Specialized Financing (Foreign Banks) Regulations (SOR/2001-432)

Regulations are current to 2019-08-28 and last amended on 2010-03-25. Previous Versions

Specialized Financing (Foreign Banks) Regulations

SOR/2001-432

BANK ACT

Registration 2001-10-04

Specialized Financing (Foreign Banks) Regulations

P.C. 2001-1803 2001-10-04

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 522.23Footnote a and 978Footnote b of the Bank ActFootnote c, hereby makes the annexed Specialized Financing (Foreign Banks) Regulations.

Interpretation

Marginal note:Definitions

  •  (1) The following definitions apply in these Regulations.

    Act

    Act means the Bank Act. (Loi)

    balance sheet value

    balance sheet value, in respect of the shares and ownership interests held by an entity, means the value reported on the entity’s balance sheet on an unconsolidated basis. (valeur au bilan)

    book value

    book value [Repealed, SOR/2008-164, s. 1]

    specialized financing entity of an entity associated with a foreign bank

    specialized financing entity of an entity associated with a foreign bank means a specialized financing entity that is controlled by an entity associated with a foreign bank or in which an entity associated with a foreign bank has a substantial investment. (entité s’occupant de financement spécial d’une entité liée à une banque étrangère)

    specialized financing entity of a foreign bank

    specialized financing entity of a foreign bank means a specialized financing entity that is controlled by a foreign bank or in which a foreign bank has a substantial investment. (entité d’une banque étrangère s’occupant de financement spécial)

  • Meaning of specialized financing entity

    (2) In these Regulations and for the purpose of the definition specialized financing entity in subsection 507(1) of the Act, specialized financing entity means a Canadian entity that acquires or holds shares of, or ownership interests in, entities that a bank may acquire control of, or hold, acquire or increase a substantial investment in, under subsection 466(4) of the Act.

  • SOR/2008-164, s. 1

Application

Marginal note:Application

 These Regulations apply to specialized financing activities under paragraph 522.1(e) of the Act and to the ownership by a foreign bank or an entity associated with a foreign bank of shares of, or ownership interests in, a specialized financing entity under paragraph 522.08(1)(b) of the Act.

  • SOR/2008-164, s. 2

Conditions

Marginal note:Limits on investments

 A foreign bank or an entity associated with a foreign bank shall not, by way of specialized financing activities, acquire or hold control of, or a substantial investment in, a Canadian entity

  • (a) referred to in any of paragraphs 468(1)(a) to (j) of the Act;

  • (b) 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;

  • (c) 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

  • (d) that acts as an insurance broker or agent in Canada.

  • SOR/2008-164, s. 2

Marginal note:Length of investment

 A foreign bank or an entity associated with a foreign bank shall not, by way of specialized financing activities, hold control of, or hold a substantial investment in, a Canadian entity for more than 13 consecutive years.

  • SOR/2008-164, s. 2

Marginal note:Maximum authorized investment

 A foreign bank shall not, by way of specialized financing activities, acquire or hold control of, or a substantial investment in, a Canadian entity if the aggregate balance sheet value of the shares and ownership interests that the following entities hold or would hold in the entity is more than $250 million:

  • (a) the foreign bank;

  • (b) the entities associated with the foreign bank;

  • (c) the specialized financing entities of the foreign bank; and

  • (d) the specialized financing entities of the entities associated with the foreign bank.

  • SOR/2008-164, s. 2
  • SOR/2010-71, s. 4(F)

Marginal note:Maximum authorized investment

 An entity associated with a foreign bank shall not, by way of specialized financing activities, acquire or hold control of, or a substantial investment in, a Canadian entity if the aggregate balance sheet value of the shares and ownership interests that the following entities hold or would hold in the entity is more than $250 million:

  • (a) the entity associated with a foreign bank;

  • (b) the foreign bank;

  • (c) any other entities associated with the foreign bank;

  • (d) the specialized financing entities of the foreign bank;

  • (e) the specialized financing entities of the entity associated with the foreign bank; and

  • (f) the specialized financing entities of any other entities associated with the foreign bank.

  • SOR/2008-164, s. 2
  • SOR/2010-71, s. 5(F)

Acquisition of Specialized Financing Entities

[SOR/2008-164, s. 2]

Marginal note:Ownership restrictions — foreign banks

  •  (1) A foreign bank shall not acquire or hold control of, or a substantial investment in, a specialized financing entity if

    • (a) the aggregate balance sheet value of the shares and the ownership interests, other than shares or ownership interests held by the specialized financing entity in a specialized financing entity of the foreign bank that it controls, that the following entities 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, namely,

      • (i) the specialized financing entity,

      • (ii) the specialized financing entities of the foreign bank,

      • (iii) the specialized financing entities of the entities associated with the foreign bank,

      • (iv) the foreign bank, and

      • (v) the entities associated with the foreign bank; or

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

      • (i) an entity referred to in any of paragraphs 468(1)(a) to (j) 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.

  • Marginal note:13 year limit

    (2) A foreign bank shall not hold control of, or a substantial investment in, a specialized financing entity of the foreign bank if either the specialized financing entity of the foreign bank or the specialized financing entity of the foreign bank 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 (3), for more than 13 consecutive years:

    • (a) the foreign bank;

    • (b) an entity associated with the foreign bank;

    • (c) any other specialized financing entity of the foreign bank; or

    • (d) a specialized financing entity of an entity associated with the foreign bank.

  • Marginal note:Exception

    (3) A specialized financing entity of the foreign bank controlled by the specialized financing entity of the foreign bank shall not be considered for the purpose of subsection (2).

  • Marginal note:Prior periods not included

    (4) If a specialized financing entity of the foreign bank or an entity referred to in any of paragraphs (2)(a) to (d) held control of, or a substantial investment in, an entity for a period before becoming that entity, that period shall not be considered for the purpose of subsection (2).

  • SOR/2008-164, s. 3

Marginal note:Ownership restrictions — entities associated with foreign banks

  •  (1) An entity associated with a foreign bank shall not acquire or hold control of, or a substantial investment in, a specialized financing entity if

    • (a) the aggregate balance sheet value of the shares and the ownership interests, other than shares or ownership interests held by the specialized financing entity in a specialized financing entity of the entity associated with the foreign bank that it controls, that the following entities 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, namely,

      • (i) the specialized financing entity,

      • (ii) the specialized financing entities of the foreign bank,

      • (iii) the specialized financing entities of the entity associated with the foreign bank,

      • (iv) the specialized financing entities of any other entities associated with the foreign bank,

      • (v) the foreign bank,

      • (vi) the entity associated with the foreign bank, and

      • (vii) any other entities associated with the foreign bank; or

    • (b) the specialized financing entity controls or holds shares of, or ownership interests in, any of the entities referred to in subparagraphs 3(1)(b)(i) to (iv).

  • Marginal note:13 year limit

    (2) An entity associated with a foreign bank shall not hold control of, or a substantial investment in, a specialized financing entity of the entity associated with the foreign bank if either the specialized financing entity of the entity associated with the foreign bank or the specialized financing entity of the entity associated with the foreign bank 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 (3), for more than 13 consecutive years:

    • (a) the foreign bank;

    • (b) the entity associated with the foreign bank;

    • (c) any other entity associated with the foreign bank;

    • (d) any specialized financing entity of the foreign bank;

    • (e) any other specialized financing entity of the entity associated with the foreign bank; or

    • (f) a specialized financing entity of any other entity associated with the foreign bank.

  • Marginal note:Exception

    (3) A specialized financing entity of the entity associated with the foreign bank controlled by the specialized financing entity of the entity associated with the foreign bank shall not be considered for the purpose of subsection (2).

  • Marginal note:Prior periods not included

    (4) If a specialized financing entity of the entity associated with the foreign bank or an entity referred to in any of paragraphs (2)(a) to (f) held control of, or a substantial investment in, an entity for a period before becoming that entity, that period shall not be considered for the purpose of subsection (2).

  • SOR/2008-164, s. 4

Coming into Force

Marginal note:Coming into force

Footnote * These Regulations come into force on the day on which sections 522.11, 522.23 and 978 of the Bank Act, as enacted by sections 132 and 183 of the Financial Consumer Agency of Canada Act, chapter 9 of the Statutes of Canada, 2001, come into force.

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