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| Limit on total
property
interest
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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.
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| Limits on
equity
acquisitions
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477. A bank shall not, and shall not permit
its prescribed subsidiaries to,
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(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
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(b) acquire control of an entity that holds
shares or ownership interests referred to in
paragraph (a),
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if the aggregate value of
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(c) all participating shares, excluding
participating shares of permitted entities in
which the bank has a substantial
investment, and
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(d) all ownership interests in
unincorporated entities, other than
ownership interests in permitted entities in
which the bank has a substantial
investment,
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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.
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| Aggregate
limit
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478. A bank shall not, and shall not permit
its prescribed subsidiaries to,
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(a) purchase or otherwise acquire
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(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,
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(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
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(iii) interests in real property, or
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(b) make an improvement to real property
in which the bank or any of its prescribed
subsidiaries has an interest
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if the aggregate value of
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(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
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(d) all interests of the bank in real property
referred to in subparagraph (a)(iii)
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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.
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| Regulations
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479. For the purposes of this Part, the
Governor in Council may make regulations
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(a) defining the interests of a bank in real
property;
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(b) determining the method of valuing those
interests; or
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(c) exempting classes of banks from the
application of sections 475 to 478.
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| 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.
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| Divestment
order
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(2) If, in the opinion of the Superintendent,
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(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
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(b) the bank or any entity it controls has
entered into an arrangement whereby it or
its nominee may veto any proposal put
before
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(i) the board of directors of a body
corporate, or
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(ii) a similar group or committee of an
unincorporated entity,
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or whereby no proposal may be approved
except with the consent of the bank, the
entity it controls or the nominee,
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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).
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| Divestment
order
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(3) If
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(i) fails to provide or obtain within a
reasonable time the undertakings
referred to in subsection 470(1), (2) or
(4), or
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(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
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(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,
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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.
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| Exception
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(4) Subsection (2) does not apply in respect
of an entity in which a bank has a substantial
investment permitted by this Part.
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| 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.
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| 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
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A + B > C
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where
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A is the value of the assets;
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B is the total value of all assets that the bank
and its subsidiaries acquired from or trans
ferred to that person in the twelve months
ending immediately before the acquisition
or transfer; and
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C is ten per cent of the total value of the as
sets of the bank, as shown in the last annual
statement of the bank prepared before the
acquisition or transfer.
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| Exception
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(2) The prohibition in subsection (1) does
not apply in respect of
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(a) assets that are debt obligations that are
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(i) guaranteed by any financial institution
other than the bank,
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(ii) fully secured by deposits with any
financial institution, including the bank,
or
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(iii) fully secured by debt obligations that
are guaranteed by any financial
institution other than the bank;
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(b) assets that are debt obligations issued
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(i) by, or by any agency of,
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(A) the Government of Canada,
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(B) the government of a province,
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(D) the government of a foreign
country or any political subdivision of
a foreign country, or
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(ii) by a prescribed international agency;
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(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);
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(d) assets that are debt obligations that are
widely distributed, as that expression is
defined by the regulations;
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(e) assets that are debt obligations of an
entity controlled by the bank; or
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(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.
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| Exception
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(3) The approval of the Superintendent is
not required if
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(a) the bank sells assets under a sale
agreement that is approved by the Minister
under section 236;
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(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
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(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.
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| Value of
assets
|
(4) For the purposes of ``A'' in subsection
(1), the value of the assets is
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(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
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(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.
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| 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.
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| 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.
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| Transitional
|
483. Nothing in this Part requires
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(a) the termination of a loan made before
February 7, 2001;
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(b) the termination of a loan made after that
date as a result of a commitment made
before that date;
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(c) the disposal of an investment made
before that date; or
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(d) the disposal of an investment made after
that date as a result of a commitment made
before that date.
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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.
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| Saving
|
484. A loan or investment referred to in
section 483 is deemed not to be prohibited by
the provisions of this Part.
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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):
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(d) transactions approved by the Minister
under subsection 678(1) of this Act or
subsection 715(1) of the Insurance
Companies Act; or
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(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.
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| 1997, c. 15,
s. 69
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(2) Subsection 487(4) of the Act is
replaced by the following:
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| 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.
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129. The Act is amended by adding the
following after section 495:
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| 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.
|
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| Policies and
procedures
|
(2) The bank shall adhere to policies and
procedures established under subsection
195(3) when entering into the transaction.
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| 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
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(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
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(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.
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| 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,
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(a) reduce the limit in paragraph (1)(a) or
(b) that would otherwise apply to the bank;
and
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(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.
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