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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2022-09-11 and last amended on 2022-06-30. Previous Versions

PART VIIIBusiness and Powers (continued)

General Business (continued)

Marginal note:Restriction on guarantees

  •  (1) A bank shall not guarantee on behalf of any person the payment or repayment of any sum of money unless

    • (a) the sum of money is a fixed sum of money with or without interest thereon; and

    • (b) the person on whose behalf the bank has undertaken to guarantee the payment or repayment has an unqualified obligation to reimburse the bank for the full amount of the payment or repayment to be guaranteed.

  • Marginal note:Exception

    (2) Paragraph (1)(a) does not apply where the person on whose behalf the bank has undertaken to guarantee the payment or repayment is a subsidiary of the bank.

  • Marginal note:Regulations

    (3) The Governor in Council may make regulations imposing terms and conditions in respect of guarantees permitted by this section.

  • 1991, c. 46, s. 414
  • 1997, c. 15, s. 44
  • 2001, c. 9, s. 105

Marginal note:Restriction on securities activities

 A bank shall not deal in Canada in securities to the extent prohibited or restricted by such regulations as the Governor in Council may make for the purposes of this section.

Marginal note:Prohibition

  •  (1) It is prohibited for a bank to issue a debt obligation in relation to which the amounts of principal and interest owing are guaranteed to be paid from loans or other assets held by an entity that is created and organized for the principal purpose of holding those loans or other assets and with the intention of legally isolating those loans or other assets from the bank, unless

    • (a) the debt obligation is a covered bond as defined in section 21.5 of the National Housing Act;

    • (b) the bank is a registered issuer as defined in section 21.5 of that Act other than one whose right to issue covered bonds has been suspended; and

    • (c) the debt obligation is issued under a registered program as defined in section 21.5 of that Act.

  • Marginal note:Exception

    (2) The Governor in Council may make regulations exempting any type of debt obligation from the application of subsection (1).

  • 2012, c. 19, s. 362

Marginal note:Derivatives and eligible financial contracts — regulations

  •  (1) The Governor in Council may make regulations respecting a bank’s activities in relation to derivatives and eligible financial contracts.

  • Definition of derivative

    (2) In this section, derivative means an option, swap, futures contract, forward contract or other financial or commodity contract or instrument whose market price, value, delivery obligations, payment obligations or settlement obligations are derived from, referenced to or based on an underlying interest, including a price, rate, index, value, variable, event, probability or thing.

  • Definition of eligible financial contract

    (3) In this section, eligible financial contract has the same meaning as in subsection 39.15(9) of the Canada Deposit Insurance Corporation Act.

  • 2014, c. 20, s. 210
  • 2016, c. 7, s. 157

Marginal note:Benchmarks  — regulations

  •  (1) The Governor in Council may make regulations respecting a bank’s activities in relation to benchmarks.

  • Definition of benchmark

    (2) In this section, benchmark means a price, estimate, rate, index or value that is

    • (a) determined from time to time by reference to an assessment of one or more underlying interests;

    • (b) made available to the public, either free of charge or on payment; and

    • (c) used for reference for any purpose, including

      • (i) determining the interest payable, or other sums that are due, under loan agreements or other financial contracts or instruments,

      • (ii) determining the value of financial instruments or the price at which they may be bought or sold, and

      • (iii) measuring the performance of financial instruments.

  • 2014, c. 20, s. 210

Marginal note:Restriction on insurance business

  •  (1) A bank shall not undertake the business of insurance except to the extent permitted by this Act or the regulations.

  • Marginal note:Restriction on acting as agent

    (2) A bank shall not act in Canada as agent for any person in the placing of insurance and shall not lease or provide space in any branch in Canada of the bank to any person engaged in the placing of insurance.

  • Marginal note:Regulations

    (3) The Governor in Council may make regulations respecting the matters referred to in subsection (1) and regulations respecting relations between banks and

    • (a) entities that undertake the business of insurance; or

    • (b) insurance agents or insurance brokers.

  • Marginal note:Saving

    (4) Nothing in this section precludes a bank from

    • (a) requiring insurance to be placed by a borrower for the security of the bank; or

    • (b) obtaining group insurance for its employees or the employees of any bodies corporate in which it has a substantial investment pursuant to section 468.

  • (5) [Repealed, 1997, c. 15, s. 45]

  • Definition of business of insurance

    (6) In this section, business of insurance includes

    • (a) the issuance of any annuity if the liability in respect of the annuity is contingent on the death of a person; and

    • (b) the issuance of any debt obligation, any of whose terms and conditions are established on the basis of mortality considerations, under which the issuer is obliged to make periodic payments.

  • 1991, c. 46, s. 416
  • 1997, c. 15, s. 45
  • 2012, c. 19, s. 206

Marginal note:Restriction on leasing

 A bank shall not engage in Canada in any personal property leasing activity in which a financial leasing entity, as defined in subsection 464(1), is not permitted to engage.

  • 1991, c. 46, s. 417
  • 2001, c. 9, s. 106

Marginal note:Restriction on residential mortgages

  •  (1) A bank shall not make a loan in Canada on the security of residential property in Canada for the purpose of purchasing, renovating or improving that property, or refinance such a loan, if the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, would exceed 80 per cent of the value of the property at the time of the loan.

  • Marginal note:Exception

    (2) Subsection (1) does not apply in respect of

    • (a) a loan made or guaranteed under the National Housing Act or any other Act of Parliament by or pursuant to which a different limit on the value of property on the security of which the bank may make a loan is established;

    • (b) a loan if repayment of the amount of the loan that exceeds the maximum amount set out in subsection (1) is guaranteed or insured by a government agency or a private insurer approved by the Superintendent;

    • (c) the acquisition by the bank from an entity of securities issued or guaranteed by the entity that are secured on any residential property, whether in favour of a trustee or otherwise, or the making of a loan by the bank to the entity against the issue of such securities; or

    • (d) a loan secured by a mortgage where

      • (i) the mortgage is taken back by the bank on a property disposed of by the bank, including where the disposition is by way of a realization of a security interest, and

      • (ii) the mortgage secures payment of an amount payable to the bank for the property.

  • 1991, c. 46, s. 418
  • 1997, c. 15, s. 46
  • 2007, c. 6, s. 27

Marginal note:Restriction on charges to borrowers

  •  (1) Subject to any regulations made under subsection (2), a bank that has obtained insurance or a guarantee against default on a loan made in Canada on the security of residential property shall not charge a borrower an amount for the insurance or guarantee that exceeds the actual cost to the bank of the insurance or guarantee.

  • Marginal note:Regulations

    (2) The Governor in Council may make regulations

    • (a) respecting the determination of the actual cost to a bank for the purposes of subsection (1);

    • (b) respecting the circumstances in which a bank is exempt from the application of subsection (1);

    • (c) respecting, in relation to insurance or a guarantee against default on a loan made by a bank in Canada on the security of residential property,

      • (i) the arrangements into which the bank and any affiliates that it controls, and the representatives and the employees of each, may or may not enter, and

      • (ii) the payments or benefits that the bank and any affiliates that it controls, and the representatives and the employees of each, may or may not accept from an insurer or the insurer’s affiliates; and

    • (d) respecting any other matters necessary to carry out the purposes of subsection (1).

  • (3) [Repealed, 2018, c. 27, s. 320]

Marginal note:Policies re security interests

  •  (1) The directors of a bank shall establish and the bank shall adhere to policies regarding the creation of security interests in property of the bank to secure obligations of the bank and the acquisition by the bank of beneficial interests in property that is subject to security interests.

  • Marginal note:Order to amend policies

    (2) The Superintendent may, by order, direct a bank to amend its policies as specified in the order.

  • Marginal note:Compliance

    (3) A bank shall comply with an order made under subsection (2) within the time specified in the order.

  • 1991, c. 46, s. 419
  • 2001, c. 9, s. 107

Marginal note:Regulations and guidelines

 The Governor in Council may make regulations and the Superintendent may make guidelines respecting the creation by a bank of security interests in its property to secure obligations of the bank and the acquisition by the bank of beneficial interests in property that is subject to security interests.

  • 2001, c. 9, s. 107

Marginal note:Exception

 Sections 419 and 419.1 do not apply in respect of a security interest created by a bank to secure an obligation of the bank to the Bank of Canada or the Canada Deposit Insurance Corporation.

  • 2001, c. 9, s. 107

Marginal note:Restriction on receivers

 A bank shall not grant to a person the right to appoint a receiver or a receiver and manager of the property or business of the bank.

Marginal note:Restriction on partnerships

  •  (1) Except with the approval of the Superintendent, a bank may not be a general partner in a limited partnership or a partner in a general partnership.

  • Meaning of general partnership

    (2) For the purposes of subsection (1), general partnership means any partnership other than a limited partnership.

  • 1991, c. 46, s. 421
  • 2001, c. 9, s. 108
  •  (1) [Repealed, 2001, c. 9, s. 109]

  • (2) [Repealed, 1993, c. 44, s. 27]

Definition of non-WTO Member bank subsidiary

 In section 422.2, non-WTO Member bank subsidiary means a bank that is a subsidiary of a foreign bank and that is not controlled by a WTO Member resident.

  • 1993, c. 44, s. 28
  • 1994, c. 47, s. 24
  • 1999, c. 28, s. 22
  • 2001, c. 9, s. 110

Marginal note:Limitation on branches in Canada of non-WTO Member bank subsidiaries

 No non-WTO Member bank subsidiary shall have any branch in Canada, other than its head office and one branch, without the approval of the Minister.

  • 1993, c. 44, s. 28
  • 1999, c. 28, s. 22

 [Repealed, 1994, c. 47, s. 25]

Special Security

Marginal note:Definitions

  •  (1) For the purposes of sections 426 to 436,

    agricultural equipment

    agricultural equipment means implements, apparatus, appliances and machinery of any kind usually affixed to real property, for use on a farm, but does not include a farm electric system; (installations agricoles ou matériel agricole immobilier)

    agricultural implements

    agricultural implements means tools, implements, apparatus, appliances and machines of any kind not usually affixed to real property, for use on or in connection with a farm, and vehicles for use in the business of farming and, without restricting the generality of the foregoing, includes plows, harrows, drills, seeders, cultivators, mowing machines, reapers, binders, threshing machines, combines, leaf tobacco tying machines, tractors, movable granaries, trucks for carrying products of agriculture, equipment for bee-keeping, cream separators, churns, washing machines, spraying apparatus, portable irrigation apparatus, incubators, milking machines, refrigerators and heating and cooking appliances for farming operations or use in the farm home of a kind not usually affixed to real property; (instruments agricoles ou matériel agricole mobilier)

    aquacultural electric system

    aquacultural electric system means all machinery, apparatus and appliances for the generation or distribution of electricity in an aquaculture operation, whether or not affixed to real property; (installation électrique aquicole)

    aquacultural equipment

    aquacultural equipment means implements, apparatus, appliances and machinery of any kind usually affixed to real property for use in an aquaculture operation, but does not include an aquacultural electric system; (installations aquicoles ou matériel aquicole immobilier)

    aquacultural implements

    aquacultural implements means tools, implements, apparatus, appliances and machines of any kind not usually affixed to real property, for use in an aquaculture operation, and includes net pen systems, vehicles and boats for use in aquaculture; (instruments aquicoles ou matériel aquicole mobilier)

    aquacultural stock growing or produced in the aquaculture operation

    aquacultural stock growing or produced in the aquaculture operation means all products of the aquaculture operation; (stock en croissance ou produits de l’exploitation aquicole)

    aquaculture

    aquaculture means the cultivation of aquatic plants and animals; (aquiculture)

    aquaculture operation

    aquaculture operation means any premises or site where aquaculture is carried out; (exploitation aquicole)

    aquaculturist

    aquaculturist includes the owner, occupier, landlord and tenant of an aquaculture operation; (aquiculteur)

    aquatic broodstock

    aquatic broodstock means any aquatic plants and animals used to produce aquatic seedstock; (stock géniteur aquicole)

    aquatic plants and animals

    aquatic plants and animals means plants and animals that, at most stages of their development or life cycles, live in an aquatic environment; (organismes animaux et végétaux aquatiques)

    aquatic seedstock

    aquatic seedstock means aquatic plants and animals that at any stage of their development are purchased or collected by an aquaculturist for cultivation; (stock aquicole de départ)

    bill of lading

    bill of lading includes all receipts for goods, wares and merchandise accompanied by an undertaking

    • (a) to move the goods, wares and merchandise from the place where they were received to some other place, by any means whatever, or

    • (b) to deliver to a place other than the place where the goods, wares and merchandise were received a like quantity of goods, wares and merchandise of the same or a similar grade or kind; (connaissement)

    crops growing or produced on the farm

    crops growing or produced on the farm means all products of the farm; (récoltes sur pied ou produites à la ferme)

    farm

    farm means land in Canada used for the purpose of farming, which term includes livestock raising, dairying, bee-keeping, fruit growing, the growing of trees and all tillage of the soil; (ferme)

    farm electric system

    farm electric system means all machinery, apparatus and appliances for the generation or distribution of electricity on a farm whether or not affixed to real property; (installation électrique de ferme)

    farmer

    farmer includes the owner, occupier, landlord and tenant of a farm; (agriculteur)

    fish

    fish includes shellfish, crustaceans and marine animals; (poisson)

    fisherman

    fisherman means a person whose business consists in whole or in part of fishing; (pêcheur)

    fishing

    fishing means fishing for or catching fish by any method; (pêche)

    fishing equipment and supplies

    fishing equipment and supplies means equipment, apparatus, appliances and supplies for use in the operation of a fishing vessel and not forming part thereof, or for use in fishing, and, without restricting the generality of the foregoing, includes detachable engines and machinery, lines, hooks, trawls, nets, anchors, traps, bait, salt, fuel and stores; (engins et fournitures de pêche)

    fishing vessel

    fishing vessel means any ship or boat or any other description of vessel for use in fishing and equipment, apparatus and appliances for use in the operation thereof and forming part thereof, or any share or part interest therein; (bateau de pêche)

    forest

    forest means land in Canada covered with timber stands or that, formerly so covered, is not put to any use inconsistent with forestry, and includes a sugar bush; (forêt)

    forestry

    forestry means the conservation, cultivation, improvement, harvesting and rational utilization of timber stands and the resources contained therein and obtainable therefrom, and includes the operation of a sugar bush; (sylviculture)

    forestry equipment

    forestry equipment means implements, apparatus, appliances and machinery of any kind usually affixed to real property, for use in a forest; (matériel sylvicole immobilier)

    forestry implements

    forestry implements means tools, implements, apparatus, appliances and machines of any kind not usually affixed to real property, for use in forestry, and includes vehicles for use in forestry; (matériel sylvicole mobilier)

    forestry producer

    forestry producer means a person whose business consists in whole or in part of forestry and includes a producer of maple products; (sylviculteur)

    goods, wares and merchandise

    goods, wares and merchandise includes products of agriculture, products of aquaculture, products of the forest, products of the quarry and mine, products of the sea, lakes and rivers, and all other articles of commerce; (effets, denrées ou marchandises)

    grain

    grain includes wheat, oats, barley, rye, corn, buckwheat, flax, beans and all kinds of seeds; (grain)

    hydrocarbons

    hydrocarbons means solid, liquid and gaseous hydrocarbons and any natural gas whether consisting of a single element or of two or more elements in chemical combination or uncombined and, without restricting the generality of the foregoing, includes oil-bearing shale, tar sands, crude oil, petroleum, helium and hydrogen sulphide; (hydrocarbures)

    livestock

    livestock includes

    • (a) horses and other equines,

    • (b) cattle, sheep, goats and other ruminants, and

    • (c) swine, poultry, bees and fur-bearing animals; (bétail)

    manufacturer

    manufacturer means any person who manufactures or produces by hand, art, process or mechanical means any goods, wares and merchandise and, without restricting the generality of the foregoing, includes a manufacturer of logs, timber or lumber, maltster, distiller, brewer, refiner and producer of petroleum, tanner, curer, packer, canner, bottler and a person who packs, freezes or dehydrates any goods, wares and merchandise; (fabricant)

    minerals

    minerals includes base and precious metals, coal, salt and every other substance that is an article of commerce obtained from the earth by any method of extraction, but does not include hydrocarbons or any animal or vegetable substance other than coal; (substances minérales)

    products of agriculture

    products of agriculture includes

    • (a) grain, hay, roots, vegetables, fruits, other crops and all other direct products of the soil, and

    • (b) honey, livestock (whether alive or dead), dairy products, eggs and all other indirect products of the soil; (produits agricoles)

    products of aquaculture

    products of aquaculture includes all cultivated aquatic plants and animals; (produits aquicoles)

    products of the forest

    products of the forest includes

    • (a) logs, pulpwood, piling, spars, railway ties, poles, pit props and all other timber,

    • (b) boards, laths, shingles, deals, staves and all other lumber, bark, wood chips and sawdust and Christmas trees,

    • (c) skins and furs of wild animals, and

    • (d) maple products; (produits de la forêt)

    products of the quarry and mine

    products of the quarry and mine includes stone, clay, sand, gravel, metals, ores, coal, salt, precious stones, metalliferous and non-metallic minerals and hydrocarbons, whether obtained by excavation, drilling or otherwise; (produits des carrières et des mines)

    products of the sea, lakes and rivers

    products of the sea, lakes and rivers includes fish of all kinds, marine and freshwater organic and inorganic life and any substances extracted or derived from any water, but does not include products of aquaculture; (produits aquatiques)

    unperfected

    unperfected, in relation to a security interest, means that the security interest has not been registered in a public register maintained under the law under which the security interest is created, or has not been perfected or published by any other means recognized by that law, where the registration or other means of perfection or publication would have made the security interest effective against third parties or would have determined priorities in rank in respect of rights in, on or in respect of the property that is subject to the security interest; (non parfaite)

    warehouse receipt

    warehouse receipt includes

    • (a) any receipt given by any person for goods, wares and merchandise in the person’s actual, visible and continued possession as bailee thereof in good faith and not as the owner thereof,

    • (b) receipts given by any person who is the owner or keeper of a harbour, cove, pond, wharf, yard, warehouse, shed, storehouse or other place for the storage of goods, wares and merchandise, for goods, wares and merchandise delivered to the person as bailee, and actually in the place or in one or more of the places owned or kept by the person, whether or not that person is engaged in other business,

    • (c) receipts given by any person in charge of logs or timber in transit from timber limits or other lands to the place of destination of the logs or timber,

    • (d) Lake Shippers’ Clearance Association receipts and transfer certificates, British Columbia Grain Shippers’ Clearance Association receipts and transfer certificates, and all documents recognized by the Canada Grain Act as elevator receipts, and

    • (e) receipts given by any person for any hydrocarbons received by the person as bailee, whether the person’s obligation to restore requires delivery of the same hydrocarbons or may be satisfied by delivery of a like quantity of hydrocarbons of the same or a similar grade or kind. (récépissé d’entrepôt)

  • Marginal note:Interpretation — products and by-products

    (2) For the purposes of sections 426 to 436, each thing included in the following terms as defined in subsection (1), namely,

    • (a) aquacultural stock growing or produced in the aquaculture operation,

    • (b) crops growing or produced on the farm,

    • (c) livestock,

    • (d) products of agriculture,

    • (e) products of aquaculture,

    • (f) products of the forest,

    • (g) products of the quarry and mine, and

    • (h) products of the sea, lakes and rivers,

    comprises that thing in any form or state and any part thereof and any product or by-product thereof or derived therefrom.

  • 1991, c. 46, s. 425
  • 2012, c. 5, s. 36
 
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