MAXIMUM ANNUAL IMPUTED INTEREST RATE

 The maximum annual imputed rate of interest used to calculate the scheduled payments on a capital lease shall not exceed the aggregate of 13.25% and the rate of interest on Government of Canada bonds.

ADDITIONAL AMOUNTS PAYABLE BY LESSEE

 A lessor may require a lessee to pay, in addition to the registration fee referred to in subsection 14(1) and the administration fee referred to in subsection 14(2),

  • (a) any charge to register the lessor’s security interest or to publish their rights;

  • (b) any premium paid by the lessor in respect of a capital lease under a life or disability insurance policy that provides that a benefit is or may become payable to the lessor;

  • (c) any charge by the lessor for the handling of a cheque presented or issued by a lessee that is subsequently returned because there are not sufficient funds, if stipulated in the capital lease;

  • (d) any cost related to the inspection of the equipment, if stipulated in the capital lease;

  • (e) any fee for changes to the capital lease requested by the lessee;

  • (f) any expense incurred by the lessor to preserve their security in the event of default;

  • (g) any fee or charge related to maintaining the equipment in good condition, if stipulated in the capital lease; and

  • (h) any premiums for equipment liability, physical damage and replacement insurance, if required under the capital lease.

DESIGNATION OF LESSORS

 The Minister is authorized to designate organizations as lessors.

MAINTAINING STATUS AS LESSOR

 A lessor that is a leasing company or a lease funder shall, in order to maintain their status as a lessor, provide proof to the Minister on an annual basis that they

  • (a) maintain a rating of “BBB” or better issued by a Canadian bond rating agency; or

  • (b) participate in a securitization program approved by a Canadian bond rating agency.

DUE DILIGENCE REQUIREMENTS

 Before entering into and administering a capital lease, the lessor shall apply the same due diligence and business procedures as those applicable to a capital lease of the same amount that is not subject to these Regulations, including

  • (a) obtaining credit references or conducting a credit check on the lessee;

  • (b) completing an assessment of the ability of the lessee to pay, taking into account all other financial obligations of the lessee;

  • (c) providing for a term similar to the term of a capital lease of the same amount that is not subject to these Regulations; and

  • (d) in the case of used equipment, substantiating in writing the fair market value and economic life of the equipment on the day on which the capital lease is entered into.

PAYMENT TERMS

  •  (1) A capital lease shall set out the total financing amount, the payment terms, the frequency of the scheduled payments and the date on which the capital lease is entered into. It shall set out either the bargain purchase option price or the residual value of the equipment, as the case may be.

  • (2) If the term of a capital lease in good standing is less than the maximum period specified in section 5, the lessor may renew it for one or more additional terms, at an annual imputed rate of interest that does not exceed the maximum annual imputed rate referred to in section 15 as of the renewal date, to an aggregate maximum term of 10 years, including all renewal terms, beginning on the day on which the capital lease is entered into.

  • SOR/2006-272, s. 2.