Canada Small Business Financing (Establishment and Operation of Capital Leasing Pilot Project) Regulations

39 (1) When a capital lease is transferred by a lessee to another lessee, the Minister’s liability under section 7 in respect of the capital lease continues if

• (a) the lessor approves the transferee as the lessee in accordance with the due diligence requirements referred to in section 19, and the aggregate outstanding balance in respect of the lessee or to any related lessee or borrower does not exceed $250,000;

• (b) the security referred to in section 23 is maintained;

• (c) any additional security referred to in section 24 is maintained or replaced by other additional security of equal or greater value on the assets in accordance with that section; and

• (d) any guarantee or suretyship referred to in section 26 is maintained or replaced by another guarantee or suretyship of equal or greater value in accordance with that section.

(2) Nothing in subsection (1) precludes the lessor from releasing the lessee from their obligations under the capital lease.

(3) When there is a change of partners in a partnership, the Minister’s liability under section 7 in respect of a capital lease continues if

• (a) in accordance with the due diligence requirements referred to in section 19, the lessor approves the fact that the new partner has assumed the obligations of the old partnership, and the aggregate outstanding balance in respect of the new partner or any related lessee or borrower does not exceed $250,000; and

• (b) the conditions set out in paragraphs (1)(b) to (d) are met.

(4) When a partner leaves a partnership and is not being replaced, the Minister’s liability under section 7 in respect of a capital lease continues if

• (a) in accordance with the due diligence requirements referred to in section 19, the lessor approves the fact that the remaining partners have assumed the obligations of the new partnership; and

• (b) the conditions set out in paragraphs (1)(b) to (d) are met.