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Bank Act (S.C. 1991, c. 46)

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

PART XII.1Authorized Foreign Banks (continued)

Miscellaneous (continued)

Marginal note:Deemed loan

 For the purposes of sections 425 to 436, as incorporated by section 555, where an authorized foreign bank accepts a bill of exchange drawn on it and not payable on demand or pays or makes money available for the payment of such a bill of exchange, or issues a guarantee, or otherwise makes a promise to effect a payment, the authorized foreign bank is deemed to lend money or make an advance.

  • 1991, c. 46, s. 580
  • 1999, c. 28, s. 35

Marginal note:Investment standards

 An authorized foreign bank shall establish and adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.

  • 1991, c. 46, s. 581
  • 1999, c. 28, s. 35

Deposit Requirements

Marginal note:Requirement to maintain assets on deposit

  •  (1) An authorized foreign bank shall maintain on deposit in Canada with a Canadian financial institution approved by the Superintendent unencumbered assets of a type approved by the Superintendent the total value of which determined in accordance with the accounting principles referred to in subsection 308(4) shall equal

    • (a) in the case of an authorized foreign bank that is subject to the restrictions and requirements referred to in subsection 524(2), one hundred thousand dollars; and

    • (b) in any other case, the greater of

      • (i) five million dollars, and

      • (ii) five per cent of the liabilities of the authorized foreign bank in respect of its business in Canada.

  • Marginal note:Deposit agreement

    (2) The assets referred to in subsection (1) shall be kept with the Canadian financial institution pursuant to a deposit agreement entered into with the prior approval of the Superintendent.

  • 1991, c. 46, s. 582
  • 1999, c. 28, s. 35
  • 2001, c. 9, s. 161

Financial Year

Marginal note:Financial year

  •  (1) The financial year of an authorized foreign bank in respect of its business in Canada may end on any of March 31, June 30, September 30 or December 31.

  • Marginal note:First financial year

    (2) If the first financial year of an authorized foreign bank would end less than four months after the authorized foreign bank has obtained an order under subsection 534(1) approving the commencement and carrying on of business in Canada, the first financial year of the authorized foreign bank ends on March 31, June 30, September 30 or December 31, as the case may be, in the next calendar year.

  • 1991, c. 46, s. 583
  • 1999, c. 28, s. 35

Auditors

Interpretation

Marginal note:Definitions

 In sections 585 to 596, the expressions firm of accountants and member have the meanings assigned to those expressions by section 313.

  • 1991, c. 46, s. 584
  • 1999, c. 28, s. 35

Appointment

Marginal note:Appointment of auditor

  •  (1) An authorized foreign bank shall appoint a firm of accountants as auditor for its business in Canada and shall notify the Superintendent in writing of the name and address and date of appointment of the auditor without delay after making the appointment.

  • Marginal note:Qualification of auditor

    (2) A firm of accountants is qualified to be an auditor if

    • (a) two or more of its members are accountants who

      • (i) are members in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province,

      • (ii) have at least five years experience at a senior level in performing audits of a financial institution,

      • (iii) are ordinarily resident in Canada, and

      • (iv) are independent of the authorized foreign bank; and

    • (b) the member of the firm jointly designated by the firm and the authorized foreign bank to conduct the audit of the authorized foreign bank on behalf of the firm is qualified in accordance with paragraph (a).

  • Marginal note:Independence

    (3) For the purposes of subsection (2),

    • (a) independence is a question of fact; and

    • (b) a member of a firm of accountants is deemed not to be independent of an authorized foreign bank if that member, a business partner of that member or the firm of accountants

      • (i) is a business partner, director, officer or employee of the authorized foreign bank or of any affiliate of the authorized foreign bank or is a business partner of any director, officer or employee of the authorized foreign bank or of any affiliate of the authorized foreign bank,

      • (ii) beneficially owns or controls, directly or indirectly, a material interest in the shares of the authorized foreign bank or of any of its affiliates, or

      • (iii) has been a liquidator, trustee in bankruptcy, receiver or receiver and manager of any affiliate of the authorized foreign bank within the two years immediately preceding the proposed appointment of the firm of accountants as auditor, other than an affiliate that is a subsidiary of the authorized foreign bank acquired under section 522.15.

  • Marginal note:Business partners

    (3.1) For the purposes of subsection (3), a business partner of a member of a firm of accountants includes

    • (a) another member of the firm; and

    • (b) a shareholder of the firm or of another business partner of the member.

  • Marginal note:Notice of designation

    (4) Within 15 days after the appointment of a firm of accountants as auditor, the authorized foreign bank and the firm shall jointly designate a member of the firm who meets the qualifications described in paragraph (2)(a) to conduct an audit under subsection 592(1) on behalf of the firm and the authorized foreign bank shall without delay notify the Superintendent in writing of the designation.

  • Marginal note:New designation

    (5) Where for any reason the member designated under subsection (4) to conduct an audit ceases to conduct the audit, the authorized foreign bank and the firm of accountants may jointly designate another member of the same firm who meets the qualifications described in paragraph (2)(a) to conduct the audit and the authorized foreign bank shall without delay notify the Superintendent in writing of the designation.

  • Marginal note:Deemed vacancy

    (6) In any case where subsection (5) applies and a designation is not made pursuant to that subsection within thirty days after the designated member ceases to conduct the audit, there shall be deemed to be a vacancy in the office of auditor of the authorized foreign bank.

  • 1991, c. 46, s. 585
  • 1999, c. 28, s. 35
  • 2005, c. 54, s. 82
  • 2007, c. 6, s. 94

Marginal note:Disqualification of auditor

  •  (1) An auditor that ceases to be qualified under subsection 585(2) shall resign without delay after any member of the firm of accountants becomes aware that the firm has ceased to be qualified.

  • Marginal note:Disqualification order

    (2) Any interested person may apply to a court for an order declaring that an authorized foreign bank’s auditor has ceased to be qualified under subsection 585(2) and declaring the office of auditor to be vacant.

  • 1991, c. 46, s. 586
  • 1999, c. 28, s. 35

Marginal note:Revocation of appointment

  •  (1) An authorized foreign bank may at any time revoke the appointment of its auditor.

  • Marginal note:Revocation by Superintendent

    (2) The Superintendent may at any time revoke the appointment of an auditor made under subsection 585(1) or 589(1) by notice in writing signed by the Superintendent and sent by registered mail to the auditor and to the principal officer of the authorized foreign bank addressed to the usual place of business of the auditor and to the principal office of the authorized foreign bank, respectively.

  • 1991, c. 46, s. 587
  • 1999, c. 28, s. 35

Marginal note:Ceasing to hold office

  •  (1) An auditor ceases to hold office when

    • (a) the auditor resigns; or

    • (b) the appointment of the auditor is revoked by the authorized foreign bank or the Superintendent.

  • Marginal note:Effective date of resignation

    (2) The resignation of an auditor becomes effective at the time a written resignation is sent to the authorized foreign bank or at the time specified in the resignation, whichever is later.

  • 1991, c. 46, s. 588
  • 1999, c. 28, s. 35

Marginal note:Filling vacancy

  •  (1) Where a vacancy occurs in the office of auditor of an authorized foreign bank under any of sections 585 to 588, the authorized foreign bank shall without delay fill the vacancy and, where it fails to do so, the Superintendent may fill the vacancy.

  • Marginal note:Designation of member of firm

    (2) Where the Superintendent has appointed a firm of accountants to fill a vacancy, the Superintendent shall designate the member of the firm who is to conduct the audit on behalf of the firm.

  • 1991, c. 46, s. 589
  • 1999, c. 28, s. 35

Marginal note:Statement of auditor

 An auditor of an authorized foreign bank who

  • (a) resigns, or

  • (b) receives a notice or otherwise learns that another person is to be appointed in the auditor’s stead, whether because of the auditor’s resignation or revocation of appointment or because the auditor’s term of office has expired or is about to expire,

shall submit to the principal officer of the authorized foreign bank and the Superintendent a written statement giving the reasons for the resignation or the reasons why the auditor opposes any proposed action.

  • 1991, c. 46, s. 590
  • 1999, c. 28, s. 35

Marginal note:Duty of replacement auditor

  •  (1) Where an auditor of an authorized foreign bank has resigned or the appointment of an auditor has been revoked, no firm of accountants shall accept an appointment or consent to be appointed as auditor of the authorized foreign bank until the firm has requested and received from the other auditor a written statement of the circumstances and reasons why the other auditor resigned or why, in the other auditor’s opinion, the other auditor’s appointment was revoked.

  • Marginal note:Exception

    (2) Notwithstanding subsection (1), a firm of accountants may accept an appointment or consent to be appointed as auditor of an authorized foreign bank if, within fifteen days after a request under that subsection is made, no reply from the other auditor is received.

  • Marginal note:Effect of non-compliance

    (3) Unless subsection (2) applies, an appointment as auditor of an authorized foreign bank is void if subsection (1) has not been complied with.

  • 1991, c. 46, s. 591
  • 1999, c. 28, s. 35

Examinations and Reports

Marginal note:Examination of annual return

  •  (1) The auditor of an authorized foreign bank shall make any examination that the auditor considers necessary to enable the auditor to report on the annual return.

  • Marginal note:Auditing standards

    (2) The auditor’s examination shall, except as otherwise specified by the Superintendent, be conducted in accordance with the auditing standards referred to in subsection 323(2).

  • Marginal note:Filing

    (3) The auditor’s report shall be filed with the Superintendent within five months after the end of the financial year of the authorized foreign bank.

  • Marginal note:Report to Superintendent and extended examination

    (4) The Superintendent may, in writing, require that an authorized foreign bank’s auditor report to the Superintendent on the extent of the auditor’s procedures in the examination of the authorized foreign bank’s annual return and may, in writing, require that the auditor enlarge or extend the scope of that examination or direct that any other particular procedure be performed in any particular case, and the auditor shall comply with any requirement of the Superintendent and report to the Superintendent on it.

  • Marginal note:Special examination

    (5) The Superintendent may, in writing, require that the auditor of the authorized foreign bank make a particular examination relating to the adequacy of the procedures adopted by the authorized foreign bank in respect of its business in Canada for the safety of its depositors and creditors, or any other examination that, in the Superintendent’s opinion, the public interest may require, and report to the Superintendent on it.

  • Marginal note:Special audit

    (6) The Superintendent may direct that a special audit or report be made if, in the opinion of the Superintendent, it is so required and may appoint for that purpose a firm of accountants qualified under subsection 585(2) to be the auditor.

  • Marginal note:Expenses payable by authorized foreign bank

    (7) The expenses entailed by any examination, audit or report referred to in any of subsections (4) to (6) are payable by the authorized foreign bank on being approved in writing by the Superintendent.

  • 1991, c. 46, s. 592
  • 1999, c. 28, s. 35

Marginal note:Right to information

  •  (1) On the request of the auditor of an authorized foreign bank, the present or former principal officers, directors, officers, employees or representatives of the authorized foreign bank shall, to the extent that they are reasonably able to do so,

    • (a) permit access to any records, assets and security held by the authorized foreign bank, or any entity in which the authorized foreign bank has a substantial investment under Part XII, and

    • (b) provide any information and explanations

    that are, in the opinion of the auditor, necessary to enable the auditor to perform the duties of auditor of the authorized foreign bank.

  • Marginal note:No civil liability

    (2) A person who in good faith makes an oral or written communication under subsection (1) shall not be liable in any civil action arising from having made the communication.

  • 1991, c. 46, s. 593
  • 1999, c. 28, s. 35

Marginal note:Auditor’s report to principal officer

  •  (1) The auditor of an authorized foreign bank shall make a report to the principal officer of the authorized foreign bank in writing on the annual return not later than five months after the end of the financial year in respect of which the annual return is prepared.

  • Marginal note:Auditor’s opinion

    (2) In the report, the auditor shall state whether, in the auditor’s opinion, the annual return presents fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the business in Canada of the authorized foreign bank as at the end of the financial year to which it relates and the results of the operations and changes in the financial position of the business in Canada of the authorized foreign bank for that financial year.

  • Marginal note:Auditor’s remarks

    (3) In the report, the auditor shall include any remarks that the auditor considers necessary when

    • (a) the examination has not been made in accordance with the auditing standards referred to in subsection 592(2);

    • (b) the annual return has not been prepared on a basis consistent with that of the preceding financial year; or

    • (c) the annual return does not present fairly, in accordance with the accounting principles referred to in subsection 308(4), the financial position of the business in Canada of the authorized foreign bank as at the end of the financial year to which it relates or the results of the operations or changes in the financial position of the authorized foreign bank for that financial year.

  • 1991, c. 46, s. 594
  • 1999, c. 28, s. 35
  • 2001, c. 9, s. 162
 
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