Bill C-38

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First Reading

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1999, c. 28, s. 35(1)	156. Subsection 613(1) of the Act is replaced by the following:
Examination of authorized foreign banks	613. (1) The Superintendent, from time to time, but, in the case of an authorized foreign bank that is not subject to the restrictions and requirements referred to in subsection 524(2), at least once in each calendar year, shall make or cause to be made any examination and inquiry into the business and affairs of each authorized foreign bank that the Superintendent considers to be necessary or expedient to determine whether the authorized foreign bank is complying with the provisions of this Act and, after the conclusion of each examination and inquiry, shall report on it to the Minister.
	*157. The Act is amended by adding the following after the heading ``Remedial Powers'' after section 614:*
	Prudential Agreements
Prudential agreement	614.1 The Superintendent may enter into an agreement, called a ``prudential agreement'', with an authorized foreign bank for the purposes of implementing any measure designed to protect the interests of its depositors and creditors in respect of its business in Canada.
1999, c. 28, s. 35(1)	158. Subsection 616(1) of the Act is replaced by the following:
Court enforcement	616. (1) Where an authorized foreign bank or a person
	(a) is contravening or has failed to comply with a prudential agreement entered into under section 614.1 or a direction of the Superintendent made under subsection 615(1) or (3),
	(b) is contravening this Act, or
	(c) has omitted to do any thing under this Act that is required to be done by or on the part of the authorized foreign bank or person,
	the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the authorized foreign bank or person to comply with the prudential agreement or the direction, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.
	159. The Act is amended by adding the following after section 617:
	Disqualification and Removal of Principal Officers
Application	617.1 (1) This section applies only in respect of an authorized foreign bank
	(a) that has been notified by the Superintendent that this section applies to it where the authorized foreign bank is subject to measures designed to protect the interests of its depositors and creditors in respect of its business in Canada, which measures
	(i) have been specified by the Superintendent by way of conditions or limitations in respect of the order approving the commencement and carrying on of business in Canada by the authorized foreign bank, or
	(ii) are contained in a prudential agreement entered into under section 614.1 or an undertaking given by the authorized foreign bank to the Superintendent; or
	(b) that is the subject of a direction made under section 615 or an order made under section 617.
Information to be provided	(2) An authorized foreign bank shall provide the Superintendent with the name of any person who has been selected by the authorized foreign bank for appointment as principal officer, together with such other information about the background, business record and experience of the person as the Superintendent may require.
When information to be provided	(3) The information required by subsection (2) shall be provided to the Superintendent at least 30 days prior to the date of the appointment or within any shorter period that the Superintendent may allow.
Disqualifi- cation	(4) If the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold the position of principal officer, the Superintendent may, by order, disqualify the person from being appointed to that office.
Risk of prejudice	(5) In forming an opinion under subsection (4), the Superintendent must consider whether the interests of the depositors and creditors of the authorized foreign bank in respect of its business in Canada would likely be prejudiced if the person were to take office.
Representa- tions may be made	(6) The Superintendent must in writing notify the person concerned and the authorized foreign bank of an order that the Superintendent proposes to make under subsection (4) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.
Prohibition	(7) If an order is made under subsection (4) disqualifying a person from being appointed as principal officer, the person shall not be, and the authorized foreign bank shall not permit the person to be, appointed to that position.
Removal	617.2 (1) The Superintendent may, by order, remove a person from office as the principal officer of an authorized foreign bank if the Superintendent is of the opinion that the person is not suitable to hold that office
	(a) on the basis of the competence, business record, experience, conduct or character of the person; or
	(b) because the person has contravened or, by action or negligence, has contributed to the contravention of
	(i) this Act or the regulations made under it,
	(ii) a direction made under section 615,
	(iii) an order made under section 617,
	(iv) a condition or limitation in respect of the order approving the commencement and carrying on of business in Canada by the authorized foreign bank, or
	(v) a prudential agreement entered into under section 614.1 or an undertaking given by the authorized foreign bank to the Superintendent.
Risk of prejudice	(2) In forming an opinion under subsection (1), the Superintendent must consider whether the interests of the depositors and creditors of the authorized foreign bank in respect of its business in Canada have been or are likely to be prejudiced by the person's holding office as principal officer.
Representa- tions may be made	(3) The Superintendent must in writing notify the principal officer and the authorized foreign bank of any removal order that the Superintendent proposes to make under subsection (1) and must afford them an opportunity within 15 days after the date of the notice, or within any longer period that the Superintendent allows, to make representations to the Superintendent in relation to the matter.
Suspension	(4) If the Superintendent is of the opinion that the public interest is likely to be prejudiced by the principal officer continuing to exercise the powers or carry out the duties and functions of that office during the period for making representations, the Superintendent may make an order suspending the principal officer. The suspension may not extend beyond 10 days after the expiration of that period.
Notice of order	(5) The Superintendent shall, without delay, notify the principal officer and the authorized foreign bank of a removal order or suspension order.
Consequences of removal order	(6) The principal officer ceases to hold that office as of the date the removal order is made or any later date specified in the order.
Appeal	(7) The principal officer or the authorized foreign bank may, within 30 days after the date of receipt of notice of the removal order under subsection (5), or within any longer period that the Court allows, appeal the matter to the Federal Court.
Powers of Federal Court	(8) The Federal Court, in the case of an appeal, may dismiss the appeal or set aside the removal order.
Order not stayed by appeal	(9) A removal order is not stayed by an appeal.
1999, c. 28, s. 35(1)	160. (1) Paragraph 619(2)(c) of the Act is repealed.
	(2) Subsection 619(2) of the Act is amended by striking out the word ``or'' at the end of paragraph (e), by adding the word ``or'' at the end of paragraph (f) and by adding the following after paragraph (f):
	(g) in the opinion of the Superintendent, any other state of affairs exists in respect of the authorized foreign bank that may be materially prejudicial to the interests of the authorized foreign bank's depositors or creditors in respect of its business in Canada or the owners of any assets under the authorized foreign bank's administration in respect of its business in Canada, including where proceedings under a law relating to bankruptcy or insolvency have been commenced in respect of the holding body corporate of the authorized foreign bank.
1999, c. 28, s. 35(1)	161. Subsection 627(2) of the Act is replaced by the following:
Priority not affected	(2) Nothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of an authorized foreign bank.
	162. The title of Part XIII of the Act is replaced by the following:
	REGULATION OF BANKS - SUPERINTENDENT
1999, c. 28, s. 39	163. Sections 633 and 634 of the Act are replaced by the following:
Copy of by-laws	633. A bank 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.
Register of banks	634. (1) The Superintendent shall, in respect of each bank for which an order approving the commencement and carrying on of business has been made, cause a register to be maintained containing a copy of
	(a) the incorporating instrument of the bank; and
	(b) the information referred to in paragraphs 632(1)(a), (c) and (e) to (h) contained in the latest return sent to the Superintendent under section 632.
Form	(2) The register may be maintained in
	(a) a bound or loose-leaf form or in a photographic film form; or
	(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.
Access	(3) Persons are entitled to reasonable access to the register and may make copies of or take extracts from the information in it.
Evidence	(4) A statement containing information in the register and purporting to be certified by the Superintendent is admissible in evidence in all courts as proof, in the absence of evidence to the contrary, of the facts stated in the statement without proof of the appointment or signature of the Superintendent.
1999, c. 28, s. 41	164. Subsection 636(1) of the Act is replaced by the following:
Confidential information	636. (1) Subject to sections 638 and 639, all information regarding the business or affairs of a bank or a foreign bank , or regarding a person dealing with a bank or a foreign bank , that is obtained by the Superintendent, or by any person acting under the direction of the Superintendent, as a result of the administration or enforcement of any Act of Parliament, and all information prepared from that information , is confidential and shall be treated accordingly.
1996, c. 6, s. 12; 1999, c. 28, s. 46	165. Section 642 of the Act is replaced by the following:
Report respecting disclosure	642. The Superintendent shall prepare a report, to be included in the report referred to in section 40 of the Office of the Superintendent of Financial Institutions Act, respecting the disclosure of information by banks and describing the state of progress made in enhancing the disclosure of information in the financial services industry.
1999, c. 28, s. 46	166. Subsection 643(1) of the Act is replaced by the following:
Examination of banks	643. (1) The Superintendent, from time to time, but at least once in each calendar year, shall make or cause to be made any examination and inquiry into the business and affairs of each bank that the Superintendent considers to be necessary or expedient to determine whether the bank is complying with the provisions of this Act and whether the bank is in a sound financial condition and, after the conclusion of each examination and inquiry, shall report on it to the Minister.
	*167. The Act is amended by adding the following after the heading ``Remedial Powers'' after section 644:*
	Prudential Agreements
Prudential agreement	644.1 The Superintendent may enter into an agreement, called a ``prudential agreement'', with a bank for the purposes of implementing any measure designed to maintain or improve its safety and soundness.
1999, c. 28, s. 48	168. Subsection 646(1) of the Act is replaced by the following:
Court enforcement	646. (1) Where a bank or person
	(a) is contravening or has failed to comply with a prudential agreement entered into under section 644.1 or a direction of the Superintendent made under subsection 645(1) or (3),
	(b) is contravening this Act, or
	(c) has omitted to do any thing under this Act that is required to be done by or on the part of the bank or person,
	the Superintendent may, in addition to any other action that may be taken under this Act, apply to a court for an order requiring the bank or person to comply with the prudential agreement or the direction, cease the contravention or do any thing that is required to be done, and on such application the court may so order and make any other order it thinks fit.
1996, c. 6, s. 14	169. The heading before section 647 of the Act is replaced by the following:
	Disqualification and Removal of Directors or Senior Officers
Meaning of ``senior officer''	646.1 In sections 647 and 647.1, ``senior officer'' means the chief executive officer, secretary, treasurer or controller of a bank or any other officer reporting directly to the bank's board of directors or chief executive officer.
1996, c. 6, s. 14; 1999, c. 28, s. 49	170. (1) Paragraphs 647(1)(a) and (b) of the Act are replaced by the following:
	(a) that has been notified by the Superintendent that this section applies to it where the bank is subject to measures designed to maintain or improve its safety and soundness, which measures
	(i) have been specified by the Superintendent by way of conditions or limitations in respect of the order approving the commencement and carrying on of the bank's business, or
	(ii) are contained in a prudential agreement entered into under section 644.1 or an undertaking given by the bank to the Superintendent; or
	(b) that is the subject of a direction made under section 645 or an order made under subsection 485(3).
1996, c. 6, s. 14; 1999, c. 28, s. 49(1)	(2) Paragraph 647(2)(b) of the Act is replaced by the following:
	(b) each person who has been selected by the bank for appointment as a senior officer , and
1996, c. 6, s. 14; 1999, c. 28, s. 49(1)	(3) The portion of subsection 647(2) of the French version of the Act after paragraph (c) is replaced by the following:
	Elle lui communique également les renseignements personnels qui les concernent et les renseignements sur leur expérience et leur dossier professionnel qu'il peut exiger .
1996, c. 6, s. 14; 1999, c. 28, s. 49(1)	(4) Subsections 647(4) and (5) of the Act are replaced by the following:
Disqualifi- cation or removal	(4) If the Superintendent is of the opinion that, on the basis of the competence, business record, experience, conduct or character of a person, he or she is not suitable to hold that position, the Superintendent may, by order,

Bill C-38

REGULATION OF BANKS - SUPERINTENDENT