Exception - subsidiaries and substantial investments of banks	(2) Where an entity in which a bank has a substantial investment would, but for this subsection, be a related party of the bank only because a person who controls the bank 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 bank, the entity is not a related party of the bank.
	(5) Subsections 486(6) to (8) of the Act are replaced by the following:
Holders of exempted shares	(6) The Superintendent may, by order, designate a class of non-voting shares of a bank for the purpose of this subsection. If a class of non-voting shares of a bank is so designated, a person is deemed, notwithstanding paragraph (1)(a), not to be a related party of the bank if the person would otherwise be a related party of the bank only because the person has a significant interest in that class.
Determi- nation of substantial investment	(7) For the purpose of determining whether an entity or a person has a substantial investment for the purposes of paragraph (1)(e) or (f), the references to ``control'' and ``controlled'' in section 10 shall be construed as references to ``control, within the meaning of section 3, determined without regard to paragraph 3(1)(d)'' and ``controlled, within the meaning of section 3, determined without regard to paragraph 3(1)(d)'', respectively.
Determi- nation of control	(8) For the purposes of paragraph (1)(d), ``controlled'' means ``controlled, within the meaning of section 3, determined without regard to paragraph 3(1)(d)''.
1991, c. 48, par. 494(d)	69. Subsections 487(4) and (5) of the Act are replaced by the following:
Exception for holding body corporate	(4) A holding body corporate of a bank is not a related party of the bank where the holding body corporate is
	(a) a Canadian financial institution that is referred to in any of paragraphs (a) to (d) of the definition ``financial institution'' in section 2; or
	(b) a central cooperative credit society for which an order has been made under subsection 473(1) of the Cooperative Credit Associations Act.
Substantial investment - related party exception	(5) Where a holding body corporate of a bank is, because of subsection (4), not a related party of the bank, any entity in which the holding body corporate has a substantial investment is not a related party of the bank if no related party of the bank has a substantial investment in the entity otherwise than through the control of the holding body corporate.
	70. Subsection 495(3) of the Act is replaced by the following:
Service corporations	(3) Notwithstanding subsection 489(2), a bank is deemed not to have indirectly entered into a transaction in respect of which this Part applies if the transaction is entered into by a service corporation, as defined in subsection 464(1), that is controlled by the bank and the transaction is on terms and conditions at least as favourable to the bank as market terms and conditions, as defined in subsection 501(2).
	71. (1) Paragraphs 496(1)(a) and (b) of the Act are replaced by the following:
	(a) a natural person who is a related party of the bank only because the person is
	(i) a director or a senior officer of the bank or of an entity that controls the bank, or
	(ii) the spouse, or a child who is less than eighteen years of age, of a director or senior officer of the bank or of an entity that controls the bank; or
	(b) an entity that is a related party of the bank only because the entity is controlled by
	(i) a director or senior officer of the bank or of an entity that controls the bank, or
	(ii) the spouse, or a child who is less than eighteen years of age, of a director or senior officer referred to in subparagraph (i).
	(2) Subsection 496(2) of the Act is replaced by the following:
Loans to full-time officers	(2) A bank may, with respect to a related party of the bank referred to in subsection (1) who is a full-time senior officer of the bank, 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 bank 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.
	(3) Subsections 496(4) to (6) of the Act are replaced by the following:
Preferred terms - loan to officer	(4) Notwithstanding section 501, a bank may make a loan, other than a margin loan, to a senior officer of the bank on terms and conditions more favourable to the officer than those offered to the public by the bank if those terms and conditions have been approved by the conduct review committee of the bank.
Preferred terms - loan to spouse of officer	(5) Notwithstanding section 501, a bank may make a loan referred to in paragraph 491(b) to the spouse of a senior officer of the bank on terms and conditions more favourable to the spouse of that officer than those offered to the public by the bank if those terms and conditions have been approved by the conduct review committee of the bank.
Preferred terms - other financial services	(6) Notwithstanding section 501, a bank may offer financial services, other than loans or guarantees, to a senior officer of the bank, or to the spouse, or a child who is less than eighteen years of age, of a senior officer of the bank, on terms and conditions more favourable than those offered to the public by the bank if
	(a) the financial services are offered by the bank to employees of the bank on those favourable terms and conditions; and
	(b) the conduct review committee of the bank has approved the practice of making those financial services available on those favourable terms and conditions to senior officers of the bank or to the spouses, or the children under eighteen years of age, of senior officers of the bank.
	72. Subparagraph 497(1)(d)(ii) of the Act is replaced by the following:
	(ii) where the related party is a full-time senior officer of the bank, loans to the related party that are permitted by subsection 496(2),
	73. Section 498 of the Act is replaced by the following:
Margin loans	498. The Superintendent may establish terms and conditions with respect to the making by a bank of margin loans to a director or senior officer of the bank.
	74. Sections 502 and 503 of the Act are repealed.
	75. Section 505 of the Act is replaced by the following:
Notice to Superin- tendent	505. Where a bank has entered into a transaction that the bank is prohibited by this Part from entering into or where a bank has entered into a transaction for which approval is required under subsection 497(1) without having obtained the approval, the bank shall, on becoming aware of that fact, notify the Superintendent without delay.
	76. (1) The portion of subsection 507(3) of the Act before paragraph (a) is replaced by the following:
Deemed substantial investment	(3) For the purposes of the definition ``non-bank affiliate of a foreign bank'' in subsection (1) and section 518, a foreign bank is deemed to have a substantial investment in a Canadian entity if
	(2) Subsection 507(6) of the Act is replaced by the following:
Publication	(6) Where the Minister makes an order under subsection (4) or (5), the Minister shall publish in the Canada Gazette a notice of the making of the order.
1996, c. 6, s. 9	77. Subsection 510(3) of the Act is replaced by the following:
Cancellation of registration	(3) 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 509(a).
	78. Paragraph 513(2)(b) of the Act is replaced by the following:
	(b) issued by another person resident in Canada and guaranteed or accepted by
	(i) a foreign bank subsidiary of the foreign bank,
	(ii) a Canadian financial institution in which a foreign bank subsidiary of the foreign bank has a substantial investment, or
	(iii) a financial institution that is a non-bank affiliate of the foreign bank.
	79. Section 514 of the Act is replaced by the following:
Non-bank affiliates - prohibited activities	514. (1) A non-bank affiliate of a foreign bank 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 affiliate is a deposit or that any liability incurred by the non-bank affiliate is a deposit.
Disclosure of status	(2) 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.
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.
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 that may be made by the Governor in Council, to a borrowing
	(i) from a person in an amount of $100,000 or more, or
	(ii) through the issue of instruments in denominations of $100,000 or more.
Exception - trust or loan company	(5) The restrictions on a non-bank affiliate of a foreign bank under subsections (1) and (2) do not apply where the non-bank affiliate is a trust or loan corporation incorporated under an Act of Parliament or of the legislature of a province.
Exception - insurance company or securities dealer	(6) The restrictions on a non-bank affiliate of a foreign bank under subsection (2) do not apply where the non-bank affiliate is
	(a) an insurance company incorporated under an Act of Parliament or of the legislature of a province; or
	(b) a financial institution that is described in paragraph (g) of the definition ``financial institution'' in section 2.
	80. Section 515 of the Act is repealed.
	81. Section 517 of the Act is repealed.
	82. (1) Subsections 518(1) and (2) of the Act are replaced by the following:
Investment restriction	518. (1) Where shares in a foreign bank subsidiary are owned by a foreign bank, by a foreign bank and one or more entities associated with the foreign bank, or by one or more entities associated with a foreign bank, the foreign bank and any entity associated with it shall not acquire or hold a substantial investment in
	(a) any bank other than the foreign bank subsidiary; or
	(b) any other Canadian entity other than a financial institution that is described in paragraph (b), (d) or (g) of the definition ``financial institution'' in section 2.
Exception	(2) Subsection (1) does not apply where the foreign bank holds a substantial investment in a Canadian entity only because a substantial investment in the Canadian entity is held
	(a) as permitted by Part IX, by a foreign bank subsidiary of the foreign bank;
	(b) as permitted by Part IX of the Trust and Loan Companies Act, by a trust or loan company incorporated under that Act that is a subsidiary of the foreign bank;
	(c) as permitted by Part IX of the Insurance Companies Act, by an insurance company incorporated under that Act that is a subsidiary of the foreign bank; or
	(d) as permitted by consent of the Governor in Council under subsection 521(1).
	(2) Paragraph 518(3)(b) of the Act is replaced by the following:
	(b) either
	(i) the shares or ownership interests were held at the time of the making of the application for the incorporation or acquisition of the foreign bank subsidiary of the foreign bank, and the application was accompanied by written evidence to that effect, or
	(ii) the shares or ownership interests were acquired subsequent to the incorporation or acquisition of the foreign bank subsidiary of the foreign bank, and the Minister, by order, approved an application requesting permission for the shares or ownership interests to be held.
	(3) Subsections 518(4) to (6) of the Act are replaced by the following:
Terms and conditions	(4) An order of the Minister made under paragraph (3)(b) may be subject to such terms and conditions as the Minister considers appropriate.
Revocation or variation of order	(5) The Minister may, by further order, revoke or vary an order made under paragraph (3)(b).
Effective date	(5.1) The revocation or variation comes into effect three months after the day the further order is made, except that if the Minister and the entity to which the order relates agree that the revocation or variation is to take effect at some other time, the revocation or variation takes effect at that other time.
Publication	(6) Where the Minister makes an order for the purposes of paragraph (3)(b) or makes an order under subsection (5), the Minister shall publish in the Canada Gazette a notice of the making of the order.
	83. Subsection 519(2) of the Act is replaced by the following:
Permission to hold shares acquired in realization of security	(2) Where a foreign bank acquires shares or ownership interests in a Canadian entity through a realization of security for any loan or advance made by the foreign bank or any other debt or liability to the foreign bank, those shares or ownership interests are deemed, for the purpose of subsection 518(1), not to have been acquired by the foreign bank and not to be owned by it for a period of five years from the day they are so acquired and for such additional period or periods as the Minister may, by order, specify.