Bank Act (S.C. 1991, c. 46)

Real Property

Marginal note:Limit on total property interest

938 A bank holding company 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 holding company or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the bank holding company 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 holding company.

Equities

Marginal note:Limits on equity acquisitions

939 A bank holding company 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 holding company 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 holding company has a substantial investment, and

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

beneficially owned by the bank holding company 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 holding company.

Aggregate Limit

Marginal note:Aggregate limit

940 A bank holding company 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 holding company 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 holding company 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 holding company 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 holding company and its prescribed subsidiaries, and

• (d) all interests of the bank holding company 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 holding company.

Miscellaneous

Marginal note:Regulations

941 For the purposes of this Division, the Governor in Council may make regulations

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

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

• (c) exempting classes of bank holding companies from the application of sections 937 to 940.

Marginal note:Divestment order

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

• Marginal note:Divestment order

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

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

  • (b) the bank holding company 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 holding company, the entity it controls or the nominee,

  the Superintendent may, by order, require the bank holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank holding company 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 holding company

    • (i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 932(1), (2) or (4), or

    • (ii) is in default of an undertaking referred to in subsection 932(1) or (2) and the default is not remedied within ninety days after the day of receipt by the bank holding company of a notice from the Superintendent of the default, or

  • (b) a permitted entity referred to in subsection 932(4) is in default of an undertaking referred to in subsection 932(4) and the default is not remedied within ninety days after the day of receipt by the bank holding company of a notice from the Superintendent of the default,

  the Superintendent may, by order, require the bank holding company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the bank holding company 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 holding company has a substantial investment permitted by this Division.

Marginal note:Deemed temporary investment

943 If a bank holding company controls or has a substantial investment in an entity as permitted by this Division and the bank holding company 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 930(5) or (6), the bank holding company is deemed to have acquired, on the day the bank holding company becomes aware of the change, a temporary investment in respect of which section 933 applies.

Marginal note:Asset transactions

• 944 (1) A bank holding company 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 holding company 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 holding company, as shown in the last annual statement of the bank holding company prepared before the acquisition or transfer.

• 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) assets that are debt obligations that are

    • (i) guaranteed by any financial institution,

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

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

  • (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 holding company; or

  • (f) assets acquired or transferred under a transaction or series of transactions by a subsidiary of the bank holding company with a financial institution as a result of the subsidiary’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 holding company or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Division 7 or subsection 930(5) is required or the approval of the Superintendent under subsection 930(6) is required; or

  • (b) 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 holding company after the acquisition, the fair market value of the assets; and

  • (b) in the case of assets that are transferred, the value of the assets as reported in the last annual statement of the bank holding 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 bank holding company if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 840(4), immediately before the transfer.

• Marginal note:Total value of all assets

  (5) For the purposes of subsection (1), the total value of all assets that the bank holding company 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 holding company, 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 holding 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 bank holding 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 bank holding company if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 840(4), immediately before the transfer of the asset.

Marginal note:Transitional

945 Nothing in this Division 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 Division, the amount of the loan or investment may not be increased after that date.