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Bill C-38

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      (iii) two or more persons who are acting in concert in relation to the entity and in relation to the foreign bank would, if they were one person, control the foreign bank and control the entity,

      (iv) the foreign bank, or an entity associated with the foreign bank, acting in concert in relation to the entity with one or more other persons would, if they were one person, control the entity, or

      (v) a person who controls the entity acts in concert in relation to the foreign bank, with one or more other persons, such that, if they were one person, they would control the foreign bank;

    (b) an entity may be associated with more than one foreign bank; and

    (c) a foreign bank may be associated with another foreign bank.

Deemed substantial investment by foreign bank

(3) For the purposes of this Part, a foreign bank is deemed to hold a substantial investment in a Canadian entity if

    (a) the foreign bank and one or more entities associated with the foreign bank, or

    (b) two or more entities associated with the foreign bank

would, if they were one person, hold a substantial investment in the Canadian entity.

Deemed substantial investment by entity associated

(4) For the purposes of this Part, an entity associated with a foreign bank is deemed to hold a substantial investment in a Canadian entity if the entity and one or more other entities associated with the foreign bank would, if they were one person, hold a substantial investment in the Canadian entity.

Deemed control by foreign bank

(5) For the purposes of this Part, a foreign bank is deemed to control a Canadian entity if

    (a) the foreign bank and one or more entities associated with the foreign bank, or

    (b) two or more entities associated with the foreign bank

would, if they were one person, control the Canadian entity.

Deemed control by entity associated

(6) For the purposes of this Part, an entity associated with a foreign bank is deemed to control a Canadian entity if the entity and one or more other entities associated with the foreign bank would, if they were one person, control the Canadian entity.

Foreign bank a major owner

(7) For the purposes of this Part, a foreign bank

    (a) is a major owner of an unincorporated Canadian entity if the foreign bank, either alone or together with one or more entities associated with the foreign bank, beneficially owns more than 35 per cent of the ownership interests, however designated, into which the unincorporated Canadian entity is divided; and

    (b) is a major owner of a Canadian body corporate if the foreign bank, either alone or together with one or more entities associated with the foreign bank, beneficially owns

      (i) more than 20 per cent of the outstanding shares of any class of voting shares of the Canadian body corporate, or

      (ii) more than 30 per cent of the outstanding shares of any class of non-voting shares of the Canadian body corporate.

Entity associated a major owner

(8) For the purposes of this Part, an entity associated with a foreign bank

    (a) is a major owner of an unincorporated Canadian entity if the entity associated with the foreign bank, either alone or together with one or more other entities associated with the foreign bank, beneficially owns more than 35 percent of the ownership interests, however designated, into which the unincorporated Canadian entity is divided; and

    (b) is a major owner of a Canadian body corporate if the entity associated with the foreign bank, either alone or together with one or more other entities associated with the foreign bank, beneficially owns

      (i) more than 20 per cent of the outstanding shares of any class of voting shares of the Canadian body corporate, or

      (ii) more than 30 per cent of the outstanding shares of any class of non-voting shares of the Canadian body corporate.

Foreign bank deemed major owner

(9) For the purposes of this Part, a foreign bank is deemed to be a major owner of a Canadian entity if

    (a) the foreign bank is acting in concert in relation to the Canadian entity with one or more other persons such that, if they were one person, they would be a major owner of the Canadian entity; or

    (b) two or more persons who are acting in concert in relation to the Canadian entity and in relation to the foreign bank would, if they were one person, control the foreign bank and be a major owner of the Canadian entity.

Entity associated deemed major owner

(10) For the purposes of this Part, an entity associated with a foreign bank is deemed to be a major owner of a Canadian entity if it is acting in concert in relation to the Canadian entity with one or more other persons such that, if they were one person, they would be a major owner of the Canadian entity.

Member of foreign bank's group

(11) For the purposes of this Part, a member of a foreign bank's group is any of the following:

    (a) an entity associated with the foreign bank;

    (b) an entity in which the foreign bank or an entity associated with the foreign bank holds a substantial investment; and

    (c) a prescribed entity, in relation to the foreign bank.

Exemption order of Minister

507.1 (1) The Minister may, by order, determine that this Part, other than this section, sections 507 and 517, subsection 520(3) and sections 521, 522, 522.1 and 522.2, shall not apply to a foreign bank if

    (a) the foreign bank is not designated under section 517;

    (b) the foreign bank is not associated with a foreign bank designated under section 517;

    (c) the conditions for designation described in section 517 are not, in the opinion of the Minister, met by the foreign bank; and

    (d) the conditions for designation described in section 517 are not, in the opinion of the Minister, met by another foreign bank that is an entity associated with the foreign bank.

Revocation of order

(2) An order under subsection (1) is deemed to be revoked if the foreign bank, or another foreign bank that is an entity associated with the foreign bank, is designated under section 517; the Minister shall revoke such an order if the Minister is satisfied that the conditions for designation described in that section are met by the foreign bank or by another foreign bank that is an entity associated with the foreign bank.

Change in circumstances

(3) A foreign bank that is the subject of an order under subsection (1), or another foreign bank that is an entity associated with the foreign bank, shall advise the Minister of any change in circumstances affecting its eligibility for designation under section 517.

Effect on associated entities

(4) This Part, other than this section, sections 507 and 517, subsection 520(3) and sections 521, 522, 522.1 and 522.2, does not apply to an entity associated with a foreign bank that is the subject of an order under subsection (1).

Effect on non-bank affiliates

(5) Section 514 does not apply to a non-bank affiliate of a foreign bank that is a non-bank affiliate of a foreign bank by reason only of its relation to a foreign bank that is the subject of an order under subsection (1).

General Prohibitions and Exceptions

Prohibited activities

508. (1) A foreign bank or an entity associated with a foreign bank shall not

    (a) engage, in Canada, in

      (i) any activity that a bank is permitted to engage in, or is prohibited from engaging in, by or under sections 409 to 418, or

      (ii) any trade or business;

    (b) maintain a branch in Canada for any purpose;

    (c) establish, maintain or acquire for use in Canada an automated banking machine, a remote service unit or a similar automated service, or accept data from such a machine, unit or service; or

    (d) acquire or hold control of, or a substantial investment in, a Canadian entity.

Guarantee and acceptance of securities and bills

(2) Subject to subsection (3), sections 515 and 515.1 and subsections 516(4) and 517.1(3),

    (a) a foreign bank shall not guarantee any securities or accept any bills of exchange or depository bills that are issued by a person resident in Canada and that are intended by the issuer or by any party to the security or bill to be sold or traded in Canada; and

    (b) no person shall participate in any arrangement in connection with a guarantee or acceptance prohibited by paragraph (a).

Exception

(3) Subsection (2) does not apply in respect of the guarantee or acceptance by a foreign bank of securities, bills of exchange or depository bills that are

    (a) issued by a non-bank affiliate of the foreign bank; or

    (b) issued by any other person resident in Canada and guaranteed or accepted by

      (i) a bank that is a subsidiary of the foreign bank or an entity associated with the foreign bank,

      (ii) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i) in which a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank, holds a substantial investment,

      (iii) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i) that is controlled by a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank,

      (iv) a Canadian entity referred to in any of paragraphs 468(1)(b) to (i) that is a non-bank affiliate of the foreign bank, or

      (v) a prescribed entity.

Accessing accounts

(4) Nothing in paragraphs (1)(a) to (c) shall be construed as prohibiting a foreign bank, or an entity associated with a foreign bank, from entering into any arrangement with one or more Canadian financial institutions by which customers of the foreign bank or the entity who are natural persons not ordinarily resident in Canada may access in Canada their accounts located outside Canada through the use of automated banking machines located in Canada and operated by the Canadian financial institution or institutions.

Quotations

(5) Nothing in paragraph (1)(c) shall be construed as prohibiting a foreign bank, or an entity associated with a foreign bank, from establishing, maintaining or using a private telephone service or similar facility for the purpose of quoting to customers in Canada, or entering with customers in Canada into verbal agreements relating to, foreign exchange, deposit or loan rates if there is no accounting or information processing involved in the private telephone service or similar facility.

Regulations

(6) The Governor in Council may make regulations exempting the undertaking of any activities that the Governor in Council may specify from any of the prohibitions set out in subsection (1) or (2).

Transitional

(7) Subject to subsection (8), paragraph (1)(d) does not apply in respect of the holding of control of, or a substantial investment in, a Canadian entity whose principal activity in Canada is an activity referred to in any of subparagraphs 518(3)(a)(i) to (v), as they read immediately before the coming into force of this Part, and that was acquired by a foreign bank or an entity associated with a foreign bank prior to August 1, 1997 and before

    (a) the foreign bank became a foreign bank or the entity associated with a foreign bank became an entity associated with a foreign bank, as the case may be; or

    (b) the Canadian entity's principal activity in Canada became an activity described in those subparagraphs.

Restriction

(8) Subsection (7) applies only if the foreign bank or an entity associated with the foreign bank

    (a) is not an authorized foreign bank; and

    (b) does not control, and is not a major shareholder of, a bank or a bank holding company.

Activity carried out by agent, etc.

508.1 For the purposes of this Part, a foreign bank is deemed to have carried out anything prohibited by section 508 if it is carried out by

    (a) a nominee or agent of the foreign bank;

    (b) an entity controlled by the foreign bank;

    (c) a nominee or agent of an entity controlled by the foreign bank; or

    (d) a Canadian entity in which the foreign bank has a substantial investment.

Activity carried out by agent, etc.

508.2 For the purposes of this Part, an entity associated with a foreign bank is deemed to have carried out anything prohibited by section 508 if it is carried out by

    (a) a nominee or agent of the entity associated with the foreign bank;

    (b) an entity controlled by the entity associated with the foreign bank;

    (c) a nominee or agent of an entity controlled by the entity associated with the foreign bank; or

    (d) a Canadian entity in which the entity associated with a foreign bank has a substantial investment.

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