First Nations Fiscal Management Act (S.C. 2005, c. 9)

Marginal note:Priority

• 78 (1) If a borrowing member is insolvent, the Authority has priority over all other creditors of the borrowing member for all moneys that are authorized or obligated to be paid to the Authority under a law made by the borrowing member, under this Act, including under the regulations, or under an agreement relating to borrowing from the Authority, but the priority is only in respect of any debt that arises on or after the day on which the borrowing member receives the initial disbursement of the first loan that it obtained from the Authority.

• Marginal note:Debts to the Crown

  (2) For greater certainty, subsection (1) does not apply to Her Majesty.

Marginal note:Limitations — loans

79 The Authority shall not make a loan to a borrowing member unless the First Nations Tax Commission has approved a law made by the borrowing member under paragraph 5(1)(d) in respect of that loan.

Marginal note:Restriction

80 A borrowing member that has obtained a loan from the Authority that is secured by property tax revenues and has a term of one year or longer shall not subsequently obtain such a loan from any other person as long as the loan from the Authority remains unpaid.

Marginal note:Limitations — short-term loans

81 The Authority shall not make a loan that has a term of less than one year to a borrowing member for a purpose described in subparagraph 74(a)(ii) unless the loan is made in anticipation of local revenues set out in a law made by the borrowing member under paragraph 5(1)(b).

Marginal note:Sinking fund

• 82 (1) The Authority shall establish a sinking fund, or any other system of repayment prescribed by regulation, to fulfil its repayment obligations to the holders of each security issued by the Authority.

• Marginal note:Separate accounts

  (2) Where a sinking fund is established, a separate sinking fund account shall be kept for each borrowing member participating in a security issued by the Authority.

• Marginal note:Sinking fund investments

  (3) Funds in a sinking fund may be invested only in

  • (a) securities issued or guaranteed by Canada or a province;

  • (b) securities of a local, municipal or region­al government in Canada;

  • (b.1) securities of the Authority or of a municipal finance authority established by a province, if the day on which they mature is not later than the day on which the security for which the sinking fund is established matures;

  • (c) investments guaranteed by a bank, trust company or credit union; or

  • (d) deposits in a bank or trust company in Canada or non-equity or membership shares in a credit union.

Marginal note:Surpluses

• 83 (1) The Authority may declare a surplus in a sinking fund and use the surplus, in order of priority, to

  • (a) replenish any amounts paid out of the debt reserve fund; and

  • (b) make a distribution to borrowing members who are participating in that fund.

• Marginal note:Recovery from sinking fund

  (2) The Authority may recover fees payable by a borrowing member from any surplus to be distributed to that member under paragraph (1)(b).

Marginal note:Debt reserve fund

• 84 (1) The Authority shall establish, to make payments or sinking fund contributions for which insufficient moneys are available from borrowing members,

  • (a) a debt reserve fund solely for financing secured by property tax revenues; and

  • (b) a debt reserve fund solely for financing secured by other revenues.

• Marginal note:Provisioning of fund

  (2) Subject to a regulation that fixes different percentages for the purposes of this subsection, the Authority shall withhold — and deposit in the corresponding debt reserve fund — 5% of the amount of any loan to a borrowing member that is secured by property tax revenues and of any loan to a borrowing member that is secured by other revenues.

• Marginal note:Percentage withheld may be reduced by board

  (2.1) However, the board of directors may, by resolution, reduce the percentage to be withheld from a loan under subsection (2) to a percentage that is not less than 1%, if the board of directors is satisfied that doing so would not have a negative impact on the Authority’s credit rating and the regulations do not fix a different percentage.

• Marginal note:Separate account

  (3) A separate account shall be kept for each security issued and for each borrowing member contributing to a debt reserve fund.

• Marginal note:Investments

  (4) The funds of a debt reserve fund may be invested only in securities, investments or deposits referred to in paragraph 82(3)(a), (c) or (d) that mature or are callable within five years, 25% of which must be callable within 90 days.

• Marginal note:Liability for shortfall

  (5) If payments from a debt reserve fund reduce its balance

  • (a) by less than 50% of the total amount contributed by borrowing members who have obtained financing for which that debt reserve fund was established, the Authority may, in accordance with the regulations, require those borrowing members to pay without delay amounts sufficient to replenish the debt reserve fund; and

  • (b) by 50% or more of the total amount contributed by borrowing members who have obtained financing for which that debt reserve fund was established, the Authority shall, in accordance with the regulations, require those borrowing members to pay without delay amounts sufficient to replenish the debt reserve fund.

• Marginal note:Repayment

  (6) Money contributed by a borrowing member to a debt reserve fund, and any investment income received on it, that has not already been repaid to the borrowing member by the Authority shall be repaid when all obligations in respect of the security in respect of which the money was contributed have been satisfied.

Marginal note:Credit enhancement fund

• 85 (1) The Authority shall establish a fund for the enhancement of the Authority’s credit rating.

• Marginal note:Investments

  (2) The funds of the credit enhancement fund may be invested only in securities, investments or deposits referred to in paragraph 82(3)(a), (c) or (d) that mature or are callable within five years, 25% of which must be callable within 90 days.

• Marginal note:Investment income

  (3) Investment income from the credit enhancement fund may be used

  • (a) to temporarily offset any shortfalls in the debt reserve fund;

  • (b) to defray the Authority’s costs of operation; and

  • (c) for any other purpose prescribed by regulation.

• Marginal note:Capital

  (4) The capital of the credit enhancement fund may be used

  • (a) to temporarily offset any shortfalls in the debt reserve fund; and

  • (b) for any other purpose prescribed by regulation.

• Marginal note:Repayment to credit enhancement fund

  (5) Any funds that are paid from the credit enhancement fund to offset a shortfall in the debt reserve fund shall be repaid by that debt reserve fund within 18 months after the day on which the funds are paid or, if more than one payment of funds is made, within 18 months after the day on which the first payment is made. After the expiry of that 18-month period, no further funds shall be paid from the credit enhancement fund to that debt reserve fund unless it has been fully replenished under section 84.

Marginal note:Default by first nation

• 86 (1) If a borrowing member fails to make a payment to the Authority, to fulfil any other obligation under a borrowing agreement with the Authority or to pay a charge imposed by the Authority under this Part, the Authority shall

  • (a) notify the borrowing member of the failure; and

  • (b) send a notice of the failure to the First Nations Financial Management Board and the First Nations Tax Commission, together with evidence of the failure and a copy of any relevant documents and records.

• Marginal note:Requirement for report

  (2) If a failure referred to in subsection (1) relates to an obligation other than payment, the Authority may require that the First Nations Financial Management Board review and report on the reasons for the failure.

• Marginal note:Report

  (3) On receipt of a notice referred to in paragraph (1)(b) in respect of a failure related to an obligation other than payment, the First Nations Financial Management Board shall advise the Authority in writing of its opinion on the reasons for the failure and recommend any intervention under section 52 or 53 that it considers appropriate.

• Marginal note:Required intervention

  (4) The Authority may, by notice in writing, require the First Nations Financial Management Board to either — at the Board’s discretion — impose a co-management arrangement on a borrowing member or assume third-party management of the First Nation’s local revenues

  • (a) where the borrowing member fails to make a payment to the Authority under a borrowing agreement with the Authority, or to pay a charge imposed by the Authority under this Part; or

  • (b) on receipt of a report of the Board under subsection (3) in respect of the borrowing member.

Marginal note:Short-term pooled investment funds

• 87 (1) The Authority may establish short-term pooled investment funds.

• Marginal note:Investments

  (2) Funds in a short-term pooled investment fund may be invested only in

  • (a) securities issued or guaranteed by Canada, a province or the United States;

  • (b) fixed-term deposits, notes, certificates or other short-term paper of, or guaranteed by, a bank, trust company or credit union, including swaps in United States currency;

  • (c) securities issued by the Authority or by a local, municipal or regional government in Canada;

  • (d) commercial paper issued by a Canadian company that is rated in the highest category by at least two recognized security-rating institutions;

  • (e) any class of investments permitted under an Act of a province relating to trustees; or

  • (f) any other investments or class of investments prescribed by regulation.

General

Marginal note:Annual report

• 88 (1) The Chairperson shall, within four months after the end of each fiscal year, submit to the Authority’s members and the Minister a report of the operations of the Authority for that fiscal year.

• Marginal note:Contents

  (2) The annual report shall include the financial statements of the Authority and its auditor’s opinion on them.

Marginal note:Assignment — revenues payable by Her Majesty

• 88.1 (1) Despite section 67 of the Financial Administration Act and anything else in federal or provincial law, a borrowing member may, for the purposes of paragraph 74(b), assign the rights to any of the other revenues referred to in that paragraph that are payable to the borrowing member by Her Majesty in right of Canada.

• Marginal note:Assignment not binding

  (2) An assignment referred to in subsection (1) is not binding on Her Majesty in right of Canada and, without limiting the generality of the foregoing,

  • (a) a minister of, or other person acting on behalf of, Her Majesty in right of Canada is not required to pay to the assignee the assigned revenues;

  • (b) the assignment does not create any liability of Her Majesty in right of Canada to the assignee; and

  • (c) the rights of the assignee are subject to all rights of set-off or compensation in favour of Her Majesty in right of Canada.

Regulations

Marginal note:Regulations

89 The Governor in Council may, on the recommendation of the Minister after consultation by the Minister with the Authority, make regulations

• (a) prescribing anything that is to be prescribed under subsection 82(1) and paragraphs 85(3)(c) and (4)(b) and 87(2)(f);

• (b) fixing a percentage in respect of an amount to be withheld from a loan under subsection 84(2), which may be a higher or lower percentage than the percentage set out in that subsection and may vary according to whether the loan is secured by property tax revenues or by other revenues; and

• (c) respecting the imposition of charges under subsection 84(5), including the manner of calculating those charges and the share of those charges to be paid by each borrowing member.

• (d) [Repealed, 2018, c. 27, s. 407]

PART 5Payment of Moneys

Marginal note:Council resolution

• 90 (1) The council of a First Nation may submit to the Minister a resolution of the council requesting the payment to the First Nation of

  • (a) moneys held by Her Majesty for the use and benefit of the First Nation; and

  • (b) moneys to be collected or received in future by Her Majesty for the use and benefit of the First Nation.

• Marginal note:Information to accompany resolution

  (2) The resolution shall be accompanied by proof that

  • (a) the council has made a law respecting the financial administration of the First Nation under paragraph 9(1)(a) and the law has been approved by the First Nations Financial Management Board;

  • (b) the council has obtained independent legal advice and independent financial advice with respect to the risks of the payment of the moneys to the First Nation; and

  • (c) the payment of the moneys to the First Nation has been approved under section 91.