TRUST AND LOAN COMPANIES ACTSpecialized Financing (Trust And Loan Companies) RegulationsP.C.2001-1802 200110
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Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 452a, 459a and 531b of the Trust and Loan Companies Actc, hereby makes the annexed Specialized Financing (Trust and Loan Companies) Regulations.S.C. 2001, c. 9, s. 550S.C. 2001, c. 9, s. 569S.C. 1991, c. 45InterpretationDefinitionsThe following definitions apply in these Regulations.Act means the Trust and Loan Companies Act. (Loi)balance sheet value in respect of the shares and ownership interests held by an entity, means the value reported on its balance sheet on an unconsolidated basis. (valeur au bilan)book value[Repealed, SOR/2008-168, s. 27]specialized financing entity of the company means a specialized financing entity that is controlled by the company or in which the company holds a substantial investment. (entité de la société s’occupant de financement spécial)subsidiary, in respect of a company, does not include a subsidiary that is a specialized financing entity of the company. (filiale)Definition of specialized financing entityIn these Regulations and for the purpose of the definition specialized financing entity in subsection 449(1) of the Act, specialized financing entity means an entity that acquires or holds shares of, or ownership interests in, entities that a company may acquire control of, or hold, acquire or increase a substantial investment in, under subsection 451(4) of the Act.SOR/2008-168, s. 27GeneralApplicationThese Regulations apply to specialized financing activities under subsection 451(4) of the Act and to the ownership by a company of shares of, or ownership interests in, a specialized financing entity under paragraph 453(2)(b) of the Act.ConditionsLimits on investmentsA company shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in,an entity referred to in any of paragraphs 453(1)(a) to (j) of the Act;an entity that is primarily engaged in the leasing of motor vehicles in Canada for the purpose of extending credit to a customer or financing a customer’s acquisition of a motor vehicle;an entity that is primarily engaged in providing temporary possession of personal property, including motor vehicles, to customers in Canada for a purpose other than to finance the customer’s acquisition of the property; oran entity that acts as an insurance broker or agent in Canada.Length of investmentA company shall not, by way of specialized financing activities, hold control of, or hold a substantial investment in, an entity for more than 13 consecutive years.Maximum authorized investmentA company shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in, an entity if the aggregate balance sheet value of the shares and ownership interests that the company, any subsidiary of the company and any specialized financing entity of the company hold or would hold in the entity is more than $250 million.SOR/2008-168, s. 28Limit of 10% of regulatory capitalA company shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in, an entity if the sum of the following exceeds 10% of the company’s regulatory capital:the aggregate balance sheet value of the shares and ownership interests that the company and its subsidiaries, whether individually or jointly, would acquire in the entity,the aggregate value of outstanding loans made by the company and its subsidiaries, whether individually or jointly, to the specialized financing entities of the company, andthe aggregate balance sheet value of the shares and ownership interests held by the company and its subsidiaries, whether individually or jointly, in the specialized financing entities of the company, in the entities controlled by the company by way of specialized financing activities, and in the entities in which the company holds a substantial investment by way of specialized financing activities.SOR/2008-168, s. 28Limit of 25% of regulatory capital — investment in a specialized financing entityA company shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in, an entity controlled by a specialized financing entity of the company or an entity in which the specialized financing entity of the company holds a substantial investment, if the sum of the following exceeds or would exceed 25% of the company’s regulatory capital:the aggregate balance sheet value of the shares and ownership interests held by the company and its subsidiaries, whether individually or jointly, in the specialized financing entity of the company, in the entities controlled by the specialized financing entity of the company and in the entities in which that specialized financing entity holds a substantial investment, andthe aggregate value of outstanding loans that the company and its subsidiaries, whether individually or jointly, have made to the specialized financing entity of the company, to the entities controlled by the specialized financing entity of the company and to the entities in which that specialized financing entity holds a substantial investment.Limit of 25% of regulatory capital — investment in an entityA company shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in, an entity, other than by way of an investment of a specialized financing entity controlled by the company, if the sum of the following exceeds 25% of the company’s regulatory capital:the aggregate balance sheet value of the shares and ownership interests that the company and its subsidiaries, whether individually or jointly, would acquire in the entity,the aggregate balance sheet value of the shares and ownership interests held by the company and its subsidiaries, whether individually or jointly, in the entities controlled by the company by way of specialized financing activities and in the entities in which the company holds a substantial investment by way of specialized financing activities, other than entities that the company has acquired control of, or a substantial investment in, by way of an investment of a specialized financing entity of the company, andthe aggregate value of outstanding loans that the company and its subsidiaries, whether individually or jointly, have made to the entities controlled by the company by way of specialized financing activities and to the entities in which the company holds a substantial investment by way of specialized financing activities, other than entities that the company has acquired control of, or a substantial investment in, by way of an investment of a specialized financing entity of the company.SOR/2008-168, s. 28Acquisition of Specialized Financing EntitiesDefinition of non-controlling interestIn this section, non-controlling interest means an equity interest, in a specialized financing entity of the company controlled by a specialized financing entity, that is held by a person other than the company or an entity controlled by the company.Ownership restrictionsA company shall not acquire or hold control of, or hold, acquire or increase a substantial investment in, a specialized financing entity ifthe value of the outstanding debt obligations, other than those payable to the company or to entities controlled by the company, of the specialized financing entity and any specialized financing entity of the company controlled by the specialized financing entity, as reported on their respective balance sheets on an unconsolidated basis, exceeds twice the value of the sum of the following, namelythe value of the excess of assets over liabilities of the specialized financing entity as reported on its balance sheet on an unconsolidated basis, andthe value of the non-controlling interests as reported on the balance sheet of the specialized financing entity on a consolidated basis;the specialized financing entity controls or holds shares of, or ownership interests in, any of the entities referred to in paragraphs 3(a) to (d);the aggregate balance sheet value of the shares and ownership interests, other than shares or ownership interests held by the specialized financing entity in a specialized financing entity of the company that it controls, that the company, the specialized financing entity, the subsidiaries of the company and the other specialized financing entities of the company hold, or would hold, in an entity that the specialized financing entity holds control of, or a substantial investment in, is more than $250 million;the sum of the values under paragraphs 6(a) to (c) exceeds or would exceed 10% of the company’s regulatory capital; orthe sum of the values under paragraphs 7(1)(a) and (b) exceeds or would exceed 25% of the company’s regulatory capital.13 year limitA company shall not hold control of, or a substantial investment in, a specialized financing entity of the company if either the specialized financing entity of the company or the specialized financing entity of the company and one or more of the following entities, one after another, have held control of, or a substantial investment in, an entity, other than an entity described in subsection (4), for more than 13 consecutive years:the company; orany other specialized financing entity of the company.ExceptionA specialized financing entity of the company controlled by the specialized financing entity of the company shall not be considered for the purpose of subsection (3).Prior periods not includedIf a specialized financing entity of the company held control of, or a substantial investment in, an entity for a period before becoming the specialized financing entity of the company, that period shall not be considered for the purpose of subsection (3).SOR/2008-168, s. 28Control not requiredSubsection 453(4) of the Act does not apply to a company’s acquisition or increase of a substantial investment in an entity by way of specialized financing activities in accordance with these Regulations.Approvals not requiredSubsections 453(5) and (6) of the Act do not apply to a company’s acquisition of control of, or its acquisition or increase of a substantial investment in, an entity by way of specialized financing activities in accordance with these Regulations.RepealRepeal[Repeal]Coming into ForceComing into forceThese Regulations come into force on the day on which sections 452, 459 and 531 of the Trust and Loan Companies Act, as enacted by sections 550 and 569 of the Financial Consumer Agency of Canada Act, chapter 9 of the Statutes of Canada, 2001, come into force.[Note: Regulations in force October 24, 2001, see SI/2001-102.]