Bill C-23

If you have any questions or comments regarding the accessibility of this publication, please contact us at accessible@parl.gc.ca.

First Reading

PDF

	Functions and Powers
Powers of board of directors	73. (1) For the purposes of this Part, the board of directors may by resolution
	(a) borrow money in an amount authorized by the resolution;
	(b) issue securities of the Authority;
	(c) lend securities to generate income, if the loan is fully secured;
	(d) enter into agreements for risk management purposes, including swaps; and
	(e) provide for
	(i) payments related to the issuance of securities,
	(ii) the registration, transfer, management and redemption of securities,
	(iii) the re-issuance, reinstatement or other disposition of lost, stolen, destroyed or damaged securities or interest coupons,
	(iv) the examination, cancellation or destruction of securities and of materials used in their production, or
	(v) the timing of the issuance of securities.
Security issuance requirements	(2) A resolution respecting the issuance of securities shall set out
	(a) the rate of interest;
	(b) the time and place of repayment of principal and interest; and
	(c) the currency in which repayment of principal and interest will be made.
Security issuance resolutions	(3) A resolution respecting the issuance of securities may provide that
	(a) the securities are to be redeemable in advance of maturity at a time and price set out in the resolution;
	(b) all or any part of the securities may be paid, refunded or renewed;
	(c) the securities are to be issued in an amount sufficient to realize the amount of any securities called in and paid before maturity, for a term not longer than the remainder of the term of the securities called in and paid; or
	(d) the securities and any interest coupons attached to them are to be in the form set out in the resolution, and are to be exchangeable for other securities of the same issue on any terms and conditions set out in the resolution.
Amount of issue	(4) The Authority may issue securities the principal amounts of which, after payment of any discount and the costs of issue and sale, will realize the net amount authorized by the board of directors in a resolution made under paragraph (1)(a).
Declaration conclusive	(5) A declaration in a resolution authorizing the issuance of securities that it is necessary to issue securities in the principal amount authorized in order to realize the net amount authorized is conclusive evidence of that fact.
Sale price	(6) The board of directors may sell securities at their par value or at other than par value.
Delegation	(7) The board of directors may delegate its powers under this section to a committee of directors and officers of the Authority, subject to such limitations as the board of directors may impose.
Application to become borrowing member	74. (1) A first nation may apply to the Authority to become a borrowing member.
Criteria	(2) The Authority shall accept a first nation as a borrowing member only if the First Nations Financial Management Board has issued to the first nation a certificate under subsection 48(3) and has not subsequently revoked it.
Ceasing to be a borrowing member	75. A first nation may cease to be a borrowing member only with the consent of all other borrowing members.
Priority	76. (1) The Authority has a priority over all other creditors of a first nation that is insolvent, for any moneys that are authorized to be paid to the Authority under a law made under paragraph 4(1)(b) or (d).
Debts to the Crown	(2) For greater certainty, subsection (1) does not apply to Her Majesty.
Limitations - infrastructure loans	77. The Authority shall not make a long-term loan to a borrowing member for the purpose of financing capital infrastructure for the provision of local services on reserve lands unless
	(a) the First Nations Tax Commission has approved a law made by the borrowing member under paragraph 4(1)(d); and
	(b) the loan is to be paid out of the property tax revenues of the borrowing member in priority to other creditors of the borrowing member.
	(c) [Deleted]
Restriction on financing	78. A borrowing member shall not obtain long-term financing secured by property tax revenues from any person other than the First Nations Finance Authority.
Limitations - short-term loans	79. The Authority shall not make a short-term loan to a borrowing member for a purpose described in subparagraph 72(a)(iii) unless the loan is made in anticipation of local revenues of the borrowing member set out in a law made under paragraph 4(1)(b).
Sinking fund	80. (1) The Authority shall establish a sinking fund, or any other system of repayment prescribed by regulation, to fulfil its repayment obligations to the holders of each security issued by the Authority.
Separate accounts	(2) Where a sinking fund is established, a separate sinking fund account shall be kept for each borrowing member participating in a security issued by the Authority.
Sinking fund investments	(3) Funds in a sinking fund may be invested only in
	(a) securities issued or guaranteed by Canada or a province;
	(b) securities of a local, municipal or regional government in Canada;
	(c) investments guaranteed by a bank, trust company or credit union; or
	(d) deposits in a bank or trust company in Canada or non-equity or membership shares in a credit union.
Surpluses	81. (1) The Authority may declare a surplus in a sinking fund and use the surplus, in order of priority, to
	(a) replenish any amounts paid out of the debt reserve fund; and
	(b) make a distribution to borrowing members who are participating in that fund.
Recovery from sinking fund	(2) The Authority may recover fees payable by a borrowing member from any surplus to be distributed to that member under paragraph (1)(b).
Debt reserve fund	82. (1) The Authority shall establish a debt reserve fund to make payments or sinking fund contributions for which insufficient moneys are available from borrowing members.
Provisioning of fund	(2) Subject to the regulations, the Authority shall withhold 5% of the amount of any loan to a borrowing member and deposit that amount in the debt reserve fund.
Separate account	(3) A separate account shall be kept for each security issued and for each borrowing member contributing to the debt reserve fund.
Investments	(4) The funds of the debt reserve fund may be invested only in securities, investments or deposits referred to in paragraph 80(3)(a), (c) or (d) that mature or are callable within five years, 25% of which must be callable within 90 days.
Liability for shortfall	(5) Where payments from the debt reserve fund reduce its balance
	(a) by less than 50% of the total amount contributed by borrowing members, the Authority may, in accordance with the regulations, require all borrowing members to pay amounts sufficient to replenish the debt reserve fund; and
	(b) by 50% or more of the total amount contributed by borrowing members,
	(i) the Authority shall, in accordance with the regulations, require all borrowing members to pay without delay amounts sufficient to replenish the debt reserve fund, and
	(ii) the borrowing members shall recover those amounts under their property taxation laws.
Repayment	(6) Money contributed by a borrowing member to the debt reserve fund and investment income received on it shall be repaid by the Authority to the borrowing member when all obligations in respect of the security in respect of which the money was contributed have been satisfied.
Credit enhancement fund	83. (1) The Authority shall establish a fund for the enhancement of the Authority's credit rating.
Investments	(2) The funds of the credit enhancement fund may be invested only in securities, investments or deposits referred to in paragraph 80(3)(a), (c) or (d) that mature or are callable within five years, 25% of which must be callable within 90 days.
Investment income	(3) Investment income from the credit enhancement fund may be used
	(a) to temporarily offset any shortfalls in the debt reserve fund;
	(b) to defray the Authority's costs of operation; and
	(c) for any other purpose prescribed by regulation.
Default by first nation	84. (1) Where a borrowing member fails to make a payment to the Authority, to fulfil any other obligation under a borrowing agreement with the Authority or to pay a charge imposed by the Authority under this Part, the Authority shall
	(a) notify the borrowing member of the failure; and
	(b) send a notice of the failure to the First Nations Financial Management Board and the First Nations Tax Commission, together with evidence of the failure and a copy of any relevant documents and records.
Requirement for report	(2) Where a failure referred to in subsection (1) relates to an obligation other than payment, the Authority may require that the First Nations Financial Management Board review and report on the reasons for the failure.
Report	(3) On receipt of a notice referred to in paragraph (1)(b) in respect of a failure related to an obligation other than payment, the First Nations Financial Management Board shall advise the Authority in writing of its opinion on the reasons for the failure and recommend any intervention under section 50 or 51 that it considers appropriate.
Required intervention	(4) The Authority may, by notice in writing, require the First Nations Financial Management Board to either - at the Board's discretion - impose a co-management arrangement on a borrowing member or assume third-party management of the first nation's local revenues
	(a) where the borrowing member fails to make a payment to the Authority under a borrowing agreement with the Authority, or to pay a charge imposed by the Authority under this Part; or
	(b) on receipt of a report of the Board under subsection (3) in respect of the borrowing member.
Short-term pooled investment funds	85. (1) The Authority may establish short-term pooled investment funds.
Investments	(2) Funds in a short-term pooled investment fund may be invested only in
	(a) securities issued or guaranteed by Canada, a province or the United States;
	(b) fixed-term deposits, notes, certificates or other short-term paper of, or guaranteed by, a bank, trust company or credit union, including swaps in United States currency;
	(c) securities issued by the Authority or by a local, municipal or regional government in Canada;
	(d) commercial paper issued by a Canadian company that is rated in the highest category by at least two recognized security-rating institutions;
	(e) any class of investments permitted under an Act of a province relating to trustees; or
	(f) any other investments or class of investments prescribed by regulation.

Bill C-23

Functions and Powers