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Information Technology Activities (Foreign Banks) Regulations (SOR/2003-65)

Regulations are current to 2019-08-28 and last amended on 2008-05-19. Previous Versions

Information Technology Activities (Foreign Banks) Regulations

SOR/2003-65

BANK ACT

Registration 2003-02-13

Information Technology Activities (Foreign Banks) Regulations

P.C. 2003-185 2003-02-13

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 Information Technology Activities (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    book value[Repealed, SOR/2008-161, s. 1]

    minority interest

    minority interest means an equity interest, in an entity that is controlled by a foreign bank, that is held by a person other than

    • (a) the foreign bank; or

    • (b) an entity controlled by the foreign bank. (participation minoritaire)

  • Marginal note:Regulatory capital

    (2) In these Regulations, subject to subsection (3), the regulatory capital of a foreign bank, at any time, is the amount determined by the formula

    A - B

    where

    A
    is the total of the amounts of the shareholders’ equity, minority interests and subordinated indebtedness that are reported in the financial statements of the foreign bank; and
    B
    is the amount of goodwill that is included in the financial statements of the foreign bank.
  • Marginal note:Restriction relating to security

    (3) In calculating the amount of regulatory capital under subsection (2), an amount may be included in respect of a security only if

    • (a) the security is, by its terms, subordinate in right of payment to all liabilities of the entity that issued the security other than liabilities that, by their terms, rank equally with, or are subordinate to, that security;

    • (b) the security is issued and fully paid up; and

    • (c) in respect of subordinated indebtedness or a preferred share, the security

      • (i) has an initial minimum term of five years or more or has no term, and

      • (ii) cannot be redeemed or purchased for cancellation in the first five years after it is issued.

  • SOR/2008-161, s. 1

Investments

Marginal note:Prescribed activity

  •  (1) For the purposes of paragraph 522.08(1)(f) of the Act and subject to subsections (2) to (4), a prescribed activity in relation to a Canadian entity is developing, designing, holding, managing, manufacturing, selling or otherwise dealing with any data transmission system, information site, communication device or information platform or portal that is used to provide information services.

  • Marginal note:Limit on size of investment — foreign bank

    (2) A foreign bank may not acquire or hold control of, or a substantial investment in, a Canadian entity engaging in an activity described in subsection (1) if the sum of the following exceeds the lesser of 5% of the foreign bank’s regulatory capital and $1 billion:

    • (a) the aggregate balance sheet value of the shares and ownership interests that the foreign bank would acquire in the Canadian entity under paragraph 522.08(1)(f) of the Act;

    • (b) the aggregate balance sheet value of the shares and ownership interests held, whether individually or jointly, by the foreign bank and the entities associated with the foreign bank in Canadian entities engaging in an activity described in subsection (1) that the foreign bank or any entity associated with the foreign bank holds control of, or a substantial investment in, under paragraph 522.08(1)(f) of the Act; and

    • (c) the aggregate value of outstanding loans made by the foreign bank and the entities associated with the foreign bank, whether individually or jointly, to Canadian entities engaging in an activity described in subsection (1) that the foreign bank or any entity associated with the foreign bank holds control of, or a substantial investment in, under paragraph 522.08(1)(f) of the Act.

  • Marginal note:Limit on size of investment — entity associated with a foreign bank

    (3) An entity associated with a foreign bank may not acquire or hold control of, or a substantial investment in, a Canadian entity engaging in an activity described in subsection (1) if the sum of the following exceeds the lesser of 5% of the foreign bank’s regulatory capital and $1 billion:

    • (a) the aggregate balance sheet value of the shares and ownership interests that the entity associated with the foreign bank would acquire in the Canadian entity under paragraph 522.08(1)(f) of the Act;

    • (b) the aggregate balance sheet value of the shares and ownership interests held, whether individually or jointly, by the entity associated with the foreign bank, the foreign bank and any other entity associated with the foreign bank in Canadian entities engaging in an activity described in subsection (1) that the entity associated with the foreign bank, the foreign bank or any other entity associated with the foreign bank holds control of, or a substantial investment in, under paragraph 522.08(1)(f) of the Act; and

    • (c) the aggregate value of outstanding loans made by the entity associated with the foreign bank, the foreign bank and any other entity associated with the foreign bank, whether individually or jointly, to Canadian entities engaging in an activity described in subsection (1) that the entity associated with the foreign bank, the foreign bank or any other entity associated with the foreign bank holds control of, or a substantial investment in, under paragraph 522.08(1)(f) of the Act.

  • Marginal note:Restricted activities

    (4) A foreign bank or an entity associated with a foreign bank may not acquire or hold control of, or a substantial investment in, a Canadian entity engaging in an activity described in subsection (1) if the activities of the Canadian entity include

    • (a) activities that a bank is not permitted to engage in under any of sections 412, 417 and 418 of the Act;

    • (b) dealing in securities, except as may be permitted under paragraph 522.08(1)(e) of the Act or as may be permitted to a bank under paragraph 409(2)(c) of the Act;

    • (c) dealing in goods, wares or merchandise that a bank is not permitted to deal in under subsection 410(2) of the Act, other than as permitted under subsection (1);

    • (d) activities that a bank is not permitted to engage in under section 416 of the Act if the Canadian entity engages in the activities of a finance entity or of any other entity prescribed under paragraph 522.08(2)(c) of the Act;

    • (e) acquiring or holding control of, or a substantial investment in, another Canadian entity unless

      • (i) in the case of a Canadian entity that is controlled by the foreign bank or the entity associated with a foreign bank, the foreign bank or the entity associated with a foreign bank itself would be permitted to acquire or hold control of, or a substantial investment in, the other Canadian entity under section 522.07, 522.08 or 522.1 or Division 8 of Part XII of the Act, or

      • (ii) in the case of a Canadian entity that is not controlled by the foreign bank or the entity associated with a foreign bank, the foreign bank or the entity associated with a foreign bank itself would be permitted to acquire or hold control of, or a substantial investment in, the other Canadian entity under section 522.07 or 522.08, any of paragraphs 522.1(a) or (c) to (e) or Division 8 of Part XII of the Act; or

    • (f) any activity prescribed under paragraph 522.08(2)(e) of the Act.

  • SOR/2008-161, ss. 2, 4

Exemption from Restrictions on Investments

Marginal note:Exemption from restrictions

 For the purposes of subparagraph 2(4)(e)(ii), subsection 522.22(1) of the Act does not apply in determining whether a foreign bank or an entity associated with a foreign bank would be permitted to acquire or hold control of, or a substantial investment in, a Canadian entity under section 522.07 or 522.08, any of paragraphs 522.1(a) or (c) to (e) or Division 8 of Part XII of the Act.

  • SOR/2008-161, s. 3

Non-application of Subsection 522.22(1) of the Act

Marginal note:Non-application

 Subsection 522.22(1) of the Act does not apply where, under paragraph 522.08(1)(f) of the Act, a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity whose business is limited to activities described in subsection 2(1). Nothing in this section limits the operation of subsections 2(2) and (4).

Marginal note:Non-application

 Subsection 522.22(1) of the Act does not apply where, under paragraph 522.08(1)(f) of the Act, an entity associated with a foreign bank acquires or holds control of, or a substantial investment in, a Canadian entity whose business is limited to activities described in subsection 2(1). Nothing in this section limits the operation of subsections 2(3) and (4).

Coming into Force

Marginal note:Coming into force

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

 
Date modified: