BILL C-38 - First Reading

	Representative Offices and Head Offices
Permitted Canadian offices	509. Notwithstanding paragraph 508(1)(a) or (b), 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 to the conduct of its banking business outside Canada.
Examination of representa- tive offices	510. (1) The Superintendent shall, from time to time, make or cause to be made such examination and inquiry into the operation of any representative office of a foreign bank and the conduct of the personnel in that office as 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 509(a).
Powers of Superinten- dent	(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.
Cancellation of registration	511. 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).
Business conducted from head office in Canada	512. (1) Subject to subsections (2) and (3), where the head office of a foreign bank is located in Canada pursuant to paragraph 509(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.
Exception	(2) Where a foreign bank, immediately prior to the establishment of its head office in Canada pursuant to paragraph 509(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.
Exception	(3) Where a foreign bank controlled a bank or was a major shareholder of a bank immediately prior to the establishment of the foreign bank's head office in Canada pursuant to paragraph 509(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 prior to the establishment of the head office in Canada.
	Foreign Bank Conglomerates Offering No Financial Services
Canadian commercial entities	513. (1) Notwithstanding paragraph 508(1)(d) but subject to subsections (4) to (7), 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 Canadian entity referred to in any of paragraphs 468(1)(a) to (i), so long as all of the Canadian entity's businesses and activities in Canada, or substantially all of them as determined under the regulations, do not include activities that are referred to in paragraphs (a) to (f) - other than prescribed activities - of the definition ``Canadian financial entity'' in subsection 507(1).
Canadian commercial branches	(2) Notwithstanding paragraphs 508(1)(a) and (b) but subject to subsections (3) to (5), a foreign bank - or an entity associated with a foreign bank and incorporated or formed by or under the laws of a country other than Canada - may carry on in Canada businesses and activities so long as all of its businesses and activities outside Canada, or substantially all of them as determined under the regulations, do not include
	(a) activities that are referred to in paragraphs (a) to (e) - other than prescribed activities - of the definition ``Canadian financial entity'' in subsection 507(1); or
	(b) except under prescribed circumstances, activities referred to in paragraph (f) of that definition.
Businesses and activities of Canadian commercial branches	(3) Subsection (2) applies to a foreign bank, or an entity associated with a foreign bank, so long as all of its businesses and activities in Canada, or substantially all of them as determined under the regulations, do not include activities that are referred to in paragraphs (a) to (f) - other than prescribed activities - of the definition ``Canadian financial entity'' in subsection 507(1).
Canadian financial branches	(4) Subsections (1), (2), (6) and (7) and 516(2) do not apply to a foreign bank or an entity associated with a foreign bank if it or any entity associated with the foreign bank
	(a) is an authorized foreign bank;
	(b) is a foreign insurance company; or
	(c) is a foreign securities dealer, or a foreign cooperative credit society, that has received the approval of the Minister under paragraph 518.2(1)(f).
Canadian financial institutions or entities	(5) Subsections (1), (2), (6) and (7) and 516(2) do not apply to a foreign bank or an entity associated with a foreign bank if it or any entity associated with the foreign bank controls, or is a major owner of,
	(a) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i); or
	(b) a Canadian entity referred to in subsection 518(5) that is a Canadian financial entity.
Acquisition of substantial investment by foreign bank	(6) Notwithstanding subsection (1) and paragraph 508(1)(d), a foreign bank may acquire or hold a substantial investment in
	(a) a Canadian entity referred to in any of paragraphs 468(1)(g) to (i), or
	(b) a Canadian entity referred to in subsection 518(5) that is a Canadian financial entity,
	so long as the foreign bank and any entity associated with it meet the conditions set out in subsections (4) and (5).
Acquisition of substantial investment by entity associated	(7) Notwithstanding subsection (1) and paragraph 508(1)(d), an entity associated with a foreign bank may acquire or hold a substantial investment in
	(a) a Canadian entity referred to in any of paragraphs 468(1)(g) to (i), or
	(b) a Canadian entity referred to in subsection 518(5) that is a Canadian financial entity,
	so long as the entity and any other entity associated with the foreign bank meet the conditions set out in subsections (4) and (5).
Non-applicati on	(8) Paragraphs 508(1)(a) and (b) do not apply to a Canadian entity referred to in subsection (1), (6) or (7).
	Restrictions on Non-Bank Affiliates
Non-bank affiliates - prohibited activities	514. (1) Notwithstanding any provision of this Part except section 507.1, 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 518.2(1)(f), 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.
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 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.
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.
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.
Exception - insurance company or securities dealer	(6) Subsection (2) does 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;
	(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 that is described in paragraph (g) of the definition ``financial institution'' in section 2; or
	(e) a prescribed entity.
Deposits prohibited	514.1 (1) Notwithstanding any provision of this Part except section 507.1, a foreign bank - or an entity associated with a foreign bank and incorporated or formed by or under the laws of a country other than Canada - 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 518.2(1)(f), 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.
Disclosure of status	(2) 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.
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.
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.
Exception - 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 518.2(1)(f).
Exception - 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 518.2(1)(f).

Representative Offices and Head Offices

Foreign Bank Conglomerates Offering No Financial Services

Restrictions on Non-Bank Affiliates