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Bill C-8

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Order	(3) The Superintendent may, by order, increase the limit in paragraph (1)(a) or (b) that would otherwise apply to a bank on transactions by the bank with related parties that are financial institutions that are regulated in a manner acceptable to the Superintendent.
Assets transactions	495.3 (1) Despite subsection 494(3), a bank shall not, without the approval of the Superintendent and its conduct review committee, directly or indirectly acquire assets from a related party of the bank with whom the bank may enter into transactions under subsection 495.1(1) that is not a federal financial institution, or directly or indirectly transfer assets to such a related party if
	A + B **** C
	where
	A is the value of the assets;
	B is the total value of all assets that the bank directly or indirectly acquired from, or directly or indirectly transferred to, that related party in the twelve months ending immediately before the acquisition or transfer; and
	C is five per cent, or the percentage that may be prescribed, of the total value of the assets of the bank, as shown in the last annual statement of the bank prepared before the acquisition or transfer.
Exception	(2) The prohibition in subsection (1) does not apply in respect of assets purchased or otherwise acquired under subsection 494(1), assets sold under subsection 494(2) or any other assets as may be prescribed.
Exception	(3) The approval of the Superintendent is not required if
	(a) the bank sells assets under a sale agreement that is approved by the Minister under section 236; or
	(b) the bank or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 468(5) is required or the approval of the Superintendent under subsection 468(6) is required.
Value of assets	(4) For the purposes of ``A'' in subsection (1), the value of the assets is
	(a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the bank after the acquisition, the fair market value of the assets; and
	(b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets as stated in the annual statement.
Total value of all assets	(5) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the bank, the fair market value of the assets of the entity at the date of the acquisition.
Total value of all assets	(6) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets of the entity as stated in the annual statement.
	130. Paragraph 501(2)(b) of the Act is replaced by the following:
	(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 the bank 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.
	131. Section 506 of the Act is replaced by the following:
Order to void contract or to grant other remedy	506. (1) If a bank enters into a transaction that it is prohibited from entering into by this Part, the bank 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 bank involved in the transaction account to the bank for any profit or gain realized or that any director or senior officer of the bank who authorized the transaction compensate the bank for any loss or damage incurred by the bank.
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 505 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.
1991, c. 47, par. 756(1)(b); 1994, c. 47, s. 26; 1997, c. 15, ss. 76 to 85; 1999, c. 28, ss. 27 to 34, c. 31, s. 15(F)	132. Part XII of the Act is replaced by the following:
	PART XII
	FOREIGN BANKS
	DIVISION 1
	INTERPRETATION AND APPLICATION
Definitions	507. (1) The following definitions apply in this Part.
``designated foreign bank'' « banque étrangère désignée »	``designated foreign bank'' means a foreign bank that is the subject of a designation order.
``designation order'' « arrêté de désignation »	``designation order'' means an order made under subsection 508(1).
``exemption order'' « arrêté d'exemption »	``exemption order'' means an order made under subsection 509(1).
``finance entity'' « entité s'occupant de finance- ment »	``finance entity'' means a Canadian entity that is a finance entity as defined in the regulations.
``financial leasing entity'' « entité s'occupant de crédit-bail »	``financial leasing entity'' means a Canadian entity that is a financial leasing entity as defined in subsection 464(1).
``financial services entity'' « entité s'occupant de services financiers »	``financial services entity'' means an entity, other than an entity referred to in any of paragraphs 468(1)(a) to (i) or a leasing entity, that engages in activities at least the prescribed portion - or if no portion is prescribed, 10 per cent - of which, determined in the prescribed manner, consists of one or more of the following activities:
	(a) providing any financial service;
	(b) acting as a financial agent;
	(c) providing investment counselling and portfolio management services;
	(d) issuing payment, credit or charge cards and, in cooperation with others, including other financial institutions, operating a payment, credit or charge card plan;
	(e) engaging in the activities referred to in the definition ``mutual fund entity'' or ``mutual fund distribution entity'' in subsection 464(1);
	(f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed;
	(g) engaging in any activity referred to in paragraphs (a) to (f) as an agent for another entity referred to in any of those paragraphs or in any of paragraphs 468(1)(a) to (j); or
	(h) acquiring or holding control of, or becoming a major owner of, an entity referred to in any of paragraphs (a) to (g) or any of paragraphs 468(1)(a) to (j).
``foreign cooperative credit society'' « société coopérative de crédit étrangère »	``foreign cooperative credit society'' means 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, outside Canada, engages in or carries on the business of a cooperative credit society.
``foreign insurance company'' « société d'assurances étrangère »	``foreign insurance company'' means a foreign company as defined in subsection 2(1) of the Insurance Companies Act.
``foreign securities dealer'' « courtier de valeurs mobilières étranger »	``foreign securities dealer'' means 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, outside Canada, engages in or carries on the business of dealing in securities.
``leasing activities'' « activités de location »	``leasing activities'' means
	(a) the financial leasing of personal property and the related activities that a financial leasing entity may engage in; and
	(b) all other leasing of personal property.
``leasing entity'' « entité s'occupant de location »	``leasing entity'' means an entity that engages in only
	(a) leasing activities; or
	(b) leasing activities and activities other than those described in paragraphs (a) to (h) of the definition ``financial services entity''.
``limited commercial entity'' « entité à activités commerciales restreintes »	``limited commercial entity'' means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with section 522.09, or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that section.
``non-bank affiliate of a foreign bank'' « établisse- ment affilié à une banque étrangère »	``non-bank affiliate of a foreign bank'' means a Canadian entity, other than a bank,
	(a) in which a foreign bank or an entity associated with a foreign bank holds a substantial investment, or
	(b) that is controlled by a foreign bank or an entity associated with a foreign bank,
	but a Canadian entity is not a non-bank affiliate of a foreign bank by reason only that a bank that is a subsidiary of the foreign bank or of the entity associated with a foreign bank controls, or holds a substantial investment in, the Canadian entity.
``permitted Canadian entity'' « entité canadienne admissible »	``permitted Canadian entity'' means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with section 522.08, or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that section.
``representa- tive office'' « bureau de représenta- tion »	``representative office'' means an office established to represent a foreign bank in Canada that is not subject to the direction of, or management by, an entity incorporated or formed by or under an Act of Parliament or of the legislature of a province, and the personnel of which are employed directly or indirectly by the foreign bank.
``specialized financing entity'' « entité s'occupant de financement spécial »	``specialized financing entity'' means a Canadian entity that is a specialized financing entity as defined in the regulations.
Entity associated with foreign bank	(2) For the purposes of this Part,
	(a) an entity is associated with a foreign bank if
	(i) the entity controls, or is controlled by, the foreign bank, or
	(ii) the entity and the foreign bank are controlled by the same person;
	(b) an entity may be associated with more than one foreign bank; and
	(c) a foreign bank may be associated with another foreign bank.
Entity deemed to be associated with a foreign bank	(3) For the purposes of this Part, the Minister may deem an entity to be associated with a foreign bank if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written,
	(a) the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons such that, if they were one person, they would control the entity;
	(b) the entity is acting, jointly or in concert, in relation to the shares or ownership interests of the foreign bank, with one or more other persons such that, if they were one person, they would control the foreign bank;
	(c) another entity that is associated with the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons such that, if they were one person, they would control the entity;
	(d) a person who controls the entity is acting, jointly or in concert, in relation to the shares or ownership interests of the foreign bank, with one or more other persons, such that, if they were one person, they would control the foreign bank;
	(e) a person who controls the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons, such that, if they were one person, they would control the entity; or
	(f) two or more persons are acting, jointly or in concert, in relation to the shares or ownership interests of the entity and the foreign bank such that, if they were one person, they would control the entity and the foreign bank.
Deemed substantial investment by foreign bank	(4) 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	(5) 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
	(a) the entity and the foreign bank, or
	(b) 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	(6) 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

Bill C-8

PART XII

FOREIGN BANKS

DIVISION 1

INTERPRETATION AND APPLICATION