PART II

AUTHORIZED FOREIGN BANKS

Application of Part

150. This Part applies only to the winding-up of the business in Canada of authorized foreign banks and to the liquidation of their assets.

Notice

151. (1) In their application to an authorized foreign bank, section 26 and subsections 35(1) and 42(1) are to be read as if notice is required to be given to the authorized foreign bank, its creditors and persons who hold security on any of its assets.

Exception

(2) Notice need not be given to persons referred to in subsection (1) who hold security on any of the assets of an authorized foreign bank unless they can be located using information contained in the books and records in Canada of the authorized foreign bank and those books and records are accessible by or under the control of, where section 26 applies, the petitioner for the winding-up order and, where subsection 35(1) or 42(1) applies, the liquidator.

Duties after appointment

152. A liquidator, on appointment in respect of an authorized foreign bank, shall take into custody or under control all the assets of the authorized foreign bank, and shall perform the duties that are imposed by the court or by this Act with reference to

    (a) the winding-up of the business in Canada of the authorized foreign bank; and

    (b) the liquidation of the assets of the authorized foreign bank.

Authorized foreign bank to cease business

153. From the time of the making of a winding-up order in respect of an authorized foreign bank, it shall cease to carry on its business in Canada or deal in any way with its assets, except in so far as is, in the opinion of the liquidator, required for the beneficial winding-up of its business in Canada and liquidation of its assets.

Effect of winding-up order

154. After a winding-up order is made in respect of an authorized foreign bank, no suit, action or other proceeding may be proceeded with or commenced against the authorized foreign bank in respect of its business in Canada or of its assets, except with the leave of the court and subject to the terms, if any, that the court imposes.

Execution, etc.

155. Every attachment, sequestration, distress or execution put in force against the assets of the authorized foreign bank after the making of a winding-up order in respect of it is void.

Liquidator to prepare statement

156. A liquidator shall, within 120 days after appointment in respect of an authorized foreign bank, prepare a statement of

    (a) the assets, debts and liabilities of the authorized foreign bank in respect of its business in Canada and of the value of those assets as shown by the books and records of the authorized foreign bank; and

    (b) the assets of the authorized foreign bank, other than those in respect of its business in Canada, and the value of the assets as shown by the books and records of the authorized foreign bank or, where the books and records are not available, an estimated value of the assets.

What debts may be proved

157. (1) When the business in Canada of an authorized foreign bank is being wound up and its assets are being liquidated under this Act, only debts and claims against the authorized foreign bank in respect of its business in Canada in existence at the commencement of the winding-up, certain or contingent, matured or not, and liquidated or unliquidated, are admissible to proof and, subject to subsection (2), the amount of any claim admissible to proof is the unpaid debt or other liability of the authorized foreign bank in respect of its business in Canada outstanding or accrued at the commencement of the winding-up.

Uncertain claims valued

(2) In case of any claim subject to any contingency or for unliquidated damages or which for any other reason does not bear a certain value, the court shall determine the value of the claim and the amount for which it shall rank.

Law of set-off to apply

158. The law of set-off, as administered by the courts, whether of law or equity, applies, in the same manner and to the same extent as if the business in Canada of the authorized foreign bank was not being wound up under this Act, only to

    (a) claims by creditors of the authorized foreign bank in respect of its business in Canada; and

    (b) proceedings for the recovery of debts due or accruing due to an authorized foreign bank in respect of its business in Canada at the commencement of the winding-up.

Distribution of property

158.1 (1) Where a winding-up order is made in respect of an authorized foreign bank, claims shall be paid in the following order of priority:

    (a) charges, costs and expenses, including the remuneration of the liquidator, incurred in the winding-up of the business in Canada of the authorized foreign bank and of the liquidation of its assets;

    (b) claims of preferred creditors, specified in section 72; and

    (c) debts and liabilities of the authorized foreign bank in respect of its business in Canada in order of priority as set out in sections 625 and 627 of the Bank Act.

Distribution and release of surplus assets

(2) Any assets that remain after payment of the claims referred to in paragraphs (1)(a) to (c) are to be applied firstly in payment of interest from the commencement of the winding-up at the rate of five per cent per annum on all claims proved in the winding-up and according to their priority. The liquidator may, with the approval of the court, release to the authorized foreign bank any assets remaining after payment of the interest.

Transfer to foreign liquidator

158.2 Where an authorized foreign bank is in liquidation in the jurisdiction in which its head office is situated or where it principally carries on business, the Superintendent may, if the Superintendent deems it advisable and in the interests of the creditors of the authorized foreign bank, authorize the liquidator, subject to the approval of the court, to transfer the assets of the authorized foreign bank to the liquidator in that jurisdiction.

Right of action not debarred

158.3 Subject to this Act, where the assets of an authorized foreign bank are not sufficient to cover in full all claims referred to in paragraphs 158.1(1)(a) to (c), the creditors are not barred from any recourse they have, either in law or equity, except in respect of the share, if any, received in the distribution of the assets.

AMENDMENTS TO OTHER ACTS RELATING TO FINANCIAL INSTITUTIONS

R.S., c. B-2

Bank of Canada Act

93. (1) The definition ``bank'' in section 2 of the Bank of Canada Act is replaced by the following:

``bank''
« banque »

``bank'' means a bank listed in Schedule I or II to the Bank Act;

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

``authorized foreign bank''
« banque étrangère autorisée »

``authorized foreign bank'' has the meaning assigned to that expression by section 2 of the Bank Act;

94. Paragraph 10(2)(a) of the Act is replaced by the following:

    (a) a bank or authorized foreign bank;

95. (1) Paragraph 18(g) of the Act is replaced by the following:

    (g) buy and sell bills of exchange and promissory notes endorsed, accepted or issued by a 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 having a maturity not exceeding one hundred and eighty days, excluding days of grace, from the date of acquisition by the Bank;

1992, c. 1, s. 142(1) (Sch. V, subitem 6(1))

(2) Paragraph 18(h) of the Act is replaced by the following:

    (h) make loans or advances for periods not exceeding six months to banks or authorized foreign banks that are not subject to the restrictions and requirements referred to in subsection 524(2) of the Bank Act or to other members of the Canadian Payments Association that maintain deposits with the Bank on the pledge or hypothecation of the classes of securities mentioned in paragraphs (a) to (g), bills of exchange or promissory notes or any other property that the institution to which the loan or advance is made is authorized to hold;

1997, c. 15, s. 98(2)

(3) Paragraph 18(l.1) of the Act is replaced by the following:

    (l.1) accept deposits from any bank, authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2) of the Bank Act or other member of the Canadian Payments Association;

1992, c. 1, s. 142(1) (Sch. V, item 7)

96. Paragraphs 20(a) and (b) of the Act are replaced by the following:

    (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 or any other member of the Canadian Payments Association that maintains deposits with the Bank and hold any warehouse receipt, bill of lading and other security, held by that bank, authorized foreign bank or member as security for the repayment of any bill of exchange or promissory note acquired by the Bank under section 18; and

    (b) exercise every right and remedy, in respect of any security acquired under paragraph (a), that could have been exercised by the bank, authorized foreign bank or member described in that paragraph.

1991, c. 46, s. 583

97. (1) 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 or a company to which the Trust and Loan Companies Act applies;

1991, c. 46, s. 583

(2) Paragraphs (a) and (b) of the definition ``relevant Act'' in subsection 22(5) of the Act are replaced by the following:

      (a) in the case of a bank or authorized foreign bank, the Bank Act,

R.S., c. C-3

Canada Deposit Insurance Corporation Act

98. Section 2 of the Canada Deposit Insurance Corporation Act is amended by adding the following in alphabetical order:

``bank''
« banque »

``bank'' means a bank listed in Schedule I or II to the Bank Act;

1991, c. 45, s. 541

99. Paragraph 8(a) of the Act is replaced by the following:

    (a) a bank; and

R.S., c. 18 (3rd Supp.), s. 55

100. Subsection 18(1) of the Act is replaced by the following:

Form of application for deposit insurance

18. (1) An application for deposit insurance shall be in the form, and accompanied by a fee of the amount and type, that may be prescribed by the by-laws.

101. Section 26.01 of the Act, as enacted by section 114 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:

Interpreta-
tion

26.01 (1) Subject to subsections (2) and 3 , for the purposes of sections 26.02 to 26.06, ``deposit'' has the meaning that would be given to it by the schedule, for the purposes of deposit insurance, if the schedule were read without reference to subsections 2(2), (5) and (6) of the schedule.

Exception

(2) For the purposes of subparagraph 26.03(1)(c)(iii) and paragraph 26.03(1)(d), ``deposit'' has the meaning that would be given to it by the schedule, for the purposes of deposit insurance, but does not include deposits not payable in Canada or in Canadian currency.

Exception

(3) For the purposes of paragraph 26.03(1)(b) and subsection 26.03(2), ``deposit'' has the meaning that would be given to it by the schedule, for the purposes of deposit insurance, if the schedule were read without reference to subsections 2(2),(5) and (6) of the schedule, but does not include deposits prescribed by the by-laws.

By-laws

(4) The Board may make by-laws

    (a) prescribing the deposits referred to in subsection (3); and

    (b) prescribing terms and conditions with respect to the acceptance of those deposits.

102. Subparagraphs 26.03(1)(d)(ii) and (iii) of the Act, as enacted by section 114 of An Act to amend certain laws relating to financial institutions, being chapter 15 of the Statutes of Canada, 1997, are replaced by the following:

      (ii) at the request in writing of the depositor, paid to the depositor the principal amount of the deposit and interest determined in accordance with rules prescribed by the by-laws and has not charged any fee or penalty in connection with the payment, or

      (iii) obtained from a member institution an agreement in writing to assume the bank's liability in relation to the deposit on the same terms and conditions; and

103. Subsection 26.04(3) of the Act, as enacted by section 114 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:

Authoriza-
tion after 30 days

(3) If the Minister does not issue that direction within those thirty days, the Corporation may then give the authorization under subsection 26.03(1). The giving of the authorization cancels the policy of deposit insurance of the member institution to which the authorization is given.

R.S., c. 18 (3rd Supp.), s. 60; 1991, c. 45, s. 544

104. Subsection 27(1) of the Act is replaced by the following:

Annual inspections

27. (1) The Superintendent shall, notwithstanding any other Act of Parliament, examine on behalf of the Corporation the affairs of each federal member institution once in each year and at the times that the Corporation may require for a specified purpose.

1996, c. 6, s. 33

105. Section 28.1 of the Act is replaced by the following:

Costs may be charged back

28.1 Where an examination or an inspection is carried out other than once in each year, the Corporation may

    (a) pay the costs of the examination or inspection;

    (b) charge the costs to the member institution in respect of which they were incurred; and

    (c) recover the costs from the member institution as a debt due and payable to the Corporation.

1996, c. 6, s. 34

106. Subsection 29(3) of the Act is replaced by the following:

Other reports to be provided to Corporation

(3) Where a report is sent by the Superintendent to the Minister under section 643 of the Bank Act or section 505 of the Trust and Loan Companies Act as to whether the provisions of that Act are being duly observed by a member institution, the Superintendent shall send a copy of the report at the same time to the Corporation.

1996, c. 6, s. 39

107. Subsection 34(2) of the Act is replaced by the following:

Non-
application of continued coverage

(2) Subsection (1) does not apply in respect of a deposit with

    (a) a member institution if the deposit has been assumed by another member institution; or

    (b) a former member institution that has received authorization to accept deposits payable in Canada without being a member institution and the policy of deposit insurance of which has been cancelled.

Corporations not member institutions

(3) A corporation is not considered to be a member institution by reason only that its deposits continue to be insured under subsection (1).

Continuing obligations

(4) Termination or cancellation of a policy of deposit insurance does not relieve a former member institution from obligations and liabilities to the Corporation that have accrued before the termination or cancellation.

108. Section 2 of the schedule to the Act is amended by adding the following after subsection (1):

Included moneys

(1.1) For greater certainty, an unpaid balance of moneys received or held by an institution from or on behalf of a mortgagor in respect of realty taxes on mortgaged property is a deposit. The moneys are considered to be repayable on the earlier of the due date of the taxes or the date the mortgage is discharged.

109. Section 3 of the schedule to the Act is amended by adding the following after subsection (6):

Realty taxes on mortgaged property

(7) An unpaid balance of money referred to in subsection 2(1.1) is deemed, for the purposes of deposit insurance with the Corporation, to be a deposit separate from any other deposit of that depositor with the member institution.