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| Investment
standards
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492. The directors of a company shall
establish and the company shall adhere to
investment and lending policies, standards
and procedures that a reasonable and prudent
person would apply in respect of a portfolio of
investments and loans to avoid undue risk of
loss and obtain a reasonable return.
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| Restriction on
control and
substantial
investments
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493. (1) Subject to subsections (2) to (4) , no
company shall acquire control of, or hold ,
acquire or increase a substantial investment
in, any entity other than a permitted entity.
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| Exception:
indirect
investments
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(2) A company may acquire control of, or
acquire or increase a substantial investment
in, an entity other than a permitted entity by
way of
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(a) an acquisition of control of an entity
referred to in any of paragraphs 495(1)(a) to
(j), or of a prescribed entity, that controls or
has a substantial investment in the entity; or
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(b) an acquisition of shares or ownership
interests in the entity by
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(i) an entity referred to in any of
paragraphs 495(1)(a) to (j), or a
prescribed entity , that is controlled by
the company, or
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(ii) an entity controlled by an entity
referred to in any of paragraphs 495(1)(a)
to (j), or a prescribed entity , that is
controlled by the company.
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| Exception:
temporary
investments,
realizations
and loan
workouts
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(3) A company may acquire control of, or
acquire or increase a substantial investment
in, an entity by way of
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(a) a temporary investment permitted by
section 498;
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(b) an acquisition of shares of a body
corporate or of ownership interests in an
unincorporated entity permitted by section
499; or
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(c) a realization of security permitted by
section 500.
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| Exception:
specialized
financing
regulations
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(4) A life company may acquire control of,
or hold, acquire or increase a substantial
investment in, an entity other than a permitted
entity if it does so in accordance with
regulations made under paragraph 494(d)
concerning specialized financing.
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| Exception:
uncontrolled
event
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(5) A company is deemed not to contravene
subsection (1) if the company acquires control
of, or acquires or increases a substantial
investment in, an entity solely as the result of
an event not within the control of the
company.
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| Regulations
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494. The Governor in Council may make
regulations
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(a) respecting the determination of the
amount or value of loans, investments and
interests for the purposes of this Part;
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(b) respecting the loans and investments,
and the maximum aggregate amount of all
loans and investments, that may be made or
acquired by a company and its prescribed
subsidiaries to or in a person and any
persons connected with that person;
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(c) specifying the classes of persons who are
connected with any person for the purposes
of paragraph (b); and
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(d) concerning specialized financing for the
purposes of subsection 493(4).
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| Permitted
investments
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495. (1) Subject to subsections (6) to (8) and
Part XI, a company may acquire control of, or
acquire or increase a substantial investment in
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(a) a company or a society;
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(b) an insurance holding company;
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(d) a bank holding company;
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(e) a body corporate to which the Trust and
Loan Companies Act applies;
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(f) an association to which the Cooperative
Credit Associations Act applies;
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(g) a trust, loan or insurance corporation
incorporated or formed by or under an Act
of the legislature of a province;
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(h) a cooperative credit society
incorporated or formed, and regulated, by
or under an Act of the legislature of a
province;
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(i) an entity that is incorporated or formed
by or under an Act of Parliament or of the
legislature of a province and that is
primarily engaged in dealing in securities;
or
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(j) an entity that is incorporated or formed,
and regulated, otherwise than by or under
an Act of Parliament or of the legislature of
a province and that is primarily engaged
outside Canada in a business that, if carried
on in Canada, would be the business of
banking, the business of a cooperative
credit society, the business of insurance, the
business of providing fiduciary services or
the business of dealing in securities.
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| Permitted
investments
- life
companies
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(2) Subject to subsections (3) and (6) to (8)
and Part XI, a life company may acquire
control of, or acquire or increase a substantial
investment in, an entity, other than an entity
referred to in any of paragraphs (1)(a) to (j),
whose business is limited to one or more of the
following:
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(a) engaging in any financial service
activity or in any other activity that a life
company is permitted to engage in under
subsection 440(2) or section 441 or 442,
other than paragraph 441(1)(h);
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(b) acquiring or holding shares of, or
ownership interests in, entities in which a
company is permitted under this Part to hold
or acquire;
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(c) engaging in the provision of any services
exclusively to any or all of the following, so
long as the entity is providing those services
to the company or any member of the
company's group:
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(ii) any member of the company's group,
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(iii) any entity that is primarily engaged
in the business of providing financial
services,
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(iv) any permitted entity in which an
entity referred to in subparagraph (iii) has
a substantial investment, or
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(v) any prescribed person, if it is doing so
under prescribed terms and conditions, if
any are prescribed;
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(d) engaging in any activity that a life
company is permitted to engage in, other
than an activity referred to in paragraph (a)
or (e), that relates to
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(i) the promotion, sale, delivery or
distribution of a financial product or
financial service that is provided by the
life company or any member of the life
company's group, or
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(ii) if a significant portion of the business
of the entity involves an activity referred
to in subparagraph (i), the promotion,
sale, delivery or distribution of a
financial product or financial service that
is provided by any other entity that is
primarily engaged in the business of
providing financial services;
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(e) engaging in the activities referred to in
the definition ``mutual fund entity'' or
``mutual fund distribution entity'' as
defined in subsection 490(1); and
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(f) engaging in prescribed activities, under
prescribed terms and conditions, if any are
prescribed.
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| Restriction -
life company
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(3) A life company may not acquire control
of, or acquire or increase a substantial
investment in, an entity whose business
includes any activity referred to in any of
paragraphs (2)(a) to (e) if the entity engages in
the business of accepting deposit liabilities or
if the activities of the entity include
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(a) activities that a company is not
permitted to engage in under any of sections
466, 468, 469 and 475;
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(b) activities that a company is not
permitted to engage in under any regulation
made under section 489 if the entity
engages in the activities of a finance entity
or of any other entity as may be prescribed;
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(c) acquiring control of or acquiring or
holding a substantial investment in an entity
that a company is not permitted to control
or in which a company is not permitted to
have a substantial investment, except as
may be permitted under paragraph
493(3)(b) or (c) or subsection 493(4); or
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(d) any prescribed activity.
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| Permitted
investments
- property
and casualty
companies
|
(4) Subject to subsections (5) to (8) and Part
XI, a property and casualty company may
acquire control of, or acquire or increase a
substantial investment in, an entity, other than
an entity referred to in any of paragraphs
(1)(a) to (j), whose business is limited to one
or more of the following:
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(a) engaging in any financial service
activity or in any other activity that a
property and casualty company is permitted
to engage in under subsection 440(2) or
section 441 or 442, other than paragraph
441(1)(h);
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(b) acquiring or holding shares of, or
ownership interests in, entities in which a
property and casualty company is permitted
under this Part to hold or acquire;
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(c) engaging in the provision of any services
exclusively to any or all of the following, so
long as the entity is providing those services
to the company or any member of the
company's group:
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(ii) any member of the company's group,
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(iii) any entity that is primarily engaged
in the business of providing financial
services,
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(iv) any permitted entity in which an
entity referred to in subparagraph (iii) has
a substantial investment, or
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(v) any prescribed person, if it is doing so
under prescribed terms and conditions, if
any are prescribed;
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(d) engaging in any activity that a property
and casualty company is permitted to
engage in, other than an activity referred to
in paragraph (a) or (e), that relates to
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(i) the promotion, sale, delivery or
distribution of a financial product or
financial service that is provided by the
property and casualty company or any
member of the property and casualty
company's group, or
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(ii) if a significant portion of the business
of the entity involves an activity referred
to in subparagraph (i), the promotion,
sale, delivery or distribution of a
financial product or financial service that
is provided by any other entity that is
primarily engaged in the business of
providing financial services;
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(e) engaging in the activities referred to in
the definition ``mutual fund entity'' or
``mutual fund distribution entity'' as
defined in subsection 490(1); and
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(f) engaging in prescribed activities, under
prescribed terms and conditions, if any are
prescribed.
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| Restriction -
property and
casualty
company
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(5) A property and casualty company may
not acquire control of, or acquire or increase
a substantial investment in, an entity whose
business includes any activity referred to in
any of paragraphs (4)(a) to (e) if the entity
engages in the business of accepting deposit
liabilities or if the activities of the entity
include
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(a) activities that a company is not
permitted to engage in under any of sections
466, 468, 469 and 478;
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(b) any financial intermediary activity that
exposes the entity to material market or
credit risk, including the activities of a
finance entity, a factoring entity, a financial
leasing entity and a specialized financing
entity;
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(c) acquiring control of or acquiring or
holding a substantial investment in an entity
that a company is not permitted to control
or in which a company is not permitted to
have a substantial investment, except as
may be permitted under paragraph
493(3)(b) or (c); or
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(d) any prescribed activity.
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| Control
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(6) Subject to subsection (10) and the
regulations, a company may not acquire
control of, or acquire or increase a substantial
investment in,
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(a) an entity referred to in any of paragraphs
(1)(a) to (j) or an entity that is primarily
engaged in acquiring or holding shares or
other ownership interests in entities in
which a company is permitted under this
Part to hold or acquire unless
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(i) the company controls, within the
meaning of paragraph 3(1)(d), the entity,
or would thereby acquire control, within
the meaning of that paragraph, of the
entity, or
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(ii) the company is permitted by
regulations made under paragraph 501(a)
to acquire or increase the substantial
investment; or
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(b) an entity whose business includes one or
more of the activities referred to in
paragraph (2)(a) and that engages, as part of
its business, in any financial intermediary
activity that exposes the entity to material
market or credit risk, including a finance
entity, a factoring entity, a financial leasing
entity and a specialized financing entity,
unless
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(i) the company controls, within the
meaning of paragraph 3(1)(d), the entity,
or would thereby acquire control, within
the meaning of that paragraph, of the
entity, or
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(ii) the company is permitted by
regulations made under paragraph 501(a)
to acquire or increase the substantial
investment.
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| Minister's
approval
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(7) Subject to the regulations, a company
may not, without the prior written approval of
the Minister,
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(a) acquire control of an entity referred to in
paragraphs (1)(g) to (i) from a person who
is not a member of the company's group;
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(b) acquire control of an entity referred to in
paragraph (1)(j) or (6)(b), other than an
entity whose activities are limited to the
activities of one or more of the following
entities, if the control is acquired from an
entity referred to in any of paragraphs (1)(a)
to (f) that is not a member of the company's
group:
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(ii) a financial leasing entity, or
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(iii) a specialized financing entity;
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(c) acquire control of, or acquire or increase
a substantial investment in, an entity whose
business includes one or more of the
activities referred to in paragraph (2)(d) or
(4)(d);
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(d) acquire control of, or acquire or increase
a substantial investment in, an entity that
engages in an activity described in
paragraph 441(1)(d) or (d.1); or
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(e) acquire control of, or acquire or increase
a substantial investment in, an entity
engaging in an activity prescribed for the
purposes of paragraph (2)(f) or (4)(f).
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Superinten-
dent's
approval
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(8) Subject to subsection (9) and the
regulations, a company may not acquire
control of, or acquire or increase a substantial
investment in, an entity referred to in any of
paragraphs (1)(g) to (j) or (6)(b) unless the
company obtains the approval of the
Superintendent.
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| Exception
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(9) Subsection (8) does not apply in respect
of a particular transaction if the Minister has
approved the transaction under subsection (7)
or is deemed to have approved it under
subsection 496(1).
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| Control not
required
|
(10) A company need not control an entity
referred to in paragraph (1)(j), or an entity that
is incorporated or formed otherwise than by or
under an Act of Parliament or of the
legislature of a province, if the laws or
customary business practices of the country
under the laws of which the entity was
incorporated or formed do not permit the
company to control the entity.
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| Prohibition on
giving up
control in fact
|
(11) A company that, under subsection (6),
controls an entity may not, without the prior
written approval of the Minister, give up
control, within the meaning of paragraph
3(1)(d), of the entity while it continues to
control the entity.
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| Giving up
control
|
(12) A company that, under subsection (6),
controls an entity may give up control of the
entity while keeping a substantial investment
in the entity if
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(a) the company is permitted to do so by
regulations made under paragraph 501(c);
and
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(b) the company has the prior written
approval of the Superintendent.
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| Subsections
do not apply
|
(13) If a company controls, within the
meaning of paragraph 3(1)(a), an entity,
subsections (7) and (8) do not apply in respect
of any subsequent increases by the company
of its substantial investment in the entity so
long as the company continues to control the
entity.
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