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| Lending limit:
companies
with
regulatory
capital of $25
million or less
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461. Subject to section 462, a company that
has twenty-five million dollars or less of
regulatory capital shall not, and shall not
permit its prescribed subsidiaries to, make or
acquire a commercial loan or acquire control
of a permitted entity that holds commercial
loans if the aggregate value of all commercial
loans held by the company and its prescribed
subsidiaries exceeds, or the making or
acquisition of the commercial loan or
acquisition of control of the entity would
cause the aggregate value of all commercial
loans held by the company and its prescribed
subsidiaries to exceed, 5 per cent of the total
assets of the company.
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| Lending limit:
regulatory
capital over
$25 million
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462. A company that has twenty-five
million dollars or less of regulatory capital
that is controlled by a financial institution that
has the equivalent of more than twenty-five
million dollars of regulatory capital or a
company that has more than twenty-five
million dollars of regulatory capital may make
or acquire commercial loans or acquire
control of a permitted entity that holds
commercial loans if the aggregate value of all
commercial loans held by the company and its
prescribed subsidiaries would thereby exceed
the limit set out in section 461 only with the
prior approval in writing of the
Superintendent and in accordance with any
terms and conditions that the Superintendent
may specify.
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| Meaning of
``total assets''
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463. For the purposes of sections 461 and
462, ``total assets'', in respect of a company,
has the meaning given to that expression by
the regulations.
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| Limit on total
property
interest
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464. A company 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 company or any of its
prescribed subsidiaries has an interest if the
aggregate value of all interests of the company
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 company.
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| Limits on
equity
acquisitions
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465. A company 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 company 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 company 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 company has a substantial
investment,
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beneficially owned by the company 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
company.
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| Aggregate
limit
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466. A company 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 company 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 company 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 company 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
company and its prescribed subsidiaries,
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and
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(d) all interests of the company 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 company.
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| Regulations
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467. For the purposes of this Part, the
Governor in Council may make regulations
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(a) defining the interests of a company in
real property;
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(b) determining the method of valuing those
interests; or
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(c) exempting classes of companies from
the application of sections 464, 465 and
466.
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| Divestment
order
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468. (1) The Superintendent may, by order,
direct a company 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 company or any
entity it controls in shares of a body
corporate or in ownership interests in an
unincorporated entity enables the company
to control the body corporate or the
unincorporated entity, or
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(b) the 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 company, the
entity it controls or the nominee,
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the Superintendent may, by order, require the
company, within any period that the
Superintendent considers reasonable, to do all
things necessary to ensure that the 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
|
(3) If
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(i) fails to provide or obtain within a
reasonable time the undertakings
referred to in subsection 455(1), (2) or
(4), or
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(ii) is in default of an undertaking
referred to in subsection 455(1) or (2) and
the default is not remedied within ninety
days after the day of receipt by the
company of a notice from the
Superintendent of the default, or
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(b) a permitted entity referred to in
subsection 455(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
company of a notice from the
Superintendent of the default,
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the Superintendent may, by order, require the
company, within any period that the
Superintendent considers reasonable, to do all
things necessary to ensure that the 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 a company has a
substantial investment permitted by this Part.
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| Deemed
temporary
investment
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469. If a company controls or has a
substantial investment in an entity as
permitted by this Part and the 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 453(5) or (6) , the company is
deemed to have acquired, on the day the
company becomes aware of the change, a
temporary investment in respect of which
section 456 applies.
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| Asset
transactions
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470. (1) A 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
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 company, as shown in the last annual
statement of the company 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) an asset that is a debt obligation referred
to in subparagraphs (b)(i) to (v) of the
definition ``commercial loan'' in
subsection 449(1); or
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(b) a transaction or series of transactions by
a company with another financial
institution as a result of the company's
participation in one or more syndicated
loans with that financial institution.
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| Exception
|
(3) The approval of the Superintendent is
not required if
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(a) the company sells assets under a sale
agreement that is approved by the Minister
under section 241;
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(b) the company or its subsidiary acquires
shares of, or ownership interests in, an
entity for which the approval of the Minister
under Part VII or subsection 453(5) is
required or the approval of the
Superintendent under subsection 453(6) is
required; or
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(c) the transaction has been approved by the
Minister under subsection 678(1) of the
Bank Act or subsection 715(1) of the
Insurance Companies 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 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 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 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 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
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
|
(6) For the purposes of subsection (1), the
total value of all assets that the 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
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 company
before the transfer, the value of the assets of
the entity as stated in the annual statement.
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| Transitional
|
471. Nothing in this Part requires
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(a) the termination of a loan made before
June 25, 1999;
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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 456(2), 457(3) and
458(3), be increased after that date.
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551. (1) Subsection 475(2) of the Act is
amended by striking out the word ``or'' at
the end of paragraph (c) and by adding the
following after paragraph (d):
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(e) transactions approved by the Minister
under subsection 678(1) of the Bank Act or
subsection 715(1) of the Insurance
Companies Act; or
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(f) if a company 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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(2) Subsection 475(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 company
is not a related party of a company 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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552. The Act is amended by adding the
following after section 483:
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| Transactions
with holding
companies
|
483.1 (1) Subject to subsection (2) and
sections 483.2 and 483.3, if a widely held
insurance holding company or a widely held
bank holding company has a significant
interest in any class of shares of a company,
the company may enter into any transaction
with the holding company or with any other
related party of the company that is an entity
in which the holding company has a
substantial investment.
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| Policies and
procedures
|
(2) The company shall adhere to policies
and procedures established under subsection
199(3) when entering into the transaction.
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| Restriction
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483.2 (1) If a company enters into a
transaction with a related party of the
company with whom the company may enter
into transactions under subsection 483.1(1)
and that is not a federal financial institution,
the company 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 company would exceed
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(a) in respect of all transactions of the
company with the related party, the
prescribed percentage of the company's
regulatory capital or, if no percentage is
prescribed, five per cent of the company's
regulatory capital; or
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(b) in respect of all transactions of the
company with such related parties of the
company, the prescribed percentage of the
company's regulatory capital or, if no
percentage is prescribed, ten per cent of the
company'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
company, 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
company; and
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(b) impose limits on transactions by the
company with related parties with whom
the company may enter into transactions
under subsection 483.1(1) that are federal
financial institutions.
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| Order
|
(3) The Superintendent may, by order,
increase the limit in paragraph (1)(a) or (b)
that would otherwise apply to a company on
transactions by the company with related
parties that are financial institutions that are
regulated in a manner acceptable to the
Superintendent.
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| Assets
transactions
|
483.3 (1) Despite subsection 482(3), a
company shall not, without the approval of the
Superintendent and its conduct review
committee, directly or indirectly acquire
assets from a related party of the company
with whom the company may enter into
transactions under subsection 483.1(1) that is
not a federal financial institution, or directly
or indirectly transfer assets to such a related
party if
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A + B **** C
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