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Bank Act (S.C. 1991, c. 46)

Full Document:  

Act current to 2021-11-17 and last amended on 2021-06-30. Previous Versions

PART XIIForeign Banks (continued)

DIVISION 4Financial Establishment in Canada (continued)

Investments (continued)

Marginal note:Indirect investments through federal institutions

  •  (1) A foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity by way of

    • (a) an acquisition or holding of the control of a Canadian entity referred to in any of paragraphs 468(1)(a) to (f), or of a prescribed Canadian entity, that controls or has a substantial investment in the Canadian entity; or

    • (b) an acquisition or holding of shares or ownership interests in the Canadian entity by

      • (i) a Canadian entity referred to in any of paragraphs 468(1)(a) to (f), or a prescribed Canadian entity, that is controlled by the foreign bank or the entity associated with the foreign bank, or

      • (ii) a Canadian entity controlled by a Canadian entity referred to in subparagraph (i).

  • Marginal note:Indirect investments through federal institutions

    (2) If a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity under subsection (1), none of the requirements relating to approval set out in Division 5 apply in respect of that acquisition or holding.

  • 2001, c. 9, s. 132
  • 2007, c. 6, s. 62

Marginal note:Investments through provincial institutions

 An entity that is associated with a foreign bank and that is

  • (a) an entity referred to in any of paragraphs 468(1)(g) to (i), or

  • (b) a Canadian entity controlled by an entity referred to in any of paragraphs 468(1)(g) to (i)

may acquire or hold control of, or a substantial investment in, a Canadian entity that is not a permitted Canadian entity or an entity referred to in paragraphs 468(1)(a) to (i), and if it does so, none of the requirements relating to approval set out in Division 5 apply in respect of that acquisition or holding.

  • 2001, c. 9, s. 132

Marginal note:Indirect investments through provincial institutions

 A foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity, other than a permitted Canadian entity or a Canadian entity referred to in any of paragraphs 468(1)(a) to (i), by way of

  • (a) an acquisition or holding of the control of a Canadian entity referred to in any of paragraphs 468(1)(g) to (i), or of a prescribed Canadian entity, that controls or has a substantial investment in the Canadian entity; or

  • (b) an acquisition or holding of shares or ownership interests in the Canadian entity by

    • (i) a Canadian entity referred to in any of paragraphs 468(1)(g) to (i), or a prescribed Canadian entity, that is controlled by the foreign bank or the entity associated with the foreign bank, or

    • (ii) a Canadian entity controlled by a Canadian entity referred to in subparagraph (i).

  • 2001, c. 9, s. 132

Marginal note:Temporary investments

  •  (1) Subject to sections 522.21 and 522.211, a foreign bank or an entity associated with a foreign bank may, by way of temporary investment, acquire or hold control of, or a substantial investment in, a Canadian entity if the foreign bank or the entity associated with a foreign bank has a financial establishment in Canada or would, by virtue of the temporary investment, have a financial establishment in Canada.

  • Marginal note:Divestiture

    (2) If subsection (1) applies in respect of a foreign bank or an entity associated with a foreign bank, the foreign bank or entity shall do all things necessary to ensure that, within two years after acquiring the control or the substantial investment or within any other period that may be specified or approved by the Minister, it no longer controls or has a substantial investment in the entity.

  • Marginal note:Extension

    (3) On application by a foreign bank, or an entity associated with a foreign bank, the Minister may extend the period referred to in subsection (2) by any further period or periods.

  • Marginal note:Exception

    (4) If a foreign bank, or an entity associated with a foreign bank, acquires or holds, by way of a temporary investment, control of, or a substantial investment in, a Canadian entity for which the approval of the Minister would have been required under any of paragraphs 522.22(1)(a) to (e) if the foreign bank or the entity associated with a foreign bank had acquired the control or the substantial investment under section 522.07 or 522.08, the foreign bank or the entity associated with a foreign bank shall, within 90 days after acquiring control, or after acquiring the substantial investment,

    • (a) apply to the Minister for approval to retain control of the Canadian entity or to continue to hold the substantial investment in the Canadian entity for a period specified by the Minister or for an indeterminate period on any terms and conditions that the Minister considers appropriate; or

    • (b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the Canadian entity or holds a substantial investment in the Canadian entity.

  • Marginal note:Deemed temporary investment

    (5) If a foreign bank or an entity associated with a foreign bank holds control of, or a substantial investment in, a Canadian entity as permitted by this Division and the foreign bank or the entity associated with the foreign bank becomes aware of a change in the business, affairs or activities of the Canadian entity that, if the change had taken place before the acquisition of control or the substantial investment, would have caused the entity not to be a limited commercial entity or a Canadian entity referred to in section 522.07 or 522.08 or would have been such that approval for the acquisition would have been required under any of paragraphs 522.22(1)(a) to (e) or (g), the foreign bank or the entity associated with the foreign bank is deemed to have acquired, on the day it becomes aware of the change, a temporary investment in respect of which subsections (1) to (4) apply.

  • Marginal note:Notification

    (6) Within 90 days after acquiring control or a substantial investment under subsection (1) or (5), a foreign bank or an entity associated with a foreign bank shall notify the Minister in writing of the acquisition.

  • 2001, c. 9, s. 132
  • 2007, c. 6, s. 63

Marginal note:Acquisition by loan workout or realization of security

  •  (1) If a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity

    • (a) as a result of a default that has occurred under the terms of an agreement with respect to a loan made between the foreign bank — or the entity associated with a foreign bank — and the Canadian entity, or under any other documents governing the terms of the loan, or

    • (b) through the realization of a security interest for any loan or advance made by the foreign bank or the entity associated with the foreign bank, or for any other debt or liability owing to it,

    it may retain the control or the substantial investment for five years, but it shall do all things necessary to ensure that, within five years after the acquisition, it no longer controls the Canadian entity or holds a substantial investment in the Canadian entity.

  • Marginal note:Extension

    (2) On application by a foreign bank or an entity associated with a foreign bank, the Minister may extend the period referred to in subsection (1) by any further period or periods.

  • Marginal note:Exception

    (3) If, under subsection (1), a foreign bank or an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity for which the approval of the Minister is required under Division 5, the foreign bank or entity associated with the foreign bank may retain control of the Canadian entity, or continue to hold the substantial investment, for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (1) or of any extension granted under subsection (2).

  • 2001, c. 9, s. 132

Branches

Marginal note:Bank branches

 A foreign bank may, under Part XII.1, maintain a branch in Canada to carry on business in Canada.

  • 2001, c. 9, s. 132

Marginal note:Insurance branches

 A foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank may obtain an order under Part XIII of the Insurance Companies Act to insure, in Canada, risks.

  • 2001, c. 9, s. 132

Marginal note:Business of a cooperative credit society and dealing in securities

  •  (1) Subject to the requirements relating to approval set out in Division 5, a foreign bank — or an entity associated with a foreign bank —

    • (a) that is a foreign cooperative credit society may, in Canada, engage in or carry on the business of a cooperative credit society, so long as that business is engaged in or carried on in accordance with provincial laws relating to cooperative credit societies; or

    • (b) that is a foreign securities dealer may, in Canada, engage in or carry on the business of dealing in securities, or the business of providing investment counselling services and portfolio management services, so long as that business is engaged in or carried on in accordance with provincial laws relating to securities dealing or investment counselling and portfolio management.

  • Marginal note:Business of investment counselling services and portfolio management services

    (2) Subject to the requirements relating to approval set out in Division 5, an entity associated with a foreign bank incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province, that engages in or carries on, outside Canada, the business of providing investment counselling services and portfolio management services may engage in or carry on that business in Canada so long as that business in Canada is engaged in or carried on in accordance with provincial laws relating to investment counselling and portfolio management.

  • 2001, c. 9, s. 132
  • 2007, c. 6, s. 64

Marginal note:Limited commercial branches

  •  (1) Subject to the requirements relating to approval set out in Division 5, and subject to subsection (2), a foreign bank, or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province and that is associated with a foreign bank, that has a financial establishment in Canada may maintain a branch in Canada or engage in or carry on business in Canada, so long as

    • (a) less than the prescribed portion — or if no portion is prescribed, 10 per cent — of its business in Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any of

      • (i) paragraphs 522.08(1)(a) to (f), and

      • (ii) paragraphs (a) to (g) of the definition financial services entity in subsection 507(1);

    • (b) less than the prescribed portion — or if no portion is prescribed, 10 per cent — of its business outside Canada, determined in the prescribed manner, consists of one or more of the activities referred to in any of

      • (i) paragraphs 522.08(1)(a) to (f),

      • (ii) paragraphs (a) to (g) of the definition financial services entity in subsection 507(1), and

      • (iii) paragraph (h) of that definition, except under prescribed circumstances; and

    • (c) in the opinion of the Minister, the business in Canada is the same as, or similar, related or incidental to, the business outside Canada of the foreign bank or the entity associated with a foreign bank.

  • Marginal note:Prohibition

    (2) A foreign bank — or an entity associated with a foreign bank — that maintains a branch or engages in or carries on any business under subsection (1) may not in Canada engage in any leasing activities.

  • 2001, c. 9, s. 132
  • 2007, c. 6, s. 65

DIVISION 5Approvals

Application

Marginal note:Non-application

 This Division does not apply in respect of investments acquired and held, branches maintained and businesses engaged in or carried on in accordance with Division 3.

  • 2001, c. 9, s. 132

Approval to Have a Financial Establishment in Canada

Marginal note:No financial establishment without approval — foreign bank

  •  (1) A foreign bank may not, without the prior written approval of the Minister, have a financial establishment in Canada.

  • Marginal note:Exception

    (2) Subsection (1) does not apply if the foreign bank or any entity associated with the foreign bank

    • (a) is an authorized foreign bank;

    • (b) is a foreign insurance company;

    • (c) controls or is a major owner of a Canadian entity referred to in any of paragraphs 468(1)(a) to (f); or

    • (d) has already received the approval of the Minister to have a financial establishment in Canada.

  • Marginal note:Deeming

    (3) A foreign bank that was the subject of a designation order under subsection 508(1) as that subsection read immediately before the coming into force of this subsection and whose designation order has not been revoked is deemed to have received the approval of the Minister to have a financial establishment in Canada.

  • 2001, c. 9, s. 132
  • 2007, c. 6, s. 67

Marginal note:No financial establishment without approval — associated entity

  •  (1) An entity that is associated with a foreign bank may not, without the prior written approval of the Minister, have a financial establishment in Canada.

  • Marginal note:Exception

    (2) Subsection (1) does not apply if the entity associated with a foreign bank, the foreign bank or any other entity associated with the foreign bank

    • (a) is an authorized foreign bank;

    • (b) is a foreign insurance company;

    • (c) controls or is a major owner of a Canadian entity referred to in any of paragraphs 468(1)(a) to (f); or

    • (d) has already received the approval of the Minister to have a financial establishment in Canada.

  • Marginal note:Deeming

    (3) An entity associated with a foreign bank that was the subject of a designation order under subsection 508(1) as that subsection read immediately before the coming into force of this subsection and whose designation order has not been revoked is deemed to have received the approval of the Minister to have a financial establishment in Canada.

  • 2007, c. 6, s. 67

Approvals in Respect of Investments and Activities

Marginal note:Minister’s approval

  •  (1) Subject to subsection (2) and the regulations, a foreign bank or an entity associated with a foreign bank may not, without the prior written approval of the Minister,

    • (a) acquire control of a Canadian entity referred to in any of paragraphs 468(1)(g) to (i) from a person who is not a member of the foreign bank’s group;

    • (b) acquire control of a Canadian entity whose business includes one or more of the activities referred to in paragraph 522.08(1)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the Canadian entity to material market or credit risk — including a finance entity — if the control is acquired from an entity referred to in any of paragraphs 468(1)(a) to (f) that is not a member of the foreign bank’s group, but does not include a Canadian entity whose activities are limited to the activities of one or more of the following entities:

      • (i) a factoring entity as defined in the regulations, or

      • (ii) a financial leasing entity;

    • (c) acquire or hold control of, or a substantial investment in, a Canadian entity whose business includes one or more of the activities referred to in paragraph 522.08(1)(d);

    • (d) acquire or hold control of, or a substantial investment in, a Canadian entity that engages in Canada in an activity described in paragraph 410(1)(c);

    • (d.1) acquire or hold control of, or a substantial investment in, a Canadian entity that engages in an activity described in paragraph 410(1)(c.1);

    • (e) acquire or hold control of, or a substantial investment in, a Canadian entity that engages in an activity prescribed for the purposes of paragraph 522.08(1)(f);

    • (f) engage in or carry on a business permitted by paragraph 522.18(1)(a) or (b) or subsection 522.18(2);

    • (g) acquire or hold control of, or a substantial investment in, a limited commercial entity;

    • (h) maintain a branch or engage in or carry on a business permitted by section 522.19; or

    • (i) engage in an activity referred to in paragraph 510(1)(c) in the circumstances described in paragraph 513(1)(a) or (2)(c).

  • Marginal note:Approval for indirect investments

    (2) Subject to the regulations, if a foreign bank or an entity associated with a foreign bank

    • (a) obtains the approval of the Minister under any of paragraphs (1)(a) to (e) and (g) to acquire or hold control of, or a substantial investment in, a Canadian entity, and

    • (b) through that acquisition or holding, indirectly acquires control of, or a substantial investment in, another Canadian entity that would require the approval of the Minister under any of those paragraphs,

    and that indirect acquisition is disclosed to the Minister in writing before the approval is obtained, the foreign bank or the entity associated with a foreign bank is deemed to have obtained the approval of the Minister for that indirect acquisition.

  • Marginal note:Ministerial approval of more than one entity

    (3) If the Minister, under paragraph (1)(g), approves the acquisition or holding of control of, or a substantial investment in, a limited commercial entity by a foreign bank or by an entity associated with a foreign bank, the Minister may also authorize the foreign bank or entity associated with a foreign bank to, at any time, acquire and hold control of, or a substantial investment in, another limited commercial entity that engages in activities that are substantially the same as those engaged in by the Canadian entity in respect of which the approval was given.

  • Marginal note:Substantial investment by underwriter

    (4) Nothing in this Part precludes a foreign bank or an entity associated with a foreign bank from acquiring a substantial investment in a Canadian entity if the substantial investment is acquired in the course of a distribution to the public of shares or ownership interests in the Canadian entity by a securities underwriter so long as the securities underwriter holds the substantial investment for no longer than six months.

  • Marginal note:Application

    (5) Subsection (1) applies regardless of whether or not the approval of the Minister is required under section 522.21 or 522.211.

  • 2001, c. 9, s. 132
  • 2007, c. 6, s. 68
 
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