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| Powers of
board of
directors
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73. (1) For the purposes of this Part, the
board of directors may by resolution
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(a) borrow money in an amount authorized
by the resolution;
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(b) issue securities of the Authority;
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(c) lend securities to generate income, if the
loan is fully secured;
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(d) enter into agreements for risk
management purposes, including swaps;
and
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(i) payments related to the issuance of
securities,
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(ii) the registration, transfer,
management and redemption of
securities,
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(iii) the re-issuance, reinstatement or
other disposition of lost, stolen,
destroyed or damaged securities or
interest coupons,
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(iv) the examination, cancellation or
destruction of securities and of materials
used in their production, or
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(v) the timing of the issuance of
securities.
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| Security
issuance
requirements
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(2) A resolution respecting the issuance of
securities shall set out
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(a) the rate of interest;
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(b) the time and place of repayment of
principal and interest; and
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(c) the currency in which repayment of
principal and interest will be made.
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| Security
issuance
resolutions
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(3) A resolution respecting the issuance of
securities may provide that
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(a) the securities are to be redeemable in
advance of maturity at a time and price set
out in the resolution;
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(b) all or any part of the securities may be
paid, refunded or renewed;
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(c) the securities are to be issued in an
amount sufficient to realize the amount of
any securities called in and paid before
maturity, for a term not longer than the
remainder of the term of the securities
called in and paid; or
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(d) the securities and any interest coupons
attached to them are to be in the form set out
in the resolution, and are to be
exchangeable for other securities of the
same issue on any terms and conditions set
out in the resolution.
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| Amount of
issue
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(4) The Authority may issue securities the
principal amounts of which, after payment of
any discount and the costs of issue and sale,
will realize the net amount authorized by the
board of directors in a resolution made under
paragraph (1)(a).
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| Declaration
conclusive
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(5) A declaration in a resolution authorizing
the issuance of securities that it is necessary to
issue securities in the principal amount
authorized in order to realize the net amount
authorized is conclusive evidence of that fact.
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| Sale price
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(6) The board of directors may sell
securities at their par value or at other than par
value.
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| Delegation
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(7) The board of directors may delegate its
powers under this section to a committee of
directors and officers of the Authority, subject
to such limitations as the board of directors
may impose.
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| Application to
become
borrowing
member
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74. (1) A first nation may apply to the
Authority to become a borrowing member.
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| Criteria
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(2) The Authority shall accept a first nation
as a borrowing member only if the First
Nations Financial Management Board has
issued to the first nation a certificate under
subsection 48(3) and has not subsequently
revoked it.
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| Ceasing to be
a borrowing
member
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75. A first nation may cease to be a
borrowing member only with the consent of
all other borrowing members.
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| Priority
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76. (1) The Authority has a priority over all
other creditors of a first nation that is
insolvent, for any moneys that are authorized
to be paid to the Authority under a law made
under paragraph 4(1)(b) or (d).
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| Debts to the
Crown
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(2) For greater certainty, subsection (1)
does not apply to Her Majesty.
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| Limitations -
infrastructure
loans
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77. The Authority shall not make a
long-term loan to a borrowing member for the
purpose of financing capital infrastructure for
the provision of local services on reserve lands
unless
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(a) the First Nations Tax Commission has
approved a law made by the borrowing
member under paragraph 4(1)(d); and
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(b) the loan is to be paid out of the property
tax revenues of the borrowing member in
priority to other creditors of the borrowing
member.
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| Restriction on
financing
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78. A borrowing member shall not obtain
long-term financing secured by property tax
revenues from any person other than the First
Nations Finance Authority.
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| Limitations -
short-term
loans
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79. The Authority shall not make a
short-term loan to a borrowing member for a
purpose described in subparagraph 72(a)(iii)
unless the loan is made in anticipation of local
revenues of the borrowing member set out in
a law made under paragraph 4(1)(b).
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| Sinking fund
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80. (1) The Authority shall establish a
sinking fund, or any other system of
repayment prescribed by regulation, to fulfil
its repayment obligations to the holders of
each security issued by the Authority.
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| Separate
accounts
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(2) Where a sinking fund is established, a
separate sinking fund account shall be kept for
each borrowing member participating in a
security issued by the Authority.
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| Sinking fund
investments
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(3) Funds in a sinking fund may be invested
only in
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(a) securities issued or guaranteed by
Canada or a province;
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(b) securities of a local, municipal or
regional government in Canada;
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(c) investments guaranteed by a bank, trust
company or credit union; or
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(d) deposits in a bank or trust company in
Canada or non-equity or membership
shares in a credit union.
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| Surpluses
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81. (1) The Authority may declare a surplus
in a sinking fund and use the surplus, in order
of priority, to
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(a) replenish any amounts paid out of the
debt reserve fund; and
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(b) make a distribution to borrowing
members who are participating in that fund.
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| Recovery
from sinking
fund
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(2) The Authority may recover fees payable
by a borrowing member from any surplus to be
distributed to that member under paragraph
(1)(b).
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| Debt reserve
fund
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82. (1) The Authority shall establish a debt
reserve fund to make payments or sinking
fund contributions for which insufficient
moneys are available from borrowing
members.
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| Provisioning
of fund
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(2) Subject to the regulations, the Authority
shall withhold 5% of the amount of any loan
to a borrowing member and deposit that
amount in the debt reserve fund.
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| Separate
account
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(3) A separate account shall be kept for each
security issued and for each borrowing
member contributing to the debt reserve fund.
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| Investments
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(4) The funds of the debt reserve fund may
be invested only in securities, investments or
deposits referred to in paragraph 80(3)(a), (c)
or (d) that mature or are callable within five
years, 25% of which must be callable within
90 days.
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| Liability for
shortfall
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(5) Where payments from the debt reserve
fund reduce its balance
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(a) by less than 50% of the total amount
contributed by borrowing members, the
Authority may, in accordance with the
regulations, require all borrowing members
to pay amounts sufficient to replenish the
debt reserve fund; and
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(b) by 50% or more of the total amount
contributed by borrowing members,
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(i) the Authority shall, in accordance
with the regulations, require all
borrowing members to pay without delay
amounts sufficient to replenish the debt
reserve fund, and
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(ii) the borrowing members shall recover
those amounts under their property
taxation laws.
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| Repayment
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(6) Money contributed by a borrowing
member to the debt reserve fund and
investment income received on it shall be
repaid by the Authority to the borrowing
member when all obligations in respect of the
security in respect of which the money was
contributed have been satisfied.
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| Credit
enhancement
fund
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83. (1) The Authority shall establish a fund
for the enhancement of the Authority's credit
rating.
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| Investments
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(2) The funds of the credit enhancement
fund may be invested only in securities,
investments or deposits referred to in
paragraph 80(3)(a), (c) or (d) that mature or
are callable within five years, 25% of which
must be callable within 90 days.
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| Investment
income
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(3) Investment income from the credit
enhancement fund may be used
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(a) to temporarily offset any shortfalls in the
debt reserve fund;
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(b) to defray the Authority's costs of
operation; and
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(c) for any other purpose prescribed by
regulation.
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| Default by
first nation
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84. (1) Where a borrowing member fails to
make a payment to the Authority, to fulfil any
other obligation under a borrowing agreement
with the Authority or to pay a charge imposed
by the Authority under this Part, the Authority
shall
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(a) notify the borrowing member of the
failure; and
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(b) send a notice of the failure to the First
Nations Financial Management Board and
the First Nations Tax Commission, together
with evidence of the failure and a copy of
any relevant documents and records.
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| Requirement
for report
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(2) Where a failure referred to in subsection
(1) relates to an obligation other than
payment, the Authority may require that the
First Nations Financial Management Board
review and report on the reasons for the
failure.
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| Report
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(3) On receipt of a notice referred to in
paragraph (1)(b) in respect of a failure related
to an obligation other than payment, the First
Nations Financial Management Board shall
advise the Authority in writing of its opinion
on the reasons for the failure and recommend
any intervention under section 50 or 51 that it
considers appropriate.
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| Required
intervention
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(4) The Authority may, by notice in writing,
require the First Nations Financial
Management Board to either - at the Board's
discretion - impose a co-management
arrangement on a borrowing member or
assume third-party management of the first
nation's local revenues
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(a) where the borrowing member fails to
make a payment to the Authority under a
borrowing agreement with the Authority, or
to pay a charge imposed by the Authority
under this Part; or
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(b) on receipt of a report of the Board under
subsection (3) in respect of the borrowing
member.
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| Short-term
pooled
investment
funds
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85. (1) The Authority may establish
short-term pooled investment funds.
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| Investments
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(2) Funds in a short-term pooled investment
fund may be invested only in
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(a) securities issued or guaranteed by
Canada, a province or the United States;
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(b) fixed-term deposits, notes, certificates
or other short-term paper of, or guaranteed
by, a bank, trust company or credit union,
including swaps in United States currency;
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(c) securities issued by the Authority or by
a local, municipal or regional government
in Canada;
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(d) commercial paper issued by a Canadian
company that is rated in the highest
category by at least two recognized
security-rating institutions;
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(e) any class of investments permitted
under an Act of a province relating to
trustees; or
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(f) any other investments or class of
investments prescribed by regulation.
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