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Interpretation
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| Definitions
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966. (1) The definitions in subsection
490(1) apply in respect of insurance holding
companies, subject to the following:
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(a) the reference to ``section 495'' in the
definition ``permitted entity'' is to be read
as a reference to ``section 971''; and
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(b) the reference to ``company'' in the
definition ``permitted entity'' is to be read
as a reference to ``insurance holding
company''.
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| Members of
an insurance
holding
company's
group
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(2) For the purpose of this Division, a
member of an insurance holding company's
group is any of the following:
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(a) an entity referred to in any of paragraphs
971(1)(a) to (f) that controls the insurance
holding company;
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(b) a subsidiary of the insurance holding
company or of an entity referred to in any of
paragraphs 971(1)(a) to (f) that controls the
insurance holding company;
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(c) an entity in which the insurance holding
company, or an entity referred to in any of
paragraphs 971(1)(a) to (f) that controls the
insurance holding company, has a
substantial investment; or
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(d) a prescribed entity in relation to the
insurance holding company.
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| Non-applicati
on of Division
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(3) This Division does not apply in respect
of
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(a) the holding of a security interest in real
property, unless the security interest is
prescribed under paragraph 984(a) to be an
interest in real property; or
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(b) the holding of a security interest in
securities of an entity.
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Investments
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| Investments
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967. Subject to this Division, an insurance
holding company may invest its funds in the
shares of or ownership interests in any entity
or make any other investment that its directors
consider necessary or advisable to manage the
insurance holding company's liquidity.
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General Constraints on Investments
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| Investment
standards
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968. The directors of an insurance holding
company shall establish and the insurance
holding company shall adhere to investment
and lending policies, standards and
procedures that a reasonable and prudent
person would apply 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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969. (1) Subject to subsections (2) and (3),
no insurance holding 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) An insurance holding 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 971(1)(a) to
(j), a specialized financing entity or 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 971(1)(a) to (j), a specialized
financing entity or a prescribed entity
that is controlled by the insurance
holding company, or
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(ii) an entity controlled by an entity
referred to in any of paragraphs 971(1)(a)
to (j), a specialized financing entity or a
prescribed entity that is controlled by the
insurance holding company.
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| Exception:
temporary
investments,
realizations
and loan
workouts
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(3) An insurance holding 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 974;
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(b) an acquisition of shares of a body
corporate or of ownership interests in an
unincorporated entity permitted by section
975; or
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(c) a realization of security permitted by
section 976.
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| Exception:
uncontrolled
event
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(4) An insurance holding company is
deemed not to contravene subsection (1) if the
insurance holding 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
insurance holding company.
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| Regulations re
limits
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970. 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 Division;
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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 an insurance holding 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) prescribing terms and conditions under
which an insurance holding company may
acquire control of, or acquire or increase a
substantial investment in, a specialized
financing entity.
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Subsidiaries and Equity Investments
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| Permitted
investments
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971. (1) Subject to subsections (4) to (6), an
insurance holding 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
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(2) Subject to subsections (3) to (6), an
insurance holding 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 an
insurance holding company is permitted
under this Division 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 insurance holding company or any
member of the insurance holding
company's group:
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(i) the insurance holding company,
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(ii) any member of the insurance holding
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 any
member of the insurance holding
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
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(3) An insurance holding 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, 469 and 475;
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(b) dealing in securities, except as may be
permitted under paragraph (2)(e) or as may
be permitted to a company under paragraph
440(2)(b);
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(c) 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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(d) acquiring control of or acquiring or
holding a substantial investment in another
entity unless
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(i) in the case of an entity that is
controlled by the insurance holding
company, a company would be permitted
under Part IX to acquire a substantial
investment in the other entity, or
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(ii) in the case of an entity that is not
controlled by the insurance holding
company, a company would be permitted
to acquire a substantial investment in the
other entity under subsection 493(2),
paragraph 493(3)(b) or (c) or subsection
493(4) or 495(1) or (2); or
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(e) any prescribed activity.
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| Control
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(4) Subject to subsection (8) and the
regulations, an insurance holding 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), unless
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(i) the insurance holding 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 insurance holding company is
permitted by regulations made under
paragraph 977(a) to acquire or increase
the substantial investment;
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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 and a financial
leasing entity, unless
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(i) the insurance holding 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 insurance holding company is
permitted by regulations made under
paragraph 977(a) to acquire or increase
the substantial investment; or
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(c) an entity whose business includes an
activity referred to in paragraph (2)(b),
including a specialized financing entity,
unless
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(i) the insurance holding 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,
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(ii) the insurance holding company is
permitted by regulations made under
paragraph 977(a) to acquire or increase
the substantial investment, or
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(iii) subject to prescribed terms and
conditions, if any are prescribed, the
activities of the entity do not include the
acquisition or holding of control of, or the
acquisition or holding of shares or other
ownership interests in, an entity referred
to in paragraph (a) or (b) or an entity that
is not a permitted entity.
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| Minister's
approval
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(5) Subject to the regulations, an insurance
holding 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 insurance holding
company's group;
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(b) acquire control of an entity referred to in
paragraph (1)(j) or (4)(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 insurance
holding company's group:
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(i) a factoring entity, or
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(ii) a financial leasing 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);
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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).
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| Superintenden
t's approval
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(6) Subject to subsection (7) and the
regulations, an insurance holding 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)
and (4)(b) and (c) unless the insurance holding
company obtains the approval of the
Superintendent.
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| Exception
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(7) Subsection (6) does not apply in respect
of a particular transaction if
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(a) the insurance holding company is
acquiring control of an entity whose
business includes an activity referred to in
paragraph (2)(b), other than a specialized
financing entity;
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(b) the insurance holding company is
acquiring control of an entity whose
activities are limited to the activities of a
factoring entity or a financial leasing entity;
or
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(c) the Minister has approved the
transaction under subsection (5) or is
deemed to have approved it under
subsection 972(1).
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| Control not
required
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(8) An insurance holding 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
insurance holding company to control the
entity.
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| Prohibition on
giving up
control in fact
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(9) An insurance holding company that,
under subsection (4), 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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