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Bill C-38

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First Reading

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	(3) Section 410 of the Act is amended by adding the following after subsection (1):
Related party of retail association	(1.1) Subject to the regulations, for the purposes of this Part, a person is a related party of a retail association if the person is
	(a) a member of the association or of an association that controls, or has a significant interest in, the association;
	(b) a director or senior officer of the association or of a body corporate that controls the association;
	(c) the spouse, or a child who is less than eighteen years of age, of a person referred to in paragraph (a) or (b);
	(d) an entity that is controlled, within the meaning of section 3, determined without regard to paragraph 3(1)(e), by a person referred to in any of paragraphs (a) to (c); or
	(e) a person, or a member of a class of persons, designated under subsection (2) or (3) as, or deemed under subsection (4) to be, a related party of the association.
Exception - subsidiaries and substantial investments of associations	(1.2) If an entity in which an association has a substantial investment would, but for this subsection, be a related party of the association only because a person who controls the association controls the entity or has a substantial investment in the entity, and the person does not control the entity or have a substantial investment in the entity otherwise than through the person's controlling interest in the association, the entity is not a related party of the association.
	304. (1) Paragraph 411(2)(a) of the Act is amended by adding the following after subparagraph (ii):
	(ii.1) in exchange for shares of a body corporate that has been continued as an association under Part III,
	(2) Paragraph 411(2)(a) of the Act is amended by striking out the word ``or'' at the end of subparagraph (iii) and by adding the following after subparagraph (iii):
	(iii.1) by way of consideration in accordance with the terms of a sale agreement under Part VII, or
	(3) Section 411 of the Act is amended by adding the following after subsection (3):
Exception for holding body corporate	(4) A holding body corporate of an association other than a retail association is not a related party of the association.
Substantial investment - related party exception	(5) If a holding body corporate of an association is, because of subsection (4), not a related party of the association, any entity in which the holding body corporate has a substantial investment is not a related party of the association if no related party of the association has a substantial investment in the entity otherwise than through the control of the holding body corporate.
	305. The Act is amended by adding the following after section 412:
Deeming	412.1 For the purposes of this Part, a transaction between an association and another person is deemed to be a transaction with a related party of the association if the proceeds of the transaction are transferred to or used for the benefit of a related party of the association or if the transaction otherwise benefits a related party of the association.
	306. Section 418 of the Act is amended by adding the following after subsection (3):
Asset transactions in restructuring	(3.1) Despite any of the provisions of subsections (1) and (2), an association may acquire any assets from, or dispose of any assets to, a related party of the association as part of, or in the course of, a restructuring, if the acquisition or disposition has been approved in writing by the Superintendent.
	307. (1) Subsection 419(1) of the Act is amended by adding the following after paragraph (a):
	(a.1) in the case of a retail association, involves, subject to subsection (4), the provision of services, other than loans or guarantees, normally provided to the public by the association in the ordinary course of business;
	(2) Section 419 of the Act is amended by adding the following after subsection (3):
Loans or guarantees not included	(4) The provision of services, for the purposes of paragraph (1)(a.1), does not include the making of loans or guarantees.
1997, c. 15, s. 153(1)	308. (1) Subparagraphs 420(1)(a)(i) and (ii) of the English version of the Act are replaced by the following:
	(i) a director or senior officer of the association or of an entity that controls the association , or
	(ii) the spouse, or a child who is less than eighteen years of age, of a director or senior officer of the association or of an entity that controls the association .
1997, c. 15, s. 153(1)	(2) Subparagraphs 420(1)(b)(i) and (ii) of the English version of the Act are replaced by the following:
	(i) a director or senior officer of the association or of an entity that controls the association , or
	(ii) the spouse, or a child who is less than eighteen years of age, of a director or senior officer of the association or of an entity that controls the association .
1997, c. 15, s. 153(2)	(3) Subsection 420(2) of the Act is replaced by the following:
Loans to full-time senior officers	(2) An association may, with respect to a related party of the association referred to in subsection (1) who is a full-time senior officer of the association, make, take an assignment of or otherwise acquire a loan to the related party only if the aggregate principal amount of all outstanding loans to the related party that are held by the association and its subsidiaries, together with the principal amount of the proposed loan, does not exceed the greater of twice the annual salary of the related party and $100,000 .
1997, c. 15, s. 153(3)	(4) Subsection 420(5) of the Act is replaced by the following:
Preferred terms - loan to spouse of senior officer	(4.1) Despite section 425, an association may make a loan referred to in paragraph 415(b) to the spouse of a senior officer of the association on terms and conditions more favourable to the spouse of that officer than market terms and conditions, as defined in subsection 425(2), by the association if those terms and conditions have been approved by the conduct review committee of the association.
Preferred terms - other financial services	(5) Despite section 425, an association may offer financial services, other than loans or guarantees, to a senior officer of the association, or to the spouse, or to a child who is less than eighteen years of age, of a senior officer of the association , on terms and conditions more favourable than market terms and conditions, as defined in subsection 425(2), if
	(a) the financial services are offered by the association to employees of the association on those favourable terms and conditions; and
	(b) the conduct review committee of the association has approved the practice of making those financial services available on those favourable terms and conditions to senior officers of the association or to the spouses, or to the children under eighteen years of age, of senior officers of the association.
1997, c. 15, s. 155	309. Section 422 of the Act is replaced by the following:
Margin loans	422. The Superintendent may establish terms and conditions with respect to the making by an association of margin loans to a director or senior officer of the association.
	310. Subsection 425(2) of the Act is replaced the following:
Meaning of ``market terms and conditions''	(2) For the purposes of subsection (1), ``market terms and conditions'' means
	(a) in respect of a service or a loan facility or a deposit facility offered to the public by the association in the ordinary course of business, terms and conditions that are no more or less favourable than those offered to the public by the association in the ordinary course of business; and
	(b) in respect of any other transaction,
	(i) terms and conditions, including those relating to price, rent or interest rate, that might reasonably be expected to apply in a similar transaction in an open market under conditions requisite to a fair transaction between parties who are at arm's length and who are acting prudently, knowledgeably and willingly, or
	(ii) if the transaction is one that would not reasonably be expected to occur in an open market between parties who are at arm's length, terms and conditions, including those relating to price, rent or interest rate, that would reasonably be expected to provide each party to the transaction with fair value, having regard to all the circumstances of the transaction, and that would be consistent with the parties to the transaction acting prudently, knowledgeably and willingly.
	311. Section 430 of the Act is replaced by the following:
Voidable contracts	430. (1) If an association enters into a transaction that it is prohibited from entering into by this Part, the association or the Superintendent may apply to a court for an order setting aside the transaction or for any other appropriate remedy, including an order directing that the related party of the association involved in the transaction account to the association for any profit or gain realized or that any director or senior officer of the association who authorized the transaction compensate the association for any loss or damage incurred by the association.
Time limit	(2) An application under subsection (1) in respect of a particular transaction may only be made within the period of three months following the day the notice referred to in section 429 in respect of the transaction is given to the Superintendent or, if no such notice is given, the day the Superintendent becomes aware of the transaction.
Certificate	(3) For the purposes of subsection (2), a document purporting to have been issued by the Superintendent, certifying the day on which the Superintendent became aware of the transaction, shall, in the absence of evidence to the contrary, be received in evidence as conclusive proof of that fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.
	312. The title of Part XIII of the Act is replaced by the following:
	REGULATION OF ASSOCIATIONS - SUPERINTENDENT
	313. The Act is amended by adding the following after section 431:
Report of unclaimed deposits	431.1 (1) A retail association shall, within sixty days after the end of each calendar year, provide the Superintendent with a return, in the form that the Superintendent may determine, as of the end of that calendar year, in respect of all deposits made with the association in Canada in Canadian currency for which no transaction has taken place and no statement of account has been requested or acknowledged by the depositors during a period of nine years or more.
Period	(2) The period referred to in subsection (1) shall be calculated
	(a) in the case of a deposit made for a fixed period, from the day on which the fixed period terminated, and
	(b) in the case of any other deposit, from the day on which the last transaction took place or a statement of account was last requested or acknowledged by the depositor, whichever is later,
	until the date of the return under that subsection.
Content of return	(3) A return made under subsection (1) must show, insofar as is known to the association,
	(a) the name of each depositor in whose name each deposit is held;
	(b) the recorded address of each such depositor;
	(c) the outstanding amount of each deposit; and
	(d) the branch of the association at which the last transaction took place in respect of the deposit, and the date of that transaction.
Amounts under one hundred dollars	(4) If the total outstanding amount of deposits in the name of a depositor is less than one hundred dollars, the association may omit the particulars in respect thereof required by subsection (3) from the return required by subsection (1).
Return on unclaimed bills of exchange	431.2 (1) A retail association shall, within sixty days after the end of each calendar year, provide the Superintendent with a return, in the form that the Superintendent may determine, as of the end of that calendar year, in respect of all negotiable instruments (including instruments drawn by one branch of the association on another branch of the association but not including instruments issued in payment of a dividend on the capital of the association) payable in Canada in Canadian currency that have been issued, certified or accepted by the association at branches of the association in Canada and for which no payment has been made for a period of nine years or more calculated from the date of issue, certification, acceptance or maturity, whichever is the latest, until the date of the return.
Content of return	(2) A return made under subsection (1) must show, insofar as is known to the association,
	(a) the name of each person to whom or at whose request each instrument was issued, certified or accepted;
	(b) the recorded address of each such person;
	(c) the name of the payee of each instrument;
	(d) the amount and date of each instrument;
	(e) the name of the place where each instrument was payable; and
	(f) the branch of the association at which each instrument was issued, certified or accepted.
Amounts under one hundred dollars	(3) If the amount of an instrument in respect of which subsection (1) applies is less than one hundred dollars, the association may omit the particulars in respect thereof required by subsection (2) from the return required by subsection (1).
Money orders	(4) A retail association may omit from a return required by subsection (1) the particulars required by subsection (2) in respect of any money order in respect of which subsection (1) applies.
Total to be reported	431.3 If a retail association, under subsection 431.1(4) or 431.2(3) or (4), omits from a return required by subsection 431.1(1) or 431.2(1) the particulars of any deposit or instrument, the total of the amounts of all deposits or instruments that have been so omitted must be reported in the return.
	314. Sections 433 and 434 of the Act are replaced by the following:
Copy of by-laws	433. An association 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 associations	434. (1) The Superintendent shall, in respect of each association, cause a register to be maintained containing a copy of
	(a) the incorporating instrument of the association; and
	(b) the information referred to in paragraphs 432(1)(a), (c) and (e) to (h) contained in the latest return sent to the Superintendent under section 432.
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.
	315. (1) Subsection 435(1) of the Act is replaced by the following:
Confidential information	435. (1) Subject to section 436, all information regarding the business or affairs of an association, or regarding a person dealing with an association , 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.
	(2) Subsection 435(2) of the Act is amended by striking out the word ``and'' at the end of paragraph (a.1) and by adding the following after paragraph (a.1):

Bill C-38

REGULATION OF ASSOCIATIONS - SUPERINTENDENT