Specialized Financing (Retail Associations) Regulations

Definition of non-controlling interest

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

• Marginal note:Ownership restrictions

  (2) A retail 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 retail association or to entities controlled by the retail association, of the specialized financing entity and any specialized financing entity of the retail 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, any of the entities referred to in paragraphs 3(a) to (d);

  • (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 retail association that it controls, that the retail association, the specialized financing entity, the subsidiaries of the retail association and the other specialized financing entities of the retail 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;

  • (d) the sum of the values under paragraphs 6(a) to (c) exceeds or would exceed 10% of the retail association’s regulatory capital; or

  • (e) the sum of the values under paragraphs 7(1)(a) and (b) exceeds or would exceed 25% of the retail association’s regulatory capital.

• Marginal note:13 year limit

  (3) A retail association shall not hold control of, or a substantial investment in, a specialized financing entity of the retail association if either the specialized financing entity of the retail association or the specialized financing entity of the retail 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 retail association; or

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

• Marginal note:Exception

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