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Budget Implementation Act, 2009 (S.C. 2009, c. 2)

Assented to 2009-03-12

 The Act is amended by adding the following after section 39.15:

Marginal note:Stay of proceedings — bridge institution

39.151 Any action or other civil proceeding to which a bridge institution becomes a party by virtue of acquiring assets or assuming liabilities of a federal member institution shall be stayed for a period of 90 days at the bridge institution’s request.

Marginal note:1996, c. 6, s. 41

 Subsections 39.2(5) and (6) of the Act are replaced by the following:

  • Marginal note:Approval by Minister

    (5) A transaction referred to in subsection (1) or (2) has no force or effect until it is approved by the Minister, unless it is between the Corporation, as receiver for a federal member institution, and a bridge institution.

  • Marginal note:Novation

    (6) Any person who assumes a liability of the federal member institution under a transaction referred to in subsection (1) or (2) becomes liable — instead of the federal member institution — to discharge the liability, on approval of the transaction by the Minister or as soon as the person assumes the liability if the transaction does not require the Minister’s approval.

  • Marginal note:Exception

    (7) Subsection (6) does not apply to the bridge institution’s assumption of any portion of the federal member institution’s liability that is not insured by the Corporation.

  • Marginal note:Novation — trust

    (8) A trust company within the meaning of subsection 57(2) of the Trust and Loan Companies Act that is designated as a bridge institution may become a trustee in substitution for the federal member institution without formality or the consent of any beneficiary of the trust.

 The Act is amended by adding the following after section 39.2:

Marginal note:Terms and conditions of transactions
  • 39.201 (1) If the Corporation as receiver for a federal member institution carries out a transaction with a bridge institution, the Corporation shall establish the terms and conditions of the transaction, including

    • (a) which assets the bridge institution shall acquire and the consideration to be paid for the assets acquired; and

    • (b) which liabilities the bridge institution shall assume and the consideration to be paid for the liabilities assumed.

  • Marginal note:Reasonable consideration

    (2) The consideration referred to in paragraph (1)(a) shall be reasonable in the circumstances.

  • Marginal note:Compensation

    (3) Nothing in subsections (1) and (2) prevents the federal member institution from seeking compensation under subsections 39.24(2) and (3) and sections 39.25 to 39.361.

Marginal note:Deposit liabilities
  • 39.202 (1) A bridge institution shall assume all of the liabilities with respect to a federal member institution’s deposits that are insured by the Corporation.

  • Marginal note:Subrogation

    (2) If the bridge institution assumes any portion of a federal member institution’s liability that is not insured by the Corporation, the bridge institution is subrogated to all the rights and interests of the creditor against the federal member institution in relation to the entire liability and may maintain an action in respect of those rights and interests in its own name or in the name of the creditor.

  • Marginal note:Creditor’s rights and interests

    (3) As soon as the bridge institution receives an amount equal to the liabilities that are not insured by the Corporation that it assumed, the rights and interests in respect of the balance remaining revert to the creditor.

Marginal note:Liquidator bound
  • 39.203 (1) The liquidator of a federal member institution appointed under the Winding-up and Restructuring Act is bound by the terms and conditions of any transaction that involves the sale or other disposition of the federal member institution’s assets or the assumption by a bridge institution of any portion of the federal member institution’s liabilities and shall carry out those transactions or cause them to be carried out.

  • Marginal note:Expenses

    (2) All costs, charges and expenses properly incurred by the liquidator in complying with the terms and conditions of any transaction referred to in subsection (1), including the liquidator’s remuneration, are payable by the bridge institution.

Marginal note:1996, c. 6, s. 41

 Section 39.21 of the Act is replaced by the following:

Marginal note:Right transferable

39.21 If the assets that are sold under a transaction described in section 39.2 or by a bank designated as a bridge institution include any outstanding security under section 426 or 427 of the Bank Act, the buyer of the assets may hold the security for the life of the loan to which the security relates and all the provisions of that Act relating to the security and its enforcement continue to apply to the buyer as though the buyer were a bank.

 Section 39.24 of the Act is amended by adding the following after subsection (2):

  • Marginal note:Period

    (2.1) The period referred to in subsection (2) is 180 days if an order directing the incorporation of a bridge institution is made in respect of a federal member institution that is the subject of an order made under paragraph 39.13(1)(b).

 The Act is amended by adding the following after section 39.37:

Creation and Operation of Bridge Institutions

Marginal note:Incorporation
  • 39.371 (1) The Minister shall, without delay after an order is made under paragraph 39.13(1)(c), issue letters patent incorporating a federal institution.

  • Marginal note:Incorporating Act

    (2) The letters patent are issued under whichever of the following Acts regulates the federal member institution that is the subject of the Superintendent’s report under subsection 39.1(1) or (3):

  • Marginal note:Order to commence and carry on business

    (3) The Superintendent shall, without delay after the letters patent are issued, make an order approving the commencement and carrying on of business by the federal institution referred to in subsection (1).

  • Marginal note:Content of Superintendent’s order — limitation

    (4) The Superintendent’s order shall not prohibit the federal institution, during the period that it is designated as a bridge institution, from accepting deposits in Canada and shall not make the federal institution, during that period, subject to subsection 413(3) of the Bank Act, subsection 378.1(2) of the Cooperative Credit Associations Act or subsection 413(2) of the Trust and Loan Companies Act.

Marginal note:Duration
  • 39.3711 (1) Subject to section 39.3715, the federal institution referred to in subsection 39.371(1) is designated as a bridge institution for a period of two years.

  • Marginal note:Extensions

    (2) The Governor in Council may, by order, on the recommendation of the Minister, grant up to three extensions — of one year each — of the period referred to in subsection (1).

Marginal note:Bridge institution not an agent

39.3712 A bridge institution is not an agent of the Corporation or Her Majesty in right of Canada.

Marginal note:Financial assistance

39.3713 The Corporation shall provide the financial assistance that a bridge institution needs in order to discharge its obligations, except for its obligations to the Corporation, as they become due.

Marginal note:Shares held by Corporation

39.3714 The Corporation may hold shares in a bridge institution only if the Corporation is the sole shareholder.

Marginal note:Termination of designation

39.3715 A federal institution’s designation as a bridge institution terminates if

  • (a) the Corporation is no longer the sole shareholder; or

  • (b) the federal institution is amalgamated with a body corporate that is not a bridge institution.

Marginal note:Mandatory dissolution of bridge institution

39.3716 If a bridge institution’s designation has not terminated under section 39.3715, the federal institution’s board of directors shall take all necessary steps to dissolve the federal institution if

  • (a) all or substantially all of the federal institution’s assets have been sold or otherwise disposed of; and

  • (b) all or substantially all of its liabilities have been assumed or discharged.

Marginal note:Winding-up of federal member institution
  • 39.3717 (1) If the Corporation considers that substantially all of the transfers of assets and liabilities of a federal member institution to a bridge institution have been substantially completed, the Corporation shall apply for a winding-up order under the Winding-up and Restructuring Act in respect of the federal member institution.

  • Marginal note:Creditor

    (2) For the purposes of the Winding-up and Restructuring Act, the Corporation is deemed to be a creditor of the federal member institution.

  • Marginal note:Exception

    (3) If the Superintendent has taken control of the federal member institution or its assets and has requested the Attorney General of Canada to apply for a winding-up order or informs the Corporation that he or she intends to request that the Attorney General of Canada apply for that order, the Corporation is not required to apply for a winding-up order.

Marginal note:Power of the Corporation
  • 39.3718 (1) The Corporation may hold any federal institution’s shares that the Corporation acquires in the course of a sale or other disposition of its shares of the bridge institution or that a bridge institution acquires in the course of a sale or other disposition of its assets.

  • Marginal note:Maximum period

    (2) The Corporation may hold the shares for a period of no more than five years from the day on which they are acquired and may dispose of them.

  • Marginal note:Extension

    (3) The Minister may, by order, extend the period referred to in subsection (2) if general market conditions so warrant.

  • Marginal note:Provisions inapplicable

    (4) The following provisions do not apply with respect to the shares referred to in subsection (1):

Marginal note:Remuneration and benefits

39.3719 An employee or officer of the Corporation shall not receive remuneration or benefits from a bridge institution for being a director or officer of that institution.

Marginal note:Not a successor employer

39.372 If a bridge institution becomes the employer of the federal member institution’s employees, it is not a successor employer to the federal member institution and is not liable for the obligations that the federal member institution has as employer or former employer.

Marginal note:Corporation’s directions
  • 39.3721 (1) The Corporation may give directions to the board of directors of a bridge institution.

  • Marginal note:Notification of implementation

    (2) After implementing a direction, the board of directors of the bridge institution shall notify the Corporation without delay that the direction has been implemented.

Marginal note:By-laws — Corporation
  • 39.3722 (1) The Corporation may give directions to the board of directors of a bridge institution to make, amend or repeal any by-law.

  • Marginal note:By-laws — board of directors

    (2) The board of directors of a bridge institution may, with the approval of the Corporation, make, amend or repeal any by-law.

  • Meaning of “by-law”

    (3) For the purposes of subsections (1) and (2), “by-law” means a by-law of the bridge institution.

Marginal note:Regulation to exempt or adapt
  • 39.3723 (1) The Governor in Council may, by regulation,

    • (a) exempt federal member institutions in respect of which an order directing the incorporation of a bridge institution is made, bridge institutions or subsidiaries of any of those institutions, or any class of those institutions or class of their subsidiaries, from the application of any provision of this Act or the regulations or of the following Acts or regulations made under them:

    • (b) provide that any provision of this Act or the regulations or of the Acts referred to in paragraph (a) or regulations made under them applies to federal member institutions in respect of which an order directing the incorporation of a bridge institution is made, bridge institutions or subsidiaries of any of those institutions, or any class of those institutions or class of their subsidiaries, only in the manner and to the extent provided for in the regulation and adapt that provision for the purpose of that application.

  • Marginal note:Scope or conditions

    (2) The exemption may be limited in scope or duration or subject to conditions.

 
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