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

Act current to 2017-09-14 and last amended on 2017-01-15. Previous Versions

Marginal note:Board approval required
  •  (1) Except with the concurrence of at least two thirds of the directors present at a meeting of the board of directors of the company, a company shall not, with respect to a related party of the company referred to in subsection 484(1),

    • (a) make, take an assignment of or otherwise acquire a loan to the related party, including a margin loan referred to in section 486,

    • (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 company and its subsidiaries, other than

      • (i) loans referred to in paragraph 479(b), and

      • (ii) if the related party is a full-time senior officer of the company, loans to the related party that are permitted by subsection 484(2),

    • (e) the sum of all outstanding amounts guaranteed by the company 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 company and its subsidiaries in the securities of the entity

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

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

    (2) A company shall not, with respect to a related party of the company referred to in subsection 484(1),

    • (a) make, take an assignment of or otherwise acquire a loan to the related party, including a margin loan referred to in section 486,

    • (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 company referred to in subsection 484(1) that are held by the company and its subsidiaries, other than

      • (i) loans referred to in section 479, and

      • (ii) loans permitted by subsection 484(2),

    • (e) the sum of all outstanding amounts guaranteed by the company and its subsidiaries on behalf of all related parties of the company referred to in subsection 484(1), and

    • (f) the book value of all investments by the company and its subsidiaries in the securities of all entities that are related parties of the company referred to in subsection 484(1)

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

  • Marginal note:Exclusion of de minimis transactions

    (3) Loans, guarantees and investments that are referred to in section 478 shall not be included in calculating the aggregate of loans, guarantees and investments referred to in subsections (1) and (2).

  • 1991, c. 45, s. 485;
  • 1997, c. 15, s. 402.
Marginal note:Margin loans

 The Superintendent may establish terms and conditions with respect to the making by a company of margin loans to a director or senior officer of the company.

  • 1991, c. 45, s. 486;
  • 1997, c. 15, s. 403.
Marginal note:Exemption by order
  •  (1) A company may enter into a transaction with a related party of the company if the Superintendent, by order, has exempted the transaction from the provisions of section 477.

  • Marginal note:Conditions for order

    (2) The Superintendent shall not make an order referred to in subsection (1) unless the Superintendent is satisfied that the decision of the company to enter into the transaction has not been and is not likely to be influenced in any significant way by a related party of the company and does not involve in any significant way the interests of a related party of the company.

  • 1991, c. 45, s. 487;
  • 1996, c. 6, s. 121.
Marginal note:Prescribed transactions

 A company may enter into a transaction with a related party of the company if the transaction is a prescribed transaction or one of a class of prescribed transactions.

Restrictions on Permitted Transactions

Marginal note:Market terms and conditions
  •  (1) Except as provided in subsections 484(4) to (6), any transaction entered into with a related party of the company shall be on terms and conditions that are at least as favourable to the company as market terms and conditions.

  • Meaning of market terms and conditions

    (2) For the purposes of subsection (1), market terms and conditions means

    • (a) in respect of a service or a loan facility or a deposit facility offered to the public by the company in the ordinary course of business, terms and conditions that are no more or less favourable than those offered to the public by the company in the ordinary course of business; and

    • (b) in respect of any other transaction,

      • (i) terms and conditions, including those relating to price, rent or interest rate, that might reasonably be expected to apply in a similar transaction in an open market under conditions requisite to a fair transaction between parties who are at arm’s length and who are acting prudently, knowledgeably and willingly, or

      • (ii) if the transaction is one that would not reasonably be expected to occur in an open market between parties who are at arm’s length, terms and conditions, including those relating to price, rent or interest rate, that would reasonably be expected to provide the company with fair value, having regard to all the circumstances of the transaction, and that would be consistent with the parties to the transaction acting prudently, knowledgeably and willingly.

  • 1991, c. 45, s. 489;
  • 2001, c. 9, s. 553.

 [Repealed, 1997, c. 15, s. 404]

Disclosure

Marginal note:Company obligation
  •  (1) Where, in respect of any proposed transaction permitted by this Part, other than those referred to in section 478, a company has reason to believe that the other party to the transaction is a related party of the company, the company shall take all reasonable steps to obtain from the other party full disclosure, in writing, of any interest or relationship, direct or indirect, that would make the other party a related party of the company.

  • Marginal note:Reliance on information

    (2) A company and any person who is a director or an officer, employee or agent of the company may rely on any information contained in any disclosure received by the company pursuant to subsection (1) or any information otherwise acquired in respect of any matter that might be the subject of such a disclosure and no action lies against the company or any such person for anything done or omitted in good faith in reliance on any such information.

Marginal note:Notice to Superintendent

 Where a company has entered into a transaction that the company is prohibited by this Part from entering into, or where a company has entered into a transaction for which approval is required under subsection 485(1) without having obtained the approval, the company shall, on becoming aware of that fact, notify the Superintendent without delay.

  • 1991, c. 45, s. 493;
  • 1997, c. 15, s. 405.

Remedial Actions

Marginal note:Order to void contract or to grant other remedy
  •  (1) If a company enters into a transaction that it is prohibited from entering into by this Part, the company or the Superintendent may apply to a court for an order setting aside the transaction or for any other appropriate remedy, including an order directing that the related party of the company involved in the transaction account to the company for any profit or gain realized or that any director or senior officer of the company who authorized the transaction compensate the company for any loss or damage incurred by the company.

  • Marginal note:Time limit

    (2) An application under subsection (1) in respect of a particular transaction may only be made within the period of three months following the day the notice referred to in section 493 in respect of the transaction is given to the Superintendent or, if no such notice is given, the day the Superintendent becomes aware of the transaction.

  • Marginal note:Certificate

    (3) For the purposes of subsection (2), a document purporting to have been issued by the Superintendent, certifying the day on which the Superintendent became aware of the transaction, shall, in the absence of evidence to the contrary, be received in evidence as conclusive proof of that fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.

  • 1991, c. 45, s. 494;
  • 2001, c. 9, s. 554.
 
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