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Bill C-3

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DESIGNATED SECURITIES

Replacement security

6.1 (1) On the maturity of a designated security of a province that was issued before January 1, 1998, the Board shall purchase another security issued by that province if the Board is requested to do so, in writing, by the appropriate provincial Minister of that province at least 30 days before the date of maturity.

Principal amount

(2) The principal amount of the replacement security shall be not more than the principal outstanding under the maturing designated security.

Term to maturity

(3) The replacement security shall be for a term of 20 years.

Interest

(4) The replacement security shall bear interest at a rate fixed by the Board, in accordance with any agreement entered into between the Board and the Minister. The rate shall be substantially the same as the interest rate that the province would be required to pay if it were to borrow the same amount for the same term through the issuance of a security on the public capital market.

Features of replacement security

(5) The replacement security shall be issued to or payable to the Board and shall be expressed to be not negotiable and not transferable or assignable.

Redemption at request of province

(6) The Board shall redeem a designated security in whole or in part before maturity if

    (a) the Board is requested to do so, in writing, by the appropriate provincial Minister of a province at least 30 days before the proposed redemption date; and

    (b) the appropriate provincial Minister has agreed to pay on the proposed redemption date

      (i) any payments of principal or interest due on or before the proposed redemption date but not yet paid,

      (ii) interest on the principal amount being redeemed accrued to the proposed redemption date, and

      (iii) an amount equal to the present value of the remaining instalments of principal being redeemed and interest on that principal.

Calculation of present value

(7) For the purposes of subparagraph (6)(b)(iii), the present value shall be calculated by discounting the instalments of principal being redeemed and interest on that principal using an interest rate fixed by the Board, in accordance with any agreement entered into between the Board and the Minister of Finance. In fixing that rate, the Board shall choose a rate that

    (a) if the designated security to be redeemed was issued before January 1, 1998, is substantially the same as the rate that the Government of Canada would be required to pay if it were to borrow the principal amount being redeemed for a term equal to the remaining term of that designated security through the issuance of a security on the public capital market; or

    (b) if the designated security to be redeemed was issued on or after January 1, 1998, is substantially the same as the rate that the province would be required to pay if it were to borrow the principal amount being redeemed for a term equal to the remaining term of that designated security through the issuance of a security on the public capital market.

Consolida-
tion of securities

(8) At the request of the provincial treasurer or other similar officer of a province, the Board may accept in the place of any series of designated securities of that province acquired during any consecutive period of not more than twelve months, on payment of any interest then accrued on the securities, another security of that province that is in an amount equal to the aggregate amount then outstanding of the designated securities of that series, and that bears interest at a rate determined by the Board.

Obligation guaranteed by the provincial government

(9) Any security purchased by the Board under this section must be an obligation of the government of a province or an obligation of an agent of Her Majesty in right of a province that is guaranteed as to principal and interest by that government.

15. Section 37 of the Act is replaced by the following:

Income Tax Act

37. The Board and its subsidiaries shall invest their assets in such a way that tax would not be payable by the Board under subsection 206(2) of the Income Tax Act if

    (a) Part XI of that Act applied to the Board; and

    (b) each subsidiary were a corporation that had made a valid election under section 259 of that Act.

16. Section 50 of the Act is replaced by the following:

Statements to go to Ministers

50. (1) The Board shall send copies of the financial statements for the first, second and third quarters of the financial year, prepared in accordance with subsection 39(6), to the Minister and the appropriate provincial Ministers within 45 days after the end of the three-month period to which they relate.

Statements to be made public

(2) Within seven days after the financial statements are sent as required under subsection (1), the Board shall make the statements available to the public.

17. Subsection 51(1) of the Act is replaced by the following:

Annual report required

51. (1) The Board shall as soon as possible, but in any case within 60 days, after the end of each financial year provide the Minister and the appropriate provincial Ministers with an annual report on the operations of the Board in that year and the Board shall make copies of the report available to the public.

18. (1) Section 56 of the Act is replaced by the following:

Duty of Board

56. The Board shall pay into the Consolidated Revenue Fund, for credit to the Canada Pension Plan Account established under subsection 108(1) of the Canada Pension Plan, any amount required under subsection 108.1(2) or 113(1.1) of that Act.

(2) Section 56 of the Act is renumbered as subsection 56(1) and is amended by adding the following:

Transfer of securities

(2) The Board shall transfer to the Minister any designated securities of a province or of Canada that the Minister requires under subsection 113(1.1) of the Canada Pension Plan.

TRANSITIONAL PROVISIONS

Transfer of securities to the Board

19. (1) On the first day of each month after the coming into force of this section, 1/36th of the right, title or interest of the Minster of Finance in each security that was purchased by the Minister under section 110 of the Canada Pension Plan, and that is held by that Minister on the first day of the first month following the coming into force of this section, is transferred to the Canada Pension Plan Investment Board established under section 3 of the Canada Pension Plan Investment Board Act (``the Board'').

Transfer of replacement securities

(2) If a security referred to in subsection (1) is replaced within the 36-month period beginning on the first day of the first month following the coming into force of this section,

    (a) the Board is deemed to have acquired a right, title or interest in the replacement security in the same proportion as the right, title or interest it had acquired in the security being replaced; and

    (b) on the first day of each month after the day on which the replacement security is purchased, for each month then remaining in the 36-month period, an equal portion of the right, title or interest of the Minister of Finance in the replacement security is transferred to the Board, so that the replacement security is fully transferred to the Board on the same day as the security that it replaced would have been fully transferred.

Rights extinguished

(3) If a security referred to in subsection (1) is redeemed during the 36-month period referred to in subsection (2) and is not replaced, any right, title or interest of the Board in the security is extinguished.

COMING INTO FORCE

Coming into force

20. (1) Subject to subsection (2), the provisions of this Act, and the provisions of any Act as enacted by this Act, come into force in accordance with subsection 114(4) of the Canada Pension Plan on a day or days to be fixed by order of the Governor in Council.

Exception

(2) Despite subsection 114(4) of the Canada Pension Plan,

    (a) subsections 4(1) and (3), 5(3), (5), (7) and (10) and 9(1) and (3), sections 10 and 11, subsection 12(2), section 14 and subsection 18(2) come into force on the day that is three years after the day on which section 19 comes into force; and

    (b) section 8 comes into force on the day that is four years after the day on which section 19 comes into force.

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