Canada Deposit Insurance Corporation Application for Deposit Insurance By-law (SOR/2006-236)

Regulations are current to 2019-07-01

Applicant’s Financial Information

  •  (1) The application must include the following documents in respect of the financial affairs of the applicant:

    • (a) if the applicant has been incorporated for less than one financial year, an audited opening balance sheet and unaudited interim financial statements, if any, for the financial period beginning on the day on which it began to carry on its business; and

    • (b) if the applicant has been incorporated for one or more financial years

      • (i) unaudited interim financial statements, if any, for the financial period following the period covered by the annual audited financial statements for the most recently completed financial year,

      • (ii) audited financial statements for

        • (A) each completed financial year from the date of incorporation, if it has been incorporated for one or more, but less than three, financial years, or

        • (B) each of the last three financial years, if it has been incorporated for three or more financial years, and

      • (iii) its latest annual report, if any.

  • (2) Subject to subsection (3), all financial statements included in the application must be

    • (a) prepared in accordance with the accounting principles and auditing standards accepted under or required by the laws of the jurisdiction of incorporation of the applicant or prescribed by the regulatory authority primarily responsible for regulating the applicant; or

    • (b) prepared in accordance with the accounting standards and guidelines established by the Canadian Institute of Chartered Accountants (“CICA”) — also referred to as “Canadian Generally Accepted Accounting Principles” (“Canadian GAAP”) — and audited in accordance with the auditing standards and guidelines established by the CICA.

  • (3) If financial statements that are included in an application are provided by a foreign entity that controls the applicant, they must be

    • (a) prepared in accordance with the generally accepted or applicable accounting principles and auditing procedures in the jurisdiction where the foreign entity was incorporated or established and accompanied by a comparison between the accounting standards used to complete the applicant’s financial statements and Canadian GAAP; or

    • (b) prepared in accordance with Canadian GAAP and audited in accordance with the auditing standards and guidelines established by the CICA.

  •  (1) The application must include a business plan that covers the three-year period beginning on the day on which the applicant proposes to begin carrying on its deposit-taking business and that contains the following information:

    • (a) the reasons why it wants to establish a deposit-taking business;

    • (b) an analysis of target markets together with its business objectives for those markets, the short- and long-term strategy it will employ to achieve those objectives and the reasons why it believes that it will be successful in achieving those objectives;

    • (c) an overview of each line of business to be conducted and a description of the products and services it will offer in each target market, together with the expected levels of business for those products and services;

    • (d) an analysis of the competitive threats it will face in each target market, together with a description of how it plans to respond to those threats and the reasons why it believes that the response will be successful;

    • (e) a detailed forecast that includes pro forma financial statements covering that three-year period and identifying the assumptions made in the preparation of the forecast;

    • (f) a list of the assumptions that it made for the purposes of paragraphs (b) to (e) and the reasons why it considers those assumptions to be reasonable;

    • (g) a description of the off-balance sheet activities that it proposes to carry on;

    • (h) a description of its proposed outsourcing arrangements and its contingency plans respecting those arrangements;

    • (i) a sensitivity analysis of its projected financial results under various assumptions or scenarios;

    • (j) its projected staff complement during that three-year period; and

    • (k) an explanation of the correlation between the business background and expertise of each director and officer and the applicant’s business objectives.

  • (2) The application must also include any other business plan that was prepared by, or for, the applicant within the 24-month period preceding the date of the business plan referred to in subsection (1) and an explanation of any significant differences between those business plans.

 The application must include the following information in respect of the applicant’s capital:

  • (a) its authorized capital level;

  • (b) the sources of its initial and future capital;

  • (c) the amount of its issued and outstanding capital;

  • (d) the amount of its paid-in or stated capital; and

  • (e) a description of any other forms of its capital that are accepted as, or considered to be, capital in the jurisdiction in which the applicant was incorporated.

 The application must include detailed information in respect of the following:

  • (a) any material pending litigation to which the applicant is a party;

  • (b) any material contingent liabilities, including guarantees, suretyships and indemnity obligations issued by the applicant to its shareholders, directors, officers, affiliates or associates; and

  • (c) any material transaction, in which the applicant has an interest, that is pending or is scheduled to occur within the 24-month period preceding the day referred to in subsection 2(2) and that confers or may confer a benefit on any of

    • (i) its directors or officers,

    • (ii) its affiliates, associates or promoter, or

    • (iii) the directors or officers of an affiliate, associate or promoter referred to in subparagraph (ii).

  •  (1) The application must include evidence that the applicant has established appropriate, effective and prudent practices with respect to corporate governance, risk management and liquidity and capital management, as well as appropriate, effective and prudent controls in respect of its operations, that will enable it to comply with the Canada Deposit Insurance Corporation Deposit Insurance Policy By-law.

  • (2) The evidence must provide a detailed description of those practices and controls, including

    • (a) the composition, mandate, roles and responsibilities of board committees and of the internal audit and compliance functions;

    • (b) the policies relating to and the procedures for monitoring risk tolerance and risk management for major risk areas such as credit, market, liquidity, operational (inclusive of business continuity planning), technology, legal, regulatory, reputational and strategic risks; and

    • (c) any procedures that are or will be integrated with those of the entity that controls the applicant, if any, or any of the applicant’s subsidiaries, associates or affiliates, if any.

Other Information About the Applicant

 The application must include detailed information in respect of the following, if applicable:

  • (a) any agreement or understanding that has or could have a significant effect on the management or control of the applicant;

  • (b) the refusal of an application for deposit insurance made by the applicant under the Act or under similar legislation in any other jurisdiction within or outside Canada;

  • (c) the suspension or revocation of the applicant’s policy of deposit insurance under the Act or under similar legislation in any other jurisdiction within or outside Canada;

  • (d) the refusal, under the laws of any jurisdiction within or outside Canada, of an application made by the applicant for licensing or registration as a financial institution;

  • (e) the suspension or revocation, under the laws of any jurisdiction within or outside Canada, of the applicant’s licence to carry on business as a financial institution;

  • (f) the suspension or cancellation, under the laws of any jurisdiction within or outside Canada, of the applicant’s registration as a financial institution;

  • (g) any investigation that was or is being conducted in relation to a licence referred to in paragraph (e) or a registration referred to in paragraph (f);

  • (h) the refusal, under the laws of any jurisdiction within or outside Canada, of an application made by the applicant for any licence or registration related to the business or affairs of the applicant;

  • (i) the suspension or revocation, under the laws of any jurisdiction within or outside Canada, of any licence referred to in paragraph (h) and held by the applicant or the cancellation of any registration referred to in paragraph (h) in the applicant’s name;

  • (j) any investigation that was or is being conducted in relation to a licence or registration referred to in paragraph (h);

  • (k) the refusal, under the laws of any jurisdiction within or outside Canada, of an application made by the applicant for membership in any self-regulatory organization;

  • (l) the suspension or revocation, under the laws of any jurisdiction within or outside Canada, of the applicant’s membership in any self-regulatory organization and any investigation that was or is being conducted in relation to that membership;

  • (m) the refusal of an application made by the applicant for bonding or suretyship or insurance coverage in relation to its business;

  • (n) the suspension or revocation of any bonding or suretyship or insurance coverage held by the applicant in relation to its business and any investigation that was or is being conducted in relation to such coverage; and

  • (o) the conviction of the applicant, under the laws of any jurisdiction within or outside Canada, for a material criminal offence or a finding, made by a court of law, tribunal or other quasi-judicial body or by a regulatory body that the applicant violated the laws of any jurisdiction within or outside Canada in respect of the carrying on of a business, and any proceedings relating to such an offence or violation that have been commenced in any jurisdiction within or outside Canada against the applicant by a competent authority.

 
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