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Regulatory Capital (Bank Holding Companies) Regulations (SOR/2001-420)

Regulations are current to 2023-09-19

Regulatory Capital (Bank Holding Companies) Regulations

SOR/2001-420

BANK ACT

Registration 2001-10-04

Regulatory Capital (Bank Holding Companies) Regulations

P.C. 2001-1791 2001-10-04

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to section 978Footnote a of the Bank ActFootnote b, hereby makes the annexed Regulatory Capital (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 an entity other than

  • (a) an insurance company;

  • (b) a securities dealer; or

  • (c) an entity controlled by an insurance company or a securities dealer. (entité désignée)

insurance company

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

minority interest

minority interest means an equity interest, in an entity that is controlled by a bank holding company, that is held by a person other than

  • (a) the bank holding company; or

  • (b) an entity controlled by the bank holding company. (participation minoritaire)

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)

Regulatory Capital

Definition of regulatory capital

  •  (1) Subject to subsection (2) and section 3, the regulatory capital of a bank holding company, at any time, is the amount determined by the formula

    A - B

    where

    A
    is the total of the amounts of the shareholders’ equity, minority interests and subordinated indebtedness that would be reported in the financial statements 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
    is the amount of goodwill that would be included in those financial statements.
  • Marginal note:Restriction relating to security

    (2) In calculating the amount of regulatory capital under subsection (1), an amount may be included in respect of a security only if

    • (a) the security is, by its terms, subordinate in right of payment to all liabilities of the entity that issued the security other than liabilities that, by their terms, rank equally with, or are subordinate to, that security;

    • (b) the security is issued and fully paid up; and

    • (c) in respect of subordinated indebtedness or a preferred share, the security

      • (i) has an initial minimum term of five years or more or has no term, and

      • (ii) cannot be redeemed or purchased for cancellation in the first five years after it is issued.

Marginal note:Definition for investment limits

  •  (1) For the purposes of sections 938 to 940 of the Act, the regulatory capital of a bank holding company is the amount calculated under section 2, less the total of

    • (a) all amounts each of which is the amount of shareholders’ equity or subordinated indebtedness of an insurance company or securities dealer controlled by the bank holding company, or an entity controlled by an insurance company or securities dealer controlled by the bank holding company, that is included in the amount of regulatory capital of the bank holding company under section 2,

    • (b) all amounts each of which is the amount of an investment, other than shareholders’ equity or subordinated indebtedness referred to in paragraph (a), of the bank holding company or a designated entity controlled by the bank holding company in an insurance company or securities dealer controlled by the bank holding company, or in an entity controlled by an insurance company or securities dealer controlled by the bank holding company, if the investment is part of the capital of the insurance company or securities dealer,

    • (c) all amounts each of which is the amount of a loan, other than subordinated indebtedness referred to in paragraph (a), made by the bank holding company or by a designated entity controlled by the bank holding company to an insurance company or securities dealer controlled by the bank holding company, or to an entity controlled by an insurance company or securities dealer controlled by the bank holding company, if the loan is part of the capital of the insurance company or securities dealer, and

    • (d) all amounts each of which is the amount of a minority interest in an insurance company or securities dealer controlled by the bank holding company, or in an entity controlled by an insurance company or securities dealer controlled by the bank holding company, that is included in the amount of regulatory capital of the bank holding company under section 2.

  • Definition of capital

    (2) For the purposes of paragraphs (1)(b) and (c), capital means

    • (a) in respect of an insurance company to which the Insurance Companies Act applies, its regulatory capital within the meaning of the Regulatory Capital (Insurance Companies) Regulations; and

    • (b) in respect of any other insurance company or a securities dealer, an amount that would be treated as its capital by a regulatory body that regulates the insurance company or securities dealer.

Coming into Force

Marginal note:Coming into force

Footnote * These Regulations come into force on the day on which sections 938 to 940 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, come into force.

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