Bank Act

Marginal note:Prohibition re guarantee and acceptance of securities and bills

• 518 (1) Subject to subsections (2) to (4),

  • (a) a foreign bank shall not guarantee any securities or accept any bills of exchange or depository bills that are issued by a person resident in Canada and that are intended by the issuer or by any party to the security or bill to be sold or traded in Canada; and

  • (b) no person shall participate in any arrangement in connection with a guarantee or acceptance prohibited by paragraph (a).

• Marginal note:Exception

  (2) Subsection (1) does not apply in respect of the guarantee or acceptance by a foreign bank of securities, bills of exchange or depository bills that are issued by

  • (a) a non-bank affiliate of the foreign bank;

  • (b) any other person resident in Canada and guaranteed or accepted by

    • (i) a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank,

    • (ii) a Canadian entity referred to in any of paragraphs 468(1)(a) to (i) in which a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank, holds a substantial investment,

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

    • (iv) a Canadian entity referred to in any of paragraphs 468(1)(b) to (i) that is a non-bank affiliate of the foreign bank, or

    • (v) a prescribed entity;

  • (c) a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank;

  • (d) a Canadian entity in which a bank that is a subsidiary of the foreign bank, or of an entity associated with the foreign bank, holds a substantial investment;

  • (e) a Canadian entity controlled by a bank that is a subsidiary of the foreign bank or of an entity associated with the foreign bank; or

  • (f) a prescribed entity.

• Marginal note:Exception

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

  • (a) the business in Canada of an authorized foreign bank; or

  • (b) a foreign insurance company in relation to its insurance business in Canada.

• Marginal note:Exception

  (4) Despite subsection (1), a foreign bank, or an entity associated with a foreign bank, that has received the approval of the Minister under paragraph 522.22(1)(f) may guarantee any securities or accept any bills of exchange or depository bills in relation to its business permitted under paragraph 522.18(1)(a) or (b).