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Budget Implementation Act, 2023, No. 1 (S.C. 2023, c. 26)

Assented to 2023-06-22

PART 4Various Measures (continued)

DIVISION 33Legislation Related to Financial Institutions (continued)

1991, c. 46Bank Act (continued)

557 Section 644.1 of the Act is replaced by the following:

Marginal note:Prudential agreement

644.1 The Superintendent may enter into an agreement, called a “prudential agreement”, with a bank for the purposes of implementing any measure designed to maintain or improve its safety and soundness or establishing adequate policies and procedures to protect it against threats to its integrity or security.

558 Subsections 645(2) and (3) of the Act are replaced by the following:

  • Marginal note:Directions — policies and procedures

    (1.1) If, in the opinion of the Superintendent, a bank does not have adequate policies and procedures to protect itself against threats to its integrity or security, the Superintendent may direct the bank to take any measures that in the opinion of the Superintendent are necessary to remedy the situation.

  • Marginal note:Opportunity for representations

    (2) Subject to subsection (3), no direction shall be issued to a bank or person under subsection (1) or (1.1) unless the bank or person is provided with a reasonable opportunity to make representations in respect of the matter.

  • Marginal note:Temporary direction

    (3) If, in the opinion of the Superintendent, the length of time required for representations to be made under subsection (2) might be prejudicial to the public interest, the Superintendent may make a temporary direction with respect to the matters referred to in paragraphs (1)(a) and (b) or subsection (1.1) having effect for a period of not more than 15 days.

559 Paragraph 646(1)(a) of the Act is replaced by the following:

  • (a) is contravening or has failed to comply with a prudential agreement entered into under section 644.1 or a direction of the Superintendent made under subsection 645(1), (1.1) or (3),

  • 560 (1) Subsection 648(1.1) of the Act is amended by striking out “or” at the end of paragraph (g) and by adding the following after that paragraph:

    • (g.1) in the opinion of the Superintendent, the bank’s depositors and creditors may be detrimentally affected because all of the common shares or membership shares of the bank must be disposed of under a direction made by the Minister or because there is a prohibition under this Act in respect of the exercise of the right to vote attached to all of the common shares or membership shares of the bank;

  • (2) Subsection 648(1.1) of the Act is amended by adding the following after paragraph (h):

    • (i) in the opinion of the Superintendent, the continued operation of the bank by the directors of the bank or by the officers of the bank responsible for its management would be materially prejudicial to its integrity or security; or

    • (j) in the opinion of the Superintendent, the continued operation of the bank by the directors of the bank or by the officers of the bank responsible for its management would pose a risk to national security.

  • (3) Section 648 of the Act is amended by adding the following after subsection (1.1):

    • Marginal note:Minister’s powers

      (1.11) Subject to this Act, the Minister may, for reasons related to national security, direct the Superintendent to

      • (a) take control, for a period not exceeding 16 days, of the assets of the bank and the assets under its administration;

      • (b) take control, for a period exceeding 16 days, of the assets of the bank and the assets under its administration;

      • (c) if control of assets has been taken under paragraph (a), continue the control beyond the 16 days referred to in that paragraph; or

      • (d) take control of the bank.

  • (4) Subsection 648(2) of the Act is replaced by the following:

    • Marginal note:Notice — up to 16 days

      (1.3) If the Superintendent takes control of the assets of the bank under paragraph (1.11)(a), the Superintendent shall notify the bank that control has been taken at the direction of the Minister.

    • Marginal note:Notice — more than 16 days

      (1.4) If the Minister is considering whether to exercise the powers under any of paragraphs (1.11)(b) to (d), the Superintendent shall notify the bank of the action that is being considered and of its right to make written representations to the Minister within the time specified in the notice, not exceeding 10 days after it receives the notice.

    • Marginal note:Notice — Committee and Review Agency

      (1.5) Within 30 days after exercising any of the powers under subsection (1.11), the Minister shall notify

    • Marginal note:Objectives of Superintendent

      (2) If the Superintendent has control under subsection (1) or (1.11) of the assets of a bank referred to in that subsection, the Superintendent may do all things necessary or expedient to protect the rights and interests of the depositors and creditors of the bank.

  • (5) The portion of subsection 648(3) of the Act before paragraph (a) is replaced by the following:

    • Marginal note:Powers of Superintendent

      (3) If the Superintendent has control under subsection (1) or (1.11) of the assets of a bank referred to in that subsection,

  • 561 (1) Subsection 649(1) of the English version of the Act is replaced by the following:

    Marginal note:Powers suspended

    • 649 (1) If the Superintendent takes control of a bank under subparagraph 648(1)(b)(iii) or paragraph 648(1.11)(d), the powers, duties, functions, rights and privileges of the directors of the bank and of the officers of the bank responsible for its management are suspended. If the bank is a federal credit union, the powers of the members to make, amend or repeal by-laws are also suspended.

  • (2) The portion of subsection 649(2) of the English version of the Act before paragraph (a) is replaced by the following:

    • Marginal note:Superintendent to manage bank

      (2) If the Superintendent takes control of a bank under subparagraph 648(1)(b)(iii) or paragraph 648(1.11)(d), the Superintendent shall manage the business and affairs of the bank and in doing so the Superintendent

  • (3) Subsection 649(3) of the English version of the Act is replaced by the following:

    • Marginal note:Persons to assist

      (3) If the Superintendent takes control of a bank under subparagraph 648(1)(b)(iii) or paragraph 648(1.11)(d), the Superintendent may appoint one or more persons to assist in the management of the bank.

562 Section 650 of the Act is renumbered as subsection 650(1) and is amended by adding the following:

  • Marginal note:Expiration of control — Minister’s direction

    (2) Control by the Superintendent under subsection 648(1.11) of a bank or of the assets of a bank expires on the day on which a notice by the Superintendent is sent to the directors and officers who conducted the business and affairs of the bank stating that the Minister is of the opinion, on the recommendation of the Superintendant, that corrective measures have been taken in response to the reasons related to national security and that the bank can resume control of its business and affairs.

563 Paragraphs 651(a) and (b) of the Act are replaced by the following:

  • (a) the assets of the bank are under the control of the Superintendent under subparagraph 648(1)(b)(i) or (ii) or paragraph 648(1.11)(b) or (c); or

  • (b) the bank is under the control of the Superintendent under subparagraph 648(1)(b)(iii) or paragraph 648(1.11)(d).

564 The portion of section 652 of the English version of the Act before paragraph (a) is replaced by the following:

Marginal note:Requirement to relinquish control

652 If no action has been taken by the Superintendent under section 651 and, after 30 days following the taking of control by the Superintendent under subsection 648(1) or (1.11) of a bank or of the assets of a bank, the Superintendent receives from its board of directors a notice in writing requesting the Superintendent to relinquish control, the Superintendent shall, not later than 12 days after receipt of the notice,

565 Section 653 of the English version of the Act is replaced by the following:

Marginal note:Advisory committee

653 The Superintendent may, from among the banks and authorized foreign banks that are subject to an assessment under section 23 of the Office of the Superintendent of Financial Institutions Act and required to share in the expenses resulting from the taking of control of a bank under subsection 648(1) or (1.11), appoint a committee of not more than six members to advise the Superintendent in respect of assets, management and all other matters pertinent to the duties and responsibilities of the Superintendent in exercising control of the bank.

566 Subsection 654(1) of the English version of the Act is replaced by the following:

Marginal note:Expenses payable by bank

  • 654 (1) If the Superintendent has taken control of a bank under subparagraph 648(1)(b)(iii) or paragraph 648(1.11)(d) and the control expires or is relinquished under section 650 or paragraph 652(a), the Superintendent may direct that the bank be liable for repayment of all or part of the expenses resulting from the taking of control of the bank and assessed against and paid by other banks and by authorized foreign banks under section 23 of the Office of the Superintendent of Financial Institutions Act, together with any interest in respect of the expenses at any rate that is specified by the Superintendent.

567 Section 655 of the English version of the Act is replaced by the following:

Marginal note:Priority of claim in liquidation

655 In the case of the winding-up of a bank, the expenses resulting from the taking of control of the bank under subsection 648(1) or (1.11) and assessed against and paid by other banks and by authorized foreign banks under section 23 of the Office of the Superintendent of Financial Institutions Act, and interest in respect of the expenses at any rate that is specified by the Superintendent, constitute a claim of His Majesty in right of Canada against the assets of the bank that ranks after all other claims but prior to any claim in respect of the shares or membership shares of the bank.

568 The Act is amended by adding the following after section 664:

Marginal note:Policies and procedures — integrity or security

664.1 A bank holding company shall establish and adhere to policies and procedures to protect itself against threats to its integrity or security, including foreign interference.

569 Subsection 954(1) of the Act is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b):

  • (c) determine whether the bank holding company has adequate policies and procedures to protect itself against threats to its integrity or security.

570 Subsection 957(1) of the Act is replaced by the following:

Marginal note:Examination of bank holding companies

  • 957 (1) The Superintendent, from time to time, shall make or cause to be made any examination and inquiry into the business and affairs of each bank holding company that the Superintendent considers to be necessary or expedient to determine whether the bank holding company is complying with the provisions of this Act and to ascertain the financial condition of the bank holding company or to determine whether the bank holding company has adequate policies and procedures to protect itself against threats to its integrity or security.

571 Section 959 of the Act is replaced by the following:

Marginal note:Prudential agreement

959 The Superintendent may enter into an agreement, called a “prudential agreement”, with a bank holding company for the purposes of implementing any measure designed to protect the interests of depositors, policyholders and creditors of any federal financial institution affiliated with it or establishing adequate policies and procedures to protect the bank holding company against threats to its integrity or security.

572 Subsections 960(2) and (3) of the Act are replaced by the following:

  • Marginal note:Directions — policies and procedures

    (1.1) If, in the opinion of the Superintendent, a bank holding company does not have adequate policies and procedures to protect itself against threats to its integrity or security, the Superintendent may direct the bank holding company to take any measures that in the opinion of the Superintendent are necessary to remedy the situation.

  • Marginal note:Opportunity for representations

    (2) Subject to subsection (4), no direction shall be issued under subsection (1) or (1.1) unless the bank holding company is provided with a reasonable opportunity to make representations in respect of the matter.

  • Marginal note:Temporary direction

    (3) If, in the opinion of the Superintendent, the length of time required for representations to be made might be prejudicial to the public interest, the Superintendent may make a temporary direction with respect to the matters referred to in paragraphs (1)(a) to (d) or subsection (1.1) having effect for a period of not more than 15 days.

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