First Nations Fiscal Management Act

Marginal note:Debt reserve fund

• 84 (1) The Authority shall establish a debt reserve fund to make payments or sinking fund contributions for which insufficient moneys are available from borrowing members.

• Marginal note:Provisioning of fund

  (2) The Authority shall withhold — and deposit in the debt reserve fund — 5% of the amount of any loan.

• Marginal note:Percentage withheld may be reduced by board

  (2.1) However, the board of directors may, by resolution, reduce the percentage to be withheld from a loan under subsection (2) to a percentage that is not less than 1%, if the board of directors is satisfied that doing so would not have a negative impact on the Authority’s credit rating.

• Marginal note:Separate account

  (3) A separate account shall be kept for each security issued and for each borrowing member contributing to the debt reserve fund.

• Marginal note:Investments

  (4) The funds of the debt reserve fund may be invested only in securities, investments or deposits referred to in paragraph 82(3)(a), (c) or (d) that mature or are callable within five years, 25% of which must be callable within 90 days.

• Marginal note:Liability for shortfall

  (5) The following rules apply if payments from the debt reserve fund reduce its balance:

  • (a) if the balance is reduced by less than 50% of an amount determined in any manner prescribed by regulation, the Authority may, in accordance with the regulations, require borrowing members with unpaid loans to pay without delay amounts sufficient to replenish the debt reserve fund; and

  • (b) if the balance is reduced by 50% or more of an amount determined in any manner prescribed by regulation, the Authority shall, in accordance with the regulations, require borrowing members with unpaid loans to pay without delay amounts sufficient to replenish the debt reserve fund.

• Marginal note:Repayment

  (6) Money contributed by a borrowing member to the debt reserve fund, and any investment income received on it, that has not already been repaid to the borrowing member by the Authority shall be repaid when all obligations in respect of the security for which the money was contributed have been satisfied.