Public Sector Pension Investment Board Regulations (SOR/2000-77)

6 For the purposes of these Regulations, a person is associated with

• (a) a corporation that the person controls and every affiliate of every such corporation;

• (b) a person who controls the person;

• (c) a partner who has a substantial investment in a partnership in which the person has a substantial investment;

• (d) a trust or estate in which the person has a substantial investment or for which the person serves as trustee or in a capacity similar to that of a trustee;

• (e) the spouse or common-law partner of the person; and

• (f) a brother, sister or child or other descendant of the person, or the spouse or common-law partner of any of them.

7 For the purposes of subparagraphs 6(2)(g)(ii) and 10(1)(a)(ii) of the Act, the prescribed kind of superannuation or pension benefit is one that is

• (a) granted under the Judges Act;

• (b) payable under the Governor General's Act or the Lieutenant Governors Superannuation Act; or

• (c) payable out of the Consolidated Revenue Fund, or out of a superannuation or pension fund or plan pursuant to which contributions have been paid out of the Consolidated Revenue Fund in respect of employees engaged locally outside of Canada, and that is

  • (i) related in amount to the period of service that may be counted by the person to whom the superannuation or pension benefit is payable, and

  • (ii) payable in instalments during the lifetime of the recipient and after his or her lifetime if the plan under which the superannuation or pension benefit is payable so provides.

PART 1Investments

General

8 In selecting investments, the Board shall evaluate them having regard to the overall rate of return and risk of loss of the entire portfolio of investments held by the Board.

Statement of Investment Policies, Standards and Procedures

• 9 (1) A written statement of the investment policies, standards and procedures in respect of the Board's portfolio of investments, established under section 32 of the Act, shall include

  • (a) categories of investments;

  • (b) the use of options, futures and other derivatives;

  • (c) diversification of the investment portfolio;

  • (d) asset mix and rate of return expectations;

  • (e) policies for the management of credit, market and other financial risks;

  • (f) liquidity of investments;

  • (g) the lending of cash or securities;

  • (h) the retention or delegation of voting rights acquired through investments;

  • (i) [Repealed, SOR/2001-463, s. 2]

  • (j) the method of, and basis for, the valuation of investments that are not regularly traded at a public exchange; and

  • (k) related party transactions permitted under section 17 and the criteria used to establish whether the value of a transaction is nominal.

• (2) The statement referred to in subsection (1) shall include a description of all factors that may affect the funding of the pension plans established under the Acts referred to in paragraph 4(1)(a) of the Act and the ability of the pension plans to meet their financial obligations and the relationship of those factors to those policies, standards and procedures.

• (3) The board of directors shall review and confirm or amend the statement at least once each financial year.

10 [Repealed, SOR/2001-463, s. 3]

Quantitative Limits

• 11 (1) The Board must not directly or indirectly invest more than 10% of the total market value of the Board’s assets in the securities of

  • (a) any one person;

  • (b) two or more associated persons; or

  • (c) two or more affiliated corporations.

• (2) Subsection (1) does not apply in respect of investments in

  • (a) a subsidiary of the Board;

  • (b) securities issued or fully guaranteed by the Government of Canada, the government of a province, or an agency of either of them;

  • (b.1) securities issued or fully guaranteed by the Government of the United States or any of its agencies;

  • (c) a fund composed of mortgage-backed securities that are fully guaranteed by the Government of Canada, the government of a province, or an agency of either of them;

  • (d) a fund that substantially replicates the composition of a widely recognized index of a broad class of securities traded on a public exchange; or

  • (e) a segregated fund or mutual or pooled fund that complies with the requirements applicable to a plan under the Pension Benefits Standards Regulations, 1985.

12 [Repealed, SOR/2012-295, s. 2]

• 13 (1) The Board shall not directly or indirectly invest in the securities of a corporation to which are attached more than 30 per cent of the votes that may be cast to elect the directors of the corporation.

• (2) Subsection (1) does not apply in respect of investments in securities issued by a subsidiary of the Board.

• (3) Subsection (1) does not apply in respect of investments in securities issued by an investment corporation if the corporation

  • (a) does not enter into a transaction — with a related party, or with a person who has ceased to be a related party within the 12 month period preceding the transaction — that the Board would be prohibited from entering into under section 16;

  • (b) limits its investments to those that are authorized for the Board under these Regulations;

  • (c) does not invest, or hold an investment, in securities of any other investment corporation to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation, unless the corporation first obtains, and provides to the Board, an undertaking by the other investment corporation

    • (i) not to enter into a transaction — with a related party, or with a person who has ceased to be a related party within the 12 month period preceding the transaction — that the Board would be prohibited from entering into under section 16,

    • (ii) not to invest, or hold an investment, in the securities of any other investment corporation, and

    • (iii) to limit its investments to those that are authorized for the Board under these Regulations; and

  • (d) has provided to the Board an undertaking described in subsection (6).

• (4) Subsection (1) does not apply in respect of investments in securities issued by a real estate corporation if the corporation

  • (a) limits its activities to acquiring, holding, maintaining, improving, leasing or managing real or immovable property, that is owned by, or held on behalf of, or mortgaged or hypothecated to

    • (i) the Board,

    • (ii) the corporation,

    • (iii) any other real estate corporation in which securities to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation have been invested in by, or on behalf of, the Board pursuant to this subsection, or

    • (iv) any other real estate corporation in which securities to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation are owned by the corporation or by a real estate corporation referred to in subparagraph (iii);

  • (b) restricts its investments and loans, other than investments in real or immovable property or in the securities of other real estate corporations, to those authorized for the Board;

  • (c) does not enter into a transaction — with a related party, or with a person who has ceased to be a related party within the 12 month period preceding the transaction — that the Board would be prohibited from entering into under section 16;

  • (d) does not invest, or hold an investment, in securities of any other real estate corporation to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation, unless the corporation first obtains and deposits with the Board an undertaking by the other real estate corporation

    • (i) not to enter into a transaction — with a related party, or with a person who has ceased to be a related party within the 12 month period preceding the transaction — that the Board would be prohibited from entering into under section 16,

    • (ii) not to invest, or hold an investment, in the securities of any other real estate corporation; and

  • (e) has provided to the Board an undertaking described in subsection (6).

• (5) Subsection (1) does not apply in respect of investments in securities issued by a resource corporation if the corporation

  • (a) limits its activities to acquiring, holding, exploring, developing, maintaining, improving, managing, operating or disposing of Canadian resource properties that are owned by, or held on behalf of,

    • (i) the Board,

    • (ii) the corporation,

    • (iii) any other resource corporation in which securities to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation have been invested in by, or on behalf of, the Board pursuant to this subsection, or

    • (iv) any other resource corporation in which securities to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation are owned by the corporation or by a resource corporation referred to in subparagraph (iii);

  • (b) restricts its investments and loans — other than investments in Canadian resource properties, investments in property to be used in connection with Canadian resource properties owned by the corporation, loans secured by Canadian resource properties to persons resident in Canada for the exploration or development of these properties, and investments in the securities of other resource corporations — to those authorized for the Board;

  • (c) does not borrow money other than for the purpose of earning income from Canadian resource properties;

  • (d) does not enter into a transaction — with a related party, or with a person who has ceased to be a related party within the 12 month period preceding the transaction — that the Board would be prohibited from entering into under section 16;

  • (e) does not invest, or hold an investment, in securities of any other resource corporation to which are attached more than 30 per cent of the votes that may be cast to elect the directors of that corporation, unless the corporation first obtains, and provides to the Board, an undertaking by the other resource corporation

    • (i) not to enter into a transaction — with a related party, or with a person who has ceased to be a related party within the 12 month period preceding the transaction — that the Board would be prohibited from entering into under section 16,

    • (ii) not to invest, or hold an investment, in the securities of any other resource corporation; and

  • (f) has provided to the Board an undertaking described in subsection (6).

• (6) An undertaking made by an investment corporation, a real estate corporation or a resource corporation to the Board must provide that for as long as the Board directly or indirectly holds securities to which are attached more than 30 per cent of the votes that may be cast to elect its directors, the corporation will

  • (a) file with the Board, at such intervals or times as the Board directs,

    • (i) copies of its annual financial statements,

    • (ii) copies of its audited financial statements in respect of the immediately preceding 5 fiscal years, or for each year since the corporation was incorporated, if less than 5 years,

    • (iii) a list clearly identifying the assets of the corporation and the market value of each asset,

    • (iv) a list of the names of its officers, directors and shareholders, and

    • (v) a certificate stating that the corporation is complying with its undertaking; and

  • (b) permit the Board or a person authorized by the Board to visit its head office and to examine its books and records.