Bill C-8

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	Real Property
Limit on total property interest	476. A bank 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 bank or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the bank in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.
	Equities
Limits on equity acquisitions	477. A bank shall not, and shall not permit its prescribed subsidiaries to,
	(a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment, or
	(b) acquire control of an entity that holds shares or ownership interests referred to in paragraph (a),
	if the aggregate value of
	(c) all participating shares, excluding participating shares of permitted entities in which the bank has a substantial investment, and
	(d) all ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the bank has a substantial investment,
	beneficially owned by the bank and its prescribed subsidiaries, exceeds, or the purchase or acquisition would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.
	Aggregate Limit
Aggregate limit	478. A bank shall not, and shall not permit its prescribed subsidiaries to,
	(a) purchase or otherwise acquire
	(i) participating shares of a body corporate, other than those of a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment,
	(ii) ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment, or
	(iii) interests in real property, or
	(b) make an improvement to real property in which the bank or any of its prescribed subsidiaries has an interest
	if the aggregate value of
	(c) all participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the bank and its prescribed subsidiaries, and
	(d) all interests of the bank in real property referred to in subparagraph (a)(iii)
	exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.
	Miscellaneous
Regulations	479. For the purposes of this Part, the Governor in Council may make regulations
	(a) defining the interests of a bank in real property;
	(b) determining the method of valuing those interests; or
	(c) exempting classes of banks from the application of sections 475 to 478.
Divestment order	480. (1) The Superintendent may, by order, direct a bank to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Part.
Divestment order	(2) If, in the opinion of the Superintendent,
	(a) an investment by a bank or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the bank to control the body corporate or the unincorporated entity, or
	(b) the bank or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put before
	(i) the board of directors of a body corporate, or
	(ii) a similar group or committee of an unincorporated entity,
	or whereby no proposal may be approved except with the consent of the bank, the entity it controls or the nominee,
	the Superintendent may, by order, require the bank, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).
Divestment order	(3) If
	(a) a bank
	(i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 470(1), (2) or (4), or
	(ii) is in default of an undertaking referred to in subsection 470(1) or (2) and the default is not remedied within ninety days after the day of receipt by the bank of a notice from the Superintendent of the default, or
	(b) a permitted entity referred to in subsection 470(4) is in default of an undertaking referred to in that subsection and the default is not remedied within ninety days after the day of receipt by the bank of a notice from the Superintendent of the default,
	the Superintendent may, by order, require the bank, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank no longer has a substantial investment in the entity to which the undertaking relates.
Exception	(4) Subsection (2) does not apply in respect of an entity in which a bank has a substantial investment permitted by this Part.
Deemed temporary investment	481. If a bank controls or has a substantial investment in an entity as permitted by this Part and the bank becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 468(5) or (6), the bank is deemed to have acquired, on the day the bank becomes aware of the change, a temporary investment in respect of which section 471 applies.
Asset transactions	482. (1) A bank shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person if
	A + B > C C
	where
	A is the value of the assets;
	B is the total value of all assets that the bank and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; and
	C is ten per cent 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
	(a) assets that are debt obligations that are
	(i) guaranteed by any financial institution other than the bank,
	(ii) fully secured by deposits with any financial institution, including the bank, or
	(iii) fully secured by debt obligations that are guaranteed by any financial institution other than the bank;
	(b) assets that are debt obligations issued
	(i) by, or by any agency of,
	(A) the Government of Canada,
	(B) the government of a province,
	(C) a municipality, or
	(D) the government of a foreign country or any political subdivision of a foreign country, or
	(ii) by a prescribed international agency;
	(c) assets that are debt obligations that are guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in paragraph (b);
	(d) assets that are debt obligations that are widely distributed, as that expression is defined by the regulations;
	(e) assets that are debt obligations of an entity controlled by the bank; or
	(f) a transaction or series of transactions by the bank with another financial institution as a result of the bank's participation in one or more syndicated loans with that financial institution.
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;
	(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; or
	(c) the transaction has been approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act.
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.
Transitional	483. Nothing in this Part requires
	(a) the termination of a loan made before February 7, 2001;
	(b) the termination of a loan made after that date as a result of a commitment made before that date;
	(c) the disposal of an investment made before that date; or
	(d) the disposal of an investment made after that date as a result of a commitment made before that date.
	But if the loan or investment would be precluded or limited by this Part, the amount of the loan or investment may not, except as provided in subsections 471(2), 472(3) and 473(3), be increased after that date.
Saving	484. A loan or investment referred to in section 483 is deemed not to be prohibited by the provisions of this Part.
	128. (1) Subsection 487(2) of the Act is amended by striking out the word ``or'' at the end of paragraph (b) and by adding the following after paragraph (c):
	(d) transactions approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act; or
	(e) if a bank is controlled by a widely held bank holding company or a widely held insurance holding company, transactions approved by the Superintendent that are entered as part of, or in the course of, a restructuring of the holding company or of any entity controlled by it.
1997, c. 15, s. 69	(2) Subsection 487(4) of the Act is replaced by the following:
Exception for holding body corporate	(4) A holding body corporate of a bank is not a related party of the bank if the holding body corporate is a Canadian financial institution that is referred to in any of paragraphs (a) to (d) of the definition ``financial institution'' in section 2.
	129. The Act is amended by adding the following after section 495:
Transactions with holding companies	495.1 (1) Subject to subsection (2) and sections 495.2 and 495.3, if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of a bank, the bank may enter into any transaction with the holding company or with any other related party of the bank that is an entity in which the holding company has a substantial investment.
Policies and procedures	(2) The bank shall adhere to policies and procedures established under subsection 195(3) when entering into the transaction.
Restriction	495.2 (1) If a bank enters into a transaction with a related party of the bank with whom the bank may enter into transactions under subsection 495.1(1) and that is not a federal financial institution, the bank shall not directly or indirectly make, take an assignment of or otherwise acquire a loan to the related party, make an acceptance, endorsement or other guarantee on behalf of the related party or make an investment in the securities of the related party if, immediately following the transaction, the aggregate financial exposure, as that expression is defined by the regulations, of the bank would exceed
	(a) in respect of all transactions of the bank with the related party, the prescribed percentage of the bank's regulatory capital or, if no percentage is prescribed, five per cent of the bank's regulatory capital; or
	(b) in respect of all transactions of the bank with such related parties of the bank, the prescribed percentage of the bank's regulatory capital or, if no percentage is prescribed, ten per cent of the bank's regulatory capital.
Order	(2) If the Superintendent is of the opinion that it is necessary for the protection of the interests of the depositors and creditors of a bank, the Superintendent may, by order,
	(a) reduce the limit in paragraph (1)(a) or (b) that would otherwise apply to the bank; and
	(b) impose limits on transactions by the bank with related parties with whom the bank may enter into transactions under subsection 495.1(1) that are federal financial institutions.

Bill C-8

Real Property

Equities

Aggregate Limit

Miscellaneous