Canada Deposit Insurance Corporation Deposit Insurance Policy By-law (SOR/93-516)

General

• 1  [Repealed, SOR/2008-293, s. 5]

• • 2 (1) In this policy,

    Act

    Act means the Canada Deposit Insurance Corporation Act; (Loi)

    affiliate

    affiliate [Repealed, SOR/2002-117, s. 2]

    appropriate

    appropriate, in relation to a thing so described, means that a knowledgeable individual in the financial institutions industry would conclude that it is suitable for its intended purpose, having regard to the nature, magnitude, complexity and implications of the matter in question; (adéquat)

    beneficial ownership

    beneficial ownership includes ownership through one or more trustees, legal representatives, agents or other intermediaries; (véritable propriétaire)

    body corporate

    body corporate means an incorporated body wherever or however incorporated; (personne morale)

    business plan

    business plan means, in respect of a specified time period,

    • (a) the member institution’s business objectives and a description of the short-term and long-term strategies for achieving those objectives,

    • (b) the member institution’s market strategy, including a description of the geographic area served by the member institution, and the scope and nature of its business (e.g., types of products offered, volume of deposit-taking business, details of lending and investment objectives),

    • (c) a detailed forecast that includes pro-forma financial statements that cover the specified time period and that identifies the assumptions made in the preparation of the forecast, and

    • (d) an explanation of the relation between the business background and expertise of each officer and the business objectives of the member institution; (plan d’entreprise)

    effective

    effective, in relation to a thing so described, means that a knowledgeable individual in the financial institutions industry would conclude that it is achieving, or can reasonably be expected to achieve, its intended purpose; (efficace)

    entity

    entity has the same meaning as in section 2 of the Bank Act; (entité)

    examiner

    examiner has the same meaning as in subsection 1(1) of the Canada Deposit Insurance Corporation Differential Premiums By-law; (inspecteur)

    financial statements

    financial statements includes a balance sheet, a statement of retained earnings, an income statement and a statement of changes in financial position; (états financiers)

    forecast

    forecast means information in respect of prospective results of operations and the financial position or changes in the financial position of an entity, based on assumptions made in respect of future economic conditions and planned courses of action for a specified period, given management’s judgment as to the most probable set of economic conditions; (prévisions)

    group entity

    group entity means, in respect of a member institution,

    • (a) an entity in which the member institution or any of its subsidiaries or affiliates holds, directly or indirectly, an ownership interest of 10 % or more, or

    • (b) a business enterprise that the member institution or any of its subsidiaries or affiliates operates with other persons for profit, including a joint venture or a special purpose vehicle; (entité du groupe)

    influence

    influence[Repealed, SOR/2002-117, s. 2]

    officer

    officer means, in respect of an entity, a chief executive officer, president, vice-president, secretary, controller, treasurer, chief financial officer or general manager or any other natural person who performs functions similar to those normally performed by an individual occupying one of those offices; (dirigeant)

    person

    person means a natural person, an entity or a personal representative; (personne)

    prescribed information

    prescribed information means the following information:

    • (a) the category in which the member institution is classified under the Canada Deposit Insurance Corporation Differential Premiums By-law,

    • (b) the premium rate assigned to the member institution under that By-law,

    • (c) the total score assigned to the member institution under that By-law,

    • (d) any score assigned to the member institution in respect of quantitative factors or qualitative factors or criteria under that By-law,

    • (e) any rating assigned by the examiner to the member institution to assess its financial condition,

    • (f) [Repealed, SOR/2005-115, s. 1]

    • (g) any stage of intervention assigned to the member institution as a result of its assessment in accordance with the Guide to Intervention for Federal Financial Institutions, and

    • (h) any other information that is given to the member institution with respect to qualitative factors or criteria by the Corporation or by the regulator or examiner and that would, alone or when combined with other information, permit the determination of the score assigned to the member institution in respect of any of those qualitative factors or criteria under the By-law referred to in paragraph (a); (renseignements prévus par la police)

    prudent

    prudent, in relation to a thing so described, means that a knowledgeable individual in the financial institutions industry would conclude that it is the product of the exercise of careful and practical judgment, having regard to business objectives, risks, the business and economic environment and the sustainability of earnings and capital; (prudent)

    regulatory authority

    regulatory authority means a supervisory or regulatory authority of financial institutions, capital markets, securities transactions or commodity futures that has jurisdiction over the member institution; (organisme de réglementation)

    resolution

    resolution means the exercise by the Corporation of its powers under the Act for the purpose of resolving financial or other difficulties of a member institution; (règlement)

    resolution plan

    resolution plan means a plan prepared for the purpose of implementing, in whole or in part, a resolution in respect of a member institution; (plan de règlement)

    Return of Insured Deposits

    Return of Insured Deposits means the return of insured deposits in the form required by the Corporation; (Déclaration des dépôts assurés)

    subsidiary

    subsidiary, where used to indicate a relationship between one body corporate and another, means a body corporate that is controlled by that other body corporate. (filiale)

  • (2) to (5) [Repealed, SOR/2002-117, s. 2]

Insurance

• 3 The Corporation insures the deposits of the member institution to the extent provided for in the Act, the by-laws and this policy.

• 4 [Repealed, SOR/2002-117, s. 3]

• 5. and 6 [Repealed, SOR/2008-293, s. 6]

Conditions

• 7 All provisions of this policy shall be considered to be conditions of this policy.

• • 8 (1) The member institution shall comply with the Act, any other applicable Act, any applicable by-law, the incorporating instrument of the member institution, any undertaking that it has given to the Corporation and any agreement it has made with the Corporation.

  • (2) The member institution shall have appropriate, effective and prudent

    • (a) practices with respect to corporate governance, risk management and liquidity and capital management; and

    • (b) controls in respect of its operations.

Premiums

• • 9 (1) The member institution shall, if required to do so under the Canada Deposit Insurance Corporation Differential Premiums By-law, submit to the Corporation the declaration referred to in section 7 of that By-law and the Reporting Form and the documents referred to in subsection 15(1) of that By-law within the time required by that By-law.

  • (1.1) Subject to subsection (2), the member institution shall, in accordance with section 21 of the Act, pay to the Corporation an annual premium calculated in accordance with that section and payable at the times specified in subsection 22(2) of the Act.

  • (2) The member institution shall, in accordance with subsection 23(1) of the Act, pay to the Corporation the premium for the premium year in which it becomes a member institution calculated in accordance with that subsection and payable at the times specified in subsection 23(2) of the Act.

• • 10 (1) The member institution shall complete and certify a Return of Insured Deposits and submit that Return to the Corporation on July 15 of each year or at any other time that the Corporation may require.

  • (2) When making the calculations for the purposes of subsections 21(1) and 23(1) of the Act, the member institution shall determine or estimate the aggregate amount of insured deposits by using a method set out in the Return of Insured Deposits.

• • 10.1 (1) Subject to subsection (2), the member institution shall not, directly or indirectly, disclose prescribed information.

  • (2) A member institution may disclose prescribed information to its affiliates, directors, officers or other employees, auditors or legal counsel if the member institution ensures that the prescribed information remains confidential.

• 10.2 Section 10.1 does not apply in respect of

  • (a) the rating referred to in paragraph (e) of the definition prescribed information in subsection 2(1), if the examiner has communicated the rating directly to the member institution without prohibiting its disclosure; or

  • (b) information referred to in paragraph (h) of the definition prescribed information in subsection 2(1), if the examiner has communicated the information directly to the member institution without prohibiting its disclosure.

• 11 In accordance with section 25 of the Act, the member institution shall pay any interest that is charged by the Corporation on the unpaid amount of any premium instalment not paid on or before the due date of that instalment, which interest shall accrue from and including the due date to but excluding the date of payment.

• 12 In accordance with subsection 25.1(1) of the Act, the member institution shall pay to the Corporation any premium surcharge assessed by the Corporation, the amount of which shall be determined in accordance with subsection 25.1(2) of the Act.

• 13 In accordance with section 25 and subsection 25.1(3) of the Act, the member institution shall pay any interest that is charged by the Corporation on the unpaid amount of any premium surcharge, which interest shall accrue from and including the due date to but excluding the date of payment.

• • 14 (1) Where the member institution, or the Corporation or person making an examination or inspection under the Act, a by-law or this policy, discovers an error in a Return of Insured Deposits, the member institution shall without delay complete and file with the Corporation an amended Return of Insured Deposits certified by the member institution.

  • (2) Where, based on an amended Return of Insured Deposits, the Corporation determines that an additional amount of premium or premium surcharge should have been paid, the member institution shall pay to the Corporation

    • (a) the additional amount without delay; and

    • (b) any interest on that amount that is charged by the Corporation in accordance with section 25 of the Act, which interest shall accrue from and including the due date to but excluding the date of payment.

Information

• • 15 (1) The member institution shall provide to the Corporation, not later than 120 days after the end of each financial year of the member institution,

    • (a) financial statements for that financial year that are

      • (i) prepared on a consolidated basis and contain comparative information in respect of the immediately preceding financial year,

      • (ii) approved by the board of directors of the member institution, and

      • (iii) audited;

    • (b) a current list of the subsidiaries and affiliates of the member institution; and

    • (c) a current list of each of its directors and officers and their titles or offices, together with their business addresses, including email addresses, and their business telephone numbers.

  • (2) The member institution shall, if requested by the Corporation, provide to the Corporation a current list of its directors and officers and those of its subsidiaries, affiliates and group entities, and their titles or offices, together with their business addresses, including email addresses, and their business and personal telephone numbers, not later than 30 days after the day on which the request is received.

• 16 Where requested by the Corporation for the purpose of monitoring or assessing the compliance of the member institution with the Act, the by-laws or this policy or where the Corporation considers it to be necessary or desirable in furtherance of its objects, the member institution shall provide to the Corporation

  • (a) without delay, financial statements of the member institution or of any of its subsidiaries, for the period specified, prepared on a consolidated or unconsolidated basis and including a balance sheet for each of its foreign branches, if any;

  • (b) without delay, a statement certified by an officer of the member institution, that sets out

    • (i) a profile and analysis of insured deposits,

    • (ii) a profile and analysis of uninsured deposits,

    • (iii) the number, amounts and sources of all deposits that are, in whole or in part, to the knowledge of the member institution, received or held as the result of the services of a person who carries on business as an agent or broker in the solicitation or placement of deposits on behalf of one or more member institutions or actual or prospective depositors,

    • (iv) a detailed description of the system that is used by the member institution to compile information on insured deposits and of that which is used to compile information on uninsured deposits,

    • (iv.1) a detailed description of the accounting and information systems and the procedures and controls used by the member institution with respect to deposit liabilities, including the manner in which the member institution identifies depositors for the purpose of calculating insured deposits, and

    • (v) a detailed list of assets, liabilities, derivatives and commitments both on- and off-balance sheet;

  • (c) within 60 days following receipt of the request, a business plan approved by the board of directors of the member institution that covers the remainder of the financial year of the member institution, commencing with the quarter in which the request is received and ending with the end of the following financial year; and

  • (d) without delay, any other reports, documents and information specified in the request that pertain to its affairs and those of its subsidiaries, affiliates and group entities, or to the affairs of any other financial institution or any other entity with which the member institution has a relationship.

• • 16.1 (1) A member institution shall, if requested to do so by the Corporation for the purpose of developing and maintaining a resolution plan for the member institution, provide to the Corporation, within the time specified in the request, any of the following information that is specified in the request:

    • (a) audited financial statements — or if they are not available, unaudited financial statements — for the period specified in the request on a consolidated and unconsolidated basis for the member institution and its subsidiaries, affiliates and group entities that include a balance sheet for each of its foreign branches, if any;

    • (b) a current list of each subsidiary, affiliate and group entity of the member institution identifying its jurisdiction of incorporation and describing its licence or licences, as applicable, to carry on business including restrictions, if any, and its applicable regulatory authority together with, if known, the name, title, address, telephone number and email address of a contact person at the regulatory authority;

    • (c) a current list of each of the directors and officers of its subsidiaries, affiliates and group entities, and their titles or offices, together with their business addresses, including email addresses, and their business and personal telephone numbers;

    • (d) the legal corporate structure of the member institution, identifying its subsidiaries, affiliates and group entities, including information about the ownership of each of those subsidiaries, affiliates and group entities;

    • (e) the financial connections between the member institution and its subsidiaries, affiliates and group entities, including intra-group exposures, guarantees, cross-group funding arrangements, cross-default clauses, liquidity support and capital support;

    • (f) detailed information about the payment, clearing and settlement systems that support the operations of the member institution and its subsidiaries, affiliates and group entities;

    • (g) detailed information about the business functions and business operations of the member institution and of its subsidiaries, affiliates and group entities, as well as the manner and extent to which those functions and operations are performed by the entities for each other or, if applicable, performed for those entities by external service providers;

    • (h) the business continuity or crisis management plans of the member institution and its subsidiaries, affiliates and group entities, together with related communication and employee retention plans;

    • (i) detailed information about both on- and off-balance sheet assets, liabilities, derivatives and commitments of the member institution, its subsidiaries, affiliates and group entities;

    • (j) detailed information about the legal and regulatory framework applicable to the member institution and its subsidiaries, affiliates and group entities; and

    • (k) any other reports, documents or information pertaining to the affairs of the member institution or to those of its subsidiaries, affiliates or group entities that relate to the resolution plan for the member institution.

  • (2) A member institution shall, if requested to do so by the Corporation for the purpose referred to in subsection (1), provide to the Corporation, within the time specified in the request, an analysis in respect of any of the information referred to in paragraphs (1)(a) to (k) that is specified in the request.

• 16.2 Despite sections 15, 16 and 16.1, a member institution is not required to provide to the Corporation any information referred to in those sections if it is prohibited from doing so by Canadian legislation or by the legislation of a jurisdiction outside Canada.

• • 17 (1) The member institution shall, without delay, provide to the Corporation a copy of

    • (a) any compliance order, cease and desist order, directive, ruling, licence or registration restriction, notice of hearing or other similar document issued at any time in respect of the member institution by or on the application of any regulatory authority; and

    • (b) any undertaking given by the member institution to any regulatory authority.

  • (2) The member institution shall, without delay, notify the Corporation in writing of

    • (a) any actual or proposed change in control of

      • (i) the member institution or any of its subsidiaries, and

      • (ii) any of the other affiliates of the member institution, if that change affects or could affect the operations or financial condition of the member institution or any other body corporate of which the member institution is a subsidiary;

    • (b) any actual or proposed amalgamation, merger, arrangement or other reorganization that involves

      • (i) the member institution or a significant portion of its assets or liabilities, or any of its subsidiaries, and

      • (ii) any of the other affiliates of the member institution, if that amalgamation, merger, arrangement or other reorganization affects or could affect the operations or financial condition of the member institution or any other body corporate of which the member institution is a subsidiary;

    • (c) any actual or proposed transfer of all or substantially all of the assets or liabilities of

      • (i) the member institution or any of its subsidiaries, and

      • (ii) any of the other affiliates of the member institution, if that transfer affects or could affect the operations or financial condition of the member institution or any other body corporate of which the member institution is a subsidiary;

    • (d) the commencement of proceedings under the Winding-up and Restructuring Act or the Bankruptcy and Insolvency Act or the filing of an assignment in respect of

      • (i) the member institution or any of its subsidiaries, and

      • (ii) any of the other affiliates of the member institution, if those proceedings or that filing affects or could affect the operations or financial condition of the member institution or any other body corporate of which the member institution is a subsidiary;

    • (e) any actual or proposed acquisition that constitutes a substantial investment, within the meaning of section 10 of the Bank Act, in a bank, a trust or loan company, a cooperative credit society or credit union, an insurance company, an investment dealer, a body corporate that manages or administers a pension plan, a mutual fund, an exchange-traded fund or any other similar investment plan or fund, or any other provider of financial services, by

      • (i) the member institution or any of its subsidiaries, and

      • (ii) any of the other affiliates of the member institution, if that acquisition affects or could affect the operations or financial condition of the member institution or any other body corporate of which the member institution is a subsidiary; and

    • (f) any actual or proposed change of address of its registered or head office.

• 18 The member institution shall, without delay, notify the Corporation in writing of any material change to any information provided pursuant to sections 15 to 17.

• 19 The member institution authorizes the Corporation to have access to any information in the possession of a regulatory authority, the Bank of Canada or the Department of Finance that pertains to the member institution.

• 20 The member institution consents to the release to any regulatory authority, the Bank of Canada or the Department of Finance of any information provided by the member institution to the Corporation.

• 21 The member institution shall cause its officers, auditors and former auditors to furnish such information and explanations that pertain to its affairs as the Corporation or any person designated by the Corporation may require.

• • 22 (1) The member institution shall, without delay, notify the Corporation in writing if the member institution, or any of its shareholders who together hold at least five per cent of the outstanding voting shares of the member institution, proposes that its auditor be removed from office or proposes not to re-appoint the auditor and, to the extent that the member institution is aware of them, shall indicate the reasons for the proposal.

  • (2) The member institution shall, without delay, notify the Corporation in writing if the member institution receives notice from its auditor of the auditor’s resignation or decision not to stand for re-appointment and, to the extent that the member institution is aware of them, shall indicate the reasons for that resignation or decision.

  • (3) The member institution is not required to notify the Corporation of any change in its auditor where that change is required by statute.

• • 23 (1) The member institution shall, without delay, notify the Corporation of the termination, cancellation or lapse of any of the following bonds or insurance policies that relate to the business of the member institution:

    • (a) fidelity bond or insurance policy;

    • (b) banker’s blanket bond or insurance policy;

    • (c) extortion bond or insurance policy;

    • (d) safe depository bond or insurance policy;

    • (e) director’s or officer’s insurance policy; or

    • (f) other bonds or insurance policies similar to those set out in paragraphs (a) to (e).

  • (2) The member institution shall use its best efforts to cause each issuer of any bond or insurance policy referred to in subsection (1) to undertake to the Corporation or the member institution that the coverage under that bond or insurance policy will in no circumstances lapse or terminate, or be terminated or cancelled, by its own terms or by the issuer, except after 30 days written notice to the Corporation, and that the right to file claims under that bond or policy will continue to exist until at least 150 days following that notice.

Records

• • 24 (1) The member institution shall create and maintain records that accurately and fully describe and disclose

    • (a) its assets, whether on- or off-balance sheet;

    • (b) its deposit liabilities, consisting of insured and uninsured deposits;

    • (c) its other actual or contingent liabilities, whether on- or off-balance sheet;

    • (d) its revenue;

    • (e) its expenses;

    • (f) its shareholders’ equity or, in the case of an association to which the Cooperative Credit Associations Act applies, its equivalent; and

    • (g) the information on which the information that it provides in the Reporting Form submitted under the Canada Deposit Insurance Corporation Differential Premiums By-law is based.

  • (2) The member institution shall retain the records referred to in paragraphs (1)(b) and (g) for a period of six years after the day on which they are created and during that period shall not remove them from Canada except with the prior written consent of the Corporation.

  • (3) If the member institution amalgamates with another member institution or acquires all or substantially all of the assets of another member institution, the institution that results from the amalgamation or acquisition shall retain the records referred to in paragraphs (1)(b) and (g) of each predecessor member institution for a period of six years after the day on which the amalgamation or acquisition occurs and during that period shall not remove them from Canada except with the prior written consent of the Corporation.

  • (4) Despite subsections (2) and (3), the member institution may retain the records referred to in paragraphs (1)(b) and (g) outside of Canada if it is a subsidiary of a foreign bank, as defined in section 2 of the Bank Act, that is incorporated or formed otherwise in a country or territory other than Canada in which a trade agreement listed in Schedule IV to that Act is applicable or of a regulated foreign entity, as defined in section 2 of that Act.

Examinations or Inspections

• • 25 (1) A federal member institution shall submit

    • (a) to an examination of its affairs by the Superintendent once in each year; and

    • (b) where required, to an examination of its affairs by or on behalf of the Corporation for a specified purpose at such times as the Corporation may require.

  • (2) In furtherance of any examination referred to in subsection (1), a federal member institution shall open its records for examination, facilitate the examination so far as it is in its power, cause its directors, officers, employees, agents and representatives to cooperate in such examination, give access to all minutes, accounts, cash, securities, documents and vouchers of the member institution and provide necessary information.

• • 26 (1) A provincial member institution shall, in accordance with paragraph 28(a) of the Act, submit to an inspection of its affairs by the Corporation or a person designated by the Corporation

    • (a) at least once in each year; and

    • (b) at such other times as the Corporation deems appropriate.

  • (2) In furtherance of any inspection referred to in subsection (1), a provincial member institution shall provide access to its records in accordance with paragraph 28(b) of the Act.

Costs

• 27 The member institution shall pay to the Corporation the costs of any examination or inspection that are charged to it by the Corporation in accordance with section 28.1 of the Act.

Notices

• • 28 (1) Any notice or request given by the Corporation under this policy shall be sufficiently given if addressed to the attention of the president of the member institution at the head office address of the member institution last shown on the records of the Corporation, and

    • (a) delivered personally during normal business hours;

    • (b) sent by registered or certified mail; or

    • (c) transmitted by an electronic means of sending messages that produces a paper record.

  • (2) Any notice or request referred to in subsection (1) shall be considered to be received

    • (a) on the day of delivery if delivered personally;

    • (b) on the fifth business day following the post-mark date if mailed; and

    • (c) on the day of transmission if sent by electronic means on a business day and within the business hours of the recipient, and on the first business day after the day of transmission if sent by electronic means at any other time.

Provincial Member Institution

• 29 A provincial member institution shall not, in carrying on its business, exercise powers that are substantially different from the powers exercisable by a company to which the Trust and Loan Companies Act applies.

Termination and Cancellation

• 30 The failure of the member institution to comply with any condition of its policy may result in

  • (a) the issuance of a report under subsection 30(1) of the Act; and

  • (b) the termination of its policy of deposit insurance in accordance with sections 31 and 31.1 of the Act.

• 31 A provincial member institution may terminate its policy of deposit insurance by giving six months written notice to the Corporation.

• 32 The Corporation may cancel the policy of the member institution under subsection 26.04(3) or section 33 of the Act.

Obligations Following Termination or Cancellation

• 33 If the policy of the member institution is terminated or cancelled, the institution shall continue to be bound by the provisions of the policy as if it were still a member institution until it no longer holds any deposits that are insured by the Corporation.