Interpretation

Marginal note:Definitions

1 The following definitions apply in these Guidelines.

Act

Act means the Bank Act. (Loi)

applicant

applicant means the applicant for an approval referred to in section 373 of the Act. (demandeur)

senior officer

senior officer has the same meaning as in section 485.1 of the Act. (cadre dirigeant)

Application

Marginal note:Acquisition referred to in section 373 of the Act

2 These Guidelines apply for the purpose of section 377.2 of the Act in respect of an acquisition referred to in section 373 of the Act.

Control in Fact

Marginal note:Determination

3 In determining whether an acquisition referred to in section 373 of the Act would, if approved by the Minister, give a person control, within the meaning of paragraph 3(1)(d) of the Act, of a federal credit union, the policy objectives set out in section 4 must be considered.

Marginal note:Policy objectives

4 The following policy objectives must be considered for the purpose of a determination referred to in section 3, taking into account the factors set out in section 5:

• (a) preserving the benefits of the ownership rules applicable to federal credit unions, including

  • (i) continuing the organization and operation of federal credit unions on a cooperative basis,

  • (ii) maintaining a high degree of transparency and member and shareholder oversight over federal credit unions,

  • (iii) lessening the risk of distortions by federal credit unions in their credit allocation that may result from links with investors, and

  • (iv) enhancing the safety and soundness of federal credit unions;

• (b) allowing federal credit unions to manage their day-to-day operations and to develop their strategic visions by taking into account their best interests, as opposed to the best interests of any single member or shareholder, any group of members or shareholders, or any person or group of persons with which the federal credit unions have a business relationship; and

• (c) allowing investors in federal credit unions to exercise the degree of influence necessary to gain the benefits of their investments, including allowing them to account for their investments using the equity accounting method in accordance with generally accepted accounting principles.

Marginal note:Factors

5 The factors referred to in section 4 are the following:

• (a) the number, type and distribution of securities and membership shares of the following entities, and the rights, privileges or features attached to those securities and membership shares:

  • (i) the federal credit union referred to in section 3, and

  • (ii) any subsidiary of the federal credit union;

• (b) the value of the equity, the number of membership shares and the number and type of securities of any entity referred to in paragraph (a) that the applicant has or proposes to acquire, and the rights, privileges or features attached to those membership shares and securities;

• (c) the involvement of the applicant or any member or shareholder of an entity referred to in paragraph (a) in the business of that entity, and their knowledge or expertise in financial services or in areas relevant to the operations of the federal credit union;

• (d) the relationships, agreements, understandings or arrangements

  • (i) among members of one or more of the entities referred to in paragraph (a),

  • (ii) among shareholders of one or more of the entities referred to in paragraph (a),

  • (iii) among members and shareholders of one or more of the entities referred to in paragraph (a),

  • (iv) between the applicant and the members or shareholders of any entity referred to in paragraph (a),

  • (v) between the applicant and any person in relation to membership shares or securities of the federal credit union, or

  • (vi) between the applicant and any entity referred to in paragraph (a);

• (e) the composition and structure of the board of directors, any committees of the board of directors and any senior management committees of any entity referred to in paragraph (a), and the voting arrangements of those boards and committees;

• (f) whether members, shareholders, directors or senior officers of any entity referred to in paragraph (a) are also members, shareholders, directors or senior officers of the applicant;

• (g) the existence of family relationships between the applicant’s directors and senior officers and the directors and senior officers of any entity referred to in paragraph (a);

• (h) the ability of any person, including the applicant, to nominate, appoint or veto the appointment of directors, members of committees of the board of directors or senior officers of any entity referred to in paragraph (a);

• (i) the ability of any person, including the applicant, in respect of the board of directors, any committee of the board of directors or any senior management committee of any entity referred to in paragraph (a), to

  • (i) require that their consent be obtained before a proposal is submitted to that board or committee, or

  • (ii) veto a proposal submitted to that board or committee;

• (j) the ability of any person, including the applicant, to determine, influence or veto the day-to-day operations, business plans, significant capital expenditures, patronage allocations, dividend policy or issuance of membership shares or securities of any entity referred to in paragraph (a);

• (k) any dependency of any entity referred to in paragraph (a) on the applicant or on a member or shareholder of any entity referred to in that paragraph, by reason of an agreement or other arrangement between them;

• (l) any links between the applicant or a member or shareholder of the federal credit union and an entity on which the federal credit union has a dependency by reason of an agreement or other arrangement between the federal credit union and the entity;

• (m) any representations made to any agency or body that regulates or supervises financial institutions about any person’s control of the federal credit union; and

• (n) any other relevant factor that is related to any of the policy objectives set out in section 4.

Coming into Force

Marginal note:S.C. 2010, c. 12

Footnote ^*6 These Guidelines come into force on the day on which subsection 1897(2) of the Jobs and Economic Growth Act comes into force, but if they are registered after that day, they come into force on the day on which they are registered.

• Return to footnote ^*[Note: Guidelines in force December 19, 2012, see SI/2012-99.]