Cooperative Credit Associations Act (S.C. 1991, c. 48)

Marginal note:Board approval required

• 421. (1) Except with the concurrence of at least two thirds of the directors present at a meeting of the board of directors of the association, an association shall not, with respect to a related party of the association referred to in subsection 420(1),

  • (a) make, take an assignment of or otherwise acquire a loan to the related party, including a margin loan referred to in section 422,

  • (b) make a guarantee on behalf of the related party, or

  • (c) make an investment in the securities of the related party

  if, immediately following the transaction, the aggregate of

  • (d) the principal amount of all outstanding loans to the related party that are held by the association and its subsidiaries, other than

    • (i) loans referred to in paragraph 415(b), and

    • (ii) where the related party is a full-time senior officer of the association, loans to the related party that are permitted by subsection 420(2),

  • (e) the sum of all outstanding amounts guaranteed by the association and its subsidiaries on behalf of the related party, and

  • (f) where the related party is an entity, the book value of all investments by the association and its subsidiaries in the securities of the entity

  would exceed 2 per cent of the regulatory capital of the association.

• Marginal note:Limit on transactions with directors, officers and their interests

  (2) An association shall not, with respect to a related party of the association referred to in subsection 420(1),

  • (a) make, take an assignment of or otherwise acquire a loan to the related party, including a margin loan referred to in section 422,

  • (b) make a guarantee on behalf of the related party, or

  • (c) make an investment in the securities of the related party

  if, immediately following the transaction, the aggregate of

  • (d) the principal amount of all outstanding loans to all related parties of the association referred to in subsection 420(1) that are held by the association and its subsidiaries, other than

    • (i) loans referred to in section 415, and

    • (ii) loans permitted by subsection 420(2),

  • (e) the sum of all outstanding amounts guaranteed by the association and its subsidiaries on behalf of all related parties of the association referred to in subsection 420(1), and

  • (f) the book value of all investments by the association and its subsidiaries in the securities of all entities that are related parties of the association referred to in subsection 420(1)

  would exceed 50 per cent of the regulatory capital of the association.

• Marginal note:Exclusion of de minimis transactions

  (3) Loans, guarantees and investments that are referred to in section 414 shall not be included in calculating the aggregate of loans, guarantees and investments referred to in subsections (1) and (2).