Specialized Financing (Cooperative Credit Associations) Regulations

Definition of non-controlling interest

• 3 (1) In this section, non-controlling interest means an equity interest, in a specialized financing entity of the association controlled by a specialized financing entity, that is held by a person other than the association or an entity controlled by the association.

• Marginal note:Ownership restrictions

  (2) An association shall not acquire or hold control of, or hold, acquire or increase a substantial investment in, a specialized financing entity if

  • (a) the value of the outstanding debt obligations, other than those payable to the association or to entities controlled by the association, of the specialized financing entity and any specialized financing entity of the association controlled by the specialized financing entity, as reported on their respective balance sheets on an unconsolidated basis, exceeds twice the value of the sum of the following, namely,

    • (i) the value of the excess of assets over liabilities of the specialized financing entity as reported on its balance sheet on an unconsolidated basis, and

    • (ii) the value of the non-controlling interests as reported on the balance sheet of the specialized financing entity on a consolidated basis;

  • (b) the specialized financing entity controls or holds shares of, or ownership interests in,

    • (i) an entity referred to in any of paragraphs 390(1)(a) to (h) of the Act,

    • (ii) an entity that is primarily engaged in the leasing of motor vehicles in Canada for the purpose of extending credit to a customer or financing a customer’s acquisition of a motor vehicle,

    • (iii) an entity that is primarily engaged in providing temporary possession of personal property, including motor vehicles, to customers in Canada for a purpose other than to finance the customer’s acquisition of the property, or

    • (iv) an entity that acts as an insurance broker or agent in Canada;

  • (c) the aggregate book value of the shares and ownership interests, other than shares or ownership interests held by the specialized financing entity in a specialized financing entity of the association that it controls, that the association, the specialized financing entity, the subsidiaries of the association and the other specialized financing entities of the association hold, or would hold, in an entity that the specialized financing entity holds control of, or a substantial investment in, is more than $250 million; or

  • (d) the sum of the following exceeds 10% of the association’s regulatory capital, namely,

    • (i) the aggregate book value of the shares and ownership interests that the association and its subsidiaries, whether individually or jointly, would acquire in the specialized financing entity,

    • (ii) the aggregate book value of the shares and ownership interests held by the association and its subsidiaries, whether individually or jointly, in the specialized financing entities of the association, and

    • (iii) the aggregate value of outstanding loans made by the association and its subsidiaries, whether individually or jointly, to the specialized financing entities of the association; or

  • (e) the sum of the following exceeds or would exceed 25% of the association’s regulatory capital, namely,

    • (i) the aggregate book value of the shares and ownership interests held by the association and its subsidiaries, whether individually or jointly, in the specialized financing entity, in the entities controlled by the specialized financing entity and in the entities in which that specialized financing entity holds a substantial investment, and

    • (ii) the aggregate value of outstanding loans that the association and its subsidiaries, whether individually or jointly, have made to the specialized financing entity, to the entities controlled by the specialized financing entity and to the entities in which that specialized financing entity holds a substantial investment.

• Marginal note:13 year limit

  (3) An association shall not hold control of, or a substantial investment in, a specialized financing entity of the association if either the specialized financing entity of the association or the specialized financing entity of the association and one or more of the following entities, one after another, have held control of, or a substantial investment in, an entity, other than an entity described in subsection (4), for more than 13 consecutive years:

  • (a) the association; or

  • (b) any other specialized financing entity of the association.

• Marginal note:Exception

  (4) A specialized financing entity of the association controlled by the specialized financing entity of the association shall not be considered for the purpose of subsection (3).

• Marginal note:Prior periods not included

  (5) If a specialized financing entity of the association held control of, or a substantial investment in, an entity for a period before becoming the specialized financing entity of the association, that period shall not be considered for the purpose of subsection (3).