Version of document from 2006-03-22 to 2011-09-21:

Minority Investment (Insurance Holding Companies) Regulations

SOR/2001-405

INSURANCE COMPANIES ACT

Registration 2001-10-04

Minority Investment (Insurance Holding Companies) Regulations

P.C. 2001-1776  2001-10-04

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 977Footnote a of the Insurance Companies ActFootnote b, hereby makes the annexed Minority Investment (Insurance Holding Companies) Regulations.

INTERPRETATION

Marginal note:Definitions

 The following definitions apply in these Regulations.

“Act”

« Loi »

“Act” means the Insurance Companies Act.

“designated entity”

« entité désignée »

“designated entity” means

  • (a) an entity referred to in any of paragraphs 971(1)(a) to (j) of the Act;

  • (b) an entity whose business includes one or more of the activities referred to in paragraph 971(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 971(2)(b) of the Act or a specialized financing entity, other than an entity in which an insurance holding company is permitted to acquire or increase a substantial investment under subparagraph 971(4)(c)(iii) of the Act.

“regulatory capital”

« capital réglementaire »

“regulatory capital” has the same meaning as in section 2 of the Regulatory Capital (Insurance Holding Companies) Regulations.

“value”

« valeur »

“value” means

  • (a) in respect of a share, ownership interest or loan held by an insurance holding company at a particular time, the book value of the share, ownership interest or loan that would be reported on the balance sheet of the insurance holding company prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 887(4) of the Act; and

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

GENERAL

Marginal note:Permitted substantial investments

 Subject to section 3,

  • (a) for the purposes of subparagraphs 971(4)(a)(ii), (b)(ii) and (c)(ii) of the Act, an insurance holding company may acquire or increase a substantial investment in a designated entity; and

  • (b) for the purpose of paragraph 971(10)(a) of the Act, if an insurance holding company controls a designated entity, the insurance holding company may give up control of the designated entity while keeping a substantial investment in it.

Marginal note:Restriction concerning investments

 Subject to sections 5 or 6, an insurance holding company must not acquire or increase a substantial investment in a designated entity under paragraph 2(a) or give up control of the 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 insurance holding company’s regulatory capital:

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

  • (b) all loans held by the insurance holding company, and all loans held by entities controlled by the insurance holding company, that were made to designated entities in which the insurance holding company has a substantial investment but over which it does not exercise control, and

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

Marginal note:Restriction concerning loans

 Subject to sections 5 and 6, an insurance holding company 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(a) to (c) would exceed 50% of the insurance holding company’s regulatory capital.

Marginal note:Limitation

 In paragraphs 3(a) to (c) and section 4, any reference to a substantial investment that an insurance holding company has does not include a substantial investment acquired by the insurance holding company under regulations made under paragraph 977(a) of the Act other than these Regulations.

Calculation of “total value” in section 3 or 4

 For the purpose of calculating the total value referred to in section 3 or 4 in respect of an insurance holding company, no amount may be included in respect of shares or ownership interests acquired under sections 974 to 976 of the Act or acquired by a bank controlled by the insurance holding company under subsection 193(12) or (13) of the Bank Act, chapter B-1 of the Revised Statutes of Canada, 1985.

COMING INTO FORCE

Marginal note:Coming into force

Footnote * These Regulations come into force on the day on which section 977 of the Insurance Companies Act, as enacted by section 465 of the Financial Consumer Agency of Canada Act, chapter 9 of the Statutes of Canada, 2001, comes into force.