not to be prohibited by the provisions of this Part.

128. (1) Subsection 487(2) of the Act is amended by striking out the word “or” at the end of paragraph (b) and by adding the following after paragraph (c):

(d) transactions approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act; or

(e) if a bank is controlled by a widely held bank holding company or a widely held insurance holding company, transactions approved by the Superintendent that are entered as part of, or in the course of, a restructuring of the holding company or of any entity controlled by it.

Marginal note:1997, c. 15, s. 69

(2) Subsection 487(4) of the Act is replaced by the following:

Marginal note:Exception for holding body corporate

(4) A holding body corporate of a bank is not a related party of the bank if the holding body corporate is a Canadian financial institution that is referred to in any of paragraphs (a) to (d) of the definition “financial institution” in section 2.

129. The Act is amended by adding the following after section 495:

Marginal note:Transactions with holding companies

495.1 (1) Subject to subsection (2) and sections 495.2 and 495.3, if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of a bank, the bank may enter into any transaction with the holding company or with any other related party of the bank that is an entity in which the holding company has a substantial investment.

Marginal note:Policies and procedures

(2) The bank shall adhere to policies and procedures established under subsection 195(3) when entering into the transaction.

Marginal note:Restriction

495.2 (1) If a bank enters into a transaction with a related party of the bank with whom the bank may enter into transactions under subsection 495.1(1) and that is not a federal financial institution, the bank shall not directly or indirectly make, take an assignment of or otherwise acquire a loan to the related party, make an acceptance, endorsement or other guarantee on behalf of the related party or make an investment in the securities of the related party if, immediately following the transaction, the aggregate financial exposure, as that expression is defined by the regulations, of the bank would exceed

(a) in respect of all transactions of the bank with the related party, the prescribed percentage of the bank’s regulatory capital or, if no percentage is prescribed, five per cent of the bank’s regulatory capital; or

(b) in respect of all transactions of the bank with such related parties of the bank, the prescribed percentage of the bank’s regulatory capital or, if no percentage is prescribed, ten per cent of the bank’s regulatory capital.

Marginal note:Order

(2) If the Superintendent is of the opinion that it is necessary for the protection of the interests of the depositors and creditors of a bank, the Superintendent may, by order,

(a) reduce the limit in paragraph (1)(a) or (b) that would otherwise apply to the bank; and

(b) impose limits on transactions by the bank with related parties with whom the bank may enter into transactions under subsection 495.1(1) that are federal financial institutions.

Marginal note:Order

(3) The Superintendent may, by order, increase the limit in paragraph (1)(a) or (b) that would otherwise apply to a bank on transactions by the bank with related parties that are financial institutions that are regulated in a manner acceptable to the Superintendent.

Marginal note:Assets transactions

495.3 (1) Despite subsection 494(3), a bank shall not, without the approval of the Superintendent and its conduct review committee, directly or indirectly acquire assets from a related party of the bank with whom the bank may enter into transactions under subsection 495.1(1) that is not a federal financial institution, or directly or indirectly transfer assets to such a related party if

A + B > C

where


is the value of the assets;


is the total value of all assets that the bank directly or indirectly acquired from, or directly or indirectly transferred to, that related party in the twelve months ending immediately before the acquisition or transfer; and


is five per cent, or the percentage that may be prescribed, of the total value of the assets of the bank, as shown in the last annual statement of the bank prepared before the acquisition or transfer.

Marginal note:Exception

(2) The prohibition in subsection (1) does not apply in respect of assets purchased or otherwise acquired under subsection 494(1), assets sold under subsection 494(2) or any other assets as may be prescribed.

Marginal note:Exception

(3) The approval of the Superintendent is not required if

(a) the bank sells assets under a sale agreement that is approved by the Minister under section 236; or

(b) the bank or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 468(5) is required or the approval of the Superintendent under subsection 468(6) is required.

Marginal note:Value of assets

(4) For the purposes of “A” in subsection (1), the value of the assets is

(a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the bank after the acquisition, the fair market value of the assets; and

(b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets as stated in the annual statement.

Marginal note:Total value of all assets

(5) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the bank, the fair market value of the assets of the entity at the date of the acquisition.

Marginal note:Total value of all assets

(6) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets of the entity as stated in the annual statement.

130. Paragraph 501(2)(b) of the Act is replaced by the following:

(b) in respect of any other transaction,

(i) terms and conditions, including those relating to price, rent or interest rate, that might reasonably be expected to apply in a similar transaction in an open market under conditions requisite to a fair transaction between parties who are at arm’s length and who are acting prudently, knowledgeably and willingly, or

(ii) if the transaction is one that would not reasonably be expected to occur in an open market between parties who are at arm’s length, terms and conditions, including those relating to price, rent or interest rate, that would reasonably be expected to provide the bank with fair value, having regard to all the circumstances of the transaction, and that would be consistent with the parties to the transaction acting prudently, knowledgeably and willingly.

131. Section 506 of the Act is replaced by the following:

Marginal note:Order to void contract or to grant other remedy

506. (1) If a bank enters into a transaction that it is prohibited from entering into by this Part, the bank or the Superintendent may apply to a court for an order setting aside the transaction or for any other appropriate remedy, including an order directing that the related party of the bank involved in the transaction account to the bank for any profit or gain realized or that any director or senior officer of the bank who authorized the transaction compensate the bank for any loss or damage incurred by the bank.

Marginal note:Time limit

(2) An application under subsection (1) in respect of a particular transaction may only be made within the period of three months following the day the notice referred to in section 505 in respect of the transaction is given to the Superintendent or, if no such notice is given, the day the Superintendent becomes aware of the transaction.

Marginal note:Certificate

(3) For the purposes of subsection (2), a document purporting to have been issued by the Superintendent, certifying the day on which the Superintendent became aware of the transaction, shall, in the absence of evidence to the contrary, be received in evidence as conclusive proof of that fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.

Marginal note:1991, c. 47, par. 756(1)(b); 1994, c. 47, s. 26; 1997, c. 15, ss. 76 to 85; 1999, c. 28, ss. 27 to 34, c. 31, s. 15(F)

132. Part XII of the Act is replaced by the following:

PART XII FOREIGN BANKS

Division 1Interpretation and Application

Marginal note:Definitions

507. (1) The following definitions apply in this Part.

“designated foreign bank”

« banque étrangère désignée »

“designated foreign bank” means a foreign bank that is the subject of a designation order.

“designation order”

« arrêté de désignation »

“designation order” means an order made under subsection 508(1).

“exemption order”

« arrêté d’exemption »

“exemption order” means an order made under subsection 509(1).

“finance entity”

« entité s’occupant de financement »

“finance entity” means a Canadian entity that is a finance entity as defined in the regulations.

“financial leasing entity”

« entité s’occupant de crédit-bail »

“financial leasing entity” means a Canadian entity that is a financial leasing entity as defined in subsection 464(1).

“financial services entity”

« entité s’occupant de services financiers »

“financial services entity” means an entity, other than an entity referred to in any of paragraphs 468(1)(a) to (i) or a leasing entity, that engages in activities at least the prescribed portion — or if no portion is prescribed, 10 per cent — of which, determined in the prescribed manner, consists of one or more of the following activities:

(a) providing any financial service;

(b) acting as a financial agent;

(c) providing investment counselling and portfolio management services;

(d) issuing payment, credit or charge cards and, in cooperation with others, including other financial institutions, operating a payment, credit or charge card plan;

(e) engaging in the activities referred to in the definition “mutual fund entity” or “mutual fund distribution entity” in subsection 464(1);

(f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed;

(g) engaging in any activity referred to in paragraphs (a) to (f) as an agent for another entity referred to in any of those paragraphs or in any of paragraphs 468(1)(a) to (j); or

(h) acquiring or holding control of, or becoming a major owner of, an entity referred to in any of paragraphs (a) to (g) or any of paragraphs 468(1)(a) to (j).

“foreign cooperative credit society”

« société coopérative de crédit étrangère »

“foreign cooperative credit society” means an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province, and that, outside Canada, engages in or carries on the business of a cooperative credit society.

“foreign insurance company”

« société d’assurances étrangère »

“foreign insurance company” means a foreign company as defined in subsection 2(1) of the Insurance Companies Act.

“foreign securities dealer”

« courtier de valeurs mobilières étranger »

“foreign securities dealer” means an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province, and that, outside Canada, engages in or carries on the business of dealing in securities.

“leasing activities”

« activités de location »

“leasing activities” means

(a) the financial leasing of personal property and the related activities that a financial leasing entity may engage in; and

(b) all other leasing of personal property.

“leasing entity”

« entité s’occupant de location »

“leasing entity” means an entity that engages in only

(a) leasing activities; or

(b) leasing activities and activities other than those described in paragraphs (a) to (h) of the definition “financial services entity”.

“limited commercial entity”

« entité à activités commerciales restreintes »

“limited commercial entity” means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with section 522.09, or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that section.

“non-bank affiliate of a foreign bank”

« établissement affilié à une banque étrangère »

“non-bank affiliate of a foreign bank” means a Canadian entity, other than a bank,

(a) in which a foreign bank or an entity associated with a foreign bank holds a substantial investment, or

(b) that is controlled by a foreign bank or an entity associated with a foreign bank,

but a Canadian entity is not a non-bank affiliate of a foreign bank by reason only that a bank that is a subsidiary of the foreign bank or of the entity associated with a foreign bank controls, or holds a substantial investment in, the Canadian entity.

“permitted Canadian entity”

« entité canadienne admissible »

“permitted Canadian entity” means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with section 522.08, or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that section.

“representative office”

« bureau de représentation »

“representative office” means an office established to represent a foreign bank in Canada that is not subject to the direction of, or management by, an entity incorporated or formed by or under an Act of Parliament or of the legislature of a province, and the personnel of which are employed directly or indirectly by the foreign bank.

“specialized financing entity”

« entité s’occupant de financement spécial »

“specialized financing entity” means a Canadian entity that is a specialized financing entity as defined in the regulations.

Marginal note:Entity associated with foreign bank

(2) For the purposes of this Part,

(a) an entity is associated with a foreign bank if

(i) the entity controls, or is controlled by, the foreign bank, or

(ii) the entity and the foreign bank are controlled by the same person;

(b) an entity may be associated with more than one foreign bank; and

(c) a foreign bank may be associated with another foreign bank.

Marginal note:Entity deemed to be associated with a foreign bank

(3) For the purposes of this Part, the Minister may deem an entity to be associated with a foreign bank if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written,

(a) the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons such that, if they were one person, they would control the entity;

(b) the entity is acting, jointly or in concert, in relation to the shares or ownership interests of the foreign bank, with one or more other persons such that, if they were one person, they would control the foreign bank;

(c) another entity that is associated with the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons such that, if they were one person, they would control the entity;

(d) a person who controls the entity is acting, jointly or in concert, in relation to the shares or ownership interests of the foreign bank, with one or more other persons, such that, if they were one person, they would control the foreign bank;

(e) a person who controls the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons, such that, if they were one person, they would control the entity; or

(f) two or more persons are acting, jointly or in concert, in relation to the shares or ownership interests of the entity and the foreign bank such that, if they were one person, they would control the entity and the foreign bank.

Marginal note:Deemed substantial investment by foreign bank

(4) For the purposes of this Part, a foreign bank is deemed to hold a substantial investment in a Canadian entity if

(a) the foreign bank and one or more entities associated with the foreign bank, or

(b) two or more entities associated with the foreign bank

would, if they were one person, hold a substantial investment in the Canadian entity.

Marginal note:Deemed substantial investment by entity associated

(5) For the purposes of this Part, an entity associated with a foreign bank is deemed to hold a substantial investment in a Canadian entity if

(a) the entity and the foreign bank, or

(b) the entity and one or more other entities associated with the foreign bank

would, if they were one person, hold a substantial investment in the Canadian entity.

Marginal note:Deemed control by foreign bank

(6) For the purposes of this Part, a foreign bank is deemed to control a Canadian entity if

(a) the foreign bank and one or more entities associated with the foreign bank, or

(b) two or more entities associated with the foreign bank

would, if they were one person, control the Canadian entity.

Marginal note:Deemed control by entity associated

(7) For the purposes of this Part, an entity associated with a foreign bank is deemed to control a Canadian entity if

(a) the entity and the foreign bank, or

(b) the entity and one or more other entities associated with the foreign bank

would, if they were one person, control the Canadian entity.

Marginal note:Person is a major owner

(8) For the purposes of this Part, a person, other than a foreign bank or an entity associated with a foreign bank,

(a) is a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; and

(b) is a major owner of a Canadian entity that is a body corporate if

(i) the aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, or

(ii) the aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.

Marginal note:Foreign bank a major owner

(9) For the purposes of this Part, a foreign bank

(a) is a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; and

(b) is a major owner of a Canadian entity that is a body corporate if

(i) the aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, or

(ii) the aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.

Marginal note:Associated entity a major owner

(10) For the purposes of this Part, an entity associated with a foreign bank

(a) is a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; and

(b) is a major owner of a Canadian entity that is a body corporate if

(i) the aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, or

(ii) the aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.

Marginal note:Deemed major owner — person

(11) For the purposes of this Part, the Minister may deem a person to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written, the person is acting, jointly or in concert, in relation to the shares or ownership interests of the Canadian entity, with one or more other persons such that, if they were one person, they would be a major owner of the Canadian entity.

Marginal note:Deemed major owner — foreign bank

(12) For the purposes of this Part, the Minister may deem a foreign bank to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written,

(a) the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the Canadian entity, with one or more other persons such that, if they were one person, they would be a major owner of the Canadian entity; or

(b) two or more persons are acting, jointly or in concert in relation to the shares or ownership interests of the Canadian entity and in relation to the shares or ownership interests of the foreign bank such that, if they were one person, they would control the foreign bank and be a major owner of the Canadian entity.

Marginal note:Deemed major owner — entity associated with a foreign bank

(13) For the purposes of this Part, the Minister may deem an entity associated with a foreign bank to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written, the entity associated with the foreign bank is acting, jointly or in concert, in relation to the shares and ownership interests of the Canadian entity with one or more other persons, such that, if they were one person, they would be a major owner of the Canadian entity.

Marginal note:Member of foreign bank’s group

(14) For the purposes of this Part, a member of a foreign bank’s group is any of the following:

(a) an entity associated with the foreign bank;

(b) an entity in which the foreign bank or an entity associated with the foreign bank holds a substantial investment; and

(c) a prescribed entity, in relation to the foreign bank.

Marginal note:Foreign bank that has a financial establishment in Canada

(15) For the purposes of this Part, a foreign bank has, or is deemed to have, a financial establishment in Canada if the foreign bank or any entity associated with the foreign bank

(a) is an authorized foreign bank;

(b) is a foreign insurance company;

(c) is a foreign securities dealer, or a foreign cooperative credit society, that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or to carry on the business of dealing in securities or the business of a cooperative credit society; or

(d) controls, or is a major owner of,

(i) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), or

(ii) a Canadian entity that is a financial services entity.

Marginal note:Associated entity that has a financial establishment in Canada

(16) For the purposes of this Part, an entity associated with a foreign bank has, or is deemed to have, a financial establishment in Canada if the entity, the foreign bank or any other entity associated with the foreign bank

(a) is an authorized foreign bank;

(b) is a foreign insurance company;

(c) is a foreign securities dealer, or a foreign cooperative credit society, that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or to carry on the business of dealing in securities or the business of a cooperative credit society; or

(d) controls, or is a major owner of,

(i) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), or

(ii) a Canadian entity that is a financial services entity.

Marginal note:Regulations concerning exemption from associated status

(17) The Governor in Council may make regulations

(a) respecting the exemption, from the application of any provision of this Act, of any class or classes of entities associated with a foreign bank from the status of being associated with a foreign bank; and

(b) authorizing the Minister, by order, and subject to any terms and conditions that the Minister considers appropriate, to deem, for the purposes of any provision of this Act, any entity not to be an entity associated with a foreign bank.

Marginal note:Revocation or variation of order

(18) The Minister may, by further order, revoke or vary any order referred to in paragraph (17)(b) and any such revocation or variation comes into effect three months after the date the further order is made unless the Minister and the entity to which the order relates agree that the revocation or variation is to take effect at some other time agreed to by them.

Marginal note:Publication

(19) If the Minister makes an order referred to in paragraph (17)(b) or subsection (18), the Minister shall publish in the Canada Gazette a notice of the making of the order.

Marginal note:Designation order

508. (1) Subject to subsection (2), the Minister may, by order, designate a foreign bank to be a designated foreign bank for the purposes of this Part if

(a) the foreign bank is a bank according to the laws of the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business;

(b) the foreign bank engages, directly or indirectly, in the business of providing financial services and employs, to identify or describe its business, a name that includes the word “bank”, “banque”, “banking” or “bancaire”, either alone or in combination with other words, or any word or words in any language other than English or French corresponding generally thereto;

(c) the foreign bank, in the opinion of the Minister, after consultation with the Superintendent, is regulated as or like a bank, according to the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business; or

(d) the foreign bank is not a foreign bank described in any of paragraphs (a) to (c) and one of the following conditions is met:

(i) subject to the regulations, the following ratio, expressed as a percentage, is equal to or greater than the prescribed material percentage: the value of the total assets of foreign banks described in any of paragraphs (a) to (c) that are associated with the foreign bank to the value of the total assets of the foreign bank and entities associated with the foreign bank, or

(ii) subject to the regulations, the following ratio, expressed as a percentage, is equal to or greater than the prescribed material percentage: the value of the total revenues of foreign banks described in any of paragraphs (a) to (c) that are associated with the foreign bank to the value of the total revenues of the foreign bank and entities associated with the foreign bank.

Marginal note:Restriction

(2) The Minister may only make an order under subsection (1) in respect of a foreign bank described in any of paragraphs (1)(a) to (c) if

(a) the foreign bank or an entity controlled by the foreign bank is or will be

(i) engaging in or carrying on business in Canada, other than holding, managing or otherwise dealing with real property,

(ii) maintaining a branch in Canada, other than an office referred to in section 522,

(iii) establishing, maintaining or acquiring for use in Canada an automated banking machine, a remote service unit or a similar automated service, or, in Canada, accepting data from such a machine, unit or service other than in circumstances described in section 511 or 512,

(iv) acquiring or holding control of, or a substantial investment in, a Canadian entity, or

(v) acquiring or holding any share or ownership interest in a Canadian entity and

(A) an entity associated with the foreign bank holds control of, or a substantial investment in, the Canadian entity, or

(B) an entity associated with the foreign bank and one or more other entities associated with the foreign bank would, if they were one person, hold control of, or a substantial investment in, the Canadian entity; or

(b) the foreign bank is controlled by an individual and

(i) one of the following conditions is met:

(A) subject to the regulations, the following ratio, expressed as a percentage, is equal to or greater than the prescribed material percentage: the value of the total assets of the foreign bank and other foreign banks described in any of paragraphs (1)(a) to (c) that are associated with the foreign bank to the value of the total assets of the foreign bank and entities associated with the foreign bank, or

(B) subject to the regulations, the following ratio, expressed as a percentage, is equal to or greater than the prescribed material percentage: the value of the total revenues of the foreign bank and other foreign banks described in any of paragraphs (1)(a) to (c) that are associated with the foreign bank to the value of the total revenues of the foreign bank and entities associated with the foreign bank, and

(ii) an entity associated with the foreign bank is or will be

(A) engaging in or carrying on business in Canada, other than holding, managing or otherwise dealing with real property,

(B) maintaining a branch in Canada, other than an office referred to in section 522,

(C) establishing, maintaining or acquiring for use in Canada an automated banking machine, a remote service unit or a similar automated service, or, in Canada, accepting data from such a machine, unit or service other than in circumstances described in section 511 or 512, or

(D) acquiring or holding control of, or a substantial investment in, a Canadian entity.

Marginal note:Subsections 507(4) to (7) do not apply

(2.1) Subsections 507(4) to (7) do not apply with respect to the making of any determination relating to control or a substantial investment for the purposes of paragraph (2)(a).

Marginal note:Deeming

(3) A foreign bank that was designated under subsection 521(1.06) as that subsection read immediately before the coming into force of this subsection and whose designation has not been revoked is deemed to be the subject of a designation order.

Marginal note:Exemption order

509. (1) The Minister may, by order, determine that this Part, other than this section, sections 507 and 508, subsection 522.25(3), sections 522.26 and 522.28, subsection 522.29(2) and section 522.3, does not apply to a foreign bank.

Marginal note:Restriction

(2) No order may be made under subsection (1) in respect of a designated foreign bank or a foreign bank that is associated with a designated foreign bank.

Marginal note:Deemed order

(3) An exemption order is deemed to have been made on the coming into force of this subsection in respect of a foreign bank if, immediately before the coming into force of this subsection, the foreign bank had received consent under subsection 521(1), the consent had not been revoked and the foreign bank or an entity associated with it was not designated under subsection 521(1.06), as those subsections read immediately before the coming into force of this subsection.

Marginal note:Change in circumstances

(4) A foreign bank that is the subject of an exemption order shall advise the Minister in writing of any change in circumstances that may affect its eligibility for a designation order.

Marginal note:Revocation of order

(5) An exemption order in respect of a foreign bank is deemed to be revoked if the foreign bank, or another foreign bank that is an entity associated with the foreign bank, is a designated foreign bank. The Minister may revoke an exemption order in respect of a foreign bank if the conditions for designation set out in section 508 are met by the foreign bank or by another foreign bank that is an entity associated with the foreign bank.

Marginal note:Effect of exemption order on associated entities

(6) This Part, other than this section, sections 507 and 508, subsection 522.25(3), sections 522.26 and 522.28, subsection 522.29(2) and section 522.3, does not apply to an entity associated with a foreign bank that is the subject of an exemption order.

Marginal note:Authorization

(7) If an exemption order in respect of a foreign bank is revoked or deemed to be revoked under subsection (5), the Minister may, by order, authorize the foreign bank and any entity associated with it to continue to hold control of, or a substantial investment in, a Canadian entity that the foreign bank or the entity associated with the foreign bank would not otherwise be allowed to continue to hold under Division 3 or 4 or to continue to engage in any activities or to engage in or carry on any business or to maintain a branch that the foreign bank or the entity associated with the foreign bank would not otherwise be allowed to continue to engage in or carry on or maintain under Division 3 or 4.

Marginal note:Non-application re federal institutions associated with a foreign bank

509.1 Subsection 510(1) does not apply to

(a) an entity referred to in any of paragraphs 468(1)(a) to (f) that is an entity associated with a foreign bank; or

(b) a Canadian entity that an entity referred to in paragraph (a) controls, or in which such an entity has a substantial investment.

Division 2General Prohibitions and Exceptions

Marginal note:Prohibited activities

510. (1) Except as permitted by this Part, a foreign bank or an entity associated with a foreign bank shall not

(a) in Canada, engage in or carry on

(i) any business that a bank is permitted to engage in or carry on under this Act, or

(ii) any other business;

(b) maintain a branch in Canada for any purpose;

(c) establish, maintain or acquire for use in Canada an automated banking machine, a remote service unit or a similar automated service, or in Canada accept data from such a machine, unit or service; or

(d) acquire or hold control of, or a substantial investment in, a Canadian entity.

Marginal note:Deeming re acts of agent, etc. — foreign banks

(2) For the purposes of this Part, a foreign bank is deemed to be carrying out or to have carried out anything prohibited by subsection (1) if it is carried out by a nominee or agent of the foreign bank acting as such.

Marginal note:Deeming re acts of agent, etc. — associated entities

(3) For the purposes of this Part, an entity associated with a foreign bank is deemed to be carrying out or to have carried out anything prohibited by subsection (1) if it is carried out by a nominee or agent of the entity associated with the foreign bank acting as such.

Marginal note:Exception re accessing accounts

511. Nothing in paragraphs 510(1)(a) to (c) is to be construed as prohibiting a foreign bank or an entity associated with a foreign bank from entering into an arrangement with one or more Canadian financial institutions by which customers of the foreign bank or the entity who are natural persons not ordinarily resident in Canada may access in Canada their accounts located outside Canada through the use of automated banking machines located in Canada and operated by the Canadian financial institution or institutions.

Marginal note:Exception re quotations

512. Nothing in paragraphs 510(1)(a) to (c) is to be construed as prohibiting a foreign bank or an entity associated with a foreign bank from establishing, maintaining or using a private telephone service or similar facility for the purpose of quoting to customers in Canada, or entering with customers in Canada into verbal agreements relating to, foreign exchange, deposit or loan rates if there is no accounting or information processing involved in the private telephone service or similar facility.

Marginal note:Exception re automated services

513. (1) A foreign bank, or an entity associated with a foreign bank, that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of dealing in securities or the business of a cooperative credit society may

(a) if it is a foreign securities dealer that has also received the approval of the Minister under paragraph 522.22(1)(i), engage in the activities referred to in paragraph 510(1)(c) so long as they relate to its business of dealing in securities engaged in or carried on by it in accordance with provincial laws relating to securities dealing; and

(b) if it is a foreign cooperative credit society, engage in the activities referred to in paragraph 510(1)(c) so long as they relate to its business as a cooperative credit society engaged in or carried on by it in accordance with provincial laws relating to cooperative credit societies.

Marginal note:Non-application

(2) Paragraph 510(1)(c) does not apply to

(a) a Canadian entity referred to in any of paragraphs 468(1)(g) to (i);

(b) a prescribed Canadian entity, other than a permitted Canadian entity, that is controlled by a Canadian entity referred to in paragraph (a); or

(c) any other Canadian entity, other than a limited commercial entity, that is acquired or held by a foreign bank or an entity associated with a foreign bank in accordance with Divisions 4 and 5, and that has received the approval of the Minister under paragraph 522.22(1)(i).

Marginal note:Exception re real property holding and management

514. Except as may be prescribed, paragraphs 510(1)(a) and (b) do not apply in respect of the holding, managing and other dealing with real property in Canada by a foreign bank or an entity associated with a foreign bank.

Marginal note:Non-application re Canadian entity associated with a foreign bank

515. Paragraphs 510(1)(a) and (b) do not apply to a Canadian entity that is an entity associated with a foreign bank and that is held or acquired in accordance with this Part.

Marginal note:Change of status

516. (1) If a foreign bank maintains a branch or engages in or carries on business in Canada that it maintained or engaged in or carried on before becoming a foreign bank and that branch or business is not permitted by or under this Part, the foreign bank may continue to maintain that branch or engage in or carry on that business for a period of six months from the time it became a foreign bank or for any other shorter period that may be specified or approved by the Minister.

Marginal note:Change of status

(2) If a foreign bank holds control of or holds a substantial investment in a Canadian entity and it did so before becoming a foreign bank and that holding is not permitted by or under this Part, the foreign bank may continue to hold control of, or a substantial investment in, the Canadian entity for a period of six months from the time it became a foreign bank or for any other shorter period that may be specified or approved by the Minister.

Marginal note:Change of status

517. (1) If an entity associated with a foreign bank maintains a branch or engages in or carries on business in Canada that it maintained or engaged in or carried on before the foreign bank became a foreign bank and that branch or business is not permitted by or under this Part, the entity may continue to maintain that branch or engage in or carry on that business for a period of six months from the time the foreign bank became a foreign bank or for any other shorter period that may be specified or approved by the Minister.

Marginal note:Change of status

(2) If an entity associated with a foreign bank holds control of or holds a substantial investment in a Canadian entity and it did so before the foreign bank became a foreign bank and that holding is not permitted by or under this Part, the entity may continue to hold control of, or a substantial investment in, the Canadian entity for a period of six months from the time the foreign bank became a foreign bank or for any other shorter period that may be specified or approved by the Minister.

Marginal note:Restriction

517.1 If an order has been made under subsection 973.1(1) in respect of a foreign bank or an entity associated with a foreign bank and section 516 applies to the foreign bank or section 517 applies to the entity, as the case may be, the period under section 516 or 517 may not extend beyond the expiry of the period referred to in the order made under subsection 973.1(1).

Marginal note:Prohibition re guarantee and acceptance of securities and bills

518. (1) Subject to subsections (2) to (4),

(a) a foreign bank shall not guarantee any securities or accept any bills of exchange or depository bills that are issued by a person resident in Canada and that are intended by the issuer or by any party to the security or bill to be sold or traded in Canada; and

(b) no person shall participate in any arrangement in connection with a guarantee or acceptance prohibited by paragraph (a).

Marginal note:Exception

(2) Subsection (1) does not apply in respect of the guarantee or acceptance by a foreign bank of securities, bills of exchange or depository bills that are issued by

(a) a non-bank affiliate of the foreign bank;

(b) any other person resident in Canada and guaranteed or accepted by

(i) a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank,

(ii) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i) in which a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank, holds a substantial investment,

(iii) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i) that is controlled by a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank,

(iv) a Canadian entity referred to in any of paragraphs 468(1)(b) to (i) that is a non-bank affiliate of the foreign bank, or

(v) a prescribed entity;

(c) a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank;

(d) a Canadian entity in which a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank, holds a substantial investment;

(e) a Canadian entity controlled by a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank; or

(f) a prescribed entity.

Marginal note:Exception

(3) Subsection (1) does not apply in respect of

(a) the business in Canada of an authorized foreign bank; or

(b) a foreign insurance company in relation to its insurance business in Canada.

Marginal note:Exception

(4) Despite subsection (1), a foreign bank, or an entity associated with a foreign bank, that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of dealing in securities or the business of a cooperative credit society may

(a) if it is a foreign securities dealer, guarantee any securities or accept any bills of exchange or depository bills in relation to its business of dealing in securities engaged in or carried on by it in accordance with provincial laws relating to securities dealing; and

(b) if it is a foreign cooperative credit society, guarantee any securities or accept any bills of exchange or depository bills in relation to its business as a cooperative credit society engaged in or carried on by it in accordance with provincial laws relating to cooperative credit societies.

Marginal note:Prohibited activities — non-bank affiliates

519. (1) Despite anything in this Part, but subject to subsection (5) and section 509, a non-bank affiliate of a foreign bank shall not, in Canada,

(a) engage in the business of accepting deposit liabilities;

(b) engage in the business of acting as an agent for the acceptance of deposit liabilities for a foreign bank or an entity associated with a foreign bank, other than for

(i) an authorized foreign bank,

(ii) a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society, or

(iii) an entity referred to in any of paragraphs 468(1)(a), (c), (d) and (h) or a trust or loan corporation referred to in paragraph 468(1)(g); or

(c) represent to the public that any instrument issued by it is a deposit or that any liability incurred by it is a deposit.

Marginal note:Disclosure of status

(2) Despite anything in this Part, but subject to subsections (4) to (6) and section 509, a non-bank affiliate of a foreign bank that carries on as part of its business the provision of financial services shall not borrow money in Canada from the public without disclosing that

(a) the non-bank affiliate is not a member institution of the Canada Deposit Insurance Corporation;

(b) the liability incurred by the non-bank affiliate through the borrowing is not a deposit; and

(c) the non-bank affiliate is not regulated as a financial institution in Canada.

Marginal note:Manner of disclosure

(3) The disclosure shall be

(a) in a prospectus, information circular or other offering document or a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or

(b) in any other manner that may be prescribed.

Marginal note:Exception for certain borrowing

(4) Subsection (2) does not apply

(a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or

(b) except as may be provided in any regulations, to a borrowing

(i) from a person in an amount of $150,000 or more, or

(ii) through the issue of instruments in denominations of $150,000 or more.

Marginal note:Exception — deposit-taking institutions

(5) Subsections (1) and (2) do not apply to a non-bank affiliate that is

(a) a trust or loan corporation incorporated under an Act of Parliament or of the legislature of a province;

(b) a Canadian entity referred to in paragraph 468(1)(d) or (h); or

(c) a prescribed entity.

Marginal note:Exception — insurance company or securities dealer

(6) Subsection (2) does not apply if the non-bank affiliate is

(a) an insurance company incorporated under an Act of Parliament or of the legislature of a province;

(b) a bank holding company or an insurance holding company;

(c) an entity controlled by a bank holding company or an insurance holding company or in which a bank holding company or an insurance holding company has a substantial investment;

(d) a financial institution referred to in paragraph (g) of the definition “financial institution” in section 2; or

(e) a prescribed entity.

Marginal note:Prohibition re deposits

520. (1) Despite anything in this Part, but subject to subsection (5) and section 509, a foreign bank — or an entity that is associated with a foreign bank and that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province — shall not, as part of its business in Canada,

(a) engage in the business of accepting deposit liabilities;

(b) engage in the business of acting as an agent for the acceptance of deposit liabilities for a foreign bank or an entity associated with a foreign bank, other than for

(i) an authorized foreign bank,

(ii) a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society, or

(iii) an entity referred to in any of paragraphs 468(1)(a), (c), (d) and (h) or a trust or loan corporation referred to in paragraph 468(1)(g); or

(c) represent to the public that any instrument issued by it is a deposit or that any liability incurred by it is a deposit.

Marginal note:Disclosure of status

(2) Despite anything in this Part, but subject to subsections (4) to (6) and section 509, a foreign bank or entity referred to in subsection (1) that carries on, as part of its business in Canada, the provision of financial services shall not borrow money in Canada from the public without disclosing that

(a) the foreign bank or entity is not a member institution of the Canada Deposit Insurance Corporation;

(b) the liability incurred through the borrowing is not a deposit; and

(c) the foreign bank or entity is not regulated as a financial institution in Canada.

Marginal note:Manner of disclosure

(3) The disclosure shall be

(a) in a prospectus, information circular or other offering document or a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or

(b) in any other manner that may be prescribed.

Marginal note:Exception for certain borrowing

(4) Subsection (2) does not apply

(a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or

(b) except as may be provided in any regulations, to a borrowing

(i) from a person in an amount of $150,000 or more, or

(ii) through the issue of instruments in denominations of $150,000 or more.

Marginal note:Non-application — authorized foreign banks and foreign cooperative credit societies

(5) Subsections (1) and (2) do not apply to

(a) a foreign bank that is an authorized foreign bank; or

(b) a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society.

Marginal note:Non-application foreign insurance company or securities dealer

(6) Subsection (2) does not apply to a foreign bank, or an entity associated with a foreign bank, that is

(a) a foreign insurance company; or

(b) a foreign securities dealer that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of dealing in securities.

Marginal note:Regulations

521. The Governor in Council may make regulations exempting any class or classes of businesses, investments, activities and branches from any of the prohibitions set out in section 510 or 518.

Marginal note:Permitted Canadian offices

522. A foreign bank may

(a) with the approval of the Superintendent and

(i) subject to any terms and conditions that are attached to the approval, and

(ii) subject to and in accordance with rules that are prescribed in relation to the operation of representative offices and the conduct of their personnel,

maintain representative offices in Canada that are registered with the Superintendent in the prescribed manner; and

(b) with the approval of the Governor in Council and subject to any terms and conditions that are attached to the approval, locate its head office in Canada and, from that office, issue directions and do all other things reasonably necessary for the conduct of its banking business outside Canada.

Marginal note:Examination of representative offices

522.01 (1) The Superintendent shall, from time to time, make or cause to be made any examination and inquiry into the operation of any representative office of a foreign bank and the conduct of the personnel in that office that the Superintendent considers necessary for the purpose of ascertaining whether the office is being operated, and whether the personnel of the office are conducting themselves, in accordance with the rules prescribed for the purposes of paragraph 522(a).

Marginal note:Powers of Superintendent

(2) For the purposes of subsection (1), the Superintendent and any person acting under the direction of the Superintendent have the same powers and obligations that the Superintendent has in relation to the examination of banks under this Act.

Marginal note:Cancellation of registration

522.02 The Superintendent may, by order, cancel the registration of a representative office of a foreign bank if

(a) the foreign bank requests the Superintendent to cancel the registration; or

(b) the Superintendent is of the opinion that the representative office is not being operated, or the personnel of that office are not conducting themselves, in accordance with the rules prescribed for the purposes of paragraph 522(a).

Marginal note:Business conducted from head office in Canada

522.03 (1) Subject to subsections (2) and (3), if the head office of a foreign bank is located in Canada under paragraph 522(b), the foreign bank shall not conduct any business from that office with persons resident in Canada or with Her Majesty in right of Canada or a province except for the purpose of acquiring premises, supplies, services and staff for that office.

Marginal note:Exception

(2) If a foreign bank, immediately before the establishment of its head office in Canada under paragraph 522(b), held deposits of, or had loans outstanding to, persons resident in Canada or Her Majesty in right of Canada or a province, the foreign bank may repay those deposits and collect those loans through the head office in Canada.

Marginal note:Exception

(3) If a foreign bank controlled a bank or was a major shareholder of a bank immediately before the establishment of the foreign bank’s head office in Canada under paragraph 522(b), the foreign bank may continue to carry out from the head office in Canada any activities that were carried out from the head office of the foreign bank in relation to the bank before the establishment of the head office in Canada.

Division 3No Financial Establishment in Canada

Marginal note:Permitted investment — foreign bank

522.04 (1) A foreign bank that does not have a financial establishment in Canada may acquire or hold control of, or a substantial investment in, a Canadian entity, so long as, by virtue of the acquisition, neither the foreign bank nor any entity associated with the foreign bank controls or becomes a major owner of

(a) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i); or

(b) a Canadian entity that is a financial services entity.

Marginal note:Permitted investment — associated entity

(2) An entity that is associated with a foreign bank and that does not have a financial establishment in Canada may acquire or hold control of, or a substantial investment in, a Canadian entity, so long as, by virtue of the acquisition, neither the entity nor the foreign bank, nor any other entity associated with the foreign bank, controls or becomes a major owner of

(a) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i); or

(b) a Canadian entity that is a financial services entity.

Marginal note:Permitted Canadian commercial branch

522.05 A foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank, that does not have a financial establishment in Canada may maintain a branch in Canada or engage in or carry on business in Canada so long as less than

(a) the prescribed portion — or if no portion is prescribed, 10 per cent — of its business in Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any of paragraphs (a) to (g) of the definition “financial services entity” in subsection 507(1); and

(b) the prescribed portion — or if no portion is prescribed, 10 per cent — of its business outside Canada, determined in the prescribed manner, consists of one or more activities referred to in any of

(i) paragraphs (a) to (g) of the definition “financial services entity” in subsection 507(1), and

(ii) paragraph (h) of that definition, except under prescribed circumstances.

Marginal note:Permitted branches re leasing

522.06 Despite section 522.05, a foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank, that does not have a financial establishment in Canada and that outside Canada

(a) engages only in the activities referred to in the definition “leasing entity” in subsection 507(1), or

(b) engages only in activities other than those referred to in any of

(i) paragraphs (a) to (g) of the definition “financial services entity” in subsection 507(1), and

(ii) paragraph (h) of that definition, except under prescribed circumstances,

may in Canada engage in the activities of a leasing entity so long as it does not engage in any other activity in Canada.

Division 4Financial Establishment in Canada

Investments

Marginal note:Investment in a financial institution

522.07 Subject to the requirements relating to designation and approval set out in Division 5, a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity referred to in any of paragraphs 468(1)(a) to (i).

Marginal note:Permitted investments

522.08 (1) Subject to subsection (2) and the requirements relating to designation and approval set out in Division 5, a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity, other than an entity referred to in paragraphs 468(1)(a) to (i), whose business is limited to one or more of the following:

(a) engaging in

(i) any financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d), or

(ii) any other activity that a bank is permitted to engage in under section 410 or 411;

(b) acquiring or holding shares of, or ownership interests in, entities that a foreign bank or an entity associated with a foreign bank is permitted to acquire or hold under this Division or Division 8, other than limited commercial entities, except in prescribed circumstances, including shares or ownership interests acquired or held in accordance with regulations made under paragraph 522.23(a) concerning specialized financing;

(c) engaging in the provision of any services exclusively to any or all of the following, so long as the Canadian entity is providing those services to the foreign bank or to any member of the foreign bank’s group, namely,

(i) the foreign bank,

(ii) any member of the foreign bank’s group,

(iii) any entity that is primarily engaged in the business of providing financial services,

(iv) any entity in which an entity referred to in subparagraph (iii) has a substantial investment and that is

(A) an entity in which a bank is permitted to acquire a substantial investment under section 468,

(B) an entity in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment under this section and section 522.07, or

(C) a prescribed entity, or

(v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

(d) engaging in any activity that a bank is permitted to engage in — or in any other prescribed activity —, other than an activity referred to in paragraph (a) or (e), that relates to

(i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by the foreign bank or by any member of the foreign bank’s group, or

(ii) if a significant portion of the business of the Canadian entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;

(e) engaging in the activities referred to in the definition “mutual fund entity”, “mutual fund distribution entity” or “real property brokerage entity” in subsection 464(1); and

(f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

Marginal note:Additional restriction

(2) A foreign bank or an entity associated with a foreign bank may not acquire or hold control of, or a substantial investment in, a Canadian entity whose business includes any activity referred to in any of paragraphs (1)(a) to (e) if the activities of the Canadian entity include

(a) activities that a bank is not permitted to engage in under section 412, 417 or 418;

(b) dealing in securities, except as may be permitted under paragraph (1)(e) or as may be permitted to a bank under paragraph 409(2)(c);

(c) activities that a bank is not permitted to engage in under section 416, if the Canadian entity engages in the activities of a finance entity or of any other entity as may be prescribed;

(d) acquiring or holding control of, or a substantial investment in, another Canadian entity unless

(i) in the case of a Canadian entity that is controlled by the foreign bank or the entity associated with a foreign bank, the foreign bank or the entity associated with a foreign bank itself would be permitted to acquire or hold control of, or a substantial investment in, the other Canadian entity under this section, section 522.07, any of paragraphs 522.1(a) to (d) or Division 8, or

(ii) in the case of a Canadian entity that is not controlled by the foreign bank or the entity associated with a foreign bank, the foreign bank or the entity associated with a foreign bank itself would be permitted to acquire or hold control of, or a substantial investment in, the other Canadian entity under this section, section 522.07, paragraph 522.1(a), (c) or (d) or Division 8; or

(e) any prescribed activity.

Marginal note:Investment in a limited commercial entity

522.09 Subject to the requirements relating to approval and designation set out in Division 5, a foreign bank or an entity associated with a foreign bank that has a financial establishment in Canada may acquire or hold control of, or a substantial investment in, a Canadian entity that is not

(a) an entity referred to in any of paragraphs 468(1)(a) to (i), or

(b) a Canadian entity that engages in more than the prescribed portion of — or if no portion is prescribed, 10 per cent of — the activities referred to in paragraphs 522.08(1)(a) to (f) or in any of paragraphs (a) to (h) of the definition “financial services entity” in subsection 507(1), determined in the prescribed manner,

if the Canadian entity does not engage in any leasing activities and, in the opinion of the Minister, engages in or carries on business that is the same as, or similar, related or incidental to, the business outside Canada of the foreign bank or the entity associated with a foreign bank.

Marginal note:Acquisition of other investments

522.1 A foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity

(a) by way of an investment permitted by any of sections 522.11 to 522.13;

(b) by way of a temporary investment permitted by section 522.14;

(c) as a result of a default that has occurred under the terms of an agreement with respect to a loan or under any other documents governing the terms of a loan, as permitted by section 522.15; or

(d) through a realization of security, as permitted by section 522.15.

Marginal note:Indirect investments through federal institutions

522.11 (1) A foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity by way of

(a) an acquisition or holding of the control of a Canadian entity referred to in any of paragraphs 468(1)(a) to (f), or of a prescribed Canadian entity, that controls or has a substantial investment in the Canadian entity; or

(b) an acquisition or holding of shares or ownership interests in the Canadian entity by

(i) a Canadian entity referred to in any of paragraphs 468(1)(a) to (f), or a prescribed Canadian entity, that is controlled by the foreign bank or the entity associated with the foreign bank, or

(ii) a Canadian entity controlled by a Canadian entity referred to in subparagraph (i).

Marginal note:Indirect investments through federal institutions

(2) If a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity under subsection (1), none of the requirements relating to designation and approval set out in Division 5 apply in respect of that acquisition or holding.

Marginal note:Investments through provincial institutions

522.12 An entity that is associated with a foreign bank and that is

(a) an entity referred to in any of paragraphs 468(1)(g) to (i), or

(b) a Canadian entity controlled by an entity referred to in any of paragraphs 468(1)(g) to (i)

may acquire or hold control of, or a substantial investment in, a Canadian entity that is not a permitted Canadian entity or an entity referred to in paragraphs 468(1)(a) to (i), and if it does so, none of the requirements relating to approval set out in Division 5 apply in respect of that acquisition or holding.

Marginal note:Indirect investments through provincial institutions

522.13 A foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity, other than a permitted Canadian entity or a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), by way of

(a) an acquisition or holding of the control of a Canadian entity referred to in any of paragraphs 468(1)(g) to (i), or of a prescribed Canadian entity, that controls or has a substantial investment in the Canadian entity; or

(b) an acquisition or holding of shares or ownership interests in the Canadian entity by

(i) a Canadian entity referred to in any of paragraphs 468(1)(g) to (i), or a prescribed Canadian entity, that is controlled by the foreign bank or the entity associated with the foreign bank, or

(ii) a Canadian entity controlled by a Canadian entity referred to in subparagraph (i).

Marginal note:Temporary investments

522.14 (1) Subject to the requirements relating to designation set out in Division 5, a foreign bank or an entity associated with a foreign bank may, by way of temporary investment, acquire or hold control of, or a substantial investment in, a Canadian entity if the foreign bank or the entity associated with a foreign bank has a financial establishment in Canada or would, by virtue of the temporary investment, have a financial establishment in Canada.

Marginal note:Divestiture

(2) If subsection (1) applies in respect of a foreign bank or an entity associated with a foreign bank, the foreign bank or entity shall do all things necessary to ensure that, within two years after acquiring the control or the substantial investment or within any other period that may be specified or approved by the Minister, it no longer controls or has a substantial investment in the entity.

Marginal note:Extension

(3) On application by a foreign bank, or an entity associated with a foreign bank, the Minister may extend the period referred to in subsection (2) by any further period or periods.

Marginal note:Exception

(4) When a foreign bank, or an entity associated with a foreign bank, acquires or holds, by way of a temporary investment, control of, or a substantial investment in, a Canadian entity for which the approval of the Minister is required under this Part, the foreign bank or entity associated with the foreign bank shall, within 90 days after acquiring control, or after acquiring the substantial investment,

(a) apply to the Minister for approval to retain control of the Canadian entity or to continue to hold the substantial investment in the Canadian entity for a period specified by the Minister or for an indeterminate period; or

(b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the Canadian entity or holds a substantial investment in the Canadian entity.

Marginal note:Deemed temporary investment

(5) If a foreign bank or an entity associated with a foreign bank holds control of, or a substantial investment in, a Canadian entity as permitted by this Division and the foreign bank or the entity associated with the foreign bank becomes aware of a change in the business, affairs or activities of the Canadian entity that, if the change had taken place before the acquisition of control or the substantial investment, would have caused the entity not to be a limited commercial entity or a Canadian entity referred to in section 522.07 or 522.08 or would have been such that approval for the acquisition would have been required under any of paragraphs 522.22(1)(a) to (e) or (g), the foreign bank or the entity associated with the foreign bank is deemed to have acquired, on the day it becomes aware of the change, a temporary investment in respect of which subsections (1) to (4) apply.

Marginal note:Notification

(6) Within 90 days after acquiring control or a substantial investment under subsection (1) or (5), a foreign bank or an entity associated with a foreign bank shall notify the Minister in writing of the acquisition.

Marginal note:Acquisition by loan workout or realization of security

522.15 (1) If a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity

(a) as a result of a default that has occurred under the terms of an agreement with respect to a loan made between the foreign bank — or the entity associated with a foreign bank — and the Canadian entity, or under any other documents governing the terms of the loan, or

(b) through the realization of a security interest for any loan or advance made by the foreign bank or the entity associated with the foreign bank, or for any other debt or liability owing to it,

it may retain the control or the substantial investment for five years, but it shall do all things necessary to ensure that, within five years after the acquisition, it no longer controls the Canadian entity or holds a substantial investment in the Canadian entity.

Marginal note:Extension

(2) On application by a foreign bank or an entity associated with a foreign bank, the Minister may extend the period referred to in subsection (1) by any further period or periods.

Marginal note:Exception

(3) If, under subsection (1), a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity for which the approval of the Minister is required under Division 5, the foreign bank or entity associated with the foreign bank may retain control of the Canadian entity, or continue to hold the substantial investment, for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (1) or of any extension granted under subsection (2).

Branches

Marginal note:Bank branches

522.16 A foreign bank may, under Part XII.1, maintain a branch in Canada to carry on business in Canada.

Marginal note:Insurance branches

522.17 A foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank may obtain an order under Part XIII of the Insurance Companies Act to insure, in Canada, risks.

Marginal note:Business of a cooperative credit society and dealing in securities

522.18 Subject to the requirements relating to designation and approval set out in Division 5, a foreign bank — or an entity associated with a foreign bank —

(a) that is a foreign cooperative credit society may, in Canada, engage in or carry on the business of a cooperative credit society, so long as that business is engaged in or carried on in accordance with provincial laws relating to cooperative credit societies; or

(b) that is a foreign securities dealer may, in Canada, engage in or carry on the business of dealing in securities, so long as that business is engaged in or carried on in accordance with provincial laws relating to securities dealing.

Marginal note:Limited commercial branches

522.19 (1) Subject to the requirements relating to designation and approval in Division 5 and subject to subsection (2), a foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank, that has a financial establishment in Canada may maintain a branch in Canada or engage in or carry on business in Canada, so long as

(a) less than the prescribed portion — or if no portion is prescribed, 10 per cent — of its business in Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any of

(i) paragraphs 522.08(1)(a) to (f), and

(ii) paragraphs (a) to (g) of the definition “financial services entity” in subsection 507(1);

(b) less than the prescribed portion — or if no portion is prescribed, 10 per cent — of its business outside Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any of

(i) paragraphs 522.08(1)(a) to (f),

(ii) paragraphs (a) to (g) of the definition “financial services entity” in subsection 507(1), and

(iii) paragraph (h) of that definition, except under prescribed circumstances; and

(c) in the opinion of the Minister, the business in Canada is the same as, or similar, related or incidental to, the business outside Canada of the foreign bank or the entity associated with a foreign bank.

Marginal note:Prohibition

(2) A foreign bank — or an entity associated with a foreign bank — that maintains a branch or engages in or carries on any business under subsection (1) may not in Canada engage in any leasing activities.

Division 5Designation and Approvals

Marginal note:Non-application

522.2 This Division does not apply in respect of investments acquired and held, branches maintained and businesses engaged in or carried on in accordance with Division 3.

Marginal note:Obligation to be designated

522.21 (1) A foreign bank that does not have a financial establishment in Canada must be a designated foreign bank or be associated with a designated foreign bank in order to

(a) acquire or hold control of, or be a major owner of,

(i) an entity referred to in any of paragraphs 468(1)(g) to (i),

(ii) a permitted Canadian entity that is a financial services entity, or

(iii) a Canadian entity that is a financial services entity, by way of a temporary investment permitted by section 522.14; or

(b) in Canada, engage in or carry on the business of dealing in securities or the business of a cooperative credit society referred to in section 522.18.

Marginal note:Entity associated with a designated foreign bank

(2) An entity that is associated with a foreign bank and that does not have a financial establishment in Canada must be associated with a designated foreign bank in order for the entity to

(a) acquire or hold control of, or be a major owner of,

(i) an entity referred to in any of paragraphs 468(1)(g) to (i),

(ii) a permitted Canadian entity that is a financial services entity, or

(iii) a Canadian entity that is a financial services entity, by way of a temporary investment permitted by section 522.14; or

(b) in Canada, engage in or carry on the business of dealing in securities or the business of a cooperative credit society referred to in section 522.18.

Marginal note:Designated foreign bank that has a financial establishment in Canada

(3) A foreign bank that has a financial establishment in Canada must be a designated foreign bank or be associated with a designated foreign bank in order to

(a) acquire or hold control of, or a substantial investment in,

(i) an entity referred to in any of paragraphs 468(1)(g) to (i),

(ii) a permitted Canadian entity,

(iii) a Canadian entity, by way of a temporary investment permitted by section 522.14, or

(iv) a limited commercial entity;

(b) in Canada, engage in or carry on the business of dealing in securities or the business of a cooperative credit society referred to in section 522.18; or

(c) maintain a branch or engage in or carry on a business permitted by section 522.19.

Marginal note:Entity associated with designated foreign bank that has a financial establishment in Canada

(4) An entity that is associated with a foreign bank and that has a financial establishment in Canada must be an entity associated with a foreign bank that is a designated foreign bank in order for the entity to

(a) acquire or hold control of, or a substantial investment in,

(i) an entity referred to in any of paragraphs 468(1)(g) to (i),

(ii) a permitted Canadian entity,

(iii) a Canadian entity, by way of a temporary investment permitted by section 522.14, or

(iv) a limited commercial entity;

(b) in Canada, engage in or carry on the business of dealing in securities or the business of a cooperative credit society referred to in section 522.18; or

(c) maintain a branch or engage in or carry on a business permitted by section 522.19.

Marginal note:Minister’s approval

522.22 (1) Subject to subsection (2) and the regulations, a foreign bank or an entity associated with a foreign bank may not, without the prior written approval of the Minister, given by order,

(a) acquire control of a Canadian entity referred to in any of paragraphs 468(1)(g) to (i) from a person who is not a member of the foreign bank’s group;

(b) acquire control of a Canadian entity whose business includes one or more of the activities referred to in paragraph 522.08(1)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the Canadian entity to material market or credit risk — including a finance entity — if the control is acquired from an entity referred to in any of paragraphs 468(1)(a) to (f) that is not a member of the foreign bank’s group, but does not include a Canadian entity whose activities are limited to the activities of one or more of the following entities:

(i) a factoring entity as defined in the regulations, or

(ii) a financial leasing entity;

(c) acquire or hold control of, or a substantial investment in, a Canadian entity whose business includes one or more of the activities referred to in paragraph 522.08(1)(d);

(d) acquire or hold control of, or a substantial investment in, a Canadian entity that engages in an activity described in paragraph 410(1)(c) or (c.1);

(e) acquire or hold control of, or a substantial investment in, a Canadian entity that engages in an activity prescribed for the purposes of paragraph 522.08(1)(f);

(f) engage in or carry on the business of dealing in securities or the business of a cooperative credit society referred to in section 522.18;

(g) acquire or hold control of, or a substantial investment in, a limited commercial entity;

(h) maintain a branch or engage in or carry on a business permitted by section 522.19; or

(i) engage in an activity referred to in paragraph 510(1)(c) in the circumstances described in paragraph 513(1)(a) or (2)(c).

Marginal note:Approval for indirect investments

(2) Subject to the regulations, if a foreign bank or an entity associated with a foreign bank

(a) obtains the approval of the Minister under any of paragraphs (1)(a) to (e) and (g) to acquire or hold control of, or a substantial investment in, a Canadian entity, and

(b) through that acquisition or holding, indirectly acquires control of, or a substantial investment in, another Canadian entity that would require the approval of the Minister under any of those paragraphs,

and that indirect acquisition is disclosed to the Minister in writing before the approval is obtained, the foreign bank or the entity associated with a foreign bank is deemed to have obtained the approval of the Minister for that indirect acquisition.

Marginal note:Ministerial approval of more than one entity

(3) If the Minister, under paragraph (1)(g), approves the acquisition or holding of control of, or a substantial investment in, a limited commercial entity by a foreign bank or by an entity associated with a foreign bank, the Minister may also authorize the foreign bank or entity associated with a foreign bank to, at any time, acquire and hold control of, or a substantial investment in, another limited commercial entity that engages in activities that are substantially the same as those engaged in by the Canadian entity in respect of which the approval was given.

Marginal note:Substantial investment by underwriter

(4) Nothing in this Part precludes a foreign bank or an entity associated with a foreign bank from acquiring a substantial investment in a Canadian entity if the substantial investment is acquired in the course of a distribution to the public of shares or ownership interests in the Canadian entity by a securities underwriter so long as the securities underwriter holds the substantial investment for no longer than six months.

Division 6Administration

Marginal note:Regulations

522.23 The Governor in Council may make regulations for the purposes of this Part and, in particular, may make regulations

(a) concerning specialized financing for the purposes of paragraph 522.08(1)(b);

(b) for the purposes of subsection 522.22(1) or (2), permitting the acquisition or holding of control or the acquisition or holding of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the foreign banks, entities associated with foreign banks or other entities in respect of which either of those subsections does not apply, including prescribing foreign banks, entities associated with foreign banks or other entities on the basis of the activities they engage in;

(c) restricting the ownership by foreign banks, or entities associated with foreign banks, of shares in a body corporate or of ownership interests in an unincorporated entity under Division 3 or 4 and imposing terms and conditions applicable to foreign banks, or entities associated with foreign banks, that own such shares or interests;

(d) in respect of sections 409 to 411, for the purposes of paragraph 522.08(1)(a), subsection 522.22(1) and section 522.24;

(e) respecting the calculation referred to in paragraphs 508(1)(d) and (2)(b), including regulations respecting the classes of entities associated with the foreign bank, and the classes of foreign banks described in any of paragraphs 508(1)(a) to (c) that are associated with the foreign bank, that are to be taken into account in that calculation;

(f) defining any terms in paragraphs 508(1)(d) and (2)(b); and

(g) defining “factoring entity” for the purpose of paragraph 522.22(1)(b).

Marginal note:Application of regulations

522.24 Any regulations made for the purposes of sections 409 to 411 apply for the purposes of paragraph 522.08(1)(a) and subsection 522.22(1) unless otherwise provided in the regulations.

Marginal note:Divestiture

522.25 (1) If a foreign bank or an entity associated with a foreign bank contravenes any provision of Division 4 or fails to comply with any terms and conditions imposed by any order made for the purpose of any of those provisions, the Minister may, if the Minister considers it in the public interest to do so, by order, direct the foreign bank or the entity to divest itself of the control of, or a substantial investment in, a bank or bank holding company to which the offence relates.

Marginal note:Ceasing to engage in or carry on business

(2) If an authorized foreign bank or an entity associated with an authorized foreign bank contravenes any provision of Division 4 or fails to comply with any terms and conditions imposed by any order made for the purpose of any of those provisions, the Minister may, if the Minister considers it in the public interest to do so, revoke the order made under subsection 524(1).

Marginal note:Divestment order

(3) The Minister may, by order, direct a foreign bank or an entity associated with a foreign bank, within any period that the Minister considers reasonable, to dispose of assets used in a business or activity engaged in or carried on, or to dispose of the control of an entity or a substantial investment in an entity acquired or held, in contravention of this Part or in contravention of any terms and conditions imposed

(a) under subsection 522.26(2); or

(b) under subsection 518(4) or 521(1.02), as it read immediately before the coming into force of this section.

Marginal note:Definition

522.26 (1) In this section and section 522.27, “decision” means a decision, an order, an approval, an extension or a permission of or by the Minister under this Part.

Marginal note:Ministerial terms and condition

(2) A decision may include any terms and conditions that the Minister considers appropriate.

Marginal note:Minister may vary or revoke

(3) The Minister may vary or revoke a previous decision.

Marginal note:Effective date of decision

(4) A decision varying or revoking a previous decision takes effect three months after the day it is made, or at any other time that is agreed to by the Minister and the foreign bank, or the entity associated with a foreign bank, to which the decision relates.

Marginal note:Publication

(5) The Minister shall publish in the Canada Gazette a notice of the making or revocation of a designation order or an exemption order.

Marginal note:Statements and returns

522.27 Not later than six months after the end of its financial year or any other period that the Superintendent may specify, a foreign bank or an entity associated with a foreign bank in respect of which a decision has been made by the Minister shall, except to the extent that the Superintendent has exempted it in relation to any of the following, provide the Superintendent with

(a) a copy of its financial statements and those of each non-bank affiliate of the foreign bank for the financial year;

(b) a list, in a form satisfactory to the Superintendent, of businesses and activities engaged in or carried on by it under sections 514, 522.18 and 522.19;

(c) a list, in a form satisfactory to the Superintendent, of each non-bank affiliate of the foreign bank, with a description of the nature of the business engaged in or carried on by it; and

(d) any other information that may be prescribed for the purposes of this section.

Division 7Non-application of Investment Canada Act

Marginal note:Investment Canada Act

522.28 The Investment Canada Act does not apply in respect of any of the following, whether it occurs directly or indirectly:

(a) the acquisition of control, within the meaning of that Act, of an entity referred to in any of paragraphs 468(1)(a) to (f) by a foreign bank or by an entity associated with a foreign bank;

(b) the establishment of a new Canadian business, within the meaning of that Act, that is the insurance business in Canada of a foreign insurance company that is a foreign bank that is the subject of an exemption order or that is an entity associated with a foreign bank that is the subject of an exemption order;

(c) the acquisition of control, within the meaning of that Act, of a Canadian entity by an entity referred to in any of paragraphs 468(1)(a) to (f) that is controlled by a foreign bank or by an entity associated with a foreign bank;

(d) the establishment of a new Canadian business, within the meaning of that Act, that is authorized by Division 4 by a foreign bank, or by an entity associated with a foreign bank; and

(e) the acquisition of control, within the meaning of that Act, of a Canadian entity in accordance with Division 4 by a foreign bank, or by an entity associated with a foreign bank.

Division 8Transitional

Marginal note:Definitions

522.29 (1) The following definitions apply in this Division.

“affected entity”

« entité visée »

“affected entity” means

(a) an entity associated with a foreign bank that is an affected foreign bank and that has a financial establishment in Canada; or

(b) a prescribed entity associated with a foreign bank referred to in paragraph (c) of the definition “affected foreign bank”.

“affected foreign bank”

« banque étrangère visée »

“affected foreign bank” means a foreign bank that

(a) immediately before the day this Division comes into force, was the subject of an order made under subsection 524(1) or former subsection 521(1.06) and whose order has not been revoked;

(b) on or before June 13, 2000, controlled a foreign bank subsidiary as defined in former section 2; or

(c) for the purposes of subsections 522.32(6) and (7) is a prescribed foreign bank that meets any of the conditions for designation set out in any of paragraphs 508(1)(a) to (d).

Marginal note:Former provision

(2) Every reference in this Division to a former provision means a reference to that provision as it read immediately before the day this Division comes into force.

Marginal note:Former s. 507(4)

522.3 (1) Every order made under former subsection 507(4) exempting an entity from the status of being associated with a foreign bank or exempting a Canadian entity from being a “non-bank affiliate of a foreign bank” that is in force on the day this Division comes in force continues in force, subject to any further order that the Minister may make varying or revoking it.

Marginal note:Date order takes effect

(2) A revocation order or variation order takes effect three months after the date it is made unless the Minister and the entity to which it relates agree that the order is to take effect at another time.

Marginal note:Publication

(3) The Minister shall publish in the Canada Gazette a notice of every revocation order.

Marginal note:Former par. 518(3)(b) or s. 521(1)

522.31 Every order made under former paragraph 518(3)(b) or former subsection 521(1) that is in force on the day this Division comes into force continues in force, subject to any further order that the Minister may make varying or revoking it.

Marginal note:Former s. 521(1)

522.32 (1) An affected foreign bank or affected entity that had received consent under former subsection 521(1) to acquire or hold control of, or a substantial investment in, a Canadian entity that is a financial services entity but is not a permitted Canadian entity or an entity referred to in any of paragraphs 468(1)(a) to (i) may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force if the consent had not been revoked before that day.

Marginal note:Application

(2) Subsection (1) applies so long as

(a) the Canadian entity restricts its businesses in accordance with any terms and conditions in the consent under former subsection 521(1), or in an undertaking to the Minister or Superintendent, other than a term or condition that limits the size of the Canadian entity’s assets; and

(b) neither the affected foreign bank nor any affected entity in relation to the foreign bank

(i) is an authorized foreign bank, or

(ii) controls or is a major shareholder of a bank or a bank holding company.

Marginal note:Former par. 518(3)(b) and former s. 521(1)

(3) An affected foreign bank or an affected entity that, immediately before the day this Division comes into force, holds control of, or a substantial investment in, a Canadian entity that is a permitted Canadian entity or an entity referred to in any of paragraphs 468(1)(g) to (i) by virtue of former paragraph 518(3)(b) or a consent received under former subsection 521(1) may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force if the approval or consent had not been revoked before that day and, if it does so, it is deemed to have received any approval required under paragraphs 522.22(1)(a) to (e) in respect of the Canadian entity.

Marginal note:Former par. 518(3)(b)

(4) An affected foreign bank or affected entity that, immediately before the day this Division comes into force, holds, by virtue of former paragraph 518(3)(b), control of, or a substantial investment in, a Canadian entity that is not a permitted Canadian entity or a financial services entity may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force if any approval of the Minister under that former paragraph has not been revoked before that day, so long as the Canadian entity does not engage in leasing activities.

Marginal note:Application

(5) Subsections (3) and (4) apply so long as

(a) after the coming into force of this Division, the Canadian entity restricts its businesses in accordance with any terms and conditions in the Minister’s approval under former paragraph 518(3)(b), or in a consent received under former subsection 521(1), as the case may be, or in an undertaking to the Minister or Superintendent given before the day this Division comes into force, other than a term or condition that limits the size of the Canadian entity’s assets;

(b) within one year after the coming into force of this Division, the affected foreign bank or affected entity discloses to the Minister the nature of its businesses and activities on June 13, 2000; and

(c) after the coming into force of this Division, the Canadian entity does not change the nature of its businesses as of

(i) June 13, 2000, or

(ii) any other date after June 13, 2000 and before the coming into force of this Division on which the businesses of the Canadian entity were approved by the Minister.

Marginal note:Holding other than by virtue of former par. 518(3)(b) or s. 521(1)

(6) An affected foreign bank or an affected entity that, immediately before the day this Division comes into force, holds, otherwise than by virtue of former paragraph 518(3)(b) or a consent received under former subsection 521(1), control of, or a substantial investment in, a Canadian entity that is not a permitted Canadian entity or a financial services entity may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force.

Marginal note:Application

(7) Subsection (6) applies so long as

(a) within one year after the coming into force of this Division, the affected foreign bank or affected entity discloses to the Minister the nature of its businesses on June 13, 2000;

(b) after the coming into force of this Division, the Canadian entity does not change the nature of its businesses as of June 13, 2000 and its businesses remain in conformity with former paragraph 518(3)(a);

(c) the Canadian entity does not engage in leasing activities; and

(d) neither the affected foreign bank nor any affected entity

(i) is an authorized foreign bank, or

(ii) controls or is a major shareholder of a bank or a bank holding company.

Marginal note:Investments

522.33 (1) Despite section 517 and subject to subsection (2), paragraph 510(1)(d) does not apply in respect of the holding of control of, or a substantial investment in, a Canadian entity whose principal activity in Canada is an activity referred to in any of former subparagraphs 518(3)(a)(i) to (v) and that was acquired by a foreign bank or an entity associated with a foreign bank before August 1, 1997 and before

(a) the foreign bank became a foreign bank or the foreign bank with which the entity is associated became a foreign bank, as the case may be; or

(b) the Canadian entity’s principal activity in Canada became an activity described in those subparagraphs.

Marginal note:Restriction

(2) Subsection (1) applies only if the foreign bank or an entity associated with the foreign bank

(a) is not an authorized foreign bank; and

(b) does not control, and is not a major shareholder of, a bank or a bank holding company.

Marginal note:1999, c. 28, ss. 35(1) and (2)

133. (1) Subsection 524(3) of the Act is replaced by the following:

Marginal note:Reciprocal treatment

(3) The Minister may make an order only if the Minister is satisfied that, if the application is made by a non-WTO Member foreign bank, treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the authorized foreign bank principally carries on business, either directly or through a subsidiary.

Marginal note:1999, c. 28, s. 35(1)

(2) Paragraph 524(4)(b) of the Act is replaced by the following:

(b) the applicant’s principal activity is the provision of

(i) financial services, or

(ii) services that would be permitted by this Act if they were provided by a bank in Canada.

134. The Act is amended by adding the following after section 524:

Marginal note:Prohibition

524.1 No foreign bank may establish a branch in Canada to carry on business in Canada under this Part if the foreign bank or an entity affiliated with the foreign bank

(a) has control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or

(b) engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

Marginal note:Prohibition

524.2 No authorized foreign bank and no entity affiliated with an authorized foreign bank may

(a) control or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or

(b) engage in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

Marginal note:1999, c. 28, s. 35(1)

135. Section 526 of the Act is replaced by the following:

Marginal note:Factors to be considered by Minister

526. Before making an order under subsection 524(1), the Minister shall take into account all matters that the Minister considers relevant to the application, including

(a) the nature and sufficiency of the financial resources of the foreign bank as a source of continuing financial support for the carrying on of its business in Canada;

(b) the soundness and feasibility of plans of the foreign bank for the future conduct and development of its business in Canada;

(c) the business record and past performance of the foreign bank;

(d) the reputation of the foreign bank for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the proposed authorized foreign bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the businesses and operations in Canada of the authorized foreign bank with those of its affiliates in Canada on the conduct of those businesses and operations; and

(g) the best interests of the financial system in Canada.

Marginal note:1999, c. 28, s. 35(1)

136. (1) Paragraphs 529(1)(e) and (f) of the Act are replaced by the following:

(f) in the case of an authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2), carry on business in Canada without having to deposit assets having a value of at least five million dollars, as required by subparagraphs 534(3)(a)(ii) and 582(1)(b)(i), where the authorized foreign bank continues to hold a substantial investment in

(i) a bank that is a subsidiary of the foreign bank and the Minister has approved an application for voluntary liquidation and dissolution made by the subsidiary under section 344, or

(ii) a company to which the Trust and Loan Companies Act applies and the Minister has approved an application for voluntary liquidation and dissolution made by the company under section 349 of that Act; or

Marginal note:1999, c. 28, s. 35(1)

(2) Paragraph 529(5)(c) of the Act is replaced by the following:

(c) with respect to matters described in paragraph (1)(f), that purports to be effective more than seven years after the day on which an order made under subsection 534(1) becomes effective in respect of the authorized foreign bank.

Marginal note:1999, c. 28, s. 35(1)

137. Paragraph 530(1)(e) of the Act is replaced by the following:

(e) reserved under section 43 for an existing or proposed bank or for an existing or proposed authorized foreign bank or under section 697 for an existing or proposed bank holding company.

Marginal note:1999, c. 28, s. 35(1)

138. Subparagraph 534(3)(a)(ii) of the Act is replaced by the following:

(ii) in any other case, five million dollars or any greater amount that the Superintendent specifies;

Marginal note:1999, c. 28, s. 35(1)

139. (1) The portion of subsection 539(1) of the English version of the Act before paragraph (a) is replaced by the following:

Marginal note:Additional activities

539. (1) In addition, an authorized foreign bank may, in Canada,

Marginal note:1999, c. 28, s. 35(1)

(2) Paragraph 539(1)(b) of the Act is replaced by the following;

(b) provide prescribed bank-related data processing services;

(b.1) with the prior written approval of the Minister, engage in any of the following activities, namely,

(i) collecting, manipulating and transmitting

(A) information that is primarily financial or economic in nature,

(B) information that relates to the business of an entity in which a bank is permitted to acquire a substantial investment under section 468 or to the business of a Canadian entity acquired or held under section 522.08, and

(C) any other information that the Minister may, by order, specify,

(ii) providing advisory or other services in the design, development or implementation of information management systems,

(iii) designing, developing or marketing computer software, and

(iv) designing, developing, manufacturing or selling, as an ancillary activity to any activity referred to in any of subparagraphs (i) to (iii) that the authorized foreign bank is engaging in, computer equipment integral to the provision of information services related to the business of financial institutions or to the provision of financial services;

(b.2) with the prior written approval of the Minister, develop, design, hold, manage, manufacture, sell or otherwise deal with data transmission systems, information sites, communication devices or information platforms or portals that are used

(i) to provide information that is primarily financial or economic in nature,

(ii) to provide information that relates to the business of an entity in which a bank is permitted to acquire a substantial investment under section 468 or to the business of a Canadian entity acquired or held under section 522.08, or

(iii) for a prescribed purpose or in prescribed circumstances;

(b.3) engage in prescribed specialized business management or advisory services;

Marginal note:1999, c. 28, s. 35(1)

(3) Paragraphs 539(3)(a) and (b) of the Act are replaced by the following:

(a) respecting what an authorized foreign bank may or may not do with respect to the carrying on of the activities referred to in paragraphs (1)(b.1) to (b.3);

(b) imposing terms and conditions in respect of

(i) the provision of financial services referred to in paragraph 538(2)(a) that are financial planning services,

(ii) the provision of services referred to in paragraph 538(2)(c), and

(iii) the carrying on of the activities referred to in any of paragraphs (1)(b.1) to (b.3); and

(c) respecting the circumstances in which authorized foreign banks may be exempted from the requirement to obtain the approval of the Minister before carrying on a particular activity referred to in paragraph (1)(b.1) or (b.2).

140. The Act is amended by adding the following after section 539:

Marginal note:Regulations apply

539.1 Regulations made for the purpose of any of sections 409 to 411 apply in respect of authorized foreign banks with any modifications that the circumstances require unless regulations made under subsection 539(3) provide otherwise.

Marginal note:1999, c. 28, s. 35(1)

141. (1) Paragraphs 540(1)(b) and (c) of the Act are replaced by the following:

(b) subject to the regulations, act as an agent for any person in the taking of deposit liabilities; or

(c) guarantee any securities or accept any bills of exchange or depository bills that are

(i) issued by any person, and

(ii) intended by the issuer or any party to be sold or traded.

Marginal note:1999, c. 28, s. 35(1)

(2) Subparagraph 540(4)(a)(ii) of the Act is replaced by the following:

(ii) a foreign bank that is or is deemed to be the subject of a designation order under section 508,

(3) Subsection 540(6) of the Act is amended by striking out the word “and” at the end of paragraph (d) and by adding the following after that paragraph:

(d.1) respecting circumstances in which and the conditions under which an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2) may act as agent for any person in the taking of deposit liabilities; and

Marginal note:1999, c. 28, s. 35(1)

142. Paragraph 543(1)(a) of the Act is replaced by the following:

(a) act as agent for any person in respect of the provision of any service that is provided by a financial institution, an entity in which a bank is permitted to acquire a substantial investment under section 468 or a Canadian entity acquired or held under section 522.08 and may enter into an arrangement with any person in respect of the provision of that service; or

Marginal note:1999, c. 28, s. 35(1)

143. (1) Subsection 546(1) of the Act is replaced by the following:

Marginal note:Deposits less than $150,000

546. (1) Subject to the regulations, an authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) may not, in respect of its business in Canada, act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.

(2) Section 546 of the Act is amended by adding the following after subsection (2):

Marginal note:Regulations

(3) The Governor in Council may make regulations respecting the circumstances in which, and the conditions under which, an authorized foreign bank referred to in subsection (1) may act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.

Marginal note:1999, c. 28, s. 35(1)

144. (1) Subsection 547(1) of the Act is replaced by the following:

Marginal note:Shared premises

547. (1) Subject to the regulations, no authorized foreign bank shall carry on business in Canada on premises that are shared with those of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the authorized foreign bank.

Marginal note:1999, c. 28, s. 35(1)

(2) Subsection 547(3) of the Act is replaced by the following:

Marginal note:Adjacent premises

(3) Subject to the regulations, no authorized foreign bank shall carry on business in Canada on premises that are adjacent to a branch or office of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the authorized foreign bank, unless the authorized foreign bank clearly indicates to its customers that its business and the premises on which it is carried on are separate and distinct from the business and premises of the affiliated member institution.

Marginal note:Regulations

(4) The Governor in Council may make regulations

(a) respecting the circumstances in which, and the conditions under which, an authorized foreign bank may carry on business in Canada on premises that are shared with those of a member institution referred to in subsection (1); and

(b) respecting the circumstances in which, and the conditions under which, an authorized foreign bank may carry on business in Canada on premises that are adjacent to a branch or office of a member institution referred to in subsection (3).

Marginal note:1999, c. 28, s. 35(1)

145. Section 550 of the Act is replaced by the following:

Marginal note:Restriction on leasing

550. An authorized foreign bank shall not engage in Canada in any personal property leasing activity in which a financial leasing entity as defined in subsection 464(1) is not permitted to engage.

Marginal note:1999, c. 28, s. 35(1)

146. Section 552 of the Act is repealed.

Marginal note:1999, c. 28, s. 35(1)

147. Subsection 553.1(1) of the Act is replaced by the following:

Marginal note:Restriction on partnerships

553.1 (1) Except with the approval of the Superintendent, an authorized foreign bank may not, in respect of its business in Canada, be a general partner in a limited partnership or a partner in a general partnership.

Marginal note:1999, c. 28, s. 35(1)

148. Subsection 556(3) of the Act is replaced by the following:

Marginal note:Execution of trust

(3) An authorized foreign bank is not, in respect of its business in Canada, bound to see to the execution of any trust to which a deposit made under the authority of this Act is subject.

Marginal note:Payment when authorized foreign bank has notice of trust

(4) Subsection (3) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the authorized foreign bank has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.

Marginal note:1999, c. 28, s. 35(1)

149. The headings before section 559 of the Act are replaced by the following:

Accounts

Marginal note:1999, c. 28, s. 35(1)

150. Subsection 560(2) of the Act is replaced by the following:

Marginal note:Exception

(2) Subsection (1) does not apply in respect of an interest-bearing deposit account that is opened with a deposit in excess of $150,000 or any greater amount that is prescribed.

Marginal note:1999, c. 28, s. 35(1)

151. (1) The portion of subsection 564(1) of the Act before paragraph (a) is replaced by the following:

Marginal note:Disclosure required on opening a deposit account

564. (1) Subject to subsections (2) to (4), an authorized foreign bank shall not open a deposit account in the name of a customer unless, at or before the time the account is opened, it provides in writing to the individual who requests the opening of the account

Marginal note:1999, c. 28, s. 35(1)

(2) Subsections 564(2) to (5) of the Act are replaced by the following:

Marginal note:Exception

(2) If a deposit account is not a personal deposit account and the amount of a charge applicable to the account cannot be established at or before the time the account is opened, the authorized foreign bank shall, as soon as is practicable after the amount is established, provide the customer in whose name the account is kept with a notice in writing of the amount of the charge.

Marginal note:Exception

(3) If an authorized foreign bank has a deposit account in the name of a customer and the customer by telephone requests the opening of another deposit account in the name of the customer and the authorized foreign bank has not complied with subsection (1) in respect of the opening of that other account, the authorized foreign bank shall not open the account unless it provides the customer orally with any information prescribed at or before the time the account is opened.

Marginal note:Disclosure in writing

(4) If an authorized foreign bank opens an account under subsection (3), it shall, not later than seven business days after the account is opened, provide to the customer in writing the agreement and information referred to in subsection (1).

Marginal note:Right to close account

(5) A customer may, within 14 business days after a deposit account is opened under subsection (3), close the account without charge and in such case is entitled to a refund of any charges related to the operation of the account, other than interest charges, incurred while the account was open.

Marginal note:Regulations

(6) For the purposes of subsection (4), the Governor in Council may make regulations prescribing circumstances in which, and the time when, the agreement and information will be deemed to have been provided to the customer.

Marginal note:1999, c. 28, s. 35(1)

152. The heading before section 567 of the Act is converted from roman type to italics.

153. Section 567 of the Act, as enacted by subsection 35(4) of An Act to amend the Bank Act, the Winding-up and Restructuring Act and other Acts relating to financial institutions and to make consequential amendments to other Acts, being chapter 28 of the Statutes of Canada, 1999, is replaced by the following:

Definition of “cost of borrowing”

567. For the purposes of this section and sections 567.1 to 574, “cost of borrowing” in respect of a loan made by an authorized foreign bank means

(a) the interest or discount applicable to the loan;

(b) any amount charged in connection with the loan that is payable by the borrower to the authorized foreign bank; and

(c) any charge prescribed to be included in the cost of borrowing.

For those purposes, however, “cost of borrowing” does not include any charge prescribed to be excluded from the cost of borrowing.

154. The Act is amended by adding the following before section 573:

Complaints

Marginal note:1999, c. 28, s. 35(1)

155. (1) Paragraph 573(1)(a) of the Act is replaced by the following:

(a) establish procedures for dealing with complaints made by persons having requested or received products or services from the authorized foreign bank;

(2) If this section comes into force before paragraph 573(1)(a) of the Act, as enacted by subsection 35(9) of An Act to amend the Bank Act, the Winding-up and Restructuring Act and other Acts relating to financial institutions and to make consequential amendments to other Acts, being chapter 28 of the Statutes of Canada, 1999, comes into force, then subsection 35(9) of that Act is repealed.

Marginal note:1999, c. 28, s. 35(1)

(3) Subsection 573(2) of the Act is replaced by the following:

Marginal note:Procedures to be filed with Commissioner

(2) An authorized foreign bank shall file with the Commissioner a copy of its procedures established under paragraph (1)(a).

156. The Act is amended by adding the following after section 573:

Marginal note:Obligation to be member

573.1 An authorized foreign bank shall be a member of any body corporate that is designated under subsection 455.1(1).

Marginal note:1999, c. 28, s. 35(1)

157. (1) Section 574 of the Act is replaced by the following:

Marginal note:Information on contacting Agency

574. (1) An authorized foreign bank shall, in the prescribed manner, provide a person requesting or receiving a product or service from it with prescribed information on how to contact the Agency if the person has a complaint about an arrangement referred to in subsection 570(3), a payment, credit or charge card, the disclosure of or manner of calculating the cost of borrowing in respect of a loan, or about any other obligation of the authorized foreign bank under a consumer provision.

Marginal note:Report

(2) The Commissioner shall prepare a report, to be included in the report referred to in section 34 of the Financial Consumer Agency of Canada Act, respecting

(a) procedures for dealing with complaints established by authorized foreign banks pursuant to paragraph 573(1)(a); and

(b) the number and nature of complaints that have been brought to the attention of the Agency by persons who have requested or received a product or service from an authorized foreign bank.

(2) If this section comes into force before subsection 574(1) of the Act, as enacted by subsection 35(10) of An Act to amend the Bank Act, the Winding-up and Restructuring Act and other Acts relating to financial institutions and to make consequential amendments to other Acts, being chapter 28 of the Statutes of Canada, 1999, then subsection 35(10) of that Act is repealed.

Marginal note:1999, c. 28, s. 35(1)

158. (1) Subsections 576.1(1) to (3) of the Act are replaced by the following:

Marginal note:Restriction on tied selling

576.1 (1) An authorized foreign bank shall not impose undue pressure on, or coerce, a person to obtain a product or service from a particular person, including the authorized foreign bank and any of its affiliates, as a condition for obtaining another product or service from the authorized foreign bank.

Marginal note:Favourable authorized foreign bank product or service tied to other sale

(2) For greater certainty, an authorized foreign bank may offer a product or service to a person on more favourable terms or conditions than the authorized foreign bank would otherwise offer, where the more favourable terms and conditions are offered on the condition that the person obtain another product or service from any particular person.

Marginal note:Favourable other sale tied to authorized foreign bank product or service

(3) For greater certainty, an affiliate of an authorized foreign bank may offer a product or service to a person on more favourable terms or conditions than the affiliate would otherwise offer, where the more favourable terms and conditions are offered on the condition that the person obtain another product or service from the authorized foreign bank.

(2) Section 576.1 of the Act is amended by adding the following after subsection (4):

Marginal note:Disclosure

(4.1) An authorized foreign bank shall disclose the prohibition on coercive tied selling set out in subsection (1) in a statement in plain language that is clear and concise, displayed and available to customers and the public at all of its branches and at all prescribed points of service in Canada.

Marginal note:Regulations

(4.2) The Governor in Council may make regulations for the purposes of subsection (4.1) defining “point of service” and prescribing points of service.

159. The Act is amended by adding the following after section 576.1:

Marginal note:Regulations re disclosure

576.2 The Governor in Council may, subject to any other provisions of this Act relating to the disclosure of information, make regulations respecting the disclosure of information by authorized foreign banks or any prescribed class of authorized foreign banks, including regulations respecting

(a) the information that must be disclosed, including information relating to

(i) any product or service or prescribed class of products or services offered by them,

(ii) any of their policies, procedures or practices relating to the offer by them of any product or service or prescribed class of products or services,

(iii) anything they are required to do or to refrain from doing under a consumer provision, and

(iv) any other matter that may affect their dealings with customers or the public;

(b) the manner, place and time in which and the persons to whom information is to be disclosed; and

(c) the content and form of any advertisement by authorized foreign banks or any prescribed class of authorized foreign banks relating to any matter referred to in paragraph (a).

Marginal note:1999, c. 28, s. 35(1)

160. Section 579 of the Act is replaced by the following:

Marginal note:Effect of writ, etc.

579. (1) Subject to subsections (3) and (4), the following documents are binding on property belonging to a person and in the possession of an authorized foreign bank, or on money owing to a person by reason of a deposit account in an authorized foreign bank, only if the document or a notice of it is served at the branch of the authorized foreign bank that has possession of the property or that is the branch of account in respect of the deposit account, as the case may be:

(a) a writ or process originating a legal proceeding or issued in or pursuant to a legal proceeding;

(b) an order or injunction made by a court;

(c) an instrument purporting to assign, perfect or otherwise dispose of an interest in the property or the deposit account; or

(d) an enforcement notice in respect of a support order or support provision.

Marginal note:Notices

(2) Any notification sent to an authorized foreign bank with respect to a customer of the authorized foreign bank, other than a document referred to in subsection (1) or (3), constitutes notice to the authorized foreign bank and fixes the authorized foreign bank with knowledge of its contents only if sent to and received at the branch of the authorized foreign bank that is the branch of account of an account held in the name of that customer.

Marginal note:Exception

(3) Subsections (1) and (2) do not apply in respect of an enforcement notice in respect of a support order or support provision if

(a) the enforcement notice, accompanied by a written statement containing the information required by the regulations, is served at an office of an authorized foreign bank designated in accordance with the regulations in respect of a province; and

(b) the order or provision can be enforced under the laws of that province.

Marginal note:Time of application

(4) Subsection (3) does not apply in respect of an enforcement notice in respect of a support order or support provision until the second business day following the day of service referred to in that subsection.

Marginal note:Regulations

(5) The Governor in Council may make regulations

(a) respecting the designation by an authorized foreign bank, for the purpose of subsection (3), of a place in any province for the service of enforcement notices in respect of support orders and support provisions;

(b) prescribing the manner in which an authorized foreign bank shall publicize the locations of designated offices of the authorized foreign bank; and

(c) respecting the information that must accompany enforcement notices in respect of support orders and support provisions.

Marginal note:Definitions

(6) The following definitions apply in this section.

“designated office”

« bureau désigné »

“designated office” means a place designated in accordance with regulations made for the purpose of subsection (3).

“enforcement notice”

« avis d’exécution »

“enforcement notice”, in respect of a support order or support provision, means a garnishee summons or other instrument issued under the laws of a province for the enforcement of the support order or support provision.

“support order”

« ordonnance alimentaire »

“support order” means an order or judgment or interim order or judgment for family financial support.

“support provision”

« disposition alimentaire »

“support provision” means a provision of an agreement relating to the payment of maintenance or family financial support.

Marginal note:1999, c. 28, s. 35(1)

161. Subparagraph 582(1)(b)(i) of the Act is replaced by the following:

(i) five million dollars, and

Marginal note:1999, c. 28, s. 35(1)

162. Subsection 594(1) of the Act is replaced by the following:

Marginal note:Auditor’s report to principal officer

594. (1) The auditor of an authorized foreign bank shall make a report to the principal officer of the authorized foreign bank in writing on the annual return not later than five months after the end of the financial year in respect of which the annual return is prepared.

Marginal note:1999, c. 28, s. 35(1)

163. (1) Paragraph 597(1)(b) of the Act is replaced by the following:

(b) accounting records respecting its business in Canada;

(2) Section 597 of the Act is amended by adding the following after subsection (6):

Marginal note:Electronic access

(7) An authorized foreign bank may make the information contained in records referred to in subsection (1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.

Marginal note:1999, c. 28, s. 35(1)

164. Subsection 606(1) of the Act is replaced by the following:

Marginal note:Confidential information

606. (1) Subject to sections 608 and 609, all information regarding the business or affairs of an authorized foreign bank, or regarding a person dealing with an authorized foreign bank, that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information, is confidential and shall be treated accordingly.

Marginal note:1999, c. 28, s. 35(1)

165. Section 612 of the Act is replaced by the following:

Marginal note:Report respecting disclosure

612. The Superintendent shall prepare a report respecting the disclosure of information by authorized foreign banks and describing the state of progress made in enhancing the disclosure of information in the financial services industry. The report is to be included in the report referred to in section 40 of the Office of the Superintendent of Financial Institutions Act.

Marginal note:1999, c. 28, s. 35(1)

166. Subsection 613(1) of the Act is replaced by the following:

Marginal note:Examination of authorized foreign banks

613. (1) The Superintendent, from time to time, but, in the case of an authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2), at least once in each calendar year, shall make or cause to be made any examination and inquiry into the business and affairs of each authorized foreign bank that the Superintendent considers to be necessary or expedient to determine whether the authorized foreign bank is complying with the provisions of this Act and, after the conclusion of each examination and inquiry, shall report on it to the Minister.

167. The Act is amended by adding the following after the heading “Remedial Powers” after section 614:

Prudential Agreements

Marginal note:Prudential agreement

614.1 The Superintendent may enter into an agreement, called a “prudential agreement”, with an authorized foreign bank for the purposes of implementing any measure designed to protect the interests of its depositors and creditors in respect of its business in Canada.

Marginal note:1999, c. 28, s. 35(1)

168. Subsection 616(1) of the Act is replaced by the following:

Marginal note:Court enforcement

616. (1) Where an authorized foreign bank or a person

(a) is contravening or has failed to comply with a prudential agreement entered into under section 614.1 or a direction of the Superintendent made under subsection 615(1) or (3),

(b) is contravening this Act, or

(c) has omitted to do any thing under this Act that is required to be done by or on the part of the authorized foreign bank or person,

the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the authorized foreign bank or person to comply with the prudential agreement or the direction, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.

169. The Act is amended by adding the following after section 617:

Disqualification and Removal of Principal Officers

Marginal note:Application

617.1 (1) This section applies only in respect of an authorized foreign bank

(a) that has been notified by the Superintendent that this section applies to it where the authorized foreign bank is subject to measures designed to protect the interests of its depositors and creditors in respect of its business in Canada, which measures

(i) have been specified by the Superintendent by way of conditions or limitations in respect of the order approving the commencement and carrying on of business in Canada by the authorized foreign bank, or

(ii) are contained in a prudential agreement entered into under section 614.1 or an undertaking given by the authorized foreign bank to the Superintendent; or

(b) that is the subject of a direction made under section 615 or an order made under section 617.

Marginal note:Information to be provided

(2) An authorized foreign bank shall provide the Superintendent with the name of any person who has been selected by the authorized foreign bank for appointment as principal officer, together with such other information about the background, business record and experience of the person as the Superintendent may require.

Marginal note:When information to be provided

(3) The information required by subsection (2) shall be provided to the Superintendent at least 30 days prior to the date of the appointment or within any shorter period that the Superintendent may allow.

Marginal note:Disqualification

(4) If the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold the position of principal officer, the Superintendent may, by order, disqualify the person from being appointed to that office.

Marginal note:Risk of prejudice

(5) In forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors and creditors of the authorized foreign bank in respect of its business in Canada would likely be prejudiced if the person were to take office.

Marginal note:Representations may be made

(6) The Superintendent must in writing notify the person concerned and the authorized foreign bank of an order that the Superintendent proposes to make under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

Marginal note:Prohibition

(7) If an order is made under subsection (4) disqualifying a person from being appointed as principal officer, the person shall not be, and the authorized foreign bank shall not permit the person to be, appointed to that position.

Marginal note:Removal

617.2 (1) The Superintendent may, by order, remove a person from office as the principal officer of an authorized foreign bank if the Superintendent is of the opinion that the person is not suitable to hold that office

(a) on the basis of the competence, business record, experience, conduct or character of the person; or

(b) because the person has contravened or, by action or negligence, has contributed to the contravention of

(i) this Act or the regulations made under it,

(ii) a direction made under section 615,

(iii) an order made under section 617,

(iv) a condition or limitation in respect of the order approving the commencement and carrying on of business in Canada by the authorized foreign bank, or

(v) a prudential agreement entered into under section 614.1 or an undertaking given by the authorized foreign bank to the Superintendent.

Marginal note:Risk of prejudice

(2) In forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors and creditors of the authorized foreign bank in respect of its business in Canada have been or are likely to be prejudiced by the person’s holding office as principal officer.

Marginal note:Representations may be made

(3) The Superintendent must in writing notify the principal officer and the authorized foreign bank of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

Marginal note:Suspension

(4) If the Superintendent is of the opinion that the public interest is likely to be prejudiced by the principal officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the principal officer. The suspension may not extend beyond 10 days after the expiration of that period.

Marginal note:Notice of order

(5) The Superintendent shall, without delay, notify the principal officer and the authorized foreign bank of a removal order or suspension order.

Marginal note:Consequences of removal order

(6) The principal officer ceases to hold that office as of the date the removal order is made or any later date specified in the order.

Marginal note:Appeal

(7) The principal officer or the authorized foreign bank may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.

Marginal note:Powers of Federal Court

(8) The Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.

Marginal note:Order not stayed by appeal

(9) A removal order is not stayed by an appeal.

Marginal note:1999, c. 28, s. 35(1)

170. (1) Paragraph 619(2)(c) of the Act is repealed.

(2) Subsection 619(2) of the Act is amended by striking out the word “or” at the end of paragraph (e), by adding the word “or” at the end of paragraph (f) and by adding the following after paragraph (f):

(g) in the opinion of the Superintendent, any other state of affairs exists in respect of the authorized foreign bank that may be materially prejudicial to the interests of the authorized foreign bank’s depositors or creditors in respect of its business in Canada or the owners of any assets under the authorized foreign bank’s administration in respect of its business in Canada, including where proceedings under a law relating to bankruptcy or insolvency have been commenced in respect of the holding body corporate of the authorized foreign bank.

Marginal note:1999, c. 28, s. 35(1)

171. Subsection 627(2) of the Act is replaced by the following:

Marginal note:Priority not affected

(2) Nothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of an authorized foreign bank.

172. The title of Part XIII of the Act is replaced by the following:

REGULATION OF BANKS — SUPERINTENDENT

Marginal note:1999, c. 28, s. 39

173. Sections 633 and 634 of the Act are replaced by the following:

Marginal note:Copy of by-laws

633. A bank shall send to the Superintendent, within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment.

Marginal note:Register of banks

634. (1) The Superintendent shall, in respect of each bank for which an order approving the commencement and carrying on of business has been made, cause a register to be maintained containing a copy of

(a) the incorporating instrument of the bank; and

(b) the information referred to in paragraphs 632(1)(a), (c) and (e) to (h) contained in the latest return sent to the Superintendent under section 632.

Marginal note:Form

(2) The register may be maintained in

(a) a bound or loose-leaf form or in a photographic film form; or

(b) a system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

Marginal note:Access

(3) Persons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.

Marginal note:Evidence

(4) A statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent.

Marginal note:1999, c. 28, s. 41

174. Subsection 636(1) of the Act is replaced by the following:

Marginal note:Confidential information

636. (1) Subject to sections 638 and 639, all information regarding the business or affairs of a bank or a foreign bank, or regarding a person dealing with a bank or a foreign bank, that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information, is confidential and shall be treated accordingly.

Marginal note:1996, c. 6, s. 12; 1999, c. 28, s. 46

175. Section 642 of the Act is replaced by the following:

Marginal note:Report respecting disclosure

642. The Superintendent shall prepare a report, to be included in the report referred to in section 40 of the Office of the Superintendent of Financial Institutions Act, respecting the disclosure of information by banks and describing the state of progress made in enhancing the disclosure of information in the financial services industry.

Marginal note:1999, c. 28, s. 46

176. Subsection 643(1) of the Act is replaced by the following:

Marginal note:Examination of banks

643. (1) The Superintendent, from time to time, but at least once in each calendar year, shall make or cause to be made any examination and inquiry into the business and affairs of each bank that the Superintendent considers to be necessary or expedient to determine whether the bank is complying with the provisions of this Act and whether the bank is in a sound financial condition and, after the conclusion of each examination and inquiry, shall report on it to the Minister.

177. The Act is amended by adding the following after the heading “Remedial Powers” after section 644:

Prudential Agreements

Marginal note:Prudential agreement

644.1 The Superintendent may enter into an agreement, called a “prudential agreement”, with a bank for the purposes of implementing any measure designed to maintain or improve its safety and soundness.

Marginal note:1999, c. 28, s. 48

178. Subsection 646(1) of the Act is replaced by the following:

Marginal note:Court enforcement

646. (1) Where a bank or person

(a) is contravening or has failed to comply with a prudential agreement entered into under section 644.1 or a direction of the Superintendent made under subsection 645(1) or (3),

(b) is contravening this Act, or

(c) has omitted to do any thing under this Act that is required to be done by or on the part of the bank or person,

the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the bank or person to comply with the prudential agreement or the direction, cease the contravention or do any thing that is required to be done, and on such application the court may so order and make any other order it thinks fit.

Marginal note:1996, c. 6, s. 14

179. The heading before section 647 of the Act is replaced by the following:

Disqualification and Removal of Directors or Senior Officers

Meaning of “senior officer”

646.1 In sections 647 and 647.1, “senior officer” means the chief executive officer, secretary, treasurer or controller of a bank or any other officer reporting directly to the bank’s board of directors or chief executive officer.

Marginal note:1996, c. 6, s. 14; 1999, c. 28, s. 49

180. (1) Paragraphs 647(1)(a) and (b) of the Act are replaced by the following:

(a) that has been notified by the Superintendent that this section applies to it where the bank is subject to measures designed to maintain or improve its safety and soundness, which measures

(i) have been specified by the Superintendent by way of conditions or limitations in respect of the order approving the commencement and carrying on of the bank’s business, or

(ii) are contained in a prudential agreement entered into under section 644.1 or an undertaking given by the bank to the Superintendent; or

(b) that is the subject of a direction made under section 645 or an order made under subsection 485(3).

Marginal note:1996, c. 6, s. 14; 1999, c. 28, s. 49(1)

(2) Paragraph 647(2)(b) of the Act is replaced by the following:

(b) each person who has been selected by the bank for appointment as a senior officer, and

Marginal note:1996, c. 6, s. 14; 1999, c. 28, s. 49(1)

(3) The portion of subsection 647(2) of the French version of the Act after paragraph (c) is replaced by the following:

Elle lui communique également les renseignements personnels qui les concernent et les renseignements sur leur expérience et leur dossier professionnel qu’il peut exiger.

Marginal note:1996, c. 6, s. 14; 1999, c. 28, s. 49(1)

(4) Subsections 647(4) and (5) of the Act are replaced by the following:

Marginal note:Disqualification or removal

(4) If the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold that position, the Superintendent may, by order,

(a) in the case of a person referred to in paragraph (2)(a) or (b), disqualify the person from being elected or appointed as a director of a bank or from being appointed as a senior officer; or

(b) in the case of a person referred to in paragraph (2)(c), remove the person from office as a director of the bank.

Marginal note:Risk of prejudice

(4.1) In forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors and creditors of the bank would likely be prejudiced if the person were to take office or continue to hold office, as the case may be.

Marginal note:Representations may be made

(5) The Superintendent must in writing notify the person concerned and the bank of any action that the Superintendent proposes to take under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

Marginal note:1996, c. 6, s. 14; 1999, c. 28, s. 49(1)

(5) Subsection 647(6) of the English version of the Act is replaced by the following:

Marginal note:Prohibition

(6) Where an order has been made under subsection (4)

(a) disqualifying a person from being elected or appointed to a position, the person shall not be, and the bank shall not permit the person to be, elected or appointed to the position; or

(b) removing a director from office, the person shall not continue to hold, and the bank shall not permit the person to continue to hold, office as a director.

181. The Act is amended by adding the following after section 647:

Marginal note:Removal of directors or senior officers

647.1 (1) The Superintendent may, by order, remove a person from office as a director or senior officer of a bank if the Superintendent is of the opinion that the person is not suitable to hold that office

(a) on the basis of the competence, business record, experience, conduct or character of the person; or

(b) because the person has contravened or, by action or negligence, has contributed to the contravention of

(i) this Act or the regulations made under it,

(ii) a direction made under section 645,

(iii) an order made under subsection 485(3),

(iv) a condition or limitation in respect of the order approving the commencement and carrying on of the bank’s business, or

(v) a prudential agreement entered into under section 644.1 or an undertaking given by the bank to the Superintendent.

Marginal note:Risk of prejudice

(2) In forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors and creditors of the bank have been or are likely to be prejudiced by the person’s holding office as a director or senior officer.

Marginal note:Representations may be made

(3) The Superintendent must in writing notify the person concerned and the bank of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

Marginal note:Suspension

(4) If the Superintendent is of the opinion that the public interest may be prejudiced by the director or senior officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the director or senior officer. The suspension may not extend beyond 10 days after the expiration of that period.

Marginal note:Notice of order

(5) The Superintendent shall, without delay, notify the director or senior officer, as the case may be, and the bank of a removal order or suspension order.

Marginal note:Consequences of removal order

(6) The director or senior officer, as the case may be, ceases to hold that office as of the date the removal order is made or any later date specified in the order.

Marginal note:Appeal

(7) The director or senior officer, as the case may be, or the bank may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.

Marginal note:Powers of Federal Court

(8) The Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.

Marginal note:Order not stayed by appeal

(9) A removal order is not stayed by an appeal.

Marginal note:1997, c. 15, s. 88(3); 1999, c. 28, s. 50

182. (1) Paragraph 648(1.1)(b) of the Act is repealed.

(2) Subsection 648(1.1) of the Act is amended by striking out the word “or” at the end of paragraph (f), by adding the word “or” at the end of paragraph (g) and by adding the following after paragraph (g):

(h) in the opinion of the Superintendent, any other state of affairs exists in respect of the bank that may be materially prejudicial to the interests of the bank’s depositors or creditors or the owners of any assets under the bank’s administration, including where proceedings under a law relating to bankruptcy or insolvency have been commenced in Canada or elsewhere in respect of the holding body corporate of the bank.

Marginal note:1991, c. 46, par. 580(b); 1996, c. 6, s. 20; 1997, c. 15, ss. 89 to 92; 1999, c. 28, ss. 58 to 73, c. 31, s. 16; 2000, c. 12, s. 6

183. Parts XIV and XV of the Act are replaced by the following:

PART XIV REGULATION OF BANKS — COMMISSIONER

Marginal note:Required information

657. A bank or an authorized foreign bank shall provide the Commissioner with the information at the times and in the form that the Commissioner may require for the purposes of the administration of the Financial Consumer Agency of Canada Act and the consumer provisions.

Marginal note:Confidential information

658. (1) Subject to subsection (2), information regarding the business or affairs of a bank or authorized foreign bank or regarding persons dealing with any of them that is obtained by the Commissioner or by any person acting under the direction of the Commissioner, in the course of the exercise or performance of powers, duties and functions referred to in subsection 5(1) of the Financial Consumer Agency of Canada Act, and any information prepared from that information, is confidential and shall be treated accordingly.

Marginal note:Disclosure permitted

(2) If the Commissioner is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed, subsection (1) does not prevent the Commissioner from disclosing it

(a) to any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;

(b) to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;

(c) to the Canada Deposit Insurance Corporation, for purposes related to its operation; and

(d) to the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions.

Marginal note:Examination of banks

659. (1) The Commissioner, from time to time but at least once in each calendar year, shall make or cause to be made any examination and inquiry that the Commissioner considers necessary for the purposes of satisfying the Commissioner that the applicable consumer provisions are being complied with and, after the conclusion of each examination and inquiry, shall report on it to the Minister.

Marginal note:Access to records of bank

(2) The Commissioner or a person acting under the Commissioner’s direction in carrying out his or her duties under subsection (1)

(a) has a right of access to any records, including electronic records, of a bank or authorized foreign bank; and

(b) may require the directors or officers of a bank or authorized foreign bank to provide information and explanations, to the extent that they are reasonably able to do so, in respect of any matter subject to examination or inquiry under subsection (1).

Marginal note:Power of Commissioner on inquiry

660. The Commissioner, in carrying out his or her duties in relation to consumer provisions, has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Commissioner’s direction.

Marginal note:Compliance agreement

661. The Commissioner may enter into an agreement, called a “compliance agreement”, with a bank or an authorized foreign bank for the purposes of implementing any measure designed to further compliance by it with the consumer provisions.

PART XV BANK HOLDING COMPANIES

Purpose

Marginal note:Purpose

662. The purpose of this Part is to provide for the incorporation, formation and regulation of bank holding companies.

Division 1Interpretation

Marginal note:Definitions

663. (1) The following definitions apply in this Part.

“complainant”

« plaignant »

“complainant”, in relation to a bank holding company or any matter concerning a bank holding company, means

(a) a registered holder or beneficial owner, and a former registered holder or beneficial owner, of a security of a bank holding company or any of its affiliates;

(b) a director or an officer, or a former director or officer, of a bank holding company or any of its affiliates; or

(c) any other person who, in the discretion of a court, is a proper person to make an application under section 334, 338 or 989.

“subordinated indebtedness”

« titre secondaire »

“subordinated indebtedness” means an instrument evidencing an indebtedness of a bank holding company that by its terms provides that the indebtedness will, in the event of the insolvency or winding-up of the bank holding company, be subordinate in right of payment to all liabilities of the bank holding company except those that, by their terms, rank equally with or are subordinate to such indebtedness.

Marginal note:Provisions in other Parts

(2) A reference in a provision of this Part to a provision in any other Part is deemed to be a reference to that provision as it has been made applicable by this Part in respect of bank holding companies.

Marginal note:References in other Parts

(3) A reference in a provision of another Part to a provision that has been made applicable in respect of bank holding companies by this Part is to be read as including a reference to that provision as it has been made applicable in respect of bank holding companies.

Division 2Status and Powers

Marginal note:Corporate powers

664. (1) A bank holding company has the capacity of a natural person and, subject to this Act, the rights, powers and privileges of a natural person.

Marginal note:Powers restricted

(2) A bank holding company shall not carry on any business or exercise any power that it is restricted by this Act from carrying on or exercising, or exercise any of its powers in a manner contrary to this Act.

Marginal note:Business in Canada

(3) A bank holding company may carry on business throughout Canada.

Marginal note:Powers outside Canada

(4) Subject to this Act, a bank holding company has the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Canada to the extent and in the manner that the laws of that jurisdiction permit.

Marginal note:No invalidity

665. No act of a bank holding company, including any transfer of property to or by a bank holding company, is invalid by reason only that the act or transfer is contrary to the bank holding company’s incorporating instrument or this Act.

Marginal note:By-law not necessary

666. It is not necessary for a bank holding company to pass a by-law in order to confer any particular power on the bank holding company or its directors.

Marginal note:No personal liability

667. The shareholders of a bank holding company are not, as shareholders, liable for any liability, act or default of the bank holding company except as otherwise provided by this Act.

Marginal note:No constructive notice

668. No person is affected by or is deemed to have notice or knowledge of the contents of a document concerning a bank holding company by reason only that the document has been filed with the Superintendent or the Minister or is available for inspection at an office of the bank holding company.

Marginal note:Authority of directors and officers

669. A bank holding company or a guarantor of an obligation of a bank holding company may not assert against a person dealing with the bank holding company or with any person who has acquired rights from the bank holding company that

(a) the bank holding company’s incorporating instrument or any by-laws of the bank holding company have not been complied with,

(b) the persons named as directors of the bank holding company in the most recent return sent to the Superintendent under section 951 are not the directors of the bank holding company,

(c) the place named in the incorporating instrument or the by-laws of the bank holding company is not the head office of the bank holding company,

(d) a person held out by the bank holding company as a director, an officer or a representative of the bank holding company has not been duly appointed or has no authority to exercise the powers and perform the duties that are customary in the business of the bank holding company or usual for such director, officer or representative, or

(e) a document issued by any director, officer or representative of the bank holding company with actual or usual authority to issue the document is not valid or not genuine,

except where the person has or ought to have by virtue of the person’s position with or relationship to the bank holding company knowledge to that effect.

Marginal note:Sunset provision

670. (1) Subject to subsection (2), bank holding companies shall not carry on business after the day that is five years after this section comes into force, except that if Parliament dissolves on that day or at any time within the three-month period before that day, bank holding companies may continue to carry on business until the day that is one hundred and eighty days after the first day of the first session of the next Parliament.

Marginal note:Extension

(2) The Governor in Council may, by order, extend by up to six months the time during which bank holding companies may continue to carry on business. No more than one order may be made under this subsection.

Division 3Incorporation and Continuance

Formalities of Incorporation

Marginal note:Incorporation of bank holding company

671. On the application of one or more persons made in accordance with this Part, the Minister may, subject to this Division, issue letters patent incorporating a bank holding company.

Marginal note:Restrictions on incorporation

672. Letters patent incorporating a bank holding company may not be issued if the application therefor is made by or on behalf of

(a) Her Majesty in right of Canada or in right of a province, an agency of Her Majesty in either of those rights, or an entity controlled by Her Majesty in either of those rights;

(b) the government of a foreign country or any political subdivision thereof;

(c) an agency of the government of a foreign country or any political subdivision thereof; or

(d) an entity, other than a foreign institution or any subsidiary of a foreign institution, that is controlled by the government of a foreign country or any political subdivision thereof.

Marginal note:National treatment

673. If a proposed bank holding company would be a subsidiary of a foreign bank, within the meaning of any of paragraphs (a) to (f) of the definition “foreign bank” in section 2, letters patent to incorporate the bank holding company may not be issued unless the Minister is satisfied that, if the application is made by a non-WTO Member foreign bank, treatment as favourable for bank holding companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.

Marginal note:Application for incorporation

674. An application for letters patent to incorporate a bank holding company setting out the names of the first directors of the bank holding company shall be filed with the Superintendent, together with such other information, material and evidence as the Superintendent may require.

Marginal note:Matters for consideration

675. Before issuing letters patent to incorporate a bank holding company, the Minister shall take into account all matters that the Minister considers relevant to the application, including

(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank that is proposed to be its subsidiary;

(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank that is proposed to be its subsidiary;

(c) the business record and experience of the applicant or applicants;

(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the bank holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank holding company and its affiliates on the conduct of those businesses and operations; and

(g) the best interests of the financial system in Canada.

Marginal note:Contents of letters patent

676. (1) There shall be set out in the letters patent incorporating a bank holding company

(a) the name of the bank holding company;

(b) the place in Canada where the head office of the bank holding company is to be situated; and

(c) the date that the bank holding company came, or is to come, into existence.

Marginal note:Provisions in letters patent

(2) The Minister may set out in the letters patent incorporating a bank holding company any provision not contrary to this Act that the Minister considers advisable in order to take into account the particular circumstances of the proposed bank holding company.

Marginal note:Terms and conditions

(3) The Minister may impose such terms and conditions in respect of the issuance of letters patent incorporating a bank holding company as the Minister considers necessary or appropriate.

Marginal note:Letters patent of incorporation on application of banks

677. (1) If, under section 671, the Minister issues letters patent incorporating a bank holding company on the application of a bank, there may, on the request of the bank, and with the approval of the Minister, be included in the letters patent of incorporation of the bank holding company a provision deeming shares of the bank holding company to be issued, on a share for share basis, to all shareholders of the bank in exchange for all the issued and outstanding shares of the bank.

Marginal note:Effect of provision

(2) Shares of a bank holding company deemed to be issued under subsection (1) are subject to the same designation, rights, privileges and restrictions or conditions and, subject to any agreement to the contrary, to the same charges, encumbrances and other restrictions as the shares of the bank for which they are exchanged and the shares of the bank, on the issuance of the letters patent, become the property of the bank holding company free and clear of any charge, encumbrance or other restriction.

Marginal note:Effect of provision

(3) An exchange of shares of a bank referred to in subsection (1) under a provision included in the letters patent incorporating a bank holding company does not deprive a person who was a holder of shares of the bank immediately before the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect of the shares, but that right or privilege must be exercised in accordance with this Act.

Marginal note:Transfer and voting of shares

(4) Despite subsection (3), no share of a bank holding company that is deemed to be issued under a provision included in the letters patent incorporating a bank holding company may subsequently be transferred or voted contrary to this Act.

Marginal note:Shareholder approval

(5) No provision described in subsection (1) may be included in letters patent issued under section 671 unless the application for the letters patent is accompanied by evidence that the request for the provision was approved by a special resolution of the shareholders of the bank at a shareholders’ meeting called to consider the application.

Marginal note:Exchange of share certificates

(6) If, under a provision included in the letters patent incorporating a bank holding company, a share exchange is deemed to have taken place, the bank holding company shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the bank holding company and for the exchange of those certificates for share certificates representing the shares of the bank that were outstanding on the effective date of the letters patent.

Marginal note:Proposal involving fundamental change

678. (1) On application, made in accordance with the regulations, by a bank to give effect to a proposal to incorporate a bank holding company as the holding body corporate of the bank, to continue a body corporate as a bank holding company of the bank or to amalgamate two or more bodies corporate and continue those bodies corporate as a bank holding company of the bank — and to make any other fundamental change to or in respect of the bank, including an exchange of any or all of the shares of the bank for shares of the bank holding company —, the Minister may, to give effect to the proposal,

(a) include in the letters patent of the bank holding company issued under section 671, 684 or 809 any provision the Minister considers necessary; or

(b) despite any provision of the Act specified in regulations made under paragraph 2(e), give any approval that the Minister considers necessary.

Marginal note:Regulations

(2) The Governor in Council may make regulations

(a) respecting applications referred to in subsection (1), including their form and the information to be contained in them, and authorizing the Superintendent to require additional information in respect of such applications;

(b) respecting proposals to which subsection (1) applies, including the information to be contained in the proposals and the times within which the transactions involved in them must occur;

(c) respecting the procedures to be followed by a bank that makes an application under subsection (1);

(d) respecting the approval, confirmation or authorization, if any, of all or any portion of proposals to which subsection (1) applies, including the approval of shareholders and including the terms and conditions of those approvals, confirmations or authorizations and their effect; and

(e) specifying provisions of the Act for the purpose of paragraph (1)(b).

Marginal note:Notice of issue of letters patent

679. The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent incorporating a bank holding company.

Marginal note:First directors

680. The first directors of a bank holding company are the directors named in the application for letters patent to incorporate the bank holding company.

Marginal note:Effect of letters patent

681. A bank holding company comes into existence on the date provided therefor in its letters patent.

Continuance

Marginal note:Federal corporations

682. (1) A body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament, including a bank, may apply to the Minister for letters patent continuing the body corporate as a bank holding company under this Part.

Marginal note:Other corporations

(2) A body corporate incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the body corporate as a bank holding company under this Part.

Marginal note:Application for continuance

683. (1) Where a body corporate applies for letters patent under subsection 682(1) or (2), sections 672 to 675 apply in respect of the application, with such modifications as the circumstances require.

Marginal note:Special resolution approval

(2) Where a body corporate applies for letters patent under subsection 682(1) or (2), the application must be duly authorized by a special resolution.

Marginal note:Copy of special resolution

(3) A copy of the special resolution referred to in subsection (2) shall be filed with the application.

Marginal note:Power to issue letters patent

684. (1) On the application of a body corporate under subsection 682(1) or (2), the Minister may, subject to this Division, issue letters patent continuing the body corporate as a bank holding company under this Part.

Marginal note:Issue of letters patent

(2) Where letters patent are issued to a body corporate under subsection (1), section 676 applies in respect of the issue of letters patent, with such modifications as the circumstances require.

Marginal note:Effect of letters patent

685. On the day set out in the letters patent continuing a body corporate as a bank holding company under subsection 684(1),

(a) the body corporate becomes a bank holding company as if it had been incorporated under this Part; and

(b) the letters patent are deemed to be the incorporating instrument of the continued bank holding company.

Marginal note:Copy of letters patent

686. (1) Where a body corporate is continued as a bank holding company under this Part, the Superintendent shall without delay send a copy of the letters patent to the appropriate official or public body in the jurisdiction in which the body corporate was authorized to apply to be continued under this Part.

Marginal note:Notice of issuance of letters patent

(2) The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as a bank holding company under this Part.

Marginal note:Effects of continuance

687. Where a body corporate is continued as a bank holding company under this Part,

(a) the property of the body corporate continues to be the property of the bank holding company;

(b) the bank holding company continues to be liable for the obligations of the body corporate;

(c) an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;

(d) a civil, criminal or administrative action or proceeding pending by or against the body corporate may continue to be prosecuted by or against the bank holding company;

(e) a conviction against, or any ruling, order or judgment in favour of or against the body corporate may be enforced by or against the bank holding company;

(f) a person who, on the day the body corporate becomes a bank holding company, was the holder of a security issued by the body corporate is not deprived of any right or privilege available to the person at that time in respect of the security or relieved of any liability in respect thereof, but any such right or privilege may be exercised only in accordance with this Act; and

(g) the by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the bank holding company.

Marginal note:Transitional

688. (1) Notwithstanding any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to a bank holding company in respect of which letters patent were issued under subsection 684(1) permission to

(a) engage in a business activity specified in the order that a bank holding company is not otherwise permitted by this Act to engage in and that the body corporate continued as the bank holding company was engaging in at the time the application for the letters patent was made;

(b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;

(c) hold assets that a bank holding company is not otherwise permitted by this Act to hold if the assets were held by the body corporate continued as the bank holding company at the time the application for the letters patent was made;

(d) acquire and hold assets that a bank holding company is not otherwise permitted by this Act to acquire or hold if the body corporate continued as the bank holding company was obliged, at the time the application for the letters patent was made, to acquire those assets; and

(e) maintain outside Canada any records or registers required by this Act to be maintained in Canada and maintain and process outside Canada information and data relating to the preparation and maintenance of such records or registers.

Marginal note:Duration

(2) The permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceeding

(a) with respect to any activity described in paragraph (1)(a), thirty days after the effective date of the letters patent or, where the activity is conducted pursuant to an agreement existing on the effective date of the letters patent, the expiration of the agreement;

(b) with respect to any matter described in paragraph (1)(b), ten years; and

(c) with respect to any matter described in any of paragraphs (1)(c) to (e), two years.

Marginal note:Renewal

(3) Subject to subsection (4), the Minister may, on the recommendation of the Superintendent, by order, renew a permission granted by order under subsection (1) with respect to any matter described in paragraphs (1)(b) to (d) for such further period or periods as the Minister considers necessary.

Marginal note:Limitation

(4) The Minister shall not grant to a bank holding company any permission

(a) with respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the effective date of the letters patent, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank holding company that the bank holding company will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and

(b) with respect to matters described in paragraphs (1)(c) and (d), that purports to be effective more than ten years after the effective date of the letters patent.

Discontinuance

Marginal note:Transferring to other Acts

689. (1) A bank holding company may, with the approval in writing of the Minister, apply to be continued as a body corporate under any other Act of Parliament or any Act of the legislature of a province.

Marginal note:Conditions for approval

(2) No approval referred to in subsection (1) may be given to a bank holding company unless the Minister is satisfied that the application of the bank holding company has been authorized by a special resolution.

Meaning of “bank holding company without a bank subsidiary”

690. (1) For the purpose of this section, “bank holding company without a bank subsidiary” means a bank holding company that does not, at any time within one year after it came into existence, have a subsidiary that is a bank or that does not, for a period of one year, have a subsidiary that is a bank.

Marginal note:Obligation to apply

(2) A bank holding company without a bank subsidiary must, within 30 days after becoming a bank holding company without a bank subsidiary, apply to be continued under subsection 689(1).

Marginal note:Cessation of existence

(3) Except for the sole purpose of winding up its affairs, a bank holding company without a bank subsidiary that has no other subsidiary that fails to make an application under subsection (2) within the time provided for in that subsection ceases to exist on the expiration of that period.

Marginal note:Act ceases to apply

691. On the day specified by the Minister, this Act ceases to apply to the body corporate continued under the other Act of Parliament or under the Act of the legislature of a province.

Marginal note:Withdrawing application

692. Where a special resolution authorizing the application under subsection 689(1) so states, the directors of a bank holding company may, without further approval of the shareholders, withdraw the application before it is acted on.

Corporate Name

Marginal note:Prohibited names

693. A bank holding company may not be incorporated under this Part with a name

(a) that is prohibited by an Act of Parliament;

(b) that is, in the opinion of the Superintendent, deceptively misdescriptive;

(c) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, any existing

(i) trade-mark or trade name, or

(ii) corporate name of a body corporate,

except where the trade-mark or trade name is being changed or the body corporate is being dissolved or is changing its corporate name and consent to the use of the trade-mark, trade name or corporate name is signified to the Superintendent in such manner as the Superintendent may require;

(d) that is the same as or, in the opinion of the Superintendent, substantially the same as or confusingly similar to, the known name under or by which any entity carries on business or is identified; or

(e) that is reserved under section 43 for a bank or an authorized foreign bank or a proposed bank or proposed authorized foreign bank or under section 697 for another bank holding company or a proposed bank holding company.

Marginal note:Affiliated bank holding company

694. Despite section 693 and subject to section 695, a bank holding company that is affiliated with another entity may, with the consent of that entity and the approval of the Superintendent,

(a) be incorporated with, or change its name to, substantially the same name as that of the affiliated entity; or

(b) subject to any terms and conditions that may be prescribed, carry on business under or identify itself by a name, other than its corporate name, that is substantially the same as the corporate name of the affiliated entity or that is another name under which or with which the affiliated entity carries on business or otherwise identifies itself.

Marginal note:Restriction

695. A bank holding company may not be incorporated or continued with, change its name to or carry on business or identify itself by, a name that is substantially similar to that of a bank unless the name contains words that, in the opinion of the Superintendent, indicate to the public that the bank holding company is distinct from any bank that is a subsidiary of the bank holding company.

Marginal note:French or English form of name

696. (1) The name of a bank holding company may be set out in its letters patent in an English form, a French form, an English form and a French form or in a combined English and French form, and the bank holding company may use and be legally designated by any such form.

Marginal note:Mandatory abbreviation

(2) Despite any other provision of this Act and subject to the regulations, every bank holding company shall have as part of its name, the abbreviations “bhc” or “spb”.

Marginal note:Alternate name

(3) A bank holding company may identify itself outside Canada by its name in any language and the bank holding company may use and be legally designated by any such form of its name outside Canada.

Marginal note:Other name

(4) Subject to subsection (5) and section 832, a bank holding company may carry on business under or identify itself by a name other than its corporate name.

Marginal note:Directions

(5) Where a bank holding company is carrying on business under or identifying itself by a name other than its corporate name, the Superintendent may, by order, direct the bank holding company not to use that other name if the Superintendent is of the opinion that that other name is a name referred to in any of paragraphs 693(a) to (e).

Marginal note:Regulations

(6) The Governor in Council may make regulations respecting the use of the abbreviations “bhc” or “spb” in the name of bank holding companies.

Marginal note:Reserved name

697. The Superintendent may, on request, reserve for ninety days a name for a proposed bank holding company or for a bank holding company that intends to change its name.

Marginal note:Directing change of name

698. (1) If through inadvertence or otherwise a bank holding company

(a) comes into existence or is continued with a name, or

(b) on an application to change its name, is granted a name

that is prohibited by section 693 or 695, the Superintendent may, by order, direct the bank holding company to change its name and the bank holding company shall comply with that direction.

Marginal note:Revoking name

(2) Where a bank holding company has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Part, the Superintendent may revoke the name of the bank holding company and assign to it a name and, until changed in accordance with section 215 or 217, the name of the bank holding company is thereafter the name so assigned.

Publication of Information

Marginal note:Publication of information

699. The Superintendent shall, within sixty days after the end of each year, cause a notice to be published in the Canada Gazette, showing

(a) the name of every bank holding company; and

(b) the place in Canada where the head office of the bank holding company is situated.

Division 4Organization and Commencement

Marginal note:First directors’ meeting

700. (1) After letters patent incorporating a bank holding company are issued, a meeting of the directors of the bank holding company shall be held at which the directors may, subject to this Division,

(a) make by-laws;

(b) adopt forms of share certificates and corporate records;

(c) authorize the issue of shares of the bank holding company;

(d) appoint officers;

(e) appoint an auditor to hold office until the first meeting of shareholders;

(f) make banking arrangements; and

(g) deal with any other matters necessary to organize the bank holding company.

Marginal note:Calling directors’ meeting

(2) An incorporator or a director named in the application for letters patent may call the meeting referred to in subsection (1) by giving, subject to subsection 770(2), no fewer than five days notice of the purpose, time and place of the meeting to each director of the bank holding company.

Marginal note:Calling shareholders’ meeting

701. (1) After the meeting referred to in subsection 700(1) is held, the directors of the bank holding company shall without delay call a meeting of the shareholders of the bank holding company.

Marginal note:Meeting of shareholders

(2) The shareholders of a bank holding company shall, by resolution at the meeting of shareholders called pursuant to subsection (1),

(a) approve, amend or reject any by-law made by the directors of the bank holding company;

(b) subject to section 756, elect directors to hold office for a term expiring not later than the close of the third annual meeting of shareholders following the election; and

(c) appoint an auditor to hold office until the close of the first annual meeting of shareholders.

Marginal note:Term of first directors

702. A director named in the application for letters patent to incorporate a bank holding company holds office until the election of directors at the meeting of shareholders called pursuant to subsection 701(1).

Division 5Capital Structure

Share Capital

Marginal note:Power to issue shares

703. (1) Subject to this Part and the by-laws of the bank holding company, shares of a bank holding company may be issued at such times and to such persons and for such consideration as the directors of the bank holding company may determine.

Marginal note:Shares

(2) Shares of a bank holding company shall be in registered form and shall be without nominal or par value.

Marginal note:Shares of continued bank holding company

(3) Where a body corporate is continued as a bank holding company under this Part, shares with nominal or par value issued by the body corporate before it was so continued are deemed to be shares without nominal or par value.

Marginal note:Deemed share conditions

(4) If a right of a holder of a share with nominal or par value of a body corporate continued as a bank holding company under this Part, other than a voting right, was stated or expressed in terms of the nominal or par value of the share immediately before the body corporate was continued under this Part, that right is deemed, after the continuance, to be the same right stated or expressed without reference to the nominal or par value of the share.

Marginal note:Common shares

704. (1) A bank holding company shall have one class of shares, to be designated as “common shares”, which are non-redeemable and in which the rights of the holders thereof are equal in all respects, and those rights include

(a) the right to vote at all meetings of shareholders except where only holders of a specified class of shares are entitled to vote;

(b) the right to receive dividends declared on those shares; and

(c) the right to receive the remaining property of the bank holding company on dissolution.

Marginal note:Designations of shares

(2) No bank holding company shall designate more than one class of its shares as “common shares” or any variation of that term.

Marginal note:Continued bank holding company

(3) A body corporate continued as a bank holding company under this Part that is not in compliance with subsection (2) on the date letters patent continuing it as a bank holding company are issued shall, within twelve months after that date, redesignate its shares to comply with that subsection.

Marginal note:Classes of shares

705. (1) The by-laws of a bank holding company may provide for more than one class of shares and, if they so provide, shall set out

(a) the rights, privileges, restrictions and conditions attaching to the shares of each class; and

(b) the maximum number, if any, of shares of any class that the bank holding company is authorized to issue.

Marginal note:Shareholder approval

(2) Where a by-law referred to in subsection (1) is made, the directors of the bank holding company shall submit the by-law to the shareholders at the next meeting of shareholders.

Marginal note:Effective date

(3) A by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders at the meeting referred to in subsection (2).

Marginal note:Shares in series

706. (1) The by-laws of a bank holding company made pursuant to section 705 may authorize the issue of any class of shares in one or more series and may authorize the directors of the bank holding company to fix the maximum number, if any, of shares in each series and to determine the designation, rights, privileges, restrictions and conditions attaching to the shares of each series, subject to the limitations set out in the by-laws.

Marginal note:Series participation

(2) If any cumulative dividend or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and return of capital.

Marginal note:Voting rights

(3) Where voting rights are attached to any series of a class of shares, the shares of every other series of that class shall have the same voting rights.

Marginal note:Restriction on series

(4) No rights, privileges, restrictions or conditions attached to a series of shares authorized under this section confer on the series a priority in respect of dividends or return of capital over any other series of shares of the same class that are then outstanding.

Marginal note:Material to Superintendent

(5) Before the issue of shares of a series of shares authorized under this section, the directors shall send to the Superintendent a copy of the by-law authorizing the directors to fix the rights, privileges, restrictions and conditions of those shares and shall provide the Superintendent with particulars of the proposed series of shares.

Marginal note:One share, one vote

707. Where voting rights are attached to a share of a bank holding company, the voting rights may confer only one vote in respect of that share.

Marginal note:Shares non-assessable

708. Shares issued by a bank holding company are non-assessable and the shareholders are not liable to the bank holding company or to its creditors in respect thereof.

Marginal note:Consideration for share

709. (1) No share of any class of shares of a bank holding company shall be issued until it is fully paid for in money or, with the approval of the Superintendent, in property.

Marginal note:Other currencies

(2) When issuing shares, a bank holding company may provide that any aspect of the shares relating to money or involving the payment of or the liability to pay money be in a currency other than the currency of Canada.

Marginal note:Stated capital account

710. (1) A bank holding company shall maintain a separate stated capital account for each class and series of shares it issues.

Marginal note:Addition to stated capital account

(2) A bank holding company shall record in the appropriate stated capital account the full amount of any consideration it receives for any shares it issues.

Marginal note:Exception

(3) Notwithstanding subsection (2), a bank holding company may record in the appropriate stated capital account part of the amount of any consideration it receives for shares it issues

(a) in exchange for

(i) property of a person who immediately before the exchange did not deal with the bank holding company at arm’s length within the meaning of the Income Tax Act, or

(ii) shares of a body corporate that immediately before the exchange, or because of the exchange, did not deal with the bank holding company at arm’s length within the meaning of the Income Tax Act; or

(b) under an agreement referred to in subsection 804(1) to shareholders of an amalgamating body corporate who receive the shares in addition to or instead of securities of the amalgamated bank holding company.

Marginal note:Limit on addition to a stated capital account

(4) On the issuance of a share, a bank holding company shall not add to the stated capital account in respect of the share an amount greater than the amount of the consideration it receives for the share.

Marginal note:Constraint on addition to a stated capital account

(5) Where a bank holding company that has issued any outstanding shares of more than one class or series proposes to add to a stated capital account that it maintains in respect of a class or series of shares an amount that was not received by the bank holding company as consideration for the issue of shares, the addition must be approved by special resolution unless all the issued and outstanding shares are of not more than two classes of convertible shares referred to in subsection 720(4).

Marginal note:Stated capital of continued bank holding company

711. (1) Where a body corporate is continued as a bank holding company under this Part, the bank holding company shall record in the stated capital account maintained for each class and series of shares then outstanding an amount that is equal to the aggregate of

(a) the aggregate amount paid up on the shares of each class and series of shares immediately before the body corporate was so continued, and

(b) the amount of the contributed surplus of the bank holding company that is attributable to those shares.

Marginal note:Contributed surplus entry

(2) The amount of any contributed surplus recorded in the stated capital account pursuant to paragraph (1)(b) shall be deducted from the contributed surplus account of the bank holding company.

Marginal note:Shares issued before continuance

(3) Any amount unpaid in respect of a share issued by a body corporate before it was continued as a bank holding company under this Part and paid after it was so continued shall be recorded in the stated capital account maintained by the bank holding company for the shares of that class or series.

Marginal note:Pre-emptive right

712. (1) Where the by-laws of a bank holding company so provide, no shares of any class shall be issued unless the shares have first been offered to the shareholders holding shares of that class, and those shareholders have a pre-emptive right to acquire the offered shares in proportion to their holdings of the shares of that class, at such price and on such terms as those shares are to be offered to others.

Marginal note:Exception

(2) Notwithstanding the existence of a pre-emptive right, a shareholder of a bank holding company has no pre-emptive right in respect of shares of a class to be issued

(a) for a consideration other than money;

(b) as a share dividend; or

(c) pursuant to the exercise of conversion privileges, options or rights previously granted by the bank holding company.

Marginal note:Exception

(3) Notwithstanding the existence of a pre-emptive right, a shareholder of a bank holding company has no pre-emptive right in respect of shares to be issued

(a) where the issue of shares to the shareholder is prohibited by this Part; or

(b) where, to the knowledge of the directors of the bank holding company, the offer of shares to a shareholder whose recorded address is in a country other than Canada ought not to be made unless the appropriate authority in that country is provided with information in addition to that submitted to the shareholders at the last annual meeting.

Marginal note:Conversion privileges

713. (1) A bank holding company may issue conversion privileges, options or rights to acquire securities of the bank holding company, and shall set out the conditions thereof

(a) in the documents that evidence the conversion privileges, options or rights; or

(b) in the securities to which the conversion privileges, options or rights are attached.

Marginal note:Transferable rights

(2) Conversion privileges, options and rights to acquire securities of a bank holding company may be made transferable or non-transferable, and options and rights to acquire such securities may be made separable or inseparable from any securities to which they are attached.

Marginal note:Reserved shares

(3) Where a bank holding company has granted privileges to convert any securities issued by the bank holding company into shares, or into shares of another class or series, or has issued or granted options or rights to acquire shares, if the by-laws limit the number of authorized shares, the bank holding company shall reserve and continue to reserve sufficient authorized shares to meet the exercise of such conversion privileges, options and rights.

Marginal note:Holding of own shares

714. Except as provided in sections 715 to 717, or unless permitted by the regulations, a bank holding company shall not

(a) hold shares of the bank holding company or of any body corporate that controls the bank holding company;

(b) hold any ownership interests of any unincorporated entity that controls the bank holding company;

(c) permit any of its subsidiaries to hold any shares of the bank holding company or of any body corporate that controls the bank holding company; or

(d) permit any of its subsidiaries to hold any ownership interests of any unincorporated entity that controls the bank holding company.

Marginal note:Purchase and redemption of shares

715. (1) Subject to subsection (2) and to its by-laws, a bank holding company may, with the consent of the Superintendent, purchase, for the purpose of cancellation, any shares issued by it, or redeem any redeemable shares issued by it at prices not exceeding the redemption price thereof calculated according to a formula stated in its by-laws or the conditions attaching to the shares.

Marginal note:Restrictions on purchase and redemption

(2) A bank holding company shall not make any payment to purchase or redeem any shares issued by it if there are reasonable grounds for believing that the bank holding company is, or the payment would cause the bank holding company to be, in contravention of any regulation referred to in subsection 949(1) or (2) or any direction made pursuant to subsection 949(3).

Marginal note:Donated shares

(3) A bank holding company may accept from any shareholder a share of the bank holding company surrendered to it as a gift, but may not extinguish or reduce a liability in respect of an amount unpaid on any such share except in accordance with section 718.

Marginal note:Holding as personal representative

716. (1) A bank holding company may permit its subsidiaries to hold, in the capacity of a personal representative, shares of the bank holding company or of any body corporate that controls the bank holding company or ownership interests in any unincorporated entity that controls the bank holding company, but only if the subsidiary does not have a beneficial interest in the shares or ownership interests.

Marginal note:Security interest

(2) A bank holding company may permit its subsidiaries to hold by way of a security interest shares of the bank holding company or of any body corporate that controls the bank holding company, or any ownership interests of any entity that controls the bank holding company, if the security interest is nominal or immaterial when measured by criteria established by the bank holding company that have been approved in writing by the Superintendent.

Marginal note:Cancellation of shares

717. (1) Subject to subsection (2), where a bank holding company purchases shares of the bank holding company or fractions thereof or redeems or otherwise acquires shares of the bank holding company, the bank holding company shall cancel those shares.

Marginal note:Requirement to sell

(2) If a subsidiary of a bank holding company, through the realization of security, acquires any shares of the bank holding company or of any body corporate that controls the bank holding company or any ownership interests in an unincorporated entity that controls the bank holding company, the bank holding company shall cause its subsidiary to, within six months after the day of the realization, sell or otherwise dispose of the shares or ownership interests.

Marginal note:Reduction of capital

718. (1) The stated capital of a bank holding company may be reduced by special resolution.

Marginal note:Limitation

(2) A bank holding company shall not reduce its stated capital by special resolution if there are reasonable grounds for believing that the bank holding company is, or the reduction would cause the bank holding company to be, in contravention of any regulation referred to in subsection 949(1) or (2) or any direction made pursuant to subsection 949(3).

Marginal note:Contents of special resolution

(3) A special resolution to reduce the stated capital of a bank holding company shall specify the stated capital account or accounts from which the reduction of stated capital effected by the special resolution will be deducted.

Marginal note:Approval by Superintendent

(4) A special resolution to reduce the stated capital of a bank holding company has no effect until it is approved in writing by the Superintendent.

Marginal note:Conditions for approval

(5) No approval to reduce the stated capital of a bank holding company may be given by the Superintendent unless application therefor is made within three months after the time of the passing of the special resolution and a copy of the special resolution, together with a notice of intention to apply for approval, has been published in the Canada Gazette.

Marginal note:Statements to be submitted

(6) In addition to evidence of the passing of a special resolution to reduce the stated capital of a bank holding company and of the publication thereof, statements showing

(a) the number of the bank holding company’s shares issued and outstanding,

(b) the results of the voting by class of shares of the bank holding company,

(c) the bank holding company’s assets and liabilities, and

(d) the reason why the bank holding company seeks the reduction of capital

shall be submitted to the Superintendent at the time of the application for approval of the special resolution.

Marginal note:Recovery by action

719. (1) Where any money or property was paid or distributed to a shareholder or other person as a consequence of a reduction of capital made contrary to section 718, a creditor of the bank holding company may apply to a court for an order compelling the shareholder or other person to pay the money or deliver the property to the bank holding company.

Marginal note:Shares held by personal representative

(2) No person holding shares in the capacity of a personal representative and registered on the records of the bank holding company as a shareholder and therein described as the personal representative of a named person is personally liable under subsection (1), but the named person is subject to all the liabilities imposed by that subsection.

Marginal note:Limitation

(3) An action to enforce a liability imposed by subsection (1) may not be commenced more than two years after the date of the act complained of.

Marginal note:Remedy preserved

(4) This section does not affect any liability that arises under section 794.

Marginal note:Adjustment of stated capital account

720. (1) On a purchase, redemption or other acquisition by a bank holding company of shares or fractions thereof issued by it, the bank holding company shall deduct from the stated capital account maintained for the class or series of shares so purchased, redeemed or otherwise acquired an amount equal to the result obtained by multiplying the stated capital in respect of the shares of that class or series by the number of shares of that class or series so purchased, redeemed or otherwise acquired and dividing by the number of shares of that class or series outstanding immediately before the purchase, redemption or other acquisition.

Marginal note:Adjustment of stated capital account

(2) A bank holding company shall adjust its stated capital account or accounts in accordance with any special resolution referred to in section 718.

Marginal note:Shares converted to another class

(3) On a conversion of outstanding shares of a bank holding company into shares of another class or series, or on a change of outstanding shares of the bank holding company into shares of another class or series, the bank holding company shall

(a) deduct from the stated capital account maintained for the class or series of shares converted or changed an amount equal to the result obtained by multiplying the stated capital of the shares of that class or series by the number of shares of that class or series converted or changed, and dividing by the number of outstanding shares of that class or series immediately before the conversion or change; and

(b) record the result obtained under paragraph (a) and any additional consideration received pursuant to the conversion or change in the stated capital account maintained or to be maintained for the class or series of shares into which the shares have been converted or changed.

Marginal note:Stated capital of convertible shares

(4) For the purposes of subsection (3) and subject to the bank holding company’s by-laws, where a bank holding company issues two classes of shares and there is attached to each class a right to convert a share of one class into a share of the other class and a share is so converted, the amount of stated capital attributable to a share in either class is the aggregate of the stated capital of both classes divided by the number of outstanding shares of both classes immediately before the conversion.

Marginal note:Conversion or change of shares

(5) Shares issued by a bank holding company and converted into shares of another class or series, or changed under subsection 217(1) into shares of another class or series, become issued shares of the class or series of shares into which the shares have been converted or changed.

Marginal note:Addition to stated capital account

721. On a conversion of any debt obligation of a bank holding company into shares of a class or series of shares, the bank holding company shall

(a) deduct from the liabilities of the bank holding company the nominal value of the debt obligation being converted; and

(b) record the result obtained under paragraph (a) and any additional consideration received for the conversion in the stated capital account maintained or to be maintained for the class or series of shares into which the debt obligation has been converted.

Marginal note:Declaration of dividend

722. (1) The directors of a bank holding company may declare and a bank holding company may pay a dividend by issuing fully paid shares of the bank holding company or options or rights to acquire fully paid shares of the bank holding company and, subject to subsection (4), the directors of a bank holding company may declare and a bank holding company may pay a dividend in money or property, and where a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.

Marginal note:Notice to Superintendent

(2) The directors of a bank holding company shall notify the Superintendent of the declaration of a dividend at least ten days prior to the day fixed for its payment.

Marginal note:Share dividend

(3) If shares of a bank holding company are issued in payment of a dividend, the bank holding company shall record in the stated capital account maintained or to be maintained for the shares of the class or series issued in payment of the dividend the declared amount of the dividend stated as an amount of money.

Marginal note:When dividend not to be declared

(4) The directors of a bank holding company shall not declare and a bank holding company shall not pay a dividend if there are reasonable grounds for believing that the bank holding company is, or the payment would cause the bank holding company to be, in contravention of any regulation referred to in subsection 949(1) or (2) or any direction made pursuant to subsection 949(3).

Subordinated Indebtedness

Marginal note:Restriction on subordinated indebtedness

723. (1) A bank holding company shall not issue subordinated indebtedness unless the subordinated indebtedness is fully paid for in money or, with the approval of the Superintendent, in property.

Marginal note:References to subordinated indebtedness

(2) A person shall not in any prospectus, advertisement, correspondence or literature relating to any subordinated indebtedness issued or to be issued by a bank holding company refer to the subordinated indebtedness otherwise than as subordinated indebtedness.

Marginal note:Other currencies

(3) When issuing subordinated indebtedness, a bank holding company may provide that any aspect of the subordinated indebtedness relating to money or involving the payment of or the liability to pay money in relation thereto be in a currency other than that of Canada including, without restricting the generality of the foregoing, the payment of any interest thereon.

Security Certificates and Transfers

Marginal note:Sections 81 to 135 apply

724. Sections 81 to 135 apply in respect of bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”;

(b) references to “this Act” in those sections are to be read as references to “this Part”;

(c) references to “Part VII” in those sections are to be read as references to “Division 7 of Part XV”;

(d) references to “this Part” in those sections are to be read as references to “this Division”;

(e) the reference to “subsections 137(2) to (5) and sections 138 to 141 and 145” in subsection 93(1) is to be read as a reference to “subsections 726(2) to (5) and sections 727 to 730 and 734”; and

(f) the reference to “section 71 or 77” in subsection 97(3) is to be read as a reference to “section 715 or 720”.

Division 6Corporate Governance

Shareholders

Marginal note:Place of meetings

725. Meetings of shareholders of a bank holding company shall be held at the place within Canada provided for in the by-laws of the bank holding company or, in the absence of any such provision, at the place within Canada that the directors determine.

Marginal note:Calling meetings

726. (1) The directors of a bank holding company

(a) shall, after the meeting called pursuant to subsection 701(1), call the first annual meeting of shareholders of the bank holding company, which meeting must be held not later than six months after the end of the first financial year of the bank holding company, and subsequently call an annual meeting of shareholders, which meeting must be held not later than six months after the end of each financial year; and

(b) may at any time call a special meeting of shareholders.

Marginal note:Fixing record date

(2) For the purpose of determining shareholders

(a) entitled to receive payment of a dividend,

(b) entitled to participate in a liquidation distribution, or

(c) for any other purpose except the right to receive notice of, or to vote at, a meeting,

the directors may fix in advance a date as the record date for the determination of shareholders, but the record date so fixed shall not precede by more than fifty days the particular action to be taken.

Marginal note:Record date for meetings

(3) For the purpose of determining shareholders entitled to receive notice of a meeting of shareholders, the directors may fix in advance a date as the record date for the determination of shareholders, but the record date so fixed shall not precede by more than fifty days or by less than twenty-one days the date on which the meeting is to be held.

Marginal note:No record date fixed

(4) If no record date is fixed pursuant to subsection (2) or (3),

(a) the record date for the determination of shareholders for any purpose, other than to establish a shareholder’s right to receive notice of a meeting or to vote, is the day on which the directors pass the resolution relating to the particular purpose; and

(b) the record date for the determination of shareholders entitled to receive notice of, or to vote at, a meeting of shareholders is

(i) the day immediately preceding the day on which the notice is given, or

(ii) if no notice is given, the day on which the meeting is held.

Marginal note:When record date fixed

(5) When a record date is fixed for a bank holding company, unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the central securities register at the close of business on the date the directors fix the record date, notice thereof shall, not less than seven days before the record date, be given

(a) by advertisement in a newspaper in general circulation in the place where the head office of the bank holding company is situated and in each place in Canada where the bank holding company has a transfer agent or where a transfer of the bank holding company’s shares may be recorded; and

(b) by written notice to each stock exchange, if any, in Canada on which the shares of the bank holding company are listed for trading.

Marginal note:Notice of meeting

727. (1) Notice of the time and place of a meeting of shareholders of a bank holding company shall be sent not less than twenty-one days or more than fifty days before the meeting

(a) to each shareholder entitled to vote at the meeting;

(b) to each director; and

(c) to the auditor of the bank holding company.

Marginal note:Number of eligible votes

(2) A bank holding company with equity of five billion dollars or more shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 156.09(1), that may be cast at the meeting as of the record date for determining those shareholders entitled to receive the notice of meeting, or if there are to be separate votes of shareholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.

Marginal note:Publication in newspaper

(3) In addition to the notice required under subsection (1), where any class of shares of a bank holding company is publicly traded on a recognized stock exchange in Canada, notice of the time and place of a meeting of shareholders shall be published once a week for at least four consecutive weeks before the date of the meeting in a newspaper in general circulation in the place where the head office of the bank holding company is situated and in each place in Canada where the bank holding company has a transfer agent or where a transfer of the bank holding company’s shares may be recorded.

Marginal note:When notice not required

728. (1) A notice of a meeting of shareholders is not required to be sent to shareholders who were not registered on the records of the bank holding company or its transfer agent on the record date fixed or determined under subsection 726(3) or (4).

Marginal note:Effect of default

(2) Failure to receive a notice of a meeting of shareholders does not deprive a shareholder of the right to vote at the meeting.

Marginal note:Notice of adjourned meeting

729. (1) If a meeting of shareholders is adjourned for less than thirty days, it is not necessary, unless the by-laws otherwise provide, to give notice of the adjourned meeting, other than by announcement at the earliest meeting that is adjourned.

Marginal note:Notice where adjournment is longer

(2) If a meeting of shareholders is adjourned by one or more adjournments for a total of thirty days or more, notice of the continuation of the meeting shall be given as for an original meeting but, unless the meeting is adjourned by one or more adjournments for a total of more than ninety days, subsection 156.04(1) does not apply.

Marginal note:Special business

730. (1) All matters dealt with at a special meeting of shareholders and all matters dealt with at an annual meeting of shareholders, except consideration of the financial statements, report of the auditor, election of directors, remuneration of directors and reappointment of the incumbent auditor, are deemed to be special business.

Marginal note:Notice of special business

(2) Notice of a meeting of shareholders at which special business is to be transacted must

(a) state the nature of the special business in sufficient detail to permit a shareholder to form a reasoned judgment thereon; and

(b) contain the text of any special resolution to be submitted to the meeting.

Marginal note:Waiver of notice

731. (1) A shareholder and any other person entitled to attend a meeting of shareholders may in any manner waive notice of a meeting of shareholders.

Marginal note:Attendance is waiver

(2) Attendance at a meeting of shareholders is a waiver of notice of the meeting, except when a person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

Marginal note:Shareholder’s proposal

732. (1) A shareholder entitled to vote at an annual meeting of shareholders of a bank holding company may

(a) submit to the bank holding company notice of any matter that the shareholder proposes to raise at the meeting; and

(b) discuss at the meeting any matter in respect of which the shareholder would have been entitled to submit a proposal.

Marginal note:Circulation of proposal

(2) A bank holding company shall attach any proposal of a shareholder submitted for consideration at a meeting of shareholders to the notice of the meeting.

Marginal note:Shareholder’s statement

(3) If so requested by a shareholder who submits a proposal to a bank holding company, the bank holding company shall attach to the notice of the meeting a statement by the shareholder of not more than two hundred words in support of the proposal and the name and address of the shareholder.

Marginal note:Nominations for directors

(4) A proposal may include nominations for the election of directors if the proposal is signed by one or more holders of shares representing in the aggregate not less than 5 per cent of the shares or 5 per cent of the shares of a class of shares of the bank holding company entitled to vote at the meeting to which the proposal is to be presented.

Marginal note:Conditions precedent for proposals

(5) A bank holding company is not required to comply with subsections (2) and (3) if

(a) the proposal is not submitted to the bank holding company at least ninety days before the anniversary date of the previous annual meeting of shareholders;

(b) it clearly appears that the proposal is submitted by the shareholder primarily for the purpose of enforcing a personal claim or redressing a personal grievance against the bank holding company or its directors, officers or security holders, or primarily for the purpose of promoting general economic, political, racial, religious, social or similar causes;

(c) the bank holding company, at the shareholder’s request, attached a proposal to the notice of a meeting of shareholders held within two years preceding the receipt of the request, and the shareholder failed to present the proposal, in person or by proxy, at the meeting;

(d) substantially the same proposal was submitted to shareholders in a dissident’s proxy circular relating to, or was attached to the notice of, a meeting of shareholders held within two years preceding the receipt of the shareholder’s request and the proposal was defeated; or

(e) the rights conferred by subsections (1) to (4) are being abused to secure publicity.

Marginal note:Immunity for proposal and statement

(6) No bank holding company or person acting on behalf of a bank holding company incurs any liability by reason only of circulating a proposal or statement in compliance with subsections (2) and (3).

Marginal note:Refusal of proposal

733. (1) If a bank holding company refuses to attach a proposal to a notice of a meeting, the bank holding company shall, within ten days after receiving the proposal, notify the shareholder submitting the proposal of its intention to not attach the proposal to the notice of the meeting and send to the shareholder a statement of the reasons for the refusal.

Marginal note:Appeal to court

(2) On the application of a shareholder claiming to be aggrieved by a bank holding company’s refusal under subsection (1), a court may restrain the holding of the meeting at which the proposal is sought to be presented and make any further order it thinks fit.

Marginal note:Appeal to court

(3) A bank holding company or any person claiming to be aggrieved by a proposal may apply to a court for an order permitting the bank holding company to not attach the proposal to the notice of a meeting, and the court, if it is satisfied that subsection 732(5) applies, may make such order as it thinks fit.

Marginal note:Notice to Superintendent

(4) An applicant under subsection (2) or (3) shall give the Superintendent written notice of the application and the Superintendent may appear and be heard at the hearing of the application in person or by counsel.

Marginal note:Shareholder list

734. (1) A bank holding company shall prepare a list, which may be in electronic form, of its shareholders entitled to receive notice of a meeting under paragraph 727(1)(a), arranged in alphabetical order and showing the number of shares held by each shareholder, which list must be prepared

(a) if a record date is fixed under subsection 726(3), not later than ten days after that date; or

(b) if no record date is fixed,

(i) at the close of business on the day immediately preceding the day on which the notice is given, or

(ii) where no notice is given, on the day on which the meeting is held.

Marginal note:Effect of list

(2) Where a bank holding company fixes a record date under subsection 726(3), a person named in the list prepared under paragraph (1)(a) is, subject to this Part, entitled to vote the shares shown opposite that person’s name at the meeting to which the list relates, except to the extent that

(a) the person has transferred the ownership of any of those shares after the record date, and

(b) the transferee of those shares

(i) produces properly endorsed share certificates, or

(ii) otherwise establishes that the transferee owns the shares,

and demands, not later than ten days before the meeting or such shorter period before the meeting as the by-laws of the bank holding company provide, that the transferee’s name be included in the list before the meeting,

in which case the transferee may vote those transferred shares at the meeting.

Marginal note:Effect of list

(3) Where a bank holding company does not fix a record date under subsection 726(3), a person named in the list prepared under paragraph (1)(b) is, subject to this Part, entitled to vote the shares shown opposite that person’s name at the meeting to which the list relates, except to the extent that

(a) the person has transferred the ownership of any of those shares after the date on which a list was prepared under subparagraph (1)(b)(i), and

(b) the transferee of those shares

(i) produces properly endorsed share certificates, or

(ii) otherwise establishes that the transferee owns the shares,

and demands, not later than ten days before the meeting or such shorter period before the meeting as the by-laws of the bank holding company provide, that the transferee’s name be included in the list before the meeting,

in which case the transferee may vote those transferred shares at the meeting.

Marginal note:Examination of list

(4) A shareholder of a bank holding company may examine the list of shareholders referred to in subsection (1)

(a) during usual business hours at the head office of the bank holding company or at the place where its central securities register is maintained; and

(b) at the meeting of shareholders for which the list was prepared.

Marginal note:Quorum

735. (1) Unless the by-laws otherwise provide, a quorum of shareholders is present at a meeting of shareholders if the holders of a majority of the shares who are entitled to vote at the meeting are present in person or represented by proxyholders.

Marginal note:Quorum present at opening

(2) If a quorum is present at the opening of a meeting of shareholders, the shareholders present may, unless the by-laws otherwise provide, proceed with the business of the meeting, notwithstanding that a quorum is not present throughout the meeting.

Marginal note:Quorum not present at opening

(3) If a quorum is not present at the opening of a meeting of shareholders, the shareholders present may adjourn the meeting to a fixed time and place but may not transact any other business.

Marginal note:One shareholder meeting

736. If a bank holding company has only one shareholder, or only one holder of any class or series of shares, the shareholder present in person or represented by a proxyholder constitutes a meeting of shareholders or a meeting of shareholders of that class or series.

Marginal note:One share — one vote

737. Subject to subsection 156.09, if a share of a bank holding company entitles the holder of the share to vote at a meeting of shareholders, that share entitles the shareholder to one vote at the meeting.

Marginal note:Representative shareholder

738. (1) If an entity is a shareholder of a bank holding company, the bank holding company shall recognize any natural person authorized by a resolution of the directors or governing body or similar authority of the entity to represent it at meetings of shareholders of the bank holding company.

Marginal note:Powers

(2) A natural person authorized under subsection (1) to represent an entity may exercise on behalf of the entity all the powers the entity could exercise if it were a natural person as well as a shareholder.

Marginal note:Joint shareholders

739. Unless the by-laws otherwise provide, if two or more persons hold shares jointly, one of those holders present at a meeting of shareholders may in the absence of the others vote the shares, but if two or more of those persons who are present in person or represented by proxyholder vote, they shall vote as one on the shares jointly held by them.

Marginal note:Voting by hands or ballot

740. (1) Unless the by-laws otherwise provide, voting at a meeting of shareholders shall take place by show of hands except when a ballot is demanded by either a shareholder or proxyholder entitled to vote at the meeting.

Marginal note:Ballot

(2) A shareholder or proxyholder may demand a ballot either before or after any vote by show of hands.

Marginal note:Resolution in lieu of meeting

741. (1) Except where a written statement is submitted by a director under section 762 or by an auditor under subsection 853(1),

(a) a resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of the shareholders; and

(b) a resolution in writing dealing with all matters required by this Part to be dealt with at a meeting of shareholders, and signed by all the shareholders entitled to vote at that meeting, satisfies all the requirements of this Part relating to meetings of shareholders.

Marginal note:Filing resolution

(2) A copy of every resolution referred to in subsection (1) shall be kept with the minutes of the meetings of shareholders.

Marginal note:Requisitioned meeting

742. (1) Shareholders who together hold not less than 5 per cent of the issued and outstanding shares of a bank holding company that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition.

Marginal note:Form

(2) A requisition referred to in subsection (1)

(a) must state the business to be transacted at the meeting and must be sent to each director and to the head office of the bank holding company; and

(b) may consist of several documents of like form, each signed by one or more shareholders.

Marginal note:Directors calling meeting

(3) On receipt of a requisition referred to in subsection (1), the directors shall call a meeting of shareholders to transact the business stated in the requisition, unless

(a) a record date has been fixed under subsection 726(3) and notice thereof has been given under subsection 726(5);

(b) the directors have called a meeting of shareholders and have given notice thereof under section 727; or

(c) the business of the meeting as stated in the requisition includes matters described in paragraphs 732(5)(b) to (e).

Marginal note:Shareholders’ power

(4) If the directors do not call a meeting within twenty-one days after receiving the requisition referred to in subsection (1), any shareholder who signed the requisition may call the meeting.

Marginal note:Procedure

(5) A meeting called under this section shall be called as nearly as possible in the manner in which meetings are to be called pursuant to the by-laws and this Part.

Marginal note:Reimbursement

(6) Unless the shareholders otherwise resolve at a meeting called under subsection (4), the bank holding company shall reimburse the shareholders for any expenses reasonably incurred by them in requisitioning, calling and holding the meeting.

Marginal note:Meeting called by court

743. (1) Where it is impracticable

(a) to call a meeting of shareholders of a bank holding company in the manner in which meetings of those shareholders are to be called, or

(b) to conduct the meeting in the manner required by the by-laws and this Part,

or where a court thinks fit to do so for any other reason, the court, on the application of a director or a shareholder entitled to vote at the meeting, may order a meeting to be called, held and conducted in such manner as the court directs.

Marginal note:Varying quorum

(2) Without restricting the generality of subsection (1), a court may order that the quorum required by the by-laws or this Part be varied or dispensed with at a meeting called, held and conducted pursuant to this section.

Marginal note:Valid meeting

(3) A meeting called, held and conducted pursuant to this section is for all purposes a meeting of shareholders of the bank holding company duly called, held and conducted.

Marginal note:Court review of election

744. (1) A bank holding company or a shareholder or director of a bank holding company may apply to a court to resolve any dispute in respect of the election or appointment of a director or an auditor of the bank holding company.

Marginal note:Powers of court

(2) On an application under subsection (1), a court may make any order it thinks fit including, without limiting the generality of the foregoing,

(a) an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute;

(b) an order declaring the result of the disputed election or appointment;

(c) an order requiring a new election or appointment, and including in the order directions for the management of the business and affairs of the bank holding company until a new election is held or the new appointment is made; and

(d) an order determining the voting rights of shareholders and of persons claiming to own shares.

Marginal note:Notice to Superintendent

745. (1) A person who makes an application under subsection 743(1) or 744(1) shall give notice of the application to the Superintendent before the hearing and shall deliver a copy of the order of the court, if any, to the Superintendent.

Marginal note:Superintendent representation

(2) The Superintendent may appear and be heard in person or by counsel at the hearing of an application referred to in subsection (1).

Proxies and Voting Restrictions

Marginal note:Sections 156.01 to 156.09 apply

746. Sections 156.01 to 156.09 apply in respect of bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”;

(b) references to “this Part” in those sections are to be read as references to “this Division”;

(c) the English version of subsection 156.05(1) is to be read without reference to “or auditors”;

(d) the reference to “section 375” in subsection 156.09(4) is to be read as a reference to “section 878”; and

(e) the reference to “subsection 138(1.1)” in subsection 156.09(11) is to be read as a reference to “subsection 727(2)”.

Directors and Officers

Duties

Marginal note:Duty to manage

747. (1) Subject to this Act, the directors of a bank holding company shall manage or supervise the management of the business and affairs of the bank holding company.

Marginal note:Specific duties

(2) Without limiting the generality of subsection (1), the directors of a bank holding company shall

(a) establish an audit committee to perform the duties referred to in subsections 782(3) and (4);

(b) establish procedures to resolve conflicts of interest, including techniques for the identification of potential conflict situations and for restricting the use of confidential information;

(c) designate a committee of the board of directors to monitor the procedures referred to in paragraph (b); and

(d) establish investment and lending policies, standards and procedures in accordance with section 927.

Marginal note:Exception

(3) Paragraph (2)(a) does not apply to the directors of a bank holding company if

(a) all the voting shares of the bank holding company are beneficially owned by a Canadian financial institution described in any of paragraphs (a) to (d) of the definition “financial institution” in section 2; and

(b) the audit committee of the financial institution performs for and on behalf of the bank holding company all the functions that would otherwise be required to be performed by the audit committee of the bank holding company under this Part.

Marginal note:Duty of care

748. (1) Every director and officer of a bank holding company in exercising any of the powers of a director or an officer and discharging any of the duties of a director or an officer shall

(a) act honestly and in good faith with a view to the best interests of the bank holding company; and

(b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

Marginal note:Duty to comply

(2) Every director, officer and employee of a bank holding company shall comply with this Act, the regulations, the bank holding company’s incorporating instrument and the by-laws of the bank holding company.

Marginal note:No exculpation

(3) No provision in any contract, in any resolution or in the by-laws of a bank holding company relieves any director, officer or employee of the bank holding company from the duty to act in accordance with this Act and the regulations or relieves a director, officer or employee from liability for a breach thereof.

Qualification and Number — Directors

Marginal note:Minimum number of directors

749. (1) A bank holding company shall have at least seven directors.

Marginal note:Residency requirement

(2) At least one half of the directors of a bank holding company that is a subsidiary of a foreign bank and at least two-thirds of the directors of any other bank holding company must be, at the time of each director’s election or appointment, resident Canadians.

Marginal note:Disqualified persons

750. The following persons are disqualified from being directors of a bank holding company:

(a) a person who is less than eighteen years of age;

(b) a person who is of unsound mind and has been so found by a court in Canada or elsewhere;

(c) a person who has the status of a bankrupt;

(d) a person who is not a natural person;

(e) a person who is prohibited by subsection 156.09(9) or section 901 or 914 from exercising voting rights attached to shares of the bank holding company;

(f) a person who is an officer, director or full time employee of an entity that is prohibited by subsection 156.09(9) or section 901 or 914 from exercising voting rights attached to shares of the bank holding company;

(g) a person who is an agent or employee of Her Majesty in right of Canada or in right of a province;

(h) a minister of Her Majesty in right of Canada or in right of a province; and

(i) a person who is an agent or employee of the government of a foreign country or any political subdivision thereof.

Marginal note:No shareholder requirement

751. A director of a bank holding company is not required to hold shares of the bank holding company.

Marginal note:Limit on directors

752. No more than 15 per cent of the directors of a bank holding company may, at each director’s election or appointment, be employees of the bank holding company or a subsidiary of the bank holding company, except that up to four persons who are employees of the bank holding company or a subsidiary of the bank holding company may be directors of the bank holding company if those directors constitute not more than one half of the directors of the bank holding company.

Election and Tenure — Directors

Marginal note:Number of directors

753. (1) Subject to section 217, subsection 749(1) and section 756, the directors of a bank holding company shall, by by-law, determine the number of directors or the minimum and maximum number of directors, but no by-law that decreases the number of directors shortens the term of an incumbent director.

Marginal note:Election at annual meeting

(2) A by-law made pursuant to subsection (1) that provides for a minimum and maximum number of directors may provide that the number of directors to be elected at any annual meeting of the shareholders be such number as is fixed by the directors prior to the annual meeting.

Marginal note:Term of directors

754. (1) Except where this Part or the by-laws of a bank holding company provide for cumulative voting, a bank holding company may, by by-law, provide that the directors be elected for terms of one, two or three years.

Marginal note:Term of one, two or three years

(2) A director elected for a term of one, two or three years holds office until the close of the first, second or third annual meeting of shareholders, as the case may be, following the election of the director.

Marginal note:No stated term

(3) A director who is not elected for an expressly stated term of office ceases to hold office at the close of the next annual meeting of shareholders following the election of the director.

Marginal note:Tenure of office

(4) It is not necessary that all directors elected at a meeting of shareholders hold office for the same term.

Marginal note:Tenure of office

(5) If a by-law of a bank holding company provides that the directors be elected for a term of two or three years, it may also provide that the term of office of each director be for the whole of that term, or that, as nearly as may be, one half of the directors retire each year if the term is two years, and that one third of the directors retire each year if the term is three years.

Marginal note:Composition requirements

(6) If a director of a bank holding company is elected or appointed for a term of more than one year, the bank holding company shall comply with subsection 749(2) and section 752 at each annual meeting of shareholders during the director’s term of office as if that director were elected or appointed on that date.

Marginal note:Determining election of directors

755. (1) Except where this Part or the by-laws of a bank holding company provide for cumulative voting, the persons, to the number authorized to be elected, who receive the greatest number of votes at an election of directors of a bank holding company shall be the directors thereof.

Marginal note:Determining election of directors

(2) If, at any election of directors referred to in subsection (1), two or more persons receive an equal number of votes and there are not sufficient vacancies remaining to enable all the persons receiving an equal number of votes to be elected, the directors who receive a greater number of votes or the majority of them shall, in order to complete the full number of directors, determine which of the persons so receiving an equal number of votes are to be elected.

Marginal note:Cumulative voting

756. (1) Where this Part or the by-laws provide for cumulative voting,

(a) there shall be a stated number of directors fixed by by-law and not a minimum and maximum number of directors;

(b) each shareholder entitled to vote at an election of directors has the right to cast a number of votes equal to the number of votes attached to the shares held by the shareholder multiplied by the number of directors to be elected, and the shareholder may cast all such votes in favour of one candidate or distribute them among the candidates in any manner;

(c) a separate vote of shareholders shall be taken with respect to each candidate nominated for director unless a resolution is passed unanimously permitting two or more persons to be elected by a single vote;

(d) if a shareholder has voted for more than one candidate without specifying the distribution of the votes among the candidates, the shareholder is deemed to have distributed the votes equally among the candidates for whom the shareholder voted;

(e) if the number of candidates nominated for director exceeds the number of positions to be filled, the candidates who receive the least number of votes shall be eliminated until the number of candidates remaining equals the number of positions to be filled;

(f) each director ceases to hold office at the close of the next annual meeting of shareholders following the director’s election;

(g) a director may not be removed from office if the votes cast against the removal would be sufficient to elect the director and those votes could be voted cumulatively at an election at which the same total number of votes were cast and the same number of directors required by the by-laws were then being elected; and

(h) the number of directors required by the by-laws may not be decreased if the votes cast against the motion to decrease would be sufficient to elect a director and those votes could be voted cumulatively at an election at which the same total number of votes were cast and the same number of directors required by the by-laws were then being elected.

Marginal note:Mandatory cumulative voting

(2) Where the aggregate of the voting shares beneficially owned by a person and any entities controlled by the person carries more than 10 per cent of the voting rights attached to all the outstanding voting shares of a bank holding company, the directors shall be elected by cumulative voting.

Marginal note:Exception

(3) Subsection (2) does not apply if all the voting shares of the bank holding company that are outstanding are beneficially owned by

(a) one person;

(b) one person and one or more entities controlled by that person; or

(c) one or more entities controlled by the same person.

Marginal note:Exception

(4) Subsection (2) does not apply to a widely held bank holding company with equity of five billion dollars or more or to a widely held bank holding company that controls a bank to which subsection 378(1) applies.

Marginal note:Transitional election

(5) Where this Part or the by-laws of a bank holding company provide for cumulative voting, the shareholders of the bank holding company shall

(a) at the first annual meeting of shareholders held not earlier than ninety days following the date that cumulative voting is required under subsection (2) or provided for in the by-laws, and

(b) at each succeeding annual meeting,

elect the stated number of directors to hold office until the close of the next annual meeting of shareholders following their election.

Marginal note:Exception

(6) Nothing in this Part precludes the holders of any class or series of shares of a bank holding company from having an exclusive right to elect one or more directors.

Marginal note:Re-election of directors

757. A director who has completed a term of office is, if otherwise qualified, eligible for re-election.

Incomplete Elections and Director Vacancies

Marginal note:Void election or appointment

758. (1) If, immediately after the time of any purported election or appointment of directors, the board of directors would fail to comply with subsection 749(2) or section 752, the purported election or appointment of all persons purported to be elected or appointed at that time is void unless the directors, within forty-five days after the discovery of the non-compliance, develop a plan, approved by the Superintendent, to rectify the non-compliance.

Marginal note:Failure to elect minimum

(2) Where, at the close of a meeting of shareholders of a bank holding company, the shareholders have failed to elect the number or minimum number of directors required by this Part or the by-laws of a bank holding company, the purported election of directors at the meeting

(a) is valid if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together constitute a quorum; or

(b) is void if the directors purported to be elected and those incumbent directors, if any, whose terms did not expire at the close of the meeting, together do not constitute a quorum.

Marginal note:Directors where elections incomplete or void

759. (1) Notwithstanding subsections 754(2) and (3) and paragraphs 756(1)(f) and 760(1)(a), where subsection 758(1) or (2) applies at the close of any meeting of shareholders of a bank holding company, the board of directors shall, until their successors are elected or appointed, consist solely of

(a) where paragraph 758(2)(a) applies, the directors referred to in that paragraph; or

(b) where subsection 758(1) or paragraph 758(2)(b) applies, the persons who were the incumbent directors immediately before the meeting.

Marginal note:Where there is no approved rectification plan

(2) Notwithstanding subsections 754(2) and (3) and paragraphs 756(1)(f) and 760(1)(a), where a plan to rectify the non-compliance referred to in subsection 758(1) has not been approved by the Superintendent by the end of the forty-five day period referred to in that subsection, the board of directors shall, until their successors are elected or appointed, consist solely of the persons who were the incumbent directors immediately before the meeting at which the purported election or appointment referred to in that subsection occurred.

Marginal note:Directors to call meeting

(3) Where subsection (1) or (2) applies, the board of directors referred to in that subsection shall without delay call a special meeting of shareholders to fill the vacancies, where paragraph 758(2)(a) applies, or elect a new board of directors, where subsection 758(1) or paragraph 758(2)(b) applies.

Marginal note:Shareholder may call meeting

(4) Where the directors fail to call a special meeting required by subsection (3), the meeting may be called by any shareholder.

Marginal note:Ceasing to hold office

760. (1) A director ceases to hold office

(a) at the close of the annual meeting at which the director’s term of office expires;

(b) when the director dies or resigns;

(c) when the director becomes disqualified under section 750 or ineligible to hold office pursuant to subsection 790(2);

(d) when the director is removed under section 761; or

(e) when the director is removed from office under section 963 or 964.

Marginal note:Date of resignation

(2) The resignation of a director of a bank holding company becomes effective at the time a written resignation is sent to the bank holding company by the director or at the time specified in the resignation, whichever is later.

Marginal note:Removal of director

761. (1) Subject to paragraph 756(1)(g), the shareholders of a bank holding company may by resolution at a special meeting remove any director or all the directors from office.

Marginal note:Exception

(2) Where the holders of any class or series of shares of a bank holding company have the exclusive right to elect one or more directors, a director so elected may be removed only by a resolution at a meeting of the shareholders of that class or series.

Marginal note:Vacancy by removal

(3) Subject to paragraphs 756(1)(b) to (e), a vacancy created by the removal of a director may be filled at the meeting of the shareholders at which the director is removed or, if not so filled, may be filled under section 765 or 766.

Marginal note:Statement of director

762. (1) A director who

(a) resigns,

(b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of removing the director from office, or

(c) receives a notice or otherwise learns of a meeting of directors or shareholders at which another person is to be appointed or elected to fill the office of director, whether because of the director’s resignation or removal or because the director’s term of office has expired or is about to expire,

is entitled to submit to the bank holding company a written statement giving the reasons for the resignation or the reasons why the director opposes any proposed action or resolution.

Marginal note:Statement re disagreement

(2) Where a director resigns as a result of a disagreement with the other directors or the officers of a bank holding company, the director shall submit to the bank holding company and the Superintendent a written statement setting out the nature of the disagreement.

Marginal note:Circulation of statement

763. (1) A bank holding company shall without delay on receipt of a director’s statement referred to in subsection 762(1) relating to a matter referred to in paragraph 762(1)(b) or (c), or a director’s statement referred to in subsection 762(2), send a copy of it to each shareholder entitled to receive a notice of meetings and to the Superintendent, unless the statement is attached to a notice of a meeting.

Marginal note:Immunity for statement

(2) No bank holding company or person acting on its behalf incurs any liability by reason only of circulating a director’s statement in compliance with subsection (1).

Marginal note:Shareholders filling vacancy

764. The by-laws of a bank holding company may provide that a vacancy among the directors is to be filled only

(a) by a vote of the shareholders; or

(b) by a vote of the holders of any class or series of shares having an exclusive right to elect one or more directors if the vacancy occurs among the directors elected by the holders of that class or series.

Marginal note:Directors filling vacancy

765. (1) Notwithstanding section 772 but subject to subsection (2) and sections 764 and 766, a quorum of directors may fill a vacancy among the directors except a vacancy among the directors resulting from a change in the by-laws by which the number or minimum number of directors is increased or from a failure to elect the number or minimum number of directors required by the by-laws.

Marginal note:Where composition fails

(2) Notwithstanding sections 764 and 772, where by reason of a vacancy the number of directors or the composition of the board of directors fails to meet any of the requirements of section 749 or section 752, the directors who, in the absence of any by-law, would be empowered to fill that vacancy shall do so forthwith.

Marginal note:Class vacancy

766. Notwithstanding section 772, where the holders of any class or series of shares of a bank holding company have an exclusive right to elect one or more directors and a vacancy occurs among those directors, then, subject to section 764,

(a) the remaining directors elected by the holders of that class or series may fill the vacancy except a vacancy resulting from an increase in the number or minimum number of directors for that class or series or from a failure to elect the number or minimum number of directors for that class or series;

(b) if there are no such remaining directors and, by reason of the vacancy, the number of directors or the composition of the board of directors fails to meet any of the requirements of section 749 or section 752, the other directors may fill that vacancy; and

(c) if there are no such remaining directors and paragraph (b) does not apply, any holder of shares of that class or series may call a meeting of the holders thereof for the purpose of filling the vacancy.

Marginal note:Unexpired term

767. Unless the by-laws otherwise provide, a director elected or appointed to fill a vacancy holds office for the unexpired term of the director’s predecessor in office.

Marginal note:Additional directors

768. (1) The directors of a bank holding company may appoint one or more additional directors where the by-laws of the bank holding company allow them to do so and the by-laws determine the minimum and maximum numbers of directors.

Marginal note:Term of office

(2) A director appointed under subsection (1) holds office for a term expiring not later than the close of the next annual meeting of shareholders of the bank holding company.

Marginal note:Limit on number appointed

(3) The total number of directors appointed under subsection (1) may not exceed one third of the number of directors elected at the previous annual meeting of shareholders of the bank holding company.

Meetings of the Board

Marginal note:Meetings required

769. (1) The directors shall meet at least four times during each financial year.

Marginal note:Place for meetings

(2) The directors may meet at any place unless the by-laws provide otherwise.

Marginal note:Notice for meetings

(3) The notice for the meetings must be given as required by the by-laws.

Marginal note:Notice of meeting

770. (1) A notice of a meeting of directors shall specify each matter referred to in section 785 that is to be dealt with at the meeting but, unless the by-laws otherwise provide, need not otherwise specify the purpose of or the business to be transacted at the meeting.

Marginal note:Waiver of notice

(2) A director may in any manner waive notice of a meeting of directors and the attendance of a director at a meeting of directors is a waiver of notice of that meeting except where the director attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

Marginal note:Adjourned meeting

(3) Notice of an adjourned meeting of directors is not required to be given if the time and place of the adjourned meeting were announced at the original meeting.

Marginal note:Quorum

771. (1) Subject to section 772, the number of directors referred to in subsection (2) constitutes a quorum at any meeting of directors or a committee of directors and, notwithstanding any vacancy among the directors, a quorum of directors may exercise all the powers of the directors.

Marginal note:Quorum

(2) The number of directors constituting a quorum at any meeting of directors or a committee of directors shall be

(a) a majority of the minimum number of directors required by this Part for the board of directors or a committee of directors; or

(b) such greater number of directors than the number calculated pursuant to paragraph (a) as may be established by the by-laws of the bank holding company.

Marginal note:Director continues to be present

(3) Any director present at a meeting of directors who is not present at any particular time during the meeting for the purposes of subsection 790(1) shall be considered as being present for the purposes of this section.

Marginal note:Resident Canadian majority

772. (1) The directors of a bank holding company shall not transact business at a meeting of directors unless

(a) in the case of a bank holding company that is a subsidiary of a foreign bank, at least one half of the directors present are resident Canadians; or

(b) in any other case, a majority of the directors present are resident Canadians.

Marginal note:Exception

(2) Notwithstanding subsection (1), the directors of a bank holding company may transact business at a meeting of directors or of a committee of directors without the required proportion of directors present who are resident Canadians if

(a) a director who is a resident Canadian unable to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting; and

(b) there would have been present the required proportion of directors who are resident Canadians had that director been present at the meeting.

Marginal note:Electronic meeting

773. (1) Subject to the by-laws of a bank holding company, a meeting of directors or of a committee of directors may be held by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other during the meeting.

Marginal note:Deemed present

(2) A director participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Part to be present at that meeting.

Marginal note:Resolution outside board meeting

774. (1) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of directors is as valid as if it had been passed at a meeting of directors.

Marginal note:Filing directors’ resolution

(2) A copy of the resolution referred to in subsection (1) shall be kept with the minutes of the proceedings of the directors.

Marginal note:Resolution outside committee meeting

(3) A resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of a committee of directors, other than a resolution of the audit committee in carrying out its duties under subsection 782(3), is as valid as if it had been passed at a meeting of that committee.

Marginal note:Filing committee resolution

(4) A copy of the resolution referred to in subsection (3) shall be kept with the minutes of the proceedings of that committee.

Marginal note:Dissent of director

775. (1) A director of a bank holding company who is present at a meeting of directors or a committee of directors is deemed to have consented to any resolution passed or action taken at that meeting unless

(a) the director requests that the director’s dissent be entered or the director’s dissent is entered in the minutes of the meeting;

(b) the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; or

(c) the director sends the director’s dissent by registered mail or delivers it to the head office of the bank holding company immediately after the meeting is adjourned.

Marginal note:Loss of right to dissent

(2) A director of a bank holding company who votes for or consents to a resolution is not entitled to dissent under subsection (1).

Marginal note:Dissent of absent director

(3) A director of a bank holding company who is not present at a meeting at which a resolution is passed or action taken is deemed to have consented thereto unless, within seven days after the director becomes aware of the resolution, the director

(a) causes the director’s dissent to be placed with the minutes of the meeting; or

(b) sends the director’s dissent by registered mail or delivers it to the head office of the bank holding company.

Marginal note:Record of attendance

776. (1) A bank holding company shall keep a record of the attendance at each meeting of directors and each committee meeting of directors.

Marginal note:Statement to shareholders

(2) A bank holding company shall attach to the notice of each annual meeting it sends to its shareholders a statement showing, in respect of the financial year immediately preceding the meeting, the total number of directors’ meetings and directors’ committee meetings held during the financial year and the number of those meetings attended by each director.

Marginal note:Meeting required by Superintendent

777. (1) Where in the opinion of the Superintendent it is necessary, the Superintendent may, by notice in writing, require a bank holding company to hold a meeting of directors of the bank holding company to consider the matters set out in the notice.

Marginal note:Attendance of Superintendent

(2) The Superintendent may attend and be heard at a meeting referred to in subsection (1).

By-laws

Marginal note:By-laws

778. (1) Unless this Part otherwise provides, the directors of a bank holding company may by resolution make, amend or repeal any by-law that regulates the business or affairs of the bank holding company.

Marginal note:Shareholder approval

(2) The directors shall submit a by-law, or an amendment to or a repeal of a by-law, that is made under subsection (1) to the shareholders at the next meeting of shareholders, and the shareholders may, by resolution, confirm or amend the by-law, amendment or repeal.

Marginal note:Effective date of by-law

(3) Unless this Part otherwise provides, a by-law, or an amendment to or a repeal of a by-law, is effective from the date of the resolution of the directors under subsection (1) until it is confirmed, confirmed as amended or rejected by the shareholders under subsection (2) or until it ceases to be effective under subsection (4) and, where the by-law is confirmed, or confirmed as amended, it continues in effect in the form in which it was so confirmed.

Marginal note:Effect where no shareholder approval

(4) If a by-law, or an amendment to or a repeal of a by-law, is rejected by the shareholders, or is not submitted to the shareholders by the directors as required under subsection (2), the by-law, amendment or repeal ceases to be effective from the date of its rejection or the date of the next meeting of shareholders, as the case may be, and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed, or confirmed as amended, by the shareholders.

Marginal note:Shareholder proposal of by-law

779. A shareholder entitled to vote at an annual meeting of shareholders may, in accordance with sections 732 and 733, make a proposal to make, amend or repeal a by-law.

Marginal note:Deemed by-laws

780. (1) Any matter that, immediately prior to the day a body corporate is continued as a bank holding company, was provided for in the incorporating instrument of the body corporate, and that, under this Part, would be provided for in the by-laws of a bank holding company, is deemed to be provided for in the by-laws of the bank holding company.

Marginal note:By-law prevails

(2) Where a by-law of the bank holding company made in accordance with sections 778 and 779 amends or repeals any matter referred to in subsection (1), the by-law prevails.

Committees of the Board

Marginal note:Committees

781. The directors of a bank holding company may appoint from their number, in addition to the committees referred to in subsection 747(2), such other committees as they deem necessary and, subject to section 785, delegate to those committees such powers of the directors, and assign to those committees such duties, as the directors consider appropriate.

Marginal note:Audit committee

782. (1) The audit committee of a bank holding company shall consist of at least three directors.

Marginal note:Membership

(2) None of the members of the audit committee may be officers or employees of the bank holding company or any of its subsidiaries.

Marginal note:Duties of audit committee

(3) The audit committee of a bank holding company shall

(a) review the annual statement of the bank holding company before the annual statement is approved by the directors;

(b) review such returns of the bank holding company as the Superintendent may specify;

(c) require the management of the bank holding company to implement and maintain appropriate internal control procedures;

(d) review, evaluate and approve those procedures;

(e) review such investments and transactions that could adversely affect the well-being of the bank holding company as the auditor or any officer of the bank holding company may bring to the attention of the committee;

(f) meet with the auditor to discuss the annual statement and the returns and transactions referred to in this subsection; and

(g) meet with the chief internal auditor of the bank holding company, or the officer or employee of the bank holding company acting in a similar capacity, and with management of the bank holding company, to discuss the effectiveness of the internal control procedures established for the bank holding company.

Marginal note:Report

(4) In the case of the annual statement and returns of a bank holding company that under this Part must be approved by the directors of the bank holding company, the audit committee of the bank holding company shall report thereon to the directors before the approval is given.

Marginal note:Required meeting of directors

(5) The audit committee of a bank holding company may call a meeting of the directors of the bank holding company to consider any matter of concern to the committee.

Directors and Officers — Authority

Marginal note:Chief executive officer

783. The directors of a bank holding company shall appoint from their number a chief executive officer who must be ordinarily resident in Canada and, subject to section 785, may delegate to that officer any of the powers of the directors.

Marginal note:Appointment of officers

784. (1) The directors of a bank holding company may, subject to the by-laws, designate the offices of the bank holding company, appoint officers thereto, specify the duties of those officers and delegate to them powers, subject to section 785, to manage the business and affairs of the bank holding company.

Marginal note:Directors as officers

(2) Subject to section 752, a director of a bank holding company may be appointed to any office of the bank holding company.

Marginal note:Two or more offices

(3) Two or more offices of a bank holding company may be held by the same person.

Marginal note:Limits on power to delegate

785. The directors of a bank holding company may not delegate any of the following powers, namely, the power to

(a) submit to the shareholders a question or matter requiring the approval of the shareholders;

(b) fill a vacancy among the directors or a committee of directors or in the office of the auditor of the bank holding company;

(c) issue or cause to be issued securities except in the manner and on terms authorized by the directors;

(d) declare a dividend;

(e) authorize the redemption or other acquisition by the bank holding company pursuant to section 715 of shares issued by the bank holding company;

(f) authorize the payment of a commission on a share issue;

(g) approve a management proxy circular;

(h) except as provided in this Part, approve the annual statement of the bank holding company and any other financial statements issued by the bank holding company; or

(i) adopt, amend or repeal by-laws.

Marginal note:Remuneration of directors, officers and employees

786. (1) Subject to this section and the by-laws, the directors of a bank holding company may fix the remuneration of the directors, officers and employees of the bank holding company.

Marginal note:By-law required

(2) No remuneration shall be paid to a director as director until a by-law fixing the aggregate of all amounts that may be paid to all directors in respect of directors’ remuneration during a fixed period of time has been confirmed by special resolution.

Marginal note:Validity of acts

787. (1) An act of a director or an officer of a bank holding company is valid notwithstanding a defect in the director’s qualification or an irregularity in the director’s election or in the appointment of the director or officer.

Marginal note:Validity of acts

(2) An act of the board of directors of a bank holding company is valid notwithstanding a defect in the composition of the board or an irregularity in the election of the board or in the appointment of a member of the board.

Marginal note:Right to attend meetings

788. A director of a bank holding company is entitled to attend and to be heard at every meeting of shareholders.

Conflicts of Interest

Marginal note:Disclosure of interest

789. (1) A director or an officer of a bank holding company who

(a) is a party to a material contract or proposed material contract with the bank holding company,

(b) is a director or an officer of any entity that is a party to a material contract or proposed material contract with the bank holding company, or

(c) has a material interest in any person who is a party to a material contract or proposed material contract with the bank holding company

shall disclose in writing to the bank holding company or request to have entered in the minutes of the meetings of directors the nature and extent of that interest.

Marginal note:Time of disclosure for director

(2) The disclosure required by subsection (1) shall be made, in the case of a director,

(a) at the meeting of directors at which a proposed contract is first considered;

(b) if the director was not then interested in a proposed contract, at the first meeting after the director becomes so interested;

(c) if the director becomes interested after a contract is made, at the first meeting after the director becomes so interested; or

(d) if a person who is interested in a contract later becomes a director, at the first meeting after that person becomes a director.

Marginal note:Time of disclosure for officer

(3) The disclosure required by subsection (1) shall be made, in the case of an officer who is not a director,

(a) forthwith after the officer becomes aware that a proposed contract is to be considered or a contract has been considered at a meeting of directors;

(b) if the officer becomes interested after a contract is made, forthwith after the officer becomes so interested; or

(c) if a person who is interested in a contract later becomes an officer, forthwith after the person becomes an officer.

Marginal note:Time of disclosure for director or officer

(4) If a material contract or proposed material contract is one that, in the ordinary course of business of the bank holding company, would not require approval by the directors or shareholders, a director or an officer referred to in subsection (1) shall disclose in writing to the bank holding company or request to have entered in the minutes of meetings of directors the nature and extent of the director’s or officer’s interest forthwith after the director or officer becomes aware of the contract or proposed contract.

Marginal note:Where director must abstain

790. (1) Where subsection 789(1) applies to a director in respect of a contract, the director shall not be present at any meeting of directors while the contract is being considered at the meeting or vote on any resolution to approve the contract unless the contract is

(a) an arrangement by way of security for money lent to or obligations undertaken by the director for the benefit of the bank holding company or a subsidiary of the bank holding company;

(b) a contract relating primarily to the director’s remuneration as a director or an officer, employee or agent of the bank holding company or a subsidiary of the bank holding company or an entity controlled by the bank holding company or an entity in which the bank holding company has a substantial investment;

(c) a contract for indemnity under section 799 or for insurance under section 800; or

(d) a contract with an affiliate of the bank holding company.

Marginal note:Ineligibility

(2) Any director who knowingly contravenes subsection (1) ceases to hold office as director and is not eligible, for a period of five years after the date on which the contravention occurred, for election or appointment as a director of any bank holding company, any insurance holding company or any financial institution that is incorporated or formed by or under an Act of Parliament.

Marginal note:Validity of acts

(3) An act of the board of directors of a bank holding company, or of a committee of the board of directors, is not invalid because a person acting as a director had ceased under subsection (2) to hold office as a director.

Marginal note:Continuing disclosure

791. For the purposes of subsection 789(1), a general notice to the directors by a director or an officer declaring that the director or officer is a director or officer of an entity, or has a material interest in a person, and is to be regarded as interested in any contract made with that entity or person, is a sufficient declaration of interest in relation to any contract so made.

Marginal note:Avoidance standards

792. A material contract between a bank holding company and one or more of its directors or officers, or between a bank holding company and another entity of which a director or an officer of the bank holding company is a director or an officer or between a bank holding company and a person in which the director or officer has a material interest, is neither void nor voidable

(a) by reason only of that relationship, or

(b) by reason only that a director with an interest in the contract is present at or is counted to determine the presence of a quorum at the meeting of directors or the committee of directors that authorized the contract,

if the director or officer disclosed the interest in accordance with subsection 789(2), (3) or (4) or section 791 and the contract was approved by the directors or the shareholders and it was reasonable and fair to the bank holding company at the time it was approved.

Marginal note:Application to court

793. Where a director or an officer of a bank holding company fails to disclose an interest in a material contract in accordance with sections 789 and 791, a court may, on the application of the bank holding company or a shareholder of the bank holding company, set aside the contract on such terms as the court thinks fit.

Liability, Exculpation and Indemnification

Marginal note:Directors’ liability

794. (1) The directors of a bank holding company who vote for or consent to a resolution of the directors authorizing the issue of a share contrary to subsection 709(1) or the issue of subordinated indebtedness contrary to section 723 for a consideration other than money are jointly and severally liable to the bank holding company to make good any amount by which the consideration received is less than the fair equivalent of the money that the bank holding company would have received if the share or subordinated indebtedness had been issued for money on the date of the resolution.

Marginal note:Further liabilities

(2) The directors of a bank holding company who vote for or consent to a resolution of the directors authorizing

(a) a redemption or purchase of shares contrary to section 715,

(b) a reduction of capital contrary to section 718,

(c) a payment of a dividend contrary to section 722, or

(d) a payment of an indemnity contrary to section 799

are jointly and severally liable to restore to the bank holding company any amounts so distributed or paid and not otherwise recovered by the bank holding company and any amounts in relation to any loss suffered by the bank holding company.

Marginal note:Contribution

795. (1) A director who has satisfied a judgment in relation to the director’s liability under section 794 is entitled to contribution from the other directors who voted for or consented to the unlawful act on which the judgment was founded.

Marginal note:Recovery

(2) A director who is liable under section 794 is entitled to apply to a court for an order compelling a shareholder or other person to pay or deliver to the director any money or property that was paid or distributed to the shareholder or other person contrary to section 715, 718, 722 or 799.

Marginal note:Court order

(3) Where an application is made to a court under subsection (2), the court may, where it is satisfied that it is equitable to do so,

(a) order a shareholder or other person to pay or deliver to a director any money or property that was paid or distributed to the shareholder or other person contrary to section 715, 718, 722 or 799;

(b) order a bank holding company to return or issue shares to a person from whom the bank holding company has purchased, redeemed or otherwise acquired shares; or

(c) make any further order it thinks fit.

Marginal note:Limitation

796. An action to enforce a liability imposed by section 794 may not be commenced after two years from the date of the resolution authorizing the action complained of.

Marginal note:Liability for wages

797. (1) Subject to subsections (2) and (3), the directors of a bank holding company are jointly and severally liable to each employee of the bank holding company for all debts not exceeding six months wages payable to the employee for services performed for the bank holding company while they are directors.

Marginal note:Conditions precedent

(2) A director is not liable under subsection (1) unless

(a) the bank holding company has been sued for the debt within six months after it has become due and execution has been returned unsatisfied in whole or in part;

(b) the bank holding company has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proven within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; or

(c) the bank holding company has made an assignment or a receiving order has been made against it under the Bankruptcy and Insolvency Act and a claim for the debt has been proved within six months after the assignment or receiving order.

Marginal note:Limitations

(3) A director is not liable under subsection (1) unless the director is sued for a debt referred to in that subsection while a director or within two years after the director has ceased to be a director.

Marginal note:Amount due after execution

(4) Where execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.

Marginal note:Subrogation of director

(5) Where a director of a bank holding company pays a debt referred to in subsection (1) that is proven in liquidation and dissolution or bankruptcy proceedings, the director is entitled to any preference that the employee would have been entitled to and, where a judgment has been obtained, the director is entitled to an assignment of the judgment.

Marginal note:Contribution entitlement

(6) A director of a bank holding company who has satisfied a claim under this section is entitled to a contribution from the other directors of the bank holding company who are liable for the claim.

Marginal note:Reliance on statement

798. A director, an officer or an employee of a bank holding company is not liable under subsection 748(1) or (2) or section 794 or 797 if the director, officer or employee relies in good faith on

(a) financial statements of the bank holding company represented to the director, officer or employee by an officer of the bank holding company or in a written report of the auditor of the bank holding company fairly to reflect the financial condition of the bank holding company; or

(b) a report of an accountant, lawyer, notary or other professional person whose profession lends credibility to a statement made by the professional person.

Marginal note:Indemnification of directors and officers

799. (1) Except in respect of an action by or on behalf of the bank holding company to procure a judgment in its favour, a bank holding company may indemnify

(a) a director or an officer of the bank holding company,

(b) a former director or officer of the bank holding company, or

(c) any person who acts or acted at the bank holding company’s request as a director or an officer of an entity of which the bank holding company is or was a shareholder or creditor

against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment reasonably incurred by the person in respect of any civil, criminal or administrative action or proceeding to which the person is made a party by reason of being or having been a person referred to in any of paragraphs (a) to (c), if

(d) the director, officer or person acted honestly and in good faith with a view to the best interests of the bank holding company, and

(e) in the case of a criminal or administrative action or proceeding enforced by a monetary penalty, the director, officer or person had reasonable grounds for believing that the impugned conduct was lawful.

Marginal note:Indemnification in derivative action

(2) A bank holding company may, with the approval of a court, indemnify a person referred to in subsection (1), in respect of an action by or on behalf of the bank holding company or entity to procure a judgment in its favour to which the person is made a party by reason of being or having been a director or an officer of the bank holding company or entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the person in connection with that action if the person fulfils the conditions set out in paragraphs (1)(d) and (e).

Marginal note:Right to indemnity

(3) Notwithstanding anything in this section, a person referred to in subsection (1) is entitled to indemnity from the bank holding company in respect of all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the person in connection with the defence of any civil, criminal or administrative action or proceeding to which the person is made a party by reason of being or having been a director or an officer of the bank holding company or an entity, if the person seeking indemnity

(a) was substantially successful on the merits in the defence of the action or proceedings; and

(b) fulfils the conditions set out in paragraphs (1)(d) and (e).

Marginal note:Heirs

(4) A bank holding company may, to the extent referred to in subsections (1) to (3) in respect of the person, indemnify the heirs or personal representatives of any person the bank holding company may indemnify pursuant to subsections (1) to (3).

Marginal note:Directors’ and officers’ insurance

800. A bank holding company may purchase and maintain insurance for the benefit of any person referred to in section 799 against any liability incurred by the person

(a) in the capacity of a director or an officer of the bank holding company, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the bank holding company; or

(b) in the capacity of a director or an officer of another entity where the person acts or acted in that capacity at the bank holding company’s request, except where the liability relates to a failure to act honestly and in good faith with a view to the best interests of the entity.

Marginal note:Application to court for indemnification

801. (1) A bank holding company or a person referred to in section 799 may apply to a court for an order approving an indemnity under that section and the court may so order and make any further order it thinks fit.

Marginal note:Notice to Superintendent

(2) An applicant under subsection (1) shall give the Superintendent written notice of the application and the Superintendent is entitled to appear and to be heard at the hearing of the application in person or by counsel.

Marginal note:Other notice

(3) On an application under subsection (1), the court may order notice to be given to any interested person and that person is entitled to appear and to be heard in person or by counsel at the hearing of the application.

Fundamental Changes

Amendments

Marginal note:Sections 215 to 222 apply

802. Sections 215 to 222 apply in respect of bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”;

(b) references to “this Act” in those sections are to be read as references to “this Part”;

(c) the reference to “subsection 159(1) and section 168” in paragraph 217(1)(i) is to be read as a reference to “subsection 749(1) and section 756”; and

(d) the reference to “sections 143 and 144” in subsection 221(1) is to be read as a reference to “sections 732 and 733”.

Amalgamation

Marginal note:Application to amalgamate

803. (1) On the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including banks and bank holding companies, the Minister may issue letters patent amalgamating and continuing the applicants as one bank holding company.

Marginal note:Restriction

(2) Despite subsection (1), if one of the applicants is a bank holding company that controls a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies, the Minister shall not issue letters patent referred to in subsection (1) unless

(a) the amalgamated bank holding company would be a widely held bank holding company; or

(b) the amalgamated bank holding company would be controlled by a widely held bank holding company that, at the time the application was made, controlled

(i) the applicant, or

(ii) any other applicant that is a bank holding company that controls a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies.

Marginal note:Restriction

(3) Despite subsection (1), if the amalgamated bank holding company would be a bank holding company with equity of five billion dollars or more, the Minister shall not issue letters patent referred to in that subsection unless the amalgamated bank holding company is

(a) widely held;

(b) controlled, within the meaning of paragraphs 3(1)(a) and (d), by a widely held bank, or by a widely held bank holding company, that controlled one of the applicants at the time the application was made; or

(c) controlled, within the meaning of paragraph 3(1)(d), by a widely held insurance holding company, or by an eligible Canadian financial institution, within the meaning of subsection 370(1), other than a bank, or by an eligible foreign institution, within the meaning of subsection 370(1), that controlled one of the applicants at the time the application was made.

Marginal note:Amalgamation agreement

804. (1) Each applicant proposing to amalgamate shall enter into an amalgamation agreement.

Marginal note:Contents of agreement

(2) Every amalgamation agreement shall set out the terms and means of effecting the amalgamation and, in particular,

(a) the name of the amalgamated bank holding company and the place in Canada where its head office is to be situated;

(b) the name and place of ordinary residence of each proposed director of the amalgamated bank holding company;

(c) the manner in which the shares of each applicant are to be converted into shares or other securities of the amalgamated bank holding company;

(d) if any shares of an applicant are not to be converted into shares or other securities of the amalgamated bank holding company, the amount of money or securities that the holders of those shares are to receive in addition to or in lieu of shares or other securities of the amalgamated bank holding company;

(e) the manner of payment of money in lieu of the issue of fractional shares of the amalgamated bank holding company or of any other body corporate that are to be issued in the amalgamation;

(f) the proposed by-laws of the amalgamated bank holding company;

(g) details of any other matter necessary to perfect the amalgamation and to provide for the subsequent management and operation of the amalgamated bank holding company; and

(h) the proposed effective date of the amalgamation.

Marginal note:Cross ownership of shares

(3) If shares of one of the applicants are held by or on behalf of another of the applicants, other than shares held in the capacity of a personal representative or by way of security, the amalgamation agreement must provide for the cancellation of those shares when the amalgamation becomes effective without any repayment of capital in respect thereof, and no provision shall be made in the agreement for the conversion of those shares into shares of the amalgamated bank holding company.

Marginal note:Approval of agreement by Minister

805. An amalgamation agreement shall be submitted to the Minister for approval and any approval of such an agreement pursuant to subsection 806(4) by the holders of any class or series of shares of an applicant is invalid unless, prior to the date of the approval, the Minister has approved the agreement in writing.

Marginal note:Shareholder approval

806. (1) The directors of each applicant shall submit an amalgamation agreement for approval to a meeting of the holders of shares of the applicant body corporate of which they are directors and, subject to subsection (3), to the holders of each class or series of such shares.

Marginal note:Right to vote

(2) Each share of an applicant carries the right to vote in respect of an amalgamation whether or not it otherwise carries the right to vote.

Marginal note:Class vote

(3) The holders of shares of a class or series of shares of an applicant are entitled to vote separately as a class or series in respect of an amalgamation if the amalgamation agreement contains a provision that, if contained in a proposed amendment to the by-laws or incorporating instrument of the applicant, would entitle those holders to vote separately as a class or series.

Marginal note:Special resolution

(4) Subject to subsection (3), an amalgamation agreement is approved when the shareholders of each applicant that is a body corporate have approved the amalgamation by special resolution.

Marginal note:Termination

(5) An amalgamation agreement may provide that, at any time before the issue of letters patent of amalgamation, the agreement may be terminated by the directors of an applicant notwithstanding that the agreement has been approved by the shareholders of all or any of the applicant bodies corporate.

Marginal note:Vertical short-form amalgamation

807. (1) A bank holding company may, without complying with sections 804 to 806, amalgamate with one or more bodies corporate that are incorporated by or under an Act of Parliament if the body or bodies corporate, as the case may be, are wholly-owned subsidiaries of the bank holding company and

(a) the amalgamation is approved by a resolution of the directors of the bank holding company and of each amalgamating subsidiary; and

(b) the resolutions provide that

(i) the shares of each amalgamating subsidiary will be cancelled without any repayment of capital in respect thereof,

(ii) the letters patent of amalgamation and the by-laws of the amalgamated bank holding company will be the same as the incorporating instrument and the by-laws of the amalgamating bank holding company that is the holding body corporate, and

(iii) no securities will be issued by the amalgamated bank holding company in connection with the amalgamation.

Marginal note:Horizontal short-form amalgamation

(2) Two or more bodies corporate incorporated by or under an Act of Parliament may amalgamate and continue as one bank holding company without complying with sections 804 to 806 if

(a) at least one of the applicants is a bank holding company;

(b) the applicants are all wholly-owned subsidiaries of the same holding body corporate;

(c) the amalgamation is approved by a resolution of the directors of each of the applicants; and

(d) the resolutions provide that

(i) the shares of all applicants, except those of one of the applicants that is a bank holding company, will be cancelled without any repayment of capital in respect thereof,

(ii) the letters patent of amalgamation and the by-laws of the amalgamated bank holding company will be the same as the incorporating instrument and the by-laws of the amalgamating bank holding company whose shares are not cancelled, and

(iii) the stated capital of the amalgamating bank holding companies and bodies corporate whose shares are cancelled will be added to the stated capital of the amalgamating bank holding company whose shares are not cancelled.

Marginal note:Joint application to Minister

808. (1) Subject to subsection (2), unless an amalgamation agreement is terminated in accordance with subsection 806(5), the applicants shall, within three months after the approval of the agreement in accordance with subsection 806(4) or the approval of the directors in accordance with subsection 807(1) or (2), jointly apply to the Minister for letters patent of amalgamation continuing the applicants as one bank holding company.

Marginal note:Conditions precedent to application

(2) No application for the issue of letters patent under subsection (1) may be made unless

(a) notice of intention to make such an application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of each applicant is situated; and

(b) the application is supported by satisfactory evidence that the applicants have complied with the requirements of this Part relating to amalgamations.

Marginal note:Application of sections 672 to 674

(3) If two or more bodies corporate, none of which is a bank holding company, apply for letters patent under subsection (1), sections 672 to 674 apply in respect of the application with any modifications that the circumstances require.

Marginal note:Matters for consideration

(4) Before issuing letters patent of amalgamation continuing the applicants as one bank holding company, the Minister shall take into account all matters that the Minister considers relevant to the application, including

(a) the sources of continuing financial support for any bank that will be a subsidiary of the amalgamated bank holding company;

(b) the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of any bank that will be a subsidiary of the amalgamated bank holding company;

(c) the business record and experience of the applicants;

(d) the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the amalgamated bank holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;

(g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated bank holding company and its affiliates may affect the supervision and regulation of any bank that will be its subsidiary, having regard to

(i) the nature and extent of the proposed financial services activities to be carried out by the affiliates of the amalgamated bank holding company, and

(ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the amalgamated bank holding company; and

(h) the best interests of the financial system in Canada.

Marginal note:Issue of letters patent

809. (1) Where an application has been made to the Minister in accordance with section 808, the Minister may issue letters patent of amalgamation continuing the applicants as one bank holding company.

Marginal note:Letters patent

(2) Where letters patent are issued pursuant to this section, section 676 applies with such modifications as the circumstances require in respect of the issue of the letters patent.

Marginal note:Publication of notice

(3) The Superintendent shall cause to be published in the Canada Gazette notice of the issuance of letters patent pursuant to subsection (1).

Marginal note:Court enforcement

810. (1) If a bank holding company or any director, officer, employee or agent of a bank holding company is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the bank holding company or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.

Marginal note:Appeal

(2) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.

Marginal note:Effect of letters patent

811. (1) On the day provided for in the letters patent issued under section 809,

(a) the amalgamation of the applicants and their continuance as one bank holding company becomes effective;

(b) the property of each applicant continues to be the property of the amalgamated bank holding company;

(c) the amalgamated bank holding company continues to be liable for the obligations of each applicant;

(d) any existing cause of action, claim or liability to prosecution is unaffected;

(e) any civil, criminal or administrative action or proceeding pending by or against an applicant may be continued to be prosecuted by or against the amalgamated bank holding company;

(f) any conviction against, or ruling, order or judgment in favour of or against, an applicant may be enforced by or against the amalgamated bank holding company;

(g) if any director or officer of an applicant continues as a director or officer of the amalgamated bank holding company, any disclosure by that director or officer of a material interest in any contract made to the applicant shall be deemed to be disclosure to the amalgamated bank holding company; and

(h) the letters patent of amalgamation are the incorporating instrument of the amalgamated bank holding company.

Marginal note:Minutes

(2) Any deemed disclosure under paragraph (1)(g) shall be recorded in the minutes of the first meeting of directors of the amalgamated bank holding company.

Marginal note:Transitional

812. (1) Despite any other provision of this Act or the regulations, the Minister may, by order, on the recommendation of the Superintendent, grant to a bank holding company in respect of which letters patent were issued under subsection 809(1) permission to

(a) engage in a business activity specified in the order that a bank holding company is not otherwise permitted by this Act to engage in and that one or more of the amalgamating bodies corporate was engaging in at the time application for the letters patent was made;

(b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;

(c) hold assets that a bank holding company is not otherwise permitted by this Act to hold if the assets were held by one or more of the amalgamating bodies corporate at the time the application for the letters patent was made;

(d) acquire and hold assets that a bank holding company is not otherwise permitted by this Act to acquire or hold if one or more of the amalgamating bodies corporate were obliged, at the time the application for the letters patent was made, to acquire those assets; and

(e) maintain outside Canada any records or registers required by this Act to be maintained in Canada and maintain and process, outside Canada, information and data relating to the preparation and maintenance of such records or registers.

Marginal note:Duration of exceptions

(2) The permission granted under subsection (1) shall be expressed to be granted for a period specified in the order not exceeding

(a) with respect to any matter described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, where the activity is conducted pursuant to an agreement existing on the date of issue of the letters patent, the expiration of the agreement;

(b) with respect to any matter described in paragraph (1)(b), ten years; and

(c) with respect to any matter described in any of paragraphs (1)(c) to (e), two years.

Marginal note:Renewal

(3) Subject to subsection (4), the Minister may, by order on the recommendation of the Superintendent, renew a permission granted by order under subsection (1) with respect to any matter described in any of paragraphs (1)(b) to (d) for any further period or periods that the Minister considers necessary.

Marginal note:Limitation

(4) The Minister shall not grant to a bank holding company any permission

(a) with respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the effective date of the letters patent of amalgamation, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the bank holding company that the bank holding company will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and

(b) with respect to matters described in paragraphs (1)(c) and (d), that purports to be effective more than ten years after the effective date of the letters patent.

Transfer of Business

Marginal note:Shareholder approval

813. (1) A sale, lease or exchange of all or substantially all the property of a bank holding company requires the approval of the shareholders in accordance with subsections (2) to (7).

Marginal note:Notice of meeting

(2) A notice of a meeting of shareholders complying with sections 727 and 730 shall be sent in accordance with those sections to each shareholder and shall include or be accompanied by a copy or summary of the agreement of sale, lease or exchange.

Marginal note:Shareholder approval

(3) At the meeting referred to in the notice, the shareholders may authorize the sale, lease or exchange and may fix or authorize the directors to fix any of the sale’s, lease’s or exchange’s terms and conditions.

Marginal note:Right to vote

(4) Each share of the bank holding company carries the right to vote in respect of the proposal whether or not the share otherwise carries the right to vote.

Marginal note:Class vote

(5) The holders of shares of a class or series of shares of the bank holding company are entitled to vote separately as a class or series in respect of the proposal if the shares of the class or series are affected by the proposed transaction in a manner different from the shares of another class or series.

Marginal note:Special resolution

(6) For the purpose of subsection (1), the proposal is not approved unless the holders of the shares of each class or series of shares entitled to vote separately on the proposal have approved the proposal by special resolution.

Marginal note:Abandoning transaction

(7) Where a special resolution under subsection (6) approving a proposed transaction so states, the directors of a bank holding company may, subject to the rights of third parties, abandon the transaction without further approval of the shareholders.

Corporate Records

Head Office and Corporate Records

Marginal note:Head office

814. (1) A bank holding company shall at all times have a head office in the place within Canada specified in its incorporating instrument or by-laws.

Marginal note:Change of head office

(2) The directors of a bank holding company may change the address of the head office within the place specified in the incorporating instrument or by-laws.

Marginal note:Notice of change of address

(3) A bank holding company shall send to the Superintendent, within fifteen days after any change of address of its head office, a notice of the change of address.

Marginal note:Bank holding company records

815. (1) A bank holding company shall prepare and maintain records containing

(a) its incorporating instrument and by-laws and all amendments to them;

(b) minutes of meetings and resolutions of shareholders;

(c) the information referred to in paragraphs 951(1)(a) and (c) to (g) contained in all returns provided to the Superintendent pursuant to section 951; and

(d) particulars of exceptions granted under section 688 or 812 that are from time to time applicable to the bank holding company.

Marginal note:Additional records

(2) In addition to the records described in subsection (1), a bank holding company shall prepare and maintain adequate

(a) corporate accounting records; and

(b) records containing minutes of meetings and resolutions of the board of directors and those of its committees.

Marginal note:Continued bank holding companies

(3) For the purposes of paragraph (1)(b) and subsection (2),

(a) in the case of a body corporate continued as a bank holding company, “records” includes similar records required by law to be maintained by the body corporate before it was so continued; and

(b) in the case of a body corporate amalgamated and continued as a bank holding company, “records” includes similar records required by law to be maintained by the body corporate before it was so amalgamated.

Marginal note:Place of records

816. (1) The records described in section 815 shall be kept at the head office of the bank holding company or at such other place in Canada as the directors think fit.

Marginal note:Notice of place of records

(2) Where any of the records described in section 815 are not kept at the head office of a bank holding company, the bank holding company shall notify the Superintendent of the place where the records are kept.

Marginal note:Inspection

(3) The records described in section 815 shall at all reasonable times be open to inspection by the directors.

Marginal note:Access to bank holding company records

(4) Shareholders and creditors of a bank holding company and their personal representatives may examine the records referred to in subsection 815(1) during the usual business hours of the bank holding company, and may take extracts therefrom, free of charge, or have copies made thereof on payment of a reasonable fee and, where the bank holding company is a distributing bank holding company within the meaning of subsection 265(1), any other person may, on payment of a reasonable fee, examine such records and take extracts therefrom or copies thereof.

Marginal note:Copies of by-laws

(5) Every shareholder of a bank holding company is entitled, on request made not more frequently than once in each calendar year, to receive, free of charge, one copy of the by-laws of the bank holding company.

Marginal note:Electronic access

(6) A bank holding company may make the information contained in records referred to in subsection 815(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.

Marginal note:Shareholder lists

817. (1) A person who is entitled to a basic list of shareholders of a bank holding company (in this section referred to as the “applicant”) may request the bank holding company to furnish the applicant with a basic list within ten days after receipt by the bank holding company of the affidavit referred to in subsection (2) and, on payment of a reasonable fee by the applicant, the bank holding company shall comply with the request.

Marginal note:Affidavit and contents

(2) A request under subsection (1) must be accompanied by an affidavit containing

(a) the name and address of the applicant,

(b) the name and address for service of the entity, if the applicant is an entity, and

(c) an undertaking that the basic list and any supplemental lists obtained pursuant to subsections (5) and (6) will not be used except as permitted under section 819,

and, if the applicant is an entity, the affidavit shall be made by a director or an officer of the entity, or any person acting in a similar capacity.

Marginal note:Entitlement

(3) Every shareholder or creditor of a bank holding company or the personal representative of a shareholder or creditor of a bank holding company is entitled to a basic list of shareholders of the bank holding company, but, if the bank holding company is a distributing bank holding company within the meaning of subsection 265(1), any person is entitled to a basic list of shareholders of the bank holding company on request therefor.

Marginal note:Basic list

(4) A basic list of shareholders of a bank holding company consists of a list of shareholders that is made up to a date not more than ten days before the receipt of the affidavit referred to in subsection (2) and that sets out

(a) the names of the shareholders of the bank holding company;

(b) the number of shares owned by each shareholder; and

(c) the address of each shareholder as shown in the records of the bank holding company.

Marginal note:Supplemental lists

(5) A person requiring a bank holding company to supply a basic list of shareholders may, if the person states in the accompanying affidavit that supplemental lists are required, request the bank holding company or its agent, on payment of a reasonable fee, to provide supplemental lists of shareholders setting out any changes from the basic list in the names and addresses of the shareholders and the number of shares owned by each shareholder for each business day following the date to which the basic list is made up.

Marginal note:When supplemental lists to be furnished

(6) A bank holding company or its agent shall provide a supplemental list of shareholders required under subsection (5)

(a) within ten days following the date the basic list is provided, where the information relates to changes that took place prior to that date; and

(b) within ten days following the day to which the supplemental list relates, where the information relates to changes that took place on or after the date the basic list was provided.

Marginal note:Option holders

818. A person requiring a bank holding company to supply a basic list or a supplemental list of shareholders may also require the bank holding company to include in that list the name and address of any known holder of an option or right to acquire shares of the bank holding company.

Marginal note:Use of shareholder list

819. A list of shareholders obtained under section 817 shall not be used by any person except in connection with

(a) an effort to influence the voting of shareholders of the bank holding company;

(b) an offer to acquire shares of the bank holding company; or

(c) any other matter relating to the affairs of the bank holding company.

Marginal note:Form of records

820. (1) A register or other record required or authorized by this Part to be prepared and maintained by a bank holding company

(a) may be in a bound or loose-leaf form or in a photographic film form; or

(b) may be entered or recorded by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

Marginal note:Conversion of records

(2) Registers and records maintained in one form may be converted to any other form.

Marginal note:Destruction of converted records

(3) Notwithstanding section 823, a bank holding company may destroy any register or other record referred to in subsection (1) at any time after the register or other record has been converted to another form.

Marginal note:Protection of records

821. A bank holding company and its agents shall take reasonable precautions to

(a) prevent loss or destruction of,

(b) prevent falsification of entries in,

(c) facilitate detection and correction of inaccuracies in, and

(d) ensure that unauthorized persons do not have access to or use of information in

the registers and records required or authorized by this Part to be prepared and maintained.

Marginal note:Location and processing of information

822. (1) Subject to subsection (3), a bank holding company shall maintain and process in Canada any information or data relating to the preparation and maintenance of the records referred to in section 815 unless the Superintendent has, subject to such terms and conditions as the Superintendent considers appropriate, exempted the bank holding company from the application of this section.

Marginal note:Copies

(2) Subject to subsections (3) and (4), a bank holding company may maintain copies of the records referred to in subsection (1) outside Canada and may further process outside Canada any information or data relating to those copies.

Marginal note:Information for Superintendent

(3) Where a bank holding company, in accordance with subsection (2), maintains outside Canada copies of any records referred to in subsection (1) or further processes information or data relating to those copies outside Canada, the bank holding company shall so inform the Superintendent and provide the Superintendent with a list of those copies maintained outside Canada and a description of the further processing of information or data relating to those copies outside Canada and such other information as the Superintendent may require from time to time.

Marginal note:Processing information in Canada

(4) If the Superintendent is at any time of the opinion that the maintenance outside Canada of any copies referred to in subsection (3), or the further processing of information or data relating to any such copies outside Canada, is incompatible with the fulfilment of the Superintendent’s responsibilities under this Part or the Superintendent is advised by the Minister that, in the opinion of the Minister, such maintenance or further processing is not in the national interest, the Superintendent shall direct the bank holding company to maintain those copies, or to further process information or data relating to those copies, in Canada.

Marginal note:Bank holding company to comply

(5) A bank holding company shall forthwith comply with any direction issued under subsection (4).

Marginal note:Guidelines

(6) The Superintendent shall issue guidelines respecting the circumstances under which an exemption referred to in subsection (1) may be available.

Marginal note:Retention of records

823. A bank holding company shall retain

(a) the records of the bank holding company referred to in subsection 815(1);

(b) any record of the bank holding company referred to in paragraph 815(2)(a) or (b); and

(c) the central securities register referred to in subsection 825(1).

Marginal note:Regulations

824. The Governor in Council may make regulations respecting the records, papers and documents to be retained by a bank holding company and the length of time those records, papers and documents are to be retained.

Securities Registers

Marginal note:Central securities register

825. (1) A bank holding company shall maintain a central securities register in which it shall record the securities, within the meaning of section 81, issued by it in registered form, showing in respect of each class or series of securities

(a) the names, alphabetically arranged, and latest known addresses of the persons who are security holders, and the names and latest known addresses of the persons who have been security holders;

(b) the number of securities held by each security holder; and

(c) the date and particulars of the issue and transfer of each security.

Marginal note:Existing and continued bank holding companies

(2) For the purposes of subsection (1), “central securities register” includes similar registers required by law to be maintained by a body corporate continued, or amalgamated and continued, as a bank holding company under this Part before the continuance, or amalgamation, as the case may be.

Marginal note:Application of certain provisions

(3) Subsections 816(4) and (6) and sections 817 and 819 to 822 apply, with such modifications as the circumstances require, in respect of a central securities register.

Marginal note:Branch registers

826. A bank holding company may establish as many branch securities registers as it considers necessary.

Marginal note:Agents

827. A bank holding company may appoint an agent to maintain its central securities register and each of its branch securities registers.

Marginal note:Location of central securities register

828. (1) The central securities register of a bank holding company shall be maintained by the bank holding company at its head office or at any other place in Canada designated by the directors of the bank holding company.

Marginal note:Location of branch securities register

(2) A branch securities register of a bank holding company may be kept at any place in or outside Canada designated by the directors of the bank holding company.

Marginal note:Effect of registration

829. Registration of the issue or transfer of a security in the central securities register or in a branch securities register is complete and valid registration for all purposes.

Marginal note:Particulars in branch register

830. (1) A branch securities register shall only contain particulars of the securities issued or transferred at the branch for which that register is established.

Marginal note:Particulars in central register

(2) Particulars of each issue or transfer of a security registered in a branch securities register of a bank holding company shall also be kept in the central securities register of the bank holding company.

Marginal note:Destruction of certificates

831. A bank holding company, its agent or a trustee within the meaning of section 294 is not required to produce

(a) a cancelled security certificate in registered form or an instrument referred to in subsection 713(1) that is cancelled or a like cancelled instrument in registered form after six years from the date of its cancellation;

(b) a cancelled security certificate in bearer form or an instrument referred to in subsection 713(1) that is cancelled or a like cancelled instrument in bearer form after the date of its cancellation; or

(c) an instrument referred to in subsection 713(1) or a like instrument, irrespective of its form, after the date of its expiration.

Corporate Name and Seal

Marginal note:Publication of name

832. A bank holding company shall set out its name in legible characters in all contracts, invoices, negotiable instruments and other documents evidencing rights or obligations with respect to other parties that are issued or made by or on behalf of the bank holding company.

Marginal note:Corporate seal

833. An instrument or agreement executed on behalf of a bank holding company by a director, an officer or an agent of the bank holding company is not invalid merely because a corporate seal is not affixed thereto.

Insiders

Marginal note:Sections 265 to 272 apply

834. Sections 265 to 272 apply in respect of bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”; and

(b) the reference to “this Act” in subsection 266(3) is to be read as a reference to “this Part”.

Prospectus

Marginal note:Sections 273 to 282 apply

835. Sections 273 to 282 apply in respect of bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”;

(b) references to “this Act” in those sections are to be read as references to “this Part”; and

(c) subsection 274(1) is to be read without reference to “or auditors”.

Compulsory Acquisitions

Marginal note:Sections 283 to 292 apply

836. Sections 283 to 292 apply in respect of bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”;

(b) references to “another deposit-taking financial institution” in subsection 287(3) are to be read as references to “a deposit-taking financial institution”; and

(c) the reference to “the Minister” in subsection 291(4) is to be read as a reference to “the Receiver General”.

Marginal note:Recovery

837. If at any time a person establishes an entitlement to any moneys paid to the Receiver General under subsection 291(4), the Receiver General shall pay an equivalent amount to that person out of the Consolidated Revenue Fund.

Trust Indentures

Marginal note:Sections 294 to 306 apply

838. Sections 294 to 306 apply in respect to bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”;

(b) references to “this Act” in those sections are to be read as references to “this Part”; and

(c) references to “subordinated indebtedness” in those sections are to be read as references to “subordinated indebtedness” as defined in subsection 663(1).

Financial Statements and Auditor

Annual Financial Statement

Marginal note:Financial year of bank holding company

839. (1) The financial year of a bank holding company ends, at the election of the bank holding company in its by-laws, on the expiration of the thirty-first day of October of each year or the thirty-first day of December of each year.

Marginal note:First financial year

(2) If, in any year, a bank holding company comes into existence after the first day of July, its first financial year ends, at its election in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.

Marginal note:Annual financial statement

840. (1) The directors of a bank holding company shall place before the shareholders at every annual meeting

(a) a comparative annual financial statement (in this Part referred to as an “annual statement”) relating separately to

(i) the financial year immediately preceding the meeting, and

(ii) the financial year, if any, immediately preceding the financial year referred to in subparagraph (i);

(b) the report of the auditor of the bank holding company; and

(c) any further information respecting the financial position of the bank holding company and the results of its operations required by the by-laws of the bank holding company to be placed before the shareholders at the annual meeting.

Marginal note:Contents of annual statement

(2) An annual statement of a bank holding company must contain, with respect to each of the financial years to which it relates,

(a) a balance sheet as at the end of the financial year,

(b) a statement of income for the financial year,

(c) a statement of change of financial position for the financial year, and

(d) a statement of changes in shareholders’ equity for the financial year,

showing such information and particulars as in the opinion of the directors are necessary to present fairly, in accordance with the accounting principles referred to in subsection (4), the financial position of the bank holding company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank holding company for that financial year.

Marginal note:Additional information

(3) A bank holding company shall include with its annual statement

(a) a list of the subsidiaries of the bank holding company, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 934 or pursuant to a realization of security in accordance with section 935 and which the bank holding company would not otherwise be permitted to hold, showing, with respect to each subsidiary,

(i) its name and the address of its head or principal office,

(ii) the book value of the aggregate of any shares of the subsidiary beneficially owned by the bank holding company and by other subsidiaries of the bank holding company, and

(iii) the percentage of the voting rights attached to all the outstanding voting shares of the subsidiary that is carried by the aggregate of any voting shares of the subsidiary beneficially owned by the bank holding company and by other subsidiaries of the bank holding company; and

(b) such other information as the Governor in Council may, by order, require in such form as may be prescribed.

Marginal note:Accounting principles

(4) The financial statements referred to in subsection (1), paragraph (3)(b) and subsection 842(1) shall, except as otherwise specified by the Superintendent, be prepared in accordance with generally accepted accounting principles, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants. A reference in any provision of this Act to the accounting principles referred to in this subsection shall be construed as a reference to those generally accepted accounting principles with any specifications so made.

Marginal note:Regulations

(5) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).

Marginal note:Approval by directors

841. (1) The directors of a bank holding company shall approve the annual statement and the approval of the directors shall be evidenced by the signature of

(a) the chief executive officer or, in the event of that officer’s absence or inability to act, any other officer of the bank holding company authorized by the directors to sign in the stead of the chief executive officer; and

(b) one director, if the signature required by paragraph (a) is that of a director, or two directors if the signature required by that paragraph is that of an officer who is not a director.

Marginal note:Condition precedent to publication

(2) A bank holding company shall not publish copies of an annual statement unless it is approved and signed in accordance with subsection (1).

Marginal note:Statements — subsidiaries

842. (1) A bank holding company shall keep at its head office a copy of the current financial statements of each subsidiary of the bank holding company.

Marginal note:Examination

(2) Subject to this section, the shareholders of a bank holding company and their personal representatives may, on request therefor, examine the statements referred to in subsection (1) during the usual business hours of the bank holding company and may take extracts therefrom free of charge.

Marginal note:Barring examination

(3) A bank holding company may refuse to permit an examination under subsection (2) by any person.

Marginal note:Application for order

(4) Within fifteen days after a refusal under subsection (3), the bank holding company shall apply to a court for an order barring the right of the person concerned to make an examination under subsection (2) and the court shall either order the bank holding company to permit the examination or, if it is satisfied that the examination would be detrimental to the bank holding company or to any other body corporate the financial statements of which would be subject to examination, bar the right and make any further order it thinks fit.

Marginal note:Notice to Superintendent

(5) A bank holding company shall give the Superintendent and the person seeking to examine the statements referred to in subsection (1) notice of an application to a court under subsection (4), and the Superintendent and the person may appear and be heard in person or by counsel at the hearing of the application.

Marginal note:Distribution of annual statement

843. (1) A bank holding company shall, not later than twenty-one days before the date of each annual meeting or before the signing of a resolution under paragraph 741(1)(b) in lieu of the annual meeting, send to each shareholder at the shareholder’s recorded address a copy of the documents referred to in subsections 840(1) and (3), unless that time period is waived by the shareholder.

Marginal note:Exception

(2) A bank holding company is not required to comply with subsection (1) with respect to a shareholder who has informed the bank holding company, in writing, that the shareholder does not wish to receive the annual statement.

Marginal note:Effect of default

(3) Where a bank holding company is required to comply with subsection (1) and the bank holding company does not comply with that subsection, the annual meeting at which the documents referred to in that subsection are to be considered shall be adjourned until that subsection has been complied with.

Marginal note:Copy to Superintendent

844. (1) Subject to subsection (2), a bank holding company shall send to the Superintendent a copy of the documents referred to in subsections 840(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the bank holding company.

Marginal note:Later filing

(2) If a bank holding company’s shareholders sign a resolution under paragraph 741(1)(b) in lieu of an annual meeting, the bank holding company shall send a copy of the documents referred to in subsections 840(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.

Auditors

Marginal note:Definitions

845. The following definitions apply in this section and sections 846 to 864.

“firm of accountants”

« cabinet de comptables »

“firm of accountants” means a partnership, the members of which are accountants engaged in the practice of accounting, or a body corporate that is incorporated by or under an Act of the legislature of a province and engaged in the practice of accounting.

“member”

« membre »

“member”, in relation to a firm of accountants, means

(a) an accountant who is a partner in a partnership, the members of which are accountants engaged in the practice of accounting; or

(b) an accountant who is an employee of a firm of accountants.

Marginal note:Appointment of auditor

846. (1) The shareholders of a bank holding company shall, by ordinary resolution at the first meeting of shareholders and at each succeeding annual meeting, appoint a firm of accountants to be the auditor of the bank holding company until the close of the next annual meeting.

Marginal note:Remuneration of auditor

(2) The remuneration of the auditor may be fixed by ordinary resolution of the shareholders but, if not so fixed, shall be fixed by the directors.

Marginal note:Qualification of auditor

847. (1) A firm of accountants is qualified to be an auditor of a bank holding company if

(a) two or more members thereof are accountants who

(i) are members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,

(ii) each have at least five years experience at a senior level in performing audits of a financial institution,

(iii) are ordinarily resident in Canada, and

(iv) are independent of the bank holding company; and

(b) the member of the firm jointly designated by the firm and the bank holding company to conduct the audit of the bank holding company on behalf of the firm is qualified in accordance with paragraph (a).

Marginal note:Independence

(2) For the purposes of subsection (1),

(a) independence is a question of fact; and

(b) a member of a firm of accountants is deemed not to be independent of a bank holding company if that member or any other member of the firm of accountants, or if the firm of accountants

(i) is a director or an officer or employee of the bank holding company or of any affiliate of the bank holding company or is a business partner of any director, officer or employee of the bank holding company or of any affiliate of the bank holding company,

(ii) beneficially owns or controls, directly or indirectly, a material interest in the shares of the bank holding company or of any affiliate of the bank holding company, or

(iii) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the bank holding company within the two years immediately preceding the firm’s proposed appointment as auditor of the bank holding company, other than an affiliate that is a subsidiary of the bank holding company acquired pursuant to section 934 or through a realization of security pursuant to section 935.

Marginal note:Notice of designation

(3) Within fifteen days after appointing a firm of accountants as auditor of a bank holding company, the bank holding company and the firm of accountants shall jointly designate a member of the firm who has the qualifications described in subsection (1) to conduct the audit of the bank holding company on behalf of the firm and the bank holding company shall forthwith notify the Superintendent in writing of the designation.

Marginal note:New designation

(4) Where for any reason a member of a firm of accountants designated pursuant to subsection (3) ceases to conduct the audit of the bank holding company, the bank holding company and the firm of accountants may jointly designate another member of the same firm of accountants who has the qualifications described in subsection (1) to conduct the audit of the bank holding company and the bank holding company shall forthwith notify the Superintendent in writing of the designation.

Marginal note:Deemed vacancy

(5) In any case where subsection (4) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit of the bank holding company, there shall be deemed to be a vacancy in the office of auditor of the bank holding company.

Marginal note:Duty to resign

848. (1) An auditor that ceases to be qualified under section 847 shall resign forthwith after any member of the firm becomes aware that the firm has ceased to be so qualified.

Marginal note:Disqualification order

(2) Any interested person may apply to a court for an order declaring that an auditor of a bank holding company has ceased to be qualified under section 847 and declaring the office of auditor to be vacant.

Marginal note:Revocation of appointment

849. (1) The shareholders of a bank holding company may, by ordinary resolution at a special meeting, revoke the appointment of an auditor.

Marginal note:Revocation of appointment

(2) The Superintendent may at any time revoke the appointment of an auditor made under subsection (3) or 846(1) or section 851 by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the bank holding company addressed to the usual place of business of the auditor and the bank holding company.

Marginal note:Filling vacancy

(3) A vacancy created by the revocation of the appointment of an auditor under subsection (1) may be filled at the meeting at which the appointment was revoked and, if not so filled, shall be filled by the directors under section 851.

Marginal note:Ceasing to hold office

850. (1) An auditor of a bank holding company ceases to hold office when

(a) the auditor resigns; or

(b) the appointment of the auditor is revoked by the shareholders or the Superintendent.

Marginal note:Effective date of resignation

(2) The resignation of an auditor becomes effective at the time a written resignation is sent to the bank holding company or at the time specified in the resignation, whichever is later.

Marginal note:Filling vacancy

851. (1) Subject to subsection 849(3), where a vacancy occurs in the office of auditor of a bank holding company, the directors shall forthwith fill the vacancy, and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.

Marginal note:Where Superintendent may fill vacancy

(2) Where the directors fail to fill a vacancy in accordance with subsection (1), the Superintendent may fill the vacancy and the auditor so appointed holds office for the unexpired term of office of the predecessor of that auditor.

Marginal note:Designation of member of firm

(3) Where the Superintendent has, pursuant to subsection (2), appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit of the bank holding company on behalf of the firm.

Marginal note:Right to attend meetings

852. (1) The auditor of a bank holding company is entitled to receive notice of every meeting of shareholders and, at the expense of the bank holding company, to attend and be heard thereat on matters relating to the duties of the auditor.

Marginal note:Duty to attend meeting

(2) If a director or shareholder of a bank holding company, whether or not the shareholder is entitled to vote at the meeting, gives written notice, not less than ten days before a meeting of shareholders, to an auditor or former auditor of the bank holding company that the director or shareholder wishes the auditor’s attendance at the meeting, the auditor or former auditor shall attend the meeting at the expense of the bank holding company and answer questions relating to the auditor’s or former auditor’s duties as auditor.

Marginal note:Notice to bank holding company

(3) A director or shareholder who gives notice under subsection (2) shall send concurrently a copy of the notice to the bank holding company and the bank holding company shall forthwith send a copy thereof to the Superintendent.

Marginal note:Superintendent may attend

(4) The Superintendent may attend and be heard at any meeting referred to in subsection (2).

Marginal note:Statement of auditor

853. (1) An auditor of a bank holding company that

(a) resigns,

(b) receives a notice or otherwise learns of a meeting of shareholders called for the purpose of revoking the appointment of the auditor, or

(c) receives a notice or otherwise learns of a meeting of directors or shareholders at which another firm of accountants is to be appointed in its stead, whether because of the auditor’s resignation or revocation of appointment or because the auditor’s term of office has expired or is about to expire,

shall submit to the bank holding company and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.

Marginal note:Statement to be sent to shareholders

(2) Where a bank holding company receives a written statement referred to in subsection (1) that relates to a resignation as a result of a disagreement with the directors or officers of the bank holding company or that relates to a matter referred to in paragraph (1)(b) or (c), the bank holding company shall forthwith send a copy of the statement to each shareholder who is entitled to vote at the annual meeting of shareholders.

Marginal note:Duty of replacement auditor

854. (1) Where an auditor of a bank holding company has resigned or the appointment of an auditor has been revoked, no firm of accountants shall accept an appointment as auditor of the bank holding company or consent to be an auditor of the bank holding company until the firm of accountants has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.

Marginal note:Exception

(2) Notwithstanding subsection (1), a firm of accountants may accept an appointment or consent to be appointed as auditor of a bank holding company if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.

Marginal note:Effect of non-compliance

(3) Unless subsection (2) applies, an appointment as auditor of a bank holding company is void if subsection (1) has not been complied with.

Marginal note:Auditors’ examination

855. (1) The auditor of a bank holding company shall make such examination as the auditor considers necessary to enable the auditor to report on the annual statement and on other financial statements required by this Part to be placed before the shareholders, except such annual statements or parts thereof as relate to the period referred to in subparagraph 840(1)(a)(ii).

Marginal note:Auditing standards

(2) The examination of the auditor referred to in subsection (1) shall, except as otherwise specified by the Superintendent, be conducted in accordance with generally accepted auditing standards, the primary source of which is the Handbook of the Canadian Institute of Chartered Accountants.

Marginal note:Right to information

856. (1) On the request of the auditor of a bank holding company, the present or former directors, officers, employees or agents of the bank holding company shall, to the extent that such persons are reasonably able to do so,

(a) permit access to such records, assets and security held by the bank holding company or any entity in which the bank holding company has a substantial investment, and

(b) provide such information and explanations

as are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of the auditor of the bank holding company.

Marginal note:Directors to provide information

(2) On the request of the auditor of a bank holding company, the directors of the bank holding company shall, to the extent that they are reasonably able to do so,

(a) obtain from the present or former directors, officers, employees and agents of any entity in which the bank holding company has a substantial investment the information and explanations that such persons are reasonably able to provide and that are, in the opinion of the auditor, necessary to enable them to perform the duties of the auditor of the bank holding company; and

(b) provide the auditor with the information and explanations so obtained.

Marginal note:No civil liability

(3) A person who in good faith makes an oral or written communication under subsection (1) or (2) shall not be liable in any civil action arising from having made the communication.

Marginal note:Auditor’s report and extended examination

857. (1) The Superintendent may, in writing, require that the auditor of a bank holding company report to the Superintendent on the extent of the procedures of the auditor in the examination of the annual statement and may, in writing, require that the auditor enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor shall comply with any such requirement of the Superintendent and report to the Superintendent thereon.

Marginal note:Special examination

(2) The Superintendent may, in writing, require that the auditor of a bank holding company make a particular examination to determine whether any procedures adopted by the bank holding company may be prejudicial to the interests of depositors, policyholders or creditors of any federal financial institution that is affiliated with the bank holding company, or any other examination as, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent thereon.

Marginal note:Special examination

(3) The Superintendent may direct that a special audit of a bank holding company be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose a firm of accountants qualified pursuant to subsection 847(1) to be an auditor of the bank holding company.

Marginal note:Expenses payable by bank holding company

(4) The expenses entailed by any examination or audit referred to in any of subsections (1) to (3) are payable by the bank holding company on being approved in writing by the Superintendent.

Marginal note:Auditor’s report

858. (1) The auditor shall, not less than twenty-one days before the date of the annual meeting of the shareholders of the bank holding company, make a report in writing to the shareholders on the annual statement referred to in subsection 840(1).

Marginal note:Audit for shareholders

(2) In each report required under subsection (1), the auditor shall state whether, in the opinion of the auditor, the annual statement presents fairly, in accordance with the accounting principles referred to in subsection 840(4), the financial position of the bank holding company as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the bank holding company for that financial year.

Marginal note:Auditor’s remarks

(3) In each report referred to in subsection (2), the auditor shall include such remarks as the auditor considers necessary when

(a) the examination has not been made in accordance with the auditing standards referred to in subsection 855(2);

(b) the annual statement has not been prepared on a basis consistent with that of the preceding financial year; or

(c) the annual statement does not present fairly, in accordance with the accounting principles referred to in subsection 840(4), the financial position of the bank holding company as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the bank holding company for that financial year.

Marginal note:Report on directors’ statement

859. (1) The auditor of a bank holding company shall, if required by the shareholders, audit and report to the shareholders on any financial statement submitted by the directors to the shareholders, and the report shall state whether, in the opinion of the auditor, the financial statement presents fairly the information required by the shareholders.

Marginal note:Making of report

(2) A report of the auditor made under subsection (1) shall be attached to the financial statement to which it relates and a copy of the statement and report shall be sent by the directors to every shareholder and to the Superintendent.

Marginal note:Auditor of subsidiaries

860. (1) A bank holding company shall take all necessary steps to ensure that each of its subsidiaries has as its auditor the auditor of the bank holding company.

Marginal note:Subsidiary outside Canada

(2) Subsection (1) applies in the case of a subsidiary that carries on its operations in a country other than Canada unless the laws of that country do not permit the appointment of an auditor of the bank holding company as the auditor of that subsidiary.

Marginal note:Exception

(3) Subsection (1) does not apply in respect of any particular subsidiary where the bank holding company, after having consulted its auditor, is of the opinion that the total assets of the subsidiary are not a material part of the total assets of the bank holding company.

Marginal note:Auditor’s attendance

861. (1) The auditor of a bank holding company is entitled to receive notice of every meeting of the audit committee of the bank holding company and, at the expense of the bank holding company, to attend and be heard at that meeting.

Marginal note:Attendance

(2) If so requested by a member of the audit committee, the auditor shall attend every meeting of the audit committee held during the member’s term of office.

Marginal note:Calling meeting

862. (1) The auditor of a bank holding company or a member of the audit committee may call a meeting of the audit committee.

Marginal note:Right to interview

(2) The chief internal auditor of a bank holding company or any officer or employee of the bank holding company acting in a similar capacity shall, at the request of the auditor of the bank holding company and on receipt of reasonable notice, meet with the auditor.

Marginal note:Notice of errors

863. (1) A director or an officer of a bank holding company shall forthwith notify the audit committee and the auditor of the bank holding company of any error or misstatement of which the director or officer becomes aware in an annual statement or other financial statement on which the auditor or any former auditor has reported.

Marginal note:Error noted by auditor

(2) If the auditor or former auditor of a bank holding company is notified or becomes aware of an error or misstatement in an annual statement or other financial statement on which the auditor reported and in the opinion of the auditor the error or misstatement is material, the auditor or former auditor shall inform each director of the bank holding company accordingly.

Marginal note:Duty of directors

(3) When under subsection (2) the auditor or former auditor of a bank holding company informs the directors of an error or misstatement in an annual statement or other financial statement, the directors shall

(a) prepare and issue a revised annual statement or financial statement; or

(b) otherwise inform the shareholders and the Superintendent of the error or misstatement.

Marginal note:Qualified privilege for statements

864. Any oral or written statement or report made under this Part by the auditor or former auditor of a bank holding company has qualified privilege.

Remedial Actions

Marginal note:Sections 334 to 338 apply

865. Sections 334 to 338 apply in respect of bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”; and

(b) references to “this Act” in those sections are to be read as references to “this Part”.

Liquidation and Dissolution

Definition of “court”

866. For the purposes of subsections 346(1) and 347(1) and (2), sections 348 to 352, subsection 353(1), sections 355 and 357 to 359, subsections 363(3) and (4) and section 368, “court” means a court having jurisdiction in the place where the bank holding company has its head office.

Marginal note:Non-application of certain provisions

867. (1) Subsection (2) and sections 342 to 365, 368 and 868 do not apply to a bank holding company that is an insolvent person or a bankrupt as those terms are defined in subsection 2(1) of the Bankruptcy and Insolvency Act.

Marginal note:Staying proceedings on insolvency

(2) Any proceedings taken under this Division to dissolve or to liquidate and dissolve a bank holding company shall be stayed if the bank holding company is at any time found, in a proceeding under the Bankruptcy and Insolvency Act, to be an insolvent person as defined in subsection 2(1) of that Act.

Marginal note:Winding-up and Restructuring Act does not apply

(3) The Winding-up and Restructuring Act does not apply to a bank holding company.

Marginal note:Returns to Superintendent

868. A liquidator appointed under this Division to wind up the business of a bank holding company shall provide the Superintendent with such information relating to the business and affairs of the bank holding company in such form as the Superintendent requires.

Simple Liquidation

Marginal note:Sections 342 to 346 apply

869. Sections 342 to 346 apply in respect of bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”; and

(b) the reference to “sections 143 and 144” in subsection 343(1) is to be read as a reference to “sections 732 and 733”.

Court-supervised Liquidation

Marginal note:Sections 347 to 360 apply

870. Sections 347 to 360 apply in respect of bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”;

(b) the reference to “subsection 308(1)” in subsection 353(1) is to be read as a reference to “subsection 840(1)”; and

(c) paragraph 354(a) is to be read without reference to “or auditors”.

General

Marginal note:Sections 361 to 365 and 368 apply

871. Sections 361 to 365 and 368 apply in respect of bank holding companies, subject to the following:

(a) references to “bank” in those sections are to be read as references to “bank holding company”;

(b) references to “this Part” in those sections are to be read as references to “this Division”;

(c) the reference to “section 632” in subsection 362(2) is to be read as a reference to “section 951”;

(d) the reference to “section 366” in section 364 is to be read as a reference to “section 872”; and

(e) the reference to “sections 366 and 367” in section 365 is to be read as a reference to “section 872”.

Marginal note:Unknown claimants

872. (1) On the dissolution of a bank holding company under this Act, the portion of the property distributable to a creditor or shareholder who cannot be found shall be converted into money and paid to the Receiver General.

Marginal note:Constructive satisfaction

(2) A payment under subsection (1) is deemed to be in satisfaction of a debt or claim of such creditor or shareholder.

Marginal note:Recovery

(3) If at any time a person establishes that he or she is entitled to any moneys paid to the Receiver General under this Act, the Receiver General shall pay an equivalent amount to him or her out of the Consolidated Revenue Fund.

Division 7Ownership

Constraints on Ownership

Marginal note:Sections 370 and 371 apply

873. Sections 370 and 371 apply in respect of bank holding companies, except that references to “bank” in section 371 are to read as references to “bank holding company”.

Marginal note:Significant interest

874. Except as permitted by this Division, no person shall have a significant interest in any class of shares of a bank holding company.

Marginal note:Acquisition of significant interest

875. (1) Subject to section 876, no person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of a bank holding company or purchase or otherwise acquire control of any entity that holds any share of a bank holding company if

(a) the acquisition would cause the person to have a significant interest in any class of shares of the bank holding company; or

(b) if the person has a significant interest in a class of shares of the bank holding company, the acquisition would increase the significant interest of the person in that class of shares.

Marginal note:Amalgamation, etc., constitutes acquisition

(2) If, as a result of an amalgamation, merger or reorganization, the entity that results would have a significant interest in a class of shares of a bank holding company, that entity is deemed to be acquiring a significant interest in that class of shares of the bank holding company through an acquisition for which the approval of the Minister is required.

Marginal note:Limitations on share holdings

876. (1) No person may be a major shareholder of a bank holding company with equity of five billion dollars or more.

Marginal note:Exception — widely held bank

(2) Subsection (1) does not apply to a widely held bank that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company with equity of five billion dollars or more if it controlled, within the meaning of those paragraphs, the bank holding company on the day the bank holding company’s equity reached five billion dollars and it has controlled, within the meaning of those paragraphs, the bank holding company since that day.

Marginal note:Exception — widely held bank holding company

(3) Subsection (1) does not apply to a widely held bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company with equity of five billion dollars or more if the widely held bank holding company controlled, within the meaning of those paragraphs, the bank holding company on the day the bank holding company’s equity reached five billion dollars and the widely held bank holding company has controlled, within the meaning of those paragraphs, the bank holding company since that day.

Marginal note:Exception — insurance holding companies and certain institutions

(4) Subsection (1) does not apply to any of the following that controls, within the meaning of paragraph 3(1)(d), the bank holding company with equity of five billion dollars or more if it controlled, within the meaning of that paragraph, the bank holding company on the day the bank holding company’s equity reached five billion dollars and it has controlled, within the meaning of that paragraph, the bank holding company since that day:

(a) a widely held insurance holding company;

(b) an eligible Canadian financial institution, other than a bank; or

(c) an eligible foreign institution.

Marginal note:Exception — other entities

(5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company with equity of five billion dollars or more if the entity is controlled, within the meaning of those paragraphs, by a widely held bank to which subsection (2) applies, or a widely held bank holding company to which subsection (3) applies, that controls the bank holding company.

Marginal note:Exception — other entities

(6) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the bank holding company with equity of five billion dollars or more if the entity is controlled, within the meaning of that paragraph, by

(a) a widely held insurance holding company to which subsection (4) applies that controls the bank holding company;

(b) an eligible Canadian financial institution, other than a bank, to which subsection (4) applies that controls the bank holding company; or

(c) an eligible foreign institution to which subsection (4) applies that controls the bank holding company.

Marginal note:Exception

877. (1) Despite section 876, if a bank holding company with equity of five billion dollars or more was formed as the result of an amalgamation, a person who is a major shareholder of the bank holding company on the effective date of the letters patent of amalgamation shall do all things necessary to ensure that the person is no longer a major shareholder of the bank holding company on the day that is one year after that day or on the day that is after any shorter period specified by the Minister.

Marginal note:Exception — widely held banks and bank holding companies

(2) Subsection (1) does not apply to a widely held bank or a widely held bank holding company that controlled, within the meaning of paragraphs 3(1)(a) and (d), one of the applicants for the letters patent of amalgamation and that has controlled, within the meaning of those paragraphs, the amalgamated bank holding company since the effective date of those letters patent.

Marginal note:Exception — insurance holding companies and certain institutions

(3) Subsection (1) does not apply to any of the following that controlled, within the meaning of paragraph 3(1)(d), one of the applicants for the letters patent of amalgamation if it has controlled, within the meaning of that paragraph, the amalgamated bank holding company since the effective date of those letters patent:

(a) a widely held insurance holding company;

(b) an eligible Canadian financial institution, other than a bank; or

(c) an eligible foreign institution.

Marginal note:Exception — other entities

(4) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the amalgamated bank holding company if the entity is controlled, within the meaning of those paragraphs, by a widely held bank or widely held bank holding company to which subsection (2) applies that controls the amalgamated bank holding company.

Marginal note:Exception — other entities

(5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the amalgamated bank holding company if the entity is controlled, within the meaning of that paragraph, by any of the following:

(a) a widely held insurance holding company to which subsection (3) applies that controls the amalgamated bank holding company;

(b) an eligible Canadian financial institution to which subsection (3) applies, other than a bank, that controls the amalgamated bank holding company; or

(c) an eligible foreign institution to which subsection (3) applies that controls the amalgamated bank holding company.

Marginal note:Extension

(6) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.

Marginal note:Limitation on share holdings

878. (1) If a person is a major shareholder of a bank holding company with equity of less than five billion dollars and the bank holding company’s equity reaches five billion dollars or more, the person shall do all things necessary to ensure that the person is not a major shareholder of the bank holding company on the day that is three years after the day the bank holding company’s equity reached five billion dollars.

Marginal note:Exception

(2) Subsection (1) does not apply if any of subsections 876(2) to (6) applies to the person in respect of the bank holding company.

Marginal note:Extension

(3) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.

Marginal note:Obligation of widely held bank holding company

879. (1) If a widely held bank holding company with equity of five billion dollars or more controls a bank and a person becomes a major shareholder of the bank or of any entity that also controls the bank, the widely held bank holding company must do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the bank or entity that controls it,

(a) the widely held bank holding company no longer controls the bank; or

(b) the bank or the entity that controls the bank does not have any major shareholder other than the widely held bank holding company or any entity that it controls.

Marginal note:Exception

(2) Subsection (1) does not apply in respect of a bank with equity of less than two hundred and fifty million dollars, or any other prescribed amount.

Marginal note:Extension

(3) If general market conditions so warrant and the Minister is satisfied that the widely held bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Obligation of widely held bank holding company

879.1 (1) Despite subsection 879(1), if a widely held bank holding company with equity of five billion dollars or more controls a bank in respect of which that subsection does not apply by reason of subsection 879(2) and the equity of the bank reaches two hundred and fifty million dollars or more or any other amount that is prescribed and on the day the equity of the bank reaches two hundred and fifty million dollars or more or the prescribed amount, as the case may be, a person is a major shareholder of the bank or of any entity that also controls the bank, the widely held bank holding company must do all things necessary to ensure that, on the day that is three years after that day,

(a) the widely held bank holding company no longer controls the bank; or

(b) the bank or the entity that controls the bank does not have any major shareholder other than the widely held bank holding company or any entity that the widely held bank holding company controls.

Marginal note:Extension

(2) If general market conditions so warrant and the Minister is satisfied that the widely held bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Prohibition against significant interest

880. No person who has a significant interest in any class of shares of a widely held bank holding company with equity of five billion dollars or more may have a significant interest in any class of shares of a subsidiary of the widely held bank holding company that is a bank or a bank holding company.

Marginal note:Prohibition against significant interest

881. No person who has a significant interest in any class of shares of a bank holding company may have a significant interest in any class of shares of any widely held bank with equity of five billion dollars or more, or of any widely held bank holding company with equity of five billion dollars or more, that controls the bank holding company.

Marginal note:Prohibition against control

882. (1) No person shall control, within the meaning of paragraph 3(1)(d), a bank holding company with equity of five billion dollars or more.

Marginal note:Exception — widely held bank

(2) Subsection (1) does not apply if any of subsections 876(2) to (6) applies in respect of the person in respect of the bank holding company.

Marginal note:Restriction on control

883. No person shall, without the prior approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank holding company with equity of less than five billion dollars.

Marginal note:Deeming

884. A bank holding company with equity of less than five billion dollars that controls a bank to which subsection 378(1) applies is deemed, for the purposes of sections 156.09, 727, 876, 879, 879.1, 880, 881, 882, 888 and 890, subsection 891(2), section 893 and subsection 906(2), to be a bank holding company with equity of five billion dollars or more.

Marginal note:Prohibition

885. No person may control or be a major shareholder of a bank holding company if the person or an entity affiliated with the person

(a) has control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in; or

(b) engages in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in.

Marginal note:Prohibition

886. No person who controls a bank holding company or who is a major shareholder of a bank holding company, and no entity affiliated with that person, may

(a) control or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in; or

(b) engage in Canada in any personal property leasing activity that a financial leasing entity within the meaning of subsection 464(1) is prohibited from engaging in.

Marginal note:Constraint on registration

887. No bank holding company shall, unless the acquisition of the share has been approved by the Minister, record in its securities register a transfer or issue of any share of the bank holding company to any person or to any entity controlled by a person if

(a) the transfer or issue of the share would cause the person to have a significant interest in any class of shares of the bank holding company; or

(b) where the person has a significant interest in a class of shares of the bank holding company, the transfer or issue of the share would increase the significant interest of the person in that class of shares.

Marginal note:Exemption

888. On application by a bank holding company, other than a bank holding company with equity of five billion dollars or more, the Superintendent may exempt any class of non-voting shares of the bank holding company the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares of the bank holding company from the application of sections 875 and 887.

Marginal note:Exception for small holdings

889. Despite section 887, if, as a result of a transfer or issue of shares of a class of shares of a bank holding company to a person, the total number of shares of that class registered in the securities register of the bank holding company in the name of that person would not exceed five thousand and would not exceed 0.1 per cent of the outstanding shares of that class, the bank holding company is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the bank holding company as a result of that issue or transfer of shares.

Marginal note:When approval not required

890. (1) Despite sections 875 and 887, the approval of the Minister is not required in respect of a bank holding company with equity of less than five billion dollars if a person with a significant interest in a class of shares of the bank holding company, or an entity controlled by a person with a significant interest in a class of shares of the bank holding company, purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the bank holding company to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.

Marginal note:Percentage

(2) Subject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the bank holding company on the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister.

Marginal note:When approval not required

(3) If a person has a significant interest in a class of shares of a bank holding company and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of

(a) 5 percentage points in excess of the significant interest of the person in that class of shares of the bank holding company on the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister, and

(b) 10 percentage points in excess of the lowest significant interest of the person in that class of shares of the bank holding company at any time after the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank holding company, or of control of an entity that held shares of that class of shares of the bank holding company, for which approval was given by the Minister.

Marginal note:Exception

(4) Subsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection would

(a) result in the acquisition of control of the bank holding company by the person referred to in that subsection;

(b) if the person controls the bank holding company but the voting rights attached to the aggregate of any voting shares of the bank holding company beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company;

(c) result in the acquisition of a significant interest in a class of shares of the bank holding company by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; or

(d) result in an increase in a significant interest in a class of shares of the bank holding company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.

Marginal note:Regulations

(5) The Governor in Council may make regulations

(a) exempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the bank holding company by an entity controlled by the person; and

(b) exempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the bank holding company by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.

Marginal note:When approval not required

891. (1) Despite sections 875 and 887, the approval of the Minister is not required if

(a) the Superintendent has, by order, directed the bank holding company to increase its capital and shares of the bank holding company are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or

(b) a person who controls, within the meaning of paragraph 3(1)(a), the bank holding company acquires additional shares of the bank holding company.

Marginal note:Exception

(2) Paragraph (1)(a) does not apply in respect of a bank holding company with equity of five billion dollars or more.

Marginal note:Pre-approval

892. For the purposes of sections 875 and 887, the Minister may approve

(a) the purchase or other acquisition of any number or percentage of shares of a bank holding company that may be required in a particular transaction or series of transactions; or

(b) the purchase or other acquisition of up to a specified number or percentage of shares of a bank holding company within a specified period.

Marginal note:Public holding requirement

893. (1) Every bank holding company with equity of one billion dollars or more but less than five billion dollars shall, from and after the day determined under this section in respect of that bank holding company, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company and that are

(a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

(b) shares none of which is beneficially owned by a person who is a major shareholder of the bank holding company in respect of the voting shares of the bank holding company or by any entity that is controlled by a person who is a major shareholder of the bank holding company in respect of such shares.

Marginal note:Determination of day

(2) The day referred to in subsection (1) is

(a) if the bank holding company had equity of one billion dollars or more but less than five billion dollars on the day the bank holding company was formed or came into existence, the day that is three years after that day; and

(b) in any other case, the day that is three years after the day of the first annual meeting of the shareholders of the bank holding company held after the equity of the bank holding company first reaches one billion dollars.

Marginal note:Extension

(3) If general market conditions so warrant and the Minister is satisfied that a bank holding company has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the bank holding company must comply with subsection (1).

Marginal note:Public holding requirement

894. If a bank holding company to which section 893 applies becomes a bank holding company with equity of five billion dollars or more, that section continues to apply to the bank holding company until no person is a major shareholder of the bank holding company, other than a person in respect of whom subsections 876(2) to (6) applies.

Marginal note:Limit on assets

895. (1) Unless an exemption order with respect to the bank holding company is granted under section 897, if a bank holding company fails to comply with section 893 in any month, the Minister may, by order, require the bank holding company not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the bank holding company’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.

Marginal note:Average total assets

(2) For the purposes of subsection (1), the average total assets of a bank holding company in a three month period is to be computed by adding the total assets of the bank holding company as calculated for the month end of each of the three months in the period and by dividing the sum by three.

Definition of “total assets”

(3) For the purposes of subsections (1) and (2), “total assets”, in respect of a bank holding company, has the meaning given that expression by the regulations.

Marginal note:Increase of capital

896. If the Superintendent has, by order, directed a bank holding company with equity of one billion dollars or more but less than five billion dollars to increase its capital and shares of the bank holding company are issued and acquired in accordance with any terms and conditions that may be specified in the order, section 893 does not apply in respect of the bank holding company until the time that the Superintendent may, by order, specify.

Marginal note:Exemption by order of the Minister

897. (1) On application by a bank holding company, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank holding company from the requirements of section 893, subject to any terms and conditions that the Minister considers appropriate.

Marginal note:Compliance with section 893

(2) If an exemption order granted under this section in respect of a bank holding company expires, the bank holding company shall comply with section 893 as of the day the exemption order expires.

Marginal note:Limit on assets

(3) If a bank holding company fails to comply with section 893 on the day referred to in subsection (2), the bank holding company shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding the bank holding company’s average total assets in the three month period ending on the last day of the month immediately before the day referred to in subsection (2) or any later day that the Minister may, by order, specify.

Marginal note:Application of ss. 895(2) and (3)

(4) Subsections 895(2) and (3) apply for the purposes of subsection (3).

Marginal note:Exception

898. (1) If a bank holding company fails to comply with section 893 as the result of any of the following, section 895 does not apply in respect of the bank holding company until the expiration of six months after the day it failed to comply with section 893:

(a) a distribution to the public of voting shares of the bank holding company;

(b) a redemption or purchase of voting shares of the bank holding company;

(c) the exercise of any option to acquire voting shares of the bank holding company; or

(d) the conversion of any convertible securities into voting shares of the bank holding company.

Marginal note:Shares acquiring voting rights

(2) If, as the result of an event that has occurred and is continuing, shares of a bank holding company acquire voting rights in such number as to cause the bank holding company to no longer be in compliance with section 893, section 895 does not apply in respect of that bank holding company until the expiration of six months after the day the bank holding company ceased to be in compliance with section 893 or any later day that the Minister may, by order, specify.

Marginal note:Acquisition of control permitted

899. (1) Subject to subsection (2) and sections 887 and 900, section 893 does not apply in respect of a bank holding company if a person acquires control of the bank holding company through the purchase or other acquisition of all or any number of the shares of the bank holding company by the person or by any entity controlled by the person.

Marginal note:Undertaking required

(2) Subsection (1) applies only if the person referred to in that subsection provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the bank holding company has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank holding company and that are

(a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

(b) shares none of which is beneficially owned by a person who is a major shareholder of the bank holding company in respect of the voting shares of the bank holding company or by any entity that is controlled by a person who is a major shareholder of the bank holding company in respect such shares.

Marginal note:Application of section 893

900. At the expiration of the period for compliance with an undertaking referred to in subsection 899(2), section 893 shall apply in respect of the bank holding company to which the undertaking relates.

Marginal note:Restriction on voting rights

901. (1) If, with respect to any bank holding company, a particular person contravenes section 874, subsection 875(1), 876(1) or 878(1), section 880 or 881 or subsection 882(1) or section 883 or fails to comply with an undertaking referred to in subsection 899(2) or with any term or condition imposed under section 907, no person, and no entity controlled by the particular person, shall, in person or by proxy, exercise any voting rights

(a) that are attached to shares of the bank holding company beneficially owned by the particular person or any entity controlled by the particular person; or

(b) that are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.

Marginal note:Subsection (1) ceases to apply

(2) Subsection (1) shall cease to apply in respect of a person when, as the case may be,

(a) the shares to which the contravention relates have been disposed of;

(b) the person ceases to control the bank holding company within the meaning of paragraph 3(1)(d);

(c) if the person failed to comply with an undertaking referred to in subsection 899(2), the bank holding company complies with section 893; or

(d) if the person failed to comply with a term or condition imposed under section 907, the person complies with the term or condition.

Marginal note:Saving

(3) Despite subsection (1), if a person contravenes subsection 876(1) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the bank holding company beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the bank holding company, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the bank holding company beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.

Marginal note:Loss of control — bank and bank holding company

902. (1) Despite sections 876 and 882, a widely held bank or a widely held bank holding company may be a major shareholder of a bank holding company with equity of five billion dollars or more and cease to control, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank holding company on the expiration of the day specified in the agreement.

Marginal note:Extension

(2) If general market conditions so warrant and the Minister is satisfied that the bank or the bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Loss of control — other entities

903. (1) Despite sections 876 and 882, an eligible foreign institution, an eligible Canadian financial institution, other than a bank, or a widely held insurance holding company may be a major shareholder of a bank holding company with equity of five billion dollars or more and cease to control, within the meaning of paragraph 3(1)(d), the bank holding company if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank holding company on the expiration of the day specified in the agreement.

Marginal note:Extension

(2) If general market conditions so warrant and the Minister is satisfied that the institution or insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Change in status

904. (1) If a body corporate that is an eligible financial institution other than a bank controls, within the meaning of paragraph 3(1)(d), a bank holding company with equity of five billion dollars or more and the body corporate subsequently ceases to be an eligible financial institution, the body corporate must do all things necessary to ensure that, on the day that is one year after the day it ceased to be an eligible financial institution,

(a) it does not control, within the meaning of paragraph 3(1)(d), the bank holding company; and

(b) it is not a major shareholder of the bank holding company.

Marginal note:Extension

(2) If general market conditions so warrant and the Minister is satisfied that the body corporate has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Approval Process

Marginal note:Application for approval

905. (1) An application for an approval of the Minister required under this Division must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.

Marginal note:Applicant

(2) If, with respect to any particular transaction, this Division applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.

Marginal note:Matters for consideration

906. (1) Subject to subsection (2), if an application for an approval under section 875 is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, including

(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support of any bank that is a subsidiary of the bank holding company;

(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of any bank that is a subsidiary of the bank holding company;

(c) the business record and experience of the applicant or applicants;

(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the bank holding company will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank holding company and its affiliates on the conduct of those businesses and operations; and

(g) the best interests of the financial system in Canada.

Marginal note:Exception

(2) Subject to subsection 882(1), the Minister shall take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holding

(a) more than 10 per cent but no more than 20 per cent of any class of the outstanding voting shares of a widely held bank holding company with equity of five billion dollars or more; or

(b) more than 10 per cent but no more than 30 per cent of any class of the outstanding non-voting shares of such a bank holding company.

Marginal note:Favourable treatment

(3) The Minister shall not approve a transaction that would cause a bank holding company to become a subsidiary of a foreign bank within the meaning of any of paragraphs (a) to (f) of the definition “foreign bank” in section 2 that is a non-WTO Member foreign bank, unless the Minister is satisfied that treatment as favourable for bank holding companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.

Marginal note:Terms and conditions

907. The Minister may impose any terms and conditions in respect of an approval given under this Division that the Minister considers necessary to ensure compliance with any provision of this Act.

Marginal note:Certifying receipt of application

908. (1) If, in the opinion of the Superintendent, an application filed under this Division contains all the required information, the Superintendent shall without delay refer the application to the Minister and send a receipt to the applicant certifying the date on which the completed application was received by the Superintendent.

Marginal note:Incomplete application

(2) If, in the opinion of the Superintendent, an application filed under this Division is incomplete, the Superintendent shall send a notice to the applicant specifying the information required by the Superintendent to complete the application.

Marginal note:Notice of decision

909. (1) Subject to subsections (2) and (3) and 910(1), the Minister shall, within a period of thirty days after the certified date referred to in subsection 908(1), send to the applicant

(a) a notice approving the transaction to which the application relates; or

(b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

Marginal note:Notice of decision

(2) Subject to subsections (4) and 910(2), if an application involves the acquisition of control of a bank holding company, the Minister shall, within a period of forty-five days after the certified date referred to in subsection 908(1), send to the applicant

(a) a notice approving the transaction to which the application relates; or

(b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

Marginal note:Extension of period for notice

(3) If the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall,

(a) within that period, send a notice to that effect to the applicant; and

(b) within a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within any other further period that may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.

Marginal note:Further extensions

(4) If the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.

Marginal note:Reasonable opportunity to make representations

910. (1) If, after receipt of the notice referred to in paragraph 909(1)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of thirty days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

Marginal note:Reasonable opportunity to make representations

(2) If, after receipt of the notice referred to in paragraph 909(2)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of forty-five days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

Marginal note:Notice of decision

911. (1) Within a period of thirty days after the expiration of the period for making representations referred to in subsection 910(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

Marginal note:Notice of decision

(2) Within a period of forty-five days after the expiration of the period for making representations referred to in subsection 910(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

Marginal note:Deemed approval

912. If the Minister does not send a notice under subsection 909(1) or (3) or 911(1) within the period provided for in those subsections, the Minister is deemed to have approved the transaction to which the application relates.

Marginal note:Constraining registration: Crown and foreign governments

913. (1) No bank holding company shall record in its securities register a transfer or issue of any share of the bank holding company to

(a) Her Majesty in right of Canada or of a province or any agent or agency of Her Majesty in either of those rights; or

(b) the government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government.

Marginal note:Exception

(2) Despite subsection (1), a bank holding company may record in its securities register a transfer or issue of any share of the bank holding company to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country or any agent or agency of a foreign country if the bank holding company is a subsidiary of the foreign bank or foreign institution.

Marginal note:Suspension of voting rights held by governments

914. (1) Despite section 737, no person shall, in person or by proxy, exercise any voting rights attached to any share of a bank holding company that is beneficially owned by

(a) Her Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights; or

(b) the government of a foreign country or any political subdivision thereof, or any agency thereof.

Marginal note:Exception

(2) Subsection (1) does not apply to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country or any agent or agency of a foreign country and that has a significant interest in a class of shares of a bank holding company that is a subsidiary of the foreign bank or foreign institution.

Marginal note:Disposition of shareholdings

915. (1) If, with respect to any bank holding company, a person contravenes section 874 or subsection 875(1), 876(1) or 878(1) or section 880 or 881 or subsection 882(1) or section 883 or fails to comply with an undertaking referred to in subsection 899(2) or with any terms and conditions imposed under section 907, the Minister may, if the Minister deems it in the public interest to do so, by order, direct that person and any person controlled by that person to dispose of any number of shares of the bank holding company beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the person and the persons controlled by that person that is specified in the order.

Marginal note:Representations

(2) No direction shall be made under subsection (1) unless the Minister has provided each person to whom the direction relates and the bank holding company concerned with a reasonable opportunity to make representations in respect of the subject-matter of the direction.

Marginal note:Appeal

916. Any person with respect to whom a direction has been made under subsection 915(1) may, within thirty days after the date of the direction, appeal the matter in accordance with section 977.

Marginal note:Application to court

917. (1) Where a person fails to comply with a direction made under subsection 915(1), an application on behalf of the Minister may be made to a court for an order to enforce the direction.

Marginal note:Court order

(2) A court may, on an application under subsection (1), make such order as the circumstances require to give effect to the terms of the direction and may, without limiting the generality of the foregoing, require the bank holding company concerned to sell the shares that are the subject-matter of the direction.

Marginal note:Appeal

(3) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.

Marginal note:Interest of securities underwriter

918. This Division does not apply to a securities underwriter in respect of shares of a body corporate or ownership interests in an unincorporated entity that are acquired by the underwriter in the course of a distribution to the public of those shares or ownership interests and that are held by the underwriter for a period of not more than six months.

Marginal note:Arrangements to effect compliance

919. (1) The directors of a bank holding company may make such arrangements as they deem necessary to carry out the intent of this Division and, in particular, but without limiting the generality of the foregoing, may

(a) require any person in whose name a share of the bank holding company is held to submit a declaration setting out

(i) the beneficial ownership of the share, and

(ii) such other information as the directors deem relevant for the purposes of this Division;

(b) require any person who wishes to have a transfer of a share registered in the name of, or to have a share issued to, that person to submit a declaration referred to in paragraph (a) as though the person were the holder of that share; and

(c) determine the circumstances in which a declaration referred to in paragraph (a) is to be required, the form of the declaration and the times at which it is to be submitted.

Marginal note:Order of Superintendent

(2) The Superintendent may, by order, direct a bank holding company to obtain from any person in whose name a share of the bank holding company is held a declaration setting out the name of every entity controlled by that person and containing information concerning

(a) the ownership or beneficial ownership of the share; and

(b) such other related matters as are specified by the Superintendent.

Marginal note:Compliance required

(3) As soon as possible after receipt by a bank holding company of a direction under subsection (2),

(a) the bank holding company shall comply with the direction; and

(b) every person who is requested by the bank holding company to provide a declaration containing information referred to in subsection (1) or (2) shall comply with the request.

Marginal note:Outstanding declaration: effect

(4) Where, pursuant to this section, a declaration is required to be submitted by a shareholder or other person in respect of the issue or transfer of any share, a bank holding company may refuse to issue the share or register the transfer unless the required declaration is submitted.

Marginal note:Reliance on information

920. A bank holding company and any person who is a director or an officer, employee or agent of the bank holding company may rely on any information contained in a declaration required by the directors pursuant to section 919 or on any information otherwise acquired in respect of any matter that might be the subject of such a declaration, and no action lies against the bank holding company or any such person for anything done or omitted to be done in good faith in reliance on any such information.

Marginal note:Competition Act

921. Nothing in, or done under the authority of, this Act affects the operation of the Competition Act.

Division 8Business and Powers

Marginal note:Main business

922. (1) Subject to this Part, a bank holding company shall not engage in or carry on any business other than

(a) acquiring, holding and administering investments that are permitted by this Part;

(b) providing management, advisory, financing, accounting, information processing and other prescribed services to entities in which it has a substantial investment; and

(c) any other prescribed business.

Marginal note:Regulations

(2) The Governor in Council may make regulations prescribing businesses or services for the purposes of subsection (1).

Marginal note:Restriction on guarantees

923. (1) A bank holding company shall not guarantee on behalf of any person the payment or repayment of any sum of money.

Marginal note:Exception

(2) Subsection (1) does not apply if

(a) the person on whose behalf the bank holding company has undertaken to guarantee the payment or repayment is a subsidiary of the bank holding company; and

(b) the subsidiary has an unqualified obligation to reimburse the bank holding company for the full amount of the payment or repayment to be guaranteed.

Marginal note:Regulations

(3) The Governor in Council may make regulations imposing terms and conditions in respect of guarantees permitted by this section.

Marginal note:Restriction on partnerships

924. (1) Except with the approval of the Superintendent, a bank holding company shall not be a general partner in a limited partnership or a partner in a general partnership.

Meaning of “general partnership”

(2) For the purposes of subsection (1), “general partnership” means any partnership other than a limited partnership.

Division 9Investments

Interpretation

Marginal note:Definitions

925. (1) The definitions in subsection 464(1) apply in respect of bank holding companies, except that the reference to “section 468” in the definition “permitted entity” is to be read as a reference to “section 930” and the reference to “bank” in that definition is to be read as a reference to “bank holding company”.

Marginal note:Members of a bank holding company’s group

(2) For the purpose of this Division, a member of a bank holding company’s group is any of the following:

(a) an entity referred to in any of paragraphs 930(1)(a) to (f) that controls the bank holding company;

(b) a subsidiary of the bank holding company or of an entity referred to in any of paragraphs 930(1)(a) to (f) that controls the bank holding company;

(c) an entity in which the bank holding company, or an entity referred to in any of paragraphs 930(1)(a) to (f) that controls the bank holding company, has a substantial investment; or

(d) a prescribed entity in relation to the bank holding company.

Marginal note:Non-application of Division

(3) This Division does not apply in respect of

(a) the holding of a security interest in real property, unless the security interest is prescribed under paragraph 941(a) to be an interest in real property; or

(b) the holding of a security interest in securities of an entity.

Investments

Marginal note:Investments

926. Subject to this Division, a bank holding company may invest its funds in the shares of or ownership interests in any entity or make any other investment that its directors consider necessary or advisable to manage the bank holding company’s liquidity.

General Constraints on Investments

Marginal note:Investment standards

927. The directors of a bank holding company shall establish and the bank holding company shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply to avoid undue risk of loss and obtain a reasonable return.

Marginal note:Restriction on control and substantial investments

928. (1) Subject to subsections (2) and (3), no bank holding company shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.

Marginal note:Exception: indirect investments

(2) A bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way of

(a) an acquisition of control of an entity referred to in any of paragraphs 930(1)(a) to (j), a specialized financing entity or a prescribed entity that controls or has a substantial investment in the entity; or

(b) an acquisition of shares or ownership interests in the entity by

(i) an entity referred to in any of paragraphs 930(1)(a) to (j), a specialized financing entity or a prescribed entity that is controlled by the bank holding company, or

(ii) an entity controlled by an entity referred to in any of paragraphs 930(1)(a) to (j), a specialized financing entity or a prescribed entity that is controlled by the bank holding company.

Marginal note:Exception: temporary investments, realizations and loan workouts

(3) A bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity by way of

(a) a temporary investment permitted by section 933;

(b) an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 934; or

(c) a realization of security permitted by section 935.

Marginal note:Exception: uncontrolled event

(4) A bank holding company is deemed not to contravene subsection (1) if the bank holding company acquires control of, or acquires or increases a substantial investment in, an entity solely as the result of an event not within the control of the bank holding company.

Marginal note:Regulations re limits

929. The Governor in Council may make regulations

(a) respecting the determination of the amount or value of loans, investments and interests for the purposes of this Division;

(b) respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by a bank holding company and its prescribed subsidiaries to or in a person and any persons connected with that person;

(c) specifying the classes of persons who are connected with any person for the purposes of paragraph (b); and

(d) prescribing terms and conditions under which a bank holding company may acquire control of, or acquire or increase a substantial investment in, a specialized financing entity.

Subsidiaries and Equity Investments

Marginal note:Permitted investments

930. (1) Subject to subsections (4) to (6), a bank holding company may acquire control of, or acquire or increase a substantial investment in

(a) a bank;

(b) a bank holding company;

(c) a body corporate to which the Trust and Loan Companies Act applies;

(d) an association to which the Cooperative Credit Associations Act applies;

(e) an insurance company or a fraternal benefit society incorporated or formed by or under the Insurance Companies Act;

(f) an insurance holding company;

(g) a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;

(h) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;

(i) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; or

(j) an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.

Marginal note:Permitted investments

(2) Subject to subsections (3) to (6), a bank holding company may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:

(a) engaging in any financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d) or any other activity that a bank is permitted to engage in under section 410 or 411;

(b) acquiring or holding shares of, or ownership interests in, entities in which a bank holding company is permitted under this Division to hold or acquire;

(c) engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the bank holding company or any member of the bank holding company’s group:

(i) the bank holding company,

(ii) any member of the bank holding company’s group,

(iii) any entity that is primarily engaged in the business of providing financial services,

(iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or

(v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

(d) engaging in any activity that a bank is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to

(i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any member of the bank holding company’s group, or

(ii) if a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;

(e) engaging in the activities referred to in the definition “mutual fund entity”, “mutual fund distribution entity” or “real property brokerage entity” in subsection 464(1); and

(f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

Marginal note:Restriction

(3) A bank holding company may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include

(a) activities that a bank is not permitted to engage in under any of sections 412, 417 and 418;

(b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a bank under paragraph 409(2)(c);

(c) activities that a bank is not permitted to engage in under section 416 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;

(d) acquiring control of or acquiring or holding a substantial investment in another entity unless

(i) in the case of an entity that is controlled by the bank holding company, a bank would be permitted under Part IX to acquire a substantial investment in the other entity, or

(ii) in the case of an entity that is not controlled by the bank holding company, a bank would be permitted to acquire a substantial investment in the other entity under subsection 466(2), paragraph 466(3)(b) or (c) or subsection 466(4) or 468(1) or (2); or

(e) any prescribed activity.

Marginal note:Control

(4) Subject to subsection (8) and the regulations, a bank holding company may not acquire control of, or acquire or increase a substantial investment in,

(a) an entity referred to in paragraph (1)(a) or (b), unless

(i) the bank holding company controls, within the meaning of paragraphs 3(1)(a) and (d), the entity or would thereby acquire control, within the meaning of those paragraphs, of the entity, or

(ii) the bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment;

(b) an entity referred to in any of paragraphs (1)(c) to (j), unless

(i) the bank holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

(ii) the bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment;

(c) an entity whose business includes one or more of the activities referred to in paragraph (2)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the entity to material market or credit risk, including a finance entity, a factoring entity and a financial leasing entity, unless

(i) the bank holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

(ii) the bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment; or

(d) an entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unless

(i) the bank holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,

(ii) the bank holding company is permitted by regulations made under paragraph 936(a) to acquire or increase the substantial investment, or

(iii) subject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in any of paragraphs (a) to (c) or an entity that is not a permitted entity.

Marginal note:Minister’s approval

(5) Subject to the regulations, a bank holding company may not, without the prior written approval of the Minister,

(a) acquire control of an entity referred to in paragraphs (1)(g) to (i) from a person who is not a member of the bank holding company’s group;

(b) acquire control of an entity referred to in paragraph (1)(j) or (4)(c), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (f) that is not a member of the bank holding company’s group:

(i) a factoring entity, or

(ii) a financial leasing entity;

(c) acquire control of, or acquire or increase a substantial investment in, an entity whose business includes one or more of the activities referred to in paragraph (2)(d);

(d) acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 410(1)(c) or (c.1); or

(e) acquire control of, or acquire or increase a substantial investment in, an entity engaging in an activity prescribed for the purposes of paragraph (2)(f).

Marginal note:Superintendent’s approval

(6) Subject to subsection (7) and the regulations, a bank holding company may not acquire control of, or acquire or increase a substantial investment in, an entity referred to in any of paragraphs (1)(g) to (j) and (4)(c) and (d) unless the bank holding company obtains the approval of the Superintendent.

Marginal note:Exception

(7) Subsection (6) does not apply in respect of a particular transaction if

(a) the bank holding company is acquiring control of an entity whose business includes an activity referred to in paragraph (2)(b), other than a specialized financing entity;

(b) the bank holding company is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity; or

(c) the Minister has approved the transaction under subsection (5) or is deemed to have approved it under subsection 931(1).

Marginal note:Control not required

(8) A bank holding company need not control an entity referred to in paragraph (1)(j), or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province, if the laws or customary business practices of the country under the laws of which the entity was incorporated or formed do not permit the bank holding company to control the entity.

Marginal note:Giving up control prohibited

(9) A bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), an entity referred to in paragraph (1)(a) or (b) may not give up control, within the meaning of paragraph 3(1)(a) or (d), of the entity while continuing to control, within the meaning of the other paragraph, the entity.

Marginal note:Prohibition on giving up control in fact

(10) A bank holding company that, under paragraph (4)(b), (c) or (d), controls an entity may not, without the prior written approval of the Minister, give up control, within the meaning of paragraph 3(1)(d), of the entity while it continues to control the entity.

Marginal note:Giving up control

(11) A bank holding company that, under subsection (4), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity if

(a) the bank holding company is permitted to do so by regulations made under paragraph 936(c); or

(b) the entity meets the conditions referred to in subparagraph (4)(d)(iii).

Marginal note:Subsections do not apply

(12) If a bank holding company controls, within the meaning of paragraph 3(1)(a), (b) or (c), an entity, subsections (5) and (6) do not apply in respect of any subsequent increases by the bank holding company of its substantial investment in the entity so long as the bank holding company continues to control the entity.

Marginal note:Approval for indirect investments

931. (1) If a bank holding company obtains the approval of the Minister under subsection 930(5) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the bank holding company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 930(5) or the Superintendent under subsection 930(6) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the bank holding company is deemed to have obtained the approval of the Minister or the Superintendent for that indirect acquisition or increase.

Marginal note:Approval for indirect investments

(2) If a bank holding company obtains the approval of the Superintendent under subsection 930(6) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase the bank holding company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Superintendent under that subsection and that indirect acquisition or increase is disclosed to the Superintendent in writing before the approval is obtained, the bank holding company is deemed to have obtained the approval of the Superintendent for that indirect acquisition or increase.

Marginal note:Undertakings

932. (1) If a bank holding company controls a permitted entity, other than an entity referred to in any of paragraphs 930(1)(a) to (f), the bank holding company shall provide the Superintendent with any undertakings that the Superintendent may require regarding

(a) the activities of the entity; and

(b) access to information about the entity.

Marginal note:Undertakings

(2) If a bank holding company acquires control of an entity referred to in any of paragraphs 930(1)(g) to (j), the bank holding company shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.

Marginal note:Agreements with other jurisdictions

(3) The Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of any entity referred to in any of paragraphs 930(1)(g) to (j) in each province or in any other jurisdiction concerning any matters referred to in paragraphs (1)(a) and (b) or any other matter the Superintendent considers appropriate.

Marginal note:Access to records

(4) Despite any other provision of this Division, a bank holding company shall not control a permitted entity, other than an entity referred to in any of paragraphs 930(1)(a) to (f), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the bank holding company obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.

Exceptions and Exclusions

Marginal note:Temporary investments in entity

933. (1) Subject to subsection (3), a bank holding company may, by way of a temporary investment, acquire control of, or acquire or increase a substantial investment in, an entity but, within two years, or any other period that may be specified or approved by the Superintendent, after acquiring control or after acquiring or increasing the substantial investment, as the case may be, it shall do all things necessary to ensure that it no longer controls the entity or has a substantial investment in the entity.

Marginal note:Extension

(2) The Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of two years, or the other period specified or approved by the Superintendent, that is referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Temporary investment

(3) If a bank holding company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Minister under subsection 930(5) is required, the bank holding company must, within 90 days after acquiring control or after acquiring or increasing the substantial investment,

(a) apply to the Minister for approval to retain control of the entity or to continue to hold the substantial investment in the entity for a period specified by the Minister or for an indeterminate period on any terms and conditions that the Minister considers appropriate; or

(b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the entity or does not have a substantial investment in the entity.

Marginal note:Indeterminate extension

(4) If a bank holding company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Superintendent under subsection 930(6) is required, the Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, permit the bank holding company to retain control of the entity or to continue to hold the substantial investment in the entity for an indeterminate period, on any terms and conditions that the Superintendent considers necessary.

Marginal note:Loan workouts

934. (1) Despite anything in this Division, if any subsidiary of a bank holding company has made a loan to an entity and, under the terms of the agreement between the subsidiary and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the bank holding company may acquire, through the subsidiary,

(a) a substantial investment in the entity to which the loan was made;

(b) a substantial investment in any entity that is an affiliate of the entity; or

(c) a substantial investment in an entity that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity to which the loan was made or any of the affiliates of that entity.

Marginal note:Obligation of bank holding company

(2) If a bank holding company acquires a substantial investment in an entity under subsection (1), the bank holding company shall, within five years after acquiring the substantial investment, cause the subsidiary that made the loan to do all things necessary to ensure that the bank holding company does not control the entity or have a substantial investment in the entity.

Marginal note:Extension

(3) The Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of five years referred to in subsection (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Exception — entities controlled by foreign governments

(4) Despite anything in this Division, if a subsidiary of a bank holding company has made a loan to, or holds a debt obligation of, the government of a foreign country or an entity controlled by the government of a foreign country and, under the terms of the agreement between the subsidiary and that government or the entity, as the case may be, and any other documents governing the terms of the loan or debt obligation, a default has occurred, the bank holding company may acquire, through the subsidiary, a substantial investment in that entity or in any other entity designated by that government if the acquisition is part of a debt restructuring program of that government.

Marginal note:Time for holding substantial investment

(5) If a bank holding company acquires a substantial investment in any entity under subsection (4), the bank holding company may, on any terms and conditions that the Superintendent considers appropriate, continue to hold the substantial investment for an indeterminate period or for any other period that the Superintendent may specify.

Marginal note:Exception

(6) If, under subsection (1), a bank holding company acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 930, the bank holding company may retain control of the entity or continue to hold the substantial investment for an indeterminate period, if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2), including any extension of it granted under subsection (3).

Marginal note:Realizations

935. (1) Despite anything in this Part, a bank holding company may acquire control of, or a substantial investment in, an entity if the control or the substantial investment is acquired through the realization of a security interest held by a subsidiary of the bank holding company.

Marginal note:Disposition

(2) Subject to subsection 717(2), if a bank holding company acquires control of, or a substantial investment in, an entity by way of the realization of a security interest held by any of its subsidiaries, the bank holding company shall, within five years after the day on which control or the substantial investment is acquired, cause the subsidiary to do all things necessary to ensure that the bank holding company no longer controls the entity or has a substantial investment in the entity.

Marginal note:Extension

(3) The Superintendent may, in the case of any particular bank holding company that makes an application under this subsection, extend the period of five years referred to in subsection (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Exception

(4) If, under subsection (1), a bank holding company acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 930, the bank holding company may retain control of the entity or continue to hold the substantial investment for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2), including any extension of it granted under subsection (3).

Marginal note:Regulations restricting ownership

936. The Governor in Council may make regulations

(a) for the purposes of subsection 930(4), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which that subsection does not apply or the bank holding companies or other entities in respect of which that subsection does not apply, including prescribing bank holding companies or other entities on the basis of the activities they engage in;

(b) for the purposes of subsection 930(5) or (6), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the bank holding companies or other entities in respect of which either of those subsections does not apply, including prescribing bank holding companies or other entities on the basis of the activities they engage in;

(c) for the purposes of subsection 930(11), permitting a bank holding company to give up control of an entity; and

(d) restricting the ownership by a bank holding company of shares of a body corporate or of ownership interests in an unincorporated entity under sections 930 to 935 and imposing terms and conditions applicable to bank holding companies that own such shares or interests.

Portfolio Limits

Marginal note:Exclusion from portfolio limits

937. (1) Subject to subsection (3), the value of all loans, investments and interests acquired by a bank holding company and any of its prescribed subsidiaries under section 934 or as a result of a realization of a security interest is not to be included in calculating the value of loans, investments and interests of the bank holding company and its prescribed subsidiaries under sections 938 to 940

(a) for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; and

(b) for a period of five years after the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.

Marginal note:Extension

(2) The Superintendent may, in the case of any particular bank holding company, extend any period referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Exception

(3) Subsection (1) does not apply to an investment or interest described in that subsection if the investment or interest is defined by a regulation made under section 941 to be an interest in real property and

(a) the bank holding company or the subsidiary acquired the investment or interest as a result of the realization of a security interest securing a loan that was defined by a regulation made under section 941 to be an interest in real property; or

(b) the bank holding company or the subsidiary acquired the investment or interest under section 934 as a result of a default referred to in that section in respect of a loan that was defined by a regulation made under section 941 to be an interest in real property.

Real Property

Marginal note:Limit on total property interest

938. A bank holding company shall not, and shall not permit its prescribed subsidiaries to, purchase or otherwise acquire an interest in real property or make an improvement to any real property in which the bank holding company or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the bank holding company in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.

Equities

Marginal note:Limits on equity acquisitions

939. A bank holding company shall not, and shall not permit its prescribed subsidiaries to,

(a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment, or

(b) acquire control of an entity that holds shares or ownership interests referred to in paragraph (a),

if the aggregate value of

(c) all participating shares, excluding participating shares of permitted entities in which the bank holding company has a substantial investment, and

(d) all ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the bank holding company has a substantial investment,

beneficially owned by the bank holding company and its prescribed subsidiaries exceeds, or the purchase or acquisition would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.

Aggregate Limit

Marginal note:Aggregate limit

940. A bank holding company shall not, and shall not permit its prescribed subsidiaries to,

(a) purchase or otherwise acquire

(i) participating shares of a body corporate, other than those of a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment,

(ii) ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the bank holding company has, or by virtue of the acquisition would have, a substantial investment, or

(iii) interests in real property, or

(b) make an improvement to real property in which the bank holding company or any of its prescribed subsidiaries has an interest

if the aggregate value of

(c) all participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the bank holding company and its prescribed subsidiaries, and

(d) all interests of the bank holding company in real property referred to in subparagraph (a)(iii)

exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank holding company.

Miscellaneous

Marginal note:Regulations

941. For the purposes of this Division, the Governor in Council may make regulations

(a) defining the interests of a bank holding company in real property;

(b) determining the method of valuing those interests; or

(c) exempting classes of bank holding companies from the application of sections 937 to 940.

Marginal note:Divestment order

942. (1) The Superintendent may, by order, direct a bank holding company to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Division.

Marginal note:Divestment order

(2) If, in the opinion of the Superintendent,

(a) an investment by a bank holding company or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the bank holding company to control the body corporate or the unincorporated entity, or

(b) the bank holding company or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put before

(i) the board of directors of a body corporate, or

(ii) a similar group or committee of an unincorporated entity,

or whereby no proposal may be approved except with the consent of the bank holding company, the entity it controls or the nominee,the Superintendent may, by order, require the bank holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank holding company no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).

Marginal note:Divestment order

(3) If

(a) a bank holding company

(i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 932(1), (2) or (4), or

(ii) is in default of an undertaking referred to in subsection 932(1) or (2) and the default is not remedied within ninety days after the day of receipt by the bank holding company of a notice from the Superintendent of the default, or

(b) a permitted entity referred to in subsection 932(4) is in default of an undertaking referred to in subsection 932(4) and the default is not remedied within ninety days after the day of receipt by the bank holding company of a notice from the Superintendent of the default,

the Superintendent may, by order, require the bank holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank holding company no longer has a substantial investment in the entity to which the undertaking relates.

Marginal note:Exception

(4) Subsection (2) does not apply in respect of an entity in which a bank holding company has a substantial investment permitted by this Division.

Marginal note:Deemed temporary investment

943. If a bank holding company controls or has a substantial investment in an entity as permitted by this Division and the bank holding company becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 930(5) or (6), the bank holding company is deemed to have acquired, on the day the bank holding company becomes aware of the change, a temporary investment in respect of which section 933 applies.

Marginal note:Asset transactions

944. (1) A bank holding company shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person if

A + B > C

where


is the value of the assets;


is the total value of all assets that the bank holding company and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; and


is ten per cent of the total value of the assets of the bank holding company, as shown in the last annual statement of the bank holding company prepared before the acquisition or transfer.

Marginal note:Exception

(2) The prohibition in subsection (1) does not apply in respect of

(a) assets that are debt obligations that are

(i) guaranteed by any financial institution,

(ii) fully secured by deposits with any financial institution, or

(iii) fully secured by debt obligations that are guaranteed by any financial institution;

(b) assets that are debt obligations issued

(i) by, or by any agency of,

(A) the Government of Canada,

(B) the government of a province,

(C) a municipality, or

(D) the government of a foreign country or any political subdivision of a foreign country, or

(ii) by a prescribed international agency;

(c) assets that are debt obligations that are guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in paragraph (b);

(d) assets that are debt obligations that are widely distributed, as that expression is defined by the regulations;

(e) assets that are debt obligations of an entity controlled by the bank holding company; or

(f) a transaction or series of transactions by a subsidiary of the bank holding company with a financial institution as a result of the subsidiary’s participation in one or more syndicated loans with that financial institution.

Marginal note:Exception

(3) The approval of the Superintendent is not required if

(a) the bank holding company or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Division 7 or subsection 930(5) is required or the approval of the Superintendent under subsection 930(6) is required; or

(b) the transaction has been approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act.

Marginal note:Value of assets

(4) For the purposes of “A” in subsection (1), the value of the assets is

(a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the bank holding company after the acquisition, the fair market value of the assets; and

(b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the bank holding company prepared before the transfer, or if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank holding company before the transfer, the value of the assets as stated in the annual statement.

Marginal note:Total value of all assets

(5) For the purposes of subsection (1), the total value of all assets that the bank holding company or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the bank holding company, the fair market value of the assets of the entity at the date of the acquisition.

Marginal note:Total value of all assets

(6) For the purposes of subsection (1), the total value of all assets that the bank holding company or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the bank holding company prepared before the transfer, or if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank holding company before the transfer, the value of the assets of the entity as stated in the annual statement.

Marginal note:Transitional

945. Nothing in this Division requires

(a) the termination of a loan made before February 7, 2001;

(b) the termination of a loan made after that date as a result of a commitment made before that date;

(c) the disposal of an investment made before that date; or

(d) the disposal of an investment made after that date as a result of a commitment made before that date.

But if the loan or investment would be precluded or limited by this Division, the amount of the loan or investment may not be increased after that date.

Marginal note:Saving

946. A loan or investment referred to in section 945 is deemed not to be prohibited by the provisions of this Division.

Meaning of “non-bank entity”

947. (1) Subject to subsection (2), for the purpose of section 948 “non-bank entity” means a Canadian entity, other than a bank, that is controlled by a bank holding company or in which a bank holding company has a substantial investment.

Marginal note:Exception

(2) A Canadian entity is not a non-bank entity by reason only that a subsidiary of a bank holding company that is a bank controls, or has a substantial investment in, the Canadian entity.

Marginal note:Prohibited activities

948. (1) A non-bank entity shall not, in Canada,

(a) engage in the business of accepting deposit liabilities; or

(b) represent to the public that any instrument issued by the non-bank entity is a deposit or that any liability incurred by the non-bank entity is a deposit.

Marginal note:Disclosure of status

(2) A non-bank entity that carries on as part of its business the provision of financial services shall not borrow money in Canada from the public without disclosing that

(a) the non-bank entity is not a member institution of the Canada Deposit Insurance Corporation;

(b) the liability incurred by the non-bank entity through the borrowing is not a deposit; and

(c) the non-bank entity is not regulated as a financial institution in Canada.

Marginal note:Manner of disclosure

(3) The disclosure shall be

(a) in a prospectus, information circular or other offering document related to the borrowing or in a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or

(b) in any other manner that may be prescribed.

Marginal note:Exception for certain borrowings

(4) Subsection (2) does not apply

(a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or

(b) except as may be provided in any regulations, to a borrowing

(i) from a person in an amount of $150,000 or more, or

(ii) through the issue of instruments in denominations of $150,000 or more.

Marginal note:Exception

(5) Subsections (1) and (2) do not apply if the non-bank entity is

(a) a trust or loan corporation incorporated under an Act of Parliament or of the legislature of a province;

(b) an entity referred to in paragraph 930(1)(d) or (h); or

(c) a prescribed entity.

Marginal note:Exception

(6) Subsection (2) does not apply if the non-bank entity is

(a) an insurance company incorporated under an Act of Parliament or of the legislature of a province;

(b) a bank holding company or an insurance holding company;

(c) an entity that is controlled by an insurance holding company or in which an insurance holding company has a substantial investment;

(d) a financial institution that is described in paragraph (g) of the definition “financial institution” in section 2; or

(e) a prescribed entity.

Division 10Adequacy of Capital and Liquidity

Marginal note:Adequacy of capital and liquidity

949. (1) A bank holding company shall, in relation to its business, maintain

(a) adequate capital, and

(b) adequate and appropriate forms of liquidity,

and shall comply with any regulations in relation thereto.

Marginal note:Regulations and guidelines

(2) The Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by bank holding companies of adequate capital and adequate and appropriate forms of liquidity.

Marginal note:Directives

(3) Notwithstanding that a bank holding company is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the bank holding company

(a) to increase its capital; or

(b) to provide additional liquidity in such forms and amounts as the Superintendent may require.

Marginal note:Compliance

(4) A bank holding company shall comply with an order made under subsection (3) within such time as the Superintendent specifies therein.

Division 11Regulation of Bank Holding Companies

Supervision

Returns

Marginal note:Required information

950. A bank holding company shall provide the Superintendent with such information, at such times and in such form as the Superintendent may require.

Marginal note:Names of directors and auditor

951. (1) A bank holding company shall, within thirty days after each annual meeting of the bank holding company, provide the Superintendent with a return showing

(a) the name, residence and citizenship of each director holding office immediately following the meeting;

(b) the mailing address of each director holding office immediately following the meeting;

(c) the bodies corporate of which each director referred to in paragraph (a) is an officer or director and the firms of which each director is a member;

(d) the names of the directors referred to in paragraph (a) who are officers or employees of the bank holding company or any affiliate of the bank holding company, and the positions they occupy;

(e) the name of each committee of the bank holding company on which each director referred to in paragraph (a) serves;

(f) the date of expiration of the term of each director referred to in paragraph (a); and

(g) the name, address and date of appointment of the auditor of the bank holding company.

Marginal note:Changes

(2) Where

(a) any information relating to a director or an auditor of a bank holding company shown in the latest return made to the Superintendent under subsection (1), other than information referred to in paragraph (1)(c), becomes inaccurate or incomplete,

(b) a vacancy in the office of auditor of the bank holding company occurs or is filled by another person, or

(c) a vacancy on the board of directors of the bank holding company occurs or is filled,

the bank holding company shall forthwith provide the Superintendent with such information as is required to maintain the return in a complete and accurate form.

Marginal note:Copy of by-laws

952. A bank holding company shall send to the Superintendent within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment.

Marginal note:Register of bank holding companies

953. (1) The Superintendent shall, in respect of each bank holding company, cause a register to be maintained containing a copy of

(a) the incorporating instrument of the bank holding company; and

(b) the information referred to in paragraphs 951(1)(a) and (c) to (g) contained in the latest return sent to the Superintendent pursuant to section 951.

Marginal note:Form

(2) The register may be maintained in

(a) a bound or loose-leaf form or in a photographic film form; or

(b) a system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

Marginal note:Access

(3) Persons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.

Marginal note:Evidence

(4) A statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent.

Marginal note:Production of information and documents

954. (1) The Superintendent may, by order, direct a person who controls a bank holding company or any entity that is affiliated with a bank holding company to provide the Superintendent with the information or documents that are specified in the order if the Superintendent believes that the production of the information or documents is necessary in order to

(a) determine whether the bank holding company is complying with the provisions of this Act; or

(b) ascertain the financial condition of the bank holding company.

Marginal note:Time

(2) Any person to whom a direction has been issued under subsection (1) shall provide the information or documents specified in the order within the time specified in the order and, where the order does not specify a time, the person shall provide the information or documents within a reasonable time.

Marginal note:Exemption

(3) Subsection (1) does not apply in respect of an entity that controls a bank holding company or is affiliated with a bank holding company where that entity is a financial institution regulated

(a) by or under an Act of Parliament; or

(b) by or under an Act of the legislature of a province where the Superintendent has entered into an agreement with the appropriate official or public body responsible for the supervision of financial institutions in that province concerning the sharing of information on such financial institutions.

Marginal note:Confidential information

955. (1) All information regarding the business or affairs of a bank holding company, or regarding a person dealing with a bank holding company, that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information, is confidential and shall be treated accordingly.

Marginal note:Disclosure permitted

(2) Nothing in subsection (1) prevents the Superintendent from disclosing any information

(a) to any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,

(b) to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision,

(c) to the Canada Deposit Insurance Corporation or any compensation association designated by order of the Minister pursuant to subsection 449(1) of the Insurance Companies Act, for purposes related to its operation, and

(d) to the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions,

if the Superintendent is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed.

Marginal note:Regulations

956. The Governor in Council may make regulations prohibiting, limiting or restricting the disclosure by bank holding companies of prescribed supervisory information.

Inspection of Bank Holding Companies

Marginal note:Examination of bank holding companies

957. (1) The Superintendent, from time to time, shall make or cause to be made any examination and inquiry into the business and affairs of each bank holding company that the Superintendent considers to be necessary or expedient to determine whether the bank holding company is complying with the provisions of this Act and to ascertain the financial condition of the bank holding company.

Marginal note:Access to records of bank holding company

(2) The Superintendent or a person acting under the Superintendent’s direction

(a) has a right of access to any records, cash, assets and security held by or on behalf of a bank holding company; and

(b) may require the directors, officers and the auditor of a bank holding company to provide information and explanations, to the extent that they are reasonably able to do so, in respect of the condition and affairs of the bank holding company or any entity in which the bank holding company has a substantial investment.

Marginal note:Power of Superintendent on inquiry

958. The Superintendent has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Superintendent’s direction.

Remedial Powers

Prudential Agreements

Marginal note:Prudential agreement

959. The Superintendent may enter into an agreement, called a “prudential agreement”, with a bank holding company for the purposes of implementing any measure designed to protect the interests of depositors, policyholders and creditors of any federal financial institution affiliated with it.

Directions of Compliance

Marginal note:Superintendent’s directions to bank holding company

960. (1) If, in the opinion of the Superintendent, a bank holding company, one of its affiliates or any person with respect to a bank holding company is committing, or is about to commit, an act — or is pursuing or is about to pursue a course of conduct — that may directly or indirectly be prejudicial to the interest of depositors, policyholders or creditors of a federal financial institution that is affiliated with the bank holding company, the Superintendent may direct the bank holding company to

(a) cease or refrain from committing the act or pursuing the course of conduct;

(b) cause the affiliate or person to cease or refrain from committing the act or pursuing the course of conduct, to the extent that the bank holding company is able to do so;

(c) perform any act that in the opinion of the Superintendent is necessary to remedy the situation or to minimize the prejudice; or

(d) cause the affiliate or person to perform any act that in the opinion of the Superintendent is necessary to remedy the situation or to minimize the prejudice, to the extent that the bank holding company is able to do so.

Marginal note:Opportunity for representations

(2) Subject to subsection (4), no direction shall be issued unless the bank holding company is provided with a reasonable opportunity to make representations in respect of the matter.

Marginal note:Temporary direction

(3) If, in the opinion of the Superintendent, the length of time required for representations to be made might be prejudicial to the public interest, the Superintendent may make a temporary direction with respect to the matters referred to in paragraphs (1)(a) to (d) having effect for a period of not more than fifteen days.

Marginal note:Continued effect

(4) A temporary direction made under subsection (3) continues to have effect after the expiration of the fifteen day period referred to in that subsection if no representations are made to the Superintendent within that period or, if representations have been made, the Superintendent notifies the bank holding company that the Superintendent is not satisfied that there are sufficient grounds for revoking the direction.

Marginal note:Court enforcement

961. (1) If a bank holding company is contravening or has failed to comply with a prudential agreement entered into under section 959 or a direction of the Superintendent issued to the bank holding company under section 960 or is contravening this Act or has omitted to do any thing under this Act that it is required to do, the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the bank holding company to comply with the prudential agreement or the direction, cease the contravention or do any thing that is required to be done, and on such application the court may so order and make any other order it thinks fit.

Marginal note:Appeal

(2) An appeal from a decision of a court under subsection (1) lies in the same manner, and to the same court, as an appeal from any other order of the court.

Disqualification and Removal of Directors or Senior Officers

Meaning of “senior officer”

962. In sections 963 and 964, “senior officer” means the chief executive officer, secretary, treasurer or controller of a bank holding company or any other officer reporting directly to the bank holding company’s board of directors or chief executive officer.

Marginal note:Application

963. (1) This section applies only in respect of a bank holding company

(a) that has been notified by the Superintendent that this section applies to it where the bank holding company is subject to measures designed to protect the interests of depositors, policyholders and creditors of any federal financial institution affiliated with it, which measures are contained in a prudential agreement entered into under section 959 or an undertaking given by the bank holding company to the Superintendent; or

(b) that is the subject of a direction made under section 960, or an order made under subsection 949(3).

Marginal note:Information to be provided

(2) A bank holding company shall provide the Superintendent with the name of

(a) each person who has been nominated for election or appointment as a member of its board of directors,

(b) each person who has been selected by the bank holding company for appointment as a senior officer, and

(c) each person who is newly elected as a director of the bank holding company at a meeting of shareholders and who was not proposed for election by anyone involved in the management of the bank holding company,

together with such other information about the background, business record and experience of the person as the Superintendent may require.

Marginal note:When information to be provided

(3) The information required by subsection (2) shall be provided to the Superintendent

(a) at least 30 days prior to the date or proposed date of the election or appointment or within such shorter period as the Superintendent may allow; or

(b) in the case of a person referred to in paragraph (2)(c), within 15 days after the date of the election of the person.

Marginal note:Disqualification or removal

(4) If the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold that position, the Superintendent may, by order,

(a) in the case of a person referred to in paragraph (2)(a) or (b), disqualify the person from being elected or appointed as a director of a bank holding company or from being appointed as a senior officer; or

(b) in the case of a person referred to in paragraph (2)(c), remove the person from office as a director of the bank holding company.

Marginal note:Risk of prejudice

(4.1) In forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors, policyholders and creditors of any federal financial institution affiliated with the bank holding company would likely be prejudiced if the person were to take office or continue to hold office, as the case may be.

Marginal note:Representations may be made

(5) The Superintendent must in writing notify the person concerned and the bank holding company of any action that the Superintendent proposes to take under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

Marginal note:Prohibition

(6) Where an order has been made under subsection (4)

(a) disqualifying a person from being elected or appointed to a position, the person shall not be, and the bank holding company shall not permit the person to be, elected or appointed to the position; or

(b) removing a director from office, the person shall not continue to hold, and the bank holding company shall not permit the person to continue to hold, office as a director.

Marginal note:Removal of directors or senior officers

964. (1) The Superintendent may, by order, remove a person from office as a director or senior officer of a bank holding company if the Superintendent is of the opinion that the person is not suitable to hold that office

(a) on the basis of the competence, business record, experience, conduct or character of the person; or

(b) because the person has contravened or, by action or negligence, has contributed to the contravention of

(i) this Act or the regulations made under it,

(ii) a direction made under section 960,

(iii) an order made under subsection 949(3), or

(iv) a prudential agreement entered into under section 959 or an undertaking given by the bank holding company to the Superintendent.

Marginal note:Risk of prejudice

(2) In forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors, policyholders and creditors of any federal financial institution affiliated with the bank holding company have been or are likely to be prejudiced by the person’s holding office as a director or senior officer.

Marginal note:Representations may be made

(3) The Superintendent must in writing notify the person concerned and the bank holding company of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

Marginal note:Suspension

(4) If the Superintendent is of the opinion that the public interest may be prejudiced by the director or senior officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the director or senior officer. The suspension may not extend beyond 10 days after the expiration of that period.

Marginal note:Notice of order

(5) The Superintendent shall, without delay, notify the director or senior officer, as the case may be, and the bank holding company of a removal order or suspension order.

Marginal note:Consequences of removal order

(6) The director or senior officer, as the case may be, ceases to hold that office as of the date the removal order is made or any later date specified in the order.

Marginal note:Appeal

(7) The director or senior officer, as the case may be, or the bank holding company may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.

Marginal note:Powers of Federal Court

(8) The Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.

Marginal note:Order not stayed by appeal

(9) A removal order is not stayed by an appeal.

PART XVI ADMINISTRATION

Notices and Other Documents

Marginal note:Notice to directors and shareholders

965. A notice or document required by this Act or the regulations or by the incorporating instrument or by-laws of a bank or a bank holding company to be sent to a shareholder or director of the bank or bank holding company may be sent by prepaid mail addressed to, or may be delivered personally to,

(a) the shareholder at the shareholder’s latest address as shown in the records of the bank or bank holding company, or its transfer agent; and

(b) the director at the director’s latest address as shown in the records of the bank or bank holding company, or in the latest return made under section 632 or 951.

Marginal note:Presumption from return

966. A director named in the latest return sent by a bank or a bank holding company to the Superintendent under section 632 or 951 is presumed for the purposes of this Act to be a director of the bank or bank holding company referred to in the return.

Marginal note:Presumption of receipt

967. (1) A notice or document sent by mail in accordance with section 965 to a shareholder or director is deemed to be received by the shareholder or director at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that the shareholder or director did not receive the notice or document at that time or at all.

Marginal note:Undelivered notices

(2) If a bank or a bank holding company sends a notice or document to a shareholder in accordance with section 965 and the notice or document is returned on three consecutive occasions because the shareholder cannot be found, the bank or bank holding company is not required to send any further notices or documents to the shareholder until informed in writing of the shareholder’s new address.

Marginal note:Service on a bank, bank holding company or authorized foreign bank

968. A notice or document required by this Act to be sent to or served on a bank, a bank holding company or an authorized foreign bank may be sent by registered mail to the head office of the bank or bank holding company, or to the principal office of the authorized foreign bank, as the case may be, and, if sent, is deemed to be received or served at the time it would be delivered in the ordinary course of mail unless there are reasonable grounds for believing that the bank, bank holding company or authorized foreign bank did not receive it at that time or at all.

Marginal note:Certificate

969. (1) A certificate issued on behalf of a bank or a bank holding company stating any fact that is set out in the incorporating instrument, the by-laws, the minutes of the meetings of the directors, a committee of directors or the shareholders, or in a contract to which the bank or bank holding company is a party, may be signed by a director or an officer of the bank or bank holding company.

Marginal note:Proof of certain cases

(2) When introduced as evidence in any civil, criminal or administrative action or proceeding, the following are, in the absence of evidence to the contrary, proof of the facts so certified without proof of the signature or official character of the person appearing to have signed the certificate:

(a) a fact stated in a certificate referred to in subsection (1);

(b) a certified extract from a securities register of a bank or a bank holding company; or

(c) a certified copy of, or an extract from, minutes of a meeting of shareholders, directors or a committee of directors of a bank or a bank holding company.

Marginal note:Entry in securities register

970. An entry in the securities register of, or on a security certificate issued by, a bank or a bank holding company is evidence that the person in whose name the security is registered is the owner of the securities described in the register or in the certificate.

Marginal note:Verification of documents or fact

971. (1) The Superintendent may require that a document or a fact stated in a document that is required by or under this Act to be sent to the Superintendent or to the Minister be verified in accordance with subsection (2).

Marginal note:Form of proof

(2) A document or fact required by this Act or by the Superintendent to be verified may be verified by affidavit made under oath or by statutory declaration under the Canada Evidence Act before any commissioner for oaths or for taking affidavits.

Marginal note:Alternative means of publication

972. (1) Anything that is required by a provision of this Act to be published in the Canada Gazette or to be published in any other way may, instead of being published in that way, be published in any manner that may be prescribed for the purpose of that provision.

Marginal note:Alternative means of publishing summaries

(2) Anything that is required by a provision of this Act to be summarized in a publication may instead be summarized and published in any manner that may be prescribed for the purpose of that provision.

Marginal note:Publication conditions

(3) Any condition under a provision of this Act that something be published in the Canada Gazette or in any other way is satisfied if that thing is published instead in any manner that may be prescribed for the purpose of that provision.

Marginal note:Other consequences

(4) If a provision of this Act provides for consequences to follow the publication of something in the Canada Gazette or in any other manner, the same consequences follow the publication of that thing in any other manner that may be prescribed for the purpose of that provision.

Approvals — Terms, Conditions and Undertakings

Definition of “approval”

973. (1) In this section, “approval” includes any consent, order, exemption, extension or other permission granted by the Minister or the Superintendent under this Act, and includes the issuance of letters patent.

Marginal note:Minister — terms, conditions and undertakings

(2) In addition to any other action that may be taken under this Act, the Minister may, in granting an approval, impose such terms and conditions or require such undertaking as the Minister considers necessary, including any terms, conditions or undertaking specified by the Superintendent to maintain or improve the safety and soundness of any financial institution regulated under an Act of Parliament and to which the approval relates or that may be affected by it.

Marginal note:Superintendent — terms, conditions and undertakings

(3) In addition to any other action that may be taken under this Act, the Superintendent may, in granting an approval, impose such terms and conditions or require such undertaking as the Superintendent considers necessary.

Marginal note:Effect of non-compliance on approval

(4) Unless otherwise expressly provided in this Act, a failure to comply with a term or condition or an undertaking imposed or required under any provision of this Act does not invalidate the approval to which the term, condition or undertaking relates.

Marginal note:Non-compliance

(5) In addition to any other action that may be taken under this Act, in the case of non-compliance by a person with a term, condition or undertaking imposed or required under any provision of this Act, the Minister or the Superintendent, as the case may be, may

(a) revoke, suspend or amend the approval to which the term, condition or undertaking relates; or

(b) apply to a court for an order directing the person to comply with the term, condition or undertaking, and on such application the court may so order and make any other order it thinks fit.

Marginal note:Representations

(6) Before taking any action under subsection (5), the Minister or the Superintendent, as the case may be, shall afford the person concerned a reasonable opportunity to make representations.

Marginal note:Revocation, suspension or amendment

(7) At the request of the person concerned, the Minister or the Superintendent, as the case may be, may revoke, suspend or amend any terms or conditions imposed by him or her or may revoke or suspend an undertaking given to him or her or approve its amendment.

Short-term Exemption Order

Marginal note:Short-term exemption order

973.1 (1) Despite sections 378.1 and 378.2, paragraph 522.32(2)(b), subsection 522.32(4), paragraphs 522.32(7)(c) and (d) and sections 524.1, 524.2, 885 and 886, the Minister may, by order, provide that any of those provisions do not apply in respect of a person specified in the order for a period of up to twelve months, subject to any terms and conditions that the Minister considers appropriate.

Marginal note:Restriction

(2) If section 516 or 517 applies in respect of a foreign bank or an entity associated with a foreign bank, the Minister may only make an order under subsection (1) to the extent that the aggregate of the period that applied under that section and the period specified in the order under subsection (1) does not exceed twelve months.

Orders and Directives

Marginal note:Not statutory instruments

974. An instrument issued or made under this Act and directed to a single bank, bank holding company, authorized foreign bank or person, other than an order referred to in section 499, is not a statutory instrument for the purposes of the Statutory Instruments Act.

Marginal note:Form

975. The Superintendent may, by order, establish the form of any application to be made to the Minister or the Superintendent under this Act.

Applications to Superintendent

Marginal note:Content of applications

976. (1) The following applications to the Superintendent must contain the information, material and evidence that the Superintendent may require:

(a) applications for approval under subsection 65(1), 72(2), 75(4), 79(5), 80(1), 170(1), 217(3), 421(1), 468(6) or (11), 471(1) or (2) or 482(1), subparagraph 487(2)(a)(vi), section 490 or subsection 494(3) or (4), 495.3(1), 553.1(1), 709(1), 716(2), 718(4), 723(1), 758(1), 924(1), 930(6) or (11), 933(1) or 944(1);

(b) applications for consent under subsection 71(1) or 715(1);

(c) applications for exemptions under subsection 156.05(3), 245(1) or 822(1); and

(d) applications for extensions of time under subsection 471(3) or (5), 472(4), 473(4), 933(2) or (4), 934(3) or 935(3).

Marginal note:Receipt

(2) Without delay after receiving the application, the Superintendent shall send a receipt to the applicant certifying the date on which it was received.

Marginal note:Notice of decision to applicant

(3) Subject to subsection (4), the Superintendent shall, within a period of thirty days after the receipt of the application, send to the applicant

(a) a notice approving the application, subject to any terms and conditions that the Superintendent considers appropriate; or

(b) if the Superintendent is not satisfied that it should be approved, a notice to that effect.

Marginal note:Extension of period

(4) If the Superintendent is unable to complete the consideration of the application within the period referred to in subsection (3), the Superintendent shall, within that period, send a notice to the applicant informing the applicant that the Superintendent has extended the period for a further period set out in the notice.

Marginal note:Deemed approval

(5) If the applicant does not receive the notice required by subsection (3) and, where applicable, subsection (4), within the required period, the Superintendent is deemed to have approved the application and granted the approval, consent, extension or exemption to which the application relates, regardless of whether the approval, consent, extension or exemption is to be in writing or not.

Appeals

Marginal note:Appeal to Federal Court

977. (1) An appeal lies to the Federal Court from any direction of the Minister made under subsection 402(1) or 915(1).

Marginal note:Powers

(2) The Federal Court may, in an appeal under subsection (1),

(a) dismiss the appeal;

(b) set aside the direction or decision; or

(c) set aside the direction or decision and refer the matter back for re-determination.

Marginal note:Certificate

(3) For the purposes of an appeal under subsection (1), the Minister shall, at the request of the bank, bank holding company or person making the appeal, provide the bank, bank holding company or person with a certificate in writing setting out the direction or decision appealed from and the reasons why the direction or decision was made.

Regulations

Marginal note:Power to make regulations

978. The Governor in Council may make regulations

(a) prescribing anything that is required or authorized by this Act to be prescribed;

(b) prescribing the way in which anything that is required or authorized by this Act to be prescribed is to be determined;

(c) respecting, for any purpose of any provision of the Act, the determination of the equity of a bank or a bank holding company;

(d) defining words and expressions to be defined for the purposes of this Act;

(e) requiring the payment of a fee in respect of the filing, examining or issuing of any document or in respect of any action that the Superintendent is required or authorized to take under this Act, and fixing the amount of the fee or the manner of determining its amount;

(f) respecting the regulatory capital and total assets of a bank or a bank holding company;

(g) respecting the retention, in Canada, of assets of a bank or a bank holding company;

(h) respecting the value of assets of a bank or a bank holding company to be held in Canada and the manner in which those assets are to be held;

(i) respecting the protection and maintenance of assets of a bank or a bank holding company, including regulations respecting the bonding of directors, officers and employees of a bank or a bank holding company;

(j) respecting the holding of shares and ownership interests for the purposes of sections 70, 74 and 714;

(k) respecting information, in addition to the information required by section 634 or 953, to be maintained in the register referred to in that section; and

(l) generally for carrying out the purposes and provisions of this Act.

Delegation

Marginal note:Delegation

979. The Minister may delegate any of the Minister’s powers, duties and functions under this Act to any Minister of State appointed under the Ministries and Ministers of State Act to assist the Minister.

PART XVII SANCTIONS

Marginal note:Offence

980. Every person who, without reasonable cause, contravenes any provision of this Act or the regulations is guilty of an offence.

Marginal note:Undue preference to creditor

981. Every director, officer or employee of a bank or an authorized foreign bank who wilfully gives or concurs in giving to any creditor of the bank or authorized foreign bank any fraudulent, undue or unfair preference over other creditors, by giving security to the creditor, by changing the nature of the creditor’s claim or otherwise, is guilty of an offence.

Marginal note:Failure to provide information

982. Every person who, without reasonable cause, refuses or fails to comply with a requirement made under paragraph 643(2)(b) or 957(2)(b) is guilty of an offence.

Marginal note:Use of name

983. (1) Except to the extent permitted by the regulations, every person who uses the name of a bank or of a bank holding company in a prospectus, offering memorandum, takeover bid circular, advertisement for a transaction related to securities or in any other document in connection with a transaction related to securities is guilty of an offence.

Marginal note:Unauthorized use of title “bank”, etc.

(2) Subject to the regulations and subsections (4) to (6.1) and (10) to (12), every entity that acquires, adopts or retains a name that, in any language, includes the word “bank”, “banker” or “banking”, either alone or in combination with other words, or any word or words of import equivalent thereto, and every person who, in any language, uses the word “bank”, “banker” or “banking”, either alone or in combination with other words, or any word or words of import equivalent thereto, to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.

Marginal note:Unauthorized use of the name of a bank holding company

(3) Subject to the regulations and subsections (7) to (9.1), every entity that acquires, adopts or retains, in any language, the name of a bank holding company and every person who, in any language, uses the name of a bank holding company to indicate or describe a business in Canada or any part of a business in Canada, without being authorized to do so by this Act or any other Act of Parliament, is guilty of an offence.

Marginal note:Permitted use

(4) No person commits an offence who uses the word “bank”, “banker” or “banking”

(a) in relation to a business that is not engaged in financial activities, unless the business is carried out by a prescribed entity;

(b) in a description of the corporate relationship of an entity controlled by a bank to that bank;

(b.1) with the approval of the Minister and subject to terms and conditions that the Minister may impose, in a description of the corporate relationship of an entity in which a bank has a substantial investment to that bank;

(b.2) in a description of the corporate relationship of an entity controlled by a bank holding company to that bank holding company;

(b.3) with the approval of the Minister and subject to terms and conditions that the Minister may impose, in a description of the corporate relationship of an entity in which a bank holding company has a substantial investment to that bank holding company;

(c) in an advertisement in Canada by or on behalf of a foreign bank in respect of its facilities outside Canada;

(d) in the identification of representative offices of a foreign bank in Canada;

(e) in relation to the business in Canada of an authorized foreign bank;

(f) in a description made in accordance with the regulations of the corporate relationship of a bank or a bank holding company with a foreign bank or an entity associated with a foreign bank within the meaning of section 507 that controls the bank or bank holding company;

(g) in a description made in accordance with the regulations of the corporate relationship of a prescribed Canadian entity with a foreign bank or an entity associated with a foreign bank within the meaning of section 507;

(h) in a description made in accordance with the regulations of the corporate relationship of a prescribed entity associated with a foreign bank within the meaning of section 507 with the foreign bank or with another prescribed entity;

(i) in the identification of a body corporate that was a non-bank affiliate of a foreign bank within the meaning of subsection 303(1) of the Bank Act, being chapter B-1 of the Revised Statutes of Canada, 1985, at any time before June 1, 1981;

(j) in the identification of a Canadian financial institution that

(i) was controlled by a bank that was a subsidiary of a foreign bank before June 15, 1997 but that has ceased to be so controlled,

(ii) is controlled by a foreign bank that, before June 15, 1997, controlled the subsidiary, and

(iii) used, before June 15, 1997, the word “bank”, “banker” or “banking” to identify itself; or

(k) in the identification of a bank holding company.

Marginal note:Permitted use

(5) No subsidiary of a bank commits an offence by reason only that it uses the name of the bank of which it is a subsidiary in its corporate name or a name under which it carries on business or by reason only that it uses any identifying mark, logogram or insignia of that bank in carrying on its business.

Marginal note:Permitted use

(5.1) No entity in which a bank has a substantial investment commits an offence by reason only that it uses the name of the bank in its corporate name or a name under which it carries on business or by reason only that it uses any identifying mark, logogram or insignia of that bank in carrying on its business if it does so with the approval of the Minister and subject to terms and conditions that the Minister may impose.

Marginal note:Permitted use

(6) No financial institution that was controlled by a bank on June 25, 1999 and that had a name that included the word “bank”, “banker” or “banking” on that day commits an offence by reason only that it uses that word in its name or in a name under which it carries on business if the financial institution is a subsidiary of a bank holding company that controls the bank.

Marginal note:Permitted use

(6.1) No financial institution in which a bank had a substantial investment on June 25, 1999 and that had a name that included the word “bank”, “banker” or “banking” on that day commits an offence by reason only that it uses that word in its name or in a name under which it carries on business if the financial institution is an entity in which the bank or a bank holding company that controls the bank has a substantial investment and the financial institution uses that word with the approval of the Minister and subject to terms and conditions that the Minister may impose.

Marginal note:Permitted use

(7) No subsidiary of a bank holding company commits an offence by reason only that it uses the name of the bank holding company in the subsidiary’s corporate name or in a name under which it carries on business, so long as, if the subsidiary is not a bank or a subsidiary of the bank, it does not use the word “bank”, “banker” or banking” in its corporate name or in a name under which it carries on business.

Marginal note:Permitted use

(7.1) No entity in which a bank holding company has a substantial investment commits an offence by reason only that it uses the name of the bank holding company in its corporate name or in a name under which it carries on business, so long as

(a) it uses that name with the approval of the Minister and subject to terms and conditions that the Minister may impose; and

(b) if the entity is not any of the following, it does not use the word “bank”, “banker” or “banking” in its corporate name or in a name under which it carries on business:

(i) a bank,

(ii) a subsidiary of a bank, and

(iii) an entity that has received an approval under subsection (5.1).

Marginal note:Permitted use

(8) No subsidiary of a bank holding company commits an offence by reason only that it uses any identifying mark, logogram or insignia of the bank holding company in carrying on the subsidiary’s business, so long as, if the subsidiary is not a bank or a subsidiary of the bank, it does not use any identifying mark, logogram or insignia that includes the word “bank”, “banker” or “banking”.

Marginal note:Permitted use

(8.1) No entity in which a bank holding company has a substantial investment commits an offence by reason only that it uses any identifying mark, logogram or insignia of the bank holding company in carrying on its business, so long as

(a) it does so with the approval of the Minister and subject to terms and conditions that the Minister may impose; and

(b) if the entity is not any of the following, it does not use any identifying mark, logogram or insignia that includes the word “bank”, “banker” or “banking”:

(i) a bank,

(ii) a subsidiary of a bank, and

(iii) an entity that has received an approval under subsection (5.1).

Marginal note:Permitted use

(9) No subsidiary of a bank holding company commits an offence by reason only that it uses the name of the bank holding company in a description of its corporate relationship to the bank holding company.

Marginal note:Permitted use

(9.1) No entity in which a bank holding company has a substantial investment commits an offence by reason only that it uses the name of the bank holding company in a description of its corporate relationship to the bank holding company if it does so with the approval of the Minister and subject to terms and conditions that the Minister may impose.

Marginal note:Permitted use

(10) No Canadian entity that is an entity associated with a foreign bank within the meaning of section 507 commits an offence by reason only that it uses the name of the foreign bank or any identifying mark, logogram or insignia of the foreign bank or the name of a prescribed entity associated with a foreign bank within the meaning of section 507 or any identifying mark, logogram or insignia of any such entity, so long as it does not use, in any language, the word “bank”, “banker” or “banking” and so long as

(a) it does so with the approval of the Minister and subject to terms and conditions that the Minister may impose; or

(b) it does so in prescribed circumstances and in accordance with prescribed terms and conditions.

Marginal note:Permitted use

(10.1) No Canadian entity in which a foreign bank or an entity associated with a foreign bank within the meaning of section 507 has a substantial investment commits an offence by reason only that it uses the name of the foreign bank or any identifying mark, logogram or insignia of the foreign bank or the name of a prescribed entity associated with a foreign bank within the meaning of section 507 or any identifying mark, logogram or insignia of that prescribed entity, so long as it does not use, in any language, the word “bank”, “banker” or “banking” and so long as

(a) it does so with the approval of the Minister and subject to terms and conditions that the Minister may impose; or

(b) it does so in prescribed circumstances and in accordance with prescribed terms and conditions.

Marginal note:Permitted use

(11) Subject to subsection (12), no foreign bank that carries on a business or activity referred to in section 514, 522.05, 522.18 or 522.19 and no entity incorporated or formed by or under the laws of a country other than Canada that carries on a business or activity referred to in any of those provisions and that is an entity associated with a foreign bank within the meaning of section 507 commits an offence by reason only that it uses

(a) its name or any of its identifying marks, logograms or insignia, or

(b) the name of an entity associated with a foreign bank within the meaning of section 507 or any identifying mark, logogram or insignia of that entity,

so long as it does not use, in any language, the word “bank”, “banker” or “banking”.

Marginal note:Permitted use

(12) A foreign bank, or an entity associated with a foreign bank, that is referred to in subsection (11) may use the word “bank”, “banker” or “banking” in prescribed circumstances if it does so in accordance with prescribed terms and conditions.

Marginal note:Deemed use of “bank”, etc.

(13) For the purposes of this section, the following are deemed to be a use of the word “bank”, “banker” or “banking”:

(a) any statement that a business, other than a bank that is a subsidiary of a foreign bank or the business in Canada of an authorized foreign bank, is connected, associated or affiliated with a bank or a foreign bank; and

(b) the use of any identifying mark, logogram, insignia or name of a bank or a foreign bank or a name substantially similar to any such name.

Marginal note:Deeming

(14) For the purposes of this section, the use of the name of a bank holding company is deemed to include the use of any identifying mark, logogram, insignia or name of the bank holding company or a name substantially similar to any such name.

Marginal note:Deeming

(15) For the purposes of this section, the identifying mark, logogram or insignia of an entity is deemed to include the logo, initials or acronym of that entity.

Marginal note:Regulations

(16) The Governor in Council may make regulations for the purposes of subsections (1) to (3) or paragraph (4)(a), (f), (g) or (h).

Marginal note:Making false statements

984. (1) Every person is guilty of an offence who wilfully makes a false statement

(a) in a warehouse receipt or bill of lading given to a bank or authorized foreign bank under the authority of this Act; or

(b) in a document giving or purporting to give security on property to a bank under section 426 or 427 or to an authorized foreign bank under either of those sections as incorporated by section 555.

Marginal note:Wilfully disposing of or withholding goods covered by security

(2) Every person is guilty of an offence who, having possession or control of property mentioned in or covered by a warehouse receipt, bill of lading or any security given to a bank under section 426 or 427 or to an authorized foreign bank under either of those sections as incorporated by section 555, and having knowledge of the receipt, bill of lading or security, without the consent of the bank or authorized foreign bank in writing before the loan, advance, debt or liability secured by it has been fully paid

(a) wilfully alienates or parts with any of the property; or

(b) wilfully withholds from the bank or authorized foreign bank possession of any of the property if demand for its possession is made by the bank or authorized foreign bank after failure to pay the loan, advance, debt or liability.

Marginal note:Non-compliance with requirements for sale

(3) If a debt or liability to a bank or authorized foreign bank is secured by a warehouse receipt or bill of lading or security on property given to a bank under section 426 or 427 or to an authorized foreign bank under either of those sections as incorporated by section 555 and is not paid, the bank or authorized foreign bank is guilty of an offence if it sells the property covered by the warehouse receipt, bill of lading or security under the power of sale conferred on it by this Act without complying with the provisions of this Act applicable to the exercise of the power of sale.

Marginal note:Acquisition of warehouse receipts, bills of lading, etc.

(4) Every bank or authorized foreign bank that acquires or holds a warehouse receipt or bill of lading or a document signed and delivered to it giving or purporting to give to the bank security on property under section 426 or 427, or to give the authorized foreign bank security or property under either of those sections as incorporated by section 555, to secure the payment of any debt, liability, loan or advance, is guilty of an offence unless

(a) the debt, liability, loan or advance is contracted or made at the time of the acquisition by the bank or authorized foreign bank of the warehouse receipt, bill of lading or document;

(b) the debt, liability, loan or advance was contracted or made on the written promise or agreement that the warehouse receipt, bill of lading or security would be given to the bank or authorized foreign bank; or

(c) the acquisition or holding by the bank or authorized foreign bank of the warehouse receipt, bill of lading or security is otherwise authorized by an Act of Parliament.

Marginal note:Definitions

(5) For the purposes of this section, the expressions “warehouse receipt” and “bill of lading” have the meaning assigned to those expressions by section 425.

Marginal note:Punishment

985. (1) Every person who is guilty of an offence under any of sections 980 to 984 is

(a) in the case of a natural person, liable

(i) on summary conviction, to a fine of not more than $100,000 or to imprisonment for a term of not more than twelve months, or to both, or

(ii) on conviction on indictment, to a fine of not more than $500,000 or to imprisonment for a term of not more than five years, or to both; and

(b) in the case of an entity, liable

(i) on summary conviction, to a fine of not more than $500,000, or

(ii) on conviction on indictment, to a fine of not more than $5,000,000.

Marginal note:Order to comply

(2) If a person has been convicted of an offence under this Act, the court may, in addition to any punishment it may otherwise impose, order the person to comply with the provisions of this Act or the regulations in respect of which the person was convicted.

Marginal note:Additional fine

(3) If a person has been convicted of an offence under this Act, the court may, if it is satisfied that as a result of the commission of the offence the convicted person acquired any monetary benefits or that monetary benefits accrued to the convicted person or to the spouse, common-law partner or other dependant of the convicted person, order the convicted person to pay, notwithstanding the maximum amount of any fine that may otherwise be imposed under this Act, an additional fine in an amount equal to the court’s estimation of the amount of those monetary benefits.

Marginal note:Liability of officers, directors, etc.

986. If an entity commits an offence under this Act, any officer, director, agent or principal officer of the entity who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence and liable on summary conviction or on conviction on indictment to the punishment provided under paragraph 985(1)(a) for the offence, whether or not the entity has been prosecuted or convicted.

Marginal note:Limitation period

987. (1) Proceedings by way of summary conviction in respect of an offence under a provision of this Act may be commenced at any time within, but not later than, two years after the day on which the subject-matter of the proceedings became known, in the case of an offence under a consumer provision, to the Commissioner and, in any other case, to the Superintendent.

Marginal note:Certificate of Superintendent or Commissioner

(2) A document appearing to have been issued by the Superintendent or the Commissioner, as the case may be, certifying the day on which the subject-matter of any proceedings became known to the Superintendent or the Commissioner is admissible in evidence without proof of the signature or official character of the person appearing to have signed it and is, in the absence of evidence to the contrary, proof of the matter asserted in it.

Marginal note:Effect of offence on contracts

988. Unless otherwise expressly provided in this Act, a contravention of any provision of this Act or the regulations does not invalidate any contract entered into in contravention of the provision.

Marginal note:Compliance or restraining order — bank

989. (1) If a bank or a bank holding company or any director, officer, employee or agent of one does not comply with any provision of this Act or the regulations other than a consumer provision, or of the incorporating instrument or any by-law of the bank or bank holding company, the Superintendent, any complainant or any creditor of the bank or bank holding company may, in addition to any other right that that person has, apply to a court for an order directing the bank, bank holding company, director, officer, employee or agent to comply with — or restraining the bank, bank holding company, director, officer, employee or agent from acting in breach of — the provision and, on the application, the court may so order and make any further order it thinks fit.

Marginal note:Compliance or restraining order — authorized foreign bank

(2) If an authorized foreign bank or any of its directors, officers, employees or agents does not comply with any provision of this Act or the regulations other than a consumer provision, or of an order made under subsection 524(1), 528(1) or 534(1) in respect of the authorized foreign bank, the Superintendent, any complainant or any creditor of the authorized foreign bank may, in addition to any other right that that person has, apply to a court for an order directing the authorized foreign bank, director, officer, employee or agent to comply with — or restraining the authorized foreign bank, director, officer, employee or agent from acting in breach of — the provision and, on the application, the court may so order and make any further order it thinks fit.

Marginal note:Compliance or restraining order — consumer provisions

(3) If a bank or an authorized foreign bank or any director, officer, employee or agent of one does not comply with any applicable consumer provision, the Commissioner or any complainant may, in addition to any other right that that person has, apply to a court for an order directing the bank, authorized foreign bank, director, officer, employee or agent to comply with — or restraining the bank, authorized foreign bank, director, officer, employee or agent from acting in breach of — the consumer provision and, on the application, the court may so order and make any further order it thinks fit.

Marginal note:Appeals

990. Any decision or order of a court under this Act may be appealed to the court of appeal.

Marginal note:Recovery and application of fines

991. All fines payable under this Act are recoverable and enforceable, with costs, at the suit of Her Majesty in right of Canada, instituted by the Attorney General of Canada, and, when recovered, belong to Her Majesty in right of Canada.

184. Schedules I and II to the Act are replaced by Schedules I and II set out in Schedule 2 to this Act.

R.S., c. B-2Bank of Canada Act

185. The definition “notes” in section 2 of the Bank of Canada Act is replaced by the following:

“notes”

« billets »

“notes” means notes intended for circulation in Canada.

186. Subsection 5(2) of the English version of the Act is replaced by the following:

Marginal note:Deputy Minister of Finance to be member of Board

(2) In addition to the members of the Board as constituted by subsection (1), the Deputy Minister of Finance or, if he or she is absent or unable to act or the office is vacant, such other officer of the Department of Finance as the Minister may nominate, is a member of the Board but does not have the right to vote.

Marginal note:1997, c. 15, s. 94

187. Paragraph 6(4)(d) of the Act is replaced by the following:

(d) except as authorized by or under any Act of Parliament, is a director, partner, officer, employee or shareholder of

(i) a member of the Canadian Payments Association,

(ii) a clearing house or participant, as defined in section 2 of the Payment Clearing and Settlement Act,

(iii) an investment dealer that acts as a primary distributor of new Government of Canada securities, or

(iv) an institution that controls or is controlled by an institution referred to in any of subparagraphs (i) to (iii); or

188. Subsection 8(3) of the Act is replaced by the following:

Marginal note:Absence, etc., of Governor and Deputy

(3) The Board may authorize one of the directors or one of the persons appointed under section 7 to act as the Governor in the event that the Governor and Deputy Governor are absent or unable to act or the offices are vacant, but no such person has authority to act as Governor for a period exceeding one month without the approval of the Governor in Council.

189. (1) Subsection 9(1) of the Act is replaced by the following:

Marginal note:Directors

9. (1) The Minister, with the approval of the Governor in Council, shall appoint directors to hold office, during good behaviour, subject to removal by the Governor in Council at any time for cause, to replace the directors whose terms of office have expired. The term of a director begins on the day he or she is appointed and ends immediately before March 1 of the year that is three years after the year in which the term of office of the director’s predecessor expired.

Marginal note:Continuation in office

(1.1) If, on the expiry of a director’s term of office, no new director is appointed, the director whose term of office expired may continue in office until a director is appointed under subsection (1).

(2) Subsection 9(2) of the English version of the Act is replaced by the following:

Marginal note:Vacancy

(2) If a person ceases to be a director during the term for which he or she was appointed, the Minister shall, with the approval of the Governor in Council, appoint a qualified person to hold office for the remainder of the term.

Marginal note:1992, c. 1, s. 142(1)(Sch. V, item 5(2)(E)); 1997, c. 15, s. 95; 1999, c. 28, s. 94

190. (1) Subsection 10(2) of the Act is replaced by the following:

Marginal note:Ineligible persons

(2) No person is eligible to be appointed or to continue as a director if the person is a director, a partner, an officer or an employee of any of the following institutions:

(a) a direct clearer as defined in the by-laws of the Canadian Payments Association;

(b) a clearing house of a clearing and settlement system designated under subsection 4(1) of the Payment Clearing and Settlement Act;

(c) a participant in the Large Value Transfer System, or its successor, operated by the Canadian Payments Association;

(d) an investment dealer that acts as a distributor of new Government of Canada securities; or

(e) an institution that controls, or is controlled by, an institution referred to in any of paragraphs (a) to (d).

(2) Subsection 10(5) of the Act is repealed.

191. The Act is amended by adding the following after section 10:

Marginal note:Disclosure of conflict

10.1 (1) A director shall disclose to the Bank, in writing or by requesting to have it entered in the minutes of a meeting of the Board, the nature and extent of the director’s interest if the director

(a) is a party to a material contract or transaction, or proposed material contract or transaction, with the Bank;

(b) is a director or an officer of, or has a material interest in, any person who is a party to a material contract or transaction, or proposed material contract or transaction, with the Bank;

(c) is or is likely to be materially affected by any action taken or proposed to be taken by the Bank or the Governor under the Payment Clearing and Settlement Act; or

(d) is a director or an officer of, or has a material interest in, any person who is or is likely to be materially affected by any action taken or proposed to be taken by the Bank or the Governor under the Payment Clearing and Settlement Act.

Marginal note:Time of disclosure

(2) The disclosure shall be made as soon as the director becomes aware of the contract, transaction or action.

Marginal note:Restriction on voting

(3) A director who is required to make a disclosure shall not vote on any resolution to approve the contract, transaction or action, unless it relates to directors’ fees.

Marginal note:Continuing disclosure

(4) For the purpose of this section, a general notice to the Board by a director, declaring that he or she is a director or officer of or has a material interest in a person, and that he or she is to be regarded as interested in a contract or transaction entered into with that person or an action that affects that person, is a sufficient declaration of interest in relation to a contract or transaction with that person or action that affects that person.

192. Section 12 of the English version of the Act is replaced by the following:

Marginal note:Chair

12. The Governor is Chair of the Board of Directors.

Marginal note:1997, c. 15, s. 97

193. Section 16 of the Act is replaced by the following:

Marginal note:Oath of directors and staff

16. Before a person starts to act as a director, an officer or an employee of the Bank, he or she shall take an oath, or make a solemn affirmation, of fidelity and secrecy, in the form set out in the schedule, before a commissioner for taking affidavits.

194. (1) Paragraphs 18(d) and (e) of the Act are replaced by the following:

(d) buy and sell securities issued or guaranteed by the Government of the United States of America or Japan or the government of a country in the European Union;

Marginal note:1997, c. 15, s. 98(1); 1999, c. 28, s. 95(2)

(2) Paragraphs 18(g.1) to (i) of the Act are replaced by the following:

(g.1) if the Governor is of the opinion that there is a severe and unusual stress on a financial market or financial system, buy and sell any other securities, treasury bills, obligations, bills of exchange or promissory notes, to the extent determined necessary by the Governor for the purpose of promoting the stability of the Canadian financial system;

(h) make loans or advances for periods not exceeding six months to members of the Canadian Payments Association on taking security in any property that the institution to which the loan or advance is made is authorized to hold;

(i) make loans or advances for periods not exceeding six months to the Government of Canada or the government of a province on taking security in readily marketable securities issued or guaranteed by Canada or any province;

Marginal note:1997, c. 15, s. 99; 1999, c. 28, s. 96

195. Sections 19 and 20 of the Act are replaced by the following:

Marginal note:Publication

19. If the Bank takes any action under paragraph 18(g.1), the Bank shall cause a notice to be published in the Canada Gazette that the Governor has formed an opinion that there is a severe and unusual stress on a financial market or financial system. The notice is to be published as soon as the Governor is of the opinion that its publication will not materially contribute to the stress to which the notice relates.

Marginal note:Acquisition of collateral securities

20. The Bank may

(a) acquire from any bank or authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) of the Bank Act and hold any property held by the bank or authorized foreign bank as security under Part VIII of the Bank Act; and

(b) exercise every right and remedy in respect of any security acquired under paragraph (a) that could have been exercised by the bank or authorized foreign bank.

Marginal note:1999, c. 28, s. 97(1)

196. The definition “federal financial institution” in subsection 22(5) of the Act is replaced by the following:

“federal financial institution”

« institution financière fédérale »

“federal financial institution” means a bank, an authorized foreign bank, a company to which the Trust and Loan Companies Act applies or an association to which the Cooperative Credit Associations Act applies;

197. Subsection 24(3) of the English version of the Act is replaced by the following:

Marginal note:Canadian Government cheques to be paid or negotiated at par

(3) The Bank shall not make any charge for cashing or negotiating a cheque drawn on the Receiver General or on the account of the Receiver General, or for cashing or negotiating any other instrument issued as authority for the payment of money out of the Consolidated Revenue Fund, or on a cheque drawn in favour of the Government of Canada or any of its departments and tendered for deposit in the Consolidated Revenue Fund.

198. (1) Subsections 25(1) and (2) of the Act are replaced by the following:

Marginal note:Sole right of note issue

25. (1) The Bank has the sole right to issue notes and those notes shall be a first charge on the assets of the Bank.

Marginal note:Arrangements for issue

(2) It is the duty of the Bank to make adequate arrangements for the issue of its notes in Canada and to supply those notes as required for circulation in Canada.

(2) Subsection 25(3) of the French version of the Act is replaced by the following:

Marginal note:Coupures

(3) Les coupures des billets de la Banque, de même que leurs modalités d’impression et de validation, sont déterminées par règlement du gouverneur en conseil.

(3) Subsections 25(4) and (5) of the Act are replaced by the following:

Marginal note:Form and material

(4) The form and material of the notes of the Bank shall be subject to approval by the Minister, but each note shall be printed in both the English and French languages.

Marginal note:Notes previously printed

(5) Notwithstanding anything contained in this section, each note of the Bank printed before June 23, 1936, whether issued before, on or after that date, is a valid and binding obligation of the Bank.

Marginal note:1997, c. 15, s. 104

199. Section 29 of the Act is replaced by the following:

Marginal note:Weekly balance sheet

29. (1) The Bank shall, as soon as practicable after the close of business on Wednesday of each week, make up and transmit to the Minister its balance sheet as at the close of business on that day.

Marginal note:Monthly balance sheet

(2) The Bank shall, as soon as practicable after the last business day of each month, make up and transmit to the Minister its balance sheet as at the close of business on that day. The balance sheet shall set out information regarding the Bank’s investments in securities issued or guaranteed by the Government of Canada.

Marginal note:Publication of balance sheets

(3) A copy of each balance sheet shall be published in the issue of the Canada Gazette next following its transmission to the Minister.

200. The Act is amended by adding the following after section 30:

LIABILITY

Marginal note:No liability if in good faith

30.1 No action lies against Her Majesty, the Minister, any officer, employee or director of the Bank or any person acting under the direction of the Governor for anything done or omitted to be done in good faith in the administration or discharge of any powers or duties that under this Act are intended or authorized to be executed or performed.

201. Sections 31 to 33 of the Act are replaced by the following:

Marginal note:Holding office when ineligible

31. Every person who holds office or continues to hold office as the Governor or as a Deputy Governor or director of the Bank, knowing that he or she is not eligible for that office, is guilty of an offence and liable on summary conviction to a fine of not more than one hundred thousand dollars or to imprisonment for a term of not more than six months or to both.

Marginal note:Verifying false statement, account or list

32. Every director, officer or auditor of the Bank who verifies any statement, account or list required to be furnished to the Minister pursuant to this Act, or who has to do with the delivering or transmitting of that statement, account or list to the Minister, knowing it to be false in any material particular, is guilty of an offence and liable on summary conviction to a fine of not more than one hundred thousand dollars or to imprisonment for a term of not more than six months or to both.

Marginal note:Contravention of Act

33. Any officer of the Bank or any officer of a bank or any other person who fails or omits to comply with any provision of this Act is guilty of an offence and, unless otherwise provided by this Act, liable on summary conviction to a fine of not more than one hundred thousand dollars or to imprisonment for a term of not more than six months or to both.

Marginal note:1997, c. 15, ss. 107 to 110

202. Schedules I to III to the Act are replaced by the schedule set out in Schedule 3 to this Act.

R.S., c. C-3Canada Deposit Insurance Corporation Act

203. The definitions “federal institution” and “member institution” in section 2 of the Canada Deposit Insurance Corporation Act are replaced by the following:

“federal institution”

« institution fédérale »

“federal institution” means a bank, company or association referred to in section 8;

“member institution”

« institution membre »

“member institution” means a corporation that has deposit insurance under this Act;

Marginal note:R.S., c. 18 (3rd Supp.), s. 48

204. Paragraphs 5(1)(b) to (c) of the Act are replaced by the following:

(b) the persons who for the time being hold the offices of the Governor of the Bank of Canada, the Deputy Minister of Finance, the Superintendent of Financial Institutions and the Commissioner of the Financial Consumer Agency of Canada;

(b.1) a Deputy Superintendent of Financial Institutions, or an officer of the Office of the Superintendent of Financial Institutions, appointed by the Minister; and

(c) not more than five other members appointed by the Minister with the approval of the Governor in Council.

205. Section 8 of the Act is amended by striking out the word “and” at the end of paragraph (a), by adding the word “and” at the end of paragraph (b) and by adding the following after paragraph (b):

(c) an association to which the Cooperative Credit Associations Act applies.

206. Subsection 10(1) of the Act is amended by striking out the word “and” at the end of paragraph (i) and by adding the following after paragraph (i):

(i.1) settle or compromise any claim by or against the Corporation; and

Marginal note:1996, c. 6, s. 29

207. The portion of subsection 23(1) of the Act before paragraph (b) is replaced by the following:

Marginal note:Calculation of first premium

23. (1) The premium payable by a member institution in respect of the premium year in which it becomes a member institution shall be the same proportion of the lesser of

(a) the annual premium for that member determined by by-law made under subsection 21(2) based on an amount equal to the sum of so much of the deposits as are considered to be insured by the Corporation and deposited with the member institution as of the end of the month in which it becomes a member institution, and

Marginal note:1996, c. 6, s. 30

208. Section 24.1 of the Act is replaced by the following:

Marginal note:No set-off on premium payment

24.1 No member institution shall, without the prior agreement of the Corporation, reduce or extinguish a premium payment, interest or other payment to be made to the Corporation by reason of a set-off or claim by the member institution against the Corporation.

Marginal note:1997, c. 15, s. 114

209. Paragraph 26.03(1)(a) of the Act is repealed.

Marginal note:1996, c. 6, s. 34; 1999, c. 28, s. 106

210. Section 29 of the Act is replaced by the following:

Marginal note:Examination considerations

29. (1) The person who conducts an examination under section 27 or an inspection under section 28 in respect of a member institution shall make all examinations or inspections that the person considers necessary to

(a) provide, by way of a rating or any other means, an assessment of the safety and soundness of the member institution, including its financial condition;

(b) comment on the operations of the member institution, taking into account the standards of sound business and financial practices established by the by-laws; and

(c) if the member institution is a provincial institution and the Corporation and the person agree, comment on whether the provisions of the statutes governing the provincial institution are being complied with.

Marginal note:Reports

(2) The person shall provide written reports to the Corporation on the matters referred to in paragraphs (1)(a) to (c) in a timely manner.

Marginal note:Right of Corporation to information

(3) The Corporation is entitled to all information obtained by or produced by or for the person, whether in the course of conducting an examination or inspection or otherwise, regarding the affairs of the member institution or any of its affiliates or subsidiaries or of any person dealing with the member institution or any of its affiliates or subsidiaries, that relates to the safety and soundness, or the operations, of the member institution.

Marginal note:Obligation to provide other information

(4) Without limiting subsection (3), the person shall provide the Corporation with any information that the person considers relevant to any matter referred to in any of paragraphs (1)(a) to (c) or to any report provided under subsection (2).

Marginal note:Obligation to inform

(5) The person shall without delay inform the Corporation if, at any time, whether in the course of conducting an examination or inspection or otherwise, there comes to the attention of the person any change in the circumstances of the member institution that might materially affect the position of the Corporation as an insurer.

Marginal note:Review of returns

29.1 If requested to do so by the Corporation, the person who conducts an examination under section 27 or an inspection under section 28 in respect of a member institution shall review, or cause another person to review on the person’s behalf, within the time specified by the Corporation, the correctness of the returns made by the member institution on which its premiums are based and through which its premium classification is in part determined.

Marginal note:Certain reports to be provided to Corporation

29.2 When a report is sent by the Superintendent to the Minister under section 643 of the Bank Act, section 505 of the Trust and Loan Companies Act or section 437 of the Cooperative Credit Associations Act, a copy of the report shall be sent by the Superintendent at the same time to the Corporation.

Marginal note:1996, c. 6, s. 41

211. (1) Paragraph 39.1(1)(b) of the Act is replaced by the following:

(b) the viability of the federal member institution cannot be restored or preserved by the exercise of the Superintendent’s powers under the Bank Act, the Trust and Loan Companies Act or the Cooperative Credit Associations Act,

Marginal note:1996, c. 6, s. 41

(2) Paragraph 39.1(2)(c) of the Act is replaced by the following:

(c) the federal member institution’s regulatory capital, within the meaning assigned to that expression by the Bank Act, the Trust and Loan Companies Act or the Cooperative Credit Associations Act, whichever is applicable, is or is about to become substantially deficient; or

Marginal note:1996, c. 6, s. 41

(3) Paragraph 39.1(3)(a) of the Act is replaced by the following:

(a) circumstances exist in respect of a federal member institution that would allow the Superintendent to take control of the federal member institution under the Bank Act, the Trust and Loan Companies Act or the Cooperative Credit Associations Act, and

Marginal note:1996, c. 6, s. 41

212. (1) Subsection 39.15(3) of the Act is replaced by the following:

Marginal note:Clearing arrangements

(3) Subsections (1) and (2) do not apply so as to prevent a member of the Canadian Payments Association from acting or ceasing to act as a clearing agent for a federal member institution in accordance with the Canadian Payments Act and the by-laws and rules of that Association.

Marginal note:1996, c. 6, s. 41

(2) Paragraph 39.15(6)(b) of the Act is replaced by the following:

(b) the Superintendent, on the application of the federal member institution, exempted the security agreement from the application of those paragraphs and that subsection before the making of an order under subsection 39.13(1).

Marginal note:1996, c. 6, s. 41

213. (1) Paragraphs 39.19(1)(a) to (c) of the Act are replaced by the following:

(a) sections 372, 373, 374, 375, 376, 376.1, 376.2, 377, 377.1 379, 385, 401.2 and 401.3 of the Bank Act;

(b) sections 407, 407.01, 407.02, 407.03, 407.1, 407.2, 408, 411, 428 and 430 of the Insurance Companies Act; and

(c) sections 375, 375.1, 376, 379 and 396 and subsection 399(2) of the Trust and Loan Companies Act.

Marginal note:1996, c. 6, s. 41

(2) Subsection 39.19(2) of the Act is replaced by the following:

Marginal note:Public holding requirement re parent

(2) An exemption from the application of section 385 of the Bank Act, section 411 of the Insurance Companies Act or section 379 of the Trust and Loan Companies Act that is granted under section 388 of the Bank Act, section 414 of the Insurance Companies Act or section 382 of the Trust and Loan Companies Act continues in force notwithstanding that the entity that controls the bank, insurance company, trust company or loan company is a federal member institution the shares of which are vested in the Corporation by an order made under paragraph 39.13(1)(a).

Marginal note:1996, c. 6, s. 43

214. Section 45.2 of the Act is replaced by the following:

Marginal note:Confidentiality

45.2 All information regarding the affairs of a federal institution or provincial institution or of any person dealing therewith that is obtained or produced by or for the Corporation is confidential and shall be treated accordingly.

Marginal note:1996, c. 6, s. 45

215. Section 47 of the Act is replaced by the following:

Marginal note:False statements

47. A person is guilty of an offence if the person prepares, signs, approves or concurs in any account, statement, return, report or other document required to be submitted to the Corporation under this Act, the by-laws or an application to become a member institution or a policy of deposit insurance that

(a) contains any false or deceptive information; or

(b) fails to present fairly information required to be submitted to the Corporation.

216. Subsection 2(4) of the schedule to the Act is repealed.

R.S., c. C-21Canadian Payments Association Act

217. The long title of the Canadian Payments Association Act is replaced by the following:

An Act respecting the Canadian Payments Association and the regulation of systems and arrangements for the making of payments218. Section 1 of the Act is replaced by the following:

Marginal note:Short title

1. This Act may be cited as the Canadian Payments Act.

Marginal note:R.S., c. 18 (3rd Supp.), s. 33(2)

219. (1) The definitions “federation of cooperative credit societies” or “federation” and “Superintendent” in subsection 2(1) of the Act are repealed.

(2) The definition “Chairman” in subsection 2(1) of the English version of the Act is repealed.

(3) The definition “payment item” in subsection 2(1) of the Act is replaced by the following:

“payment item”

« instrument de paiement »

“payment item” means a bill of exchange drawn on a member and includes any other class of items approved by by-law;

(4) Subsection 2(1) of the Act is amended by adding the following in alphabetical order:

“cooperative credit association”

« association coopérative de crédit »

“cooperative credit association” means an association to which the Cooperative Credit Associations Act applies;

“life insurance company”

« société d’assurance-vie »

“life insurance company” means

(a) a life company within the meaning of subsection 2(1) of the Insurance Companies Act,

(b) a foreign life company within the meaning of section 571 of that Act, acting in respect of its insurance business in Canada, or

(c) a body corporate that carries on under a constating instrument issued under an Act of the legislature of a province a business substantially similar to the business of a life company referred to in paragraph (a);

“money market mutual fund”

« fonds mutuel en instruments du marché monétaire »

“money market mutual fund” means a fund

(a) the assets of which are fully or principally invested in short-term and highly liquid debt securities, and

(b) that satisfies conditions prescribed by regulation;

“qualified corporation”

« société admissible »

“qualified corporation” means a body corporate

(a) that has issued shares to the public under a prospectus, filed in accordance with the laws of the province in which the shares were issued, having conditions attached to the shares requiring the body corporate to accept the surrender of any fully-paid shares, or fractions or portions of the shares,

(i) at the demand of their holder, and

(ii) at prices determined and payable in accordance with specified conditions,

(b) whose shares referred to in paragraph (a) have a fair market value, determined without regard to any voting rights attached to the shares, that is not less than 95 % of the fair market value of all of the issued shares of the capital stock of the body corporate, and

(c) having assets that constitute a money market mutual fund;

“qualified trust”

« fiducie admissible »

“qualified trust” means an inter vivos trust

(a) in which the interest of its beneficiaries is described by reference to units of the trust that have been issued to the public under a prospectus, filed in accordance with the laws of the province in which the units were issued, having conditions attached to the units requiring the trustee to accept the surrender of any fully-paid units, or fractions or portions of the units,

(i) at the demand of their holder, and

(ii) at prices determined and payable in accordance with specified conditions,

(b) whose units referred to in paragraph (a) have a fair market value, determined without regard to any voting rights attached to the units, that is not less than 95 % of the fair market value of all of the issued units of the trust, and

(c) whose assets constitute a money market mutual fund;

“securities dealer”

« courtier en valeurs mobilières »

“securities dealer” means a body corporate that is registered or licensed under the laws of a province to trade in securities, as agent or for its own behalf;

“trustee”

« fiduciaire »

“trustee”, in respect of a qualified trust, means a trustee that is a body corporate;

“user”

« usager »

“user” means

(a) in Part 1, a person who is a user of payment services but is not a member, and

(b) in Part 2, a person who is a user of services provided by a participant of a payment system but is not a participant in the system.

(5) Subsection 2(1) of the English version of the Act is amended by adding the following in alphabetical order:

“Chairperson”

« président »

“Chairperson” means the Chairperson of the Board referred to in section 15;

Marginal note:1991. c. 45, s. 546(2)

(6) Subsection 2(2) of the Act is replaced by the following:

Marginal note:Societies and federations

(2) For the purposes of Part 1, a local cooperative credit society, a cooperative credit association, a central cooperative credit society or a federation of cooperative credit societies is deemed not to be a loan company or a trust company.

Marginal note:Rule not statutory instrument

(3) A rule is not a statutory instrument for the purposes of the Statutory Instruments Act.

220. The Act is amended by adding the following after section 2:

ACT BINDING ON HER MAJESTY

Marginal note:Her Majesty

2.1 (1) This Act is binding on Her Majesty in right of Canada.

Marginal note:Her Majesty in right of a province

(2) If Her Majesty in right of a province becomes a member of the Association, this Act is binding on Her Majesty in right of the province.

221. The heading before section 3 of the Act is replaced by the following:

PART 1CANADIAN PAYMENTS ASSOCIATION

Establishment and Membership

222. The heading before section 4 of the Act is repealed.

223. (1) Paragraph 4(1)(d) of the Act is replaced by the following:

(d) any other person who is entitled under this Part to be a member and who, on application to the Association for membership in the Association, establishes entitlement to be a member.

(2) Subsections 4(2) to (4) of the Act are replaced by the following:

Marginal note:Entitled members

(2) Each of the following persons is entitled to be a member of the Association if they meet the requirements set out in the regulations and the by-laws:

(a) a central, a trust company, a loan company and any other person, other than a local that is a member of a central or a cooperative credit association, that accepts deposits transferable by order to a third party;

(b) a federation, if the federation has as one of its members a central that is a member of the Association, except that the federation may not vote at any meeting of members of the Association;

(c) Her Majesty in right of a province or an agent thereof, if Her Majesty in right of the province or the agent thereof accepts deposits transferable by order to a third party;

(d) a life insurance company;

(e) a securities dealer;

(f) a cooperative credit association;

(g) the trustee of a qualified trust; and

(h) a qualified corporation, on behalf of its money market mutual fund.

(3) Paragraph 4(2)(b) of the Act, as enacted by subsection (2), is repealed.

(4) Subsection 4(6) of the Act is replaced by the following:

Marginal note:Termination of membership

(6) A member, other than a member referred to in paragraphs (1)(a) to (c), ceases being a member of the Association three days after the day on which the Board adopts a resolution, by a majority of not less than two-thirds of the votes cast by directors voting in respect of the resolution, declaring that, in the opinion of the Board, the member does not meet the requirements set out in the regulations and the by-laws.

(5) Paragraph 4(7)(b) of the Act is replaced by the following:

(b) eligible, despite any other provision of this Part, for readmission to the Association as a member until a resolution is adopted by the Board, by a majority of not less than two-thirds of the votes cast by directors voting in respect of the resolution, declaring that, in the opinion of the Board, the member or former member concerned meets the requirements set out in the regulations and the by-laws; or

224. Section 5 of the Act is replaced by the following:

Marginal note:Objects

5. (1) The objects of the Association are to

(a) establish and operate national systems for the clearing and settlement of payments and other arrangements for the making or exchange of payments;

(b) facilitate the interaction of its clearing and settlement systems and related arrangements with other systems or arrangements involved in the exchange, clearing or settlement of payments; and

(c) facilitate the development of new payment methods and technologies.

Marginal note:Duty of Association

(2) In pursuing its objects, the Association shall promote the efficiency, safety and soundness of its clearing and settlement systems and take into account the interests of users.

225. The portion of subsection 6(1) of the Act before paragraph (a) is replaced by the following:

Marginal note:Powers

6. (1) The Association may, in carrying out its objects,

226. Section 8 of the Act is replaced by the following:

Marginal note:Composition

8. There shall be a Board of Directors of the Association consisting of sixteen persons elected or appointed in accordance with section 9.

227. (1) Paragraph 9(1)(b) of the English version of the Act is replaced by the following:

(b) an officer of the Bank to be an alternate director to the director appointed under paragraph (a) and the alternate director so appointed may act as a director during any period in which the director for whom he or she is an alternate is, by reason of absence or incapacity, unable to act.

Marginal note:1993, c. 34, s. 46(F); 1999, c. 28, s. 112

(2) Subsections 9(2) to (4) of the Act are replaced by the following:

Marginal note:Appointments by Minister

(1.1) The Minister shall appoint three directors of the Association to hold office for a term of not more than three years, except that the first director appointed shall be appointed to hold office for a term of three years, the second shall be appointed to hold office for a term of two years and the third shall be appointed to hold office for a term of one year.

Marginal note:Disqualifications

(1.2) No person is eligible to be appointed under subsection (1.1) or, having been appointed under that subsection, to continue as a member of the Board who is

(a) a director, an officer or an employee of a person that is eligible to apply to be a member of the Association, or of an affiliate of such a person;

(b) employed in any capacity in the public service of Canada or a province or holds any office or position for which any salary or other remuneration is payable out of public moneys; or

(c) a member of the Senate or House of Commons or a member of a provincial legislature.

Marginal note:Election by members

(2) Subject to subsection (3), twelve directors of the Association shall be elected by the members to hold office for a term of three years, except that of those first elected four shall be elected for a term of three years, four for a term of two years and four for a term of one year.

Marginal note:Composition of Board

(3) For the purpose of election of directors, the members, other than the Bank of Canada, shall be grouped into seven classes, namely,

(a) banks and authorized foreign banks;

(b) centrals and cooperative credit associations;

(c) trust companies and loan companies;

(d) qualified corporations and trustees of qualified trusts;

(e) securities dealers;

(f) life insurance companies; and

(g) other members.

Marginal note:Removal of director

(4) If a resolution passed by a two-thirds majority of the members of a class described in subsection (3) who are present at a special meeting of members of that class called to consider the resolution provides for the recall of a director elected by that class, then, despite subsection (2), that director ceases to be a director of the Association at the time notice of the resolution is given to the director or at any other time that may be fixed by by-law.

Marginal note:Remuneration of directors

(5) A director appointed under subsection (1.1) shall be paid by the Association such remuneration as may be fixed by by-law.

Marginal note:Affiliated bodies corporate

(6) For the purposes of paragraph (1.2)(a),

(a) one body corporate is affiliated with another body corporate if one of them is the subsidiary of the other or both are subsidiaries of the same body corporate or each of them is controlled by the same person; and

(b) if two bodies corporate are affiliated with the same body corporate at the same time, they are deemed to be affiliated with each other.

Marginal note:Definition of control

(7) In paragraph (6)(a), “control” means control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, agreement or arrangement, the ownership of any body corporate or otherwise.

Marginal note:1993, c. 34, s. 47(F); 1999, c. 28, s. 113

228. Section 10 of the Act is repealed.

229. Section 12 of the English version of the Act is replaced by the following:

Marginal note:Election of alternates

12. At every meeting of members at which a director is elected, the members of the class that elected the director shall elect an alternate director for that director and the alternate director so elected may act as a director during any period in which the director for whom he or she is an alternate is, by reason of absence or incapacity, unable to act.

230. Subsections 13(2) and (3) of the Act are replaced by the following:

Marginal note:Quorum

(2) At a meeting of a class of members at which a director is to be elected, the members of that class present or deemed to be present, in person or by proxy, constitute a quorum if, together, they are entitled to cast a majority of the votes that may be cast for the election of a director by all members of that class.

231. The heading before section 15 of the Act is replaced by the following:

Chairperson
Marginal note:

232. Subsection 15(3) of the English version of the Act is replaced by the following:

Marginal note:Additional vote

(3) The Chairperson or, in the absence or incapacity of the Chairperson, his or her alternate has, in the event of a tie vote on any matter before the Board at a meeting of the Board, a second vote.

233. Subsection 18(1) of the Act is replaced by the following:

Marginal note:By-laws

18. (1) The Board may make such by-laws as it considers necessary for the attainment of the objects of the Association and in particular, but without limiting the generality of the foregoing, may make by-laws

(a) respecting the procedure in all business at meetings of the Board, or its committees;

(b) establishing, subject to this Part, requirements for membership in the Association;

(c) for the administration and management of the business of the Association;

(c.1) respecting the remuneration of directors appointed under subsection 9(1.1);

(d) respecting the exchange and clearing of payment items and related matters;

(e) respecting settlements and related matters;

(f) respecting the payment of dues by the members and establishing the method of determining the amount of those dues;

(f.1) respecting the payment of fees for services performed by or on behalf of the Association and establishing the method of determining the amount of those fees;

(g) establishing penalties to be paid by members for failure to comply with the by-laws and rules, and procedures in respect of the imposition of penalties;

(h) respecting the authenticity and integrity of payment items and messages; and

(i) respecting the identification and authentication of members and other persons.

234. (1) Subsection 19(1) of the Act is replaced by the following:

Marginal note:Rules

19. (1) Subject to the by-laws, the Board may make such rules as it considers necessary for the attainment of the objects of the Association and, without limiting the generality of the foregoing, may make rules

(a) respecting payment items acceptable for exchange, clearing or settlement;

(b) establishing standards and procedures in respect of the exchange and clearing of payment items;

(c) respecting settlements and related matters;

(d) respecting the authenticity and integrity of payment items and messages; and

(e) respecting the identification and authentication of members and other persons.

(2) Subsection 19(3) of the Act is replaced by the following:

Marginal note:Rules to be available

(3) The Association shall make a copy of every rule available to members in the manner determined by the General Manager.

Marginal note:Copies of rules to be sent to Minister

(4) A copy of every rule shall be sent to the Minister within ten days after it is made.

235. The Act is amended by adding the following after section 19:

Marginal note:Statements of principle and standards

19.1 Subject to the by-laws and rules, the Board may make such statements of principle and standards as it considers necessary for the attainment of the objects of the Association.

Disallowance

Marginal note:Effective date of rule

19.2 (1) A rule, including an amendment to or a repeal of a rule, made under subsection 19(1) shall not come into force before the thirtieth day after a copy of it is sent to the Minister in accordance with subsection 19(4), but the Minister may declare the rule to be in force at any time before that period expires.

Marginal note:Extension of time

(2) If the Minister is of the opinion that an extension of the period mentioned in subsection (1) is necessary to permit adequate review of a rule, the Minister may within 10 days after its receipt, on written notice to the sender of the rule, extend that period by up to 30 days.

Marginal note:Minister’s disallowance

(3) The Minister may disallow the whole or a part of a rule.

Directives

Marginal note:Directives by Minister

19.3 (1) If the Minister is of the opinion that it is in the public interest to do so, the Minister may, in writing, direct the Association to make, amend or repeal a by-law, rule or standard.

Marginal note:Consultation

(2) Before a directive is given to the Association, the Minister shall consult the Board, and may consult any interested party, with respect to the content and effect of the directive.

Marginal note:Notification of implementation

(3) As soon as is practicable after implementing a directive and completing any action required to be taken in connection with it, the Association shall notify the Minister that the directive has been implemented and the action completed.

Marginal note:Directive not statutory instrument

(4) A directive is not a statutory instrument for the purposes of the Statutory Instruments Act. However, it must be published in the Canada Gazette.

Marginal note:Implementation

(5) The Board shall ensure that a directive is implemented in a prompt and efficient manner.

Marginal note:Duty to comply

(6) Every director, officer and employee of the Association shall comply with any directive given to the Association.

Information Requirements

Marginal note:Request by Minister

19.4 For the purpose of the administration of this Part, the Association shall provide the Minister with such information and documents as the Minister may from time to time request.

236. The heading before section 20 of the Act is replaced by the following:

Committees
Marginal note:

237. Subsection 20(2) of the English version of the Act is replaced by the following:

Marginal note:Chairperson

(2) The Chairperson is the chairperson of the Executive Committee.

238. Section 21 of the Act is replaced by the following:

Marginal note:Other committees

21. The Board may, subject to the regulations, establish other committees consisting of such persons as the Board considers appropriate.

Marginal note:Powers and duties

21.1 Subject to the by-laws, the Board may delegate to its committees such powers and duties as the Board considers appropriate.

Marginal note:Stakeholder Advisory Council

21.2 (1) There shall be a Stakeholder Advisory Council consisting of not more than twenty persons appointed in accordance with subsections (3) and (4).

Marginal note:Object

(2) The object of the Council is to provide counsel and advice to the Board on payment and clearing and settlement matters and any other matter relating to the objects of the Association.

Marginal note:Appointment of directors

(3) The Board shall appoint up to two directors elected under subsection 9(2) to be members of the Council.

Marginal note:Appointment of other members

(4) The remaining members shall be appointed by the Board, in consultation with the Minister, for a term of not more than three years, except that as far as possible one third of the first members shall be appointed for a term of three years, one third shall be appointed for a term of two years and one third shall be appointed for a term of one year.

Marginal note:Representative character

(5) The Council must be broadly representative of users and service providers to payment systems.

Marginal note:Chairperson and vice-chairperson

(6) The members of the Council shall elect a chairperson and a vice-chairperson of the Council from among the members of the Council for a term of not more than two years.

Marginal note:Remuneration

(7) The members of the Council shall serve without remuneration but may be paid by the Association any reasonable travel and living expenses incurred by them when engaged on the business of the Council while absent from their ordinary places of residence.

Marginal note:R.S., c. 18 (3rd Supp.), s. 34

239. The heading before section 27 and sections 27 and 28 of the Act are replaced by the following:

Fiscal Year

Marginal note:Fiscal year

27. The fiscal year of the Association is the calendar year.

Electronic Meetings

Marginal note:Electronic meetings

28. (1) Subject to the by-laws, a meeting of the Board or of a committee of the Board, a meeting of the members or a meeting of the Stakeholder Advisory Council may be held by means of such telephonic, electronic or other communications facilities as permit all persons participating in the meeting to communicate adequately with each other during the meeting.

Marginal note:Deemed present

(2) A person participating in a meeting by any means referred to in subsection (1) is deemed for the purposes of this Part to be present at the meeting.

Marginal note:1991, c. 48, s. 489; 1997, c. 15, s. 115; 1999, c. 28, s. 114

240. Section 30 of the Act and the heading before it are repealed.

Marginal note:1993, c. 34, s. 48(E)

241. Section 33 of the Act and the heading before it are repealed.

242. Subsection 34(2) of the Act is replaced by the following:

Marginal note:Exemption from Canada Corporations Act

(2) The Canada Corporations Act, chapter C-32 of the Revised Statutes of Canada, 1970, does not apply to the Association.

243. Section 35 of the Act is replaced by the following:

Marginal note:Regulations by Governor in Council

35. (1) The Governor in Council may make regulations

(a) establishing the number of members of committees of the Board and the number of members of the Board that shall be designated by the Board from each class of members established under subsection 9(3);

(b) respecting the election of directors of the Association, including regulations

(i) respecting the eligibility of persons to be elected as directors,

(ii) determining the number of directors, if any, to be elected in respect of each class established under subsection 9(3), and

(iii) prescribing the circumstances when two or more of the classes established under subsection 9(3) are to be deemed to be one class and determining the number of directors to be elected in respect of that deemed class;

(c) determining the number of votes that a member is entitled to cast for the election of directors;

(d) establishing requirements for membership in the Association to be met by persons or classes of persons;

(e) respecting the conditions that a money market mutual fund must satisfy; and

(f) generally, for carrying out the purposes and provisions of this Part.

Marginal note:Deeming

(2) A director elected in respect of classes that are deemed to be one class under regulations made under subparagraph (1)(b)(iii) is deemed to be elected by and to represent the members of each of the affected classes for the purposes of subsection 9(4) and sections 11 to 13.

244. The Act is amended by adding the following after section 35:

PART 2 DESIGNATED PAYMENT SYSTEMS

Interpretation

Marginal note:Definitions

36. The definitions in this section apply in this Part.

“designated payment system”

« système de paiement désigné »

“designated payment system” means a payment system designated under subsection 37(1).

“participant”

« participant »

“participant” means a party to an arrangement in respect of a payment system.

“payment system”

« système de paiement »

“payment system” means a system or arrangement for the exchange of messages effecting, ordering, enabling or facilitating the making of payments or transfers of value.

“rule”

« règle »

“rule” means a rule, by whatever name called, that governs a designated payment system. It includes an amendment to or a repeal of a rule.

Application

Marginal note:Application

36.1 This Part does not apply to the Association.

Designation

Marginal note:Designation by Minister

37. (1) The Minister may, if he or she considers that it is in the public interest to do so, designate a payment system that in the opinion of the Minister

(a) is national or substantially national in its scope; or

(b) plays a major role in supporting transactions in Canadian financial markets or the Canadian economy.

Marginal note:Factors

(2) The following factors shall be considered in a determination of whether it is in the public interest to designate a payment system:

(a) the level of financial safety provided by the payment system to the participants and users;

(b) the efficiency and competitiveness of payment systems in Canada; and

(c) the best interests of the financial system in Canada.

Marginal note:Consultation

(3) Before a payment system is designated, the Minister shall consult the manager and the participants of the payment system and may consult interested parties, with respect to the effect of the designation.

Marginal note:Notice

(4) The Minister shall notify the manager and the participants of a designated payment system in any manner that the Minister considers appropriate.

Marginal note:Designation not statutory instrument

(5) A designation is not a statutory instrument for the purposes of the Statutory Instruments Act. However, it must be published in the Canada Gazette.

Rules

Marginal note:Copies of rules to be sent to Minister

38. (1) A copy of every rule governing a designated payment system shall be sent by the manager of the designated payment system or, if there is none, by the participants to the Minister

(a) in the case of a rule made before the designation of the payment system, within 30 days after the designation; and

(b) in the case of a rule made after the designation, within 10 days after it is made.

Marginal note:Effective date of rule

(2) A rule, other than a rule referred to in paragraph (1)(a), does not come into force before the thirtieth day after a copy of it is sent to the Minister under subsection (1), but the Minister may declare the rule to be in force at any time before that period expires.

Marginal note:Extension of time

(3) If the Minister is of the opinion that an extension of the period mentioned in subsection (2) is necessary to permit adequate review of a rule, the Minister may within 10 days after its receipt, on written notice to the sender of the rule, extend that period by up to 30 days.

Marginal note:Disallowance

(4) The Minister may disallow the whole or a part of a rule.

Marginal note:Exemption

(5) The Minister may exempt a designated payment system from the application of subsection (2).

Guidelines and Directives

Marginal note:Minister may issue guidelines

39. (1) The Minister may issue guidelines in respect of any matter relating to the administration or enforcement of this Part.

Marginal note:Guidelines public

(2) Guidelines shall be made available to the public and the Minister shall give notice of them in any manner that the Minister considers appropriate.

Marginal note:Minister may issue directive

40. (1) The Minister may issue a written directive to the manager or a participant of a designated payment system in respect of

(a) the conditions a person must meet to become a participant in the designated payment system;

(b) the operation of the designated payment system;

(c) the interaction of the designated payment system with other payment systems; or

(d) the relationship of the designated payment system with users.

Marginal note:Consultation

(2) Before giving a directive, the Minister shall consult the person to whom it is to be given, and may consult any interested party, with respect to the content and effect of the directive.

Marginal note:Content

(3) The Minister may specify in a directive that a manager of a designated payment system or a participant shall, within such time as the Minister considers necessary,

(a) cease or refrain from engaging in an act or course of conduct;

(b) perform such acts as in the opinion of the Minister are necessary in the public interest; or

(c) make, amend or repeal a rule.

Marginal note:Notification of implementation

(4) As soon as is practicable after implementing a directive and completing any actions required to be taken in connection with it, the person to whom it is given shall notify the Minister that the directive has been implemented and the action completed.

Marginal note:Directive not statutory instrument

(5) A directive is not a statutory instrument for the purposes of the Statutory Instruments Act. However, it must be published in the Canada Gazette.

Marginal note:Duty to comply

(6) A directive is binding on the person to whom it is given.

Information Requirements

Marginal note:Information requests

41. (1) If the Minister requires information in order to determine whether a payment system should be designated under subsection 37(1), the Minister may request that the manager of the payment system or a participant provide the Minister with any information and documents regarding the system that the Minister may require.

Marginal note:Ongoing information requests

(2) Every manager of a designated payment system or, if there is none, the participants shall, in respect of the designated payment system, provide the Minister with such information and documents as the Minister may from time to time request.

Marginal note:Compliance with request required

(3) Every person to whom a request is directed shall comply with the request.

Participants

Marginal note:Responsibility if foreign system manager

42. (1) If a designated payment system does not have a Canadian manager, the Canadian participants

(a) shall comply with the obligations imposed under this Part on a manager of a designated payment system, and

(b) have all the rights conferred by this Part on a manager of a designated payment system

in the same manner and to the same extent as if the Canadian participants were the manager of the designated payment system on which those obligations and rights are imposed or conferred and, for that purpose, any action that the Minister may take in respect of the manager of the designated payment system may only be taken in respect of its Canadian participants.

Marginal note:Failure to comply of system manager

(2) If a manager of a designated payment system fails to comply with the obligations imposed on it under this Part in respect of the designated payment system or otherwise contravenes this Part, the participants jointly and severally shall comply with those obligations or are liable for the contravention in the same manner and to the same extent as the manager.

Marginal note:Interpretation

(3) In subsection (1), a manager of a designated payment system or a participant is “Canadian” if the manager or participant is incorporated or formed under the laws of Canada or a province.

PART 3 GENERAL

Marginal note:Information is confidential

43. (1) Information and documents obtained under this Act are confidential and shall be treated accordingly.

Marginal note:Disclosure permitted

(2) Nothing in subsection (1) prevents the Minister from disclosing any information or documents to

(a) any government agency or regulatory body charged with the regulation of financial institutions, as defined in section 2 of the Bank Act, for purposes related to that regulation,

(b) the Bank of Canada or any officer of the Bank authorized in writing by the Governor of the Bank, and

(c) the Chairperson of the Canada Deposit Insurance Corporation or any officer of that Corporation authorized in writing by the Chairperson,

if the Minister is satisfied that the information or documents will be treated as confidential by the agency, body or person to whom they are disclosed.

Marginal note:No liability if in good faith

44. No action lies against Her Majesty, the Minister, any officer or employee of the Department of Finance or any person acting under the direction of the Minister for anything done or omitted to be done in good faith in the administration or discharge of any powers or duties that under this Act are intended or authorized to be executed or performed.

Marginal note:Compliance orders

45. If a person fails to comply with a provision of this Act or a directive issued to it by the Minister under subsection 19.3(1) or 40(1) in connection with any matter under this Act, or a person to whom a request referred to in section 41 is directed fails to comply with the request, the Minister may apply to a superior court for an order directing the person to comply with the provision, directive or request and, on the application, the court may so order and make any further order it thinks fit.

Marginal note:No stay on judicial review

46. On an application for judicial review under the Federal Court Act of a designation under subsection 37(1) or of a directive issued under subsection 19.3(1) or 40(1), no stay of the designation or directive shall be granted pending the final disposition of the application.

Marginal note:Offence and punishment

47. Every person who, without reasonable cause, contravenes any provision of this Act is guilty of an offence and

(a) in the case of a natural person, liable on summary conviction to a fine not exceeding $100,000 or to imprisonment for a term not exceeding twelve months, or to both; or

(b) in the case of any other entity, liable on summary conviction to a fine not exceeding $500,000.

Marginal note:Replacement of “Chairman” with “Chairperson”

245. The English version of the Act is amended by replacing the word “Chairman” with the word “Chairperson” wherever it occurs in the following provisions:

(a) subsections 15(1) and (2);

(b) subsection 16(2);

(c) subsection 19(2);

(d) subsection 20(1); and

(e) subsection 20(3).

Marginal note:Change of headings

246. The headings before sections 5, 7, 8, 16, 17, 22, 25, 26, 29, 31, 34 and 35 of the Act are converted from roman to italic type to conform with the format of the new Parts enacted by this Act.

Marginal note:Chairperson continued

247. (1) The person who holds the office of Chairperson of the Board of the Canadian Payments Association immediately before section 8 of the Canadian Payments Act, as amended by section 218 of this Act, comes into force continues in office as the Chairperson of the Board for the remainder of the term for which that person was appointed Chairperson.

Marginal note:Directors continued

(2) Each person who holds office as a director of the Canadian Payments Association immediately before the day subsection 9(2) of the Canadian Payments Act, as amended by subsection 219(2) of this Act, comes into force ceases to hold office at the close of the next annual meeting of the members of the Association that is held after the coming into force of that subsection. The new directors of the Board shall be elected at that meeting.

Marginal note:Coming into force of rules

247.1 Every rule of the Canadian Payments Association made under the Canadian Payments Association Act before the coming into force of subsection 2(3) of that Act, as enacted by section 219 of this Act, is deemed to have come into force on the day the rule was made.

1991, c. 48Cooperative Credit Associations Act

248. (1) The definition “subsidiary” in section 2 of the Cooperative Credit Associations Act is replaced by the following:

“subsidiary”

« filiale »

“subsidiary” means an entity that is a subsidiary of another entity within the meaning of section 5;

Marginal note:1991, c. 48, par. 497(a)

(2) Paragraph (d) of the definition “financial institution” in section 2 of the Act is replaced by the following:

(d) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act,

(3) Section 2 of the Act is amended by adding the following in alphabetical order:

“Agency”

« Agence »

“Agency” means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act;

“branch”

« bureau »

“branch”, in respect of an association, means an agency, the head office and any other office of the association;

“Commissioner”

« commissaire »

“Commissioner” means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act;

“consumer provision”

« disposition visant les consomma­teurs »

“consumer provision” means a provision referred to in paragraph (b) of the definition “consumer provision” in section 2 of the Financial Consumer Agency of Canada Act;

“league”

« confédération »

“league” means a cooperative corporation incorporated by or under an Act of the legislature of a province whose membership consists wholly or primarily of local cooperative credit societies and whose principal purpose is the provision of administrative, technical, research and consultative services, and goods related to those services, to any cooperative credit society or to persons intending to organize or operate such a society;

“retail association”

« association de détail »

“retail association”, for the purpose of any particular provision of this Act, means an association as defined in the regulations;

249. (1) Paragraph 3(1)(e) of the French version of the Act is replaced by the following:

e) dans tous les cas, la personne dont l’influence directe ou indirecte auprès de l’entité est telle que son exercice aurait pour résultat le contrôle de fait de celle-ci.

(2) The portion of subsection 3(3) of the Act before paragraph (a) is replaced by the following:

Marginal note:Deemed control

(3) A person is deemed to control, within the meaning of paragraph (1)(a), (b) or (d), an entity if the aggregate of

(3) Section 3 of the Act is amended by adding the following after subsection (3):

Marginal note:Guidelines

(4) The Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(e), make guidelines respecting what constitutes such control, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(e) in that provision shall be interpreted in accordance with the guidelines.

250. Sections 4 and 5 of the Act are replaced by the following:

Marginal note:Holding body corporate

4. A body corporate is the holding body corporate of any entity that is its subsidiary.

Marginal note:Subsidiary

5. An entity is a subsidiary of another entity if it is controlled by the other entity.

251. Subsection 6(2) of the Act is repealed.

252. The Act is amended by adding the following after section 13:

Marginal note:References in other Acts

13.1 A reference in any other Act of Parliament to “an association to which the Cooperative Credit Associations Act applies” is to be construed as not including a central cooperative credit society for which an order has been made under subsection 473(1).

253. Section 14 of the Act is replaced by the following:

Marginal note:Application of Act

14. This Act applies to the former-Act association, and to every body corporate incorporated or formed by or under this Act, so long as it is not discontinued under this Act.

Marginal note:1997, c. 15, s. 116

254. Section 22 of the Act is replaced by the following:

Marginal note:Sunset provision

22. (1) Subject to subsection (2), associations shall not carry on business after the day that is five years after this section comes into force, except that if Parliament dissolves on that day or at any time within the three-month period before that day, associations may continue to carry on business until the day that is one hundred and eighty days after the first day of the first session of the next Parliament.

Marginal note:Extension

(2) The Governor in Council may, by order, extend by up to six months the time during which associations may continue to carry on business. No more than one order may be made under this subsection.

255. The heading of Part III of the Act is replaced by the following:

INCORPORATION, CONTINUANCE AND DISCONTINUANCE
256. Sections 23 and 24 of the Act are replaced by the following:

Marginal note:Incorporation of association

23. On the application of one or more persons made in accordance with this Act, the Minister may, subject to this Part, issue letters patent incorporating an association.

Marginal note:Who may apply for incorporation

24. An application for incorporation of an association may only be made by

(a) an association; or

(b) persons who are entitled to be members of an association under Part IV that include at least

(i) two central cooperative credit societies not all of which are incorporated under the laws of one province,

(ii) ten local cooperative credit societies not all of which are incorporated under the laws of one province, or

(iii) two or more leagues not all of which are incorporated under the laws of one province.

257. Section 27 of the Act is replaced by the following:

Marginal note:Matters for consideration

27. Before issuing letters patent to incorporate an association, the Minister shall take into account all matters that the Minister considers relevant to the application, including

(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the association;

(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the association;

(c) the business record and experience of the applicant or applicants;

(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the association will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the association on the conduct of those businesses and operations;

(g) whether the association is to be operated in accordance with cooperative principles; and

(h) the best interests of the financial system in Canada and, in particular, the cooperative financial system in Canada.

258. The Act is amended by adding the following after section 31:

Continuance

Marginal note:Federal corporations

31.1 (1) A body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament may apply to the Minister for letters patent continuing the body corporate as an association.

Marginal note:Other corporations

(2) A body corporate incorporated otherwise than by or under an Act of Parliament may, if so authorized by the laws of the jurisdiction where it is incorporated, apply to the Minister for letters patent continuing the body corporate as an association.

Marginal note:Continuance for the purpose of amalgamation

(3) A body corporate incorporated or continued otherwise than under this Act may apply to the Minister for letters patent continuing the body corporate as an association if the body corporate proposes to be continued under this Act for the purpose of amalgamating with another body corporate in compliance with this Act.

Marginal note:Application for continuance

31.2 (1) When a body corporate applies for letters patent under section 31.1, sections 24 to 27 apply in respect of the application, with any modifications that the circumstances require.

Marginal note:Special resolution approval

(2) When a body corporate applies for letters patent under section 31.1, the application must be duly authorized by a special resolution.

Marginal note:Copy of special resolution

(3) A copy of the special resolution must be filed with the application.

Marginal note:Power to issue letters patent

31.3 (1) On the application of a body corporate under subsection 31.1(1) or (2), the Minister may, subject to this Part, issue letters patent continuing the body corporate as an association if the body corporate

(a) satisfies the requirements for incorporation as an association or will, immediately after the letters patent are issued, satisfy those requirements;

(b) is organized and operated and carries on its business on a cooperative basis or will, immediately after the letters patent are issued, be organized and operated and carry on its business on a cooperative basis; and

(c) has a capital and corporate structure that, if set out in the letters patent and by-laws, would meet the requirements of this Act.

Marginal note:Power to issue letters patent

(2) On the application of a body corporate under subsection 31.1(3), the Minister may, subject to this Part, issue letters patent continuing the body corporate as an association only if the Minister is of the opinion that the association that results from the amalgamation will

(a) satisfy the requirements for incorporation as an association;

(b) be organized and operated and carry on its business on a cooperative basis; and

(c) have a capital and corporate structure that meet the requirements of this Act.

Marginal note:Issue of letters patent

(3) If letters patent are issued to a body corporate under subsection (1) or (2), section 27 applies in respect of the issue of letters patent, with any modifications that the circumstances require.

Marginal note:Effect of letters patent

31.4 On the day set out in the letters patent continuing a body corporate as an association under section 31.3,

(a) the body corporate becomes an association as if it had been incorporated under this Act; and

(b) the letters patent are deemed to be the incorporating instrument of the continued company.

Marginal note:Copy of letters patent

31.5 (1) When a body corporate is continued as an association under section 31.3, the Superintendent shall without delay send a copy of the letters patent to the appropriate official or public body in the jurisdiction in which the body corporate was incorporated.

Marginal note:Notice of issuance of letters patent

(2) The Superintendent shall cause to be published in the Canada Gazette a notice of the issuance of letters patent continuing a body corporate as an association.

Marginal note:Effects of continuance

31.6 Where a body corporate is continued as an association,

(a) the property of the body corporate continues to be the property of the association;

(b) the association continues to be liable for the obligations of the body corporate;

(c) an existing cause of action or claim by or against the body corporate or any liability of the body corporate to prosecution is unaffected;

(d) a civil, criminal or administrative action or proceeding pending by or against the body corporate may continue to be prosecuted by or against the association;

(e) a conviction against, or any ruling, order or judgment in favour of or against the body corporate may be enforced by or against the association;

(f) a person who, on the day the body corporate becomes an association, was the holder of a security issued by the body corporate is not deprived of any right or privilege available to the person at that time in respect of the security or relieved of any liability in respect of the security, but any such right or privilege may be exercised only in accordance with this Act; and

(g) the by-laws of the body corporate, except those that are in conflict with this Act, continue as the by-laws of the association.

Marginal note:Transitional

31.7 (1) Despite any other provision of this Act or the regulations, the Minister may, on the recommendation of the Superintendent, by order, grant to an association in respect of which letters patent were issued under section 31.3 permission to

(a) engage in a business activity specified in the order that an association is not otherwise permitted by this Act to engage in and that the body corporate continued as the association was engaging in at the time the application for the letters patent was made;

(b) continue to have issued and outstanding debt obligations the issue of which is not authorized by this Act if the debt obligations were outstanding at the time the application for the letters patent was made;

(c) hold assets that an association is not otherwise permitted by this Act to hold if the assets were held by the body corporate continued as the association at the time the application for the letters patent was made;

(d) acquire and hold assets that an association is not otherwise permitted by this Act to acquire or hold if the body corporate continued as the association was obliged, at the time the application for the letters patent was made, to acquire those assets; and

(e) maintain outside Canada any records or registers required by this Act to be maintained in Canada and maintain and process outside Canada information and data relating to the preparation and maintenance of those records or registers.

Marginal note:Duration

(2) The permission shall be expressed to be granted for a period specified in the order not exceeding

(a) with respect to any activity described in paragraph (1)(a), thirty days after the date of issue of the letters patent or, if the activity is conducted under an agreement existing on the date of issue of the letters patent, the expiration of the agreement;

(b) with respect to any matter described in paragraph (1)(b), ten years; and

(c) with respect to any matter described in any of paragraphs (1)(c) to (e), two years.

Marginal note:Renewal

(3) Subject to subsection (4), the Minister may, on the recommendation of the Superintendent, by order, renew a permission with respect to any matter described in paragraphs (1)(b) to (d) for any further period or periods that the Minister considers necessary.

Marginal note:Limitation

(4) The Minister shall not grant to an association a permission

(a) with respect to matters described in paragraph (1)(b), that purports to be effective more than ten years after the date of the approval for the association to commence and carry on business, unless the Minister is satisfied on the basis of evidence on oath provided by an officer of the association that the association will not be able at law to redeem at the end of the ten years the outstanding debt obligations to which the permission relates; and

(b) with respect to matters referred to in paragraphs (1)(c) and (d), that purports to be effective more than ten years after the date of the approval for the association to commence and carry on business.

Marginal note:1998, c. 1, s. 382

259. Sections 32 to 34 of the Act are replaced by the following:

Marginal note:Transferring to other federal Acts

32. (1) An association may

(a) apply for letters patent continuing the association as a company under subsection 33(1) of the Trust and Loan Companies Act or amalgamating and continuing the association as a company under section 228 and subsection 234(1) of that Act;

(b) apply for letters patent continuing the association as a bank under subsection 35(1) of the Bank Act or amalgamating and continuing the association as a bank under section 223 and subsection 229(1) of that Act;

(c) apply for letters patent continuing the association as a bank holding company under subsection 684(1) of the Bank Act or amalgamating and continuing the association as a bank holding company under section 803 and subsection 809(1) of that Act;

(d) with the approval of the Minister, apply for a certificate of continuance under section 187 of the Canada Business Corporations Act; or

(e) with the approval of the Minister, apply for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, under section 285 of the Canada Cooperatives Act.

Marginal note:Conditions for approval

(2) No approval referred to in paragraph (1)(d) or (e) may be given to an association unless the Minister is satisfied that

(a) the application has been authorized by a special resolution of the members; and

(b) the association holds no deposits that are insured under the Canada Deposit Insurance Corporation Act.

Marginal note:Effect of letters patent or certificate

33. On the day specified in the letters patent or certificate of continuance referred to in any of paragraphs 32(1)(a) to (e), the Act referred to in the relevant paragraph applies and this Act ceases to apply to the body corporate continued under that Act.

Marginal note:Withdrawing application

34. If a special resolution authorizing the application for letters patent or a certificate of continuance referred to in any of paragraphs 32(1)(a) to (e) so states, the directors of an association may, without further approval of the members, withdraw the application before it is acted on.

260. Section 36 of the Act is replaced by the following:

Marginal note:Name

36. The name of an association shall include

(a) the word “cooperative” or “coopérative”, along with another word or expression indicating the financial nature of the association,

(b) the phrase “central credit union”, “credit union central” or “fédération de caisses populaires”, or

(c) any word or phrase specified by the Minister

or any combination or derivative thereof.

Marginal note:1996, c. 6, s. 50

261. Section 37 of the Act is replaced by the following:

Marginal note:Affiliated entity

37. Despite section 35, an association that is affiliated with another entity may, with the consent of that entity and the approval of the Superintendent, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.

Marginal note:1996, c. 6, s. 52

262. Subsection 40(2) of the Act is replaced by the following:

Marginal note:Revoking name

(2) If an association has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Act, the Superintendent may revoke the name of the association and assign to it a name and, until changed in accordance with section 219 or 221, the name of the association is thereafter the name so assigned.

263. Subsection 41(1) of the Act is replaced by the following:

Marginal note:Members

41. (1) Only a person that is an association, a central cooperative credit society, a local cooperative credit society, a cooperative corporation, a league, a deposit protection agency or an unincorporated organization consisting wholly of any of those entities may be admitted to membership in an association.

264. Subsection 41(3) of the Act is repealed.

Marginal note:1998, c. 1, s. 38

265. Section 50 of the Act is replaced by the following:

Marginal note:Minimum membership

50. (1) The membership in an association must include at least

(a) an association;

(b) two central cooperative credit societies not all of which are incorporated under the laws of one province;

(c) ten local cooperative credit societies not all of which are incorporated under the laws of one province; or

(d) two or more leagues not all of which are incorporated under the laws of one province.

Marginal note:Where minimum not attained

(2) If, at any time, the membership in an association is not in accordance with subsection (1), the association shall without delay take the steps that are necessary to

(a) apply for a certificate of continuation or letters patent referred to in subsection 32(1); or

(b) liquidate and dissolve the association under Part VII.

266. Section 52 of the Act is replaced by the following:

Marginal note:No control

52. No person other than an association may control an association.

267. Paragraph 60(1)(b) of the Act is replaced by the following:

(b) the association has paid-in capital of at least five million dollars or such greater amount as the Minister may specify;

268. Section 61 of the Act is replaced by the following:

Marginal note:Conditions of order

61. An order approving the commencement and carrying on of business by an association may contain any conditions or limitations that the Superintendent considers appropriate.

269. Subsection 70(2) of the Act is replaced by the following:

Marginal note:Approval required

(2) A by-law referred to in subsection (1) must be approved by special resolution.

270. Section 74 of the Act is amended by adding the following after subsection (2):

Marginal note:When approval not necessary

(3) The by-laws of an association may, with the approval of the Superintendent, provide for a formula or procedure for valuing a member of the association or any of its assets or liabilities when the member, or the asset or liability, is proposed to be acquired by the association in exchange for membership shares or shares of the association. The approval of the Superintendent under subsection (1) is not necessary when such shares are issued in accordance with such a by-law.

Marginal note:1997, c. 15, s. 118

271. The portion of subsection 75(2.1) of the Act before paragraph (b) is replaced by the following:

Marginal note:Exception

(2.1) Despite subsection (2), an association may, subject to subsection (2.2), record in the appropriate stated capital account part of the amount of any consideration it receives for shares it issues

(a) in exchange for

(i) property of a person who immediately before the exchange did not deal with the association at arm’s length within the meaning of that expression in the Income Tax Act or property of any other prescribed person, or

(ii) shares of, or another interest in, a body corporate that immediately before the exchange, or because of the exchange, did not deal with the association at arm’s length within the meaning of that expression in the Income Tax Act or shares of or another interest in any prescribed entity; or

272. (1) Subsection 86(1) of the Act is replaced by the following:

Marginal note:Declaration of dividend

86. (1) The directors of an association may declare and an association may pay a dividend by issuing fully paid membership shares or options or rights to acquire membership shares to members or fully paid shares or options or rights to acquire fully paid shares to members or shareholders and, subject to subsections (4) and (5), the directors of an association may declare and an association may pay a dividend in money or property, and if a dividend is to be paid in money, the dividend may be paid in a currency other than the currency of Canada.

(2) Section 86 of the Act is amended by adding the following after subsection (4):

Marginal note:When dividend not to be declared

(5) The directors of an association shall not declare and an association shall not pay a dividend in any financial year without the approval of the Superintendent if, on the day the dividend is declared, the total of all dividends declared by the association in that year would exceed the aggregate of the association’s net income up to that day in that year and its retained net income for the preceding two financial years.

273. Subsection 151(2) of the French version of the Act is replaced by the following:

Marginal note:Renonciation à l’avis

(2) La présence à l’assemblée équivaut à une renonciation de l’avis de convocation, sauf lorsque la personne y assiste spécialement pour s’opposer aux délibérations au motif que l’assemblée n’est pas régulièrement convoquée.

274. (1) Subsection 154(1) of the Act is replaced by the following:

Marginal note:Member list

154. (1) An association shall prepare a list, which may be in electronic form, of its members entitled to receive notice of a meeting under paragraph 146(1)(a), arranged in alphabetical order, which list must be prepared at the close of business on the day immediately preceding the day on which notice is given.

(2) The portion of subsection 154(2) of the Act before paragraph (a) is replaced by the following:

Marginal note:Shareholder list

(2) An association shall prepare a list, which may be in electronic form, of its shareholders entitled to receive notice of a meeting under paragraph 146(1)(b), arranged in alphabetical order and showing the number of shares held by each shareholder, which list must be prepared

275. Subsection 167(2) of the Act is amended by striking out the word “and” at the end of paragraph (d) and by adding the following after paragraph (e):

(f) in the case of a retail association, establish procedures to provide disclosure of information to customers of the association that is required to be disclosed by this Act and for dealing with complaints as required by section 385.22; and

(g) designate a committee of the board of directors to monitor the procedures referred to in paragraph (f) and satisfy itself that they are being adhered to by the retail association.

276. Subsection 169(2) of the Act is replaced by the following:

Marginal note:Residency requirement

(2) At least two thirds of the directors of an association must be, at the time of each director’s election or appointment, resident Canadians.

277. Subsection 179(1) of the Act is amended by striking out the word “or” at the end of paragraph (c), by adding the word “or” at the end of paragraph (d) and by adding the following after paragraph (d):

(e) when the director is removed from office under section 441.2.

Marginal note:1997, c. 15, s. 127(2)

278. Paragraph 200(3)(b) of the Act is replaced by the following:

(b) review those procedures and their effectiveness in ensuring that the association is complying with Part XII; and

279. The portion of section 215 of the Act before paragraph (a) is replaced by the following:

Marginal note:Reliance on statement

215. A director, an officer or an employee of an association is not liable under subsection 168(1) or (2) or section 211 or 214 or subsection 430(1) if the director, officer or employee relies in good faith on

280. The portion of subsection 216(1) of the French version of the Act before paragraph (a) is replaced by the following:

Marginal note:Indemnisation

216. (1) L’association peut indemniser ses administrateurs ou ses dirigeants — ou leurs prédécesseurs —, ainsi que les personnes qui, à sa demande, agissent ou ont agi en cette qualité pour une entité dont elle est ou a été associée, actionnaire ou créancière, de tous leurs frais, y compris les montants versés en règlement d’une action ou pour satisfaire à un jugement, entraînés par des procédures civiles, pénales ou administratives auxquelles ils étaient parties en cette qualité, sauf à l’occasion d’actions intentées par l’association ou pour son compte en vue d’obtenir un jugement favorable, si :

281. Section 219 of the Act is replaced by the following:

Marginal note:Incorporating instrument

219. On the application of an association duly authorized by special resolution of the members, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the association’s incorporating instrument.

282. Subsection 220(1) of the Act is replaced by the following:

Marginal note:Letters patent to amend

220. (1) On receipt of an application referred to in section 219, the Minister may issue letters patent to effect the proposal.

283. (1) Subsection 221(1) of the Act is amended by striking out the word “or” at the end of paragraph (i) and by adding the following after paragraph (i):

(i.1) change the name of the association; or

(2) Subsection 221(2) of the Act is replaced by the following:

Marginal note:Effective date of by-law

(2) A by-law, or an amendment to or a repeal of a by-law, made under paragraph (1)(i.1) is not effective until it is approved by the Superintendent.

284. Subsection 224(1) of the Act is replaced by the following:

Marginal note:Proposal to amend

224. (1) Subject to subsection (2), a member may, in accordance with sections 152 and 153, make a proposal to make an application referred to in section 219 or to make, amend or repeal the by-laws referred to in subsection 221(1) of the association.

285. Section 226 of the Act is replaced by the following:

Marginal note:Application to amalgamate

226. On the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including associations, the Minister may issue letters patent amalgamating and continuing the applicants as one association if the proposed capital and corporate structure of the amalgamated association meets the requirements for an association to be incorporated under this Act.

286. Section 230 of the Act is renumbered as subsection 230(1) and is amended by adding the following:

Marginal note:Horizontal short-form amalgamation

(2) Two or more bodies corporate incorporated by or under an Act of Parliament may amalgamate and continue as an association without complying with sections 227 to 229 if

(a) at least one of the applicants is an association;

(b) the applicants are all wholly-owned subsidiaries of the same holding body corporate;

(c) the amalgamation is approved by a resolution of the directors of each of the applicants; and

(d) the resolutions provide that

(i) the shares of all applicants, except those of one of the applicants that is an association, will be cancelled without any repayment of capital in respect of those shares,

(ii) the letters patent of amalgamation and the by-laws of the amalgamated association will be the same as the incorporating instrument and the by-laws of the amalgamating association whose shares are not cancelled, and

(iii) the stated capital of the amalgamating association and bodies corporate whose shares are cancelled will be added to the stated capital of the amalgamating association whose shares are not cancelled.

287. Section 231 of the Act is amended by adding the following after subsection (2):

Marginal note:Application of sections 24 to 26

(3) If two or more bodies corporate, none of which is an association, apply for letters patent under subsection (1), sections 24 to 26 apply in respect of the application with any modifications that the circumstances require.

Marginal note:Matters for consideration

(4) Before issuing letters patent of amalgamation continuing the applicants as one association, the Minister shall take into account all matters that the Minister considers relevant to the application, including

(a) the sources of continuing financial support for the amalgamated association;

(b) the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of the amalgamated association;

(c) the business record and experience of the applicants;

(d) the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the amalgamated association will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;

(g) whether the association is to be operated in accordance with cooperative principles; and

(h) the best interests of the financial system in Canada and, in particular, the cooperative financial system in Canada.

288. The Act is amended by adding the following after section 232:

Marginal note:Court enforcement

232.1 (1) If an association or any director, officer, employee or agent of an association is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the association or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.

Marginal note:Appeal

(2) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.

289. The Act is amended by adding the following after section 233:

Transfer of Business

Marginal note:Sale by association

233.1 (1) An association may sell all or substantially all of its assets to a financial institution incorporated by or under an Act of Parliament, a central cooperative credit society for which an order has been made under subsection 473(1), a bank holding company or an authorized foreign bank in respect of its business in Canada if the purchasing financial institution, central cooperative credit society, bank holding company or authorized foreign bank assumes all or substantially all of the liabilities of the association.

Marginal note:Sale agreement

(2) An agreement of purchase and sale (in subsection (3), section 233.2, subsections 233.3(1) and (4) and section 233.5 referred to as a “sale agreement”) must set out the terms of, and means of effecting, the sale of assets referred to in subsection (1).

Marginal note:Consideration

(3) Despite anything in this Act, the consideration for a sale referred to in subsection (1) may be cash or fully paid securities of the purchasing financial institution, central cooperative credit society for which an order has been made under subsection 473(1), bank holding company or authorized foreign bank or in part cash and in part fully paid securities of the purchasing financial institution, central cooperative credit society, bank holding company or authorized foreign bank or any other consideration that is provided for in the sale agreement.

Meaning of “authorized foreign bank” and “bank holding company”

(4) In this section, “authorized foreign bank” and “bank holding company” have the meaning assigned to those expressions by section 2 of the Bank Act.

Marginal note:Agreement to Minister

233.2 A sale agreement must be submitted to the Minister before the sending of the sale agreement to members and shareholders of the selling association under subsection 233.3(1).

Marginal note:Approval

233.3 (1) The directors of a selling association shall submit a sale agreement for approval to a meeting of the members, and to a meeting of shareholders, of the association and, subject to subsection (3), to the holders of each class or series of shares of the association.

Marginal note:Right to vote

(2) Each share of a selling association carries the right to vote in respect of a sale referred to in subsection 233.1(1) whether or not the share otherwise carries the right to vote.

Marginal note:Class vote

(3) The holders of shares of a class or series of shares of a selling association are entitled to vote separately as a class or series in respect of a sale referred to in subsection 233.1(1) only if the shares of the class or series are affected by the sale in a manner different from the shares of another class or series.

Marginal note:Special resolution

(4) A sale agreement is approved when the members and shareholders, and the holders of each class or series of shares entitled to vote separately as a class or series under subsection (3), of the selling association have approved the sale by special resolution.

Marginal note:Abandoning sale

233.4 If a special resolution approving a sale under subsection 233.3(4) so states, the directors of a selling association may, subject to the rights of third parties, abandon the sale without further approval of the members and shareholders.

Marginal note:Application to Minister

233.5 (1) Subject to subsection (2), unless a sale agreement is abandoned in accordance with section 233.4, the selling association shall, within three months after the approval of the sale agreement in accordance with subsection 233.3(4), apply to the Minister for approval of the sale agreement.

Marginal note:Conditions precedent to application

(2) No application for approval under subsection (1) may be made unless

(a) a notice of intention to make the application has been published at least once a week for a period of four consecutive weeks in the Canada Gazette and in a newspaper in general circulation at or near the place where the head office of the selling association is situated; and

(b) the application is supported by satisfactory evidence that the selling association has complied with the requirements of sections 233.1 to 233.4 and this section.

Marginal note:Approval by Minister

(3) A sale agreement has no force or effect until it has been approved by the Minister.

Marginal note:Approval by Minister

(4) If an application has been made to the Minister in accordance with subsections (1) and (2), the Minister may approve the sale agreement to which the application relates.

290. (1) Section 236 of the Act is amended by adding the following after subsection (4):

Marginal note:Electronic access

(4.1) An association may make the information contained in records referred to in subsection 235(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.

(2) Subsection 236(5) of the French version of the Act is replaced by the following:

Marginal note:Exemplaires

(5) Les associés et les actionnaires peuvent sur demande et sans frais, une fois par année civile, obtenir un exemplaire des règlements administratifs de l’association.

291. Subsection 242(1) of the Act is replaced by the following:

Marginal note:Location and processing of information

242. (1) Subject to subsection (3), an association shall maintain and process in Canada any information or data relating to the preparation and maintenance of the records referred to in section 235 unless the Superintendent has, subject to any terms and conditions that the Superintendent considers appropriate, exempted the association from the application of this section.

292. Subsection 245(3) of the Act is replaced by the following:

Marginal note:Application of certain provisions

(3) Subsections 236(4) and (4.1) and sections 237 and 239 to 242 apply, with any modifications that the circumstances require, in respect of a central securities register.

293. (1) The portion of paragraph 292(3)(a) of the Act before subparagraph (i) is replaced by the following:

(a) a list of the subsidiaries of the association, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 394 or pursuant to a realization of security in accordance with section 395 and which the association would not otherwise be permitted to hold, showing, with respect to each subsidiary,

(2) Section 292 of the Act is amended by adding the following after subsection (4):

Marginal note:Regulations

(5) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).

Marginal note:1997, c. 15, s. 135

294. Section 296 of the Act is replaced by the following:

Marginal note:Copy to Superintendent

296. (1) Subject to subsection (2), an association shall send to the Superintendent a copy of the documents referred to in subsections 292(1) and (3) not later than twenty-one days before the date of each annual meeting of members of the association.

Marginal note:Later filing

(2) If an association’s shareholders or members sign a resolution under paragraph 161(1)(b) in lieu of an annual meeting, the association shall send a copy of the documents referred to in subsections 292(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.

295. (1) Subsection 299(3) of the Act is replaced by the following:

Marginal note:Notice of designation

(3) Within fifteen days after the appointment of a firm of accountants as auditor of the association, the association and the firm of accountants shall jointly designate a member of the firm who meets the qualifications described in subsection (1) to conduct the audit of the association on behalf of the firm and the association shall forthwith notify the Superintendent in writing of the designation.

(2) Subsection 299(4) of the French version of the Act is replaced by the following:

Marginal note:Remplacement d’un membre désigné

(4) Si, pour une raison quelconque, le membre désigné cesse de remplir ses fonctions, l’association et le cabinet de comptables peuvent désigner conjointement un autre membre qui remplit les conditions du paragraphe (1); l’association en avise sans délai par écrit le surintendant.

296. Subsection 353(2) of the Act is replaced by the following:

Marginal note:Priority not affected

(2) Nothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of an association.

Marginal note:1993, c. 34, s. 54

297. Subsections 354(3) and (4) of the Act are replaced by the following:

Marginal note:Exemption

(3) On application by an association, the Superintendent may exempt from the application of this section and section 355 any class of shares of the association that do not amount to more than 30 % of the equity of the association.

Definition of “equity”

(4) For the purposes of this section, “equity”, in respect of an association, means its equity as determined in accordance with the regulations.

298. The Act is amended by adding the following after section 354:

Marginal note:No acquisition of control without approval

354.1 No person shall acquire control, within the meaning of paragraph 3(1)(e), of an association without the prior approval of the Minister.

299. Subsection 357(1) of the Act is replaced by the following:

Marginal note:When approval not required

357. (1) Despite subsections 354(1) and (2) and section 355, the approval of the Minister is not required if

(a) the Superintendent has, by order, directed the association to increase its capital and shares of the association are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or

(b) a person who controls, within the meaning of paragraph 3(1)(d), the association acquires additional shares of the association.

300. Sections 358 and 359 of the Act are replaced by the following:

Marginal note:Application for approval

358. (1) An application for an approval of the Minister required under this Part must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.

Marginal note:Applicant

(2) If, with respect to any particular transaction, this Part applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.

Marginal note:Matters for consideration

358.1 If an application for an approval under subsection 354(1) is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, including

(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the association;

(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the association;

(c) the business record and experience of the applicant or applicants;

(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the association will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the association on the conduct of those businesses and operations;

(g) whether the association is to be operated in accordance with cooperative principles; and

(h) the best interests of the financial system in Canada and, in particular, the cooperative financial system in Canada.

Marginal note:Terms and conditions

359. The Minister may impose any terms and conditions in respect of an approval given under this Part that the Minister considers necessary to ensure compliance with any provision of this Act.

301. Section 361 of the Act is replaced by following:

Marginal note:Notice of decision to applicant

361. (1) Subject to subsections (2) and (3) and section 362, the Minister shall, within a period of thirty days after the certified date referred to in subsection 360(1), send to the applicant

(a) a notice approving the transaction to which the application relates; or

(b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

Marginal note:Notice of decision

(2) Subject to subsections (4) and 362(2), if an application involves the acquisition of control of an association, the Minister shall, within a period of forty-five days after the certified date referred to in subsection 360(1), send to the applicant

(a) a notice approving the transaction to which the application relates; or

(b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

Marginal note:Extension of period for notice

(3) If the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall

(a) within that period, send a notice to that effect to the applicant; and

(b) within a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within any other further period that may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.

Marginal note:Further extensions

(4) If the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.

302. Section 362 of the Act is renumbered as subsection 362(1) and is amended by adding the following:

Marginal note:Reasonable opportunity to make representations

(2) If after receipt of the notice referred to in paragraph 361(2)(b) the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of forty-five days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

303. Sections 363 and 364 of the Act are replaced by the following:

Marginal note:Notice of decision

363. (1) Within a period of thirty days after the expiration of the period for making representations referred to in subsection 362(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

Marginal note:Notice of decision

(2) Within a period of forty-five days after the expiration of the period for making representations referred to in subsection 362(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

Marginal note:Deemed approval

364. If the Minister does not send a notice under subsection 361(1) or (3) or 363(1) within the period provided for in those subsections, the Minister is deemed to have approved the transaction to which the application relates.

304. The portion of subsection 368(1) of the Act before paragraph (a) is replaced by the following:

Marginal note:Disposition of shareholdings

368. (1) If, with respect to any association, a person contravenes section 354 or 354.1 or fails to comply with any terms and conditions imposed under section 359, the Minister may, if the Minister deems it in the public interest to do so, by order,

305. The Act is amended by adding the following immediately before section 375:

General Business

Marginal note:1997, c. 15, s. 137

306. (1) The portion of subsection 375(1) of the Act before subparagraph (a)(i) is replaced by the following:

Marginal note:Main business

375. (1) Subject to this Act, an association shall not engage in or carry on any business other than such business as generally appertains to the business of

(a) providing financial services to one or more of the following:

Marginal note:1997, c. 15, s. 137

(2) Subparagraphs 375(1)(a)(iii) to (v) of the Act are replaced by the following:

(ii.1) another association,

(iii) a cooperative credit society,

(iv) a cooperative corporation, or

(v) an entity controlled by an entity or group of entities described by any of subparagraphs (i) to (iv); and

(3) Subsection 375(3) of the Act is replaced by the following:

Marginal note:Restriction

(3) Subject to any order that may be made by the Superintendent under section 61 or 62, an association shall not receive money on deposit from a local cooperative credit society, or a cooperative corporation, that is not a member of the association.

Marginal note:1997, c. 15, s. 138

307. Section 376 of the Act is replaced by the following:

Marginal note:Additional businesses

375.1 (1) In addition to engaging in or carrying on any business that an association is permitted to engage in or carry on under subsection 375(1), an association may, with the approval of the Minister and subject to any order of the Superintendent that may be made under section 61 or 62,

(a) provide financial services to persons or entities that are not persons or entities referred to in any of subparagraphs 375(1)(a)(i) to (v); or

(b) provide clearing, settlement and payment services to members of the Canadian Payments Association and engage in or carry on ancillary services related to those clearing, settlement and payment services.

Marginal note:Terms and conditions

(2) The Minister may impose any terms and conditions in respect of the provision of financial services provided by a retail association as the Minister considers necessary or appropriate. The Minister may also vary or revoke any of those terms and conditions.

Marginal note:Regulations

(3) The Governor in Council may make regulations

(a) respecting what an association may or may not do with respect to the provision of services and products referred to in paragraphs (1)(a) and (b); and

(b) imposing terms and conditions in respect of the provision of services and products referred to in paragraphs (1)(a) and (b).

Marginal note:Additional activities

376. (1) In addition, an association may

(a) hold, manage and otherwise deal with real property;

(b) act as a custodian of property on behalf of any entity referred to in paragraph 375(1)(a) or, if the association is a retail association, on behalf of any person to whom the association may provide financial services;

(c) receive money on deposit, on such terms as to interest and time and mode of repayment as may be agreed on, from

(i) the government of Canada, a province or a municipality in Canada, or any agency thereof, and

(ii) a deposit protection agency;

(d) make loans to and investments in entities that are not members of the association;

(e) make loans to officers and employees of the association;

(f) provide management, investment, administrative, advisory, educational, promotional, technical, research and consultative services to the entities described in paragraph 375(1)(a);

(g) outside Canada, or with the prior written approval of the Minister, in Canada, provide the following services to entities described in paragraph 375(1)(a) or, if the association is a retail association, to any person:

(i) collecting, manipulating and transmitting

(A) information that is primarily financial or economic in nature,

(B) information that relates to the business of a permitted entity, as defined in subsection 386(1), or

(C) any other information that the Minister may, by order, specify,

(ii) providing advisory or other services in the design, development or implementation of information management systems,

(iii) designing, developing or marketing computer software, and

(iv) designing, developing, manufacturing or selling, as an ancillary activity to any activity referred to in any of subparagraphs (i) to (iii) that the association is engaging in, computer equipment integral to the provision of information services related to the business of financial institutions or to the provision of financial services;

(h) with the prior written approval of the Minister, develop, design, hold, manage, manufacture, sell or otherwise deal with data transmission systems, information sites, communication devices or information platforms or portals that are used

(i) to provide information that is primarily financial or economic in nature,

(ii) to provide information that relates to the business of a permitted entity, as defined in subsection 386(1), or

(iii) for a prescribed purpose or in prescribed circumstances; and

(i) if it is a retail association,

(i) act as a financial agent,

(ii) provide investment counselling services and portfolio management services,

(iii) issue payment, credit or charge cards and, in cooperation with others including other financial institutions, operate a payment, credit or charge card plan,

(iv) promote merchandise and services to the holders of any payment, credit or charge card issued by the association,

(v) engage in the sale of

(A) tickets, including lottery tickets, on a non-profit public service basis in connection with special, temporary and infrequent non-commercial celebrations or projects that are of local, municipal, provincial or national interest,

(B) urban transit tickets, and

(C) tickets in respect of a lottery sponsored by the federal government or a provincial or municipal government or an agency of any such government or governments, and

(vi) act as receiver, liquidator or sequestrator.

Marginal note:Specialized business management or advisory services

(2) A retail association may engage, under prescribed terms and conditions, if any are prescribed, in specialized business management or advisory services.

Marginal note:Restriction

(3) Except as authorized by or under this Act, an association shall not deal in goods or engage in any trade or business.

Marginal note:Regulations

(4) The Governor in Council may make regulations

(a) respecting what an association may or may not do with respect to the provision of services and products referred to in paragraphs (1)(g) and (h) and subsection (2);

(b) imposing terms and conditions in respect of the provision of investment counselling and portfolio management services and the provision of services and products referred to in paragraphs (1)(g) and (h) and subsection (2); and

(c) respecting the circumstances in which associations may be exempted from the requirement to obtain the approval of the Minister before carrying on a particular activity referred to in paragraph (1)(g) or (h).

308. Paragraphs 377(a) and (b) of the Act are replaced by the following:

(a) act as agent for any entity referred to in paragraph 375(1)(a), any member of a cooperative credit society or, if the association is a retail association, any other person in respect of the provision of any service that is provided by a financial institution, a permitted entity as defined in subsection 386(1) or a prescribed entity and may enter into an arrangement with any person in respect of the provision of that service; or

(b) refer any person to any such financial institution or entity.

309. The Act is amended by adding the following after section 378:

Marginal note:Restriction on deposit taking

378.1 A retail association shall not accept deposits in Canada unless it is a member institution within the meaning of section 2 of the Canada Deposit Insurance Corporation Act.

310. (1) The portion of subsection 379(1) of the Act before paragraph (a) is replaced by the following:

Marginal note:Restriction on guarantees

379. (1) An association shall not guarantee on behalf of any person the payment or repayment of any sum of money unless

Marginal note:1997, c. 15, s. 139

(2) Subsection 379(2) of the French version of the Act is replaced by the following:

Marginal note:Exception

(2) Dans les cas où la personne visée au paragraphe (1) est une filiale de l’association garante, celle-ci peut garantir une somme qui n’est pas fixe.

(3) Subsection 379(3) of the Act is replaced by the following:

Marginal note:Exception

(3) Paragraph (1)(a) does not apply in respect of a guarantee given on behalf of a central, within the meaning of section 472, or a local cooperative credit society if the payment guaranteed represents the obligation of the central or the local cooperative credit society to settle for payment items in accordance with the by-laws and rules of the Canadian Payments Association.

311. Sections 382 and 383 of the Act are replaced by the following:

Marginal note:Restriction on leasing

382. An association shall not engage in Canada in any personal property leasing activity in which a financial leasing entity, within the meaning of subsection 386(1), is not permitted to engage.

Marginal note:Restriction on residential mortgages

382.1 (1) A retail association shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance such a loan, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed 75 % of the value of the property at the time of the loan.

Marginal note:Exception

(2) Subsection (1) does not apply in respect of

(a) a loan made or guaranteed under the National Housing Act or any other Act of Parliament by or under which a different limit on the value of property on the security of which the association may make a loan is established;

(b) a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or a private insurer approved by the Superintendent;

(c) the acquisition by the association from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the association to the entity against the issue of such securities; or

(d) a loan secured by a mortgage where

(i) the mortgage is taken back by the association on a property disposed of by the association, including where the disposition is by way of a realization of a security interest, and

(ii) the mortgage secures payment of an amount payable to the association for the property.

Marginal note:Policies re security interests

383. (1) The directors of an association shall establish and the association shall adhere to policies regarding the creation of security interests in property of the association to secure obligations of the association and the acquisition by the association of beneficial interests in property that is subject to security interests.

Marginal note:Order to amend policies

(2) The Superintendent may, by order, direct an association to amend its policies as specified in the order.

Marginal note:Compliance

(3) An association shall comply with an order made under subsection (2) within the time specified in the order.

Marginal note:Regulations and guidelines

383.1 The Governor in Council may make regulations and the Superintendent may make guidelines respecting the creation by an association of security interests in its property to secure obligations of the association and the acquisition by the association of beneficial interests in property that is subject to security interests.

Marginal note:Exception

383.2 Sections 383 and 383.1 do not apply in respect of a security interest created by an association to secure an obligation of the association to the Bank of Canada or the Canada Deposit Insurance Corporation.

312. Subsection 385(1) of the Act is replaced by the following:

Marginal note:Restriction on partnerships

385. (1) Except with the approval of the Superintendent, an association may not be a general partner in a limited partnership or a partner in a general partnership.

313. The Act is amended by adding the following after section 385:

Deposit Acceptance

Marginal note:Deposit acceptance

385.01 (1) A retail association may, without the intervention of any other person,

(a) accept a deposit from any person whether or not the person is qualified by law to enter into contracts; and

(b) pay all or part of the principal of the deposit and all or part of the interest on that principal to or to the order of that person.

Marginal note:Exception

(2) Paragraph (1)(b) does not apply if, before payment, the money deposited in the association pursuant to paragraph (1)(a) is claimed by some other person

(a) in any action or proceeding to which the association is a party and in respect of which service of a writ or other process originating that action or proceeding has been made on the association; or

(b) in any other action or proceeding pursuant to which an injunction or order made by the court requiring the association not to make payment of that money or to make payment thereof to some person other than the depositor has been served on the association.

If such a claim is made, the money so deposited may be paid to the depositor with the consent of the claimant or to the claimant with the consent of the depositor.

Marginal note:Execution of trust

385.02 (1) An association is not bound to see to the execution of any trust to which any deposit made under the authority of this Act is subject.

Marginal note:Payment when association has notice of trust

(2) Subsection (1) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the association has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.

Unclaimed Balances

Marginal note:Unclaimed balances

385.03 (1) Where

(a) a deposit has been made in Canada that is payable in Canada in Canadian currency and in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor during a period of ten years

(i) in the case of a deposit made for a fixed period, from the day on which the fixed period terminated, and

(ii) in the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the creditor, whichever is later, or

(b) a cheque, draft or bill of exchange (including any such instrument drawn by one branch of a retail association on another branch of the association but not including such an instrument issued in payment of a dividend on the capital of an association) payable in Canada in Canadian currency has been issued, certified or accepted by an association in Canada and no payment has been made in respect of the instrument for a period of ten years after the date of issue, certification, acceptance or maturity, whichever is later,

the retail association shall pay to the Bank of Canada not later than December 31 in each year an amount equal to the principal amount of the deposit or instrument, plus interest, if any, calculated in accordance with the terms of the deposit or instrument, and payment accordingly discharges the association from all liability in respect of the deposit or instrument.

Marginal note:Particulars

(2) A retail association shall, on making a payment under subsection (1), provide the Bank of Canada, for each deposit or instrument in respect of which the payment is made, with all the particulars of the deposit or instrument listed in subsection 431.1(3) or 431.2(2), as the case may be, current as of the day the payment is made.

Marginal note:Payment to claimant

(3) Subject to section 22 of the Bank of Canada Act, if a payment has been made to the Bank of Canada under subsection (1) in respect of any deposit or instrument, and if payment is demanded or the instrument is presented at the Bank of Canada by the person who, but for that section, would be entitled to receive payment of the deposit or instrument, the Bank of Canada is liable to pay, at its agency in the province in which the deposit or instrument was payable, an amount equal to the amount so paid to it together with interest, if interest was payable under the terms of the deposit or instrument,

(a) for a period not exceeding ten years from the day on which the payment was received by the Bank of Canada until the date of payment to the claimant; and

(b) at the rate and computed in the manner that the Minister determines.

Marginal note:Enforcing liability

(4) The liability of the Bank of Canada under subsection (3) may be enforced by action against the Bank of Canada in the court in the province in which the deposit or instrument was payable.

Marginal note:Application of subsection (1)

(5) Subsection (1) applies only in respect of deposits made, and cheques, drafts and bills of exchange issued, certified or accepted, after the day that subsection comes into force.

Marginal note:Notice of unpaid amount

385.04 (1) A retail association shall mail to each person, insofar as is known to the association, to whom a deposit referred to in paragraph 385.03(1)(a) is payable, or to whom or at whose request an instrument referred to in paragraph 385.03(1)(b) was issued, certified or accepted, at the person’s recorded address, a notice stating that the deposit or instrument remains unpaid.

Marginal note:When notice to be given

(2) A notice required by subsection (1) must be given during the month of January next following the end of the first two year period, and also during the month of January next following the end of the first five year period,

(a) in the case of a deposit made for a fixed period, after the fixed period has terminated;

(b) in the case of any other deposit in respect of which no transaction has taken place and no statement of account has been requested or acknowledged by the creditor; and

(c) in the case of a cheque, draft or bill of exchange, in respect of which the instrument has remained unpaid.

Accounts

Marginal note:Definitions

385.05 The following definitions apply in this section and sections 385.1 to 385.13, 385.27 and 385.28.

“member association”

« association membre »

“member association” means a retail association that is a member institution as defined in section 2 of the Canada Deposit Insurance Corporation Act.

“personal deposit account”

« compte de dépôt personnel »

“personal deposit account” means a deposit account in the name of one or more natural persons that is kept by that person or those persons for a purpose other than that of carrying on business.

“retail deposit account”

« compte de dépôt de détail »

“retail deposit account” means a personal deposit account that is opened with a deposit of less than $150,000 or any greater amount that may be prescribed.

Marginal note:Account charges

385.06 A retail association shall not, directly or indirectly, charge or receive any sum for the keeping of an account unless the charge is made by express agreement between the association and a customer or by order of a court.

Marginal note:Disclosure on opening account

385.07 (1) A retail association shall not open or maintain an interest-bearing deposit account in Canada in the name of any natural person unless the association discloses, in accordance with the regulations, to the person who requests the association to open the account, the rate of interest applicable to the account and how the amount of interest to be paid is to be calculated.

Marginal note:Exception

(2) Subsection (1) does not apply in respect of an interest-bearing deposit account that is opened with a deposit in excess of $150,000 or any greater amount that may be prescribed.

Marginal note:Disclosure in advertisements

385.08 No person shall authorize the publication, issue or appearance of any advertisement in Canada that indicates the rate of interest offered by a retail association on an interest-bearing deposit or a debt obligation unless the advertisement discloses, in accordance with the regulations, how the amount of interest is to be calculated.

Marginal note:Disclosure regulations

385.09 The Governor in Council may make regulations respecting

(a) the manner in which and the time at which disclosure is to be made by a retail association of

(i) interest rates applicable to debts of the association and deposits with the association, and

(ii) the manner in which the amount of interest paid is to be calculated;

(b) the manner in which any charges for the keeping of an account are to be disclosed by a retail association to its customers and when the disclosure is to be made; and

(c) any other matters or things that may be necessary to carry out the requirements of sections 385.06 to 385.08.

Marginal note:Disclosure required on opening a deposit account

385.1 (1) Subject to subsections (2) to (4), a retail association shall not open a deposit account in the name of a customer unless, at or before the time the account is opened, the retail association provides in writing to the individual who requests the opening of the account

(a) a copy of the account agreement with the association;

(b) information about all charges applicable to the account;

(c) information about how the customer will be notified of any increase in those charges and of any new charges applicable to the account;

(d) information about the association’s procedures relating to complaints about the application of any charge applicable to the account; and

(e) any other information that may be prescribed.

Marginal note:Exception

(2) If a deposit account is not a personal deposit account and the amount of a charge applicable to the account cannot be established at or before the time the account is opened, the retail association shall, as soon as is practicable after the amount is established, provide the customer in whose name the account is kept with a notice in writing of the amount of the charge.

Marginal note:Exception

(3) If a retail association has a deposit account in the name of a customer and the customer by telephone requests the opening of another deposit account in the name of the customer and the retail association has not complied with subsection (1) in respect of the opening of that other account, the retail association shall not open the account unless it provides the customer orally with any information prescribed at or before the time the account is opened.

Marginal note:Disclosure in writing

(4) If a retail association opens an account under subsection (3), it shall, not later than seven business days after the account is opened, provide to the customer in writing the agreement and information referred to in subsection (1).

Marginal note:Right to close account

(5) A customer may, within 14 business days after a deposit account is opened under subsection (3), close the account without charge and in such case is entitled to a refund of any charges related to the operation of the account, other than interest charges, incurred while the account was open.

Marginal note:Regulations

(6) For the purposes of subsection (4), the Governor in Council may make regulations prescribing circumstances in which, and the time when, the agreement and information will be deemed to have been provided to the customer.

Marginal note:Disclosure of charges

385.11 A retail association shall disclose, in the prescribed manner and at the prescribed time, to its customers and to the public, the charges applicable to deposit accounts with the association and the usual amount, if any, charged by the association for services normally provided by the association to its customers and to the public.

Marginal note:No increase or new charges without disclosure

385.12 (1) A retail association shall not increase any charge applicable to a personal deposit account with the association or introduce any new charge applicable to a personal deposit account with the association unless the association discloses the charge in the prescribed manner and at the prescribed time to the customer in whose name the account is kept.

Marginal note:No increase or new charges without disclosure

(2) With respect to such services in relation to deposit accounts, other than personal deposit accounts, as are prescribed, a retail association shall not increase any charge for any such service in relation to a deposit account with the association or introduce any new charge for any such service in relation to a deposit account with the association unless the association discloses the charge in the prescribed manner and at the prescribed time to the customer in whose name the account is kept.

Marginal note:Application

385.13 Sections 385.1 to 385.12 apply only in respect of charges applicable to deposit accounts with the retail association in Canada and services provided by it in Canada.

Borrowing Costs

Definition of “cost of borrowing”

385.14 For the purposes of this section and sections 385.15 to 385.24, “cost of borrowing” means, in respect of a loan made by a retail association,

(a) the interest or discount applicable to the loan;

(b) any amount charged in connection with the loan that is payable by the borrower to the association; and

(c) any charge prescribed to be included in the cost of borrowing.

For those purposes, however, “cost of borrowing” does not include any charge prescribed to be excluded from the cost of borrowing.

Marginal note:Rebate of borrowing costs

385.15 (1) If a retail association makes a loan in respect of which the disclosure requirements of section 385.16 apply and the loan is not secured by a mortgage on real property and is required to be repaid either on a fixed future date or by instalments, the association shall, if there is a prepayment of the loan, rebate to the borrower a portion of the charges included in the cost of borrowing in respect of the loan.

Marginal note:Exception

(2) The charges to be rebated do not include the interest or discount applicable to the loan.

Marginal note:Regulations

(3) The Governor in Council may make regulations governing the rebate of charges under subsection (1). The rebate shall be made in accordance with those regulations.

Marginal note:Disclosing borrowing costs

385.16 (1) A retail association shall not make a loan to a natural person that is repayable in Canada unless the cost of borrowing, as calculated and expressed in accordance with section 385.17, and other prescribed information have in the prescribed manner and at the prescribed time been disclosed by the association to the borrower.

Marginal note:Non-application

(2) Subsection (1) does not apply in respect of a loan that is of a prescribed class of loans.

Marginal note:Calculating borrowing costs

385.17 The cost of borrowing shall be calculated, in the prescribed manner, on the basis that all obligations of the borrower are duly fulfilled and shall be expressed as a rate per annum and, in prescribed circumstances, as an amount in dollars and cents.

Marginal note:Additional disclosure

385.18 (1) If a retail association makes a loan in respect of which the disclosure requirements of section 385.16 are applicable and the loan is required to be repaid either on a fixed future date or by instalments, the association shall disclose to the borrower, in accordance with the regulations,

(a) whether the borrower has the right to repay the amount borrowed before the maturity of the loan and, if applicable,

(i) any terms and conditions relating to that right, including the particulars of the circumstances in which the borrower may exercise that right, and

(ii) whether, in the event that the borrower exercises the right, any portion of the cost of borrowing is to be rebated, the manner in which any such rebate is to be calculated or, if a charge or penalty will be imposed on the borrower, the manner in which the charge or penalty is to be calculated;

(b) in the event that an amount borrowed is not repaid at maturity or, if applicable, an instalment is not paid on the day the instalment is due to be paid, particulars of the charges or penalties to be paid by the borrower because of the failure to repay or pay in accordance with the contract governing the loan;

(c) at such time and in such manner as may be prescribed, any changes respecting the cost of borrowing or the loan agreement as may be prescribed;

(d) particulars of any other rights and obligations of the borrower; and

(e) any other prescribed information, at such time and in such form and manner as may be prescribed.

Marginal note:Disclosure in credit card applications

(2) A retail association shall, in accordance with the regulations, at such time and in such manner as may be prescribed, provide prescribed information in any application forms or related documents that it prepares for the issuance of credit, payment or charge cards and provide prescribed information to any person applying to it for a credit, payment or charge card.

Marginal note:Disclosure re credit cards

(3) If a retail association issues or has issued a credit, payment or charge card to a natural person, the association shall, in addition to disclosing the costs of borrowing in respect of any loan obtained through the use of the card, disclose to the person, in accordance with the regulations,

(a) any charges or penalties described in paragraph (1)(b);

(b) particulars of the person’s rights and obligations;

(c) any charges for which the person becomes responsible by accepting or using the card;

(d) at such time and in such manner as may be prescribed, any changes respecting the cost of borrowing or the loan agreement as may be prescribed; and

(e) any other prescribed information, at such time and in such form and manner as may be prescribed.

Marginal note:Additional disclosure re other loans

(4) If a retail association enters into or has entered into an arrangement, including a line of credit, for the making of a loan in respect of which the disclosure requirements of section 385.16 apply and the loan is not a loan in respect of which subsection (1) or (3) applies, the association shall, in addition to disclosing the costs of borrowing, disclose to the person to whom the loan is made, in accordance with the regulations,

(a) any charges or penalties described in paragraph (1)(b);

(b) particulars of the person’s rights and obligations;

(c) any charges for which the person is responsible under the arrangement;

(d) at such time and in such manner as may be prescribed, any changes respecting the cost of borrowing under the arrangement as may be prescribed; and

(e) any other prescribed information, at such time and in such form and manner as may be prescribed.

Marginal note:Renewal statement

385.19 If a retail association makes a loan in respect of which the disclosure requirements of section 385.16 apply and the loan is secured by a mortgage on real property, the association shall disclose to the borrower, at such time and in such manner as may be prescribed, such information as may be prescribed respecting the renewal of the loan.

Marginal note:Disclosure in advertising

385.2 No person shall authorize the publication, issue or appearance of any advertisement in Canada relating to arrangements referred to in subsection 385.18(4), loans, credit cards, payment cards or charge cards, offered to natural persons by a retail association, and purporting to disclose prescribed information about the cost of borrowing or about any other matter unless the advertisement contains such information as may be required by the regulations, in such form and manner as may be prescribed.

Marginal note:Regulations re borrowing costs

385.21 The Governor in Council may make regulations

(a) respecting the manner in which, and the time at which, a retail association is to disclose to a borrower

(i) the cost of borrowing,

(ii) any rebate of the cost of borrowing, and

(iii) any other information relating to a loan, arrangement, credit card, payment card or charge card referred to in section 385.18;

(b) respecting the contents of any statement disclosing the cost of borrowing and other information required to be disclosed by a retail association to a borrower;

(c) respecting the manner of calculating the cost of borrowing;

(d) respecting the circumstances under which the cost of borrowing is to be expressed as an amount in dollars and cents;

(e) specifying any class of loans that are not to be subject to section 385.15, subsection 385.16(1) or 385.18(1) or (4) or section 385.19 or 385.2 or the regulations or any specified provisions of the regulations;

(f) respecting the manner in which and the time at which any rights, obligations, charges or penalties referred to in sections 385.15 to 385.2 are to be disclosed;

(g) prohibiting the imposition of any charge or penalty referred to in section 385.18 or providing that the charge or penalty, if imposed, will not exceed a prescribed amount;

(h) respecting the nature or amount of any charge or penalty referred to in paragraph 385.18(1)(b), (3)(a) or (4)(a) and the costs of the retail association that may be included or excluded in the determination of the charge or penalty;

(i) respecting the method of calculating the amount of rebate of the cost of borrowing, or the portion of the cost of borrowing referred to in subparagraph 385.18(1)(a)(ii);

(j) respecting advertisements made by a retail association regarding arrangements referred to in subsection 385.18(4), loans, credit cards, payment cards or charge cards;

(k) respecting the renewal of loans; and

(l) respecting such other matters or things as are necessary to carry out the purposes of sections 385.15 to 385.2.

Complaints

Marginal note:Procedures for dealing with complaints

385.22 (1) A retail association shall

(a) establish procedures for dealing with complaints made by persons having requested or received products or services in Canada from the retail association;

(b) designate an officer or employee of the association to be responsible for implementing those procedures; and

(c) designate one or more officers or employees of the association to receive and deal with those complaints.

Marginal note:Procedures to be filed with Commissioner

(2) A retail association shall file with the Commissioner a copy of its procedures established under paragraph (1)(a).

Marginal note:Obligation to be member

385.23 In any province, if there is no law of the province that makes a retail association subject to the jurisdiction of an organization that deals with complaints made by persons having requested or received products or services in the province from a retail association, the retail association shall be a member of an organization that is not controlled by it and that deals with those complaints that have not been resolved to the satisfaction of the persons under procedures established by retail associations under paragraph 385.22(1)(a).

Marginal note:Information on contacting Agency

385.24 (1) A retail association shall, in the prescribed manner, provide a person requesting or receiving a product or service from it with prescribed information on how to contact the Agency if the person has a complaint about a deposit account, an arrangement referred to in subsection 385.18(4), a payment, credit or charge card, the disclosure of or manner of calculating the cost of borrowing in respect of a loan or about any other obligation of the retail association under a consumer provision.

Marginal note:Report

(2) The Commissioner shall prepare a report, to be included in the report referred to in section 34 of the Financial Consumer Agency of Canada Act, respecting

(a) procedures for dealing with complaints established by retail associations pursuant to paragraph 385.22(1)(a); and

(b) the number and nature of complaints that have been brought to the attention of the Agency by persons who have requested or received a product or service from a retail association.

Miscellaneous

Marginal note:Prepayment protected

385.25 (1) A retail association shall not make a loan to a natural person that is repayable in Canada, the terms of which prohibit prepayment of the money advanced or any instalment thereon before its due date.

Marginal note:Minimum balance

(2) Except by express agreement between the retail association and the borrower, the making in Canada of a loan or advance by a retail association to a borrower shall not be subject to a condition that the borrower maintain a minimum credit balance with the association.

Marginal note:Non-application of subsection (1)

(3) Subsection (1) does not apply in respect of a loan that is

(a) secured by a mortgage on real property; or

(b) made for business purposes and the principal amount of which is more than $100,000 or such other amount as may be prescribed.

Marginal note:Government cheques

(4) A retail association shall not make a charge

(a) for cashing a cheque or other instrument drawn on the Receiver General or on the Receiver General’s account in the Bank of Canada, in an association or in any other deposit-taking Canadian financial institution incorporated by or under an Act of Parliament;

(b) for cashing any other instrument issued as authority for the payment of money out of the Consolidated Revenue Fund; or

(c) in respect of any cheque or other instrument that is

(i) drawn in favour of the Receiver General, the Government of Canada or any department thereof or any public officer acting in the capacity of a public officer, and

(ii) tendered for deposit to the credit of the Receiver General.

Marginal note:Deposits of Government of Canada

(5) Nothing in subsection (4) precludes any arrangement between the Government of Canada and a retail association concerning

(a) compensation for services performed by the association for the Government of Canada; or

(b) interest to be paid on any or all deposits of the Government of Canada with the association.

Marginal note:Regulations re customer information

385.26 The Governor in Council may make regulations

(a) requiring a retail association to establish procedures regarding the collection, retention, use and disclosure of any information about its customers or any class of customers;

(b) requiring a retail association to establish procedures for dealing with complaints made by a customer about the collection, retention, use or disclosure of information about the customer;

(c) respecting the disclosure by a retail association of information relating to the procedures referred to in paragraphs (a) and (b);

(d) requiring a retail association to designate the officers and employees of the association who are responsible for

(i) implementing the procedures referred to in paragraph (b), and

(ii) receiving and dealing with complaints made by a customer of the association about the collection, retention, use or disclosure of information about the customer;

(e) requiring a retail association to report information relating to

(i) complaints made by customers of the association about the collection, retention, use or disclosure of information, and

(ii) the actions taken by the association to deal with the complaints; and

(f) defining “information”, “collection” and “retention” for the purposes of paragraphs (a) to (e) and the regulations made under those paragraphs.

Marginal note:Notice of branch closure

385.27 (1) Subject to regulations made under subsection (5), a member association with a branch in Canada at which it, through a natural person, opens retail deposit accounts and disburses cash to customers, shall give notice in accordance with those regulations before closing that branch or having it cease to carry on either of those activities.

Marginal note:Pre-closure meeting

(2) After notice is given but before the branch is closed or ceases to carry on the activities, the Commissioner may, in prescribed situations, require the member association to convene and hold a meeting between representatives of the member association, representatives of the Agency and interested parties in the vicinity of the branch in order to exchange views about the closing or cessation of activities.

Marginal note:Meeting details

(3) The Commissioner may establish rules for convening a meeting referred to in subsection (2) and for its conduct.

Marginal note:Not statutory instruments

(4) The Statutory Instruments Act does not apply to rules established under subsection (3).

Marginal note:Regulations

(5) The Governor in Council may make regulations prescribing

(a) the manner and time, which may vary according to circumstances specified in the regulation, in which notice shall be given under subsection (1), to whom it shall be given and the information to be included;

(b) circumstances in which a member association is not required to give notice under subsection (1), circumstances in which the Commissioner may exempt a member association from the requirement to give notice under that subsection, and circumstances in which the Commissioner may vary the manner and time in which notice is required to be given under any regulation made under paragraph (a); and

(c) circumstances in which a meeting may be convened under subsection (2).

Marginal note:Regulations re disclosure

385.28 The Governor in Council may, subject to any other provisions of this Act relating to the disclosure of information, make regulations respecting the disclosure of information by retail associations or any prescribed class of retail associations, including regulations respecting

(a) the information that must be disclosed, including information relating to

(i) any product or service or prescribed class of products or services offered by them,

(ii) any of their policies, procedures or practices relating to the offer by them of any product or service or prescribed class of products or services,

(iii) anything they are required to do or to refrain from doing under a consumer provision, and

(iv) any other matter that may affect their dealings with customers or the public;

(b) the manner, place and time in which and the persons to whom information is to be disclosed; and

(c) the content and form of any advertisement, by retail associations or any prescribed class of retail associations, relating to any matter referred to in paragraph (a).

Marginal note:Bank Act security

385.29 A bank that is continued as an association under this Act that, immediately before that continuance, held any outstanding security pursuant to section 426 or 427 of the Bank Act may continue to hold the security for the life of the loan to which the security relates and all the provisions of the Bank Act relating to the security and its enforcement continue to apply to the association as though it were a bank.

Marginal note:Transmission in case of death

385.3 (1) If the transmission of a debt owing by a retail association by reason of a deposit, of property held by a retail association as security or for safe-keeping or of rights with respect to a safety deposit box and property deposited therein takes place because of the death of a person, the delivery to the association of

(a) an affidavit or declaration in writing in a form satisfactory to the association signed by or on behalf of a person claiming by virtue of the transmission stating the nature and effect of the transmission, and

(b) one of the following documents, namely,

(i) when the claim is based on a will or other testamentary instrument or on a grant of probate thereof or on such a grant and letters testamentary or other document of like import or on a grant of letters of administration or other document of like import, purporting to be issued by any court of authority in Canada or elsewhere, an authenticated copy or certificate thereof under the seal of the court or authority without proof of the authenticity of the seal or other proof, or

(ii) when the claim is based on a notarial will, an authenticated copy thereof,

is sufficient justification and authority for giving effect to the transmission in accordance with the claim.

Marginal note:Transmission in case of death

(2) Nothing in subsection (1) shall be construed to prevent a retail association from refusing to give effect to a transmission until there has been delivered to the association such documentary or other evidence of or in connection with the transmission as it may deem requisite.

Marginal note:Branch of account with respect to deposits

385.31 (1) For the purposes of this Act, the branch of account with respect to a deposit account is

(a) the branch the address or name of which appears on the specimen signature card or other signing authority signed by a depositor with respect to the deposit account or that is designated by an agreement between the retail association and the depositor at the time of opening of the deposit account; or

(b) if no branch has been identified or agreed on as provided in paragraph (a), the branch that is designated as the branch of account with respect thereto by the retail association by notice in writing to the depositor.

Marginal note:Where debt payable

(2) The amount of any debt owing by a retail association by reason of a deposit in a deposit account in the association is payable to the person entitled thereto only at the branch of account and the person entitled thereto is not entitled to demand payment or to be paid at any other branch of the association.

Marginal note:Where debt payable

(3) Despite subsection (2), a retail association may permit, either occasionally or as a regular practice, the person to whom the association is indebted by reason of a deposit in a deposit account in the association to withdraw moneys owing by reason of that deposit at a branch of the association other than the branch of account or to draw cheques or other orders for the payment of such moneys at a branch other than the branch of account.

Marginal note:Situs of indebtedness

(4) The indebtedness of a retail association by reason of a deposit in a deposit account in the association shall be deemed for all purposes to be situated at the place where the branch of account is situated.

Marginal note:Effect of writ, etc.

385.32 (1) Subject to subsections (3) and (4), the following documents are binding on property belonging to a person and in the possession of an association, or on money owing to a person by reason of a deposit account in an association, only if the document or a notice of it is served at the branch of the association that has possession of the property or that is the branch of account in respect of the deposit account, as the case may be:

(a) a writ or process originating a legal proceeding or issued in or pursuant to a legal proceeding;

(b) an order or injunction made by a court;

(c) an instrument purporting to assign, perfect or otherwise dispose of an interest in the property or the deposit account; or

(d) an enforcement notice in respect of a support order or support provision.

Marginal note:Notices

(2) Any notification sent to an association with respect to a customer of the association, other than a document referred to in subsection (1) or (3), constitutes notice to the association and fixes the association with knowledge of its contents only if sent to and received at the branch of the association that is the branch of account of an account held in the name of that customer.

Marginal note:Exception

(3) Subsections (1) and (2) do not apply in respect of an enforcement notice in respect of a support order or support provision if

(a) the enforcement notice, accompanied by a written statement containing the information required by the regulations, is served at an office of an association designated in accordance with the regulations in respect of a province; and

(b) the order or provision can be enforced under the laws of that province.

Marginal note:Time of application

(4) Subsection (3) does not apply in respect of an enforcement notice in respect of a support order or support provision until the second business day following the day of service referred to in that subsection.

Marginal note:Regulations

(5) The Governor in Council may make regulations

(a) respecting the designation by an association, for the purpose of subsection (3), of a place in any province for the service of enforcement notices in respect of support orders and support provisions;

(b) prescribing the manner in which an association shall publicize the locations of designated offices of the association; and

(c) respecting the information that must accompany enforcement notices in respect of support orders and support provisions.

Marginal note:Definitions

(6) The following definitions apply in this section.

“designated office”

« bureau désigné »

“designated office” means a place designated in accordance with regulations made for the purpose of subsection (3).

“enforcement notice”

« avis d’exécution »

“enforcement notice”, in respect of a support order or support provision, means a garnishee summons or other instrument issued under the laws of a province for the enforcement of the support order or support provision.

“support order”

« ordonnance alimentaire »

“support order” means an order or judgment or interim order or judgment for family financial support.

“support provision”

« disposition alimentaire »

“support provision” means a provision of an agreement relating to the payment of maintenance or family financial support.

Marginal note:1993, c. 34, s. 55(F); 1997, c. 15, ss. 140 to 149; 1999, c. 28, s. 116

314. Sections 386 to 408 of the Act are replaced by the following:

Marginal note:Definitions

386. (1) The following definitions apply in this Part.

“commercial loan”

« prêt commercial »

“commercial loan” means

(a) any loan made or acquired by an association, other than

(i) a loan to a natural person in an amount of two hundred and fifty thousand dollars or less,

(ii) a loan to the Government of Canada, the government of a province, a municipality, or to any agency thereof, or to the government of a foreign country or any political subdivision thereof, or any agency thereof, or to a prescribed international agency,

(iii) a loan that is guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in subparagraph (ii),

(iv) a loan that is secured by a mortgage on real property, where

(A) the mortgage is on residential property and the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, does not exceed 75 % of the value of the property at the time the loan is made or acquired, or

(B) the mortgage is on real property other than residential property and

(I) the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, does not exceed 75 % of the value of the property at the time the loan is made or acquired, and

(II) at the time the loan is made or acquired the property provides an annual income sufficient to pay all annual expenses related to the property, including the payments owing under the mortgage and the mortgages having an equal or prior claim against the property,

(v) a loan that is secured by a mortgage on real property, where

(A) the mortgage is on residential property and

(I) the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, exceeds 75 % of the value of the property at the time the loan is made or acquired, and

(II) repayment of the amount of the loan that exceeds 75 % of the value of the property is guaranteed or insured by a government agency or private insurer approved by the Superintendent, or

(B) the mortgage is on real property other than residential property and

(I) the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, exceeds 75 % of the value of the property at the time the loan is made or acquired,

(II) repayment of the amount of the loan that exceeds 75 % of the value of the property is guaranteed or insured by a government agency or private insurer approved by the Superintendent, and

(III) at the time the loan is made or acquired, the property provides an annual income sufficient to pay all annual expenses related to the property, including the payments owing under the mortgage and the mortgages having an equal or prior claim against the property,

(vi) a loan that

(A) consists of a deposit made by the association with a financial institution,

(B) is fully secured by a deposit with any financial institution, including the association,

(C) is fully secured by debt obligations guaranteed by any financial institution other than the association, or

(D) is fully secured by a guarantee of a financial institution other than the association,

(vii) a loan to another association under prescribed terms and conditions, if any are prescribed, or

(viii) a loan to any prescribed entity under prescribed terms and conditions, if any are prescribed;

(b) an investment in debt obligations, other than

(i) debt obligations that are

(A) guaranteed by any financial institution other than the association,

(B) fully secured by deposits with any financial institution, including the association, or

(C) fully secured by debt obligations that are guaranteed by any financial institution other than the association,

(ii) debt obligations issued by the Government of Canada, the government of a province, a municipality, or by any agency thereof, or by the government of a foreign country or any political subdivision thereof, or by any agency thereof, or by a prescribed international agency,

(iii) debt obligations that are guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in subparagraph (ii),

(iv) debt obligations that are widely distributed, as that expression is defined by the regulations,

(v) debt obligations that are issued by another association under prescribed terms and conditions, if any are prescribed,

(vi) debt obligations of an entity controlled by the association, or

(vii) debt obligations of a prescribed entity that are issued under prescribed terms and conditions, if any are prescribed; and

(c) an investment in shares of a body corporate or ownership interests in an unincorporated entity, other than

(i) shares or ownership interests that are widely distributed, as that expression is defined by the regulations,

(ii) shares or ownership interests of an entity controlled by the association, or

(iii) participating shares.

“factoring entity”

« entité s’occupant d’affacturage »

“factoring entity” means a factoring entity as defined in the regulations.

“finance entity”

« entité s’occupant de financement »

“finance entity” means a finance entity as defined in the regulations.

“financial leasing entity”

« entité s’occupant de crédit-bail »

“financial leasing entity” means an entity

(a) whose activities are limited to the financial leasing of personal property and such related activities as are prescribed and whose activities conform to such restrictions and limitations thereon as are prescribed; and

(b) that, in conducting the activities referred to in paragraph (a) in Canada, does not

(i) direct its customers or potential customers to particular dealers in the leased property or the property to be leased,

(ii) enter into lease agreements with persons in respect of any motor vehicle having a gross vehicle weight, as that expression is defined by the regulations, of less than twenty-one tonnes, or

(iii) enter into lease agreements with natural persons in respect of personal household property, as that expression is defined by the regulations.

“loan”

« prêt »ou« emprunt »

“loan” includes an acceptance, endorsement or other guarantee, a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit but does not include investments in securities.

“motor vehicle”

« véhicule à moteur »

“motor vehicle” means a motorized vehicle designed to be used primarily on a public highway for the transportation of persons or things, but does not include

(a) a fire-engine, bus, ambulance or utility truck; or

(b) any other special purpose motorized vehicle that contains significant special features that make it suitable for a specific purpose.

“mutual fund distribution entity”

« courtier de fonds mutuels »

“mutual fund distribution entity” means an entity whose principal activity is acting as a selling agent of units, shares or other interests in a mutual fund and acting as a collecting agent in the collection of payments for any such interests if

(a) the proceeds of the sales of any such interests, less any sales commissions and service fees, are paid to the mutual fund; and

(b) the existence of a sales commission and service fee in respect of the sale of any such interest is disclosed to the purchaser of the interest before the purchase of the interest.

“mutual fund entity”

« entité s’occupant de fonds mutuels »

“mutual fund entity” means an entity

(a) whose activities are limited to the investing of the funds of the entity so as to provide investment diversification and professional investment management to the holders of its securities; and

(b) whose securities entitle their holders to receive, on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in a part of its net assets, including a separate fund or trust account of the entity.

“participating share”

« action participante »

“participating share” means a share of a body corporate that carries the right to participate in the earnings of the body corporate to an unlimited degree and to participate in a distribution of the remaining property of the body corporate on dissolution.

“permitted entity”

« entité admissible »

“permitted entity” means an entity in which an association is permitted to acquire a substantial investment under section 390.

“prescribed subsidiary”

« filiale réglementaire »

“prescribed subsidiary” means a subsidiary that is one of a prescribed class of subsidiaries.

“real property brokerage entity”

« courtier immobilier »

“real property brokerage entity” means an entity that is primarily engaged in

(a) acting as an agent for vendors, purchasers, mortgagors, mortgagees, lessors or lessees of real property; and

(b) the provision of consulting or appraisal services in respect of real property.

“specialized financing entity”

« entité s’occupant de financement spécial »

“specialized financing entity” means a specialized financing entity as defined in the regulations.

Marginal note:Members of an association’s group

(2) For the purpose of this Part, a member of an association’s group is any of the following:

(a) an entity referred to in paragraph 390(1)(a) that controls the association;

(b) a subsidiary of the association or of an entity referred to in paragraph 390(1)(a) that controls the association;

(c) an entity in which the association, or an entity referred to in paragraph 390(1)(a) that controls the association, has a substantial investment; or

(d) a prescribed entity in relation to the association.

Marginal note:Non-application of Part

(3) This Part does not apply in respect of

(a) the holding of a security interest in real property, unless the security interest is prescribed under paragraph 403(a) to be an interest in real property; or

(b) the holding of a security interest in securities of an entity.

General Constraints on Investments

Marginal note:Investment standards

387. The directors of an association shall establish and the association shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.

Marginal note:Restriction on control and substantial investments

388. (1) Subject to subsections (2) to (4), no association shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.

Marginal note:Exception: indirect investments

(2) An association may, subject to Part XII, acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way of

(a) an acquisition of control of an entity referred to in any of paragraphs 390(1)(a) to (h), a specialized financing entity or a prescribed entity that controls or has a substantial investment in the entity; or

(b) an acquisition of shares or ownership interests in the entity by

(i) an entity referred to in any of paragraphs 390(1)(a) to (h), a specialized financing entity or a prescribed entity that is controlled by the association, or

(ii) an entity controlled by an entity referred to in any of paragraphs 390(1)(a) to (h), a specialized financing entity or a prescribed entity that is controlled by the association.

Marginal note:Exception: temporary investments, realizations and loan workouts

(3) An association may, subject to Part XII, acquire control of, or acquire or increase a substantial investment in, an entity by way of

(a) a temporary investment permitted by section 393;

(b) an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 394; or

(c) a realization of security permitted by section 395.

Marginal note:Exception: specialized financing regulations

(4) A retail association may, subject to Part XII, acquire control of, or hold, acquire or increase a substantial investment in, an entity other than a permitted entity if it does so in accordance with regulations made under paragraph 389(d) concerning specialized financing.

Marginal note:Exception: uncontrolled event

(5) An association is deemed not to contravene subsection (1) if the association acquires control of, or acquires or increases a substantial investment in, an entity solely as the result of an event not within the control of the association.

Marginal note:Regulations re limits

389. The Governor in Council may make regulations

(a) respecting the determination of the amount or value of loans, investments and interests for the purposes of this Part;

(b) respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by an association and its prescribed subsidiaries to or in a person and any persons connected with that person;

(c) specifying the classes of persons who are connected with any person for the purposes of paragraph (b); and

(d) concerning specialized financing for the purposes of subsection 388(4).

Subsidiaries and Equity Investments

Marginal note:Permitted investments

390. (1) Subject to subsections (4) to (6) and Part XII, an association may acquire control of, or acquire or increase a substantial investment in,

(a) an association;

(b) a bank or a bank holding company as that expression is defined in section 2 of the Bank Act;

(c) a body corporate to which the Trust and Loan Companies Act applies;

(d) an insurance company, a fraternal benefit society or an insurance holding company incorporated or formed by or under the Insurance Companies Act;

(e) a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;

(f) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;

(g) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; or

(h) an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.

Marginal note:Permitted investments

(2) Subject to subsections (3) to (6) and Part XII, an association may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (h), whose business is limited to one or more of the following:

(a) engaging in any financial service activity or in any other activity that a retail association is permitted to engage in under subsection 375(2) or section 376 or 377;

(b) acquiring or holding shares of, or ownership interests in, entities in which an association is permitted under this Part to hold or acquire;

(c) engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the association or any member of the association’s group:

(i) the association,

(ii) any member of the association’s group,

(iii) any entity that is primarily engaged in the business of providing financial services,

(iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or

(v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

(d) engaging in any activity that a retail association is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to

(i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by the association or any member of the association’s group, or

(ii) if a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;

(e) engaging in the activities referred to in the definition “mutual fund entity”, “mutual fund distribution entity” or “real property brokerage entity” in subsection 386(1); and

(f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

Marginal note:Restriction

(3) An association may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include

(a) activities that an association is not permitted to engage in under any of sections 378, 382 and 382.1;

(b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted either to an association under paragraph 376(1)(f) or to a retail association under subparagraph 376(1)(i)(ii);

(c) activities that an association is not permitted to engage in under section 381 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;

(d) acquiring control of or acquiring or holding a substantial investment in another entity unless

(i) in the case of an entity that is controlled by the association, the association itself would be permitted under this Part to acquire a substantial investment in the other entity, or

(ii) in the case of an entity that is not controlled by the association, the association itself would be permitted to acquire a substantial investment in the other entity under subsection (1) or (2) or 388(2), paragraph 388(3)(b) or (c) or subsection 388(4); or

(e) any prescribed activity.

Marginal note:Control

(4) Subject to subsection (8) and the regulations, an association may not acquire control of, or acquire or increase a substantial investment in,

(a) an entity referred to in any of paragraphs (1)(a) to (h), unless

(i) the association controls, within the meaning of paragraph 3(1)(e), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

(ii) the association is permitted by regulations made under paragraph 396(a) to acquire or increase the substantial investment;

(b) an entity whose business includes one or more of the activities referred to in paragraph (2)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the entity to material market or credit risk, including a finance entity, a factoring entity and a financial leasing entity, unless

(i) the association controls, within the meaning of paragraph 3(1)(e), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

(ii) the association is permitted by regulations made under paragraph 396(a) to acquire or increase the substantial investment; or

(c) an entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unless

(i) the association controls, within the meaning of paragraph 3(1)(e), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,

(ii) the association is permitted by regulations made under paragraph 396(a) to acquire or increase the substantial investment, or

(iii) subject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in paragraph (a) or (b) or an entity that is not a permitted entity.

Marginal note:Minister’s approval

(5) Subject to the regulations, an association may not, without the prior written approval of the Minister,

(a) acquire control of an entity referred to in any of paragraphs (1)(e) to (g) from a person who is not a member of the association’s group;

(b) acquire control of an entity referred to in paragraph (1)(h) or (4)(b), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (d) that is not a member of the association’s group:

(i) a factoring entity, or

(ii) a financial leasing entity;

(c) acquire control of, or acquire or increase a substantial investment in, an entity whose business includes one or more of the activities referred to in paragraph (2)(d);

(d) acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 376(1)(g) or (h); or

(e) acquire control of, or acquire or increase a substantial investment in, an entity engaging in an activity prescribed for the purposes of paragraph (2)(f).

Marginal note:Superintendent’s approval

(6) Subject to subsection (7) and the regulations, an association may not acquire control of, or acquire or increase a substantial investment in, an entity referred to in any of paragraphs (1)(e) to (g) and (4)(b) and (c), unless the association obtains the approval of the Superintendent.

Marginal note:Exception

(7) Subsection (6) does not apply in respect of a particular transaction if

(a) the association is acquiring control of an entity whose business includes an activity referred to in paragraph (2)(b), other than a specialized financing entity;

(b) the association is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity; or

(c) the Minister has approved the transaction under subsection (5) or is deemed to have approved it under subsection 391(1).

Marginal note:Control not required

(8) An association need not control an entity referred to in paragraph (1)(h), or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province, if the laws or customary business practices of the country under the laws of which the entity was incorporated or formed do not permit the association to control the entity.

Marginal note:Prohibition on giving up control in fact

(9) An association that, under subsection (4), controls an entity may not, without the prior written approval of the Minister, give up control, within the meaning of paragraph 3(1)(e), of the entity while it continues to control the entity.

Marginal note:Giving up control

(10) An association that, under subsection (4), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity if

(a) the association is permitted to do so by regulations made under paragraph 396(c); or

(b) the entity meets the conditions referred to in subparagraph (4)(c)(iii).

Marginal note:Subsections do not apply

(11) If an association controls, within the meaning of paragraph 3(1)(a), (b), (c) or (d), an entity, subsections (5) and (6) do not apply in respect of any subsequent increases by the association of its substantial investment in the entity so long as the association continues to control the entity.

Marginal note:Approval for indirect investments

391. (1) If an association obtains the approval of the Minister under subsection 390(5) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the association indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 390(5) or the Superintendent under subsection 390(6) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the association is deemed to have obtained the approval of the Minister or the Superintendent for that indirect acquisition or increase.

Marginal note:Approval for indirect investments

(2) If an association obtains the approval of the Superintendent under subsection 390(6) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase the association indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Superintendent under that subsection and that indirect acquisition or increase is disclosed to the Superintendent in writing before the approval is obtained, the association is deemed to have obtained the approval of the Superintendent for that indirect acquisition or increase.

Marginal note:Undertakings

392. (1) If an association controls a permitted entity, other than an entity referred to in any of paragraphs 390(1)(a) to (d), the association shall provide the Superintendent with any undertakings that the Superintendent may require regarding

(a) the activities of the entity; and

(b) access to information about the entity.

Marginal note:Undertakings

(2) If an association acquires control of an entity referred to in any of paragraphs 390(1)(e) to (g), the association shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.

Marginal note:Agreements with other jurisdictions

(3) The Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of any entity referred to in any of paragraphs 390(1)(e) to (g) in each province or in any other jurisdiction concerning any matters referred to in paragraphs (1)(a) and (b) or any other matter the Superintendent considers appropriate.

Marginal note:Access to records

(4) Despite any other provision of this Part, an association shall not control a permitted entity, other than an entity referred to in any of paragraphs 390(1)(a) to (d), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the association obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.

Exceptions and Exclusions

Marginal note:Temporary investments in entity

393. (1) Subject to subsection (4), an association may, by way of a temporary investment, acquire control of, or acquire or increase a substantial investment in, an entity but, within two years, or any other period that may be specified or approved by the Superintendent, after acquiring control or after acquiring or increasing the substantial investment, as the case may be, it shall do all things necessary to ensure that it no longer controls the entity or has a substantial investment in the entity.

Marginal note:Transitional

(2) Despite subsection (1), if an association that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 12 and the association subsequently increases that substantial investment by way of a temporary investment, the association shall, within two years, or any other period that is specified or approved by the Superintendent, after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

Marginal note:Extension

(3) The Superintendent may, in the case of any particular association that makes an application under this subsection, extend the period of two years, or the other period specified or approved by the Superintendent, that is referred to in subsection (1) or (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Temporary investment

(4) If an association, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Minister under subsection 390(5) is required, the association must, within 90 days after acquiring control or after acquiring or increasing the substantial investment,

(a) apply to the Minister for approval to retain control of the entity or to continue to hold the substantial investment in the entity for a period specified by the Minister or for an indeterminate period on any terms and conditions that the Minister considers appropriate; or

(b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the entity or does not have a substantial investment in the entity.

Marginal note:Indeterminate extension

(5) If an association, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Superintendent under subsection 390(6) is required, the Superintendent may, in the case of any particular association that makes an application under this subsection, permit the association to retain control of the entity or to continue to hold the substantial investment in the entity for an indeterminate period, on any terms and conditions that the Superintendent considers necessary.

Marginal note:Loan workouts

394. (1) Despite anything in this Part, if an association or any of its subsidiaries has made a loan to an entity and, under the terms of the agreement between the association, or any of its subsidiaries, and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the association may acquire

(a) if the entity is a body corporate, all or any of the shares of the body corporate;

(b) if the entity is an unincorporated entity, all or any of the ownership interests in the entity;

(c) all or any of the shares or all or any of the ownership interests in any entity that is an affiliate of the entity; or

(d) all or any of the shares of a body corporate that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity or any of its affiliates.

Marginal note:Obligation of association

(2) If an association acquires shares or ownership interests in an entity under subsection (1), the association shall, within five years after acquiring them, do all things necessary to ensure that the association does not control the entity or have a substantial investment in the entity.

Marginal note:Transitional

(3) Despite subsection (1), if an association that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 12 and the association later increases that substantial investment by way of an investment made under subsection (1), the association shall, within five years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

Marginal note:Extension

(4) The Superintendent may, in the case of any particular association that makes an application under this subsection, extend the period of five years referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Exception — entities controlled by foreign governments

(5) Despite anything in this Part, if an association has made a loan to, or holds a debt obligation of, the government of a foreign country or an entity controlled by the government of a foreign country and, under the terms of the agreement between the association and that government or the entity, as the case may be, and any other documents governing the terms of the loan or debt obligation, a default has occurred, the association may acquire all or any of the shares of, or ownership interests in, that entity or in any other entity designated by that government, if the acquisition is part of a debt restructuring program of that government.

Marginal note:Time for holding shares

(6) If an association acquires any shares or ownership interests under subsection (5), the association may, on any terms and conditions that the Superintendent considers appropriate, hold those shares or ownership interests for an indeterminate period or for any other period that the Superintendent may specify.

Marginal note:Exception

(7) If, under subsection (1), an association acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 390, the association may retain control of the entity or continue to hold the substantial investment for an indeterminate period, if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2) or (3), including any extension of it granted under subsection (4).

Marginal note:Realizations

395. (1) Despite anything in this Act, an association may acquire

(a) an investment in a body corporate,

(b) an interest in an unincorporated entity, or

(c) an interest in real property,

if the investment or interest is acquired through the realization of a security interest held by the association or any of its subsidiaries.

Marginal note:Disposition

(2) Subject to subsection 81(2), if an association acquires control of, or a substantial investment in, an entity by way of the realization of a security interest held by the association or any of its subsidiaries, the association shall, within five years after the day on which the substantial investment is acquired, do all things necessary, or cause its subsidiary to do all things necessary, as the case may be, to ensure that the association no longer controls the entity or has a substantial investment in the entity.

Marginal note:Transitional

(3) Despite subsection (2), if an association that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 12 and the association later increases that substantial investment by way of a realization of a security interest under subsection (1), the association shall, within five years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

Marginal note:Extension

(4) The Superintendent may, in the case of any particular association that makes an application under this subsection, extend the period of five years referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Exception

(5) If, under subsection (1), an association acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 390, the association may retain control of the entity or continue to hold the substantial investment for an indeterminate period, if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2) or (3), including any extension of it granted under subsection (4).

Marginal note:Regulations restricting ownership

396. The Governor in Council may make regulations

(a) for the purposes of subsection 390(4), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which that subsection does not apply or the associations or other entities in respect of which that subsection does not apply, including prescribing associations or other entities on the basis of the activities they engage in;

(b) for the purposes of subsection 390(5) or (6), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the associations or other entities in respect of which either of those subsections does not apply, including prescribing associations or other entities on the basis of the activities they engage in;

(c) for the purposes of subsection 390(10), permitting an association to give up control of an entity; and

(d) restricting the ownership by an association of shares of a body corporate or of ownership interests in an unincorporated entity under sections 390 to 395 and imposing terms and conditions applicable to associations that own such shares or interests.

Portfolio Limits

Marginal note:Exclusion from portfolio limits

397. (1) Subject to subsection (3), the value of all loans, investments and interests acquired by an association and any of its prescribed subsidiaries under section 394 or as a result of a realization of a security interest is not to be included in calculating the value of loans, investments and interests of the association and its prescribed subsidiaries under sections 398 to 402

(a) for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; and

(b) for a period of five years after the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.

Marginal note:Extension

(2) The Superintendent may, in the case of any particular association, extend any period referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

Marginal note:Exception

(3) Subsection (1) does not apply in respect of an investment or interest described in that subsection if the investment or interest is defined by a regulation made under section 403 to be an interest in real property and

(a) the association or the subsidiary acquired the investment or interest as a result of the realization of a security interest securing a loan that was defined by a regulation made under section 403 to be an interest in real property; or

(b) the association or the subsidiary acquired the investment or interest under section 394 as a result of a default referred to in that section in respect of a loan that was defined by a regulation made under section 403 to be an interest in real property.

Commercial Loans

Marginal note:Lending limit: regulatory capital of $25 million or less

398. An association with twenty-five million dollars or less of regulatory capital shall not, and shall not permit its prescribed subsidiaries to,

(a) make or acquire a commercial loan, or

(b) acquire control of a permitted entity that holds commercial loans,

if the aggregate value of all commercial loans held by the association and its prescribed subsidiaries exceeds, or the acquisition or making of the commercial loan or the acquisition of control of the entity would cause the aggregate value of all commercial loans held by the association and its prescribed subsidiaries to exceed, 5 % of the total assets of the association.

Marginal note:Lending limit: regulatory capital over $25 million

399. An association with more than twenty-five million dollars of regulatory capital may

(a) make or acquire commercial loans, or

(b) acquire control of a permitted entity that holds commercial loans,

if the aggregate value of all commercial loans held by the association and its prescribed subsidiaries would thereby exceed 5 % of the total assets of the association only with the prior approval in writing of the Superintendent and in accordance with any terms and conditions that the Superintendent may specify.

Meaning of “total assets”

400. For the purposes of sections 398 and 399, “total assets”, in respect of an association, has the meaning given to that expression by the regulations.

Real Property

Marginal note:Limit on total property interest

401. An association shall not, and shall not permit its prescribed subsidiaries to, purchase or otherwise acquire an interest in real property or make an improvement to any real property in which the association or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the association in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the association.

Equities

Marginal note:Limits on equity acquisitions

402. An association shall not, and shall not permit its prescribed subsidiaries to,

(a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of a permitted entity in which the association has, or by virtue of the acquisition would have, a substantial investment, or

(b) acquire control of an entity that holds shares or ownership interests referred to in paragraph (a),

if the aggregate value of

(c) all participating shares, excluding participating shares of permitted entities in which the association has a substantial investment, and

(d) all ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the association has a substantial investment,

beneficially owned by the association and its prescribed subsidiaries exceeds, or the purchase or acquisition would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the association.

Miscellaneous

Marginal note:Regulations

403. For the purposes of this Part, the Governor in Council may make regulations

(a) defining the interests of an association in real property;

(b) determining the method of valuing those interests; or

(c) exempting classes of associations from the application of sections 397 to 402.

Marginal note:Divestment order

404. (1) The Superintendent may, by order, direct an association to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Part.

Marginal note:Divestment order

(2) If, in the opinion of the Superintendent,

(a) an investment by an association or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the association to control the body corporate or the unincorporated entity, or

(b) the association or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put before

(i) the board of directors of a body corporate, or

(ii) a similar group or committee of an unincorporated entity,

or whereby no proposal may be approved except with the consent of the association, the entity it controls or the nominee,

the Superintendent may, by order, require the association, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the association no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).

Marginal note:Divestment order

(3) If

(a) an association

(i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 392(1), (2) or (4), or

(ii) is in default of an undertaking referred to in subsection 392(1) or (2) and the default is not remedied within ninety days after the day of receipt by the association of a notice from the Superintendent of the default, or

(b) a permitted entity referred to in subsection 392(4) is in default of an undertaking referred to in subsection 392(4) and the default is not remedied within ninety days after the day of receipt by the association of a notice from the Superintendent of the default,

the Superintendent may, by order, require the association, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the association no longer has a substantial investment in the entity to which the undertaking relates.

Marginal note:Exception

(4) Subsection (2) does not apply in respect of an entity in which an association has a substantial investment permitted by this Part.

Marginal note:Deemed temporary investment

405. If an association controls or has a substantial investment in an entity as permitted by this Part and the association becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 390(5) or (6), the association is deemed to have acquired, on the day the association becomes aware of the change, a temporary investment in respect of which section 393 applies.

Marginal note:Asset transactions

406. (1) An association shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person if

A + B > C

where


is the value of the assets;


is the total value of all assets that the association and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; and


is ten per cent of the total value of the assets of the association, as shown in the last annual statement of the association prepared before the acquisition or transfer.

Marginal note:Restriction

(2) The prohibition in subsection (1) does not apply in respect of a transaction or series of transactions between an association and a member of the association.

Marginal note:Exception

(3) The prohibition in subsection (1) does not apply in respect of

(a) an asset that is a debt obligation referred to in subparagraphs (b)(i) to (vi) of the definition “commercial loan” in subsection 386(1); or

(b) a transaction or series of transactions by an association with another financial institution as a result of the association’s participation in one or more syndicated loans with that financial institution.

Marginal note:Exception

(4) The approval of the Superintendent is not required if

(a) the association sells assets under a sale agreement that is approved by the Minister under section 233.5; or

(b) the association or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Part VIII or subsection 390(5) is required or the approval of the Superintendent under subsection 390(6) is required.

Marginal note:Value of assets

(5) For the purposes of “A” in subsection (1), the value of the assets is

(a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the association after the acquisition, the fair market value of the assets; and

(b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the association prepared before the transfer, or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the association before the transfer, the value of the assets as stated in the annual statement.

Marginal note:Total value of all assets

(6) For the purposes of subsection (1), the total value of all assets that the association or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the association, the fair market value of the assets of the entity at the date of the acquisition.

Marginal note:Total value of all assets

(7) For the purposes of subsection (1), the total value of all assets that the association or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the association prepared before the transfer, or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the association before the transfer, the value of the assets of the entity as stated in the annual statement.

Marginal note:Transitional

407. Nothing in this Part requires

(a) the termination of a loan made before February 7, 2001;

(b) the termination of a loan made after that date as a result of a commitment made before that date;

(c) the disposal of an investment made before that date; or

(d) the disposal of an investment made after that date as a result of a commitment made before that date.

But if the loan or investment would be precluded or limited by this Part, the amount of the loan or investment may not, except as provided in subsections 393(2), 394(3) and 395(3), be increased after that date.

Marginal note:Saving

408. A loan or investment referred to in section 407 is deemed not to be prohibited by the provisions of this Part.

Marginal note:1997, c. 15, s. 151(1)

315. (1) Paragraph 410(1)(b) of the Act is replaced by the following:

(b) is a director or senior officer of the association or of a body corporate that controls the association;

(2) Subsection 410(1) of the Act is amended by striking out the word “or” at the end of paragraph (d) and by adding the following after paragraph (d):

(d.1) is an entity in which a person who controls the association has a substantial investment; or

(3) Section 410 of the Act is amended by adding the following after subsection (1):

Marginal note:Related party of retail association

(1.1) Subject to the regulations, for the purposes of this Part, a person is a related party of a retail association if the person is

(a) a member of the association or of an association that controls, or has a significant interest in, the association;

(b) a director or senior officer of the association or of a body corporate that controls the association;

(c) the spouse or common-law partner, or a child who is less than eighteen years of age, of a person referred to in paragraph (a) or (b);

(d) an entity that is controlled, within the meaning of section 3, determined without regard to paragraph 3(1)(e), by a person referred to in any of paragraphs (a) to (c); or

(e) a person, or a member of a class of persons, designated under subsection (2) or (3) as, or deemed under subsection (4) to be, a related party of the association.

Marginal note:Exception — subsidiaries and substantial investments of associations

(1.2) If an entity in which an association has a substantial investment would, but for this subsection, be a related party of the association only because a person who controls the association controls the entity or has a substantial investment in the entity, and the person does not control the entity or have a substantial investment in the entity otherwise than through the person’s controlling interest in the association, the entity is not a related party of the association.

316. (1) Paragraph 411(2)(a) of the Act is amended by adding the following after subparagraph (ii):

(ii.1) in exchange for shares of a body corporate that has been continued as an association under Part III,

(2) Paragraph 411(2)(a) of the Act is amended by striking out the word “or” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

(iii.1) by way of consideration in accordance with the terms of a sale agreement under Part VII, or

(3) Section 411 of the Act is amended by adding the following after subsection (3):

Marginal note:Exception for holding body corporate

(4) Subject to subsection (5), a holding body corporate of an association is not a related party of the association.

Marginal note:Holding body corporate of a retail association

(5) Unless the regulations provide otherwise, a holding body corporate of a retail association is a related party of the retail association.

Marginal note:Substantial investment — related party exception

(6) If a holding body corporate of an association is, because of subsection (4), not a related party of the association, any entity in which the holding body corporate has a substantial investment is not a related party of the association if no related party of the association has a substantial investment in the entity otherwise than through the control of the holding body corporate.

317. Section 418 of the Act is amended by adding the following after subsection (3):

Marginal note:Asset transactions in restructuring

(3.1) Despite any of the provisions of subsections (1) and (2), an association may acquire any assets from, or dispose of any assets to, a related party of the association as part of, or in the course of, a restructuring, if the acquisition or disposition has been approved in writing by the Superintendent.

318. (1) Subsection 419(1) of the Act is amended by adding the following after paragraph (a):

(a.1) in the case of a retail association, involves, subject to subsection (4), the provision of services, other than loans or guarantees, normally provided to the public by the association in the ordinary course of business;

(2) Section 419 of the Act is amended by adding the following after subsection (3):

Marginal note:Loans or guarantees not included

(4) The provision of services, for the purposes of paragraph (1)(a.1), does not include the making of loans or guarantees.

Marginal note:1997, c. 15, s. 153(1); 2000, c. 12, par. 86(b)

319. (1) Subparagraphs 420(1)(a)(i) and (ii) of the English version of the Act are replaced by the following:

(i) a director or senior officer of the association or of an entity that controls the association, or

(ii) the spouse or common-law partner, or a child who is less than eighteen years of age, of a director or senior officer of the association or of an entity that controls the association.

Marginal note:1997, c. 15, s. 153(1); 2000, c. 12, par. 86(c)

(2) Subparagraphs 420(1)(b)(i) and (ii) of the English version of the Act are replaced by the following:

(i) a director or senior officer of the association or of an entity that controls the association, or

(ii) the spouse or common-law partner, or a child who is less than eighteen years of age, of a director or senior officer of the association or of an entity that controls the association.

Marginal note:1997, c. 15, s. 153(2)

(3) Subsection 420(2) of the Act is replaced by the following:

Marginal note:Loans to full-time senior officers

(2) An association may, with respect to a related party of the association referred to in subsection (1) who is a full-time senior officer of the association, make, take an assignment of or otherwise acquire a loan to the related party only if the aggregate principal amount of all outstanding loans to the related party that are held by the association and its subsidiaries, together with the principal amount of the proposed loan, does not exceed the greater of twice the annual salary of the related party and $100,000.

Marginal note:1997, c. 15, s. 153(3)

(4) Subsection 420(5) of the Act is replaced by the following:

Marginal note:Preferred terms — loan to spouse or common-law partner of senior officer

(4.1) Despite section 425, an association may make a loan referred to in paragraph 415(b) to the spouse or common-law partner of a senior officer of the association on terms and conditions more favourable than market terms and conditions, as defined in subsection 425(2), by the association if those terms and conditions have been approved by the conduct review committee of the association.

Marginal note:Preferred terms — other financial services

(5) Despite section 425, an association may offer financial services, other than loans or guarantees, to a senior officer of the association, or to the spouse or common-law partner, or to a child who is less than eighteen years of age, of a senior officer of the association, on terms and conditions more favourable than market terms and conditions, as defined in subsection 425(2), if

(a) the financial services are offered by the association to employees of the association on those favourable terms and conditions; and

(b) the conduct review committee of the association has approved the practice of making those financial services available on those favourable terms and conditions to senior officers of the association or to the spouses or the common-law partners, or to the children under eighteen years of age, of senior officers of the association.

Marginal note:1997, c. 15, s. 155

320. Section 422 of the Act is replaced by the following:

Marginal note:Margin loans

422. The Superintendent may establish terms and conditions with respect to the making by an association of margin loans to a director or senior officer of the association.

321. Subsection 425(2) of the Act is replaced the following:

Meaning of “market terms and conditions”

(2) For the purposes of subsection (1), “market terms and conditions” means

(a) in respect of a service or a loan facility or a deposit facility offered to the public by the association in the ordinary course of business, terms and conditions that are no more or less favourable than those offered to the public by the association in the ordinary course of business; and

(b) in respect of any other transaction,

(i) terms and conditions, including those relating to price, rent or interest rate, that might reasonably be expected to apply in a similar transaction in an open market under conditions requisite to a fair transaction between parties who are at arm’s length and who are acting prudently, knowledgeably and willingly, or

(ii) if the transaction is one that would not reasonably be expected to occur in an open market between parties who are at arm’s length, terms and conditions, including those relating to price, rent or interest rate, that would reasonably be expected to provide the association with fair value, having regard to all the circumstances of the transaction, and that would be consistent with the parties to the transaction acting prudently, knowledgeably and willingly.

322. Section 430 of the Act is replaced by the following:

Marginal note:Voidable contracts

430. (1) If an association enters into a transaction that it is prohibited from entering into by this Part, the association or the Superintendent may apply to a court for an order setting aside the transaction or for any other appropriate remedy, including an order directing that the related party of the association involved in the transaction account to the association for any profit or gain realized or that any director or senior officer of the association who authorized the transaction compensate the association for any loss or damage incurred by the association.

Marginal note:Time limit

(2) An application under subsection (1) in respect of a particular transaction may only be made within the period of three months following the day the notice referred to in section 429 in respect of the transaction is given to the Superintendent or, if no such notice is given, the day the Superintendent becomes aware of the transaction.

Marginal note:Certificate

(3) For the purposes of subsection (2), a document purporting to have been issued by the Superintendent, certifying the day on which the Superintendent became aware of the transaction, shall, in the absence of evidence to the contrary, be received in evidence as conclusive proof of that fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.

323. The title of Part XIII of the Act is replaced by the following:

REGULATION OF ASSOCIATIONS — SUPERINTENDENT
324. The Act is amended by adding the following after section 431:

Marginal note:Report of unclaimed deposits

431.1 (1) A retail association shall, within sixty days after the end of each calendar year, provide the Superintendent with a return, in the form that the Superintendent may determine, as of the end of that calendar year, in respect of all deposits made with the association in Canada in Canadian currency for which no transaction has taken place and no statement of account has been requested or acknowledged by the depositors during a period of nine years or more.

Marginal note:Period

(2) The period referred to in subsection (1) shall be calculated

(a) in the case of a deposit made for a fixed period, from the day on which the fixed period terminated, and

(b) in the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the depositor, whichever is later,

until the date of the return under that subsection.

Marginal note:Content of return

(3) A return made under subsection (1) must show, insofar as is known to the association,

(a) the name of each depositor in whose name each deposit is held;

(b) the recorded address of each such depositor;

(c) the outstanding amount of each deposit; and

(d) the branch of the association at which the last transaction took place in respect of the deposit, and the date of that transaction.

Marginal note:Amounts under one hundred dollars

(4) If the total outstanding amount of deposits in the name of a depositor is less than one hundred dollars, the association may omit the particulars in respect thereof required by subsection (3) from the return required by subsection (1).

Marginal note:Return on unclaimed bills of exchange

431.2 (1) A retail association shall, within sixty days after the end of each calendar year, provide the Superintendent with a return, in the form that the Superintendent may determine, as of the end of that calendar year, in respect of all negotiable instruments (including instruments drawn by one branch of the association on another branch of the association but not including instruments issued in payment of a dividend on the capital of the association) payable in Canada in Canadian currency that have been issued, certified or accepted by the association at branches of the association in Canada and for which no payment has been made for a period of nine years or more calculated from the date of issue, certification, acceptance or maturity, whichever is the latest, until the date of the return.

Marginal note:Content of return

(2) A return made under subsection (1) must show, insofar as is known to the association,

(a) the name of each person to whom or at whose request each instrument was issued, certified or accepted;

(b) the recorded address of each such person;

(c) the name of the payee of each instrument;

(d) the amount and date of each instrument;

(e) the name of the place where each instrument was payable; and

(f) the branch of the association at which each instrument was issued, certified or accepted.

Marginal note:Amounts under one hundred dollars

(3) If the amount of an instrument in respect of which subsection (1) applies is less than one hundred dollars, the association may omit the particulars in respect thereof required by subsection (2) from the return required by subsection (1).

Marginal note:Money orders

(4) A retail association may omit from a return required by subsection (1) the particulars required by subsection (2) in respect of any money order in respect of which subsection (1) applies.

Marginal note:Total to be reported

431.3 If a retail association, under subsection 431.1(4) or 431.2(3) or (4), omits from a return required by subsection 431.1(1) or 431.2(1) the particulars of any deposit or instrument, the total of the amounts of all deposits or instruments that have been so omitted must be reported in the return.

325. Sections 433 and 434 of the Act are replaced by the following:

Marginal note:Copy of by-laws

433. An association shall send to the Superintendent within thirty days after the coming into effect of a by-law or an amendment to a by-law, a copy of the by-law or amendment.

Marginal note:Register of associations

434. (1) The Superintendent shall, in respect of each association, cause a register to be maintained containing a copy of

(a) the incorporating instrument of the association; and

(b) the information referred to in paragraphs 432(1)(a) and (c) to (g) contained in the latest return sent to the Superintendent under section 432.

Marginal note:Form

(2) The register may be maintained in

(a) a bound or loose-leaf form or in a photographic film form; or

(b) a system of mechanical or electronic data processing or any other information storage device that is capable of reproducing any required information in intelligible written form within a reasonable time.

Marginal note:Access

(3) Persons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.

Marginal note:Evidence

(4) A statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent.

326. (1) Subsection 435(1) of the Act is replaced by the following:

Marginal note:Confidential information

435. (1) Subject to section 436, all information regarding the business or affairs of an association, or regarding a person dealing with an association, that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information, is confidential and shall be treated accordingly.

(2) Subsection 435(2) of the Act is amended by striking out the word “and” at the end of paragraph (a.1) and by adding the following after paragraph (a.1):

(a.2) to the Canada Deposit Insurance Corporation for purposes related to its operation, and

327. The Act is amended by adding the following after section 435.1:

Marginal note:Publication

435.2 The Superintendent shall cause to be published in the Canada Gazette the information contained in each of the returns made under sections 431.1 and 431.2 within sixty days after the expiration of the time provided by this Act for providing the return.

Marginal note:1996, c. 6, s. 57

328. Section 436.3 of the Act is replaced by the following:

Marginal note:Report respecting disclosure

436.3 The Superintendent shall prepare a report, to be included in the report referred to in section 40 of the Office of the Superintendent of Financial Institutions Act, respecting the disclosure of information by associations and describing the state of progress made in enhancing the disclosure of information in the financial services industry.

329. Subsection 437(1) of the Act is replaced by the following:

Marginal note:Examination of associations

437. (1) The Superintendent, from time to time, but at least once in each calendar year, shall make or cause to be made any examination and inquiry into the business and affairs of each association that the Superintendent considers to be necessary or expedient to determine whether the association is complying with the provisions of this Act and whether the association is in a sound financial condition and, after the conclusion of each examination and inquiry, shall report on it to the Minister.

330. The Act is amended by adding the following after the heading “Remedial Powers” after section 438:

Prudential Agreements

Marginal note:Prudential agreement

438.1 The Superintendent may enter into an agreement, called a “prudential agreement”, with an association for the purposes of implementing any measure designed to maintain or improve its safety and soundness.

331. Subsection 441(1) of the Act is replaced by the following:

Marginal note:Court enforcement

441. (1) Where an association or person

(a) is contravening or has failed to comply with a prudential agreement entered into under section 438.1 or a direction of the Superintendent issued to the association or person pursuant to subsection 439(1) or (3),

(b) is contravening this Act, or

(c) has omitted to do any thing under this Act that is required to be done by or on the part of the association or person,

the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the association or person to comply with the prudential agreement or the direction, cease the contravention or do any thing that is required to be done, and on such application the court may so order and make any other order it thinks fit.

Marginal note:1996, c. 6, s. 59

332. The heading before section 441.1 of the Act is replaced by the following:

Disqualification and Removal of Directors or Senior Officers

Meaning of “senior officer”

441.01 In sections 441.1 and 441.2, “senior officer” means the chief executive officer, secretary, treasurer, controller of an association or any other officer reporting directly to the association’s board of directors or chief executive officer.

Marginal note:1996, c. 6, s. 59

333. (1) Paragraphs 441.1(1)(a) and (b) of the Act are replaced by the following:

(a) that has been notified by the Superintendent that this section applies to it where the association is subject to measures designed to maintain or improve its safety and soundness, which measures

(i) have been specified by the Superintendent by way of conditions or limitations in respect of the order approving the commencement and carrying on of the association’s business, or

(ii) are contained in a prudential agreement entered into under section 438.1 or an undertaking given by the association to the Superintendent; or

(b) that is the subject of a direction made under section 439 or an order made under subsection 409(3).

Marginal note:1996, c. 6, s. 59

(2) Paragraph 441.1(2)(b) of the Act is replaced by the following:

(b) each person who has been selected by the association for appointment as a senior officer,

Marginal note:1996, c. 6, s. 59

(3) The portion of subsection 441.1(2) of the French version of the Act after paragraph (b) is replaced by the following:

Elle lui communique également les renseignements personnels qui les concernent et les renseignements sur leur expérience et leur dossier professionnel qu’il peut exiger.

Marginal note:1996, c. 6, s. 59

(4) Subsections 441.1(4) and (5) of the Act are replaced by the following:

Marginal note:Disqualification

(4) If the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold that position, the Superintendent may, by order, disqualify the person from being elected or appointed as a director of an association or from being appointed as a senior officer.

Marginal note:Risk of prejudice

(4.1) In forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors and creditors of the association would likely be prejudiced if the person were to take office or continue to hold office, as the case may be.

Marginal note:Representations may be made

(5) The Superintendent must in writing notify the person concerned and the association of any action that the Superintendent proposes to take under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

334. The Act is amended by adding the following after section 441.1:

Marginal note:Removal of directors or senior officers

441.2 (1) The Superintendent may, by order, remove a person from office as a director or senior officer of an association if the Superintendent is of the opinion that the person is not suitable to hold that office

(a) on the basis of the competence, business record, experience, conduct or character of the person; or

(b) because the person has contravened or, by action or negligence, has contributed to the contravention of

(i) this Act or the regulations made under it,

(ii) a direction made under section 439,

(iii) an order made under subsection 409(3),

(iv) a condition or limitation in respect of the order approving the commencement and carrying on of the association’s business, or

(v) a prudential agreement entered into under section 438.1 or an undertaking given by the association to the Superintendent.

Marginal note:Risk of prejudice

(2) In forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors and creditors of the association have been or are likely to be prejudiced by the person’s holding office as a director or senior officer.

Marginal note:Representations may be made

(3) The Superintendent must in writing notify the person concerned and the association of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.

Marginal note:Suspension

(4) If the Superintendent is of the opinion that the public interest may be prejudiced by the director or senior officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the director or senior officer. The suspension may not extend beyond 10 days after the expiration of that period.

Marginal note:Notice of order

(5) The Superintendent shall, without delay, notify the director or senior officer, as the case may be, and the association of a removal order or suspension order.

Marginal note:Consequences of removal order

(6) The director or senior officer, as the case may be, ceases to hold that office as of the date the removal order is made or any later date specified in the order.

Marginal note:Appeal

(7) The director or senior officer, as the case may be, or the association may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.

Marginal note:Powers of Federal Court

(8) The Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.

Marginal note:Order not stayed by appeal

(9) A removal order is not stayed by an appeal.

Marginal note:1996, c. 6, s. 60

335. (1) Paragraphs 442(1.1)(b) to (f) of the Act are replaced by the following:

(c) the assets of the association are not, in the opinion of the Superintendent, sufficient to give adequate protection to its depositors and creditors;

(d) any asset appearing on the books or records of the association or held under the administration of the association is not, in the opinion of the Superintendent, satisfactorily accounted for;

(e) the regulatory capital of the association has, in the opinion of the Superintendent, reached a level or is eroding in a manner that may detrimentally affect its depositors and creditors;

(f) the association has failed to comply with an order of the Superintendent under paragraph 409(3)(a);

(g) in the case of a retail association, the association’s deposit insurance has been terminated by the Canada Deposit Insurance Corporation; or

(h) in the opinion of the Superintendent, any other state of affairs exists in respect of the association that may be materially prejudicial to the interests of the depositors or creditors of the association or to those of the owners of any assets under the association’s administration.

(2) Subsection 442(2) of the Act is replaced by the following:

Marginal note:Objectives of Superintendent

(2) If, pursuant to subsection (1), the Superintendent has control of the assets of an association referred to in that subsection, the Superintendent may do all things necessary or expedient to protect the rights and interests of the depositors and creditors of the association.

336. The Act is amended by adding the following after section 452:

PART XIII.1 REGULATION OF RETAIL ASSOCIATIONS — COMMISSIONER

Marginal note:Required information

452.1 A retail association shall provide the Commissioner with the information at the times and in the form that the Commissioner may require for the purposes of the administration of the Financial Consumer Agency of Canada Act and the consumer provisions.

Marginal note:Confidential information

452.2 (1) Subject to subsection (2), information regarding the business or affairs of a retail association or regarding persons dealing with one that is obtained by the Commissioner or by any person acting under the direction of the Commissioner, in the course of the exercise or performance of powers, duties and functions referred to in subsection 5(1) of the Financial Consumer Agency of Canada Act, and any information prepared from that information, is confidential and shall be treated accordingly.

Marginal note:Disclosure permitted

(2) If the Commissioner is satisfied that the information will be treated as confidential by the agency, body or person to whom it is disclosed, subsection (1) does not prevent the Commissioner from disclosing it

(a) to any government agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;

(b) to any other agency or body that regulates or supervises financial institutions, for purposes related to that regulation or supervision;

(c) to the Canada Deposit Insurance Corporation, for purposes related to its operation; and

(d) to the Deputy Minister of Finance or any officer of the Department of Finance authorized in writing by the Deputy Minister of Finance or to the Governor of the Bank of Canada or any officer of the Bank of Canada authorized in writing by the Governor of the Bank of Canada, for the purposes of policy analysis related to the regulation of financial institutions.

Marginal note:Examination

452.3 (1) The Commissioner, from time to time, but at least once in each calendar year, shall make or cause to be made any examination and inquiry that the Commissioner considers necessary for the purposes of satisfying the Commissioner that the applicable consumer provisions are being complied with and, after the conclusion of each examination and inquiry, shall report on it to the Minister.

Marginal note:Access to records of retail association

(2) The Commissioner or a person acting under the Commissioner’s direction in carrying out his or her duties under subsection (1)

(a) has a right of access to any records, including electronic records, of a retail association; and

(b) may require the directors or officers of a retail association to provide information and explanations, to the extent that they are reasonably able to do so, in respect of any matter subject to examination or inquiry under subsection (1).

Marginal note:Power of Commissioner on inquiry

452.4 The Commissioner, in carrying out his or her duties in relation to consumer provisions, has all the powers of a person appointed as a commissioner under Part II of the Inquiries Act for the purpose of obtaining evidence under oath, and may delegate those powers to any person acting under the Commissioner’s direction.

Marginal note:Compliance agreement

452.5 The Commissioner may enter into an agreement, called a “compliance agreement”, with a retail association for the purposes of implementing any measure designed to further compliance by it with the consumer provisions.

337. The Act is amended by adding the following after section 459.1:

Approvals: Terms, Conditions and Undertakings

Definition of “approval”

459.2 (1) In this section, “approval” includes any consent, order, exemption, extension or other permission granted by the Minister or the Superintendent under this Act, and includes the issuance of letters patent.

Marginal note:Minister — terms, conditions and undertakings

(2) In addition to any other action that may be taken under this Act, the Minister may, in granting an approval, impose such terms and conditions or require such undertaking as the Minister considers necessary, including any terms, conditions or undertaking specified by the Superintendent to maintain or improve the safety and soundness of any financial institution regulated under an Act of Parliament and to which the approval relates or that may be affected by it.

Marginal note:Superintendent — terms, conditions and undertakings

(3) In addition to any other action that may be taken under this Act, the Superintendent may, in granting an approval, impose such terms and conditions or require such undertaking as the Superintendent considers necessary.

Marginal note:Effect of non-compliance on approval

(4) Unless otherwise expressly provided in this Act, a failure to comply with a term or condition or an undertaking imposed or required under any provision of this Act does not invalidate the approval to which the term, condition or undertaking relates.

Marginal note:Non-compliance

(5) In addition to any other action that may be taken under this Act, in case of non-compliance by a person with a term, condition or undertaking imposed or required under any provision of this Act, the Minister or Superintendent, as the case may be, may

(a) revoke, suspend or amend the approval to which the term, condition or undertaking relates; or

(b) apply to a court for an order directing the person to comply with the term, condition or undertaking, and on such application the court may so order and make any other order it thinks fit.

Marginal note:Representations

(6) Before taking any action under subsection (5), the Minister or the Superintendent, as the case may be, shall afford the person concerned a reasonable opportunity to make representations.

Marginal note:Revocation, suspension or amendment

(7) At the request of the person concerned, the Minister or the Superintendent, as the case may be, may revoke, suspend or amend any terms or conditions imposed by him or her or may revoke or suspend an undertaking given to him or her or approve its amendment.

338. The Act is amended by adding the following after section 461:

Applications to Superintendent

Marginal note:Content of applications

461.1 (1) The following applications to the Superintendent must contain the information, material and evidence that the Superintendent may require:

(a) applications for approval under subsection 74(1), 80(2), 82(4), 86(5), 87(1), 177(1), 221(2), 385(1), 390(6) or (10), 393(1) or (2) or 406(1), subparagraph 411(2)(a)(iv), section 414 or subsection 418(3) or (3.1);

(b) applications for consent under subsection 79(1);

(c) applications for exemptions under subsection 166.05(3) or 242(1); and

(d) applications for extensions of time under subsection 393(3) or (5), 394(4) or 395(4).

Marginal note:Receipt

(2) Without delay after receiving the application, the Superintendent shall send a receipt to the applicant certifying the date on which it was received.

Marginal note:Notice of decision to applicant

(3) Subject to subsection (4), the Superintendent shall, within a period of thirty days after the receipt of the application, send to the applicant

(a) a notice approving the application, subject to any terms and conditions that the Superintendent considers appropriate; or

(b) if the Superintendent is not satisfied that it should be approved, a notice to that effect.

Marginal note:Extension of period

(4) If the Superintendent is unable to complete the consideration of the application within the period referred to in subsection (3), the Superintendent shall, within that period, send a notice to the applicant informing the applicant that the Superintendent has extended the period for a further period set out in the notice.

Marginal note:Deemed approval

(5) If the applicant does not receive the notice required by subsection (3) and, where applicable, subsection (4), within the required period, the Superintendent is deemed to have approved the application and granted the approval, consent, extension or exemption to which the application relates, regardless of whether the approval, consent, extension or exemption is to be in writing or not.

339. Section 463 of the Act is amended by striking out the word “and” at the end of paragraph (i) and by adding the following after paragraph (i):

(i.1) respecting the determination of the equity of an association;

(i.2) respecting persons who are a related party to a retail association; and

340. The Act is amended by adding the following after section 467:

Marginal note:Limitation period

467.1 (1) Proceedings by way of summary conviction in respect of an offence under a provision of this Act may be commenced at any time within, but not later than, two years after the day on which the subject-matter of the proceedings became known, in the case of an offence under a consumer provision, to the Commissioner and, in any other case, to the Superintendent.

Marginal note:Certificate of Superintendent or Commissioner

(2) A document appearing to have been issued by the Superintendent or Commissioner, as the case may be, certifying the day on which the subject-matter of any proceedings became known to the Superintendent or Commissioner is admissible in evidence without proof of the signature or official character of the person appearing to have signed it and is, in the absence of evidence to the contrary, proof of the matter asserted in it.

341. Section 469 of the Act is replaced by the following:

Marginal note:Compliance or restraining order

469. (1) If an association or any director, officer, employee or agent of an association does not comply with any provision of this Act or the regulations other than a consumer provision, or of the incorporating instrument or any by-law of the association, the Superintendent, any complainant or any creditor of the association may, in addition to any other right that that person has, apply to a court for an order directing the association, director, officer, employee or agent to comply with — or restraining the association, director, officer, employee or agent from acting in breach of — the provision and, on the application, the court may so order and make any further order it thinks fit.

Marginal note:Compliance or restraining order — consumer provisions

(2) If a retail association or any director, officer, employee or agent of a retail association does not comply with any applicable consumer provision, the Commissioner or any complainant may, in addition to any other right that that person has, apply to a court for an order directing the retail association, director, officer, employee or agent to comply with — or restraining the retail association, director, officer, employee or agent from acting in breach of — the consumer provision and, on the application, the court may so order and make any further order it thinks fit.

Marginal note:1997, c. 15, s. 163

342. (1) Paragraph 474(1)(d) of the Act is replaced by the following:

(d) Parts IX to XV and XVII, other than subsection 375(3), section 375.1 and paragraph 442(1.1)(g),

(2) Section 474 of the Act is amended by adding the following after subsection (4):

Marginal note:Exception

(5) Paragraph 390(4)(a) does not apply to the acquisition or increase of a substantial investment by a central in an association referred to in section 14.

1992, c. 56Green Shield Canada Act

Marginal note:1997, c. 15, s. 164(1)

343. (1) The portion of subsection 17(1) of the Green Shield Canada Act before paragraph (a) is replaced by the following:

Marginal note:Application of the Insurance Companies Act

17. (1) Subject to any other provision of this Act, the following provisions of the Insurance Companies Act as amended or enacted by An Act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to financial institutions, enacted during the first session of the thirty-seventh Parliament, together with any regulations made under or for the purposes of those provisions, apply to the Association, with such modifications as the circumstances require:

Marginal note:1997, c. 15, s. 164(2)

(2) Paragraph 17(1)(e) of the Act is replaced by the following:

(e) sections 160 to 162, paragraphs 165(a) to (e), (h) and (i), sections 166 and 167, subsection 168(1), sections 170 to 172, subsections 174(1) and (3) to (6), 174(7) (excepting therefrom the reference to subsection 173(4)) and 175(1) and (4), sections 177 and 189 to 194, subsection 195(1), sections 196, 202 and 203, subsections 204(1) and (2), paragraphs 204(3)(a) to (c), subsections 204(4) to (6), sections 205 and 206, paragraphs 207(a), (b), (c), (h) and (i), sections 208 to 215, paragraphs 216(2)(d) and (e), subsections 217(1) and (2), paragraphs 217(3)(a) and (c), sections 218 to 223, 244, 254 to 256 and 260, subsections 261(1) and (2) and 262(1) to (6), sections 266 to 268, paragraphs 269(a) and (b), sections 270, 278, 279 and 330, subsections 331(1) and (2), paragraphs 331(3)(b) and (c), subsections 331(4) and (6), sections 332 to 357 and 359.1 to 380, paragraph 381(1)(a), subsection 381(2) and sections 382 to 406 of Part VI;

(3) Paragraph 17(1)(f) of the Act is replaced by the following:

(f) paragraph 441(1)(d), subsection 441(3) and sections 448, 450, 465 to 472 and 476 to 478 of Part VIII;

(f.1) paragraphs 165(2)(f) and (g) of Part VI and sections 479 to 489 and 489.2 of Part VIII;

(4) Paragraphs 17(1)(h) and (i) of the Act are replaced by the following:

(h) sections 515 to 517 of Part X; and

(i) Part XI, except sections 528.1 to 528.3, and Parts XV, XVI, XVIII and XIX.

344. Subsection 17(2) of the Act is amended by adding the following after paragraph (l):

(l.1) a reference to a consumer provision shall be deemed to be a reference to a provision referred to in paragraph (e) of the definition “consumer provision” in section 2 of the Financial Consumer Agency of Canada Act;

1991, c. 47Insurance Companies Act

Marginal note:1996, c. 6, s. 66(1)

345. (1) Paragraph (a) of the definition “provincial company” in subsection 2(1) of the Insurance Companies Act is repealed.

Marginal note:1996, c. 6, s. 66(1)

(2) The definitions “annual statement”, “central securities register” or “securities register”, “head office”, “incorporator”, “recorded address”, “regulatory capital”, “subsidiary” and “total assets” in subsection 2(1) of the Act are replaced by the following:

“annual statement”

« rapport annuel »

“annual statement”, in relation to a company, means the annual financial statement of the company within the meaning of paragraph 331(1)(a) and, in relation to an insurance holding company, means the annual financial statement of the insurance holding company within the meaning of paragraph 887(1)(a);

“central securities register” or “securities register”

« registre central des valeurs mobilières »ou« registre des valeurs mobilières »

“central securities register” or “securities register”, in relation to a company or an insurance holding company, means the register referred to in section 271;

“head office”

« siège »

“head office” means

(a) in relation to a company, the office required to be maintained by the company under section 260,

(b) in relation to a society, the office required to be maintained by the society under section 544, and

(c) in relation to an insurance holding company, the office required to be maintained by the insurance holding company under section 868;

“incorporator”

« fondateur »

“incorporator”, in relation to a company or an insurance holding company, means a person who applied for letters patent to incorporate the company or insurance holding company, as the case may be;

“recorded address”

« adresse enregistrée »

“recorded address” means

(a) in relation to a person who is a shareholder of a company or an insurance holding company, the latest postal address of the person according to the central securities register of the company or the insurance holding company, as the case may be, and

(b) in relation to a person in any other respect, the latest postal address of the person according to the records of the company or insurance holding company;

“regulatory capital”

« capital réglementaire »

“regulatory capital”, in respect of a company, a society, a provincial company or an insurance holding company, has the meaning given that expression by the regulations;

“subsidiary”

« filiale »

“subsidiary” means an entity that is a subsidiary of another entity within the meaning of section 5;

“total assets”

« actif total »

“total assets”, in respect of a company, society, provincial company or insurance holding company, has the meaning given that expression by the regulations;

(3) Paragraph (c) of the definition “complainant” in subsection 2(1) of the Act is replaced by the following:

(c) any other person who, in the discretion of a court, is a proper person to make an application under section 371, 375 or 1031;

Marginal note:1991, c. 48, par. 495(1)(a)

(4) Paragraph (d) of the definition “financial institution” in subsection 2(1) of the Act is replaced by the following:

(d) an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act,

(5) Subsection 2(1) of the Act is amended by adding the following in alphabetical order:

“Agency”

« Agence »

“Agency” means the Financial Consumer Agency of Canada established under section 3 of the Financial Consumer Agency of Canada Act;

“bank holding company”

« société de portefeuille bancaire »

“bank holding company” means a body corporate that is incorporated or formed under Part XV of the Bank Act;

“Commissioner”

« commissaire »

“Commissioner” means the Commissioner of the Financial Consumer Agency of Canada appointed under section 4 of the Financial Consumer Agency of Canada Act;

“consumer provision”

« disposition visant les consomma­teurs »

“consumer provision” means a provision referred to in paragraph (c) of the definition “consumer provision” in section 2 of the Financial Consumer Agency of Canada Act;

“converted company”

« société transformée »

“converted company” means a mutual company that has been converted under this Act into a company with common shares;

“equity”

« capitaux propres »

“equity”, in respect of a company or an insurance holding company, means its equity as determined in accordance with the regulations;

“federal financial institution”

« institution financière fédérale »

“federal financial institution” means

(a) a company or a society,

(b) a bank,

(c) a body corporate to which the Trust and Loan Companies Act applies, or

(d) an association to which the Cooperative Credit Associations Act applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act;

“insurance holding company”

« société de portefeuille d’assurances »

“insurance holding company” means a body corporate that is incorporated or formed under Part XVII;

(6) Section 2 of the Act is amended by adding the following after subsection (2):

Marginal note:Major shareholder

(3) For the purposes of this Act, a person is a major shareholder of a body corporate if

(a) the aggregate of the shares of any class of voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the body corporate; or

(b) the aggregate of the shares of any class of non-voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the body corporate.

Marginal note:Widely held

(4) For the purposes of this Act, a body corporate is widely held if it has no major shareholder.

346. (1) Paragraph 3(1)(d) of the French version of the Act is replaced by the following:

d) dans tous les cas, la personne dont l’influence directe ou indirecte auprès de l’entité est telle que son exercice aurait pour résultat le contrôle de fait de celle-ci.

(2) The portion of subsection 3(3) of the Act before paragraph (a) is replaced by the following:

Marginal note:Deemed control

(3) A person is deemed to control, within the meaning of paragraph (1)(a) or (b), an entity if the aggregate of

(3) Section 3 of the Act is amended by adding the following after subsection (3):

Marginal note:Guidelines

(4) The Minister may, for any purpose of any provision of this Act that refers to control within the meaning of paragraph (1)(d), make guidelines respecting what constitutes such control, including guidelines describing the policy objectives that the guidelines and the relevant provisions of the Act are intended to achieve and, if any such guidelines are made, the reference to paragraph (1)(d) in that provision shall be interpreted in accordance with the guidelines.

347. Sections 4 and 5 of the Act are replaced by the following:

Marginal note:Holding body corporate

4. A body corporate is the holding body corporate of any entity that is its subsidiary.

Marginal note:Subsidiary

5. An entity is a subsidiary of another entity if it is controlled by the other entity.

348. Subsection 6(2) of the Act is replaced by the following:

Marginal note:Affiliated entities

(2) Despite subsection (1), for the purposes of Divisions VIII and X of Part VI and Subdivisions 8 and 10 of Division 6 of Part XVII, one entity is affiliated with another entity if one of them is controlled, determined without regard to paragraph 3(1)(d), by the other or both are controlled, determined without regard to paragraph 3(1)(d), by the same person.

349. Section 8 of the Act is replaced by the following:

Marginal note:Significant interest

8. (1) A person has a significant interest in a class of shares of a company or an insurance holding company if the aggregate of

(a) any shares of that class beneficially owned by the person, and

(b) any shares of that class beneficially owned by entities controlled by the person

exceeds 10 per cent of all of the outstanding shares of that class of shares of the company or insurance holding company, as the case may be.

Marginal note:Increasing significant interest

(2) A person who has a significant interest in a class of shares of a company or insurance holding company increases that significant interest in the class of shares if the person or any entity controlled by the person

(a) acquires beneficial ownership of additional shares of that class, or

(b) acquires control of any entity that beneficially owns shares of that class,

in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.

350. Subsections 9(1) and (2) of the Act are replaced by the following:

Marginal note:Acting in concert

9. (1) For the purposes of Part VII and Division 7 of Part XVII, if two or more persons have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of

(a) shares of a company or of an insurance holding company that they beneficially own,

(b) shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a company or of an insurance holding company, or

(c) shares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of a company or insurance holding company,

those persons are deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the company or insurance holding company or shares or ownership interests of the entity that are beneficially owned by them.

Marginal note:Acting in concert

(2) Without limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of a company or insurance holding company or shares or ownership interests of any entity referred to in paragraph (1)(b) or (c),

(a) whereby any of them or their nominees may veto any proposal put before the board of directors of the company or insurance holding company, as the case may be, or

(b) under which no proposal put before the board of directors of the company or insurance holding company, as the case may be, may be approved except with the consent of any of them or their nominees,

is deemed to be an agreement, commitment or understanding referred to in subsection (1).

351. Subsections 11(2) and (3) of the Act are replaced by the following:

Marginal note:Exemption

(2) On application by a company or insurance holding company, the Superintendent may determine that a security of the company or insurance holding company is not or was not part of a distribution to the public if the Superintendent is satisfied that the determination would not prejudice any security holder of the company or insurance holding company.

Marginal note:Securities deemed part of distribution

(3) For the purposes of this Act, securities of a company or insurance holding company issued on the conversion of other securities or issued in exchange for other securities are deemed to be securities that are part of a distribution to the public if those other securities were part of a distribution to the public.

Marginal note:1999, c. 31, s. 138

352. The portion of subsection 13(2) of the Act before paragraph (a) is replaced by the following:

Marginal note:Application of certain provisions

(2) This Part and Parts II to IV, sections 224, 225, 245 to 258 and 489 and Parts X, XII, XV, XVI, XVIII and XIX apply to every body corporate

Marginal note:1997, c. 15, s. 168

353. Section 21 of the Act is replaced by the following:

Marginal note:Sunset provision

21. (1) Subject to subsection (2), companies and societies shall not carry on business after the day that is five years after this section comes into force, except that if Parliament dissolves on that day or at any time within the three-month period before that day, companies and societies may continue to carry on business until the day that is one hundred and eighty days after the first day of the first session of the next Parliament.

Marginal note:Extension

(2) The Governor in Council may, by order, extend by up to six months the time during which companies and societies may continue to carry on business. No more than one order may be made under this subsection.

Marginal note:1999, c. 28, s. 120

354. Subsection 24(1) of the Act is replaced by the following:

Marginal note:National treatment

24. (1) If a proposed company would be a subsidiary of a foreign institution that is engaged in the insurance business, letters patent to incorporate the company may not be issued unless the Minister is satisfied that, if the application is made by a non-WTO Member foreign institution, treatment as favourable for companies to which this Act applies exists or will be provided in the jurisdiction in which the foreign institution principally carries on business, either directly or through a subsidiary.

355. Section 27 of the Act is replaced by the following:

Marginal note:Matters for consideration

27. Before issuing letters patent to incorporate a company or society, the Minister shall take into account all matters that the Minister considers relevant to the application, including

(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the company or society;

(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the company or society;

(c) the business record and experience of the applicant or applicants;

(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

(e) whether the company or society will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

(f) the impact of any integration of the operations and businesses of the applicant or applicants with those of the company or society on the conduct of those operations and businesses; and

(g) the best interests of the financial system in Canada.

356. The Act is amended by adding the following after section 28:

Marginal note:Letters patent of incorporation on application of converted companies

28.1 (1) If the Minister, under section 22, issues letters patent incorporating a company on the application of a converted company in respect of which subsection 407(4) or (11) applies or applied at any time, the Minister may include in the letters patent of incorporation of the company a provision deeming shares of the company to be issued, on a share for share basis, to all shareholders of the converted company in exchange for all the issued and outstanding shares of the converted company.

Marginal note:Effect of provision

(2) Shares of a company deemed to be issued under subsection (1) are subject to the same designation, rights, privileges and restrictions or conditions and, subject to any agreement to the contrary, to the same charges, encumbrances and other restrictions as the shares of the converted company for which they are exchanged and the shares of the converted company, on the issuance of the letters patent, become the property of the company free and clear of any charge, encumbrance or other restriction.

Marginal note:Effect of provision

(3) An exchange of shares of a converted company referred to in subsection (1) under a provision included in the letters patent incorporating a company does not deprive a person who was a holder of shares of the converted company immediately before the exchange of any right or privilege with respect to the shares or relieve the person of any liability in respect of the shares, but that right or privilege must be exercised in accordance with this Act.

Marginal note:Transfer and voting of company shares

(4) Despite subsection (3), no share of a company that is deemed to be issued under a provision included in the letters patent incorporating a company may subsequently be transferred or voted contrary to this Act.

Marginal note:Shareholder and policyholder approval

(5) No provision described in subsection (1) may be included in letters patent issued under section 22 unless the application for the letters patent is accompanied by evidence that the request for the provision was approved by a special resolution of the shareholders and policyholders of the converted company who are entitled to vote at a meeting of shareholders and policyholders called to consider the application.

Marginal note:Exchange of share certificates

(6) If, under a provision included in the letters patent incorporating a company, a share exchange is deemed to have taken place, the company shall, within ninety days after the issuance of the letters patent, make provision for the issue of share certificates representing shares of the company and for the exchange of those certificates for share certificates representing the shares of the converted company that were outstanding on the day the letters patent were issued.

Marginal note:Proposal involving fundamental change

28.2 (1) On application, made in accordance with the regulations, by a converted company in respect of which subsection 407(4) or (11) applies or applied at any time to give effect to a proposal to incorporate a company as the holding body corporate of the converted company, to continue a body corporate as a company that is the holding body corporate of the converted company or to amalgamate two or more bodies corporate and continue those bodies corporate as a company that is the holding body corporate of the converted company — and to make any other fundamental change to the converted company, including an exchange of any or all of the shares of the converted company for shares of the company —, the Minister may, to give effect to the proposal,

(a) include in the letters patent of the company issued under section 22, 34 or 251 any provision the Minister considers necessary; or

(b) despite any provision of the Act specified in regulations made under paragraph (2)(e), give any approval that the Minister considers necessary.

Marginal note:Regulations

(2) The Governor in Council may make regulations

(a) respecting applications referred to in subsection (1), including their form and the information to be contained in them, and authorizing the Superintendent to require additional information in respect of such applications;

(b) respecting proposals to which subsection (1) applies, including the information to be contained in the proposals and the times within which the transactions involved in them must occur;

(c) respecting the procedures to be followed by a converted company that makes an application under subsection (1);

(d) respecting the approval, confirmation or authorization, if any, of all or any portion of proposals to which subsection (1) applies, including the approval of shareholders and policyholders and including the terms and conditions of those approvals, confirmations or authorizations and their effect; and

(e) specifying provisions of the Act for the purpose of paragraph (1)(b).

Marginal note:1997, c. 15, s. 170(1) (F)

357. Subsection 32(1) of the Act is replaced by the following:

Marginal note:Federal corporations

32. (1) A body corporate incorporated under the Canada Business Corporations Act or any other Act of Parliament, including an insurance holding company, may apply to the Minister for letters patent continuing the body corporate as a company under this Act.

Marginal note:1991, c. 47, s. 759; 1994, c. 24, par. 34(1)(l) (F)

358. Sections 39 to 41 of the Act are replaced by the following:

Marginal note:Transferring to other federal Acts

39. (1) A company or society may

(a) apply, with the approval in writing of the Minister, for a certificate of continuance under section 187 of the Canada Business Corporations Act; or

(b) apply for letters patent continuing the company or society as a bank under subsection 35(1) of the Bank Act or amalgamating and continuing the company or society as a bank under subsections 223(1) and 229(1) of that Act.

Marginal note:Transferring to other federal Acts — societies

(1.1) A society may also, with the approval in writing of the Minister,

(a) apply, under section 156 of the Canada Corporations Act, for letters patent creating it as a corporation under Part II of that Act; or

(b) apply, under section 285 of the Canada Cooperatives Act, for a certificate of continuance, or a certificate of continuance and a certificate of amalgamation, under that Act.

Marginal note:Conditions for approval

(2) No approval referred to in paragraph (1)(a) may be given to a company or society and no approval referred to in subsection (1.1) may be given to a society unless the Minister is satisfied that

(a) the application has been authorized by a special resolution;

(b) the company or society has discharged, or provided for the discharge of, all its policy liabilities; and

(c) unless the company or society is an entity referred to in paragraph 47(2)(b) or (c), the company or society will not use the word “assurance”, “assurances” or “insurance” in its name after a certificate or letters patent referred to in subsection (1) or (1.1) are issued in respect of the company or society.

Marginal note:Withdrawing application

(3) If a special resolution authorizing the application for the certificate or letters patent so states, the directors of a company or society may, without further approval of the shareholders, policyholders entitled to vote or members, withdraw the application before it is acted on.

Marginal note:Day this Act ceases to apply

(4) On the day specified in the certificate or letters patent, this Act ceases to apply to the body corporate to which the certificate or letters patent relate.

Marginal note:1996, c. 6, s. 67

359. Paragraph 42(1)(e) of the Act is replaced by the following:

(e) that is reserved under section 45 for another company or society or a proposed company or society or under section 734 for an insurance holding company or a proposed insurance holding company.

Marginal note:1996, c. 6, s. 68

360. Section 43 of the Act is replaced by the following:

Marginal note:Affiliated company or society

43. Despite section 42, a company or society that is affiliated with another entity may, with the consent of that entity and the approval of the Superintendent, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.

Marginal note:1996, c. 6, s. 70

361. Subsection 46(2) of the Act is replaced by the following:

Marginal note:Revoking name

(2) If a company or society has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Act, the Superintendent may revoke the name of the company or society and assign to it a name and, until changed in accordance with section 224, 238 or 544.1, the name of the company or society is thereafter the name so assigned.

362. Subsection 47(2) of the Act is amended by adding the following after paragraph (a):

(a.1) an insurance holding company;

Marginal note:1996, c. 6, s. 70

363. Section 48 of the Act is replaced by the following:

Marginal note:Subsidiaries

48. Despite subsection 47(1), a subsidiary of a company or society may use the company’s or society’s name in its name.

364. Subsection 50(1) of the Act is replaced by the following:

Marginal note:Calling shareholders’ meeting

50. (1) If at least five million dollars, or any greater amount that the Minister may specify, has been received by a company, other than a mutual company, in respect of which letters patent were issued under section 22 from the issue of its shares, the directors of the company shall without delay call a meeting of the shareholders of the company.

365. Clause 57(1)(a)(ii)(B) of the Act is replaced by the following:

(B) at least five million dollars or any greater amount that is specified by the Minister under subsection 50(1), in the case of a company other than a mutual company,

366. The Act is amended by adding the following after section 59:

Marginal note:Limit on assets

59.1 (1) The Minister may, by order, require a company that is a converted company in respect of which the Minister has issued an order under subsection 407(8) or a converted company in respect of which subsection 407(11) applied at any time not to have average total assets in any three month period ending on the last day of a month subsequent to the month specified in the order exceeding the company’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order if the Minister is of the opinion that it is in the best interests of the financial system in Canada to do so, after having considered the Superintendent’s opinion on

(a) the nature and extent of the financial services activities carried out by entities affiliated with the company; and

(b) the impact that the nature and degree of supervision and regulation of those financial services activities have on the supervision and regulation of the company.

Marginal note:Revocation of order

(2) If the Minister is of the opinion that the circumstances giving rise to the order have ceased to exist or have changed substantially, the Minister may, by further order, revoke the order.

Marginal note:Average total assets

(3) For the purposes of subsection (1), the average total assets of a company in a three month period shall be computed by adding the total assets of the company as calculated for the month end of each of the three months in the period and by dividing the sum by three.

367. Subsection 65(3) of the Act is replaced by the following:

Marginal note:Effective date

(3) A by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders and policyholders at the meeting referred to in subsection (2).

Marginal note:1997, c. 15, s. 183

368. The portion of section 76.1 of the Act before paragraph (a) is replaced by the following:

Marginal note:Holding in market-indexed segregated fund

76.1 A company may hold shares of the company or shares or ownership interests of an entity that controls the company, if

369. Section 83 of the Act is amended by adding the following after subsection (4):

Marginal note:When dividend not to be declared

(5) The directors of a company shall not declare and a company shall not pay a dividend in any financial year without the approval of the Superintendent if, on the day the dividend is declared, the total of all dividends declared by the company in that year would exceed the aggregate of the company’s net income up to that day in that year and its retained net income for the preceding two financial years.

370. (1) Section 143 of the Act is amended by adding the following after subsection (1):

Marginal note:Number of eligible votes

(1.01) A converted company in respect of which subsection 407(4) applies or a company to which subsection 407(5) applies shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 164.08(1), that may be cast at the meeting as of the record date for determining the shareholders or policyholders entitled to receive the notice of meeting or, if there are to be separate votes of shareholders or policyholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.

Marginal note:1997, c. 15, s. 187(2)

(2) Subsection 143(1.2) of the French version of the Act is replaced by the following:

Marginal note:Renonciation à l’avis

(1.2) La présence à l’assemblée équivaut à une renonciation de l’avis de convocation, sauf lorsque la personne y assiste spécialement pour s’opposer aux délibérations au motif que l’assemblée n’est pas régulièrement convoquée.

371. Subsection 147(3) of the French version of the Act is replaced by the following:

Marginal note:Déclaration à l’appui de propositions

(3) La société doit, sur demande, annexer à l’avis de l’assemblée une déclaration de deux cents mots au plus préparée par l’actionnaire ou le souscripteur à l’appui de sa proposition, avec ses nom et adresse.

372. Subsections 150(2) and (3) of the Act are replaced by the following:

Marginal note:Policyholders

(2) Unless the by-laws otherwise provide, a quorum of policyholders is present at a meeting of policyholders if at least five hundred policyholders who are entitled to vote at the meeting, or one per cent of the total number of those policyholders, whichever is lesser, are present in person or represented by proxyholders.

Marginal note:Shareholders and policyholders

(3) Unless the by-l