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Insurance Companies Act

Version of section 971 from 2012-05-24 to 2018-12-12:


Marginal note:Permitted investments

  •  (1) Subject to subsections (4) to (6), an insurance holding company may acquire control of, or acquire or increase a substantial investment in,

    • (a) a company or a society;

    • (b) an insurance holding company;

    • (c) a bank;

    • (d) a bank holding company;

    • (e) a body corporate to which the Trust and Loan Companies Act applies;

    • (f) an association to which the Cooperative Credit Associations Act applies;

    • (g) a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;

    • (h) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;

    • (i) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; or

    • (j) an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.

  • Marginal note:Permitted investments

    (2) Subject to subsections (3) to (6), an insurance holding company may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:

    • (a) engaging in any financial service activity or in any other activity that a life company is permitted to engage in under subsection 440(2) or section 441 or 442, other than paragraph 441(1)(h);

    • (b) acquiring or holding shares of, or ownership interests in, entities in which an insurance holding company is permitted under this Division to hold or acquire;

    • (c) engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the insurance holding company or any member of the insurance holding company’s group:

      • (i) the insurance holding company,

      • (ii) any member of the insurance holding company’s group,

      • (iii) any entity that is primarily engaged in the business of providing financial services,

      • (iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or

      • (v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;

    • (d) engaging in any activity that a life company is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to

      • (i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any member of the insurance holding company’s group, or

      • (ii) if a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;

    • (e) engaging in the activities referred to in the definition closed-end fund, mutual fund distribution entity or mutual fund entity as defined in subsection 490(1); and

    • (f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.

  • Marginal note:Restriction

    (3) An insurance holding company may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include

    • (a) activities that a company is not permitted to engage in under any of sections 466, 469 and 475;

    • (b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a company under paragraph 440(2)(b);

    • (c) activities that a company is not permitted to engage in under any regulation made under section 489 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;

    • (d) acquiring control of or acquiring or holding a substantial investment in another entity unless

      • (i) in the case of an entity that is controlled by the insurance holding company, a company would be permitted under Part IX to acquire a substantial investment in the other entity, or

      • (ii) in the case of an entity that is not controlled by the insurance holding company, a company would be permitted to acquire a substantial investment in the other entity under subsection 493(2), paragraph 493(3)(b) or (c) or subsection 493(4) or 495(1) or (2); or

    • (e) any prescribed activity.

  • Marginal note:Exception

    (3.1) Despite paragraph (3)(a), an insurance holding company may acquire control of, or acquire or increase a substantial investment in, any entity that acts as a trustee for a trust if the entity has been permitted under the laws of a province to act as a trustee for a trust and the following conditions are satisfied:

    • (a) the entity acts as a trustee only with respect to a closed-end fund or mutual fund entity; and

    • (b) if the entity engages in other business, that business is limited to engaging in one or more of the following:

      • (i) the activities of a mutual fund distribution entity,

      • (ii) any activity that a company is permitted to engage in under subsection 441(1.1), and

      • (iii) the provision of investment counselling services and portfolio management services.

  • Marginal note:Control

    (4) Subject to subsection (8) and the regulations, an insurance holding company may not acquire control of, or acquire or increase a substantial investment in,

    • (a) an entity referred to in any of paragraphs (1)(a) to (j), unless

      • (i) the insurance holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

      • (ii) the insurance holding company is permitted by regulations made under paragraph 977(a) to acquire or increase the substantial investment;

    • (b) an entity whose business includes one or more of the activities referred to in paragraph (2)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the entity to material market or credit risk, including a finance entity, a factoring entity and a financial leasing entity, unless

      • (i) the insurance holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or

      • (ii) the insurance holding company is permitted by regulations made under paragraph 977(a) to acquire or increase the substantial investment; or

    • (c) an entity whose business includes an activity referred to in paragraph (2)(b), including a specialized financing entity, unless

      • (i) the insurance holding company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,

      • (ii) the insurance holding company is permitted by regulations made under paragraph 977(a) to acquire or increase the substantial investment, or

      • (iii) subject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in paragraph (a) or (b) or an entity that is not a permitted entity.

  • Marginal note:Minister’s approval

    (5) Subject to the regulations, an insurance holding company may not, without the prior written approval of the Minister,

    • (a) acquire control of an entity referred to in paragraphs (1)(g) to (i) from a person who is not a member of the insurance holding company’s group;

    • (b) acquire control of an entity referred to in paragraph (1)(j) or (4)(b), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (f) that is not a member of the insurance holding company’s group:

      • (i) a factoring entity, or

      • (ii) a financial leasing entity;

    • (b.1) acquire control of an entity referred to in paragraph (1)(j) if the insurance holding company is an insurance holding company with equity of two billion dollars or more and

      A + B > C

      where

      A
      is the value of the entity’s consolidated assets, as it would have been reported in the entity’s annual financial statements if those statements had been prepared immediately before the acquisition,
      B
      is the aggregate of the values of the consolidated assets of all other entities referred to in paragraph (1)(j) that the insurance holding company has acquired control of within the preceding 12 months, as the value for each entity would have been reported in its annual financial statements if those statements had been prepared immediately before the acquisition of control of that entity, and
      C
      is 10% of the value of the insurance holding company’s consolidated assets, as shown in the insurance holding company’s last annual statement that was prepared before its first acquisition of control of an entity referred to in paragraph (1)(j) within the preceding 12 months;
    • (c) acquire control of, or acquire or increase a substantial investment in, an entity whose business includes one or more of the activities referred to in paragraph (2)(d);

    • (d) acquire control of, or acquire or increase a substantial investment in, an entity that engages in Canada in an activity described in paragraph 441(1)(d);

    • (d.1) acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 441(1)(d.1); or

    • (e) acquire control of, or acquire or increase a substantial investment in, an entity engaging in an activity prescribed for the purposes of paragraph (2)(f).

  • Marginal note:Matters for consideration

    (5.1) In addition to any matters or conditions provided for in this Act that are relevant to the granting of an approval, the Minister may, in considering whether to grant the approval under paragraph (5)(b.1), take into account all matters that he or she considers relevant in the circumstances, including

    • (a) the stability of the financial system in Canada; and

    • (b) the best interests of the financial system in Canada.

  • Marginal note:Superintendent’s approval

    (6) Subject to subsection (7) and the regulations, an insurance holding company may not acquire control of, or acquire or increase a substantial investment in, an entity referred to in any of paragraphs (1)(g) to (j) and (4)(b) and (c) unless the insurance holding company obtains the approval of the Superintendent.

  • Marginal note:Exception

    (7) Subsection (6) does not apply in respect of a particular transaction if

    • (a) the insurance holding company is acquiring control of an entity, other than a specialized financing entity, and the only reason for which the insurance holding company would, but for this subsection, require approval for the acquisition is that the entity carries on activities referred to in paragraph (2)(b);

    • (b) the insurance holding company is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity; or

    • (c) the Minister has approved the transaction under subsection (5) or is deemed to have approved it under subsection 972(1).

  • Marginal note:Control not required

    (8) An insurance holding company need not control an entity referred to in paragraph (1)(j), or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province, if the laws or customary business practices of the country under the laws of which the entity was incorporated or formed do not permit the insurance holding company to control the entity.

  • Marginal note:Prohibition on giving up control in fact

    (9) An insurance holding company that, under subsection (4), controls an entity may not, without the prior written approval of the Minister, give up control, within the meaning of paragraph 3(1)(d), of the entity while it continues to control the entity.

  • Marginal note:Giving up control

    (10) An insurance holding company that, under subsection (4), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity if

    • (a) the insurance holding company is permitted to do so by regulations made under paragraph 977(c); or

    • (b) the entity meets the conditions referred to in subparagraph (4)(c)(iii).

  • Marginal note:Subsections do not apply

    (11) If an insurance holding company controls, within the meaning of paragraph 3(1)(a), (b) or (c) an entity, subsections (5) and (6) do not apply in respect of any subsequent increases by the insurance holding company of its substantial investment in the entity so long as the insurance holding company continues to control the entity.

  • 2001, c. 9, s. 465
  • 2007, c. 6, ss. 326, 336(F)
  • 2012, c. 5, s. 158

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