Marginal note:Meaning of “transaction”
(2) For the purposes of this Part, the fulfilment of an obligation under the terms of any transaction, including the payment of interest on a loan or deposit, is part of the transaction, and not a separate transaction.
Marginal note:Meaning of “loan”
(3) For the purposes of this Part, loan includes a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit, but does not include investments in securities or the making of an acceptance, endorsement or other guarantee.
Marginal note:Security of a related party
(4) For the purposes of this Part, security of a related party includes an option, transferable by delivery, to demand delivery of a specified number or amount of shares of the related party at a fixed price within a specified time.
- 1991, c. 45, s. 476;
- 2007, c. 6, s. 375.
Prohibited Related Party Transactions
Marginal note:Prohibited transactions
Marginal note:Transaction of entity
(2) Without limiting the generality of subsection (1), a company is deemed to have indirectly entered into a transaction in respect of which this Part applies where the transaction is entered into by an entity that is controlled by the company.
(3) Subsection (2) does not apply where an entity that is controlled by a company is a financial institution incorporated or formed under the laws of a province and is subject to regulation and supervision, satisfactory to the Minister, regarding transactions with related parties of the company.
(4) Subsection (2) does not apply in respect of transactions entered into by an entity that is controlled by a company if the transaction is a prescribed transaction or is one of a class of prescribed transactions.
Permitted Related Party Transactions
Marginal note:Nominal value transactions
478 Notwithstanding anything in this Part, a company may enter into a transaction with a related party of the company if the value of the transaction is nominal or immaterial to the company when measured by criteria that have been established by the conduct review committee of the company and approved in writing by the Superintendent.
Marginal note:Secured loans
479 A company may make a loan to or a guarantee on behalf of a related party of the company or take an assignment of or otherwise acquire a loan to a related party of the company if
(a) the loan or guarantee is fully secured by securities of or guaranteed by the Government of Canada or the government of a province; or
(b) the loan is a loan permitted by section 418 made to a related party who is a natural person on the security of a mortgage of the principal residence of that related party.
480 A company may enter into a transaction with a related party of the company if the transaction consists of a deposit by the company with a financial institution that is a direct clearer or a member of a clearing group under the by-laws of the Canadian Payments Association and the deposit is made for clearing purposes.
Marginal note:Borrowing, etc., from related party
481 A company may borrow money from, take deposits from, or issue debt obligations to, a related party of the company.
Marginal note:Acquisition of assets
Marginal note:Sale of assets
(2) Subject to section 470, a company may sell any assets of the company to a related party of the company if
Marginal note:Asset transactions with financial institutions
(3) Notwithstanding any of the provisions of subsections (1) and (2), a company may, in the normal course of business and pursuant to arrangements that have been approved by the Superintendent in writing, acquire or dispose of any assets, other than real property, from or to a related party of the company that is a financial institution.
Marginal note:Asset transactions in restructuring
(4) Notwithstanding any of the provisions of subsections (1) and (2), a company may acquire any assets from, or dispose of any assets to, a related party of the company as part of, or in the course of, a restructuring, if the acquisition or disposition has been approved in writing by the Superintendent.
Marginal note:Goods or space for use in business
(5) A company may lease assets
(a) from a related party of the company for use in the ordinary course of business of the company, or
(b) to a related party of the company,
if the lease payments are made in money.
Marginal note:Approval under section 241
(6) A company may acquire any assets from, or dispose of any assets to, a related party of the company under a sale agreement that is approved by the Minister under section 241.
- 1991, c. 45, s. 482;
- 2007, c. 6, s. 376.
(a) subject to subsection (2), consists of a written contract for the purchase by the company of services used in the ordinary course of business;
(b) subject to subsection (4), involves the provision by the company of services, other than loans or guarantees, normally offered to the public by the company in the ordinary course of business;
(c) consists of a written contract with a financial institution or an entity in which the company is permitted to have a substantial investment pursuant to section 453 that is a related party of the company
(d) consists of a written contract for such pension or benefit plans or their management or administration as are incidental to directorships or to the employment of officers or employees of the company or its subsidiaries; or
(e) involves the provision by the company of management, advisory, accounting, information processing or other services in relation to any business of the related party.
Marginal note:Order concerning management by employees
(2) Where a company has entered into a contract pursuant to paragraph (1)(a) and the contract, when taken together with all other such contracts entered into by the company, results in all or substantially all of the management functions of the company being exercised by persons who are not employees of the company, the Superintendent may, by order, if the Superintendent considers that result to be inappropriate, require the company, within such time as may be specified in the order, to take all steps necessary to ensure that management functions that are integral to the carrying on of business by the company are exercised by employees of the company to the extent specified in the order.
(3) Despite subsection 477(2), a company is deemed not to have indirectly entered into a transaction in respect of which this Part applies if the transaction is entered into by an entity that is controlled by the company and the business of which is limited to the activity referred to in 453(2)(c) and the transaction is on terms and conditions at least as favourable to the company as market terms and conditions, as defined in subsection 489(2).
Marginal note:Loans or guarantees not included
(4) The provision of services, for the purposes of paragraph (1)(b), does not include the making of loans or guarantees.
- 1991, c. 45, s. 483;
- 1997, c. 15, s. 400;
- 2007, c. 6, s. 377.
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