Minority Investment (Cooperative Credit Associations) Regulations (SOR/2001-403)

Interpretation

Marginal note:Definitions

1 The following definitions apply in these Regulations.

Act

Act means the Cooperative Credit Associations Act. (Loi)

designated entity

designated entity means

• (a) an entity referred to in any of paragraphs 390(1)(a) to (h) of the Act;

• (b) an entity whose business includes one or more of the activities referred to in paragraph 390(2)(a) of the Act 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 factoring entity, a finance entity or a financial leasing entity; or

• (c) an entity whose business includes an activity referred to in paragraph 390(2)(b) of the Act, including a specialized financing entity, other than an entity in which an association is permitted to acquire or increase a substantial investment under subparagraph 390(4)(c)(iii) of the Act. (entité désignée)

regulatory capital

regulatory capital has the same meaning as in section 3 of the Regulatory Capital (Cooperative Credit Associations) Regulations. (capital réglementaire)

value

value means

• (a) in respect of a share, ownership interest or loan held by an association at a particular time, the book value of the share, ownership interest or loan that would be reported on the balance sheet of the association prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 292(4) of the Act; and

• (b) in respect of a guarantee, the face value of the guarantee. (valeur)

General

Marginal note:Permitted substantial investments

2 Subject to section 3,

• (a) for the purpose of subparagraphs 390(4)(a)(ii), (b)(ii) and (c)(ii) of the Act, an association may acquire or increase a substantial investment in a designated entity; and

• (b) for the purpose of paragraph 390(10)(a) of the Act, if an association controls a designated entity, the association may give up control of the designated entity while keeping a substantial investment in it.

Marginal note:Restriction concerning investments

• 3 (1) Subject to sections 5 and 6, an association must not acquire or increase a substantial investment in a designated entity under paragraph 2(a) or give up control of a designated entity while keeping a substantial investment in it under paragraph 2(b) if, after the acquisition, increase or giving up of control, the total value of the following would exceed 50% of the association’s regulatory capital:

  • (a) all shares and ownership interests beneficially owned by the association, and all shares and ownership interests beneficially owned by entities controlled by the association, in designated entities in which the association has a substantial investment but over which it does not exercise control,

  • (b) all loans held by the association, and all loans held by entities controlled by the association, that were made to designated entities in which the association has a substantial investment but over which it does not exercise control, other than loans to designated entities that are not foreign institutions and that are deemed to be controlled by a group of associations, and

  • (c) all outstanding guarantees given by the association, and all outstanding guarantees given by entities controlled by the association, on behalf of designated entities in which the association has a substantial investment but over which it does not exercise control.

• Meaning of control in paragraph (1)(b)

  (2) For the purpose of paragraph (1)(b), a designated entity is deemed to be controlled by a group of associations if the association mentioned in that paragraph and other associations beneficially own securities of the designated entity in such a number that, if the association and the other associations were one association, that association would control the designated entity.

Marginal note:Restriction concerning loans

4 Subject to sections 5 and 6, an association that has a substantial investment in a designated entity over which it does not exercise control must not make a loan to, or give a guarantee on behalf of, the designated entity, or permit entities controlled by it to do so, if, after the making of the loan or the giving of the guarantee, the total value of the shares, ownership interests, loans and guarantees referred to in paragraphs 3(1)(a) to (c) would exceed 50% of the association’s regulatory capital.

Marginal note:Limitation

5 In paragraphs 3(1)(a) to (c) and section 4, any reference to a substantial investment that an association has does not include a substantial investment acquired by the association

• (a) under regulations made under paragraph 396(a) of the Act, other than these Regulations; or

• (b) by way of an investment of a specialized financing entity controlled by the association.

Calculation of total value in section 3 or 4

6 For the purposes of calculating the total value referred to in subsection 3(1) or section 4 in respect of an association, no amount may be included in respect of shares or ownership interests acquired under sections 393 to 395 of the Act or acquired by a bank controlled by the association under subsection 193(12) or (13) of the Bank Act, chapter B-1 of the Revised Statutes of Canada, 1985.

Repeal

Marginal note:Repeal

7 [Repeal]

Coming into Force

Marginal note:Coming into force

Footnote ^*8 These Regulations come into force on the day on which section 396 of the Cooperative Credit Associations Act, as enacted by section 314 of the Financial Consumer Agency of Canada Act, chapter 9 of the Statutes of Canada, 2001, comes into force.

• Return to footnote ^*[Note: Regulations in force October 24, 2001, see SI/2001-102.]