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An Act to amend the law governing financial institutions and to provide for related and consequential matters (S.C. 2007, c. 6)

Assented to 2007-03-29

Marginal note:2001, c. 9, s. 426

238. Section 505 of the Act and the heading before it are replaced by the following:

Consumer and Commercial Lending by Property and Casualty Companies and Marine Companies

Marginal note:Lending limit — property and casualty companies and marine companies

505. A property and casualty company, or a marine company, shall not, and shall not permit its prescribed subsidiaries to, make or acquire a commercial loan or a loan to a natural person, or acquire control of a permitted entity that holds commercial loans or loans to natural persons, if the aggregate value of all such loans held by the company and its prescribed subsidiaries exceeds, or the making or acquisition of the loan or the acquisition of control of the permitted entity would cause the aggregate value of all such loans held by the company and its prescribed subsidiaries to exceed, the prescribed percentage of the total assets of the company.

Marginal note:2001, c. 9, s. 426

  • 239. (1) Subsections 512(2) and (3) of the Act are replaced by the following:

    • Marginal note:Approval of series of transactions

      (1.1) The Superintendent may, for the purposes of subsection (1), approve a transaction or series of transactions relating to the acquisition or transfer of assets that may be entered into with a person, or with persons of any class of persons, regardless of whether those persons are known at the time of the granting of the approval or not.

    • Marginal note:Exception

      (2) Subsection (1) does not apply in respect of

      • (a) an asset that is a debt obligation referred to in subparagraphs (b)(i) to (v) of the definition “commercial loan” in subsection 490(1);

      • (b) assets that are acquired or transferred under a transaction or series of transactions by a company with another financial institution as a result of the company’s participation in one or more syndicated loans with that financial institution;

      • (c) assets that are acquired or transferred under a transaction that is approved by the Minister or the Superintendent under subsection 254(2) or (2.01);

      • (d) shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 495(7) is required or the approval of the Superintendent under subsection 495(8) is required;

      • (e) assets that are acquired or transferred under a transaction approved by the Minister under subsection 715(1) of this Act or subsection 678(1) of the Bank Act;

      • (f) assets, other than real property, acquired or disposed of under an arrangement that has been approved by the Superintendent under subsection 527(3); or

      • (g) assets acquired or disposed of with the approval of the Superintendent under subsection 527(4).

  • Marginal note:2001, c. 9, s. 426

    (2) Paragraph 512(4)(b) of the Act is replaced by the following:

    • (b) in the case of assets that are transferred, the value of the assets as reported in the last annual statement of the company prepared before the transfer or, if the value of the assets is not reported in that annual statement, the value of the assets as it would be reported in the annual statement of the company if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 331(4), immediately before the transfer.

  • Marginal note:2001, c. 9, s. 426

    (3) Subsection 512(6) of the Act is replaced by the following:

    • Marginal note:Total value of all assets

      (6) For the purposes of subsection (1), the total value of all assets that the company or any of its subsidiaries has transferred during the 12-month period referred to in subsection (1) is the total of the value of each of those assets as reported in the last annual statement of the company prepared before the transfer of the asset or, if the value of any of those assets is not reported in that annual statement, as it would be reported in the annual statement of the company if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 331(4), immediately before the transfer of the asset.

Marginal note:1996, c. 6, s. 82; 1997, c. 15, s. 275

240. Section 516 of the Act is repealed.

241. Paragraph 519(2)(a) of the Act is replaced by the following:

  • (a) assets of a segregated fund maintained pursuant to section 451 if

    • (i) all the policies in respect of which the fund is maintained are held by one person or all the amounts in respect of which it is maintained are retained on the direction of one person, or

    • (ii) the assets of the fund reflect the securities upon which a generally recognized market index is based and the weighting of those securities in that index;

  • 242. (1) Paragraph 520(1)(e) of the Act is replaced by the following:

    • (e) causing the company to be reinsured by the related party against any risk undertaken by the company under its policies.

  • (2) Section 520 of the Act is amended by adding the following after subsection (3):

    • Marginal note:Security of a related party

      (4) For the purposes of this Part, “security” of a related party includes an option, transferable by delivery, to demand delivery of a specified number or amount of shares of the related party at a fixed price within a specified time.

243. Section 523 of the Act is replaced by the following:

Marginal note:Reinsurance

  • 523. (1) A company may, subject to subsection (2) and to Division III of Part VI, cause itself to be reinsured by a related party of the company against any risk undertaken by the company under its policies.

  • Marginal note:Restriction re related parties

    (2) Except with the approval of the Superintendent, a company may cause itself to be reinsured in respect of risks undertaken under its policies by a related party of the company only if the related party is

    • (a) a company; or

    • (b) a foreign company that, in Canada, reinsures those risks.

  • Marginal note:Exception

    (3) The approval of the Superintendent under subsection (2) is not required if the reinsurance transaction was approved by the Minister or the Superintendent under subsection 254(2) or (2.01).

244. Section 524 of the French version of the Act is replaced by the following:

Marginal note:Risques d’un apparenté

524. La société peut, sous réserve de la section III de la partie VI, réassurer les risques acceptés par un apparenté.

245. Section 527 of the Act is amended by adding the following after subsection (5):

  • Marginal note:Approval under subsection 254(2) or (2.01)

    (6) A company or society may acquire any assets from, or dispose of any assets to, a related party of the company under a transaction that is approved by the Minister or the Superintendent under subsection 254(2) or (2.01).

Marginal note:1997, c. 15, s. 279

246. Subsection 528(3) of the Act is replaced by the following:

  • Marginal note:Exception

    (3) Despite subsection 521(2), a company is deemed not to have indirectly entered into a transaction in respect of which this Part applies if the transaction is entered into by an entity that is controlled by the company and the business of which is limited to the activity referred to in paragraph 495(2)(c) and the transaction is on terms and conditions at least as favourable to the company as market terms and conditions, as defined in subsection 534(2).

Marginal note:2001, c. 9, s. 429

  • 247. (1) The description of B in subsection 528.3(1) of the Act is replaced by the following:

    B 
    is the total value of all assets that the company directly or indirectly acquired from, or directly or indirectly transferred to, that related party in the 12 months ending immediately before the acquisition or transfer, other than assets acquired by or transferred to the company under transactions permitted by section 522; and
  • Marginal note:2001, c. 9, s. 429

    (2) The portion of subsection 528.3(3) of the Act before paragraph (b) is replaced by the following:

    • Marginal note:Exception

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

      • (a) the company acquires or transfers assets under a transaction that is approved by the Minister or the Superintendent under subsection 254(2) or (2.01);

Marginal note:1997, c. 15, s. 285

248. Subsection 542.03(4) of the Act is replaced by the following:

  • Marginal note:Transfers from segregated funds

    (4) A society may return the current value of an amount transferred under subsection (3) to the account from which the amount was transferred.

Marginal note:1997, c. 15, s. 285

249. Subsection 542.04(1) of the Act is replaced by the following:

Marginal note:Regulations

  • 542.04 (1) The Governor in Council may make regulations limiting the extent to which a society may cause itself to be reinsured against risks undertaken under its policies.

Marginal note:1997, c. 15, s. 285

250. Section 542.05 of the Act is replaced by the following:

Marginal note:Restriction on issuance of annuities and endowment insurance

542.05 A society may issue annuities or policies of endowment insurance only if it is authorized to insure risks within the class of life insurance.

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