BANK ACTSpecialized Financing (Banks) RegulationsP.C.2001-1799 200110
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Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance, pursuant to sections 467a, 474a and 978b of the Bank Actc, hereby makes the annexed Specialized Financing (Banks) Regulations.S.C. 2001, c. 9, s. 127S.C. 2001, c. 9, s. 183S.C. 1991, c. 146INTERPRETATIONDefinitionsThe following definitions apply in these Regulations.ActLoiAct means the Bank Act.balance sheet valuevaleur au bilanbalance 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interests held by an entity, means the value reported on its balance sheet on an unconsolidated basis.book value [Repealed, SOR/2008-168, s. 1]specialized financing entity of the bankentité de la banque s’occupant de financement spécialspecialized financing entity of the bank means a specialized financing entity that is controlled by the bank or in which the bank holds a substantial investment.subsidiaryfilialesubsidiary, in respect of a bank, does not include a subsidiary that is a specialized financing entity of the bank.Definition of specialized financing entityIn these Regulations and for the purpose of the definition specialized financing entity in subsection 464(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. 1.
Previous VersionGENERALApplicationThese Regulations apply to specialized financing activities under subsection 466(4) of the Act and to the ownership by a bank of shares of, or ownership interests in, a specialized financing entity under paragraph 468(2)(b) of the Act.CONDITIONSLimits on investmentsA bank shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in,an entity referred to in any of paragraphs 468(1)(a) to (j) of the Act;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;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; oran entity that acts as an insurance broker or agent in Canada.Length of investmentA bank shall not, by way of specialized financing activities, hold control of, or hold a substantial investment in, an entity for more than 13 consecutive years.Maximum authorized investmentA bank shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in, an entity if the aggregate balance sheet value of the shares and ownership interests that the bank, any subsidiary of the bank and any specialized financing entity of the bank hold or would hold in the entity is more than $250 million.
SOR/2008-168, s. 2.
Previous VersionLimit of 10% of regulatory capitalA bank shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in, an entity if the sum of the following exceeds 10% of the bank’s regulatory capital:the aggregate balance sheet value of the shares and ownership interests that the bank and its subsidiaries, whether individually or jointly, would acquire in the entity,the aggregate value of outstanding loans made by the bank and its subsidiaries, whether individually or jointly, to the specialized financing entities of the bank, andthe aggregate balance sheet value of the shares and ownership interests held by the bank and its subsidiaries, whether individually or jointly, in the specialized financing entities of the bank, in the entities controlled by the bank by way of specialized financing activities, and in the entities in which the bank holds a substantial investment by way of specialized financing activities.
SOR/2008-168, s. 2.
Previous VersionLimit of 25% of regulatory capital — investment in a specialized financing entityA bank shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in, an entity controlled by a specialized financing entity of the bank or an entity in which the specialized financing entity of the bank holds a substantial investment, if the sum of the following exceeds or would exceed 25% of the bank’s regulatory capital:the aggregate balance sheet value of the shares and ownership interests held by the bank and its subsidiaries, whether individually or jointly, in the specialized financing entity of the bank, in the entities controlled by the specialized financing entity of the bank and in the entities in which that specialized financing entity holds a substantial investment, andthe aggregate value of outstanding loans that the bank and its subsidiaries, whether individually or jointly, have made to the specialized financing entity of the bank, to the entities controlled by the specialized financing entity of the bank and to the entities in which that specialized financing entity holds a substantial investment.Limit of 25% of regulatory capital — investment in an entityA bank shall not, by way of specialized financing activities, acquire control of, or hold, acquire or increase a substantial investment in, an entity, other than by way of an investment of a specialized financing entity controlled by the bank, if the sum of the following exceeds 25% of the bank’s regulatory capital:the aggregate balance sheet value of the shares and ownership interests that the bank and its subsidiaries, whether individually or jointly, would acquire in the entity,the aggregate balance sheet value of the shares and ownership interests held by the bank and its subsidiaries, whether individually or jointly, in the entities controlled by the bank by way of specialized financing activities and in the entities in which the bank holds a substantial investment by way of specialized financing activities, other than entities that the bank has acquired control of, or a substantial investment in, by way of an investment of a specialized financing entity of the bank, andthe aggregate value of outstanding loans that the bank and its subsidiaries, whether individually or jointly, have made to the entities controlled by the bank by way of specialized financing activities and to the entities in which the bank holds a substantial investment by way of specialized financing activities, other than entities that the bank has acquired control of, or a substantial investment in, by way of an investment of a specialized financing entity of the bank.
SOR/2008-168, s. 2.
Previous VersionACQUISITION OF SPECIALIZED FINANCING ENTITIESDefinition of non-controlling interestIn this section, non-controlling interest means an equity interest, in a specialized financing entity of the bank controlled by a specialized financing entity, that is held by a person other than the bank or an entity controlled by the bank.Ownership restrictionsA bank shall not acquire or hold control of, or hold, acquire or increase a substantial investment in, a specialized financing entity ifthe value of the outstanding debt obligations, other than those payable to the bank or to entities controlled by the bank, of the specialized financing entity and any specialized financing entity of the bank 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,the value of the excess of assets over liabilities of the specialized financing entity as reported on its balance sheet on an unconsolidated basis, andthe value of the non-controlling interests as reported on the balance sheet of the specialized financing entity on a consolidated basis;the specialized financing entity controls or holds shares of, or ownership interests in, any of the entities referred to in paragraphs 3(a) to (d);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 that it controls, that the bank, the specialized financing entity, the subsidiaries of the bank and the other specialized financing entities of the bank 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;the sum of the values under paragraphs 6(a) to (c) exceeds or would exceed 10% of the bank’s regulatory capital; orthe sum of the values under paragraphs 7(1)(a) and (b) exceeds or would exceed 25% of the bank’s regulatory capital.13 year limitA bank shall not hold control of, or a substantial investment in, a specialized financing entity of the bank if either the specialized financing entity of the bank or the specialized financing entity of the bank 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:the bank; orany other specialized financing entity of the bank.ExceptionA specialized financing entity of the bank controlled by the specialized financing entity of the bank shall not be considered for the purpose of subsection (3).Prior periods not includedIf a specialized financing entity of the bank held control of, or a substantial investment in, an entity for a period before becoming the specialized financing entity of the bank, that period shall not be considered for the purpose of subsection (3).
SOR/2008-168, s. 2.
Previous VersionControl not requiredSubsection 468(4) of the Act does not apply to a bank’s acquisition or increase of a substantial investment in an entity by way of specialized financing activities in accordance with these Regulations.Approvals not requiredSubsections 468(5) and (6) of the Act do not apply to a bank’s acquisition of control of, or its acquisition or increase of a substantial investment in, an entity by way of specialized financing activities in accordance with these Regulations.REPEALRepealThe Specialized Financing Corporation (Banks) Regulations1 are repealed.SOR/92-357COMING INTO FORCEComing into forceThese Regulations come into force on the day on which sections 467, 474 and 978 of the Bank Act, as enacted by sections 127 and 183 of the Financial Consumer Agency of Canada Act, chapter 9 of the Statutes of Canada, 2001, come into force.[Note: Regulations in force October 24, 2001, see SI/2001-102.]