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Investment Limits (Cooperative Credit Associations) Regulations (SOR/2001-395)

Regulations are current to 2024-10-30 and last amended on 2011-09-22. Previous Versions

Investment Limits (Cooperative Credit Associations) Regulations

SOR/2001-395

COOPERATIVE CREDIT ASSOCIATIONS ACT

Registration 2001-10-04

Investment Limits (Cooperative Credit Associations) Regulations

P.C. 2001-1766  2001-10-04

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 389Footnote a, 403Footnote a and 463Footnote b of the Cooperative Credit Associations ActFootnote c, hereby makes the annexed Investment Limits (Cooperative Credit Associations) Regulations.

Interpretation

Marginal note:Definitions

1 The following definitions apply in these Regulations.

Act

Act means the Cooperative Credit Associations Act. (Loi)

designated entity

designated entity means an entity other than

  • (a) a joint venture;

  • (b) an insurance company;

  • (c) a securities dealer; or

  • (d) a subsidiary of an insurance company or securities dealer. (entité désignée)

insurance company

insurance company means an insurance company incorporated by or under the laws of Canada or a province. (société d’assurances)

joint venture

joint venture means a real property entity

  • (a) that was formed by an association, or by a designated entity controlled by an association, and one or more other persons for the purpose of a specific business undertaking;

  • (b) in which the association or designated entity has a substantial investment; and

  • (c) in respect of which the persons who formed it have agreed on joint control, regardless of the distribution of their equity. (coentreprise)

real property entity

real property entity means an entity that is primarily engaged in holding, managing or otherwise dealing with

  • (a) real property;

  • (b) shares of a body corporate that is primarily engaged in holding, managing or otherwise dealing with real property, including shares of a body corporate that is another real property entity; or

  • (c) ownership interests in an unincorporated entity that is primarily engaged in holding, managing or otherwise dealing with real property, including ownership interests in an unincorporated entity that is another real property entity. (entité immobilière)

related real property entity

related real property entity, in respect of an association, means

  • (a) a real property entity, other than a designated entity controlled by the association, in which the association or a designated entity controlled by the association beneficially owns sufficient shares or ownership interests to cause the association or designated entity to have a substantial investment in the real property entity; or

  • (b) a real property entity that is controlled by a real property entity described in paragraph (a). (entité immobilière apparentée)

securities dealer

securities dealer means an entity described in paragraph (g) of the definition financial institution in section 2 of the Act. (négociant en valeurs mobilières)

third party

third party, in respect of an association, means a person other than

  • (a) the association;

  • (b) a designated entity controlled by the association; or

  • (c) a related real property entity of the association. (tierce partie)

Marginal note:Book value of interest in real property

2 For the purposes of sections 8 to 11, the book value of an asset that is an interest of an association in real property, at a particular time, is

  • (a) if the asset is real property, the gross book value of the real property, less any accumulated depreciation on the real property, that would be reported on a balance sheet of the association prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 292(4) of the Act; and

  • (b) if the asset is a security or loan, the book value of the security or loan that would be reported on a balance sheet of the association prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 292(4) of the Act.

Exemptions

Marginal note:Exempt associations

3 Sections 401 and 402 of the Act do not apply to an association if the sum of the equity of the association and the minority interests in entities controlled by the association, as they appear in the consolidated financial statements of the association, is five billion dollars or more.

Prescribed Subsidiary

[
  • SOR/2011-196, s. 15(F)
]

Marginal note:Prescribed subsidiary

4 For the purposes of sections 401 and 402 of the Act, a prescribed subsidiary of an association is a subsidiary of the association other than

  • (a) an insurance company;

  • (b) a securities dealer; or

  • (c) a subsidiary of an insurance company or securities dealer.

  • SOR/2011-196, s. 16(F)
Previous Version

Prescribed Percentage

[
  • SOR/2011-196, s. 17(F)
]

Marginal note:Definitions

  • 5 (1) The following definitions apply in this section.

    real property percentage

    real property percentage of an association means the amount determined by the formula

    (A/B) × 100%

    where

    A
    is the total value of all interests of the association in real property, other than interests that, because of section 397 of the Act, are not to be included in computing the value of loans, investments and interests of the association, and of its subsidiaries prescribed by section 4, under sections 398 to 402 of the Act; and
    B
    is the regulatory capital of the association. (pourcentage de biens immeubles)
    equity percentage

    equity percentage of an association means the amount determined by the formula

    ((A + B)/C) × 100%

    where

    A
    is the total value of all participating shares that are beneficially owned by the association and its subsidiaries prescribed by section 4, other than

    • (a) participating shares of permitted entities in which the association has a substantial investment, and

    • (b) shares that, because of section 397 of the Act, are not to be included in computing the value of loans, investments and interests of the association, and of its subsidiaries prescribed by section 4, under sections 398 to 402 of the Act;

    B
    is the total value of all ownership interests in unincorporated entities that are beneficially owned by the association and its subsidiaries prescribed by section 4, other than

    • (a) ownership interests in permitted entities in which the association has a substantial investment, and

    • (b) ownership interests that, because of section 397 of the Act, are not to be included in computing the value of loans, investments and interests of the association, and of its subsidiaries prescribed by section 4, under sections 398 to 402 of the Act; and

    C
    is the regulatory capital of the association. (pourcentage de capitaux propres)

  • Marginal note:Prescribed percentage — real property

    (2) For the purpose of section 401 of the Act, the prescribed percentage of the regulatory capital of an association is

    • (a) 35%, if the association is primarily engaged in the business of managing liquidity or providing treasury, clearing, settlement or payment services;

    • (b) 70%, if the association is not an association referred to in paragraph (a) and its equity percentage does not exceed 30%; and

    • (c) 100% minus its equity percentage, if the association is not an association referred to in paragraph (a) and its equity percentage exceeds 30%.

  • Marginal note:Prescribed percentage — equity

    (3) For the purpose of section 402 of the Act, the prescribed percentage of the regulatory capital of an association is

    • (a) 35%, if the association is primarily engaged in the business of managing liquidity or providing treasury, clearing, settlement or payment services;

    • (b) 70%, if the association is not an association referred to in paragraph (a) and its real property percentage does not exceed 30%; and

    • (c) 100% minus its real property percentage, if the association is not an association referred to in paragraph (a) and its real property percentage exceeds 30%.

  • SOR/2011-196, s. 18(F)
Previous Version

Valuation of Equity

Marginal note:Value equals book value

6 For the purpose of section 402 of the Act, the value of the participating shares and ownership interests referred to in that section that are beneficially owned by an association and its subsidiaries prescribed by section 4 is equal to their book value as reported on the consolidated balance sheet of the association.

Interests of an Association in Real Property

General

Marginal note:Definition of interest in real property

  • 7 (1) For the purposes of Part X of the Act, other than subsection 397(3) of the Act, sections 8 to 12 define the interests of an association in real property and set out how those interests are to be valued.

  • Marginal note:Exception

    (2) For the purpose of subsection 397(3) of the Act, the interests of an association in real property means real property referred to in paragraph 11(1)(a) and shares and ownership interests referred to in paragraph 11(1)(b) that become beneficially owned by the association, or by a designated entity controlled by the association, as a result of the realization of a security interest on a loan or debt obligation referred to in subsection 11(1).

Direct Interests — Real Property and Debt Obligations

Marginal note:Direct interests

  • 8 (1) The following are interests of an association in real property:

    • (a) real property beneficially owned by the association or by a designated entity controlled by the association; and

    • (b) a debt obligation, for which the association or a designated entity controlled by the association is liable, that was issued for the purpose of acquiring or improving real property referred to in paragraph (a).

  • Marginal note:Value of direct interests

    (2) The value of the interests of an association in real property is

    • (a) in respect of real property referred to in paragraph (1)(a), the book value of the real property; and

    • (b) in respect of a debt obligation referred to in paragraph (1)(b), any amount by which the book value of the debt obligation exceeds the book value of the real property referred to in that paragraph.

Indirect Interests — Real Property, Shares and Ownership Interests

Marginal note:Certain indirect interests

  • 9 (1) The following are interests of an association in real property:

    • (a) at a particular time, real property

      • (i) that is beneficially owned by

        • (A) a related real property entity of the association that is a joint venture, or

        • (B) an entity in which an entity described in clause (A) has a substantial investment, and

      • (ii) that would be reported on a balance sheet of the association prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 292(4) of the Act; and

    • (b) shares and ownership interests beneficially owned by the association, or by a designated entity controlled by the association, in any related real property entity of the association other than a related real property entity referred to in paragraph (a).

  • Marginal note:Value of those interests

    (2) The value of the interests of an association in real property is

    • (a) in respect of real property referred to in paragraph (1)(a), the book value of the real property; and

    • (b) in respect of shares and ownership interests referred to in paragraph (1)(b), the book value of the shares and ownership interests.

Indirect Interests — Loans and Debt Obligations

Marginal note:Certain indirect interests

  • 10 (1) The following are interests of an association in real property:

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

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

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

      • (i) a real property entity in which a securities dealer or insurance company controlled by the association 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 association or by a designated entity controlled by the association;

    • (e) a debt obligation that is

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

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

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

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

  • Marginal note:Value of those interests

    (2) The value of the interests of an association 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 association and the entity beneficially owns real property that is an interest of the association 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.

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