Pension Benefits Standards Regulations, 1985 (SOR/87-19)

Regulations are current to 2016-08-15 and last amended on 2016-07-01. Previous Versions

SCHEDULE III(Section 6)Permitted Investments

Interpretation

  • 1 In this Schedule,

    child

    child, in respect of a person, means

    • (a) the child of the person,

    • (b) the child of the person’s spouse or common-law partner, or

    • (c) the spouse or common-law partner of a child of the person; (enfant)

    debt obligation

    debt obligation means a bond, debenture, note or other evidence of indebtedness of an entity; (titre de créance)

    entity

    entity means

    • (a) a corporation, trust, partnership or fund or an unincorporated association or organization, or

    • (b) Her Majesty in right of Canada or of a province or the government of a foreign country or of a political subdivision of a foreign country, or an agency thereof; (entité)

    investment corporation

    investment corporation, in respect of a plan, means a corporation that

    • (a) is limited in its investments to those that are authorized for the plan under this Schedule,

    • (b) holds at least 98 per cent of its assets in cash, investments and loans,

    • (c) does not issue debt obligations,

    • (d) obtains at least 98 per cent of its income from investments and loans, and

    • (e) does not lend any of its assets to, or invest any of its moneys in, a related party of the plan; (société de placement)

    loan

    loan includes a deposit, financial lease, conditional sales contract, repurchase agreement and any other similar arrangement for obtaining money or credit, but does not include investments in securities or the making of an acceptance, endorsement or other guarantee; (prêt)

    market terms and conditions

    market terms and conditions, in respect of a transaction, means terms and conditions, including those relating to price, rent or interest rate, that would apply to a similar transaction in an open market under conditions requisite to a fair transaction between parties who are at arm’s length and acting prudently, knowledgeably and willingly; (conditions du marché)

    person

    person includes an entity; (personne)

    public exchange

    public exchange[Repealed, SOR/2015-60, s. 20]

    real estate corporation

    real estate corporation means a corporation incorporated to acquire, hold, maintain, improve, lease or manage real property other than real property that yields petroleum or natural gas; (société immobilière)

    real property

    real property includes a leasehold interest in real property; (biens immeubles)

    related party

    related party, in respect of a plan, means a person who is

    • (a) the administrator of the plan or who is a member of a pension committee, board of trustees or other body that is the administrator of the plan,

    • (b) an officer, director or employee of the administrator of the plan,

    • (c) a person responsible for holding or investing the assets of the plan, or any officer, director or employee thereof,

    • (d) an association or union representing employees of the employer, or an officer or employee thereof,

    • (e) an employer who participates in the plan, or an employee, officer or director thereof,

    • (f) a member of the plan,

    • (g) where the employer is a corporation, a person who directly or indirectly holds, or together with the spouse or common-law partner or a child of the person holds, more than 10 per cent of the voting shares carrying more than 10 per cent of the voting rights attached to all voting securities of the corporation,

    • (h) the spouse or common-law partner or a child of any person referred to in any of paragraphs (a) to (g),

    • (i) where the employer is a corporation, an affiliate of the employer,

    • (j) a corporation that is directly or indirectly controlled by a person referred to in any of paragraphs (a) to (h),

    • (k) an entity in which a person referred to in paragraph (a), (b), (e) or (g), or the spouse or common-law partner or a child of such a person, has a substantial investment, or

      • (l) an entity that holds a substantial investment in the employer,

    but does not include Her Majesty in right of Canada or of a province, or an agency thereof, or a bank, trust company or other financial institution that holds the assets of the plan, where that person is not the administrator of the plan; (apparenté)

    resource corporation

    resource corporation means a corporation that has, at all times since the date on which it was incorporated,

    • (a) limited its activities to acquiring, holding, exploring, developing, maintaining, improving, managing, operating or disposing of Canadian resource properties,

    • (b) restricted its investments and loans, other than investments in Canadian resource properties or property to be used in connection with Canadian resource properties owned by it and loans secured by Canadian resource properties to persons resident in Canada for the exploration or development of such properties, to investments and loans authorized for a plan under this Schedule, and

    • (c) not borrowed money other than for the purpose of earning income from Canadian resource properties; (société minière)

    security

    security means

    • (a) in respect of a corporation, a share of any class of shares of the corporation or a debt obligation of the corporation, and includes a warrant of the corporation, but does not include a deposit with a financial institution or an instrument evidencing such a deposit, and

    • (b) in respect of any other entity, any ownership interest in or debt obligation of the entity; (titre ou valeur mobilière)

    transaction

    transaction includes

    • (a) the making of an investment in securities,

    • (b) the taking of an assignment of, or otherwise acquiring, a loan made by a third party,

    • (c) the taking of a security interest in securities or a hypothec on securities, and

    • (d) any modification, renewal or extension of a prior transaction,

    but does not include a payment of pension benefits or other benefits, a transfer of pension benefit credits or a withdrawal of contributions from a plan; (transaction)

    voting share

    voting share means a share of any class of shares of a corporation that carries voting rights under all circumstances, by reason of an event that has occurred and is continuing or by reason of a condition that has been fulfilled. (action avec droit de vote)

  • 2 For the purposes of this Schedule, the making, holding or acquiring of an investment indirectly by an administrator on behalf of a plan, the holding, acquiring or owning of property indirectly by an administrator on behalf of a plan or the lending of money indirectly by an administrator on behalf of a plan includes the holding, making, acquiring, owning or lending of an investment, a property or money, as the case may be, by

    • (a) a real estate corporation, resource corporation or investment corporation in which the moneys of the plan have been invested in accordance with section 12, 13 or 14;

    • (b) a real estate corporation, resource corporation or investment corporation of which a corporation referred to in paragraph (a) holds securities to which are attached more than 30 per cent of the votes that may be cast to elect the directors of the real estate corporation, resource corporation or investment corporation; or

    • (c) an investment fund, a segregated fund or a trust fund in which the moneys of the plan have been invested.

    • 3 (1) For the purposes of this Schedule,

      • (a) a person or plan controls a corporation if securities of the corporation to which are attached more than 50 per cent of the votes that may be cast to elect the directors of the corporation are beneficially owned by the person or plan and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the corporation;

      • (b) a person or plan controls an unincorporated entity, other than a limited partnership, if more than 50 per cent of the ownership interests into which the unincorporated entity is divided are beneficially owned by the person or plan and the person or plan is able to direct the business and affairs of the unincorporated entity;

      • (c) the general partner of a limited partnership controls the limited partnership; and

      • (d) a trustee of a trust controls the trust.

    • (2) For the purposes of this Schedule, a person or plan who controls an entity controls any other entity that is controlled by the entity.

  • 4 [Repealed, SOR/2015-60, s. 22]

  • 5 For the purposes of this Schedule, one entity is affiliated with another entity if the entity is controlled by the other entity or if both entities are controlled by the same person.

  • 6 For the purposes of this Schedule, a person or plan has a substantial investment in

    • (a) an unincorporated entity if the person, the plan or an entity controlled by the person or plan beneficially owns more than 25 per cent of the ownership interests in the unincorporated entity; and

    • (b) a corporation if

      • (i) the voting rights attached to voting shares of the corporation that are beneficially owned by the person or plan, or by an entity controlled by the person or plan, exceed 10 per cent of the voting rights attached to all of the outstanding voting shares of the corporation, or

      • (ii) shares of the corporation that are beneficially owned by the person or plan, or by an entity controlled by the person or plan, represent ownership of more than 25 per cent of the shareholders’ equity of the corporation.

  • 7 For the purposes of this Schedule, a person or plan is associated with

    • (a) a corporation that the person or plan controls and every affiliate of every such corporation;

    • (b) a person who controls the person or plan;

    • (c) a partner who has a substantial investment in a partnership in which the person or plan has a substantial investment;

    • (d) a trust or estate in which the person or plan has a substantial investment or for which the person or plan serves as trustee or in a similar capacity to a trustee;

    • (e) the spouse or common-law partner of the person; and

    • (f) a brother, sister or child or other descendant of the person, or the spouse or common-law partner thereof.

Application

  • 8 This Schedule does not apply in respect of

    • (a) an insured plan or a plan in respect of which all benefits are provided through an annuity contract issued by the Government of Canada; or

    • (b) investments held in an unallocated general fund of a person authorized to carry on a life insurance business in Canada.

Quantitative Limits

    • 9 (1) The administrator of a plan shall not, directly or indirectly, lend or invest moneys of the plan to or in any one person, any associated persons or any affiliated corporations if

      • (a) 10% or more of the total market value of the plan’s assets has already been lent or invested, in total, to or in the person, the associated persons or the affiliated corporations; or

      • (b) 10% or more of the total market value of the plan’s assets would be lent or invested, in total, to or in the person, the associated persons or the affiliated corporations as a result of the loan or investment.

    • (1.1) The administrator of a plan shall not, directly or indirectly, lend or invest funds that are in a member choice account to or in any one person, any associated persons or any affiliated corporations if

      • (a) 10% or more of the total market value of the account’s assets has already been lent or invested, in total, to or in the person, the associated persons or the affiliated corporations; or

      • (b) 10% or more of the total market value of the account’s assets would be lent or invested, in total, to or in the person, the associated persons or the affiliated corporations as a result of the loan or investment.

    • (2) Subsections (1) and (1.1) do not apply in respect of moneys of a plan held by a bank, trust company or other financial institution to the extent that the moneys are fully insured by the Canada Deposit Insurance Corporation, by Assuris or by any similar provincial body established for the purpose of providing insurance against loss of deposits with trust companies or other financial institutions.

    • (3) Subsections (1) and (1.1) do not apply in respect of investments in

      • (a) an investment fund or a segregated fund that complies with

        • (i) in the case of investments applicable to a member choice account, section 11 of this Schedule, and

        • (ii) in the case of any other investments, the requirements applicable to a plan that are set out in this Schedule;

      • (b) an unallocated general fund of a person authorized to carry on a life insurance business in Canada;

      • (c) an investment corporation, real estate corporation or resource corporation;

      • (d) securities issued or fully guaranteed by the Government of Canada, the government of a province, or an agency thereof;

      • (e) a fund composed of mortgage-backed securities that are fully guaranteed by the Government of Canada, the government of a province, or an agency thereof; or

      • (f) a fund that replicates the composition of a widely recognized index of a broad class of securities traded at a marketplace.

    • (4) Subsections (1) and (1.1) do not apply in respect of investments that involve the purchase of a contract or agreement in respect of which the return is based on the performance of a widely recognized index of a broad class of securities traded at a marketplace.

  • 10 [Repealed, SOR/2010-149, s. 6]

    • 11 (1) Subject to subsection (2), the administrator of a plan shall not, directly or indirectly, invest the moneys of the plan in the securities of a corporation to which are attached more than 30 per cent of the votes that may be cast to elect the directors of the corporation.

    • (2) Subsection (1) does not apply in respect of investments in securities of

      • (a) a real estate corporation;

      • (b) a resource corporation; or

      • (c) an investment corporation.

    • 12 (1) The administrator of a plan shall not, directly or indirectly, invest the moneys of the plan in the securities of a real estate corporation to which are attached more than 30% of the votes that may be cast to elect the directors of the corporation, unless the administrator obtains and deposits with the Superintendent an undertaking by the corporation that, while those securities are held, the corporation will

      • (a) file with the Superintendent, at such intervals or times as the Superintendent directs,

        • (i) copies of its annual financial statements,

        • (ii) copies of its audited financial statements in respect of fiscal years ending after December 31, 1994,

        • (iii) a list clearly identifying the assets of the corporation and the market value of each asset,

        • (iv) a list of the names of its officers, directors and shareholders, and

        • (v) a certificate stating that the corporation is complying with its undertaking;

      • (b) permit the Superintendent or an authorized member of the Superintendent’s staff to visit its head office and to examine its books and records;

      • (c) limit its activities to acquiring, holding, maintaining, improving, leasing or managing real property other than real property that yields petroleum or natural gas;

      • (d) not carry on the activities referred to in paragraph (c) in respect of any real property that is not owned by, or on behalf of, or mortgaged to,

        • (i) the plan,

        • (ii) the corporation,

        • (iii) any other real estate corporation in which securities to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation have been invested in by, or on behalf of, the plan pursuant to this subsection, or

        • (iv) any other real estate corporation in which securities to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation are owned by the corporation or by a real estate corporation referred to in subparagraph (iii);

      • (e) procure, at the request of the Superintendent and at its own expense, an appraisal by one or more accredited appraisers of any parcel of real property owned by it or on its behalf;

      • (f) not lend any of its assets to, or invest any of its moneys in, a related party of the plan;

      • (g) restrict its investments and loans, other than investments in real property or in the securities of other real estate corporations, to those authorized for the plan under this Schedule; and

      • (h) not invest, or hold an investment, in securities of any other real estate corporation to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation, unless the corporation first obtains and deposits with the Superintendent an undertaking by the other real estate corporation not to invest, or hold an investment, in the securities of any other real estate corporation.

    • (2) A list of assets referred to in subparagraph (1)(a)(iii)

      • (a) shall not include any asset, other than an asset referred to in paragraph (1)(g), that is not authorized under this Schedule; and

      • (b) shall value any securities that are included in the assets of the corporation at a value not exceeding the market value thereof.

    • (3) Any financial statement of a plan filed under subsection 12(2) of the Act shall value the common shares of the real estate corporation held by, or on behalf of, the plan at a value not greater than the amount obtained by multiplying

      • (a) an amount equal to the total assets of the corporation less the sum of its total liabilities and its preferred capital stock

      by

      • (b) the number of common shares of the corporation held by, or on behalf of, the plan divided by the total number of the issued and outstanding common shares of the corporation.

    • 13 (1) The administrator of a plan shall not, directly or indirectly, invest the moneys of the plan in the securities of a resource corporation to which are attached more than 30% of the votes that may be cast to elect the directors of the corporation, unless the administrator obtains and deposits with the Superintendent an undertaking by the corporation that, while those securities are held, the corporation will

      • (a) file with the Superintendent, at such intervals or times as the Superintendent directs,

        • (i) copies of its annual financial statements,

        • (ii) copies of its audited financial statements in respect of fiscal years ending after December 31, 1994,

        • (iii) a list clearly identifying the assets of the corporation and the market value of each asset,

        • (iv) a list of the names of its officers, directors and shareholders, and

        • (v) a certificate stating that the corporation is complying with its undertaking;

      • (b) permit the Superintendent or an authorized member of the Superintendent’s staff to visit its head office and to examine its books and records;

      • (c) limit its activities to acquiring, holding, exploring, developing, maintaining, improving, managing, operating or disposing of Canadian resource properties;

      • (d) not carry on the activities referred to in paragraph (c) in respect of any Canadian resource property that is not owned by, or on behalf of,

        • (i) the plan,

        • (ii) the corporation,

        • (iii) any other resource corporation in which securities to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation have been invested in by, or on behalf of, the plan pursuant to this subsection, or

        • (iv) any other resource corporation in which securities to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation are owned by the corporation or by a resource corporation referred to in subparagraph (iii);

      • (e) procure, at the request of the Superintendent and at its own expense, an appraisal by one or more accredited appraisers of any Canadian resource property owned by it;

      • (f) not lend any of its assets to, or invest any of its moneys in, a related party of the plan;

      • (g) restrict its investments and loans, other than investments in Canadian resource property or properties to be used in connection with Canadian resource properties owned by it, loans secured by Canadian resource properties to persons resident in Canada for the exploration or development of such properties and investments in the securities of other resource corporations, to investments and loans authorized for the plan under this Schedule;

      • (h) not borrow money other than for the purpose of earning income from Canadian resource properties; and

      • (i) not invest, or hold an investment, in securities of any other resource corporation to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation, unless the corporation first obtains and deposits with the Superintendent an undertaking by the other resource corporation not to invest, or hold an investment, in the securities of any other resource corporation.

    • (2) A list of assets referred to in subparagraph (1)(a)(iii)

      • (a) shall not include any asset, other than an asset referred to in paragraph (1)(g), that is not authorized under this Schedule; and

      • (b) shall value any securities that are included in the assets of the corporation at a value not exceeding the market value.

    • (3) Any financial statement of the plan filed under subsection 12(2) of the Act shall value the common shares of the resource corporation held by, or on behalf of, the plan at a value not greater than the amount obtained by multiplying

      • (a) an amount equal to the total assets of the corporation set out in the balance sheet less the sum of its liabilities and its preferred capital stock

      by

      • (b) the number of common shares of the corporation held by, or on behalf of, the plan divided by the total number of the issued and outstanding common shares of the corporation.

  • 14 The administrator of a plan shall not, directly or indirectly, invest the moneys of the plan in the securities of an investment corporation to which are attached more than 30% of the votes that may be cast to elect the directors of the corporation, unless the administrator obtains and deposits with the Superintendent an undertaking by the corporation that, while those securities are held, the corporation will

    • (a) file with the Superintendent, at such intervals or times as the Superintendent directs,

      • (i) copies of its annual financial statements,

      • (ii) copies of its audited financial statements in respect of fiscal years ending after December 31, 1994,

      • (iii) a list clearly identifying the assets of the corporation and the market value of each asset,

      • (iv) a list of the names of its officers, directors and shareholders, and

      • (v) a certificate stating that the corporation is complying with its undertaking;

    • (b) permit the Superintendent or an authorized member of the Superintendent’s staff to visit its head office and to examine its books and records;

    • (c) hold at least 98 per cent of its assets in cash, investments and loans;

    • (d) not issue debt obligations;

    • (e) obtain at least 98 per cent of its income from investments and loans;

    • (f) not lend any of its assets to, or invest any of its moneys in, a related party of the plan; and

    • (g) not invest, or hold an investment, in securities of any other investment corporation if there are attached to those securities more than 30 per cent of the votes that may be cast to elect the directors of that corporation, unless the corporation first obtains and deposits with the Superintendent an undertaking by the other investment corporation not to invest, or hold an investment, in the securities of any other investment corporation.

  • 15 For the purposes of sections 16 and 17,

    • (a) where a transaction is entered into by, or on behalf of, a plan with a person who the administrator of the plan, or any person acting on the administrator’s behalf, knows will become a related party to the plan, the person shall be considered to be a related party of the plan in respect of the transaction; and

    • (b) 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.

    • 16 (1) Subject to sections 17 and 18, the administrator of a plan shall not, directly or indirectly,

      • (a) lend the moneys of the plan to a related party or use those moneys to hold an investment in the securities of a related party; or

      • (b) enter into a transaction with a related party on behalf of the plan.

    • (2) Subject to sections 17 and 18, during the period of twelve months after the day on which a person ceases to be a related party of a plan, the administrator of the plan shall not, directly or indirectly,

      • (a) lend the moneys of the plan to that person or invest those moneys in the securities of that person; or

      • (b) enter into a transaction with that person on behalf of the plan.

    • 17 (1) The administrator of a plan may enter into a transaction with a related party for the operation or administration of the plan if

      • (a) it is under terms and conditions that are not less favourable to the plan than market terms and conditions; and

      • (b) it does not involve the making of loans to, or investments in, the related party.

    • (2) Section 16 does not apply in respect of investments

      • (a) in an investment fund or a segregated fund in which investors other than the administrator and its affiliates may invest and that complies with

        • (i) in the case of investments applicable to a member choice account, section 11 of this Schedule, and

        • (ii) in the case of any other investments, the requirements applicable to a plan that are set out in section 9 and 11 of this Schedule;

      • (b) in an unallocated general fund of a person authorized to carry on a life insurance business in Canada;

      • (c) in securities issued or fully guaranteed by the Government of Canada, the government of a province, or an agency of either one of them;

      • (d) in a fund composed of mortgage-backed securities that are fully guaranteed by the Government of Canada, the government of a province, or an agency of either one of them;

      • (e) in a fund that replicates the composition of a widely recognized index of a broad class of securities traded at a marketplace; or

      • (f) that involve the purchase of a contract or agreement in respect of which the return is based on the performance of a widely recognized index of a broad class of securities traded at a marketplace.

    • (3) The administrator of a plan may enter into a transaction with a related party on behalf of the plan if the value of the transaction is nominal or the transaction is immaterial to the plan.

    • (4) For the purposes of subsection (3), in assessing whether the value of a transaction is nominal or whether a transaction is immaterial, two or more transactions with the same related party shall be considered as a single transaction.

    • (5) If an administrator of a plan is in contravention of section 16 as a result of a transaction that was entered into by someone other than the administrator or an entity controlled by the administrator, the administrator has five years to comply with section 16 from the day of the contravention.

  • 17.1 An administrator of a plan who does not comply with section 16 on the day on which this section comes into force shall comply with that section before the end of the five-year period that begins on that day.

General

  • 18 Sections 9 to 16 do not apply in respect of

    • (a) investments in a corporation that are held by, or on behalf of, a plan as a result of an arrangement, within the meaning of subsection 192(1) of the Canada Business Corporations Act, for the reorganization or liquidation of the corporation or for the amalgamation of the corporation with another corporation, if the investments are to be exchanged for shares or debt obligations;

    • (b) assets that are acquired by, or on behalf of, a plan through the realization of a security interest held by, or on behalf of, the plan and that are held for a period not exceeding two years from the day on which the assets were acquired.

  • SOR/90-363, s. 8;
  • SOR/93-299, s. 6;
  • 1994, c. 24, s. 34(F);
  • SOR/2001-194, ss. 3, 5;
  • SOR/2010-149, s. 6;
  • SOR/2011-85, ss. 10 to 12, 14(F);
  • SOR/2015-60, ss. 20 to 28.
 
Date modified: