Minority Investment (Bank Holding Companies) Regulations (SOR/2001-401)

Regulations are current to 2019-08-28 and last amended on 2012-12-19. Previous Versions

Minority Investment (Bank Holding Companies) Regulations

SOR/2001-401

BANK ACT

Registration 2001-10-04

Minority Investment (Bank Holding Companies) Regulations

P.C. 2001-1772 2001-10-04

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 936Footnote a of the Bank ActFootnote b, hereby makes the annexed Minority Investment (Bank Holding Companies) Regulations.

Interpretation

Marginal note:Definitions

 The following definitions apply in these Regulations.

Act

Act means the Bank Act. (Loi)

designated entity

designated entity means

  • (a) an entity referred to in any of paragraphs 930(1)(a) to (j) of the Act;

  • (b) an entity whose business includes one or more of the activities referred to in paragraph 930(2)(a) of the Act 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 factoring entity, a finance entity or a financial leasing entity; or

  • (c) an entity whose business includes an activity referred to in paragraph 930(2)(b) of the Act, including a specialized financing entity, other than an entity in which a bank holding company is permitted to acquire or increase a substantial investment under subparagraph 930(4)(d)(iii) of the Act. (entité désignée)

regulatory capital

regulatory capital has the same meaning as in section 2 of the Regulatory Capital (Bank Holding Companies) Regulations. (capital réglementaire)

value

value means

  • (a) in respect of a share, membership share, ownership interest or loan held by a bank holding company at a particular time, the book value of the share, membership share, ownership interest or loan that would be reported on the balance sheet of the bank holding company prepared as at that time in accordance with the accounting principles and specifications of the Superintendent referred to in subsection 840(4) of the Act; and

  • (b) in respect of a guarantee, the face value of the guarantee. (valeur)

  • SOR/2011-196, s. 7
  • SOR/2012-269, s. 5

General

Marginal note:Permitted substantial investments

 Subject to section 3,

  • (a) for the purposes of subparagraphs 930(4)(a)(ii), (b)(ii), (c)(ii) and (d)(ii) of the Act, a bank holding company may acquire or increase a substantial investment in a designated entity; and

  • (b) for the purpose of paragraph 930(11)(a) of the Act, if a bank holding company controls a designated entity, the bank holding company may give up control of the designated entity while keeping a substantial investment in it.

Marginal note:Restriction concerning investments

 Subject to sections 5 and 6, a bank holding company must not acquire or increase a substantial investment in a designated entity under paragraph 2(a) or give up control of a designated entity while keeping a substantial investment in it under paragraph 2(b) if, after the acquisition, increase or giving up of control, the total value of the following would exceed 50% of the bank holding company’s regulatory capital:

  • (a) all shares, membership shares and ownership interests beneficially owned by the bank holding company, and all shares, membership shares and ownership interests beneficially owned by entities controlled by the bank holding company, in designated entities in which the bank holding company has a substantial investment but over which it does not exercise control,

  • (b) all loans held by the bank holding company, and all loans held by entities controlled by the bank holding company, that were made to designated entities in which the bank holding company has a substantial investment but over which it does not exercise control, and

  • (c) all outstanding guarantees given by the bank holding company, and all outstanding guarantees given by entities controlled by the bank holding company, on behalf of designated entities in which the bank holding company has a substantial investment but over which it does not exercise control.

  • SOR/2012-269, s. 6

Marginal note:Restriction concerning loans

 Subject to sections 5 and 6, a bank holding company that has a substantial investment in a designated entity over which it does not exercise control must not make a loan to, or give a guarantee on behalf of, the designated entity, or permit entities controlled by it to do so, if, after the making of the loan or the giving of the guarantee, the total value of the shares, membership shares, ownership interests, loans and guarantees referred to in paragraphs 3(a) to (c) would exceed 50% of the bank holding company’s regulatory capital.

  • SOR/2012-269, s. 7(E)

Marginal note:Limitation

 In paragraphs 3(a) to (c) and section 4, any reference to a substantial investment that a bank holding company has does not include a substantial investment acquired by the bank holding company under regulations made under paragraph 936(a) of the Act other than these Regulations.

Marginal note:Calculation of “total value” in section 3 or 4

 For the purpose of calculating the total value referred to in section 3 or 4 in respect of a bank holding company, no amount may be included in respect of shares, membership shares or ownership interests acquired under sections 933 to 935 of the Act or acquired by a bank controlled by the bank holding company under subsection 193(12) or (13) of the Bank Act, chapter B-1 of the Revised Statutes of Canada, 1985.

  • SOR/2012-269, s. 8

Coming into Force

Marginal note:Coming into force

Footnote * These Regulations come into force on the day on which section 936 of the Bank Act, as enacted by section 183 of the Financial Consumer Agency of Canada Act, chapter 9 of the Statutes of Canada, 2001, comes into force.

 
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