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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2022-06-20 and last amended on 2022-02-26. Previous Versions

PART XVBank Holding Companies (continued)

DIVISION 7Ownership (continued)

Constraints on Ownership (continued)

Marginal note:When approval not required

  •  (1) Despite sections 875 and 887, the approval of the Minister is not required if

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

    • (b) a person, other than an eligible agent, who controls, within the meaning of paragraph 3(1)(a), the bank holding company acquires additional shares of the bank holding company.

  • Marginal note:Exception

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

  • 2001, c. 9, s. 183
  • 2007, c. 6, s. 132
  • 2012, c. 5, s. 91, c. 31, s. 122

Marginal note:Pre-approval

 For the purposes of sections 875 and 887, the Minister may approve

  • (a) the purchase or other acquisition of any number or percentage of shares of a bank holding company 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 holding company within a specified period.

  • 2001, c. 9, s. 183

Marginal note:Public holding requirement

  •  (1) Every bank holding company with equity of two billion dollars or more but less than twelve billion dollars shall, from and after the day determined under this section in respect of that bank holding company, 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 holding company 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 holding company in respect of the voting shares of the bank holding company or by any entity that is controlled by a person who is a major shareholder of the bank holding company in respect of such shares.

  • Marginal note:Determination of day

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

    • (a) if the bank holding company had equity of two billion dollars or more but less than twelve billion dollars on the day the bank holding company was formed or 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 holding company held after the equity of the bank holding company first reaches two billion dollars.

  • Marginal note:Extension

    (3) If general market conditions so warrant and the Minister is satisfied that a bank holding company 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 holding company must comply with subsection (1).

  • 2001, c. 9, s. 183
  • 2007, c. 6, ss. 132, 133
  • 2012, c. 5, s. 92

Marginal note:Public holding requirement

 If a bank holding company to which section 893 applies becomes a bank holding company with equity of twelve billion dollars or more, that section continues to apply to the bank holding company until no person is a major shareholder of the bank holding company, other than a person in respect of whom subsections 876(2) to (6) applies.

  • 2001, c. 9, s. 183
  • 2007, c. 6, s. 132
  • 2012, c. 5, s. 93

Marginal note:Limit on assets

  •  (1) Unless an exemption order with respect to the bank holding company is granted under section 897, if a bank holding company fails to comply with section 893 in any month, the Minister may, by order, require the bank holding company 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 holding company’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 holding company in a three month period is to be computed by adding the total assets of the bank holding company 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 holding company, has the meaning given that expression by the regulations.

  • 2001, c. 9, s. 183

Marginal note:Increase of capital

 If the Superintendent has, by order, directed a bank holding company with equity of two billion dollars or more but less than twelve billion dollars to increase its capital and shares of the bank holding company are issued and acquired in accordance with any terms and conditions that may be specified in the order, section 893 does not apply in respect of the bank holding company until the time that the Superintendent may, by order, specify.

  • 2001, c. 9, s. 183
  • 2007, c. 6, ss. 132, 133
  • 2012, c. 5, s. 94

Marginal note:Exemption by order of the Minister

  •  (1) On application by a bank holding company, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank holding company from the requirements of section 893, subject to any terms and conditions that the Minister considers appropriate.

  • Marginal note:Compliance with section 893

    (2) If an exemption order granted under this section in respect of a bank holding company expires, the bank holding company shall comply with section 893 as of the day the exemption order expires.

  • Marginal note:Limit on assets

    (3) If a bank holding company fails to comply with section 893 on the day referred to in subsection (2), the bank holding company 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 holding company’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. 895(2) and (3)

    (4) Subsections 895(2) and (3) apply for the purposes of subsection (3).

  • 2001, c. 9, s. 183

Marginal note:Exception

  •  (1) If a bank holding company fails to comply with section 893 as the result of any of the following, section 895 does not apply in respect of the bank holding company until the expiration of six months after the day it failed to comply with section 893:

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

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

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

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

  • Marginal note:Shares acquiring voting rights

    (2) If, as the result of an event that has occurred and is continuing, shares of a bank holding company acquire voting rights in such number as to cause the bank holding company to no longer be in compliance with section 893, section 895 does not apply in respect of that bank holding company until the expiration of six months after the day the bank holding company ceased to be in compliance with section 893 or any later day that the Minister may, by order, specify.

  • 2001, c. 9, s. 183

Marginal note:Acquisition of control permitted

  •  (1) Subject to subsection (2) and sections 887 and 900, section 893 does not apply in respect of a bank holding company if a person acquires control of the bank holding company through the purchase or other acquisition of all or any number of the shares of the bank holding company 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 holding company 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 holding company 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 holding company in respect of the voting shares of the bank holding company or by any entity that is controlled by a person who is a major shareholder of the bank holding company in respect such shares.

  • 2001, c. 9, s. 183

Marginal note:Application of section 893

 At the expiration of the period for compliance with an undertaking referred to in subsection 899(2), section 893 shall apply in respect of the bank holding company to which the undertaking relates.

  • 2001, c. 9, s. 183

Marginal note:Restriction on voting rights

  •  (1) If, with respect to any bank holding company, a particular person contravenes section 874, subsection 875(1), 876(1) or 878(1), section 880 or 881 or subsection 882(1) or section 883 or fails to comply with an undertaking referred to in subsection 899(2) or with any term or condition imposed under section 907, 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 holding company 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) shall cease 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 holding company within the meaning of paragraph 3(1)(d);

    • (c) if the person failed to comply with an undertaking referred to in subsection 899(2), the bank holding company complies with section 893; or

    • (d) if the person failed to comply with a term or condition imposed under section 907, the person complies with the term or condition.

  • Marginal note:Saving

    (3) Despite subsection (1), if a person contravenes subsection 876(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 holding company 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 holding company, 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 holding company beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.

  • 2001, c. 9, s. 183

Marginal note:Loss of control — bank and bank holding company

  •  (1) Despite sections 876 and 882, a widely held bank or a widely held bank holding company may be a major shareholder of a bank holding company with equity of twelve billion dollars or more and cease to control, within the meaning of paragraphs 3(1)(a) and (d), the bank holding company 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 holding company 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.

  • 2001, c. 9, s. 183
  • 2007, c. 6, s. 132
  • 2012, c. 5, s. 95

Marginal note:Loss of control — other entities

  •  (1) Despite sections 876 and 882, 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 holding company with equity of twelve billion dollars or more and cease to control, within the meaning of paragraph 3(1)(d), the bank holding company 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 holding company 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.

  • 2001, c. 9, s. 183
  • 2007, c. 6, s. 132
  • 2012, c. 5, s. 96

Marginal note:Change in status

  •  (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 holding company with equity of twelve 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 holding company; and

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

  • 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.

  • 2001, c. 9, s. 183
  • 2007, c. 6, s. 132
  • 2012, c. 5, s. 97

Approval Process

Marginal note:Application for approval

  •  (1) An application for an approval of the Minister required under this Division 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 Division 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.

  • 2001, c. 9, s. 183

Marginal note:Matters for consideration

  •  (1) Subject to subsection (2), if an application for an approval under section 875 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 of any bank that is a subsidiary of the bank holding company;

    • (b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of any bank that is a subsidiary of the bank holding company;

    • (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 holding company 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 holding company and its affiliates on the conduct of those businesses and operations; and

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

  • Marginal note:Exception

    (2) Except for an application by an eligible agent for an approval under section 875, and subject to subsection 882(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 holding company with equity of twelve 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 holding company.

  • Marginal note:Favourable treatment

    (3) The Minister shall not approve a transaction that would cause a bank holding company 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 bank holding companies 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.

  • 2001, c. 9, s. 183
  • 2007, c. 6, s. 132
  • 2012, c. 5, s. 98, c. 31, s. 123
 
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