Investment Limits (Banks) Regulations (SOR/2001-393)

Regulations are current to 2019-06-20

Interests of a Bank in Real Property (continued)

Indirect Interests — Loans and Debt Obligations

Marginal note:Certain indirect interests

  •  (1) The following are interests of a bank in real property:

    • (a) a debt obligation issued by a related real property entity of the bank and beneficially owned by the bank or by a designated entity controlled by the bank;

    • (b) a loan made by the bank, or by a designated entity controlled by the bank, to a related real property entity of the bank;

    • (c) a loan made by the bank, or by a designated entity controlled by the bank, to

      • (i) a real property entity in which a securities dealer or insurance company controlled by the bank has a substantial investment, or

      • (ii) a real property entity that is controlled by a real property entity described in subparagraph (i);

    • (d) a debt obligation issued by a real property entity described in subparagraph (c)(i) or (ii) and beneficially owned by the bank or by a designated entity controlled by the bank;

    • (e) a debt obligation that is

      • (i) issued by a related real property entity of the bank,

      • (ii) beneficially owned by a third party, and

      • (iii) guaranteed by the bank or by a designated entity controlled by the bank; and

    • (f) a loan made by a third party to a related real property entity of the bank and guaranteed by the bank or by a designated entity controlled by the bank.

  • Marginal note:Value of those interests

    (2) The value of the interests of a bank in real property is

    • (a) in respect of a debt obligation referred to in paragraph (1)(a) or (d), the book value of the debt obligation;

    • (b) in respect of a loan referred to in paragraph (1)(b) or (c), the book value of the loan; and

    • (c) in respect of a guaranteed debt obligation referred to in paragraph (1)(e) or a guaranteed loan referred to in paragraph (1)(f),

      • (i) if the debt obligation is issued by, or the loan is made to, an entity that is a related real property entity of the bank and the entity beneficially owns real property that is an interest of the bank in real property under paragraph 9(1)(a), any amount by which the face value of the guarantee exceeds the value of the real property determined in accordance with paragraph 9(2)(a), and

      • (ii) in any other case, the face value of the guarantee.

Indirect Interests — Secured Loans and Debt Obligations

Marginal note:Certain indirect interests

  •  (1) If a bank or a designated entity controlled by a bank makes a loan to, or beneficially owns or guarantees the debt obligation of, a third party, the loan or debt obligation is an interest of the bank in real property if it is secured by

    • (a) real property beneficially owned by a third party in conjunction with

      • (i) the bank,

      • (ii) the designated entity,

      • (iii) a related real property entity of the bank,

      • (iv) a securities dealer or insurance company controlled by the bank,

      • (v) an entity controlled by a securities dealer or insurance company referred to in subparagraph (iv), or

      • (vi) a real property entity described in subparagraph 10(1)(c)(i) or (ii); or

    • (b) shares or ownership interests beneficially owned by a third party in

      • (i) an entity that beneficially owns real property in conjunction with the bank, a related real property entity of the bank or a designated entity controlled by the bank, or

      • (ii) a related real property entity of the bank.

  • Marginal note:Value of those interests

    (2) The value of the interests of a bank in real property is

    • (a) in respect of a loan or debt obligation that is secured by real property referred to in paragraph (1)(a), the lesser of

      • (i) the net realizable value of the third party’s interest in the real property at the time that the security interest was given, and

      • (ii) the amount determined by the formula

        A - B

        where

        A
        is
        • (A) if the loan was made by the bank or a designated entity controlled by the bank or the debt obligation is beneficially owned by the bank or a designated entity controlled by the bank, the book value of the loan or debt obligation, or

        • (B) if the debt obligation is guaranteed by the bank or a designated entity controlled by the bank, the face value of the guarantee, and

        B
        is the total net realizable value of any other security interests that were given for the loan or debt obligation;
    • (b) in respect of a loan or debt obligation that is secured by shares or ownership interests beneficially owned by a third party in an entity referred to in subparagraph (1)(b)(i), the lesser of

      • (i) the net realizable value of the third party’s interest in those shares or ownership interests at the time that the security interest was given, and

      • (ii) the amount determined by the formula

        A - (B - (C × D/E))

        where

        A
        is
        • (A) if the loan was made by the bank or a designated entity controlled by the bank or the debt obligation is beneficially owned by the bank or a designated entity controlled by the bank, the book value of the loan or debt obligation, or

        • (B) if the debt obligation is guaranteed by the bank or a designated entity controlled by the bank, the face value of the guarantee,

        B
        is the total net realizable value of all security interests that were given for the loan or debt obligation,
        C
        is the net realizable value of the entity’s interest in the real property referred to in subparagraph (1)(b)(i),
        D
        is the value of the shares or ownership interests that are given as the security interest, and
        E
        is the total value of the outstanding shares or ownership interests in the entity; and
    • (c) in respect of a loan or debt obligation that is secured by shares or ownership interests beneficially owned by a third party in a related real property entity referred to in subparagraph (1)(b)(ii), the lesser of

      • (i) the net realizable value of the third party’s interest in those shares or ownership interests at the time that the security interest was given, and

      • (ii) the amount determined by the formula

        A - B

        where

        A
        is
        • (A) if the loan was made by the bank or a designated entity controlled by the bank or the debt obligation is beneficially owned by the bank or a designated entity controlled by the bank, the book value of the loan or debt obligation, or

        • (B) if the debt obligation is guaranteed by the bank or a designated entity controlled by the bank, the face value of the guarantee, and

        B
        is the total net realizable value of any other security interests that were given for the loan or debt obligation.

Other Interests

Marginal note:Other interests

  •  (1) The following are interests of a bank in real property:

    • (a) a guarantee given by the bank, or by a designated entity controlled by the bank, to an entity other than the bank or designated entity for the purpose of completing the development of real property that is beneficially owned by

      • (i) the bank,

      • (ii) a designated entity controlled by the bank, or

      • (iii) a related real property entity of the bank; and

    • (b) an agreement made by the bank, or by a designated entity controlled by the bank, to support a third party’s cost of operating or financing real property that is beneficially owned by

      • (i) the bank,

      • (ii) a designated entity controlled by the bank, or

      • (iii) a related real property entity of the bank.

  • Marginal note:Value of those interests

    (2) The value of the interests of a bank in real property is

    • (a) in respect of a guarantee referred to in paragraph (1)(a), the estimated cost of completing the development of the real property; and

    • (b) in respect of an agreement referred to in paragraph (1)(b), the amount of any funds advanced by the bank, or by a designated entity controlled by the bank, under the agreement.

 
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