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Insurance Companies Act (S.C. 1991, c. 47)

Act current to 2021-02-24 and last amended on 2019-06-17. Previous Versions

PART XIIFraternal Benefit Societies (continued)

Investments (continued)

Exceptions and Exclusions (continued)

Marginal note:Regulations restricting ownership

 The Governor in Council may make regulations restricting the ownership under sections 554 to 559 by a society of shares of a body corporate or of ownership interest in an unincorporated entity and imposing terms and conditions applicable to societies that own such shares or interests.

  • 1991, c. 47, s. 560
  • 2001, c. 9, s. 437

Portfolio Limits

Marginal note:Exclusion from portfolio limits

  •  (1) The value of all loans, investments and interests acquired by a society and any of its prescribed subsidiaries as a result of a realization of a security interest or pursuant to section 558 shall not be included in calculating the value of loans, investments and interests of the society and its prescribed subsidiaries under sections 562 to 566

    • (a) for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; and

    • (b) for a period of five years after the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.

  • Marginal note:Extension

    (2) The Superintendent may, in the case of any particular society, extend any period referred to in subsection (1) for such further period or periods, and on such terms and conditions, as the Superintendent considers necessary.

  • 1991, c. 47, s. 561
  • 1997, c. 15, s. 294

Consumer and Commercial Lending by Societies

Marginal note:Lending limit

 A society shall not, and shall not permit its prescribed subsidiaries to,

  • (a) make or acquire a commercial loan or a loan to a natural person, or

  • (b) acquire control of a permitted entity that holds commercial loans or loans to natural persons

where the aggregate value of all such loans held by the society and its prescribed subsidiaries exceeds, or the acquisition or making of the loan or the acquisition of control of the body corporate would cause the aggregate value of all such loans held by the society and its prescribed subsidiaries to exceed, the prescribed percentage of the total assets of the society.

  • 1991, c. 47, s. 562
  • 2001, c. 9, s. 438

Real Property

Marginal note:Limit on total property interest

 A society shall not, and shall not permit its prescribed subsidiaries to,

  • (a) purchase or otherwise acquire an interest in real property, or

  • (b) make an improvement to any real property in which the society or any of its prescribed subsidiaries has an interest

if the aggregate value of all interests of the society in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, an amount determined in accordance with the regulations.

  • 1991, c. 47, s. 563
  • 2001, c. 9, s. 439

Marginal note:Regulations

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

  • (a) defining the interests of a society in real property;

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

  • (c) respecting the determination of an amount for the purpose of each of sections 563, 565 and 566.

  • 1991, c. 47, s. 564
  • 2001, c. 9, s. 439

Equities

Marginal note:Limits on equity acquisitions

 A society 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 society 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 society has a substantial investment, and

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

beneficially owned by the society and its prescribed subsidiaries exceeds, or the purchase or acquisition would cause that aggregate value to exceed, an amount determined in accordance with the regulations.

  • 1991, c. 47, s. 565
  • 1993, c. 34, s. 84(F)
  • 1997, c. 15, s. 295
  • 2001, c. 9, s. 439

Aggregate Limit

Marginal note:Aggregate limit

 A society 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 society 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 society 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 society 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 society and its prescribed subsidiaries, and

  • (d) all interests of the society 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, an amount determined in accordance with the regulations.

  • 1991, c. 47, s. 566
  • 1997, c. 15, s. 296
  • 2001, c. 9, s. 439

Miscellaneous

Marginal note:Divestment order

  •  (1) The Superintendent may, by order, direct a society to dispose of, within such period as the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Part.

  • Marginal note:Idem

    (2) Where

    • (a) a society

      • (i) fails to provide or obtain within a reasonable time the undertakings referred to in section 556, or

      • (ii) is in default of an undertaking referred to in section 556 and the default is not remedied within ninety days after the day of receipt by the society of a notice from the Superintendent of the default, or

    • (b) a body corporate referred to in section 556 is in default of an undertaking referred to in section 556 and the default is not remedied within ninety days after the day of receipt by the society of a notice from the Superintendent of the default,

    the Superintendent may, by order, require the society, within such period as the Superintendent considers reasonable, to do all things necessary to ensure that the society no longer has a substantial investment in the body corporate to which the undertaking relates.

Marginal note:Deemed temporary investment

 If a society controls or has a substantial investment in an entity as permitted by this Part and the society 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 554(5), the society is deemed to have acquired, on the day the society becomes aware of the change, a temporary investment in respect of which section 557 applies.

  • 1991, c. 47, s. 568
  • 1997, c. 15, s. 297
  • 2001, c. 9, s. 440

Marginal note:Asset transactions

  •  (1) A society 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 society 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 society, as shown in the last annual statement of the society 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) an asset that is a debt obligation referred to in subparagraphs (b)(i) to (v) of the definition “commercial loan” in subsection 490(1); or

    • (b) a transaction or series of transactions by a society with another financial institution as a result of the society’s participation in one or more syndicated loans with that financial institution.

  • Marginal note:Exception

    (3) The approval of the Superintendent under this section is not required if

    • (a) the society sells or transfers assets under a transaction that is approved by the Minister or the Superintendent under subsection 254(2) or (2.01);

    • (b) the society or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 554(5) is required.

  • 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 society 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 society 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 society if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 331(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 society 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 society, 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 society 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 society 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 society if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 331(4), immediately before the transfer of the asset.

  • 1991, c. 47, s. 569
  • 2001, c. 9, s. 440
  • 2007, c. 6, s. 255
 
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