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(a) an investment by an insurance holding
company or any entity it controls in shares
of a body corporate or in ownership
interests in an unincorporated entity
enables the insurance holding company to
control the body corporate or the
unincorporated entity, or
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(b) the insurance holding company 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 insurance
holding company, the entity it controls or
the nominee,
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the Superintendent may, by order, require the
insurance holding company, within any period
that the Superintendent considers reasonable,
to do all things necessary to ensure that the
insurance 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).
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| Divestment
order
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(3) If
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(a) an insurance holding company
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(i) fails to provide or obtain within a
reasonable time the undertakings
referred to in subsection 973(1), (2) or
(4), or
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(ii) is in default of an undertaking
referred to in subsection 973(1) or (2) and
the default is not remedied within ninety
days after the day of receipt by the
insurance holding company of a notice
from the Superintendent of the default, or
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(b) a permitted entity referred to in
subsection 973(4) is in default of an
undertaking referred to in subsection 973(4)
and the default is not remedied within
ninety days after the day of receipt by the
insurance holding company of a notice
from the Superintendent of the default,
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the Superintendent may, by order, require the
insurance holding company, within any period
that the Superintendent considers reasonable,
to do all things necessary to ensure that the
insurance holding company 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 an insurance holding
company has a substantial investment
permitted by this Division.
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| Deemed
temporary
investment
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986. If an insurance holding company
controls or has a substantial investment in an
entity as permitted by this Division and the
insurance 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 971(5) or
(6), the insurance holding company is deemed
to have acquired, on the day the insurance
holding company becomes aware of the
change, a temporary investment in respect of
which section 974 applies.
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| Asset
transactions
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987. (1) An insurance 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
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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
insurance holding company and its
subsidiaries acquired from or transferred
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
assets of the insurance holding company,
as shown in the last annual statement of the
insurance holding company prepared
before the acquisition or transfer.
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| Exception
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(2) The prohibition referred to in subsection
(1) does not apply to
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(a) an asset that is a debt obligation referred
to in subparagraphs (b)(i) to (v) of the
definition ``commercial loan'' in
subsection 490(1); or
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(b) a transaction or series of transactions by
a subsidiary of the insurance holding
company with a financial institution as a
result of the subsidiary'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 insurance 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 971(5) is required or the
approval of the Superintendent under
subsection 971(6) is required; or
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(b) the transaction has been approved by the
Minister under subsection 715(1) of this
Act or subsection 678(1) of the Bank Act.
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| Value of
assets
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(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 insurance
holding company 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 insurance
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 insurance holding
company before the transfer, the value of
the assets as stated in the annual statement.
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| Total value of
all assets
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(5) For the purposes of subsection (1), the
total value of all assets that the insurance
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
insurance holding company, 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
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(6) For the purposes of subsection (1), the
total value of all assets that the insurance
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 insurance 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 insurance holding
company before the transfer, the value of the
assets of the entity as stated in the annual
statement.
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| Transitional
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988. Nothing in this Division 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 Division, the
amount of the loan or investment may not be
increased after that date.
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| Saving
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989. A loan or investment referred to in
section 988 is deemed not to be prohibited by
the provisions of this Division.
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| Meaning of
``non-insuran
ce entity''
|
990. (1) Subject to subsection (2), for the
purpose of section 991, ``non-insurance
entity'' means a Canadian entity, other than a
company, that is controlled by an insurance
holding company or in which an insurance
holding company has a substantial
investment.
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| Exception
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(2) A Canadian entity is not a non-insurance
entity by reason only that a subsidiary of an
insurance holding company that is a company
that controls, or has a substantial investment,
in the Canadian entity.
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| Disclosure of
status
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991. (1) A non-insurance 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 the non-insurance entity is not regulated
as a financial institution in Canada.
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| Manner of
disclosure
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(2) The disclosure shall be
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(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
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(b) in any other manner that may be
prescribed.
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| Exception for
certain
borrowings
|
(3) Subsection (1) does not apply
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(a) to a borrowing of a prescribed class or
type or to a borrowing in prescribed
circumstances or in a prescribed manner; or
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(b) except as may be provided in any
regulations, to a borrowing
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(i) from a person in an amount of
$150,000 or more, or
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(ii) through the issue of instruments in
denominations of $150,000 or more.
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| Exception
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(4) Subsection (1) does not apply if the
non-insurance entity is
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(a) an insurance holding company or a bank
holding company;
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(c) an entity that is controlled by a bank
holding company or in which a bank
holding company has a substantial
investment;
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(d) a trust, loan or insurance corporation
incorporated under an Act of Parliament or
of the legislature of a province;
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(e) a financial institution that is described in
paragraph (g) of the definition ``financial
institution'' in section 2;
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(f) an entity referred to in paragraph
971(1)(f) or (h); or
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| Adequacy of
capital and
liquidity
|
992. (1) An insurance holding company
shall, in relation to its business, maintain
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(a) adequate capital, and
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(b) adequate and appropriate forms of
liquidity,
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and comply with any regulations in relation to
capital and liquidity.
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| Regulations
and guidelines
|
(2) The Governor in Council may make
regulations and the Superintendent may make
guidelines respecting the maintenance by an
insurance holding company of adequate
capital and adequate and appropriate forms of
liquidity.
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| Directives
|
(3) Even if an insurance holding company
is complying with regulations or guidelines
made under subsection (2), the
Superintendent may, by order, direct the
insurance holding company
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(a) to increase its capital; or
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(b) to provide additional liquidity in such
forms and amounts as the Superintendent
may require.
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| Compliance
|
(4) An insurance holding company shall
comply with an order made under subsection
(3) within the time specified by the
Superintendent in the order.
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Supervision
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Returns
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| Required
information
|
993. An insurance holding company shall
provide the Superintendent with such
information, at such times and in such form as
the Superintendent may require.
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| Names of
directors and
auditors
|
994. (1) An insurance holding company
shall, within thirty days after each annual
meeting of the insurance holding company,
provide the Superintendent with a return
showing
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(a) the name, residence and citizenship of
each director holding office immediately
following the meeting;
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(b) the mailing address of each director
holding office immediately following the
meeting;
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(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;
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(d) the names of the directors referred to in
paragraph (a) who are officers or
employees of the insurance holding
company or any affiliate of the insurance
holding company, and the positions they
occupy;
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(e) the name of each committee of the
insurance holding company on which each
director referred to in paragraph (a) serves;
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(f) the date of expiration of the term of each
director referred to in paragraph (a); and
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(g) the name, address and date of
appointment of the auditor of the insurance
holding company.
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| Changes
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(2) Where
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(a) any information relating to a director or
auditor of an insurance 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,
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(b) a vacancy in the position of auditor of
the insurance holding company occurs or is
filled by another person, or
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(c) a vacancy on the board of directors of the
insurance holding company occurs or is
filled,
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the insurance holding company shall
forthwith provide the Superintendent with
such information as is required to maintain the
return in a complete and accurate form.
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| Copy of
by-laws
|
995. An insurance 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.
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| Register for
insurance
holding
company
|
996. (1) The Superintendent shall, in
respect of each insurance holding company,
cause a register to be maintained containing a
copy of
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(a) the incorporating instrument of the
insurance holding company; and
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(b) the information referred to in
paragraphs 994(1)(a) and (c) to (g)
contained in the latest return provided to the
Superintendent under section 994.
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| Form
|
(2) The register may be maintained in
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(a) a bound or loose-leaf form or in a
photographic film form; or
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(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.
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| Access
|
(3) Persons are entitled to reasonable access
to the register and may make copies of or take
extracts from the information in it.
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