Bill C-38
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Approval for
indirect
investments
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496. (1) If a company obtains the approval
of the Minister under subsection 495(7) to
acquire control of, or to acquire or increase a
substantial investment in, an entity and,
through that acquisition or increase, the
company indirectly acquires control of, or
acquires or increases a substantial investment
in, another entity that would require the
approval of the Minister under subsection
495(7) or the Superintendent under subsection
495(8) and that indirect acquisition or
increase is disclosed to the Minister in writing
before the approval is obtained, the company
is deemed to have obtained the approval of the
Minister or the Superintendent for that
indirect acquisition or increase.
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Approval for
indirect
investments
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(2) If a company obtains the approval of the
Superintendent under subsection 495(8) to
acquire control of, or to acquire or increase a
substantial investment in, an entity and,
through that acquisition or increase the
company indirectly acquires control of, or
acquires or increases a substantial investment
in, another entity that would require the
approval of the Superintendent under that
subsection and that indirect acquisition or
increase is disclosed to the Superintendent in
writing before the approval is obtained, the
company is deemed to have obtained the
approval of the Superintendent for that
indirect acquisition or increase.
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Undertakings
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497. (1) If a company controls a permitted
entity, other than an entity referred to in any of
paragraphs 495(1)(a) to (f) , the company shall
provide the Superintendent with any
undertakings that the Superintendent may
require regarding
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Undertakings
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(2) If a company acquires control of an
entity referred to in any of paragraphs
495(1)(g) to (j) , the company shall provide the
Superintendent with any undertakings
concerning the entity that the Superintendent
may require.
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Agreements
with other
jurisdictions
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(3) The Superintendent may enter into an
agreement with the appropriate official or
public body responsible for the supervision of
any entity referred to in any of paragraphs
495(1)(g) to (j ) in each province or in any
other jurisdiction concerning any matters
referred to in paragraphs (1)(a) and (b) or any
other matter the Superintendent considers
appropriate.
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Access to
records
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(4) Despite any other provision of this Part,
a company shall not control a permitted entity,
other than an entity referred to in any of
paragraphs 495(1)(a) to (f) , unless the
company obtains from the permitted entity an
undertaking to provide the Superintendent
with reasonable access to the records of the
permitted entity in the course of the
acquisition of control or within a reasonable
time after control is acquired .
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Exceptions and Exclusions |
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Temporary
investments in
entity
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498. (1) Subject to subsection (4) , a
company may, by way of a temporary
investment, acquire control of, or acquire or
increase a substantial investment in, an entity
but , within two years, or any other period that
may be specified or approved by the
Superintendent, after acquiring control or
acquiring or increasing the substantial
investment, it shall do all things necessary to
ensure that it no longer controls the entity or
has a substantial investment in the entity .
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Transitional
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(2) Despite subsection (1), if a company
that was in existence immediately before June
1, 1992 had an investment in an entity on
September 27, 1990 that is a substantial
investment within the meaning of section 10
and the company subsequently increases that
substantial investment by way of a temporary
investment, the company shall, within two
years, or any other period that is specified or
approved by the Superintendent, after
increasing the substantial investment, do all
things necessary to ensure that its substantial
investment in the entity is no greater than it
was on September 27, 1990.
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Extension
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(3) The Superintendent may, in the case of
any particular company that makes an
application under this subsection , extend the
period of two years, or the other period
specified or approved by the Superintendent,
that is referred to in subsection (1) or (2) for
any further period or periods, and on any
terms and conditions, that the Superintendent
considers necessary.
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Temporary
investment
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(4) If a company, by way of temporary
investment, acquires control of, or acquires or
increases a substantial investment in, an entity
for which the approval of the Minister under
subsection 495(7) is required, the company
must, within 90 days after acquiring control or
after acquiring or increasing the substantial
investment,
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Indetermi- nate extension
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(5) If a company, by way of temporary
investment, acquires control of, or acquires or
increases a substantial investment in, an entity
for which the approval of the Superintendent
under subsection 495(8) is required, the
Superintendent may, in the case of any
particular company that makes an application
under this subsection, permit the company to
retain control of the entity or to continue to
hold the substantial investment in the entity
for an indeterminate period, on any terms and
conditions that the Superintendent considers
necessary.
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Loan
workouts
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499. (1) Despite anything in this Part, if a
company or any of its subsidiaries has made
a loan to an entity and, under the terms of the
agreement between the company, or any of its
subsidiaries , and the entity with respect to the
loan and any other documents governing the
terms of the loan, a default has occurred, the
company may acquire
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Obligation of
company
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(2) If a company acquires shares or
ownership interests in an entity under
subsection (1) , the company shall, within five
years after acquiring them , do all things
necessary to ensure that the company does not
control the entity or have a substantial
investment in the entity.
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Transitional
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(3) Despite subsection (1), if a company
that was in existence immediately before June
1, 1992 had an investment in an entity on
September 27, 1990 that is a substantial
investment within the meaning of section 10
and the company later increases that
substantial investment by way of an
investment made under subsection (1), the
company shall, within five years after
increasing the substantial investment, do all
things necessary to ensure that its substantial
investment in the entity is no greater than it
was on September 27, 1990.
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Extension
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(4) The Superintendent may, in the case of
any particular company that makes an
application under this subsection , extend the
period of five years referred to in subsection
(2) or (3) for any further period or periods, and
on any terms and conditions, that the
Superintendent considers necessary.
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Exception -
entities
controlled by
foreign
governments
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(5) Despite anything in this Part, if a
company has made a loan to, or holds a debt
obligation of, the government of a foreign
country or an entity controlled by the
government of a foreign country and, under
the terms of the agreement between the
company and that government or the entity, as
the case may be, and any other documents
governing the terms of the loan or debt
obligation, a default has occurred, the
company may acquire all or any of the shares
of, or ownership interests in, that entity or in
any other entity designated by that
government, if the acquisition is part of a debt
restructuring program of that government.
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Time for
holding shares
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(6) If a company acquires any shares or
ownership interests under subsection (5) , the
company may, on any terms and conditions
that the Superintendent considers appropriate,
hold those shares or ownership interests for an
indeterminate period or for any other period
that the Superintendent may specify.
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Exception
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(7) If , under subsection (1), a company
acquires control of, or acquires or increases a
substantial investment in, an entity that it
would otherwise be permitted to acquire or
increase under section 495, the company may
retain control of the entity or continue to hold
the substantial investment for an
indeterminate period if the approval in
writing of the Minister is obtained before the
end of the period referred to in subsection (2)
or (3) , including any extension of it granted
under subsection (4) .
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Realizations
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500. (1) Despite anything in this Act, a
company may acquire
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if the investment or interest is acquired
through the realization of a security interest
held by the company or any of its subsidiaries .
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Disposition
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(2) Subject to subsection 77(2), if a
company acquires control of, or acquires a
substantial investment in, an entity by way of
the realization of a security interest held by the
company or any of its subsidiaries , the
company shall, within five years after the day
on which control or the substantial investment
is acquired, do all things necessary, or cause its
subsidiary to do all things necessary, as the
case may be , to ensure that the company no
longer controls the entity or has a substantial
investment in the entity.
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Transitional
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(3) Despite subsection (2), if a company
that was in existence immediately before June
1, 1992 had an investment in an entity on
September 27, 1990 that is a substantial
investment within the meaning of section 10
and the company later increases that
substantial investment by way of a realization
of a security interest under subsection (1), the
company shall, within five years after
increasing the substantial investment, do all
things necessary to ensure that its substantial
investment in the entity is no greater than it
was on September 27, 1990.
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Extension
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(4) The Superintendent may, in the case of
any particular company that makes an
application under this subsection , extend the
period of five years referred to in subsection
(2) or (3) for any further period or periods, and
on any terms and conditions, that the
Superintendent considers necessary.
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Exception
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(5) If, under subsection (1) , a company
acquires control of, or acquires or increases a
substantial investment in, an entity that it
would otherwise be permitted to acquire or
increase under section 495, the company may
retain control of the entity or continue to hold
the substantial investment for an
indeterminate period if the approval in
writing of the Minister is obtained before the
end of the period referred to in subsection (2)
or (3), including any extension of it granted
under subsection (4).
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Regulations
restricting
ownership
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501. The Governor in Council may make
regulations
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Portfolio Limits |
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Exclusion
from portfolio
limits
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502. (1) Subject to subsection (3), the value
of all loans, investments and interests
acquired by a company and any of its
prescribed subsidiaries under section 499 or as
a result of a realization of a security interest is
not to be included in calculating the value of
loans, investments and interests of the
company and its prescribed subsidiaries under
sections 503 to 508
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Extension
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(2) The Superintendent may, in the case of
any particular company, extend any period
referred to in subsection (1) for any further
period or periods, and on any terms and
conditions, that the Superintendent considers
necessary.
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Exception
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(3) Subsection (1) does not apply to an
investment or interest described in that
subsection if the investment or interest is
defined by a regulation made under section
509 to be an interest in real property and
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Commercial Lending by Life Companies |
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Lending limit:
companies
with
regulatory
capital of $25
million or less
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503. Subject to section 504, a life company
that has twenty-five million dollars or less of
regulatory capital shall not, and shall not
permit its prescribed subsidiaries to, make or
acquire a commercial loan or acquire control
of a permitted entity that holds commercial
loans if the aggregate value of all commercial
loans held by the company and its prescribed
subsidiaries exceeds, or the making or
acquisition of the commercial loan or
acquisition of control of the entity would
cause the aggregate value of all commercial
loans held by the company and its prescribed
subsidiaries to exceed, 5 per cent of the total
assets of the company.
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Lending limit:
regulatory
capital over
$25 million
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504. A life company that has twenty-five
million dollars or less of regulatory capital
that is controlled by a financial institution that
has the equivalent of more than twenty-five
million dollars of regulatory capital or a life
company that has more than twenty-five
million dollars of regulatory capital may make
or acquire commercial loans or acquire
control of a permitted entity that holds
commercial loans if the aggregate value of all
commercial loans held by the company and its
prescribed subsidiaries would thereby exceed
the limit set out in section 503 only with the
prior approval in writing of the
Superintendent and in accordance with any
terms and conditions that the Superintendent
may specify.
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Consumer and Commercial Lending by Property and Casualty Companies |
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Lending
limit -
property and
casualty
companies
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505. A property and casualty company shall
not, and shall not permit its prescribed
subsidiaries to,
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if the aggregate value of all such loans held by
the company and its prescribed subsidiaries
exceeds, or the making or acquisition of the
loan or the acquisition of control of the
permitted entity would cause the aggregate
value of all such loans held by the company
and its prescribed subsidiaries to exceed, the
prescribed percentage of the total assets of the
company.
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Real Property |
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Limit on total
property
interest
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506. A company shall not, and shall not
permit its prescribed subsidiaries to, purchase
or otherwise acquire an interest in real
property or make an improvement to any real
property in which the company or any of its
prescribed subsidiaries has an interest if the
aggregate value of all interests of the company
in real property exceeds, or the acquisition of
the interest or the making of the improvement
would cause that aggregate value to exceed,
an amount determined in accordance with the
regulations.
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Equities |
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Limits on
equity
acquisitions
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507. A company shall not, and shall not
permit its prescribed subsidiaries to,
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if the aggregate value of
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beneficially owned by the company and its
prescribed subsidiaries exceeds, or the
purchase or acquisition would cause that
aggregate value to exceed, an amount
determined in accordance with the
regulations.
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