Trust and Loan Companies Act (S.C. 1991, c. 45)

Act current to 2016-08-01 and last amended on 2016-06-22. Previous Versions

General Constraints on Investments

Marginal note:Investment standards

 The directors of a company shall establish and the company shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.

  • 1991, c. 45, s. 450;
  • 2001, c. 9, s. 550.
Marginal note:Restriction on control and substantial investments
  •  (1) Subject to subsections (2) to (4), no company shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.

  • Marginal note:Exception: indirect investments

    (2) A company may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way of

    • (a) an acquisition of control of an entity referred to in any of paragraphs 453(1)(a) to (j), or of a prescribed entity, that controls or has a substantial investment in the entity; or

    • (b) an acquisition of shares or ownership interests in the entity by

      • (i) an entity referred to in any of paragraphs 453(1)(a) to (j), or a prescribed entity, that is controlled by the company, or

      • (ii) an entity controlled by an entity referred to in any of paragraphs 453(1)(a) to (j), or a prescribed entity, that is controlled by the company.

  • Marginal note:Exception: temporary investments, realizations and loan workouts

    (3) A company may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity by way of

    • (a) a temporary investment permitted by section 456;

    • (b) an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 457; or

    • (c) a realization of security permitted by section 458.

  • Marginal note:Exception: specialized financing regulations

    (4) A company may, subject to Part XI, acquire control of, or hold, acquire or increase a substantial investment in, an entity other than a permitted entity if it does so in accordance with regulations made under paragraph 452(d) concerning specialized financing.

  • Marginal note:Exception: uncontrolled event

    (5) A company is deemed not to contravene subsection (1) if the 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 company.

  • Marginal note:Non-application of subsection (2)

    (5.1) No company shall, under subsection (2), acquire control of, or acquire or increase a substantial investment in, an entity referred to in paragraph 453(1)(j).

  • Marginal note:Holding

    (5.2) If a company holds a substantial investment in an entity referred to in paragraph 453(1)(j) that it acquired or increased under subsection (2) before the coming into force of subsection (5.1), the company may continue to hold that substantial investment.

  • Marginal note:Application of other provision

    (6) Despite having acquired control of, or a substantial investment in, an entity under a particular provision of this Part, a company may continue to control the entity or hold the substantial investment in the entity as though it had made the acquisition under another provision of this Part so long as the conditions of that other provision are met.

  • Marginal note:Timing of deemed acquisition

    (7) If a company decides to exercise its right under subsection (6), the company is deemed to be acquiring the control or the substantial investment under the other provision.

  • 1991, c. 45, s. 451;
  • 1997, c. 15, s. 387;
  • 2001, c. 9, s. 550;
  • 2007, c. 6, s. 370;
  • 2013, c. 40, s. 167.
Marginal note:Regulations

 The Governor in Council may make regulations

  • (a) respecting the determination of the amount or value of loans, investments and interests for the purposes of this Part;

  • (b) respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by a company and its prescribed subsidiaries to or in a person and any persons connected with that person;

  • (c) specifying the classes of persons who are connected with any person for the purposes of paragraph (b); and

  • (d) concerning specialized financing for the purposes of subsection 451(4).

  • 1991, c. 45, s. 452;
  • 2001, c. 9, s. 550.

Subsidiaries and Equity Investments

Marginal note:Permitted investments
  •  (1) Subject to subsections (4) to (6) and Part XI, a company may acquire control of, or acquire or increase a substantial investment in

    • (a) a company;

    • (b) a bank;

    • (c) a bank holding company;

    • (d) an association to which the Cooperative Credit Associations Act applies;

    • (e) an insurance company or a fraternal benefit society incorporated or formed under the Insurance Companies Act;

    • (f) an insurance holding company;

    • (g) a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;

    • (h) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;

    • (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

    • (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.

  • Marginal note:Permitted investments

    (2) Subject to subsections (3) to (6) and Part XI, a 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:

    • (a) engaging in any financial service activity or in any other activity that a company is permitted to engage in under any of paragraphs 409(2)(b) to (d) or section 410 or 411;

    • (b) acquiring or holding shares of, or ownership interests in, entities in which a company is permitted under this Part to hold or acquire;

    • (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 company or any member of the company’s group:

      • (i) the company,

      • (ii) any member of the company’s group,

      • (iii) any entity that is primarily engaged in the business of providing financial services,

      • (iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or

      • (v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

    • (d) engaging in any activity that a company is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to

      • (i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by the company or any member of the company’s group, or

      • (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;

    • (e) engaging in the activities referred to in the definition closed-end fund, mutual fund distribution entity or mutual fund entity in subsection 449(1); and

    • (f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

  • Marginal note:Restriction

    (3) A 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

    • (a) activities that a company is not permitted to engage in under any of sections 417 and 418;

    • (b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a company under paragraph 409(2)(c);

    • (c) acting as an executor, administrator or official guardian or as a guardian, tutor, curator, judicial adviser or committee of a mentally incompetent person;

    • (d) being a trustee for a trust;

    • (e) activities that a company is not permitted to engage in under any regulation made under section 416 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;

    • (f) acquiring control of or acquiring or holding a substantial investment in another entity unless

      • (i) in the case of an entity that is controlled by the company, the company itself would be permitted under this Part to acquire a substantial investment in the other entity, or

      • (ii) in the case of an entity that is not controlled by the company, the company itself would be permitted to acquire a substantial investment in the other entity under subsection (1) or (2) or 451(2), paragraph 451(3)(b) or (c) or subsection 451(4); or

    • (g) any prescribed activity.

  • Marginal note:Exception

    (3.1) Despite paragraph (3)(d), a company may acquire control of, or acquire or increase a substantial investment in, any entity that acts as a trustee for a trust if the entity has been permitted under the laws of a province to act as a trustee for a trust and the following conditions are satisfied:

    • (a) the entity acts as a trustee only with respect to a closed-end fund or mutual fund entity; and

    • (b) if the entity engages in other business, that business is limited to engaging in one or more of the following:

      • (i) the activities of a mutual fund distribution entity,

      • (ii) any activity that a company is permitted to engage in under paragraph 410(1)(d.1), and

      • (iii) the provision of investment counselling services and portfolio management services.

  • Marginal note:Control

    (4) Subject to subsection (8) and the regulations, a company may not acquire control of, or acquire or increase a substantial investment in,

    • (a) an entity referred to in any of paragraphs (1)(a) to (j), unless

      • (i) the 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

      • (ii) the company is permitted by regulations made under paragraph 459(a) to acquire or increase the substantial investment;

    • (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

      • (i) the 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

      • (ii) the company is permitted by regulations made under paragraph 459(a) to acquire or increase the substantial investment; or

    • (c) an entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unless

      • (i) the 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,

      • (ii) the company is permitted by regulations made under paragraph 459(a) to acquire or increase the substantial investment, or

      • (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.

  • Marginal note:Minister’s approval

    (5) Subject to the regulations, a company may not, without the prior written approval of the Minister,

    • (a) acquire control of an entity referred to in paragraphs (1)(g) to (i) from a person who is not a member of the company’s group;

    • (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 company’s group:

      • (i) a factoring entity, or

      • (ii) a financial leasing entity;

    • (b.1) acquire control of an entity referred to in paragraph (1)(j) if the company is a company with equity of two billion dollars or more and

      A + B > C

      where

      A 
      is the value of the entity’s consolidated assets, as it would have been reported in the entity’s annual financial statements if those statements had been prepared immediately before the acquisition,
      B 
      is the aggregate of the values of the consolidated assets of all other entities referred to in paragraph (1)(j) that the company has acquired control of within the preceding 12 months, as the value for each entity would have been reported in its annual financial statements if those statements had been prepared immediately before the acquisition of control of that entity, and
      C 
      is 10% of the value of the company’s consolidated assets, as shown in the company’s last annual statement that was prepared before its first acquisition of control of an entity referred to in paragraph (1)(j) within the preceding 12 months;
    • (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);

    • (d) acquire control of, or acquire or increase a substantial investment in, an entity that engages in Canada in an activity described in paragraph 410(1)(c);

    • (d.1) acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 410(1)(c.1); or

    • (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).

  • Marginal note:Matters for consideration

    (5.1) In addition to any matters or conditions provided for in this Act that are relevant to the granting of an approval, the Minister may, in considering whether to grant the approval under paragraph (5)(b.1), take into account all matters that he or she considers relevant in the circumstances, including

    • (a) the stability of the financial system in Canada; and

    • (b) the best interests of the financial system in Canada.

  • Marginal note:Superintendent’s approval

    (6) Subject to subsection (7) and the regulations, a 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 company obtains the approval of the Superintendent.

  • Marginal note:Exception

    (7) Subsection (6) does not apply in respect of a particular transaction if

    • (a) the company is acquiring control of an entity, other than a specialized financing entity, and the only reason for which the company would, but for this subsection, require approval for the acquisition is that the entity carries on activities referred to in paragraph (2)(b);

    • (b) the company is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity; or

    • (c) the Minister has approved the transaction under subsection (5) or is deemed to have approved it under subsection 454(1).

  • Marginal note:Control not required

    (8) A 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 company to control the entity.

  • Marginal note:Prohibition on giving up control in fact

    (9) A 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.

  • Marginal note:Giving up control

    (10) A company that, under subsection (4), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity if

    • (a) the company is permitted to do so by regulations made under paragraph 459(c); or

    • (b) the entity meets the conditions referred to in subparagraph (4)(c)(iii).

  • Marginal note:Subsections do not apply

    (11) If a company controls, within the meaning of paragraph 3(1)(a), (b) or (c), an entity, subsections (5) and (6) do not apply in respect of any subsequent increases by the company of its substantial investment in the entity so long as the company continues to control the entity.

  • 1991, c. 45, s. 453;
  • 1997, c. 15, s. 388;
  • 1999, c. 28, s. 141;
  • 2001, c. 9, s. 550;
  • 2007, c. 6, s. 371;
  • 2012, c. 5, s. 179.
 
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