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Specialized Financing (Bank Holding Companies) Regulations (SOR/2001-477)

Regulations are current to 2019-08-28 and last amended on 2008-05-15. Previous Versions

Specialized Financing (Bank Holding Companies) Regulations

SOR/2001-477

BANK ACT

Registration 2001-11-01

Specialized Financing (Bank Holding Companies) Regulations

P.C. 2001-2021 2001-11-01

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 929Footnote a and 936Footnote a of the Bank ActFootnote b, hereby makes the annexed Specialized Financing (Bank Holding Companies) 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 its balance sheet on an unconsolidated basis. (valeur au bilan)

    book value

    book value [Repealed, SOR/2008-168, s. 3]

    specialized financing entity of the bank holding company

    specialized financing entity of the bank holding company means a specialized financing entity that is controlled by the bank holding company or in which the bank holding company has a substantial investment. (entité de la société de portefeuille bancaire s’occupant de financement spécial)

    subsidiary

    subsidiary, in respect of a bank holding company, does not include a subsidiary that is a specialized financing entity of the bank holding company. (filiale)

  • Definition of specialized financing entity

    (2) In these Regulations and for the purpose of the definition specialized financing entity in subsection 464(1) of the Act as it applies in respect of a bank holding company under subsection 925(1) of the Act, specialized financing entity means an 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/2008-168, s. 3

General

Marginal note:Application

 These Regulations apply to the ownership by a bank holding company of shares of, or ownership interests in, a specialized financing entity under paragraph 930(2)(b) of the Act.

Acquisition of Specialized Financing Entities

Definition of non-controlling interest

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

  • Marginal note:Ownership restrictions

    (2) A bank holding company 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 bank holding company or to entities controlled by the bank holding company, of the specialized financing entity and any specialized financing entity of the bank holding company 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 930(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;

    • (c) the aggregate balance sheet 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 bank holding company that it controls, that the bank holding company, the specialized financing entity, the subsidiaries of the bank holding company and the other specialized financing entities of the bank holding company 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 following exceeds 10% of the bank holding company’s regulatory capital, namely,

      • (i) the aggregate balance sheet value of the shares and ownership interests that the bank holding company and its subsidiaries, whether individually or jointly, would acquire in the specialized financing entity,

      • (ii) the aggregate balance sheet value of the shares and ownership interests held by the bank holding company and its subsidiaries, whether individually or jointly, in the specialized financing entities of the bank holding company, and

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

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

      • (i) the aggregate balance sheet value of the shares and ownership interests held by the bank holding company 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 bank holding company 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) A bank holding company shall not hold control of, or a substantial investment in, a specialized financing entity of the bank holding company if either the specialized financing entity of the bank holding company or the specialized financing entity of the bank holding company 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 bank holding company; or

    • (b) any other specialized financing entity of the bank holding company.

  • Marginal note:Exception

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

  • Marginal note:Prior periods not included

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

  • SOR/2008-168, s. 4

Marginal note:Control not required

 Subsection 930(4) of the Act does not apply to a bank holding company’s acquisition or increase of a substantial investment in an entity, in accordance with these Regulations, by way of an investment of a specialized financing entity of the bank holding company.

Marginal note:Approvals not required — general

 Subsections 930(5) and (6) of the Act do not apply to a bank holding company’s acquisition of control of, or acquisition or increase of a substantial investment in, an entity, in accordance with these Regulations, by way of an investment of a specialized financing entity of the bank holding company.

Coming into Force

Marginal note:Coming into force

 These Regulations come into force on the day on which they are registered.

Date modified: