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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 9Investments (continued)

Miscellaneous

Marginal note:Regulations

 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.

  • 2001, c. 9, s. 183

Marginal note:Divestment order

  •  (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.

  • 2001, c. 9, s. 183

Marginal note:Deemed temporary investment

 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.

  • 2001, c. 9, s. 183

Marginal note:Asset transactions

  •  (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.

  • 2001, c. 9, s. 183
  • 2007, c. 6, s. 124

Marginal note:Transitional

 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.

  • 2001, c. 9, s. 183

Marginal note:Saving

 A loan or investment referred to in section 945 is deemed not to be prohibited by the provisions of this Division.

  • 2001, c. 9, s. 183

Meaning of non-bank entity

  •  (1) Subject to subsection (2), for the purpose of section 948 non-bank entity means a Canadian entity, other than a bank, that is controlled by a bank holding company or in which a bank holding company has a substantial investment.

  • Marginal note:Exception

    (2) A Canadian entity is not a non-bank entity by reason only that a subsidiary of a bank holding company that is a bank controls, or has a substantial investment in, the Canadian entity.

  • 2001, c. 9, s. 183

Marginal note:Prohibited activities

  •  (1) A non-bank entity shall not, in Canada,

    • (a) engage in the business of accepting deposit liabilities; or

    • (b) represent to the public that any instrument issued by the non-bank entity is a deposit or that any liability incurred by the non-bank entity is a deposit.

  • Marginal note:Disclosure of status

    (2) A non-bank entity that carries on as part of its business the provision of financial services shall not borrow money in Canada from the public without disclosing that

    • (a) the non-bank entity is not a member institution of the Canada Deposit Insurance Corporation;

    • (b) the liability incurred by the non-bank entity through the borrowing is not a deposit; and

    • (c) the non-bank entity is not regulated as a financial institution in Canada.

  • Marginal note:Manner of disclosure

    (3) The disclosure shall be

    • (a) in a prospectus, information circular or other offering document related to the borrowing or in a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or

    • (b) in any other manner that may be prescribed.

  • Marginal note:Exception for certain borrowings

    (4) Subsection (2) does not apply

    • (a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or

    • (b) except as may be provided in any regulations, to a borrowing

      • (i) from a person in an amount of $150,000 or more, or

      • (ii) through the issue of instruments in denominations of $150,000 or more.

  • Marginal note:Exception

    (5) Subsections (1) and (2) do not apply if the non-bank entity is

    • (a) a trust or loan corporation incorporated under an Act of Parliament or of the legislature of a province;

    • (b) an entity referred to in paragraph 930(1)(d) or (h); or

    • (c) a prescribed entity.

  • Marginal note:Exception

    (6) Subsection (2) does not apply if the non-bank entity is

    • (a) an insurance company incorporated under an Act of Parliament or of the legislature of a province;

    • (b) a bank holding company or an insurance holding company;

    • (c) an entity that is controlled by an insurance holding company or in which an insurance holding company has a substantial investment;

    • (d) a financial institution that is described in paragraph (g) of the definition financial institution in section 2; or

    • (e) a prescribed entity.

  • 2001, c. 9, s. 183

DIVISION 10Adequacy of Capital and Liquidity

Marginal note:Adequacy of capital and liquidity

  •  (1) A bank holding company shall, in relation to its business, maintain

    • (a) adequate capital, and

    • (b) adequate and appropriate forms of liquidity,

    and shall comply with any regulations in relation thereto.

  • Marginal note:Regulations and guidelines

    (2) The Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by bank holding companies of adequate capital and adequate and appropriate forms of liquidity.

  • Marginal note:Directives

    (3) Notwithstanding that a bank holding company is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the bank holding company

    • (a) to increase its capital; or

    • (b) to provide additional liquidity in such forms and amounts as the Superintendent may require.

  • Marginal note:Compliance

    (4) A bank holding company shall comply with an order made under subsection (3) within such time as the Superintendent specifies therein.

  • 2001, c. 9, s. 183

DIVISION 11Regulation of Bank Holding Companies

Supervision

Returns

Marginal note:Required information

 A bank holding company shall provide the Superintendent with such information, at such times and in such form as the Superintendent may require.

  • 2001, c. 9, s. 183

Marginal note:Names of directors and auditor

  •  (1) A bank holding company shall, within thirty days after each annual meeting of the bank holding company, provide the Superintendent with a return showing

    • (a) the name, residence and citizenship of each director holding office immediately following the meeting;

    • (b) the mailing address of each director holding office immediately following the meeting;

    • (c) the bodies corporate of which each director referred to in paragraph (a) is an officer or director and the firms of which each director is a member;

    • (d) the names of the directors referred to in paragraph (a) who are officers or employees of the bank holding company or any affiliate of the bank holding company, and the positions they occupy;

    • (e) the name of each committee of the bank holding company on which each director referred to in paragraph (a) serves;

    • (f) the date of expiration of the term of each director referred to in paragraph (a); and

    • (g) the name, address and date of appointment of the auditor of the bank holding company.

  • Marginal note:Changes

    (2) Where

    • (a) any information relating to a director or an auditor of a bank holding company shown in the latest return made to the Superintendent under subsection (1), other than information referred to in paragraph (1)(c), becomes inaccurate or incomplete,

    • (b) a vacancy in the office of auditor of the bank holding company occurs or is filled by another person, or

    • (c) a vacancy on the board of directors of the bank holding company occurs or is filled,

    the bank holding company shall forthwith provide the Superintendent with such information as is required to maintain the return in a complete and accurate form.

  • 2001, c. 9, s. 183
 
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