Marginal note:Major shareholder

2.2 For the purposes of this Act, a person is a major shareholder of a body corporate if

• (a) the aggregate of the shares of any class of voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the body corporate; or

• (b) the aggregate of the shares of any class of non-voting shares of the body corporate that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the body corporate.

Marginal note:Widely held

2.3 For the purposes of this Act, an entity is widely held if it is

• (a) a body corporate that has no major shareholder;

• (b) an insurance company incorporated or formed under a mutual plan;

• (c) an association to which the Cooperative Credit Associations Act applies; or

• (d) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province.

Marginal note:Holding body corporate

4. A body corporate is the holding body corporate of any entity that is its subsidiary.

Marginal note:Subsidiary

5. An entity is a subsidiary of another entity if it is controlled by the other entity.

• Marginal note:Affiliated entities

  (2) Despite subsection (1), for the purposes of subsections 265(1) and 283(1), one entity is affiliated with another entity if one of them is controlled, determined without regard to paragraph 3(1)(d), by the other or both are controlled, determined without regard to paragraph 3(1)(d), by the same person.

Marginal note:Significant interest

• 8. (1) A person has a significant interest in a class of shares of a bank or a bank holding company if the aggregate of

  • (a) any shares of that class beneficially owned by the person, and

  • (b) any shares of that class beneficially owned by entities controlled by the person

  exceeds 10 per cent of all of the outstanding shares of that class of shares of the bank or bank holding company.

• Marginal note:Increasing significant interest

  (2) A person who has a significant interest in a class of shares of a bank or bank holding company increases that significant interest in the class of shares if the person or any entity controlled by the person

  • (a) acquires beneficial ownership of additional shares of that class, or

  • (b) acquires control of any entity that beneficially owns shares of that class,

  in such number as to increase the percentage of shares of that class that are beneficially owned by the person and by any entities controlled by the person.

Marginal note:Acting in concert

• 9. (1) For the purposes of Part VII and Division 7 of Part XV, if two or more persons have agreed, under any agreement, commitment or understanding, whether formal or informal, verbal or written, to act jointly or in concert in respect of

  • (a) shares of a bank or of a bank holding company that they beneficially own,

  • (b) shares or ownership interests that they beneficially own of any entity that beneficially owns shares of a bank or of a bank holding company, or

  • (c) shares or ownership interests that they beneficially own of any entity that controls any entity that beneficially owns shares of a bank or bank holding company,

  those persons are deemed to be a single person who is acquiring beneficial ownership of the aggregate number of shares of the bank or bank holding company or shares or ownership interests of the entity that are beneficially owned by them.

• Marginal note:Acting in concert

  (2) Without limiting the generality of subsection (1), any agreement, commitment or understanding by or between two or more persons who beneficially own shares of a bank or bank holding company or shares or ownership interests of any entity referred to in paragraph (1)(b) or (c),

  • (a) whereby any of them or their nominees may veto any proposal put before the board of directors of the bank or bank holding company, or

  • (b) under which no proposal put before the board of directors of the bank or bank holding company may be approved except with the consent of any of them or their nominees,

  is deemed to be an agreement, commitment or understanding referred to in subsection (1).

• Marginal note:Exemption

  (2) On application by a bank or bank holding company, the Superintendent may determine that a security of the bank or bank holding company is not or was not part of a distribution to the public if the Superintendent is satisfied that the determination would not prejudice any security holder of the bank or bank holding company.

• Marginal note:Securities deemed part of distribution

  (3) For the purposes of this Act, securities of a bank or bank holding company issued on the conversion of other securities or issued in exchange for other securities are deemed to be securities that are part of a distribution to the public if those other securities were part of a distribution to the public.

Marginal note:Exemption from foreign bank status

• 12. (1) The Minister may, by order, and subject to such terms and conditions as the Minister considers appropriate, exempt for the purposes of any provision of this Act any entity from being a foreign bank that, but for that order, would be a foreign bank.

Marginal note:Application of Act

13. This Act is the charter of and applies to each bank.

Marginal note:Schedule I and Schedule II banks

• 14. (1) Subject to this Act,

  • (a) there shall be set out in Schedule I

    • (i) the name of every bank named in Schedules I and II as those Schedules read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force that was not a subsidiary of a foreign bank,

    • (ii) the name of every bank incorporated or formed under this Act that is not a subsidiary of a foreign bank, and

    • (iii) the place in Canada where the head office of the bank is situated; and

  • (b) there shall be set out in Schedule II

    • (i) the name of every bank named in Schedule II as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force that was a subsidiary of a foreign bank,

    • (ii) the name of every bank incorporated or formed under this Act that is a subsidiary of a foreign bank, and

    • (iii) the place in Canada where the head office of the bank is situated.

• Marginal note:Amending the schedules

  (2) Where

  • (a) a bank is incorporated,

  • (b) a body corporate is continued as a bank,

  • (c) one or more bodies corporate are amalgamated as a bank,

  • (d) the name of a bank is changed,

  • (e) the head office of a bank is changed,

  • (f) a bank becomes, or ceases to be, a subsidiary of a foreign bank, or

  • (g) a bank is dissolved,

  Schedules I and II shall be amended accordingly.

• Marginal note:Notice of amendments

  (3) If in any year either Schedule I or II is amended, the Superintendent shall, within sixty days after the end of the year, cause a notice to be published in the Canada Gazette showing Schedule I or II in its complete amended form as at the end of the year.

Marginal note:Exemption of foreign banks

14.2 The Governor in Council may make regulations exempting any class of foreign banks from the application of any provision of this Act.

Marginal note:Sunset provision

• 21. (1) Subject to subsection (2), banks shall not carry on business and authorized foreign banks shall not carry on business in Canada after the day that is five years after this section comes into force, except that, if Parliament dissolves on that day or at any time within the three-month period before that day, banks may continue to carry on business, and authorized foreign banks may continue to carry on business in Canada, respectively, until the day that is one hundred and eighty days after the first day of the first session of the next Parliament.

• Marginal note:Extension

  (2) The Governor in Council may, by order, extend by up to six months the time during which banks may continue to carry on business and authorized foreign banks may continue to carry on business in Canada. No more than one order may be made under this subsection.

• (d) an entity that is controlled by the government of a foreign country or any political subdivision thereof, other than an entity that is a foreign bank, a foreign institution or a subsidiary of a foreign bank or foreign institution.

Marginal note:Subsidiary of foreign bank

24. If a proposed bank would be a subsidiary of a foreign bank, within the meaning of paragraphs (a) to (f) of the definition “foreign bank” in section 2, and the application for letters patent to incorporate the bank is made by a non-WTO Member foreign bank, letters patent to incorporate the bank may not be issued unless the Minister is satisfied that treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.

Marginal note:Matters for consideration

27. Before issuing letters patent to incorporate a bank, the Minister shall take into account all matters that the Minister considers relevant to the application, including

• (a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;

• (b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;

• (c) the business record and experience of the applicant or applicants;

• (d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

• (e) whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

• (f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;

• (g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard to

  • (i) the nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, and

  • (ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank; and

• (h) the best interests of the financial system in Canada.

Marginal note:Federal corporations

• 33. (1) A body corporate incorporated under the Canada Business Corporations Actor any other Act of Parliament, including a bank holding company, may apply to the Minister for letters patent continuing the body corporate as a bank under this Act.

Marginal note:This Act ceases to apply

39.1 If section 39.2 or 402.1 applies in respect of a bank, on the day specified in the letters patent continuing the bank as a company under subsection 33(1) or 234(1) of the Trust and Loan Companies Act, this Act ceases to apply to the bank and that Act applies to the company so continued under that Act.

Marginal note:Other transfer

39.2 A bank may apply for letters patent continuing the bank as a company under subsection 33(1) of the Trust and Loan Companies Act or amalgamating and continuing the bank as a company under section 228 and subsection 234(1) of that Act.

• (e) that is reserved under section 43 for another bank or an authorized foreign bank or a proposed bank or a proposed authorized foreign bank or under section 697 for a bank holding company or a proposed bank holding company.

Marginal note:Affiliated bank

41. Despite section 40, a bank that is affiliated with another entity may, with the consent of that entity and the approval of the Superintendent, be incorporated with, or change its name to, substantially the same name as that of the affiliated entity.

• Marginal note:Revoking name

  (2) If a bank has been directed under subsection (1) to change its name and has not, within sixty days after the service of the direction, changed its name to a name that is not prohibited by this Act, the Superintendent may revoke the name of the bank and assign to it a name and, until changed in accordance with section 215 or 217, the name of the bank is thereafter the name so assigned.

Marginal note:Calling shareholders’ meeting

• 46. (1) If at least five million dollars, or any greater amount that the Minister may specify, has been received by a bank in respect of which letters patent were issued under section 22 from the issue of its shares, the directors of the bank shall without delay call a meeting of the shareholders of the bank.

• Marginal note:Deeming

  (2) If, on the day this subsection comes into force, an order approving the commencement and carrying on of business by a bank named in Schedule I or II as those Schedules read immediately before that day, has not been made, such an order is deemed to have been made in respect of the bank on that day.

• (b) the bank has paid-in capital of at least five million dollars or any greater amount that is specified by the Minister under subsection 46(1);

Marginal note:Limit on assets

• 54.1 (1) The Minister may, by order, require a bank not to have average total assets in any three month period ending on the last day of a month subsequent to the month specified in the order exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order if the Minister is of the opinion that it is in the best interests of the financial system in Canada to do so, after having considered the Superintendent’s opinion on

  • (a) the nature and extent of the financial services activities carried out by entities affiliated with the bank; and

  • (b) the impact that the nature and degree of supervision and regulation of those financial services activities have on the supervision and regulation of the bank.

• Marginal note:Revocation of order

  (2) If the Minister is of the opinion that the circumstances giving rise to the order have ceased to exist or have changed substantially, the Minister may, by further order, revoke the order.

• Marginal note:Average total assets

  (3) For the purposes of subsection (1), the average total assets of a bank in a three month period shall be computed by adding the total assets of the bank as calculated for the month end of each of the three months in the period and by dividing the sum by three.

• Definition of “total assets”

  (4) For the purposes of subsections (1) and (3), “total assets”, in respect of a bank, has the meaning given that expression by the regulations.

Marginal note:Permission to subsidiary of foreign bank

• 55. (1) On the recommendation of the Superintendent, the Minister may, at the same time that an order is made approving the commencement and carrying on of business by a bank that is the subsidiary of a foreign bank, by further order, grant the subsidiary permission to

  • (a) hold assets that banks are not otherwise permitted by this Act to hold if those assets consist of shares of a body corporate incorporated by or under an Act of Parliament or of the legislature of a province that, at the time application for letters patent incorporating the subsidiary was made, were held by the eligible foreign institution, as defined in subsection 370(1), that is the holding body corporate of the subsidiary or any affiliate of that eligible foreign institution; and

  • (b) hold assets that banks are not otherwise permitted by this Act to hold if, at the time application for letters patent incorporating the subsidiary was made, the assets were held by an affiliate of the eligible foreign institution, as defined in subsection 370(1), that is the holding body corporate of the subsidiary.

  Despite any other provision of this Act or the regulations, the subsidiary may act in accordance with that permission.

• Marginal note:Deemed share conditions

  (5) If a right, other than a voting right, of a holder of a share with nominal or par value of a bank referred to in subsection (3) or a body corporate continued as a bank under this Act was stated or expressed in terms of the nominal or par value of the share immediately before the coming into force of this subsection or the continuance under this Act, as the case may be, that right is deemed, after the coming into force of this Part or the continuance, as the case may be, to be the same right stated or expressed without reference to the nominal or par value of the share.

• Marginal note:Effective date

  (3) A by-law referred to in subsection (1) is not effective until it is confirmed or confirmed with amendments by special resolution of the shareholders at the meeting referred to in subsection (2).

Marginal note:Relations avec le détenteur inscrit

• 93. (1) La banque ou le fiduciaire visé à l’article 294 peut, sous réserve des paragraphes 137(2) à (5) et des articles 138 à 141 et 145, considérer le détenteur inscrit d’une valeur mobilière comme la seule personne ayant qualité pour voter, recevoir des avis ainsi que les intérêts, dividendes ou autres paiements et exercer tous les droits et pouvoirs du propriétaire de la valeur mobilière.

• Marginal note:Number of eligible votes

  (1.1) A bank with equity of five billion dollars or more shall set out in the notice of a meeting the number of eligible votes, as defined under subsection 156.09(1), that may be cast at the meeting as of the record date for determining those shareholders entitled to receive the notice of meeting or, if there are to be separate votes of shareholders at the meeting, the number of eligible votes, as defined in that subsection, in respect of each separate vote to be held at the meeting.

• Marginal note:Renonciation à l’avis

  (2) La présence à l’assemblée équivaut à une renonciation de l’avis de convocation, sauf lorsque la personne y assiste spécialement pour s’opposer aux délibérations au motif que l’assemblée n’est pas régulièrement convoquée.

Marginal note:Shareholder list

• 145. (1) A bank shall prepare a list, which may be in electronic form, of its shareholders entitled to receive notice of a meeting under paragraph 138(1)(a), arranged in alphabetical order and showing the number of shares held by each shareholder, which list must be prepared

Marginal note:One share — one vote

148. Subject to section 156.09, if a share of a bank entitles the holder of the share to vote at a meeting of shareholders, that share entitles the shareholder to one vote at the meeting.

Restrictions on Voting

Meaning of “eligible votes”

• 156.09 (1) In this section, “eligible votes” means the total number of votes that may be cast by or on behalf of shareholders on a vote of shareholders or a vote of holders of a class or series of shares, as the case may be, in respect of any particular matter, calculated without regard to subsection (2).

• Marginal note:Restriction

  (2) At a meeting of shareholders of a bank with equity of five billion dollars or more, no person and no entity controlled by any person may, in respect of any vote of shareholders or holders of any class or series of shares of the bank, cast votes in respect of any shares beneficially owned by the person or the entity that are, in aggregate, more than 20 per cent of the eligible votes that may be cast in respect of that vote.

• Marginal note:Proxyholders

  (3) No person who is a proxyholder for a person or for an entity controlled by a person may cast votes to which the proxy relates that the person or entity may not cast by reason of subsection (2).

• Marginal note:Exception

  (4) If a person is, with respect to a bank, a person referred to in subsection 375(1), subsections (2) and (3) do not apply with respect to votes cast by or on behalf of the person during any period that the person is entitled under section 375 to remain a major shareholder of the bank.

• Marginal note:Exception

  (5) Subsections (2) and (3) do not apply in respect of votes cast by or on behalf of any entity that controls the bank or any entity that is controlled by an entity that controls the bank.

• Marginal note:Exception

  (6) Subsection (2) does not apply in respect of a vote held under section 218.

• Marginal note:Validity of vote

  (7) A vote in respect of a particular matter is not invalid merely because a person voted contrary to subsection (2) or (3).

• Marginal note:Disposition of shareholdings

  (8) If, with respect to any bank, a person contravenes subsection (2) or (3), the Minister may, by order, direct the shareholder of the shares to which the contravention relates or any person controlled by that shareholder to dispose of any number of shares of the bank beneficially owned by any of those persons that the Minister specifies in the order, within the time specified in the order and in the proportion, if any, as between the shareholder and the persons controlled by that shareholder that is specified in the order.

• Marginal note:Restriction on voting rights

  (9) If the Minister makes an order under subsection (8), the person to whom the order relates may not, in person or by proxy, exercise any voting rights that are attached to shares of the bank beneficially owned by the person.

• Marginal note:Subsection (9) ceases to apply

  (10) Subsection (9) ceases to apply in respect of a person when the shares to which the order relates have been disposed of.

• Marginal note:Reliance on number in notice

  (11) For the purpose of this section, a person is entitled to rely on the number of eligible votes set out in a notice of a meeting under subsection 138(1.1).

• Marginal note:Designation of persons

  (12) For the purpose of this section, the Minister may, with respect to a particular bank, designate two or more persons who are parties to an agreement, commitment or understanding referred to in section 9 to be a single person.

• f) désigner l’un des comités du conseil d’administration pour surveiller l’application des mécanismes et procédures visés à l’alinéa e) et s’assurer que ces mécanismes et procédures soient respectés par la banque;

• Marginal note:Residency requirement

  (2) At least one half of the directors of a bank that is a subsidiary of a foreign bank and at least two thirds of the directors of any other bank must be, at the time of each director’s election or appointment, resident Canadians.

• (e) a person who is prohibited by section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;

• (f) a person who is an officer, director or full time employee of an entity that is prohibited by section 392 or 401.3 or subsection 156.09(9) from exercising voting rights attached to shares of the bank;

Marginal note:Exception

160.1 Paragraph 160(g) does not apply to a person if

• (a) the person is employed in a department or agency of the Government of Canada that is not involved in the regulation or supervision of financial institutions;

• (b) the person’s duties do not involve financial institutions; and

• (c) the bank is controlled by a local cooperative credit society, as defined in section 2 of the Cooperative Credit Associations Act, in which the following persons, in aggregate, hold more than 50 per cent or, if a percentage has been prescribed for the purpose of this paragraph, the prescribed percentage, of the ownership interests in the local cooperative credit society, namely,

  • (i) employees of Her Majesty in right of Canada or of a province,

  • (ii) former employees of Her Majesty in right of Canada or of a province,

  • (iii) the spouse or common-law partner of a person referred to in subparagraph (i) or (ii), and

  • (iv) a child who is less than eighteen years of age of a person referred to in subparagraph (i) or (ii).

• Marginal note:Exception

  (3.1) Subsection (2) does not apply to a widely held bank with equity of five billion dollars or more or to a bank in respect of which subsection 378(1) applies.

• (e) when the director is removed from office under section 647 or 647.1.

• (a) in the case of a bank that is a subsidiary of a foreign bank, at least one half of the directors present are resident Canadians; or

Marginal note:Presence of unaffiliated director

• 183.1 (1) The directors of a bank shall not transact business at a meeting of directors unless at least one of the directors who is not affiliated with the bank is present.

• Marginal note:Exception

  (2) Despite subsection (1), the directors of a bank may transact business at a meeting of directors if a director who is not affiliated with the bank and who is not able to be present approves, in writing or by telephonic, electronic or other communications facilities, the business transacted at the meeting.

• Marginal note:Exception

  (3) Subsection (1) does not apply if all the voting shares of the bank, other than directors’ qualifying shares, if any, are beneficially owned by a Canadian financial institution incorporated by or under an Act of Parliament.

• (b) review those procedures and their effectiveness in ensuring that the bank is complying with Part XI;

• (b.1) if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of the bank,

  • (i) establish policies for entering into transactions referred to in subsection 495.1(1), and

  • (ii) review transactions referred to in subsection 495.3(1); and

Marginal note:Déclaration suffisante d’intérêt

204. Pour l’application du paragraphe 202(1), quiconque donne au conseil un avis général lui faisant savoir qu’il est administrateur ou dirigeant d’une entité ou possède un intérêt important dans une personne, et doit être considéré comme ayant un intérêt dans tout contrat conclu avec cette entité ou personne, s’acquitte de son obligation de déclaration d’intérêt.

Marginal note:Reliance on statement

211. A director, an officer or an employee of a bank is not liable under subsection 158(1) or (2), section 207 or 210 or subsection 506(1) if the director, officer or employee relies in good faith on

Marginal note:Indemnisation

• 212. (1) La banque peut indemniser ses administrateurs ou ses dirigeants — ou leurs prédécesseurs —, ainsi que les personnes qui, à sa demande, agissent ou ont agi en cette qualité pour une entité dont elle est ou a été actionnaire ou créancière, de tous leurs frais, y compris les montants versés en règlement d’une action ou pour satisfaire à un jugement, entraînés par des procédures civiles, pénales ou administratives auxquelles ils étaient parties en cette qualité, sauf à l’occasion d’actions intentées par la banque ou pour son compte en vue d’obtenir un jugement favorable, si :

Marginal note:Incorporating instrument

215. On the application of a bank duly authorized by special resolution, the Minister may approve a proposal to add, change or remove any provision that is permitted by this Act to be set out in the bank’s incorporating instrument.

Marginal note:Letters patent to amend

• 216. (1) On receipt of an application referred to in section 215, the Minister may issue letters patent to effect the proposal.

Marginal note:Proposal to amend

• 221. (1) Subject to subsection (2), a director or a shareholder who is entitled to vote at an annual meeting of shareholders of a bank may, in accordance with sections 143 and 144, make a proposal to make an application referred to in section 215 or to make, amend or repeal the by-laws referred to in subsection 217(1) of the bank.

Marginal note:Application to amalgamate

• 223. (1) On the joint application of two or more bodies corporate incorporated by or under an Act of Parliament, including banks and bank holding companies, the Minister may issue letters patent amalgamating and continuing the applicants as one bank.

• Marginal note:Restriction

  (2) Despite subsection (1), if one of the applicants is a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies, the Minister shall not issue letters patent referred to in subsection (1) unless

  • (a) the amalgamated bank would be a widely held bank; or

  • (b) the amalgamated bank would be controlled by a widely held bank holding company that, at the time the application was made, controlled

    • (i) the applicant, or

    • (ii) any other applicant that is a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force, other than a bank in respect of which the Minister has specified that subsection 378(1) no longer applies.

• Marginal note:Restriction

  (3) Despite subsection (1), if the amalgamated bank would be a bank with equity of five billion dollars or more, the Minister shall not issue letters patent referred to in that subsection unless the amalgamated bank is

  • (a) widely held;

  • (b) controlled, within the meaning of paragraphs 3(1)(a) and (d), by a widely held bank, or by a widely held bank holding company, that controlled one of the applicants at the time the application was made; or

  • (c) controlled, within the meaning of paragraph 3(1)(d), by a widely held insurance holding company, or by an eligible Canadian financial institution, as defined in subsection 370(1), other than a bank, or by an eligible foreign institution, as defined in subsection 370(1), that controlled one of the applicants at the time the application was made.

• Marginal note:Application of sections 23 to 26

  (3) If two or more bodies corporate, none of which is a bank, apply for letters patent under subsection (1), sections 23 to 26 apply in respect of the application with any modifications that the circumstances require.

• Marginal note:Matters for consideration

  (4) Before issuing letters patent of amalgamation continuing the applicants as one bank, the Minister shall take into account all matters that the Minister considers relevant to the application, including

  • (a) the sources of continuing financial support for the amalgamated bank;

  • (b) the soundness and feasibility of the plans of the applicants for the future conduct and development of the business of the amalgamated bank;

  • (c) the business record and experience of the applicants;

  • (d) the reputation of the applicants for being operated in a manner that is consistent with the standards of good character and integrity;

  • (e) whether the amalgamated bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

  • (f) the impact of any integration of the operations and businesses of the applicants on the conduct of those operations and businesses;

  • (g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the amalgamated bank and its affiliates may affect the supervision and regulation of the amalgamated bank, having regard to

    • (i) the nature and extent of the proposed financial services activities to be carried out by the amalgamated bank and its affiliates, and

    • (ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the amalgamated bank; and

  • (h) the best interests of the financial system in Canada.

Marginal note:Court enforcement

• 229.1 (1) If a bank or any director, officer, employee or agent of a bank is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the bank or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.

• Marginal note:Appeal

  (2) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.

Marginal note:Location and processing of information

• 245. (1) Subject to subsection (3), a bank shall maintain and process in Canada any information or data relating to the preparation and maintenance of the records referred to in section 238 unless the Superintendent has, subject to any terms and conditions that the Superintendent considers appropriate, exempted the bank from the application of this section.

• Marginal note:Application of certain provisions

  (3) Subsections 239(5) and (5.1) and sections 240 and 242 to 245 apply, with any modifications that the circumstances require, in respect of a central securities register.

Marginal note:Financial year

• 307. (1) The financial year of a bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in each year.

• Marginal note:First financial year

  (2) If a bank, after the first day of July in any year, obtains an order approving the commencement and carrying on of business, the first financial year of the bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.

• Marginal note:Exception

  (3) Despite subsection (1), the financial year of a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force ends on the expiration of the thirty-first day of October in each year unless the bank elects in its by-laws to have its financial year end on the thirty-first day of December in each year.

Marginal note:Copy to Superintendent

• 312. (1) Subject to subsection (2), a bank shall send to the Superintendent a copy of the documents referred to in subsections 308(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the bank.

• Marginal note:Later filing

  (2) If a bank’s shareholders sign a resolution under paragraph 152(1)(b) in lieu of an annual meeting, the bank shall send a copy of the documents referred to in subsections 308(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.

• Marginal note:Priority not affected

  (2) Nothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of a bank.

Marginal note:Associates

• 371. (1) For the purpose of determining ownership of a bank, where two persons who each beneficially own shares of a bank are associated with each other, those persons are deemed to be a single person who beneficially owns the aggregate number of shares of the bank beneficially owned by them.

Constraints on Ownership

Marginal note:Significant interest

372. Except as permitted by this Part, no person shall have a significant interest in any class of shares of a bank.

Marginal note:Acquisition of significant interest

• 373. (1) Subject to this Part, no person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of a bank or purchase or otherwise acquire control of any entity that holds any share of a bank if

  • (a) the acquisition would cause the person to have a significant interest in any class of shares of the bank; or

  • (b) where the person has a significant interest in a class of shares of the bank, the acquisition would increase the significant interest of the person in that class of shares.

• Marginal note:Amalgamation, etc., constitutes acquisition

  (2) If, as a result of an amalgamation, merger or reorganization, the entity that results would have a significant interest in a class of shares of a bank, that entity is deemed to be acquiring a significant interest in that class of shares of the bank through an acquisition for which the approval of the Minister is required.

Marginal note:Limitations on share holdings

• 374. (1) No person may be a major shareholder of a bank with equity of five billion dollars or more.

• Marginal note:Exception — widely held bank

  (2) Subsection (1) does not apply to a widely held bank that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of five billion dollars or more if it controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day.

• Marginal note:Exception — widely held bank holding company

  (3) Subsection (1) does not apply to a widely held bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of five billion dollars or more if

  • (a) the bank holding company controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day;

  • (b) the bank holding company acquired control, within the meaning of those paragraphs, of the bank under section 677 or 678 and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day the bank holding company acquired control; or

  • (c) the bank was a subsidiary of another bank that was continued under section 684 as the bank holding company and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day it came into existence as a bank holding company.

• Marginal note:Exception — insurance holding companies and certain institutions

  (4) Subsection (1) does not apply to any of the following that controls, within the meaning of paragraph 3(1)(d), the bank with equity of five billion dollars or more if it controlled, within the meaning of that paragraph, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of that paragraph, the bank since that day:

  • (a) a widely held insurance holding company;

  • (b) an eligible Canadian financial institution, other than a bank; or

  • (c) an eligible foreign institution.

• Marginal note:Exception — other entities

  (5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of five billion dollars or more if the entity is controlled, within the meaning of those paragraphs, by a widely held bank to which subsection (2) applies, or a widely held bank holding company to which subsection (3) applies, that controls the bank.

• Marginal note:Exception — other entities

  (6) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the bank with equity of five billion dollars or more if the entity is controlled, within the meaning of that paragraph, by

  • (a) a widely held insurance holding company to which subsection (4) applies that controls the bank;

  • (b) an eligible Canadian financial institution to which subsection (4) applies, other than a bank, that controls the bank; or

  • (c) an eligible foreign institution to which subsection (4) applies that controls the bank.

Marginal note:Exception

• 374.1 (1) Despite section 374, if a bank with equity of five billion dollars or more was formed as the result of an amalgamation, a person who is a major shareholder of the bank on the effective date of the letters patent of amalgamation shall do all things necessary to ensure that the person is no longer a major shareholder of the bank on the day that is one year after that day or on the day that is after any shorter period specified by the Minister.

• Marginal note:Exception — widely held banks and bank holding companies

  (2) Subsection (1) does not apply to a widely held bank or a widely held bank holding company that controlled, within the meaning of paragraphs 3(1)(a) and (d), one of the applicants for the letters patent of amalgamation and that has controlled, within the meaning of those paragraphs, the amalgamated bank since the effective date of those letters patent.

• Marginal note:Exception — insurance holding companies and certain institutions

  (3) Subsection (1) does not apply to any of the following that controlled, within the meaning of paragraph 3(1)(d), one of the applicants for the letters patent of amalgamation if it has controlled, within the meaning of that paragraph, the amalgamated bank since the effective date of those letters patent:

  • (a) a widely held insurance holding company;

  • (b) an eligible Canadian financial institution, other than a bank; or

  • (c) an eligible foreign institution.

• Marginal note:Exception — other entities

  (4) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the amalgamated bank if the entity is controlled, within the meaning of those paragraphs, by a widely held bank or widely held bank holding company to which subsection (2) applies that controls the amalgamated bank.

• Marginal note:Exception — other entities

  (5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the amalgamated bank if the entity is controlled, within the meaning of that paragraph, by any of the following:

  • (a) a widely held insurance holding company to which subsection (3) applies that controls the amalgamated bank;

  • (b) an eligible Canadian financial institution to which subsection (3) applies, other than a bank, that controls the amalgamated bank; or

  • (c) an eligible foreign institution to which subsection (3) applies that controls the amalgamated bank.

• Marginal note:Extension

  (6) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.

Marginal note:Limitation on share holdings

• 375. (1) If a person is a major shareholder of a bank with equity of less than five billion dollars and the bank’s equity reaches five billion dollars or more, the person shall do all things necessary to ensure that the person is not a major shareholder of the bank on the day that is three years after the day the bank’s equity reached five billion dollars.

• Marginal note:Exception

  (2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.

• Marginal note:Extension

  (3) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.

Marginal note:Obligation of widely held bank

• 376. (1) If a widely held bank with equity of five billion dollars or more controls another bank and a person becomes a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the other bank or entity that controls the other bank,

  • (a) the widely held bank no longer controls the other bank; or

  • (b) the other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of a bank with equity of less than two hundred and fifty million dollars or any other amount that is prescribed.

• Marginal note:Extension

  (3) If general market conditions so warrant and the Minister is satisfied that the widely held bank has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Obligation of widely held bank

• 376.01 (1) Despite subsection 376(1), if a widely held bank with equity of five billion dollars or more controls a bank (in this subsection referred to as the “other bank”) in respect of which that subsection does not apply by reason of subsection 376(2) and the equity of the other bank reaches two hundred and fifty million dollars or more or any other amount that is prescribed and on the day the equity of the other bank reaches two hundred and fifty million dollars or more, or the prescribed amount, as the case may be, a person is a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is three years after that day,

  • (a) the widely held bank no longer controls the other bank; or

  • (b) the other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the widely held bank has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Prohibition against significant interest

376.1 No person who has a significant interest in any class of shares of a widely held bank with equity of five billion dollars or more may have a significant interest in any class of shares of a subsidiary of the widely held bank that is a bank or a bank holding company.

Marginal note:Prohibition against significant interest

376.2 No person who has a significant interest in any class of shares of a bank may have a significant interest in any class of shares of any widely held bank with equity of five billion dollars or more, or of any widely held bank holding company with equity of five billion dollars or more, that controls the bank.

Marginal note:Prohibition against control

• 377. (1) No person shall control, within the meaning of paragraph 3(1)(d), a bank with equity of five billion dollars or more.

• Marginal note:Exception

  (2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.

Marginal note:Restriction on control

377.1 No person shall, without the prior approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank with equity of less than five billion dollars.

Marginal note:Former Schedule I banks with equity of less than five billion dollars

• 378. (1) A bank that was named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force and that had equity of less than five billion dollars on that day is deemed, for the purposes of sections 138, 156.09, 374, 376, 376.01, 376.1, 376.2, 377, 380 and 382, subsection 383(2), section 385 and subsection 396(2), to be a bank with equity of five billion dollars or more.

• Marginal note:Non-application of subsection (1)

  (2) Subsection (1) ceases to apply to a bank that continues to have equity of less than five billion dollars if the Minister specifies that it no longer applies to the bank.

Marginal note:Prohibition

378.1 No person may control or be a major shareholder of a bank if the person or an entity affiliated with the person

• (a) has control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or

• (b) engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

Marginal note:Prohibition

378.2 No person who controls a bank or who is a major shareholder of a bank, and no entity affiliated with that person, may

• (a) control or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or

• (b) engage in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

Marginal note:Constraint on registration

379. No bank shall, unless the acquisition of the share has been approved by the Minister, record in its securities register a transfer or issue of any share of the bank to any person or to any entity controlled by a person if

• (a) the transfer or issue of the share would cause the person to have a significant interest in any class of shares of the bank; or

• (b) where the person has a significant interest in a class of shares of the bank, the transfer or issue of the share would increase the significant interest of the person in that class of shares.

Marginal note:Exemption

380. On application by a bank, other than a bank with equity of five billion dollars or more, the Superintendent may exempt any class of non-voting shares of the bank the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares of the bank from the application of sections 373 and 379.

Marginal note:Exception for small holdings

381. Despite section 379, if, as a result of a transfer or issue of shares of a class of shares of a bank to a person, the total number of shares of that class registered in the securities register of the bank in the name of that person would not exceed five thousand and would not exceed 0.1 per cent of the outstanding shares of that class, the bank is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the bank as a result of that issue or transfer of shares.

Marginal note:When approval not required

• 382. (1) Despite sections 373 and 379, the approval of the Minister is not required in respect of a bank with equity of less than five billion dollars if a person with a significant interest in a class of shares of the bank, or an entity controlled by a person with a significant interest in a class of shares of the bank, purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the bank to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.

• Marginal note:Percentage

  (2) Subject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.

• Marginal note:Percentage

  (3) If a person has a significant interest in a class of shares of a bank and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of

  • (a) 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, and

  • (b) 10 percentage points in excess of the lowest significant interest of the person in that class of shares of the bank at any time after the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.

• Marginal note:Exception

  (4) Subsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection would

  • (a) result in the acquisition of control of the bank by the person referred to in that subsection;

  • (b) if the person controls the bank but the voting rights attached to the aggregate of any voting shares of the bank beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank;

  • (c) result in the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; or

  • (d) result in an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.

• Marginal note:Regulations

  (5) The Governor in Council may make regulations

  • (a) exempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person; and

  • (b) exempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.

Marginal note:When approval not required

• 383. (1) Despite sections 373 and 379, the approval of the Minister is not required if

  • (a) the Superintendent has, by order, directed the bank to increase its capital and shares of the bank are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or

  • (b) a person who controls, within the meaning of paragraph 3(1)(a), the bank acquires additional shares of the bank.

• Marginal note:Exception

  (2) Paragraph (1)(a) does not apply in respect of a bank with equity of five billion dollars or more.

Marginal note:Pre-approval

384. For the purposes of sections 373 and 379, the Minister may approve

• (a) the purchase or other acquisition of any number or percentage of shares of a bank that may be required in a particular transaction or series of transactions; or

• (b) the purchase or other acquisition of up to a specified number or percentage of shares of a bank within a specified period.

Marginal note:Public holding requirement

• 385. (1) Every bank with equity of one billion dollars or more but less than five billion dollars shall, from and after the day determined under this section in respect of that bank, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that are

  • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

  • (b) shares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.

• Marginal note:Determination of day

  (2) The day referred to in subsection (1) is

  • (a) if the bank had equity of one billion dollars or more but less than five billion dollars on the day the bank came into existence, the day that is three years after that day; and

  • (b) in any other case, the day that is three years after the day of the first annual meeting of the shareholders of the bank held after the equity of the bank first reaches one billion dollars.

• Marginal note:Extension

  (3) If general market conditions so warrant and the Minister is satisfied that a bank has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the bank must comply with subsection (1).

Marginal note:Public holding requirement

385.1 If a bank to which section 385 applies becomes a bank with equity of five billion dollars or more, that section continues to apply to the bank until no person is a major shareholder of the bank, other than a person to whom subsections 374(2) to (6) apply.

Marginal note:Limit on assets

• 386. (1) Unless an exemption order with respect to the bank is granted under section 388, if a bank fails to comply with section 385 in any month, the Minister may, by order, require the bank not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.

• Marginal note:Average total assets

  (2) For the purposes of subsection (1), the average total assets of a bank in a three month period is to be computed by adding the total assets of the bank as calculated for the month end of each of the three months in the period and by dividing the sum by three.

• Definition of “total assets”

  (3) For the purposes of subsections (1) and (2), “total assets”, in respect of a bank, has the meaning given that expression by the regulations.

Marginal note:Increase of capital

387. If the Superintendent has, by order, directed a bank with equity of one billion dollars or more but less than five billion dollars to increase its capital and shares of the bank are issued and acquired in accordance with any terms and conditions that may be specified in the order, section 385 does not apply in respect of the bank until the time that the Superintendent may, by order, specify.

Marginal note:Exemption by order of the Minister

• 388. (1) On application by a bank, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank from the requirements of section 385, subject to any terms and conditions that the Minister considers appropriate.

• Marginal note:Compliance with section 385

  (2) If an exemption order granted under this section in respect of a bank expires, the bank shall comply with section 385 as of the day the exemption order expires.

• Marginal note:Limit on assets

  (3) If a bank fails to comply with section 385 on the day referred to in subsection (2), the bank shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the day referred to in subsection (2) or any later day that the Minister may, by order, specify.

• Marginal note:Application of ss. 386(2) and (3)

  (4) Subsections 386(2) and (3) apply for the purposes of subsection (3).

Marginal note:Exception

• 389. (1) If a bank fails to comply with section 385 as the result of any of the following, section 386 does not apply in respect of the bank until the expiration of six months after the day it failed to comply with section 385:

  • (a) a distribution to the public of voting shares of the bank;

  • (b) a redemption or purchase of voting shares of the bank;

  • (c) the exercise of any option to acquire voting shares of the bank; or

  • (d) the conversion of any convertible securities into voting shares of the bank.

• Marginal note:Shares acquiring voting rights

  (2) If, as the result of an event that has occurred and is continuing, shares of a bank acquire voting rights in such number as to cause the bank to no longer be in compliance with section 385, section 386 does not apply in respect of that bank until the expiration of six months after the day the bank ceased to be in compliance with section 385 or any later day that the Minister may, by order, specify.

Marginal note:Acquisition of control permitted

• 390. (1) Subject to subsection (2) and sections 379 and 391, section 385 does not apply in respect of a bank if a person acquires control of the bank through the purchase or other acquisition of all or any number of the shares of the bank by the person or by any entity controlled by the person.

• Marginal note:Undertaking required

  (2) Subsection (1) applies only if the person referred to in that subsection provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the bank has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that are

  • (a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and

  • (b) shares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.

Marginal note:Application of section 385

391. At the expiration of the period for compliance with an undertaking referred to in subsection 390(2), section 385 shall apply in respect of the bank to which the undertaking relates.

Marginal note:Restriction on voting rights

• 392. (1) If, with respect to any bank, a particular person contravenes section 372, subsection 373(1), 374(1) or 375(1), section 376.1 or 376.2, subsection 377(1) or section 377.1 or fails to comply with an undertaking referred to in subsection 390(2) or with any term or condition imposed under section 397, no person, and no entity controlled by the particular person, shall, in person or by proxy, exercise any voting rights

  • (a) that are attached to shares of the bank beneficially owned by the particular person or any entity controlled by the particular person; or

  • (b) that are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.

• Marginal note:Subsection (1) ceases to apply

  (2) Subsection (1) ceases to apply in respect of a person when, as the case may be,

  • (a) the shares to which the contravention relates have been disposed of;

  • (b) the person ceases to control the bank within the meaning of paragraph 3(1)(d);

  • (c) if the person failed to comply with an undertaking referred to in subsection 390(2), the bank complies with section 385; or

  • (d) if the person failed to comply with a term or condition imposed under section 397, the person complies with the term or condition.

• Marginal note:Saving

  (3) Despite subsection (1), if a person contravenes subsection 374(1) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the bank beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the bank, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the bank beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.

Marginal note:Loss of control — banks and bank holding companies

• 393. (1) Despite sections 374 and 377, a widely held bank or a widely held bank holding company may be a major shareholder of a bank with equity of five billion dollars or more and cease to control, within the meaning of paragraphs 3(1)(a) and (d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the bank or the bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Loss of control — other entities

• 393.1 (1) Despite sections 374 and 377, an eligible foreign institution, an eligible Canadian financial institution, other than a bank, or a widely held insurance holding company may be a major shareholder of a bank with equity of five billion dollars or more and cease to control, within the meaning of paragraph 3(1)(d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the institution or insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Marginal note:Change in status

• 394. (1) If a body corporate that is an eligible financial institution other than a bank controls, within the meaning of paragraph 3(1)(d), a bank with equity of five billion dollars or more and the body corporate subsequently ceases to be an eligible financial institution, the body corporate must do all things necessary to ensure that, on the day that is one year after the day it ceased to be an eligible financial institution,

  • (a) it does not control, within the meaning of paragraph 3(1)(d), the bank; and

  • (b) it is not a major shareholder of the bank.

• Marginal note:Extension

  (2) If general market conditions so warrant and the Minister is satisfied that the body corporate has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.

Approval Process

Marginal note:Application for approval

• 395. (1) An application for an approval of the Minister required under this Part must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.

• Marginal note:Applicant

  (2) If, with respect to any particular transaction, this Part applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.

Marginal note:Matters for consideration

• 396. (1) Subject to subsection (2), if an application for an approval under section 373 is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, including

  • (a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;

  • (b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;

  • (c) the business record and experience of the applicant or applicants;

  • (d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;

  • (e) whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

  • (f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;

  • (g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard to

    • (i) the nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, and

    • (ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank; and

  • (h) the best interests of the financial system in Canada.

• Marginal note:Exception

  (2) Subject to subsection 377(1), the Minister shall take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holding

  • (a) more than 10 per cent but no more than 20 per cent of any class of the outstanding voting shares of a widely held bank with equity of five billion dollars or more; or

  • (b) more than 10 per cent but no more than 30 per cent of any class of the outstanding non-voting shares of such a bank.

• Marginal note:Favourable treatment

  (3) The Minister shall not approve a transaction that would cause a bank to become a subsidiary of a foreign bank within the meaning of any of paragraphs (a) to (f) of the definition “foreign bank” in section 2 that is a non-WTO Member foreign bank unless the Minister is satisfied that treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.

Marginal note:Terms and conditions

397. The Minister may impose any terms and conditions in respect of an approval given under this Part that the Minister considers necessary to ensure compliance with any provision of this Act.

Marginal note:Certifying receipt of application

• 398. (1) If, in the opinion of the Superintendent, an application filed under this Part contains all the required information, the Superintendent shall without delay refer the application to the Minister and send a receipt to the applicant certifying the date on which the completed application was received by the Superintendent.

• Marginal note:Incomplete application

  (2) If, in the opinion of the Superintendent, an application filed under this Part is incomplete, the Superintendent shall send a notice to the applicant specifying the information required by the Superintendent to complete the application.

Marginal note:Notice of decision

• 399. (1) Subject to subsections (2) and (3) and 400(1), the Minister shall, within a period of thirty days after the certified date referred to in subsection 398(1), send to the applicant

  • (a) a notice approving the transaction to which the application relates; or

  • (b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

• Marginal note:Notice of decision

  (2) Subject to subsections (4) and 400(2), if an application involves the acquisition of control of a bank, the Minister shall, within a period of forty-five days after the certified date referred to in subsection 398(1), send to the applicant

  • (a) a notice approving the transaction to which the application relates; or

  • (b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.

• Marginal note:Extension of period for notice

  (3) If the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall

  • (a) within that period, send a notice to that effect to the applicant; and

  • (b) within a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within any other further period that may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.

• Marginal note:Further extensions

  (4) If the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.

Marginal note:Reasonable opportunity to make representations

• 400. (1) If, after receipt of the notice referred to in paragraph 399(1)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of thirty days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

• Marginal note:Reasonable opportunity to make representations

  (2) If, after receipt of the notice referred to in paragraph 399(2)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of forty-five days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.

Marginal note:Notice of decision

• 401. (1) Within a period of thirty days after the expiration of the period for making representations referred to in subsection 400(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

• Marginal note:Notice of decision

  (2) Within a period of forty-five days after the expiration of the period for making representations referred to in subsection 400(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.

Marginal note:Deemed approval

401.1 If the Minister does not send a notice under subsection 399(1) or (3) or 401(1) within the period provided for in those subsections, the Minister is deemed to have approved the transaction to which the application relates.

Marginal note:Constraining registration: Crown and foreign governments

• 401.2 (1) No bank shall record in its securities register a transfer or issue of any share of the bank to

  • (a) Her Majesty in right of Canada or of a province or any agent or agency of Her Majesty in either of those rights; or

  • (b) the government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government.

• Marginal note:Exception

  (2) Despite subsection (1), a bank may record in its securities register a transfer or issue of any share of the bank to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country or any agent or agency of a foreign country if the bank is a subsidiary of the foreign bank or foreign institution.

Marginal note:Suspension of voting rights held by governments

• 401.3 (1) Despite section 148, no person shall, in person or by proxy, exercise any voting rights attached to any share of a bank that is beneficially owned by

  • (a) Her Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights; or

  • (b) the government of a foreign country or any political subdivision thereof, or any agency thereof.

• Marginal note:Exception

  (2) Subsection (1) does not apply to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country or any agent or agency of a foreign country and that has a significant interest in a class of shares of a bank that is a subsidiary of the foreign bank or foreign institution.

• (a) act as agent for any person in respect of the provision of any service that is provided by a financial institution, a permitted entity as defined in subsection 464(1) or a prescribed entity and may enter into an arrangement with any person in respect of the provision of that service; or

• (b) refer any person to any such financial institution or entity.

Marginal note:Deposits less than $150,000

• 413.2 (1) Subject to the regulations, a bank to which paragraph 413(1)(b) applies may not, in respect of its business in Canada, act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.

• Meaning of “deposit”

  (2) In this section, “deposit” has the meaning assigned to that term by subsection 413(5).

• Marginal note:Regulations

  (3) The Governor in Council may make regulations respecting the circumstances in which, and the conditions under which, a bank referred to in subsection (1) may act as agent for any person in the taking of a deposit that is less than $150,000 and payable in Canada.

Marginal note:Shared premises

• 413.3 (1) Subject to the regulations, no bank to which paragraph 413(1)(b) applies shall carry on business in Canada on premises that are shared with those of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the bank.

• Marginal note:Limitation

  (2) Subsection (1) only applies in respect of premises or any portion of premises on which both the bank and the member institution carry on business with the public and to which the public has access.

• Marginal note:Adjacent premises

  (3) Subject to the regulations, no bank to which paragraph 413(1)(b) applies shall carry on business in Canada on premises that are adjacent to a branch or office of a member institution, within the meaning of section 2 of the Canada Deposit Insurance Corporation Act, that is affiliated with the bank, unless the bank clearly indicates to its customers that its business and the premises on which it is carried on are separate and distinct from the business and premises of the affiliated member institution.

• Marginal note:Regulations

  (4) The Governor in Council may make regulations

  • (a) respecting the circumstances in which, and the conditions under which, a bank to which paragraph 413(1)(b) applies may carry on business in Canada on premises that are shared with those of a member institution referred to in subsection (1); and

  • (b) respecting the circumstances in which, and the conditions under which, a bank to which paragraph 413(1)(b) applies may carry on business in Canada on premises that are adjacent to a branch or office of a member institution referred to in subsection (3).

Marginal note:Restriction on leasing

417. A bank shall not engage in Canada in any personal property leasing activity in which a financial leasing entity, as defined in subsection 464(1), is not permitted to engage.

Marginal note:Policies re security interests

• 419. (1) The directors of a bank shall establish and the bank shall adhere to policies regarding the creation of security interests in property of the bank to secure obligations of the bank and the acquisition by the bank of beneficial interests in property that is subject to security interests.

• Marginal note:Order to amend policies

  (2) The Superintendent may, by order, direct a bank to amend its policies as specified in the order.

• Marginal note:Compliance

  (3) A bank shall comply with an order made under subsection (2) within the time specified in the order.

Marginal note:Regulations and guidelines

419.1 The Governor in Council may make regulations and the Superintendent may make guidelines respecting the creation by a bank of security interests in its property to secure obligations of the bank and the acquisition by the bank of beneficial interests in property that is subject to security interests.

Marginal note:Exception

419.2 Sections 419 and 419.1 do not apply in respect of a security interest created by a bank to secure an obligation of the bank to the Bank of Canada or the Canada Deposit Insurance Corporation.

Marginal note:Restriction on partnerships

• 421. (1) Except with the approval of the Superintendent, a bank may not be a general partner in a limited partnership or a partner in a general partnership.

Definition of “non-WTO Member bank subsidiary”

422.1 In section 422.2, “non-WTO Member bank subsidiary” means a bank that is a subsidiary of a foreign bank and that is not controlled by a WTO Member resident.

• Marginal note:Execution of trust

  (3) A bank is not bound to see to the execution of any trust to which any deposit made under the authority of this Act is subject.

• Marginal note:Payment when bank has notice of trust

  (4) Subsection (3) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the bank has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.

Marginal note:Definitions

439.1 The following definitions apply in this section and in sections 445 to 448.2, 458.1, 459.2 and 459.4.

“low-fee retail deposit account”

« compte de dépôt de détail à frais modiques »

“low-fee retail deposit account” means a retail deposit account that has the prescribed characteristics.

“member bank”

« banque membre »

“member bank” means a bank that is a member institution as defined in section 2 of the Canada Deposit Insurance Corporation Act.

“personal deposit account”

« compte de dépôt personnel »

“personal deposit account” means a deposit account in the name of one or more natural persons that is kept by that person or those persons for a purpose other than that of carrying on business.

“retail deposit account”

« compte de dépôt de détail »

“retail deposit account” means a personal deposit account that is opened with a deposit of less than $150,000 or any greater amount that may be prescribed.

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of an interest-bearing deposit account that is opened with a deposit in excess of $150,000 or any greater amount that may be prescribed.

Marginal note:Application

448. Sections 445 to 447 apply only in respect of charges applicable to deposit accounts with the bank in Canada and services provided by the bank in Canada.

Marginal note:Retail deposit accounts

• 448.1 (1) Subject to regulations made under subsection (3), a member bank shall, at any prescribed point of service in Canada or any branch in Canada at which it opens retail deposit accounts through a natural person, open a retail deposit account for an individual who meets the prescribed conditions at his or her request made there in person.

• Marginal note:No minimum deposit or balance requirements

  (2) A member bank shall not require that, in the case of an account opened under subsection (1), the individual make an initial minimum deposit or maintain a minimum balance.

• Marginal note:Regulations

  (3) The Governor in Council may make regulations

  • (a) for the purposes of subsection (1), defining “point of service” and prescribing points of service;

  • (b) respecting circumstances in which subsection (1) does not apply; and

  • (c) prescribing conditions to be met by an individual for the purposes of subsection (1).

Marginal note:Low-fee retail deposit accounts — regulations

448.2 The Governor in Council may make regulations

• (a) requiring a member bank, at any prescribed point of service in Canada or any branch referred to in subsection 448.1(1), to open a low-fee retail deposit account for an individual who meets the prescribed conditions at his or her request made there in person;

• (b) for the purposes of paragraph (a), defining “point of service” and prescribing points of service;

• (c) prescribing the characteristics, including the name, of a low-fee retail deposit account;

• (d) respecting circumstances in which a regulation made under paragraph (a) does not apply; and

• (e) prescribing conditions to be met by an individual for the purposes of paragraph (a).

Definition of “cost of borrowing”

449. For the purposes of this section and sections 449.1 to 456, “cost of borrowing” means, in respect of a loan made by a bank,

• (a) the interest or discount applicable to the loan;

• (b) any amount charged in connection with the loan that is payable by the borrower to the bank; and

• (c) any charge prescribed to be included in the cost of borrowing.

For those purposes, however, “cost of borrowing” does not include any charge prescribed to be excluded from the cost of borrowing.

Complaints

Marginal note:Designation of complaints body

• 455.1 (1) The Minister may, for the purposes of this section, designate a body corporate incorporated under Part II of the Canada Corporations Act whose purpose, in the view of the Minister, under its letters patent is dealing with complaints, made by persons having requested or received products or services from its member financial institutions, that have not been resolved to the satisfaction of those persons under procedures established by those financial institutions under paragraph 455(1)(a).

• Marginal note:Obligation to be member

  (2) A bank shall be a member of any body corporate that is designated under subsection (1).

• Marginal note:Directors

  (3) The Minister may, in accordance with the letters patent and by-laws of the body corporate designated under subsection (1), appoint the majority of its directors.

• Marginal note:Not an agent

  (4) A body corporate designated under subsection (1) is not an agent of Her Majesty.

• Marginal note:Designation to be published

  (5) A designation under subsection (1) shall be published in the Canada Gazette.

Marginal note:Cashing of government cheques

• 458.1 (1) Subject to regulations made under subsection (2), a member bank shall, at any branch in Canada at which it, through a natural person, opens retail deposit accounts and disburses cash to customers, cash a cheque or other instrument for an individual who is considered not to be a customer of the bank under the regulations, if

  • (a) the cheque or other instrument is drawn on the Receiver General or on the Receiver General’s account in the Bank of Canada, or in any bank or other deposit-taking Canadian financial institution incorporated by or under an Act of Parliament, or is any other instrument issued as authority for the payment of money out of the Consolidated Revenue Fund;

  • (b) the individual makes the request to cash it in person and meets the prescribed conditions; and

  • (c) the amount of the cheque or other instrument is not more than the prescribed amount.

• Marginal note:Regulations

  (2) The Governor in Council may make regulations

  • (a) respecting circumstances in which subsection (1) does not apply;

  • (b) for the purposes of subsection (1), prescribing the maximum amount of a cheque or other instrument;

  • (c) prescribing conditions to be met by an individual referred to in subsection (1); and

  • (d) prescribing circumstances in which an individual referred to in subsection (1) is considered not to be a customer of the bank.

Marginal note:Notice of branch closure

• 459.2 (1) Subject to regulations made under subsection (5), a member bank with a branch in Canada at which it, through a natural person, opens retail deposit accounts and disburses cash to customers, shall give notice in accordance with those regulations before closing that branch or having it cease to carry on either of those activities.

• Marginal note:Pre-closure meeting

  (2) After notice is given but before the branch is closed or ceases to carry on the activities, the Commissioner may, in prescribed situations, require the bank to convene and hold a meeting between representatives of the bank, representatives of the Agency and interested parties in the vicinity of the branch in order to exchange views about the closing or cessation of activities.

• Marginal note:Meeting details

  (3) The Commissioner may establish rules for convening a meeting referred to in subsection (2) and for its conduct.

• Marginal note:Not statutory instruments

  (4) The Statutory Instruments Act does not apply in respect of rules established under subsection (3).

• Marginal note:Regulations

  (5) The Governor in Council may make regulations prescribing

  • (a) the manner and time, which may vary according to circumstances specified in the regulations, in which notice shall be given under subsection (1), to whom it shall be given and the information to be included;

  • (b) circumstances in which a member bank is not required to give notice under subsection (1), circumstances in which the Commissioner may exempt a member bank from the requirement to give notice under that subsection, and circumstances in which the Commissioner may vary the manner and time in which notice is required to be given under any regulation made under paragraph (a); and

  • (c) circumstances in which a meeting may be convened under subsection (2).

Marginal note:Public accountability statements

• 459.3 (1) A bank with equity of one billion dollars or more shall, in accordance with regulations made under subsection (4), annually publish a statement describing the contribution of the bank and its prescribed affiliates to the Canadian economy and society.

• Marginal note:Filing

  (2) A bank shall, in the manner and at the time prescribed, file a copy of the statement with the Commissioner.

• Marginal note:Provision of statement to public

  (3) A bank shall, in the manner and at the time prescribed, disclose the statement to its customers and to the public.

• Marginal note:Regulations

  (4) The Governor in Council may make regulations prescribing

  • (a) the name, contents and form of the statement referred to in subsection (1) and the time within which it must be prepared;

  • (b) affiliates of a bank referred to in subsection (1);

  • (c) the manner and time in which a statement must be filed under subsection (2); and

  • (d) the manner and time in which a statement mentioned in subsection (3) is to be disclosed, respectively, to a bank’s customers and to the public.

Marginal note:Regulations re disclosure

459.4 The Governor in Council may, subject to any other provisions of this Act relating to the disclosure of information, make regulations respecting the disclosure of information by banks or any prescribed class of banks, including regulations respecting

• (a) the information that must be disclosed, including information relating to

  • (i) any product or service or prescribed class of products or services offered by them,

  • (ii) any of their policies, procedures or practices relating to the offer by them of any product or service or prescribed class of products or services,

  • (iii) anything they are required to do or to refrain from doing under a consumer provision, and

  • (iv) any other matter that may affect their dealings with customers or the public;

• (b) the manner, place and time in which and the persons to whom information is to be disclosed; and

• (c) the content and form of any advertisement by banks or any prescribed class of banks relating to any matter referred to in paragraph (a).

Marginal note:Affiliates

459.5 A bank shall not enter into any arrangement or otherwise cooperate with any of its affiliates that is controlled by a bank or a bank holding company and that is a finance entity as defined in subsection 464(1) or other prescribed entity to sell or further the sale of a product or service of the bank or the affiliate unless

• (a) the affiliate complies, with respect to the product or service, with the following provisions as if it were a bank, namely,

  • (i) sections 449 to 455, subsections 458(1) and (3) and section 459.1, and

  • (ii) section 456, to the extent that it is applicable to the activities of the affiliate; and

• (b) the persons who request or receive the product or service have access to complaint handling by the body corporate designated under subsection 455.1(1).

Marginal note:Effect of writ, etc.

• 462. (1) Subject to subsections (3) and (4), the following documents are binding on property belonging to a person and in the possession of a bank, or on money owing to a person by reason of a deposit account in a bank, only if the document or a notice of it is served at the branch of the bank that has possession of the property or that is the branch of account in respect of the deposit account, as the case may be:

  • (a) a writ or process originating a legal proceeding or issued in or pursuant to a legal proceeding;

  • (b) an order or injunction made by a court;

  • (c) an instrument purporting to assign, perfect or otherwise dispose of an interest in the property or the deposit account; or

  • (d) an enforcement notice in respect of a support order or support provision.

• Marginal note:Notices

  (2) Any notification sent to a bank with respect to a customer of the bank, other than a document referred to in subsection (1) or (3), constitutes notice to the bank and fixes the bank with knowledge of its contents only if sent to and received at the branch of the bank that is the branch of account of an account held in the name of that customer.

• Marginal note:Exception

  (3) Subsections (1) and (2) do not apply in respect of an enforcement notice in respect of a support order or support provision if

  • (a) the enforcement notice, accompanied by a written statement containing the information required by the regulations, is served at an office of a bank designated in accordance with the regulations in respect of a province; and

  • (b) the order or provision can be enforced under the laws of that province.

• Marginal note:Time of application

  (4) Subsection (3) does not apply in respect of an enforcement notice in respect of a support order or support provision until the second business day following the day of service referred to in that subsection.

• Marginal note:Regulations

  (5) The Governor in Council may make regulations

  • (a) respecting the designation by a bank, for the purpose of subsection (3), of a place in any province for the service of enforcement notices in respect of support orders and support provisions;

  • (b) prescribing the manner in which a bank shall publicize the locations of designated offices of the bank; and

  • (c) respecting the information that must accompany enforcement notices in respect of support orders and support provisions.

• Marginal note:Definitions

  (6) The following definitions apply in this section.

  “designated office”

  « bureau désigné »

  “designated office” means a place designated in accordance with regulations made for the purpose of subsection (3).

  “enforcement notice”

  « avis d’exécution »

  “enforcement notice”, in respect of a support order or support provision, means a garnishee summons or other instrument issued under the laws of a province for the enforcement of the support order or support provision.

  “support order”

  « ordonnance alimentaire »

  “support order” means an order or judgment or interim order or judgment for family financial support.

  “support provision”

  « disposition alimentaire »

  “support provision” means a provision of an agreement relating to the payment of maintenance or family financial support.

Marginal note:Definitions

• 464. (1) The following definitions apply in this Part.

  “factoring entity”

  « entité s’occupant d’affacturage »

  “factoring entity” means a factoring entity as defined in the regulations.

  “finance entity”

  « entité s’occupant de financement »

  “finance entity” means a finance entity as defined in the regulations.

  “financial leasing entity”

  « entité s’occupant de crédit-bail »

  “financial leasing entity” means an entity

  • (a) the activities of which are limited to the financial leasing of personal property and such related activities as are prescribed and whose activities conform to such restrictions and limitations thereon as are prescribed; and

  • (b) that, in conducting the activities referred to in paragraph (a) in Canada, does not

    • (i) direct its customers or potential customers to particular dealers in the leased property or the property to be leased,

    • (ii) enter into lease agreements with persons in respect of any motor vehicle having a gross vehicle weight, as that expression is defined by the regulations, of less than twenty-one tonnes, or

    • (iii) enter into lease agreements with natural persons in respect of personal household property, as that expression is defined by the regulations.

  “loan”

  « prêt »ou« emprunt »

  “loan” includes an acceptance, endorsement or other guarantee, a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit but does not include investments in securities.

  “motor vehicle”

  « véhicule à moteur »

  “motor vehicle” means a motorized vehicle designed to be used primarily on a public highway for the transportation of persons or things, but does not include

  • (a) a fire-engine, bus, ambulance or utility truck; or

  • (b) any other special purpose motorized vehicle that contains significant special features that make it suitable for a specific purpose.

  “mutual fund distribution entity”

  « courtier de fonds mutuels »

  “mutual fund distribution entity” means an entity whose principal activity is acting as a selling agent of units, shares or other interests in a mutual fund and acting as a collecting agent in the collection of payments for any such interests if

  • (a) the proceeds of the sales of any such interests, less any sales commissions and service fees, are paid to the mutual fund; and

  • (b) the existence of a sales commission and service fee in respect of the sale of any such interest is disclosed to the purchaser of the interest before the purchase of the interest.

  “mutual fund entity”

  « entité s’occupant de fonds mutuels »

  “mutual fund entity” means an entity

  • (a) whose activities are limited to the investing of the funds of the entity so as to provide investment diversification and professional investment management to the holders of its securities; and

  • (b) whose securities entitle their holders to receive, on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in a part of its net assets, including a separate fund or trust account of the entity.

  “participating share”

  « action participante »

  “participating share” means a share of a body corporate that carries the right to participate in the earnings of the body corporate to an unlimited degree and to participate in a distribution of the remaining property of the body corporate on dissolution.

  “permitted entity”

  « entité admissible »

  “permitted entity” means an entity in which a bank is permitted to acquire a substantial investment under section 468.

  “prescribed subsidiary”

  « filiale réglementaire »

  “prescribed subsidiary” means a subsidiary that is one of a prescribed class of subsidiaries.

  “real property brokerage entity”

  « courtier immobilier »

  “real property brokerage entity” means an entity that is primarily engaged in

  • (a) acting as an agent for vendors, purchasers, mortgagors, mortgagees, lessors or lessees of real property; and

  • (b) the provision of consulting or appraisal services in respect of real property.

  “specialized financing entity”

  « entité s’occupant de financement spécial »

  “specialized financing entity” means a specialized financing entity as defined in the regulations.

• Marginal note:Members of a bank’s group

  (2) For the purpose of this Part, a member of a bank’s group is any of the following:

  • (a) an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank;

  • (b) a subsidiary of the bank or of an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank;

  • (c) an entity in which the bank, or an entity referred to in any of paragraphs 468(1)(a) to (f) that controls the bank, has a substantial investment; or

  • (d) a prescribed entity in relation to the bank.

• Marginal note:Non-application of Part

  (3) This Part does not apply in respect of

  • (a) the holding of a security interest in real property, unless the security interest is prescribed under paragraph 479(a) to be an interest in real property; or

  • (b) the holding of a security interest in securities of an entity.

General Constraints on Investments

Marginal note:Investment standards

465. The directors of a bank shall establish and the bank shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.

Marginal note:Restriction on control and substantial investments

• 466. (1) Subject to subsections (2) to (4), no bank shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.

• Marginal note:Exception: indirect investments

  (2) A bank may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way of

  • (a) an acquisition of control of an entity referred to in any of paragraphs 468(1)(a) to (j), or of a prescribed entity, that controls or has a substantial investment in the entity; or

  • (b) an acquisition of shares or ownership interests in the entity by

    • (i) an entity referred to in any of paragraphs 468(1)(a) to (j), or a prescribed entity, that is controlled by the bank, or

    • (ii) an entity controlled by an entity referred to in any of paragraphs 468(1)(a) to (j), or a prescribed entity, that is controlled by the bank.

• Marginal note:Exception: temporary investments, realizations and loan workouts

  (3) A bank may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity by way of

  • (a) a temporary investment permitted by section 471;

  • (b) an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 472; or

  • (c) a realization of security permitted by section 473.

• Marginal note:Exception: specialized financing regulations

  (4) A bank may, subject to Part XI, acquire control of, or hold, acquire or increase a substantial investment in, an entity other than a permitted entity if it does so in accordance with regulations made under paragraph 467(d) concerning specialized financing.

• Marginal note:Exception: uncontrolled event

  (5) A bank is deemed not to contravene subsection (1) if the bank acquires control of, or acquires or increases a substantial investment in, an entity solely as the result of an event not within the control of the bank.

Marginal note:Regulations re limits

467. The Governor in Council may make regulations

• (a) respecting the determination of the amount or value of loans, investments and interests for the purposes of this Part;

• (b) respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by a bank and its prescribed subsidiaries to or in a person and any persons connected with that person;

• (c) specifying the classes of persons who are connected with any person for the purposes of paragraph (b); and

• (d) concerning specialized financing for the purposes of subsection 466(4).

Subsidiaries and Equity Investments

Marginal note:Permitted investments

• 468. (1) Subject to subsections (4) to (6) and Part XI, a bank may acquire control of, or acquire or increase a substantial investment in

  • (a) a bank;

  • (b) a bank holding company;

  • (c) a body corporate to which the Trust and Loan Companies Act applies;

  • (d) an association to which the Cooperative Credit Associations Act applies;

  • (e) an insurance company or a fraternal benefit society incorporated or formed by or under the Insurance Companies Act;

  • (f) an insurance holding company;

  • (g) a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;

  • (h) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;

  • (i) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; or

  • (j) an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.

• Marginal note:Permitted investments

  (2) Subject to subsections (3) to (6) and Part XI, a bank may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:

  • (a) engaging in any financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d) or any other activity that a bank is permitted to engage in under section 410 or 411;

  • (b) acquiring or holding shares of, or ownership interests in, entities in which a bank is permitted under this Part to hold or acquire;

  • (c) engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the bank or any member of the bank’s group, namely,

    • (i) the bank,

    • (ii) any member of the bank’s group,

    • (iii) any entity that is primarily engaged in the business of providing financial services,

    • (iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or

    • (v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

  • (d) engaging in any activity that a bank is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to

    • (i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by the bank or any member of the bank’s group, or

    • (ii) if a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;

  • (e) engaging in the activities referred to in the definition “mutual fund entity”, “mutual fund distribution entity” or “real property brokerage entity” in subsection 464(1); and

  • (f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

• Marginal note:Restriction

  (3) A bank may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include

  • (a) activities that a bank is not permitted to engage in under any of sections 412, 417 and 418;

  • (b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a bank under paragraph 409(2)(c);

  • (c) activities that a bank is not permitted to engage in under section 416 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;

  • (d) acquiring control of or acquiring or holding a substantial investment in another entity unless

    • (i) in the case of an entity that is controlled by the bank, the bank itself would be permitted under this Part to acquire a substantial investment in the other entity, or

    • (ii) in the case of an entity that is not controlled by the bank, the bank itself would be permitted to acquire a substantial investment in the other entity under subsection (1) or (2), subsection 466(2), paragraph 466(3)(b) or (c) or subsection 466(4); or

  • (e) any prescribed activity.

• Marginal note:Control

  (4) Subject to subsection (8) and the regulations, a bank may not acquire control of, or acquire or increase a substantial investment in,

  • (a) an entity referred to in paragraph (1)(a) or (b), unless

    • (i) the bank controls, within the meaning of paragraphs 3(1)(a) and (d), the entity or would thereby acquire control, within the meaning of those paragraphs, of the entity, or

    • (ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment;

  • (b) an entity referred to in any of paragraphs (1)(c) to (j), unless

    • (i) the bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

    • (ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment;

  • (c) an entity whose business includes one or more of the activities referred to in paragraph (2)(a) 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 finance entity, a factoring entity and a financial leasing entity, unless

    • (i) the bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

    • (ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment; or

  • (d) an entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unless

    • (i) the bank controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,

    • (ii) the bank is permitted by regulations made under paragraph 474(a) to acquire or increase the substantial investment, or

    • (iii) subject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in any of paragraphs (a) to (c) or an entity that is not a permitted entity.

• Marginal note:Minister’s approval

  (5) Subject to the regulations, a bank may not, without the prior written approval of the Minister,

  • (a) acquire control of an entity referred to in any of paragraphs (1)(g) to (i) from a person who is not a member of the bank’s group;

  • (b) acquire control of an entity referred to in paragraph (1)(j) or (4)(c), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (f) that is not a member of the bank’s group:

    • (i) a factoring entity, or

    • (ii) a financial leasing entity;

  • (c) acquire control of, or acquire or increase a substantial investment in, an entity whose business includes one or more of the activities referred to in paragraph (2)(d);

  • (d) acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 410(1)(c) or (c.1); or

  • (e) acquire control of, or acquire or increase a substantial investment in, an entity engaging in an activity prescribed for the purposes of paragraph (2)(f).

• Marginal note:Superintendent’s approval

  (6) Subject to subsection (7) and the regulations, a bank may not acquire control of, or acquire or increase a substantial investment in, an entity referred to in any of paragraphs (1)(g) to (j) and (4)(c) and (d), unless the bank obtains the approval of the Superintendent.

• Marginal note:Exception

  (7) Subsection (6) does not apply in respect of a particular transaction if

  • (a) the bank is acquiring control of an entity whose business includes an activity referred to in paragraph (2)(b), other than a specialized financing entity;

  • (b) the bank is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity; or

  • (c) the Minister has approved the transaction under subsection (5) or is deemed to have approved it under subsection 469(1).

• Marginal note:Control not required

  (8) A bank need not control an entity referred to in paragraph (1)(j), or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province, if the laws or customary business practices of the country under the laws of which the entity was incorporated or formed do not permit the bank to control the entity.

• Marginal note:Giving up control prohibited

  (9) A bank that controls, within the meaning of paragraphs 3(1)(a) and (d), an entity referred to in paragraph (1)(a) or (b) may not give up control, within the meaning of paragraph 3(1)(a) or (d), of the entity while continuing to control, within the meaning of the other paragraph, the entity.

• Marginal note:Prohibition on giving up control in fact

  (10) A bank that, under paragraph (4)(b), (c) or (d), controls an entity may not, without the prior written approval of the Minister, give up control, within the meaning of paragraph 3(1)(d), of the entity while it continues to control the entity.

• Marginal note:Giving up control

  (11) A bank that, under subsection (4), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity if

  • (a) the bank is permitted to do so by regulations made under paragraph 474(c); or

  • (b) the entity meets the conditions referred to in subparagraph (4)(d)(iii).

• Marginal note:Subsections do not apply

  (12) If a bank controls, within the meaning of paragraph 3(1)(a), (b) or (c), an entity, subsections (5) and (6) do not apply in respect of any subsequent increases by the bank of its substantial investment in the entity so long as the bank continues to control the entity.

Marginal note:Approval for indirect investments

• 469. (1) If a bank obtains the approval of the Minister under subsection 468(5) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the bank indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 468(5) or the Superintendent under subsection 468(6) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the bank is deemed to have obtained the approval of the Minister or the Superintendent for that indirect acquisition or increase.

• Marginal note:Approval for indirect investments

  (2) If a bank obtains the approval of the Superintendent under subsection 468(6) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase the bank indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Superintendent under that subsection and that indirect acquisition or increase is disclosed to the Superintendent in writing before the approval is obtained, the bank is deemed to have obtained the approval of the Superintendent for that indirect acquisition or increase.

Marginal note:Undertakings

• 470. (1) If a bank controls a permitted entity, other than an entity referred to in any of paragraphs 468(1)(a) to (f), the bank shall provide the Superintendent with any undertakings that the Superintendent may require regarding

  • (a) the activities of the entity; and

  • (b) access to information about the entity.

• Marginal note:Undertakings

  (2) If a bank acquires control of an entity referred to in any of paragraphs 468(1)(g) to (j), the bank shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.

• Marginal note:Agreements with other jurisdictions

  (3) The Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of an entity referred to in any of paragraphs 468(1)(g) to (j) in each province or in any other jurisdiction concerning any matters referred to in paragraphs (1)(a) and (b) or any other matter the Superintendent considers appropriate.

• Marginal note:Access to records

  (4) Despite any other provision of this Part, a bank shall not control a permitted entity, other than an entity referred to in any of paragraphs 468(1)(a) to (f), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the bank obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.

Exceptions and Exclusions

Marginal note:Temporary investments in entity

• 471. (1) Subject to subsection (4), a bank may, by way of a temporary investment, acquire control of, or acquire or increase a substantial investment in, an entity but, within two years, or any other period that may be specified or approved by the Superintendent, after acquiring control or after acquiring or increasing the substantial investment, as the case may be, it shall do all things necessary to ensure that it no longer controls the entity or has a substantial investment in the entity.

• Marginal note:Transitional

  (2) Despite subsection (1), if a bank that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the bank subsequently increases that substantial investment by way of a temporary investment, the bank shall, within two years, or any other period that is specified or approved by the Superintendent, after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

• Marginal note:Extension

  (3) The Superintendent may, in the case of any particular bank that makes an application under this subsection, extend the period of two years, or the other period specified or approved by the Superintendent, that is referred to in subsection (1) or (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Temporary investment

  (4) If a bank, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Minister under subsection 468(5) is required, the bank must, within 90 days after acquiring control or after acquiring or increasing the substantial investment,

  • (a) apply to the Minister for approval to retain control of the entity or to continue to hold the substantial investment in the entity for a period specified by the Minister or for an indeterminate period on any terms and conditions that the Minister considers appropriate; or

  • (b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the entity or does not have a substantial investment in the entity.

• Marginal note:Indeterminate extension

  (5) If a bank, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Superintendent under subsection 468(6) is required, the Superintendent may, in the case of any particular bank that makes an application under this subsection, permit the bank to retain control of the entity or to continue to hold the substantial investment in the entity for an indeterminate period, on any terms and conditions that the Superintendent considers necessary.

Marginal note:Loan workouts

• 472. (1) Despite anything in this Part, if a bank or any of its subsidiaries has made a loan to an entity and, under the terms of the agreement between the bank, or any of its subsidiaries, and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the bank may acquire

  • (a) if the entity is a body corporate, all or any of the shares of the body corporate;

  • (b) if the entity is an unincorporated entity, all or any of the ownership interests in the entity;

  • (c) all or any of the shares or all or any of the ownership interests in any entity that is an affiliate of the entity; or

  • (d) all or any of the shares of a body corporate that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity or any of its affiliates.

• Marginal note:Obligation of bank

  (2) If a bank acquires shares or ownership interests in an entity under subsection (1), the bank shall, within five years after acquiring them, do all things necessary to ensure that the bank does not control the entity or have a substantial investment in the entity.

• Marginal note:Transitional

  (3) Despite subsection (1), if a bank that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the bank later increases that substantial investment by way of an investment made under subsection (1), the bank shall, within five years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

• Marginal note:Extension

  (4) The Superintendent may, in the case of any particular bank that makes an application under this subsection, extend the period referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception — entities controlled by foreign governments

  (5) Despite anything in this Part, if a bank has made a loan to, or holds a debt obligation of, the government of a foreign country or an entity controlled by the government of a foreign country and, under the terms of the agreement between the bank and that government or the entity, as the case may be, and any other documents governing the terms of the loan or debt obligation, a default has occurred, the bank may acquire all or any of the shares of, or ownership interests in, that entity or in any other entity designated by that government, if the acquisition is part of a debt restructuring program of that government.

• Marginal note:Time for holding shares

  (6) If a bank acquires any shares or ownership interests under subsection (5), the bank may, on any terms and conditions that the Superintendent considers appropriate, hold those shares or ownership interests for an indeterminate period or for any other period that the Superintendent may specify.

• Marginal note:Exception

  (7) If, under subsection (1), a bank acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 468, the bank may retain control of the entity or continue to hold the substantial investment for an indeterminate period, if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2) or (3), including any extension of it granted under subsection (4).

Marginal note:Realizations

• 473. (1) Despite anything in this Act, a bank may acquire

  • (a) an investment in a body corporate,

  • (b) an interest in an unincorporated entity, or

  • (c) an interest in real property

  if the investment or interest is acquired through the realization of a security interest held by the bank or any of its subsidiaries.

• Marginal note:Disposition

  (2) Subject to subsection 73(2), if a bank acquires control of, or acquires a substantial investment in, an entity by way of the realization of a security interest held by the bank or any of its subsidiaries, the bank shall, within five years after the day on which control or the substantial investment is acquired, do all things necessary, or cause its subsidiary to do all things necessary, as the case may be, to ensure that the bank no longer controls the entity or has a substantial investment in the entity.

• Marginal note:Transitional

  (3) Despite subsection (2), if a bank that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the bank later increases that substantial investment by way of a realization of a security interest under subsection (1), the bank shall, within five years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

• Marginal note:Extension

  (4) The Superintendent may, in the case of any particular bank that makes an application under this subsection, extend the period referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception

  (5) If, under subsection (1), a bank acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 468, the bank may retain control of the entity or continue to hold the substantial investment for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2) or (3), including any extension of it granted under subsection (4).

Marginal note:Regulations restricting ownership

474. The Governor in Council may make regulations

• (a) for the purposes of subsection 468(4), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which that subsection does not apply or the banks or other entities in respect of which that subsection does not apply, including prescribing banks or other entities on the basis of the activities they engage in;

• (b) for the purposes of subsection 468(5) or (6), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the banks or other entities in respect of which either of those subsections does not apply, including prescribing banks or other entities on the basis of the activities they engage in;

• (c) for the purposes of subsection 468(11), permitting a bank to give up control of an entity; and

• (d) restricting the ownership by a bank of shares of a body corporate or of ownership interests in an unincorporated entity under sections 468 to 473 and imposing terms and conditions applicable to banks that own such shares or interests.

Portfolio Limits

Marginal note:Exclusion from portfolio limits

• 475. (1) Subject to subsection (3), the value of all loans, investments and interests acquired by a bank and any of its prescribed subsidiaries under section 472 or as a result of a realization of a security interest is not to be included in calculating the value of loans, investments and interests of the bank and its prescribed subsidiaries under sections 476 to 478

  • (a) for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; and

  • (b) for a period of five years after the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.

• Marginal note:Extension

  (2) The Superintendent may, in the case of any particular bank, extend any period referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception

  (3) Subsection (1) does not apply to an investment or interest described in that subsection if the investment or interest is defined by a regulation made under section 479 to be an interest in real property and

  • (a) the bank or the subsidiary acquired the investment or interest as a result of the realization of a security interest securing a loan that was defined by a regulation made under section 479 to be an interest in real property; or

  • (b) the bank or the subsidiary acquired the investment or interest under section 472 as a result of a default referred to in that section in respect of a loan that was defined by a regulation made under section 479 to be an interest in real property.

Real Property

Marginal note:Limit on total property interest

476. A bank shall not, and shall not permit its prescribed subsidiaries to, purchase or otherwise acquire an interest in real property or make an improvement to any real property in which the bank or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the bank in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.

Equities

Marginal note:Limits on equity acquisitions

477. A bank shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment, or

• (b) acquire control of an entity that holds shares or ownership interests referred to in paragraph (a),

if the aggregate value of

• (c) all participating shares, excluding participating shares of permitted entities in which the bank has a substantial investment, and

• (d) all ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the bank has a substantial investment,

beneficially owned by the bank and its prescribed subsidiaries, exceeds, or the purchase or acquisition would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.

Aggregate Limit

Marginal note:Aggregate limit

478. A bank shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire

  • (i) participating shares of a body corporate, other than those of a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment,

  • (ii) ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the bank has, or by virtue of the acquisition would have, a substantial investment, or

  • (iii) interests in real property, or

• (b) make an improvement to real property in which the bank or any of its prescribed subsidiaries has an interest

if the aggregate value of

• (c) all participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the bank and its prescribed subsidiaries, and

• (d) all interests of the bank in real property referred to in subparagraph (a)(iii)

exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, the prescribed percentage of the regulatory capital of the bank.

Miscellaneous

Marginal note:Regulations

479. For the purposes of this Part, the Governor in Council may make regulations

• (a) defining the interests of a bank in real property;

• (b) determining the method of valuing those interests; or

• (c) exempting classes of banks from the application of sections 475 to 478.

Marginal note:Divestment order

• 480. (1) The Superintendent may, by order, direct a bank to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Part.

• Marginal note:Divestment order

  (2) If, in the opinion of the Superintendent,

  • (a) an investment by a bank or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the bank to control the body corporate or the unincorporated entity, or

  • (b) the bank or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put before

    • (i) the board of directors of a body corporate, or

    • (ii) a similar group or committee of an unincorporated entity,

    or whereby no proposal may be approved except with the consent of the bank, the entity it controls or the nominee,

  the Superintendent may, by order, require the bank, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).

• Marginal note:Divestment order

  (3) If

  • (a) a bank

    • (i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 470(1), (2) or (4), or

    • (ii) is in default of an undertaking referred to in subsection 470(1) or (2) and the default is not remedied within ninety days after the day of receipt by the bank of a notice from the Superintendent of the default, or

  • (b) a permitted entity referred to in subsection 470(4) is in default of an undertaking referred to in that subsection and the default is not remedied within ninety days after the day of receipt by the bank of a notice from the Superintendent of the default,

  the Superintendent may, by order, require the bank, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank no longer has a substantial investment in the entity to which the undertaking relates.

• Marginal note:Exception

  (4) Subsection (2) does not apply in respect of an entity in which a bank has a substantial investment permitted by this Part.

Marginal note:Deemed temporary investment

481. If a bank controls or has a substantial investment in an entity as permitted by this Part and the bank becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 468(5) or (6), the bank is deemed to have acquired, on the day the bank becomes aware of the change, a temporary investment in respect of which section 471 applies.

Marginal note:Asset transactions

• 482. (1) A bank shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person if

  A + B > C

  where

  A

  is the value of the assets;

  B

  is the total value of all assets that the bank and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; and

  C

  is ten per cent of the total value of the assets of the bank, as shown in the last annual statement of the bank prepared before the acquisition or transfer.

• Marginal note:Exception

  (2) The prohibition in subsection (1) does not apply in respect of

  • (a) assets that are debt obligations that are

    • (i) guaranteed by any financial institution other than the bank,

    • (ii) fully secured by deposits with any financial institution, including the bank, or

    • (iii) fully secured by debt obligations that are guaranteed by any financial institution other than the bank;

  • (b) assets that are debt obligations issued

    • (i) by, or by any agency of,

      • (A) the Government of Canada,

      • (B) the government of a province,

      • (C) a municipality, or

      • (D) the government of a foreign country or any political subdivision of a foreign country, or

    • (ii) by a prescribed international agency;

  • (c) assets that are debt obligations that are guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in paragraph (b);

  • (d) assets that are debt obligations that are widely distributed, as that expression is defined by the regulations;

  • (e) assets that are debt obligations of an entity controlled by the bank; or

  • (f) a transaction or series of transactions by the bank with another financial institution as a result of the bank’s participation in one or more syndicated loans with that financial institution.

• Marginal note:Exception

  (3) The approval of the Superintendent is not required if

  • (a) the bank sells assets under a sale agreement that is approved by the Minister under section 236;

  • (b) the bank or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 468(5) is required or the approval of the Superintendent under subsection 468(6) is required; or

  • (c) the transaction has been approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act.

• Marginal note:Value of assets

  (4) For the purposes of “A” in subsection (1), the value of the assets is

  • (a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the bank after the acquisition, the fair market value of the assets; and

  • (b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets as stated in the annual statement.

• Marginal note:Total value of all assets

  (5) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the bank, the fair market value of the assets of the entity at the date of the acquisition.

• Marginal note:Total value of all assets

  (6) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets of the entity as stated in the annual statement.

Marginal note:Transitional

483. Nothing in this Part requires

• (a) the termination of a loan made before February 7, 2001;

• (b) the termination of a loan made after that date as a result of a commitment made before that date;

• (c) the disposal of an investment made before that date; or

• (d) the disposal of an investment made after that date as a result of a commitment made before that date.

But if the loan or investment would be precluded or limited by this Part, the amount of the loan or investment may not, except as provided in subsections 471(2), 472(3) and 473(3), be increased after that date.

Marginal note:Saving

484. A loan or investment referred to in section 483 is deemed not to be prohibited by the provisions of this Part.

Marginal note:Transactions with holding companies

• 495.1 (1) Subject to subsection (2) and sections 495.2 and 495.3, if a widely held bank holding company or a widely held insurance holding company has a significant interest in any class of shares of a bank, the bank may enter into any transaction with the holding company or with any other related party of the bank that is an entity in which the holding company has a substantial investment.

• Marginal note:Policies and procedures

  (2) The bank shall adhere to policies and procedures established under subsection 195(3) when entering into the transaction.

Marginal note:Restriction

• 495.2 (1) If a bank enters into a transaction with a related party of the bank with whom the bank may enter into transactions under subsection 495.1(1) and that is not a federal financial institution, the bank shall not directly or indirectly make, take an assignment of or otherwise acquire a loan to the related party, make an acceptance, endorsement or other guarantee on behalf of the related party or make an investment in the securities of the related party if, immediately following the transaction, the aggregate financial exposure, as that expression is defined by the regulations, of the bank would exceed

  • (a) in respect of all transactions of the bank with the related party, the prescribed percentage of the bank’s regulatory capital or, if no percentage is prescribed, five per cent of the bank’s regulatory capital; or

  • (b) in respect of all transactions of the bank with such related parties of the bank, the prescribed percentage of the bank’s regulatory capital or, if no percentage is prescribed, ten per cent of the bank’s regulatory capital.

• Marginal note:Order

  (2) If the Superintendent is of the opinion that it is necessary for the protection of the interests of the depositors and creditors of a bank, the Superintendent may, by order,

  • (a) reduce the limit in paragraph (1)(a) or (b) that would otherwise apply to the bank; and

  • (b) impose limits on transactions by the bank with related parties with whom the bank may enter into transactions under subsection 495.1(1) that are federal financial institutions.

• Marginal note:Order

  (3) The Superintendent may, by order, increase the limit in paragraph (1)(a) or (b) that would otherwise apply to a bank on transactions by the bank with related parties that are financial institutions that are regulated in a manner acceptable to the Superintendent.

Marginal note:Assets transactions

• 495.3 (1) Despite subsection 494(3), a bank shall not, without the approval of the Superintendent and its conduct review committee, directly or indirectly acquire assets from a related party of the bank with whom the bank may enter into transactions under subsection 495.1(1) that is not a federal financial institution, or directly or indirectly transfer assets to such a related party if

  A + B > C

  where

  A

  is the value of the assets;

  B

  is the total value of all assets that the bank directly or indirectly acquired from, or directly or indirectly transferred to, that related party in the twelve months ending immediately before the acquisition or transfer; and

  C

  is five per cent, or the percentage that may be prescribed, of the total value of the assets of the bank, as shown in the last annual statement of the bank prepared before the acquisition or transfer.

• Marginal note:Exception

  (2) The prohibition in subsection (1) does not apply in respect of assets purchased or otherwise acquired under subsection 494(1), assets sold under subsection 494(2) or any other assets as may be prescribed.

• Marginal note:Exception

  (3) The approval of the Superintendent is not required if

  • (a) the bank sells assets under a sale agreement that is approved by the Minister under section 236; or

  • (b) the bank or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 468(5) is required or the approval of the Superintendent under subsection 468(6) is required.

• Marginal note:Value of assets

  (4) For the purposes of “A” in subsection (1), the value of the assets is

  • (a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the bank after the acquisition, the fair market value of the assets; and

  • (b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets as stated in the annual statement.

• Marginal note:Total value of all assets

  (5) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the bank, the fair market value of the assets of the entity at the date of the acquisition.

• Marginal note:Total value of all assets

  (6) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the bank prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the bank before the transfer, the value of the assets of the entity as stated in the annual statement.

• (b) in respect of any other transaction,

  • (i) terms and conditions, including those relating to price, rent or interest rate, that might reasonably be expected to apply in a similar transaction in an open market under conditions requisite to a fair transaction between parties who are at arm’s length and who are acting prudently, knowledgeably and willingly, or

  • (ii) if the transaction is one that would not reasonably be expected to occur in an open market between parties who are at arm’s length, terms and conditions, including those relating to price, rent or interest rate, that would reasonably be expected to provide the bank with fair value, having regard to all the circumstances of the transaction, and that would be consistent with the parties to the transaction acting prudently, knowledgeably and willingly.

Marginal note:Order to void contract or to grant other remedy

• 506. (1) If a bank enters into a transaction that it is prohibited from entering into by this Part, the bank or the Superintendent may apply to a court for an order setting aside the transaction or for any other appropriate remedy, including an order directing that the related party of the bank involved in the transaction account to the bank for any profit or gain realized or that any director or senior officer of the bank who authorized the transaction compensate the bank for any loss or damage incurred by the bank.

• Marginal note:Time limit

  (2) An application under subsection (1) in respect of a particular transaction may only be made within the period of three months following the day the notice referred to in section 505 in respect of the transaction is given to the Superintendent or, if no such notice is given, the day the Superintendent becomes aware of the transaction.

• Marginal note:Certificate

  (3) For the purposes of subsection (2), a document purporting to have been issued by the Superintendent, certifying the day on which the Superintendent became aware of the transaction, shall, in the absence of evidence to the contrary, be received in evidence as conclusive proof of that fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.

PART XIIFOREIGN BANKS

Division 1Interpretation and Application

Marginal note:Definitions

• 507. (1) The following definitions apply in this Part.

  “designated foreign bank”

  « banque étrangère désignée »

  “designated foreign bank” means a foreign bank that is the subject of a designation order.

  “designation order”

  « arrêté de désignation »

  “designation order” means an order made under subsection 508(1).

  “exemption order”

  « arrêté d’exemption »

  “exemption order” means an order made under subsection 509(1).

  “finance entity”

  « entité s’occupant de financement »

  “finance entity” means a Canadian entity that is a finance entity as defined in the regulations.

  “financial leasing entity”

  « entité s’occupant de crédit-bail »

  “financial leasing entity” means a Canadian entity that is a financial leasing entity as defined in subsection 464(1).

  “financial services entity”

  « entité s’occupant de services financiers »

  “financial services entity” means an entity, other than an entity referred to in any of paragraphs 468(1)(a) to (i) or a leasing entity, that engages in activities at least the prescribed portion — or if no portion is prescribed, 10 per cent — of which, determined in the prescribed manner, consists of one or more of the following activities:

  • (a) providing any financial service;

  • (b) acting as a financial agent;

  • (c) providing investment counselling and portfolio management services;

  • (d) issuing payment, credit or charge cards and, in cooperation with others, including other financial institutions, operating a payment, credit or charge card plan;

  • (e) engaging in the activities referred to in the definition “mutual fund entity” or “mutual fund distribution entity” in subsection 464(1);

  • (f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed;

  • (g) engaging in any activity referred to in paragraphs (a) to (f) as an agent for another entity referred to in any of those paragraphs or in any of paragraphs 468(1)(a) to (j); or

  • (h) acquiring or holding control of, or becoming a major owner of, an entity referred to in any of paragraphs (a) to (g) or any of paragraphs 468(1)(a) to (j).

  “foreign cooperative credit society”

  « société coopérative de crédit étrangère »

  “foreign cooperative credit society” means an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province, and that, outside Canada, engages in or carries on the business of a cooperative credit society.

  “foreign insurance company”

  « société d’assurances étrangère »

  “foreign insurance company” means a foreign company as defined in subsection 2(1) of the Insurance Companies Act.

  “foreign securities dealer”

  « courtier de valeurs mobilières étranger »

  “foreign securities dealer” means an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province, and that, outside Canada, engages in or carries on the business of dealing in securities.

  “leasing activities”

  « activités de location »

  “leasing activities” means

  • (a) the financial leasing of personal property and the related activities that a financial leasing entity may engage in; and

  • (b) all other leasing of personal property.

  “leasing entity”

  « entité s’occupant de location »

  “leasing entity” means an entity that engages in only

  • (a) leasing activities; or

  • (b) leasing activities and activities other than those described in paragraphs (a) to (h) of the definition “financial services entity”.

  “limited commercial entity”

  « entité à activités commerciales restreintes »

  “limited commercial entity” means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with section 522.09, or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that section.

  “non-bank affiliate of a foreign bank”

  « établissement affilié à une banque étrangère »

  “non-bank affiliate of a foreign bank” means a Canadian entity, other than a bank,

  • (a) in which a foreign bank or an entity associated with a foreign bank holds a substantial investment, or

  • (b) that is controlled by a foreign bank or an entity associated with a foreign bank,

  but a Canadian entity is not a non-bank affiliate of a foreign bank by reason only that a bank that is a subsidiary of the foreign bank or of the entity associated with a foreign bank controls, or holds a substantial investment in, the Canadian entity.

  “permitted Canadian entity”

  « entité canadienne admissible »

  “permitted Canadian entity” means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with section 522.08, or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that section.

  “representative office”

  « bureau de représentation »

  “representative office” means an office established to represent a foreign bank in Canada that is not subject to the direction of, or management by, an entity incorporated or formed by or under an Act of Parliament or of the legislature of a province, and the personnel of which are employed directly or indirectly by the foreign bank.

  “specialized financing entity”

  « entité s’occupant de financement spécial »

  “specialized financing entity” means a Canadian entity that is a specialized financing entity as defined in the regulations.

• Marginal note:Entity associated with foreign bank

  (2) For the purposes of this Part,

  • (a) an entity is associated with a foreign bank if

    • (i) the entity controls, or is controlled by, the foreign bank, or

    • (ii) the entity and the foreign bank are controlled by the same person;

  • (b) an entity may be associated with more than one foreign bank; and

  • (c) a foreign bank may be associated with another foreign bank.

• Marginal note:Entity deemed to be associated with a foreign bank

  (3) For the purposes of this Part, the Minister may deem an entity to be associated with a foreign bank if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written,

  • (a) the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons such that, if they were one person, they would control the entity;

  • (b) the entity is acting, jointly or in concert, in relation to the shares or ownership interests of the foreign bank, with one or more other persons such that, if they were one person, they would control the foreign bank;

  • (c) another entity that is associated with the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons such that, if they were one person, they would control the entity;

  • (d) a person who controls the entity is acting, jointly or in concert, in relation to the shares or ownership interests of the foreign bank, with one or more other persons, such that, if they were one person, they would control the foreign bank;

  • (e) a person who controls the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the entity, with one or more other persons, such that, if they were one person, they would control the entity; or

  • (f) two or more persons are acting, jointly or in concert, in relation to the shares or ownership interests of the entity and the foreign bank such that, if they were one person, they would control the entity and the foreign bank.

• Marginal note:Deemed substantial investment by foreign bank

  (4) For the purposes of this Part, a foreign bank is deemed to hold a substantial investment in a Canadian entity if

  • (a) the foreign bank and one or more entities associated with the foreign bank, or

  • (b) two or more entities associated with the foreign bank

  would, if they were one person, hold a substantial investment in the Canadian entity.

• Marginal note:Deemed substantial investment by entity associated

  (5) For the purposes of this Part, an entity associated with a foreign bank is deemed to hold a substantial investment in a Canadian entity if

  • (a) the entity and the foreign bank, or

  • (b) the entity and one or more other entities associated with the foreign bank

  would, if they were one person, hold a substantial investment in the Canadian entity.

• Marginal note:Deemed control by foreign bank

  (6) For the purposes of this Part, a foreign bank is deemed to control a Canadian entity if

  • (a) the foreign bank and one or more entities associated with the foreign bank, or

  • (b) two or more entities associated with the foreign bank

  would, if they were one person, control the Canadian entity.

• Marginal note:Deemed control by entity associated

  (7) For the purposes of this Part, an entity associated with a foreign bank is deemed to control a Canadian entity if

  • (a) the entity and the foreign bank, or

  • (b) the entity and one or more other entities associated with the foreign bank

  would, if they were one person, control the Canadian entity.

• Marginal note:Person is a major owner

  (8) For the purposes of this Part, a person, other than a foreign bank or an entity associated with a foreign bank,

  • (a) is a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; and

  • (b) is a major owner of a Canadian entity that is a body corporate if

    • (i) the aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, or

    • (ii) the aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the person and that are beneficially owned by any entities controlled by the person is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.

• Marginal note:Foreign bank a major owner

  (9) For the purposes of this Part, a foreign bank

  • (a) is a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; and

  • (b) is a major owner of a Canadian entity that is a body corporate if

    • (i) the aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, or

    • (ii) the aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the foreign bank and that are beneficially owned by any entities associated with the foreign bank is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.

• Marginal note:Associated entity a major owner

  (10) For the purposes of this Part, an entity associated with a foreign bank

  • (a) is a major owner of an unincorporated Canadian entity if the aggregate of any ownership interests, however designated, into which the unincorporated Canadian entity is divided that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 35 per cent of all of the ownership interests into which the unincorporated Canadian entity is divided; and

  • (b) is a major owner of a Canadian entity that is a body corporate if

    • (i) the aggregate of the shares of any class of voting shares of the Canadian entity that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 20 per cent of the outstanding shares of that class of voting shares of the Canadian entity, or

    • (ii) the aggregate of the shares of any class of non-voting shares of the Canadian entity that are beneficially owned by the entity associated with the foreign bank, that are beneficially owned by the foreign bank and that are beneficially owned by any other entities associated with the foreign bank is more than 30 per cent of the outstanding shares of that class of non-voting shares of the Canadian entity.

• Marginal note:Deemed major owner — person

  (11) For the purposes of this Part, the Minister may deem a person to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written, the person is acting, jointly or in concert, in relation to the shares or ownership interests of the Canadian entity, with one or more other persons such that, if they were one person, they would be a major owner of the Canadian entity.

• Marginal note:Deemed major owner — foreign bank

  (12) For the purposes of this Part, the Minister may deem a foreign bank to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written,

  • (a) the foreign bank is acting, jointly or in concert, in relation to the shares or ownership interests of the Canadian entity, with one or more other persons such that, if they were one person, they would be a major owner of the Canadian entity; or

  • (b) two or more persons are acting, jointly or in concert in relation to the shares or ownership interests of the Canadian entity and in relation to the shares or ownership interests of the foreign bank such that, if they were one person, they would control the foreign bank and be a major owner of the Canadian entity.

• Marginal note:Deemed major owner — entity associated with a foreign bank

  (13) For the purposes of this Part, the Minister may deem an entity associated with a foreign bank to be a major owner of a Canadian entity if, in the opinion of the Minister, it is reasonable to conclude that under any agreement, commitment or understanding, whether formal or informal, verbal or written, the entity associated with the foreign bank is acting, jointly or in concert, in relation to the shares and ownership interests of the Canadian entity with one or more other persons, such that, if they were one person, they would be a major owner of the Canadian entity.

• Marginal note:Member of foreign bank’s group

  (14) For the purposes of this Part, a member of a foreign bank’s group is any of the following:

  • (a) an entity associated with the foreign bank;

  • (b) an entity in which the foreign bank or an entity associated with the foreign bank holds a substantial investment; and

  • (c) a prescribed entity, in relation to the foreign bank.

• Marginal note:Foreign bank that has a financial establishment in Canada

  (15) For the purposes of this Part, a foreign bank has, or is deemed to have, a financial establishment in Canada if the foreign bank or any entity associated with the foreign bank

  • (a) is an authorized foreign bank;

  • (b) is a foreign insurance company;

  • (c) is a foreign securities dealer, or a foreign cooperative credit society, that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or to carry on the business of dealing in securities or the business of a cooperative credit society; or

  • (d) controls, or is a major owner of,

    • (i) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), or

    • (ii) a Canadian entity that is a financial services entity.

• Marginal note:Associated entity that has a financial establishment in Canada

  (16) For the purposes of this Part, an entity associated with a foreign bank has, or is deemed to have, a financial establishment in Canada if the entity, the foreign bank or any other entity associated with the foreign bank

  • (a) is an authorized foreign bank;

  • (b) is a foreign insurance company;

  • (c) is a foreign securities dealer, or a foreign cooperative credit society, that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or to carry on the business of dealing in securities or the business of a cooperative credit society; or

  • (d) controls, or is a major owner of,

    • (i) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), or

    • (ii) a Canadian entity that is a financial services entity.

• Marginal note:Regulations concerning exemption from associated status

  (17) The Governor in Council may make regulations

  • (a) respecting the exemption, from the application of any provision of this Act, of any class or classes of entities associated with a foreign bank from the status of being associated with a foreign bank; and

  • (b) authorizing the Minister, by order, and subject to any terms and conditions that the Minister considers appropriate, to deem, for the purposes of any provision of this Act, any entity not to be an entity associated with a foreign bank.

• Marginal note:Revocation or variation of order

  (18) The Minister may, by further order, revoke or vary any order referred to in paragraph (17)(b) and any such revocation or variation comes into effect three months after the date the further order is made unless the Minister and the entity to which the order relates agree that the revocation or variation is to take effect at some other time agreed to by them.

• Marginal note:Publication

  (19) If the Minister makes an order referred to in paragraph (17)(b) or subsection (18), the Minister shall publish in the Canada Gazette a notice of the making of the order.

Marginal note:Designation order

• 508. (1) Subject to subsection (2), the Minister may, by order, designate a foreign bank to be a designated foreign bank for the purposes of this Part if

  • (a) the foreign bank is a bank according to the laws of the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business;

  • (b) the foreign bank engages, directly or indirectly, in the business of providing financial services and employs, to identify or describe its business, a name that includes the word “bank”, “banque”, “banking” or “bancaire”, either alone or in combination with other words, or any word or words in any language other than English or French corresponding generally thereto;

  • (c) the foreign bank, in the opinion of the Minister, after consultation with the Superintendent, is regulated as or like a bank, according to the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business; or

  • (d) the foreign bank is not a foreign bank described in any of paragraphs (a) to (c) and one of the following conditions is met:

    • (i) subject to the regulations, the following ratio, expressed as a percentage, is equal to or greater than the prescribed material percentage: the value of the total assets of foreign banks described in any of paragraphs (a) to (c) that are associated with the foreign bank to the value of the total assets of the foreign bank and entities associated with the foreign bank, or

    • (ii) subject to the regulations, the following ratio, expressed as a percentage, is equal to or greater than the prescribed material percentage: the value of the total revenues of foreign banks described in any of paragraphs (a) to (c) that are associated with the foreign bank to the value of the total revenues of the foreign bank and entities associated with the foreign bank.

• Marginal note:Restriction

  (2) The Minister may only make an order under subsection (1) in respect of a foreign bank described in any of paragraphs (1)(a) to (c) if

  • (a) the foreign bank or an entity controlled by the foreign bank is or will be

    • (i) engaging in or carrying on business in Canada, other than holding, managing or otherwise dealing with real property,

    • (ii) maintaining a branch in Canada, other than an office referred to in section 522,

    • (iii) establishing, maintaining or acquiring for use in Canada an automated banking machine, a remote service unit or a similar automated service, or, in Canada, accepting data from such a machine, unit or service other than in circumstances described in section 511 or 512,

    • (iv) acquiring or holding control of, or a substantial investment in, a Canadian entity, or

    • (v) acquiring or holding any share or ownership interest in a Canadian entity and

      • (A) an entity associated with the foreign bank holds control of, or a substantial investment in, the Canadian entity, or

      • (B) an entity associated with the foreign bank and one or more other entities associated with the foreign bank would, if they were one person, hold control of, or a substantial investment in, the Canadian entity; or

  • (b) the foreign bank is controlled by an individual and

    • (i) one of the following conditions is met:

      • (A) subject to the regulations, the following ratio, expressed as a percentage, is equal to or greater than the prescribed material percentage: the value of the total assets of the foreign bank and other foreign banks described in any of paragraphs (1)(a) to (c) that are associated with the foreign bank to the value of the total assets of the foreign bank and entities associated with the foreign bank, or

      • (B) subject to the regulations, the following ratio, expressed as a percentage, is equal to or greater than the prescribed material percentage: the value of the total revenues of the foreign bank and other foreign banks described in any of paragraphs (1)(a) to (c) that are associated with the foreign bank to the value of the total revenues of the foreign bank and entities associated with the foreign bank, and

    • (ii) an entity associated with the foreign bank is or will be

      • (A) engaging in or carrying on business in Canada, other than holding, managing or otherwise dealing with real property,

      • (B) maintaining a branch in Canada, other than an office referred to in section 522,

      • (C) establishing, maintaining or acquiring for use in Canada an automated banking machine, a remote service unit or a similar automated service, or, in Canada, accepting data from such a machine, unit or service other than in circumstances described in section 511 or 512, or

      • (D) acquiring or holding control of, or a substantial investment in, a Canadian entity.

• Marginal note:Subsections 507(4) to (7) do not apply

  (2.1) Subsections 507(4) to (7) do not apply with respect to the making of any determination relating to control or a substantial investment for the purposes of paragraph (2)(a).

• Marginal note:Deeming

  (3) A foreign bank that was designated under subsection 521(1.06) as that subsection read immediately before the coming into force of this subsection and whose designation has not been revoked is deemed to be the subject of a designation order.

Marginal note:Exemption order

• 509. (1) The Minister may, by order, determine that this Part, other than this section, sections 507 and 508, subsection 522.25(3), sections 522.26 and 522.28, subsection 522.29(2) and section 522.3, does not apply to a foreign bank.

• Marginal note:Restriction

  (2) No order may be made under subsection (1) in respect of a designated foreign bank or a foreign bank that is associated with a designated foreign bank.

• Marginal note:Deemed order

  (3) An exemption order is deemed to have been made on the coming into force of this subsection in respect of a foreign bank if, immediately before the coming into force of this subsection, the foreign bank had received consent under subsection 521(1), the consent had not been revoked and the foreign bank or an entity associated with it was not designated under subsection 521(1.06), as those subsections read immediately before the coming into force of this subsection.

• Marginal note:Change in circumstances

  (4) A foreign bank that is the subject of an exemption order shall advise the Minister in writing of any change in circumstances that may affect its eligibility for a designation order.

• Marginal note:Revocation of order

  (5) An exemption order in respect of a foreign bank is deemed to be revoked if the foreign bank, or another foreign bank that is an entity associated with the foreign bank, is a designated foreign bank. The Minister may revoke an exemption order in respect of a foreign bank if the conditions for designation set out in section 508 are met by the foreign bank or by another foreign bank that is an entity associated with the foreign bank.

• Marginal note:Effect of exemption order on associated entities

  (6) This Part, other than this section, sections 507 and 508, subsection 522.25(3), sections 522.26 and 522.28, subsection 522.29(2) and section 522.3, does not apply to an entity associated with a foreign bank that is the subject of an exemption order.

• Marginal note:Authorization

  (7) If an exemption order in respect of a foreign bank is revoked or deemed to be revoked under subsection (5), the Minister may, by order, authorize the foreign bank and any entity associated with it to continue to hold control of, or a substantial investment in, a Canadian entity that the foreign bank or the entity associated with the foreign bank would not otherwise be allowed to continue to hold under Division 3 or 4 or to continue to engage in any activities or to engage in or carry on any business or to maintain a branch that the foreign bank or the entity associated with the foreign bank would not otherwise be allowed to continue to engage in or carry on or maintain under Division 3 or 4.

Marginal note:Non-application re federal institutions associated with a foreign bank

509.1 Subsection 510(1) does not apply to

• (a) an entity referred to in any of paragraphs 468(1)(a) to (f) that is an entity associated with a foreign bank; or

• (b) a Canadian entity that an entity referred to in paragraph (a) controls, or in which such an entity has a substantial investment.

Division 2General Prohibitions and Exceptions

Marginal note:Prohibited activities

• 510. (1) Except as permitted by this Part, a foreign bank or an entity associated with a foreign bank shall not

  • (a) in Canada, engage in or carry on

    • (i) any business that a bank is permitted to engage in or carry on under this Act, or

    • (ii) any other business;

  • (b) maintain a branch in Canada for any purpose;

  • (c) establish, maintain or acquire for use in Canada an automated banking machine, a remote service unit or a similar automated service, or in Canada accept data from such a machine, unit or service; or

  • (d) acquire or hold control of, or a substantial investment in, a Canadian entity.

• Marginal note:Deeming re acts of agent, etc. — foreign banks

  (2) For the purposes of this Part, a foreign bank is deemed to be carrying out or to have carried out anything prohibited by subsection (1) if it is carried out by a nominee or agent of the foreign bank acting as such.

• Marginal note:Deeming re acts of agent, etc. — associated entities

  (3) For the purposes of this Part, an entity associated with a foreign bank is deemed to be carrying out or to have carried out anything prohibited by subsection (1) if it is carried out by a nominee or agent of the entity associated with the foreign bank acting as such.

Marginal note:Exception re accessing accounts

511. Nothing in paragraphs 510(1)(a) to (c) is to be construed as prohibiting a foreign bank or an entity associated with a foreign bank from entering into an arrangement with one or more Canadian financial institutions by which customers of the foreign bank or the entity who are natural persons not ordinarily resident in Canada may access in Canada their accounts located outside Canada through the use of automated banking machines located in Canada and operated by the Canadian financial institution or institutions.

Marginal note:Exception re quotations

512. Nothing in paragraphs 510(1)(a) to (c) is to be construed as prohibiting a foreign bank or an entity associated with a foreign bank from establishing, maintaining or using a private telephone service or similar facility for the purpose of quoting to customers in Canada, or entering with customers in Canada into verbal agreements relating to, foreign exchange, deposit or loan rates if there is no accounting or information processing involved in the private telephone service or similar facility.

Marginal note:Exception re automated services

• 513. (1) A foreign bank, or an entity associated with a foreign bank, that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of dealing in securities or the business of a cooperative credit society may

  • (a) if it is a foreign securities dealer that has also received the approval of the Minister under paragraph 522.22(1)(i), engage in the activities referred to in paragraph 510(1)(c) so long as they relate to its business of dealing in securities engaged in or carried on by it in accordance with provincial laws relating to securities dealing; and

  • (b) if it is a foreign cooperative credit society, engage in the activities referred to in paragraph 510(1)(c) so long as they relate to its business as a cooperative credit society engaged in or carried on by it in accordance with provincial laws relating to cooperative credit societies.

• Marginal note:Non-application

  (2) Paragraph 510(1)(c) does not apply to

  • (a) a Canadian entity referred to in any of paragraphs 468(1)(g) to (i);

  • (b) a prescribed Canadian entity, other than a permitted Canadian entity, that is controlled by a Canadian entity referred to in paragraph (a); or

  • (c) any other Canadian entity, other than a limited commercial entity, that is acquired or held by a foreign bank or an entity associated with a foreign bank in accordance with Divisions 4 and 5, and that has received the approval of the Minister under paragraph 522.22(1)(i).

Marginal note:Exception re real property holding and management

514. Except as may be prescribed, paragraphs 510(1)(a) and (b) do not apply in respect of the holding, managing and other dealing with real property in Canada by a foreign bank or an entity associated with a foreign bank.

Marginal note:Non-application re Canadian entity associated with a foreign bank

515. Paragraphs 510(1)(a) and (b) do not apply to a Canadian entity that is an entity associated with a foreign bank and that is held or acquired in accordance with this Part.

Marginal note:Change of status

• 516. (1) If a foreign bank maintains a branch or engages in or carries on business in Canada that it maintained or engaged in or carried on before becoming a foreign bank and that branch or business is not permitted by or under this Part, the foreign bank may continue to maintain that branch or engage in or carry on that business for a period of six months from the time it became a foreign bank or for any other shorter period that may be specified or approved by the Minister.

• Marginal note:Change of status

  (2) If a foreign bank holds control of or holds a substantial investment in a Canadian entity and it did so before becoming a foreign bank and that holding is not permitted by or under this Part, the foreign bank may continue to hold control of, or a substantial investment in, the Canadian entity for a period of six months from the time it became a foreign bank or for any other shorter period that may be specified or approved by the Minister.

Marginal note:Change of status

• 517. (1) If an entity associated with a foreign bank maintains a branch or engages in or carries on business in Canada that it maintained or engaged in or carried on before the foreign bank became a foreign bank and that branch or business is not permitted by or under this Part, the entity may continue to maintain that branch or engage in or carry on that business for a period of six months from the time the foreign bank became a foreign bank or for any other shorter period that may be specified or approved by the Minister.

• Marginal note:Change of status

  (2) If an entity associated with a foreign bank holds control of or holds a substantial investment in a Canadian entity and it did so before the foreign bank became a foreign bank and that holding is not permitted by or under this Part, the entity may continue to hold control of, or a substantial investment in, the Canadian entity for a period of six months from the time the foreign bank became a foreign bank or for any other shorter period that may be specified or approved by the Minister.

Marginal note:Restriction

517.1 If an order has been made under subsection 973.1(1) in respect of a foreign bank or an entity associated with a foreign bank and section 516 applies to the foreign bank or section 517 applies to the entity, as the case may be, the period under section 516 or 517 may not extend beyond the expiry of the period referred to in the order made under subsection 973.1(1).

Marginal note:Prohibition re guarantee and acceptance of securities and bills

• 518. (1) Subject to subsections (2) to (4),

  • (a) a foreign bank shall not guarantee any securities or accept any bills of exchange or depository bills that are issued by a person resident in Canada and that are intended by the issuer or by any party to the security or bill to be sold or traded in Canada; and

  • (b) no person shall participate in any arrangement in connection with a guarantee or acceptance prohibited by paragraph (a).

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of the guarantee or acceptance by a foreign bank of securities, bills of exchange or depository bills that are issued by

  • (a) a non-bank affiliate of the foreign bank;

  • (b) any other person resident in Canada and guaranteed or accepted by

    • (i) a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank,

    • (ii) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i) in which a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank, holds a substantial investment,

    • (iii) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i) that is controlled by a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank,

    • (iv) a Canadian entity referred to in any of paragraphs 468(1)(b) to (i) that is a non-bank affiliate of the foreign bank, or

    • (v) a prescribed entity;

  • (c) a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank;

  • (d) a Canadian entity in which a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank, holds a substantial investment;

  • (e) a Canadian entity controlled by a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank; or

  • (f) a prescribed entity.

• Marginal note:Exception

  (3) Subsection (1) does not apply in respect of

  • (a) the business in Canada of an authorized foreign bank; or

  • (b) a foreign insurance company in relation to its insurance business in Canada.

• Marginal note:Exception

  (4) Despite subsection (1), a foreign bank, or an entity associated with a foreign bank, that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of dealing in securities or the business of a cooperative credit society may

  • (a) if it is a foreign securities dealer, guarantee any securities or accept any bills of exchange or depository bills in relation to its business of dealing in securities engaged in or carried on by it in accordance with provincial laws relating to securities dealing; and

  • (b) if it is a foreign cooperative credit society, guarantee any securities or accept any bills of exchange or depository bills in relation to its business as a cooperative credit society engaged in or carried on by it in accordance with provincial laws relating to cooperative credit societies.

Marginal note:Prohibited activities — non-bank affiliates

• 519. (1) Despite anything in this Part, but subject to subsection (5) and section 509, a non-bank affiliate of a foreign bank shall not, in Canada,

  • (a) engage in the business of accepting deposit liabilities;

  • (b) engage in the business of acting as an agent for the acceptance of deposit liabilities for a foreign bank or an entity associated with a foreign bank, other than for

    • (i) an authorized foreign bank,

    • (ii) a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society, or

    • (iii) an entity referred to in any of paragraphs 468(1)(a), (c), (d) and (h) or a trust or loan corporation referred to in paragraph 468(1)(g); or

  • (c) represent to the public that any instrument issued by it is a deposit or that any liability incurred by it is a deposit.

• Marginal note:Disclosure of status

  (2) Despite anything in this Part, but subject to subsections (4) to (6) and section 509, a non-bank affiliate of a foreign bank that carries on as part of its business the provision of financial services shall not borrow money in Canada from the public without disclosing that

  • (a) the non-bank affiliate is not a member institution of the Canada Deposit Insurance Corporation;

  • (b) the liability incurred by the non-bank affiliate through the borrowing is not a deposit; and

  • (c) the non-bank affiliate is not regulated as a financial institution in Canada.

• Marginal note:Manner of disclosure

  (3) The disclosure shall be

  • (a) in a prospectus, information circular or other offering document or a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or

  • (b) in any other manner that may be prescribed.

• Marginal note:Exception for certain borrowing

  (4) Subsection (2) does not apply

  • (a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or

  • (b) except as may be provided in any regulations, to a borrowing

    • (i) from a person in an amount of $150,000 or more, or

    • (ii) through the issue of instruments in denominations of $150,000 or more.

• Marginal note:Exception — deposit-taking institutions

  (5) Subsections (1) and (2) do not apply to a non-bank affiliate that is

  • (a) a trust or loan corporation incorporated under an Act of Parliament or of the legislature of a province;

  • (b) a Canadian entity referred to in paragraph 468(1)(d) or (h); or

  • (c) a prescribed entity.

• Marginal note:Exception — insurance company or securities dealer

  (6) Subsection (2) does not apply if the non-bank affiliate is

  • (a) an insurance company incorporated under an Act of Parliament or of the legislature of a province;

  • (b) a bank holding company or an insurance holding company;

  • (c) an entity controlled by a bank holding company or an insurance holding company or in which a bank holding company or an insurance holding company has a substantial investment;

  • (d) a financial institution referred to in paragraph (g) of the definition “financial institution” in section 2; or

  • (e) a prescribed entity.

Marginal note:Prohibition re deposits

• 520. (1) Despite anything in this Part, but subject to subsection (5) and section 509, a foreign bank — or an entity that is associated with a foreign bank and that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province — shall not, as part of its business in Canada,

  • (a) engage in the business of accepting deposit liabilities;

  • (b) engage in the business of acting as an agent for the acceptance of deposit liabilities for a foreign bank or an entity associated with a foreign bank, other than for

    • (i) an authorized foreign bank,

    • (ii) a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society, or

    • (iii) an entity referred to in any of paragraphs 468(1)(a), (c), (d) and (h) or a trust or loan corporation referred to in paragraph 468(1)(g); or

  • (c) represent to the public that any instrument issued by it is a deposit or that any liability incurred by it is a deposit.

• Marginal note:Disclosure of status

  (2) Despite anything in this Part, but subject to subsections (4) to (6) and section 509, a foreign bank or entity referred to in subsection (1) that carries on, as part of its business in Canada, the provision of financial services shall not borrow money in Canada from the public without disclosing that

  • (a) the foreign bank or entity is not a member institution of the Canada Deposit Insurance Corporation;

  • (b) the liability incurred through the borrowing is not a deposit; and

  • (c) the foreign bank or entity is not regulated as a financial institution in Canada.

• Marginal note:Manner of disclosure

  (3) The disclosure shall be

  • (a) in a prospectus, information circular or other offering document or a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or

  • (b) in any other manner that may be prescribed.

• Marginal note:Exception for certain borrowing

  (4) Subsection (2) does not apply

  • (a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or

  • (b) except as may be provided in any regulations, to a borrowing

    • (i) from a person in an amount of $150,000 or more, or

    • (ii) through the issue of instruments in denominations of $150,000 or more.

• Marginal note:Non-application — authorized foreign banks and foreign cooperative credit societies

  (5) Subsections (1) and (2) do not apply to

  • (a) a foreign bank that is an authorized foreign bank; or

  • (b) a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society.

• Marginal note:Non-application foreign insurance company or securities dealer

  (6) Subsection (2) does not apply to a foreign bank, or an entity associated with a foreign bank, that is

  • (a) a foreign insurance company; or

  • (b) a foreign securities dealer that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of dealing in securities.

Marginal note:Regulations

521. The Governor in Council may make regulations exempting any class or classes of businesses, investments, activities and branches from any of the prohibitions set out in section 510 or 518.

Marginal note:Permitted Canadian offices

522. A foreign bank may

• (a) with the approval of the Superintendent and

  • (i) subject to any terms and conditions that are attached to the approval, and

  • (ii) subject to and in accordance with rules that are prescribed in relation to the operation of representative offices and the conduct of their personnel,

  maintain representative offices in Canada that are registered with the Superintendent in the prescribed manner; and

• (b) with the approval of the Governor in Council and subject to any terms and conditions that are attached to the approval, locate its head office in Canada and, from that office, issue directions and do all other things reasonably necessary for the conduct of its banking business outside Canada.

Marginal note:Examination of representative offices

• 522.01 (1) The Superintendent shall, from time to time, make or cause to be made any examination and inquiry into the operation of any representative office of a foreign bank and the conduct of the personnel in that office that the Superintendent considers necessary for the purpose of ascertaining whether the office is being operated, and whether the personnel of the office are conducting themselves, in accordance with the rules prescribed for the purposes of paragraph 522(a).

• Marginal note:Powers of Superintendent

  (2) For the purposes of subsection (1), the Superintendent and any person acting under the direction of the Superintendent have the same powers and obligations that the Superintendent has in relation to the examination of banks under this Act.

Marginal note:Cancellation of registration

522.02 The Superintendent may, by order, cancel the registration of a representative office of a foreign bank if

• (a) the foreign bank requests the Superintendent to cancel the registration; or

• (b) the Superintendent is of the opinion that the representative office is not being operated, or the personnel of that office are not conducting themselves, in accordance with the rules prescribed for the purposes of paragraph 522(a).

Marginal note:Business conducted from head office in Canada

• 522.03 (1) Subject to subsections (2) and (3), if the head office of a foreign bank is located in Canada under paragraph 522(b), the foreign bank shall not conduct any business from that office with persons resident in Canada or with Her Majesty in right of Canada or a province except for the purpose of acquiring premises, supplies, services and staff for that office.

• Marginal note:Exception

  (2) If a foreign bank, immediately before the establishment of its head office in Canada under paragraph 522(b), held deposits of, or had loans outstanding to, persons resident in Canada or Her Majesty in right of Canada or a province, the foreign bank may repay those deposits and collect those loans through the head office in Canada.

• Marginal note:Exception

  (3) If a foreign bank controlled a bank or was a major shareholder of a bank immediately before the establishment of the foreign bank’s head office in Canada under paragraph 522(b), the foreign bank may continue to carry out from the head office in Canada any activities that were carried out from the head office of the foreign bank in relation to the bank before the establishment of the head office in Canada.

Division 3No Financial Establishment in Canada

Marginal note:Permitted investment — foreign bank

• 522.04 (1) A foreign bank that does not have a financial establishment in Canada may acquire or hold control of, or a substantial investment in, a Canadian entity, so long as, by virtue of the acquisition, neither the foreign bank nor any entity associated with the foreign bank controls or becomes a major owner of

  • (a) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i); or

  • (b) a Canadian entity that is a financial services entity.

• Marginal note:Permitted investment — associated entity

  (2) An entity that is associated with a foreign bank and that does not have a financial establishment in Canada may acquire or hold control of, or a substantial investment in, a Canadian entity, so long as, by virtue of the acquisition, neither the entity nor the foreign bank, nor any other entity associated with the foreign bank, controls or becomes a major owner of

  • (a) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i); or

  • (b) a Canadian entity that is a financial services entity.

Marginal note:Permitted Canadian commercial branch

522.05 A foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank, that does not have a financial establishment in Canada may maintain a branch in Canada or engage in or carry on business in Canada so long as less than

• (a) the prescribed portion — or if no portion is prescribed, 10 per cent — of its business in Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any of paragraphs (a) to (g) of the definition “financial services entity” in subsection 507(1); and

• (b) the prescribed portion — or if no portion is prescribed, 10 per cent — of its business outside Canada, determined in the prescribed manner, consists of one or more activities referred to in any of

  • (i) paragraphs (a) to (g) of the definition “financial services entity” in subsection 507(1), and

  • (ii) paragraph (h) of that definition, except under prescribed circumstances.

Marginal note:Permitted branches re leasing

522.06 Despite section 522.05, a foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank, that does not have a financial establishment in Canada and that outside Canada

• (a) engages only in the activities referred to in the definition “leasing entity” in subsection 507(1), or

• (b) engages only in activities other than those referred to in any of

  • (i) paragraphs (a) to (g) of the definition “financial services entity” in subsection 507(1), and

  • (ii) paragraph (h) of that definition, except under prescribed circumstances,

may in Canada engage in the activities of a leasing entity so long as it does not engage in any other activity in Canada.

Division 4Financial Establishment in Canada

Investments

Marginal note:Investment in a financial institution

522.07 Subject to the requirements relating to designation and approval set out in Division 5, a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity referred to in any of paragraphs 468(1)(a) to (i).

Marginal note:Permitted investments

• 522.08 (1) Subject to subsection (2) and the requirements relating to designation and approval set out in Division 5, a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity, other than an entity referred to in paragraphs 468(1)(a) to (i), whose business is limited to one or more of the following:

  • (a) engaging in

    • (i) any financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d), or

    • (ii) any other activity that a bank is permitted to engage in under section 410 or 411;

  • (b) acquiring or holding shares of, or ownership interests in, entities that a foreign bank or an entity associated with a foreign bank is permitted to acquire or hold under this Division or Division 8, other than limited commercial entities, except in prescribed circumstances, including shares or ownership interests acquired or held in accordance with regulations made under paragraph 522.23(a) concerning specialized financing;

  • (c) engaging in the provision of any services exclusively to any or all of the following, so long as the Canadian entity is providing those services to the foreign bank or to any member of the foreign bank’s group, namely,

    • (i) the foreign bank,

    • (ii) any member of the foreign bank’s group,

    • (iii) any entity that is primarily engaged in the business of providing financial services,

    • (iv) any entity in which an entity referred to in subparagraph (iii) has a substantial investment and that is

      • (A) an entity in which a bank is permitted to acquire a substantial investment under section 468,

      • (B) an entity in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment under this section and section 522.07, or

      • (C) a prescribed entity, or

    • (v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

  • (d) engaging in any activity that a bank is permitted to engage in — or in any other prescribed activity —, other than an activity referred to in paragraph (a) or (e), that relates to

    • (i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by the foreign bank or by any member of the foreign bank’s group, or

    • (ii) if a significant portion of the business of the Canadian entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;

  • (e) engaging in the activities referred to in the definition “mutual fund entity”, “mutual fund distribution entity” or “real property brokerage entity” in subsection 464(1); and

  • (f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

• Marginal note:Additional restriction

  (2) A foreign bank or an entity associated with a foreign bank may not acquire or hold control of, or a substantial investment in, a Canadian entity whose business includes any activity referred to in any of paragraphs (1)(a) to (e) if the activities of the Canadian entity include

  • (a) activities that a bank is not permitted to engage in under section 412, 417 or 418;

  • (b) dealing in securities, except as may be permitted under paragraph (1)(e) or as may be permitted to a bank under paragraph 409(2)(c);

  • (c) activities that a bank is not permitted to engage in under section 416, if the Canadian entity engages in the activities of a finance entity or of any other entity as may be prescribed;

  • (d) acquiring or holding control of, or a substantial investment in, another Canadian entity unless

    • (i) in the case of a Canadian entity that is controlled by the foreign bank or the entity associated with a foreign bank, the foreign bank or the entity associated with a foreign bank itself would be permitted to acquire or hold control of, or a substantial investment in, the other Canadian entity under this section, section 522.07, any of paragraphs 522.1(a) to (d) or Division 8, or

    • (ii) in the case of a Canadian entity that is not controlled by the foreign bank or the entity associated with a foreign bank, the foreign bank or the entity associated with a foreign bank itself would be permitted to acquire or hold control of, or a substantial investment in, the other Canadian entity under this section, section 522.07, paragraph 522.1(a), (c) or (d) or Division 8; or

  • (e) any prescribed activity.

Marginal note:Investment in a limited commercial entity

522.09 Subject to the requirements relating to approval and designation set out in Division 5, a foreign bank or an entity associated with a foreign bank that has a financial establishment in Canada may acquire or hold control of, or a substantial investment in, a Canadian entity that is not

• (a) an entity referred to in any of paragraphs 468(1)(a) to (i), or

• (b) a Canadian entity that engages in more than the prescribed portion of — or if no portion is prescribed, 10 per cent of — the activities referred to in paragraphs 522.08(1)(a) to (f) or in any of paragraphs (a) to (h) of the definition “financial services entity” in subsection 507(1), determined in the prescribed manner,

if the Canadian entity does not engage in any leasing activities and, in the opinion of the Minister, engages in or carries on business that is the same as, or similar, related or incidental to, the business outside Canada of the foreign bank or the entity associated with a foreign bank.

Marginal note:Acquisition of other investments

522.1 A foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity

• (a) by way of an investment permitted by any of sections 522.11 to 522.13;

• (b) by way of a temporary investment permitted by section 522.14;

• (c) as a result of a default that has occurred under the terms of an agreement with respect to a loan or under any other documents governing the terms of a loan, as permitted by section 522.15; or

• (d) through a realization of security, as permitted by section 522.15.

Marginal note:Indirect investments through federal institutions

• 522.11 (1) A foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity by way of

  • (a) an acquisition or holding of the control of a Canadian entity referred to in any of paragraphs 468(1)(a) to (f), or of a prescribed Canadian entity, that controls or has a substantial investment in the Canadian entity; or

  • (b) an acquisition or holding of shares or ownership interests in the Canadian entity by

    • (i) a Canadian entity referred to in any of paragraphs 468(1)(a) to (f), or a prescribed Canadian entity, that is controlled by the foreign bank or the entity associated with the foreign bank, or

    • (ii) a Canadian entity controlled by a Canadian entity referred to in subparagraph (i).

• Marginal note:Indirect investments through federal institutions

  (2) If a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity under subsection (1), none of the requirements relating to designation and approval set out in Division 5 apply in respect of that acquisition or holding.

Marginal note:Investments through provincial institutions

522.12 An entity that is associated with a foreign bank and that is

• (a) an entity referred to in any of paragraphs 468(1)(g) to (i), or

• (b) a Canadian entity controlled by an entity referred to in any of paragraphs 468(1)(g) to (i)

may acquire or hold control of, or a substantial investment in, a Canadian entity that is not a permitted Canadian entity or an entity referred to in paragraphs 468(1)(a) to (i), and if it does so, none of the requirements relating to approval set out in Division 5 apply in respect of that acquisition or holding.

Marginal note:Indirect investments through provincial institutions

522.13 A foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity, other than a permitted Canadian entity or a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), by way of

• (a) an acquisition or holding of the control of a Canadian entity referred to in any of paragraphs 468(1)(g) to (i), or of a prescribed Canadian entity, that controls or has a substantial investment in the Canadian entity; or

• (b) an acquisition or holding of shares or ownership interests in the Canadian entity by

  • (i) a Canadian entity referred to in any of paragraphs 468(1)(g) to (i), or a prescribed Canadian entity, that is controlled by the foreign bank or the entity associated with the foreign bank, or

  • (ii) a Canadian entity controlled by a Canadian entity referred to in subparagraph (i).

Marginal note:Temporary investments

• 522.14 (1) Subject to the requirements relating to designation set out in Division 5, a foreign bank or an entity associated with a foreign bank may, by way of temporary investment, acquire or hold control of, or a substantial investment in, a Canadian entity if the foreign bank or the entity associated with a foreign bank has a financial establishment in Canada or would, by virtue of the temporary investment, have a financial establishment in Canada.

• Marginal note:Divestiture

  (2) If subsection (1) applies in respect of a foreign bank or an entity associated with a foreign bank, the foreign bank or entity shall do all things necessary to ensure that, within two years after acquiring the control or the substantial investment or within any other period that may be specified or approved by the Minister, it no longer controls or has a substantial investment in the entity.

• Marginal note:Extension

  (3) On application by a foreign bank, or an entity associated with a foreign bank, the Minister may extend the period referred to in subsection (2) by any further period or periods.

• Marginal note:Exception

  (4) When a foreign bank, or an entity associated with a foreign bank, acquires or holds, by way of a temporary investment, control of, or a substantial investment in, a Canadian entity for which the approval of the Minister is required under this Part, the foreign bank or entity associated with the foreign bank shall, within 90 days after acquiring control, or after acquiring the substantial investment,

  • (a) apply to the Minister for approval to retain control of the Canadian entity or to continue to hold the substantial investment in the Canadian entity for a period specified by the Minister or for an indeterminate period; or

  • (b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the Canadian entity or holds a substantial investment in the Canadian entity.

• Marginal note:Deemed temporary investment

  (5) If a foreign bank or an entity associated with a foreign bank holds control of, or a substantial investment in, a Canadian entity as permitted by this Division and the foreign bank or the entity associated with the foreign bank becomes aware of a change in the business, affairs or activities of the Canadian entity that, if the change had taken place before the acquisition of control or the substantial investment, would have caused the entity not to be a limited commercial entity or a Canadian entity referred to in section 522.07 or 522.08 or would have been such that approval for the acquisition would have been required under any of paragraphs 522.22(1)(a) to (e) or (g), the foreign bank or the entity associated with the foreign bank is deemed to have acquired, on the day it becomes aware of the change, a temporary investment in respect of which subsections (1) to (4) apply.

• Marginal note:Notification

  (6) Within 90 days after acquiring control or a substantial investment under subsection (1) or (5), a foreign bank or an entity associated with a foreign bank shall notify the Minister in writing of the acquisition.

Marginal note:Acquisition by loan workout or realization of security

• 522.15 (1) If a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity

  • (a) as a result of a default that has occurred under the terms of an agreement with respect to a loan made between the foreign bank — or the entity associated with a foreign bank — and the Canadian entity, or under any other documents governing the terms of the loan, or

  • (b) through the realization of a security interest for any loan or advance made by the foreign bank or the entity associated with the foreign bank, or for any other debt or liability owing to it,

  it may retain the control or the substantial investment for five years, but it shall do all things necessary to ensure that, within five years after the acquisition, it no longer controls the Canadian entity or holds a substantial investment in the Canadian entity.

• Marginal note:Extension

  (2) On application by a foreign bank or an entity associated with a foreign bank, the Minister may extend the period referred to in subsection (1) by any further period or periods.

• Marginal note:Exception

  (3) If, under subsection (1), a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity for which the approval of the Minister is required under Division 5, the foreign bank or entity associated with the foreign bank may retain control of the Canadian entity, or continue to hold the substantial investment, for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (1) or of any extension granted under subsection (2).

Branches

Marginal note:Bank branches

522.16 A foreign bank may, under Part XII.1, maintain a branch in Canada to carry on business in Canada.

Marginal note:Insurance branches

522.17 A foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank may obtain an order under Part XIII of the Insurance Companies Act to insure, in Canada, risks.

Marginal note:Business of a cooperative credit society and dealing in securities

522.18 Subject to the requirements relating to designation and approval set out in Division 5, a foreign bank — or an entity associated with a foreign bank —

• (a) that is a foreign cooperative credit society may, in Canada, engage in or carry on the business of a cooperative credit society, so long as that business is engaged in or carried on in accordance with provincial laws relating to cooperative credit societies; or

• (b) that is a foreign securities dealer may, in Canada, engage in or carry on the business of dealing in securities, so long as that business is engaged in or carried on in accordance with provincial laws relating to securities dealing.

Marginal note:Limited commercial branches

• 522.19 (1) Subject to the requirements relating to designation and approval in Division 5 and subject to subsection (2), a foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank, that has a financial establishment in Canada may maintain a branch in Canada or engage in or carry on business in Canada, so long as

  • (a) less than the prescribed portion — or if no portion is prescribed, 10 per cent — of its business in Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any of

    • (i) paragraphs 522.08(1)(a) to (f), and

    • (ii) paragraphs (a) to (g) of the definition “financial services entity” in subsection 507(1);

  • (b) less than the prescribed portion — or if no portion is prescribed, 10 per cent — of its business outside Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any of

    • (i) paragraphs 522.08(1)(a) to (f),

    • (ii) paragraphs (a) to (g) of the definition “financial services entity” in subsection 507(1), and

    • (iii) paragraph (h) of that definition, except under prescribed circumstances; and

  • (c) in the opinion of the Minister, the business in Canada is the same as, or similar, related or incidental to, the business outside Canada of the foreign bank or the entity associated with a foreign bank.

• Marginal note:Prohibition

  (2) A foreign bank — or an entity associated with a foreign bank — that maintains a branch or engages in or carries on any business under subsection (1) may not in Canada engage in any leasing activities.

Division 5Designation and Approvals

Marginal note:Non-application

522.2 This Division does not apply in respect of investments acquired and held, branches maintained and businesses engaged in or carried on in accordance with Division 3.

Marginal note:Obligation to be designated

• 522.21 (1) A foreign bank that does not have a financial establishment in Canada must be a designated foreign bank or be associated with a designated foreign bank in order to

  • (a) acquire or hold control of, or be a major owner of,

    • (i) an entity referred to in any of paragraphs 468(1)(g) to (i),

    • (ii) a permitted Canadian entity that is a financial services entity, or

    • (iii) a Canadian entity that is a financial services entity, by way of a temporary investment permitted by section 522.14; or

  • (b) in Canada, engage in or carry on the business of dealing in securities or the business of a cooperative credit society referred to in section 522.18.

• Marginal note:Entity associated with a designated foreign bank

  (2) An entity that is associated with a foreign bank and that does not have a financial establishment in Canada must be associated with a designated foreign bank in order for the entity to

  • (a) acquire or hold control of, or be a major owner of,

    • (i) an entity referred to in any of paragraphs 468(1)(g) to (i),

    • (ii) a permitted Canadian entity that is a financial services entity, or

    • (iii) a Canadian entity that is a financial services entity, by way of a temporary investment permitted by section 522.14; or

  • (b) in Canada, engage in or carry on the business of dealing in securities or the business of a cooperative credit society referred to in section 522.18.

• Marginal note:Designated foreign bank that has a financial establishment in Canada

  (3) A foreign bank that has a financial establishment in Canada must be a designated foreign bank or be associated with a designated foreign bank in order to

  • (a) acquire or hold control of, or a substantial investment in,

    • (i) an entity referred to in any of paragraphs 468(1)(g) to (i),

    • (ii) a permitted Canadian entity,

    • (iii) a Canadian entity, by way of a temporary investment permitted by section 522.14, or

    • (iv) a limited commercial entity;

  • (b) in Canada, engage in or carry on the business of dealing in securities or the business of a cooperative credit society referred to in section 522.18; or

  • (c) maintain a branch or engage in or carry on a business permitted by section 522.19.

• Marginal note:Entity associated with designated foreign bank that has a financial establishment in Canada

  (4) An entity that is associated with a foreign bank and that has a financial establishment in Canada must be an entity associated with a foreign bank that is a designated foreign bank in order for the entity to

  • (a) acquire or hold control of, or a substantial investment in,

    • (i) an entity referred to in any of paragraphs 468(1)(g) to (i),

    • (ii) a permitted Canadian entity,

    • (iii) a Canadian entity, by way of a temporary investment permitted by section 522.14, or

    • (iv) a limited commercial entity;

  • (b) in Canada, engage in or carry on the business of dealing in securities or the business of a cooperative credit society referred to in section 522.18; or

  • (c) maintain a branch or engage in or carry on a business permitted by section 522.19.

Marginal note:Minister’s approval

• 522.22 (1) Subject to subsection (2) and the regulations, a foreign bank or an entity associated with a foreign bank may not, without the prior written approval of the Minister, given by order,

  • (a) acquire control of a Canadian entity referred to in any of paragraphs 468(1)(g) to (i) from a person who is not a member of the foreign bank’s group;

  • (b) acquire control of a Canadian entity whose business includes one or more of the activities referred to in paragraph 522.08(1)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the Canadian entity to material market or credit risk — including a finance entity — if the control is acquired from an entity referred to in any of paragraphs 468(1)(a) to (f) that is not a member of the foreign bank’s group, but does not include a Canadian entity whose activities are limited to the activities of one or more of the following entities:

    • (i) a factoring entity as defined in the regulations, or

    • (ii) a financial leasing entity;

  • (c) acquire or hold control of, or a substantial investment in, a Canadian entity whose business includes one or more of the activities referred to in paragraph 522.08(1)(d);

  • (d) acquire or hold control of, or a substantial investment in, a Canadian entity that engages in an activity described in paragraph 410(1)(c) or (c.1);

  • (e) acquire or hold control of, or a substantial investment in, a Canadian entity that engages in an activity prescribed for the purposes of paragraph 522.08(1)(f);

  • (f) engage in or carry on the business of dealing in securities or the business of a cooperative credit society referred to in section 522.18;

  • (g) acquire or hold control of, or a substantial investment in, a limited commercial entity;

  • (h) maintain a branch or engage in or carry on a business permitted by section 522.19; or

  • (i) engage in an activity referred to in paragraph 510(1)(c) in the circumstances described in paragraph 513(1)(a) or (2)(c).

• Marginal note:Approval for indirect investments

  (2) Subject to the regulations, if a foreign bank or an entity associated with a foreign bank

  • (a) obtains the approval of the Minister under any of paragraphs (1)(a) to (e) and (g) to acquire or hold control of, or a substantial investment in, a Canadian entity, and

  • (b) through that acquisition or holding, indirectly acquires control of, or a substantial investment in, another Canadian entity that would require the approval of the Minister under any of those paragraphs,

  and that indirect acquisition is disclosed to the Minister in writing before the approval is obtained, the foreign bank or the entity associated with a foreign bank is deemed to have obtained the approval of the Minister for that indirect acquisition.

• Marginal note:Ministerial approval of more than one entity

  (3) If the Minister, under paragraph (1)(g), approves the acquisition or holding of control of, or a substantial investment in, a limited commercial entity by a foreign bank or by an entity associated with a foreign bank, the Minister may also authorize the foreign bank or entity associated with a foreign bank to, at any time, acquire and hold control of, or a substantial investment in, another limited commercial entity that engages in activities that are substantially the same as those engaged in by the Canadian entity in respect of which the approval was given.

• Marginal note:Substantial investment by underwriter

  (4) Nothing in this Part precludes a foreign bank or an entity associated with a foreign bank from acquiring a substantial investment in a Canadian entity if the substantial investment is acquired in the course of a distribution to the public of shares or ownership interests in the Canadian entity by a securities underwriter so long as the securities underwriter holds the substantial investment for no longer than six months.

Division 6Administration

Marginal note:Regulations

522.23 The Governor in Council may make regulations for the purposes of this Part and, in particular, may make regulations

• (a) concerning specialized financing for the purposes of paragraph 522.08(1)(b);

• (b) for the purposes of subsection 522.22(1) or (2), permitting the acquisition or holding of control or the acquisition or holding of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the foreign banks, entities associated with foreign banks or other entities in respect of which either of those subsections does not apply, including prescribing foreign banks, entities associated with foreign banks or other entities on the basis of the activities they engage in;

• (c) restricting the ownership by foreign banks, or entities associated with foreign banks, of shares in a body corporate or of ownership interests in an unincorporated entity under Division 3 or 4 and imposing terms and conditions applicable to foreign banks, or entities associated with foreign banks, that own such shares or interests;

• (d) in respect of sections 409 to 411, for the purposes of paragraph 522.08(1)(a), subsection 522.22(1) and section 522.24;

• (e) respecting the calculation referred to in paragraphs 508(1)(d) and (2)(b), including regulations respecting the classes of entities associated with the foreign bank, and the classes of foreign banks described in any of paragraphs 508(1)(a) to (c) that are associated with the foreign bank, that are to be taken into account in that calculation;

• (f) defining any terms in paragraphs 508(1)(d) and (2)(b); and

• (g) defining “factoring entity” for the purpose of paragraph 522.22(1)(b).

Marginal note:Application of regulations

522.24 Any regulations made for the purposes of sections 409 to 411 apply for the purposes of paragraph 522.08(1)(a) and subsection 522.22(1) unless otherwise provided in the regulations.

Marginal note:Divestiture

• 522.25 (1) If a foreign bank or an entity associated with a foreign bank contravenes any provision of Division 4 or fails to comply with any terms and conditions imposed by any order made for the purpose of any of those provisions, the Minister may, if the Minister considers it in the public interest to do so, by order, direct the foreign bank or the entity to divest itself of the control of, or a substantial investment in, a bank or bank holding company to which the offence relates.

• Marginal note:Ceasing to engage in or carry on business

  (2) If an authorized foreign bank or an entity associated with an authorized foreign bank contravenes any provision of Division 4 or fails to comply with any terms and conditions imposed by any order made for the purpose of any of those provisions, the Minister may, if the Minister considers it in the public interest to do so, revoke the order made under subsection 524(1).

• Marginal note:Divestment order

  (3) The Minister may, by order, direct a foreign bank or an entity associated with a foreign bank, within any period that the Minister considers reasonable, to dispose of assets used in a business or activity engaged in or carried on, or to dispose of the control of an entity or a substantial investment in an entity acquired or held, in contravention of this Part or in contravention of any terms and conditions imposed

  • (a) under subsection 522.26(2); or

  • (b) under subsection 518(4) or 521(1.02), as it read immediately before the coming into force of this section.

Marginal note:Definition

• 522.26 (1) In this section and section 522.27, “decision” means a decision, an order, an approval, an extension or a permission of or by the Minister under this Part.

• Marginal note:Ministerial terms and condition

  (2) A decision may include any terms and conditions that the Minister considers appropriate.

• Marginal note:Minister may vary or revoke

  (3) The Minister may vary or revoke a previous decision.

• Marginal note:Effective date of decision

  (4) A decision varying or revoking a previous decision takes effect three months after the day it is made, or at any other time that is agreed to by the Minister and the foreign bank, or the entity associated with a foreign bank, to which the decision relates.

• Marginal note:Publication

  (5) The Minister shall publish in the Canada Gazette a notice of the making or revocation of a designation order or an exemption order.

Marginal note:Statements and returns

522.27 Not later than six months after the end of its financial year or any other period that the Superintendent may specify, a foreign bank or an entity associated with a foreign bank in respect of which a decision has been made by the Minister shall, except to the extent that the Superintendent has exempted it in relation to any of the following, provide the Superintendent with

• (a) a copy of its financial statements and those of each non-bank affiliate of the foreign bank for the financial year;

• (b) a list, in a form satisfactory to the Superintendent, of businesses and activities engaged in or carried on by it under sections 514, 522.18 and 522.19;

• (c) a list, in a form satisfactory to the Superintendent, of each non-bank affiliate of the foreign bank, with a description of the nature of the business engaged in or carried on by it; and

• (d) any other information that may be prescribed for the purposes of this section.

Division 7Non-application of Investment Canada Act

Marginal note:Investment Canada Act

522.28 The Investment Canada Act does not apply in respect of any of the following, whether it occurs directly or indirectly:

• (a) the acquisition of control, within the meaning of that Act, of an entity referred to in any of paragraphs 468(1)(a) to (f) by a foreign bank or by an entity associated with a foreign bank;

• (b) the establishment of a new Canadian business, within the meaning of that Act, that is the insurance business in Canada of a foreign insurance company that is a foreign bank that is the subject of an exemption order or that is an entity associated with a foreign bank that is the subject of an exemption order;

• (c) the acquisition of control, within the meaning of that Act, of a Canadian entity by an entity referred to in any of paragraphs 468(1)(a) to (f) that is controlled by a foreign bank or by an entity associated with a foreign bank;

• (d) the establishment of a new Canadian business, within the meaning of that Act, that is authorized by Division 4 by a foreign bank, or by an entity associated with a foreign bank; and

• (e) the acquisition of control, within the meaning of that Act, of a Canadian entity in accordance with Division 4 by a foreign bank, or by an entity associated with a foreign bank.

Division 8Transitional

Marginal note:Definitions

• 522.29 (1) The following definitions apply in this Division.

  “affected entity”

  « entité visée »

  “affected entity” means

  • (a) an entity associated with a foreign bank that is an affected foreign bank and that has a financial establishment in Canada; or

  • (b) a prescribed entity associated with a foreign bank referred to in paragraph (c) of the definition “affected foreign bank”.

  “affected foreign bank”

  « banque étrangère visée »

  “affected foreign bank” means a foreign bank that

  • (a) immediately before the day this Division comes into force, was the subject of an order made under subsection 524(1) or former subsection 521(1.06) and whose order has not been revoked;

  • (b) on or before June 13, 2000, controlled a foreign bank subsidiary as defined in former section 2; or

  • (c) for the purposes of subsections 522.32(6) and (7) is a prescribed foreign bank that meets any of the conditions for designation set out in any of paragraphs 508(1)(a) to (d).

• Marginal note:Former provision

  (2) Every reference in this Division to a former provision means a reference to that provision as it read immediately before the day this Division comes into force.

Marginal note:Former s. 507(4)

• 522.3 (1) Every order made under former subsection 507(4) exempting an entity from the status of being associated with a foreign bank or exempting a Canadian entity from being a “non-bank affiliate of a foreign bank” that is in force on the day this Division comes in force continues in force, subject to any further order that the Minister may make varying or revoking it.

• Marginal note:Date order takes effect

  (2) A revocation order or variation order takes effect three months after the date it is made unless the Minister and the entity to which it relates agree that the order is to take effect at another time.

• Marginal note:Publication

  (3) The Minister shall publish in the Canada Gazette a notice of every revocation order.

Marginal note:Former par. 518(3)(b) or s. 521(1)

522.31 Every order made under former paragraph 518(3)(b) or former subsection 521(1) that is in force on the day this Division comes into force continues in force, subject to any further order that the Minister may make varying or revoking it.

Marginal note:Former s. 521(1)

• 522.32 (1) An affected foreign bank or affected entity that had received consent under former subsection 521(1) to acquire or hold control of, or a substantial investment in, a Canadian entity that is a financial services entity but is not a permitted Canadian entity or an entity referred to in any of paragraphs 468(1)(a) to (i) may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force if the consent had not been revoked before that day.

• Marginal note:Application

  (2) Subsection (1) applies so long as

  • (a) the Canadian entity restricts its businesses in accordance with any terms and conditions in the consent under former subsection 521(1), or in an undertaking to the Minister or Superintendent, other than a term or condition that limits the size of the Canadian entity’s assets; and

  • (b) neither the affected foreign bank nor any affected entity in relation to the foreign bank

    • (i) is an authorized foreign bank, or

    • (ii) controls or is a major shareholder of a bank or a bank holding company.

• Marginal note:Former par. 518(3)(b) and former s. 521(1)

  (3) An affected foreign bank or an affected entity that, immediately before the day this Division comes into force, holds control of, or a substantial investment in, a Canadian entity that is a permitted Canadian entity or an entity referred to in any of paragraphs 468(1)(g) to (i) by virtue of former paragraph 518(3)(b) or a consent received under former subsection 521(1) may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force if the approval or consent had not been revoked before that day and, if it does so, it is deemed to have received any approval required under paragraphs 522.22(1)(a) to (e) in respect of the Canadian entity.

• Marginal note:Former par. 518(3)(b)

  (4) An affected foreign bank or affected entity that, immediately before the day this Division comes into force, holds, by virtue of former paragraph 518(3)(b), control of, or a substantial investment in, a Canadian entity that is not a permitted Canadian entity or a financial services entity may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force if any approval of the Minister under that former paragraph has not been revoked before that day, so long as the Canadian entity does not engage in leasing activities.

• Marginal note:Application

  (5) Subsections (3) and (4) apply so long as

  • (a) after the coming into force of this Division, the Canadian entity restricts its businesses in accordance with any terms and conditions in the Minister’s approval under former paragraph 518(3)(b), or in a consent received under former subsection 521(1), as the case may be, or in an undertaking to the Minister or Superintendent given before the day this Division comes into force, other than a term or condition that limits the size of the Canadian entity’s assets;

  • (b) within one year after the coming into force of this Division, the affected foreign bank or affected entity discloses to the Minister the nature of its businesses and activities on June 13, 2000; and

  • (c) after the coming into force of this Division, the Canadian entity does not change the nature of its businesses as of

    • (i) June 13, 2000, or

    • (ii) any other date after June 13, 2000 and before the coming into force of this Division on which the businesses of the Canadian entity were approved by the Minister.

• Marginal note:Holding other than by virtue of former par. 518(3)(b) or s. 521(1)

  (6) An affected foreign bank or an affected entity that, immediately before the day this Division comes into force, holds, otherwise than by virtue of former paragraph 518(3)(b) or a consent received under former subsection 521(1), control of, or a substantial investment in, a Canadian entity that is not a permitted Canadian entity or a financial services entity may continue to hold control of, or a substantial investment in, the Canadian entity on and after the day this Division comes into force.

• Marginal note:Application

  (7) Subsection (6) applies so long as

  • (a) within one year after the coming into force of this Division, the affected foreign bank or affected entity discloses to the Minister the nature of its businesses on June 13, 2000;

  • (b) after the coming into force of this Division, the Canadian entity does not change the nature of its businesses as of June 13, 2000 and its businesses remain in conformity with former paragraph 518(3)(a);

  • (c) the Canadian entity does not engage in leasing activities; and

  • (d) neither the affected foreign bank nor any affected entity

    • (i) is an authorized foreign bank, or

    • (ii) controls or is a major shareholder of a bank or a bank holding company.

Marginal note:Investments

• 522.33 (1) Despite section 517 and subject to subsection (2), paragraph 510(1)(d) does not apply in respect of the holding of control of, or a substantial investment in, a Canadian entity whose principal activity in Canada is an activity referred to in any of former subparagraphs 518(3)(a)(i) to (v) and that was acquired by a foreign bank or an entity associated with a foreign bank before August 1, 1997 and before

  • (a) the foreign bank became a foreign bank or the foreign bank with which the entity is associated became a foreign bank, as the case may be; or

  • (b) the Canadian entity’s principal activity in Canada became an activity described in those subparagraphs.

• Marginal note:Restriction

  (2) Subsection (1) applies only if the foreign bank or an entity associated with the foreign bank

  • (a) is not an authorized foreign bank; and

  • (b) does not control, and is not a major shareholder of, a bank or a bank holding company.

Marginal note:Prohibition

524.1 No foreign bank may establish a branch in Canada to carry on business in Canada under this Part if the foreign bank or an entity affiliated with the foreign bank

• (a) has control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or

• (b) engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

Marginal note:Prohibition

524.2 No authorized foreign bank and no entity affiliated with an authorized foreign bank may

• (a) control or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or

• (b) engage in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.

Marginal note:Factors to be considered by Minister

526. Before making an order under subsection 524(1), the Minister shall take into account all matters that the Minister considers relevant to the application, including

• (a) the nature and sufficiency of the financial resources of the foreign bank as a source of continuing financial support for the carrying on of its business in Canada;

• (b) the soundness and feasibility of plans of the foreign bank for the future conduct and development of its business in Canada;

• (c) the business record and past performance of the foreign bank;

• (d) the reputation of the foreign bank for being operated in a manner that is consistent with the standards of good character and integrity;

• (e) whether the proposed authorized foreign bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;

• (f) the impact of any integration of the businesses and operations in Canada of the authorized foreign bank with those of its affiliates in Canada on the conduct of those businesses and operations; and

• (g) the best interests of the financial system in Canada.

• (e) reserved under section 43 for an existing or proposed bank or for an existing or proposed authorized foreign bank or under section 697 for an existing or proposed bank holding company.

• (ii) in any other case, five million dollars or any greater amount that the Superintendent specifies;

Marginal note:Regulations apply

539.1 Regulations made for the purpose of any of sections 409 to 411 apply in respect of authorized foreign banks with any modifications that the circumstances require unless regulations made under subsection 539(3) provide otherwise.

• (a) act as agent for any person in respect of the provision of any service that is provided by a financial institution, an entity in which a bank is permitted to acquire a substantial investment under section 468 or a Canadian entity acquired or held under section 522.08 and may enter into an arrangement with any person in respect of the provision of that service; or

Marginal note:Restriction on leasing

550. An authorized foreign bank shall not engage in Canada in any personal property leasing activity in which a financial leasing entity as defined in subsection 464(1) is not permitted to engage.

Marginal note:Restriction on partnerships

• 553.1 (1) Except with the approval of the Superintendent, an authorized foreign bank may not, in respect of its business in Canada, be a general partner in a limited partnership or a partner in a general partnership.

• Marginal note:Execution of trust

  (3) An authorized foreign bank is not, in respect of its business in Canada, bound to see to the execution of any trust to which a deposit made under the authority of this Act is subject.

• Marginal note:Payment when authorized foreign bank has notice of trust

  (4) Subsection (3) applies regardless of whether the trust is express or arises by the operation of law, and it applies even when the authorized foreign bank has notice of the trust if it acts on the order of or under the authority of the holder or holders of the account into which the deposit is made.

Accounts

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of an interest-bearing deposit account that is opened with a deposit in excess of $150,000 or any greater amount that is prescribed.

Definition of “cost of borrowing”

567. For the purposes of this section and sections 567.1 to 574, “cost of borrowing” in respect of a loan made by an authorized foreign bank means

• (a) the interest or discount applicable to the loan;

• (b) any amount charged in connection with the loan that is payable by the borrower to the authorized foreign bank; and

• (c) any charge prescribed to be included in the cost of borrowing.

For those purposes, however, “cost of borrowing” does not include any charge prescribed to be excluded from the cost of borrowing.

Complaints

Marginal note:Obligation to be member

573.1 An authorized foreign bank shall be a member of any body corporate that is designated under subsection 455.1(1).

Marginal note:Regulations re disclosure

576.2 The Governor in Council may, subject to any other provisions of this Act relating to the disclosure of information, make regulations respecting the disclosure of information by authorized foreign banks or any prescribed class of authorized foreign banks, including regulations respecting

• (a) the information that must be disclosed, including information relating to

  • (i) any product or service or prescribed class of products or services offered by them,

  • (ii) any of their policies, procedures or practices relating to the offer by them of any product or service or prescribed class of products or services,

  • (iii) anything they are required to do or to refrain from doing under a consumer provision, and

  • (iv) any other matter that may affect their dealings with customers or the public;

• (b) the manner, place and time in which and the persons to whom information is to be disclosed; and

• (c) the content and form of any advertisement by authorized foreign banks or any prescribed class of authorized foreign banks relating to any matter referred to in paragraph (a).

Marginal note:Effect of writ, etc.

• 579. (1) Subject to subsections (3) and (4), the following documents are binding on property belonging to a person and in the possession of an authorized foreign bank, or on money owing to a person by reason of a deposit account in an authorized foreign bank, only if the document or a notice of it is served at the branch of the authorized foreign bank that has possession of the property or that is the branch of account in respect of the deposit account, as the case may be:

  • (a) a writ or process originating a legal proceeding or issued in or pursuant to a legal proceeding;

  • (b) an order or injunction made by a court;

  • (c) an instrument purporting to assign, perfect or otherwise dispose of an interest in the property or the deposit account; or

  • (d) an enforcement notice in respect of a support order or support provision.

• Marginal note:Notices

  (2) Any notification sent to an authorized foreign bank with respect to a customer of the authorized foreign bank, other than a document referred to in subsection (1) or (3), constitutes notice to the authorized foreign bank and fixes the authorized foreign bank with knowledge of its contents only if sent to and received at the branch of the authorized foreign bank that is the branch of account of an account held in the name of that customer.

• Marginal note:Exception

  (3) Subsections (1) and (2) do not apply in respect of an enforcement notice in respect of a support order or support provision if

  • (a) the enforcement notice, accompanied by a written statement containing the information required by the regulations, is served at an office of an authorized foreign bank designated in accordance with the regulations in respect of a province; and

  • (b) the order or provision can be enforced under the laws of that province.

• Marginal note:Time of application

  (4) Subsection (3) does not apply in respect of an enforcement notice in respect of a support order or support provision until the second business day following the day of service referred to in that subsection.

• Marginal note:Regulations

  (5) The Governor in Council may make regulations

  • (a) respecting the designation by an authorized foreign bank, for the purpose of subsection (3), of a place in any province for the service of enforcement notices in respect of support orders and support provisions;

  • (b) prescribing the manner in which an authorized foreign bank shall publicize the locations of designated offices of the authorized foreign bank; and

  • (c) respecting the information that must accompany enforcement notices in respect of support orders and support provisions.

• Marginal note:Definitions

  (6) The following definitions apply in this section.

  “designated office”

  « bureau désigné »

  “designated office” means a place designated in accordance with regulations made for the purpose of subsection (3).

  “enforcement notice”

  « avis d’exécution »

  “enforcement notice”, in respect of a support order or support provision, means a garnishee summons or other instrument issued under the laws of a province for the enforcement of the support order or support provision.

  “support order”

  « ordonnance alimentaire »

  “support order” means an order or judgment or interim order or judgment for family financial support.

  “support provision”

  « disposition alimentaire »

  “support provision” means a provision of an agreement relating to the payment of maintenance or family financial support.