Financial Consumer Agency of Canada Act (S.C. 2001, c. 9)
Full Document:
Assented to 2001-06-14
424. (1) Sections 486 and 487 of the Act are replaced by the following:
Complaints
Marginal note:Procedures for dealing with complaints
486. (1) A company shall
(a) establish procedures for dealing with complaints made by persons having requested or received products or services in Canada from the company;
(b) designate an officer or employee of the company to be responsible for implementing those procedures; and
(c) designate one or more officers or employees of the company to receive and deal with those complaints.
Marginal note:Procedures to be filed with Commissioner
(2) A company shall file with the Commissioner a copy of its procedures established under paragraph (1)(a).
Marginal note:Obligation to be member of complaints body
486.1 In any province, if there is no law of the province that makes a company subject to the jurisdiction of an organization that deals with complaints made by persons having requested or received products or services in the province from a company, the company shall be a member of an organization that is not controlled by it and that deals with those complaints that have not been resolved to the satisfaction of the persons under procedures established by companies under paragraph 486(1)(a).
Marginal note:Information on contacting Agency
487. (1) A company shall, in the prescribed manner, provide a person requesting or receiving a product or service from it with prescribed information on how to contact the Agency if the person has a complaint about an arrangement referred to in subsection 482(3), a payment, credit or charge card, the disclosure of or manner of calculating the cost of borrowing in respect of a loan or an advance on the security or against the cash surrender value of a policy, or about any other obligation of the company under a consumer provision.
Marginal note:Report
(2) The Commissioner shall prepare a report, to be included in the report referred to in section 34 of the Financial Consumer Agency of Canada Act, respecting
(a) procedures for dealing with complaints established by companies pursuant to paragraph 486(1)(a); and
(b) the number and nature of complaints that have been brought to the attention of the Agency by persons who have requested or received a product or service from a company.
(2) If this section comes into force before paragraph 486(1)(a) and subsection 487(1) of the Act, as enacted, respectively, by sections 260 and 261 of An Act to amend certain laws relating to financial institutions, being chapter 15 of the Statutes of Canada, 1997, come into force, then sections 260 and 261 of that Act are repealed.
425. The Act is amended by adding the following after section 489:
Marginal note:Public accountability statements
489.1 (1) A company with equity of $1 billion or more shall, in accordance with regulations made under subsection (4), annually publish a statement describing the contribution of the company and its prescribed affiliates to the Canadian economy and society.
Marginal note:Filing
(2) A company shall, in the manner and at the time prescribed, file a copy of the statement with the Commissioner.
Marginal note:Provision of statement to public
(3) A company shall, in the manner and at the time prescribed, disclose the statement to its customers and to the public.
Marginal note:Regulations
(4) The Governor in Council may make regulations prescribing
(a) the name, contents and form of a statement referred to in subsection (1) and the time in which it must be prepared;
(b) affiliates of a company referred to in subsection (1);
(c) the manner and time in which a statement must be filed under subsection (2); and
(d) the manner and time in which a statement mentioned in subsection (3) is to be disclosed, respectively, to a company’s customers and to the public.
Marginal note:Regulations re disclosure
489.2 The Governor in Council may, subject to any other provisions of this Act relating to the disclosure of information, make regulations respecting the disclosure of information by companies or any prescribed class of companies, including regulations respecting
(a) the information that must be disclosed, including information relating to
(i) any product or service or prescribed class of products or services offered by them,
(ii) any of their policies, procedures or practices relating to the offer by them of any product or service or prescribed class of products or services,
(iii) anything they are required to do or to refrain from doing under a consumer provision, and
(iv) any other matter that may affect their dealings with customers or the public;
(b) the manner, place and time in which, and the persons to whom information is to be disclosed; and
(c) the content and form of any advertisement by companies or any prescribed class of companies relating to any matter referred to in paragraph (a).
Marginal note:1991, c. 47, s. 760; 1993, c. 34, ss. 81(F), 82, 83; 1997, c. 15, ss. 264 to 274; 1999, c. 28, ss. 122 to 124
426. Sections 490 to 513 of the Act are replaced by the following:
Marginal note:Definitions
490. (1) The definitions in this subsection apply in this Part.
“commercial loan”
« prêt commercial »
“commercial loan” means
(a) any loan made or acquired by a company, other than
(i) a loan to a natural person in an amount of two hundred and fifty thousand dollars or less,
(ii) a loan to the Government of Canada, the government of a province, a municipality, or to any agency thereof, or to the government of a foreign country or any political subdivision thereof, or any agency thereof, or to a prescribed international agency,
(iii) a loan that is guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in subparagraph (ii),
(iv) a loan that is secured by a mortgage on real property, where
(A) the mortgage is on residential property and the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, does not exceed 75 % of the value of the property at the time the loan is made or acquired, or
(B) the mortgage is on real property other than residential property and
(I) the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, does not exceed 75 % of the value of the property at the time the loan is made or acquired, and
(II) at the time the loan is made or acquired, the property provides an annual income sufficient to pay all annual expenses related to the property, including the payments owing under the mortgage and the mortgages having an equal or prior claim against the property,
(v) a loan that is secured by a mortgage on real property, where
(A) the mortgage is on residential property and
(I) the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, exceeds 75 % of the value of the property at the time the loan is made or acquired, and
(II) repayment of the amount of the loan that exceeds 75 % of the value of the property is guaranteed or insured by a government agency or private insurer approved by the Superintendent,
(B) the mortgage is on real property other than residential property and
(I) the amount of the loan, together with the amount then outstanding of any mortgage having an equal or prior claim against the property, exceeds 75 % of the value of the property at the time the loan is made or acquired,
(II) repayment of the amount of the loan that exceeds 75 % of the value of the property is guaranteed or insured by a government agency or private insurer approved by the Superintendent, and
(III) at the time the loan is made or acquired, the property provides an annual income sufficient to pay all annual expenses related to the property, including the payments owing under the mortgage and the mortgages having an equal or prior claim against the property, or
(C) the loan is one referred to in paragraph 469(2)(d),
(vi) a loan that
(A) consists of a deposit made by the company with another financial institution,
(B) is fully secured by a deposit with any financial institution, including the company,
(C) is fully secured by debt obligations guaranteed by any financial institution other than the company, or
(D) is fully secured by a guarantee of a financial institution other than the company,
(vii) an advance on the security of or against the cash surrender value of a policy, or
(viii) a loan to an entity controlled by the company;
(b) an investment in debt obligations, other than
(i) debt obligations that are
(A) guaranteed by any financial institution other than the company,
(B) fully secured by deposits with any financial institution, or
(C) fully secured by debt obligations that are guaranteed by any financial institution other than the company,
(ii) debt obligations issued by the Government of Canada, the government of a province, a municipality, or by any agency thereof, or by the government of a foreign country or any political subdivision thereof, or by any agency thereof, or by a prescribed international agency,
(iii) debt obligations that are guaranteed by, or fully secured by securities issued by, a government, a municipality or an agency referred to in subparagraph (ii),
(iv) debt obligations that are widely distributed, as that expression is defined by the regulations, or
(v) debt obligations of an entity controlled by the company; and
(c) an investment in shares of a body corporate or ownership interests in an unincorporated entity, other than
(i) shares or ownership interests that are widely distributed, as that expression is defined by the regulations,
(ii) shares or ownership interests of an entity controlled by the company, or
(iii) participating shares.
“factoring entity”
« entité s’occupant d’affacturage »
“factoring entity” means a factoring entity as defined in the regulations.
“finance entity”
« entité s’occupant de financement »
“finance entity” means a finance entity as defined in the regulations.
“financial leasing entity”
« entité s’occupant de crédit-bail »
“financial leasing entity” means an entity
(a) the activities of which are limited to the financial leasing of personal property and such related activities as are prescribed and whose activities conform to such restrictions and limitations thereon as are prescribed; and
(b) that, in conducting the activities referred to in paragraph (a) in Canada, does not
(i) direct its customers or potential customers to particular dealers in the leased property or the property to be leased,
(ii) enter into lease agreements with persons in respect of any motor vehicle having a gross vehicle weight, as that expression is defined by the regulations, of less than twenty-one tonnes, or
(iii) enter into lease agreements with natural persons in respect of personal household property, as that expression is defined by the regulations.
“loan”
« prêt »ou« emprunt »
“loan” includes an acceptance, advance on the security of or against the cash surrender value of a policy, endorsement or other guarantee, a deposit, a financial lease, a conditional sales contract, a repurchase agreement and any other similar arrangement for obtaining funds or credit but does not include investments in securities.
“motor vehicle”
« véhicule à moteur »
“motor vehicle” means a motorized vehicle designed to be used primarily on a public highway for the transportation of persons or things, but does not include
(a) a fire-engine, bus, ambulance or utility truck; or
(b) any other special purpose motorized vehicle that contains significant special features that make it suitable for a specific purpose.
“mutual fund distribution entity”
« courtier de fonds mutuels »
“mutual fund distribution entity” means an entity whose principal activity is acting as a selling agent of units, shares or other interests in a mutual fund and acting as a collecting agent in the collection of payments for any such interests if
(a) the proceeds of the sales of any such interests, less any sales commissions and service fees, are paid to the mutual fund; and
(b) the existence of a sales commission and service fee in respect of the sale of any such interest is disclosed to the purchaser of the interest before the purchase of the interest.
“mutual fund entity”
« entité s’occupant de fonds mutuels »
“mutual fund entity” means an entity
(a) whose activities are limited to the investing of the funds of the entity so as to provide investment diversification and professional investment management to the holders of its securities; and
(b) whose securities entitle their holders to receive, on demand, or within a specified period after demand, an amount computed by reference to the value of a proportionate interest in the whole or in a part of its net assets, including a separate fund or trust account of the entity.
“participating share”
« action participante »
“participating share” means a share of a body corporate that carries the right to participate in the earnings of the body corporate to an unlimited degree and to participate in a distribution of the remaining property of the body corporate on dissolution.
“permitted entity”
« entité admissible »
“permitted entity” means an entity in which a company is permitted to acquire a substantial investment under section 495.
“prescribed subsidiary”
« filiale réglementaire »
“prescribed subsidiary” means a subsidiary that is one of a prescribed class of subsidiaries.
“specialized financing entity”
« entité s’occupant de financement spécial »
“specialized financing entity” means a specialized financing entity as defined in the regulations.
Marginal note:Members of a company’s group
(2) For the purpose of this Part, a member of a company’s group is any of the following:
(a) an entity referred to in any of paragraphs 495(1)(a) to (f) that controls the company;
(b) a subsidiary of the company or of an entity referred to in any of paragraphs 495(1)(a) to (f) that controls the company;
(c) an entity in which the company, or an entity referred to in any of paragraphs 495(1)(a) to (f) that controls the company, has a substantial investment; or
(d) a prescribed entity in relation to the company.
Marginal note:Exclusion of assets and liabilities of segregated funds
(3) A reference in this Part to the assets or liabilities of a company does not include
(a) assets of a segregated fund maintained pursuant to section 451; or
(b) liabilities of the company under the policies and for the amounts in respect of which such a fund is maintained.
Marginal note:Non-application of Part
491. This Part does not apply in respect of
(a) assets of a segregated fund maintained pursuant to section 451;
(b) the holding of a security interest in real property, unless the security interest is prescribed under paragraph 509(a) to be an interest in real property; or
(c) the holding of a security interest in securities of an entity.
General Constraints on Investments
Marginal note:Investment standards
492. The directors of a company shall establish and the company shall adhere to investment and lending policies, standards and procedures that a reasonable and prudent person would apply in respect of a portfolio of investments and loans to avoid undue risk of loss and obtain a reasonable return.
Marginal note:Restriction on control and substantial investments
493. (1) Subject to subsections (2) to (4), no company shall acquire control of, or hold, acquire or increase a substantial investment in, any entity other than a permitted entity.
Marginal note:Exception: indirect investments
(2) A company may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity other than a permitted entity by way of
(a) an acquisition of control of an entity referred to in any of paragraphs 495(1)(a) to (j), or of a prescribed entity, that controls or has a substantial investment in the entity; or
(b) an acquisition of shares or ownership interests in the entity by
(i) an entity referred to in any of paragraphs 495(1)(a) to (j), or a prescribed entity, that is controlled by the company, or
(ii) an entity controlled by an entity referred to in any of paragraphs 495(1)(a) to (j), or a prescribed entity, that is controlled by the company.
Marginal note:Exception: temporary investments, realizations and loan workouts
(3) A company may, subject to Part XI, acquire control of, or acquire or increase a substantial investment in, an entity by way of
(a) a temporary investment permitted by section 498;
(b) an acquisition of shares of a body corporate or of ownership interests in an unincorporated entity permitted by section 499; or
(c) a realization of security permitted by section 500.
Marginal note:Exception: specialized financing regulations
(4) A life company may, subject to Part XI, acquire control of, or hold, acquire or increase a substantial investment in, an entity other than a permitted entity if it does so in accordance with regulations made under paragraph 494(d) concerning specialized financing.
Marginal note:Exception: uncontrolled event
(5) A company is deemed not to contravene subsection (1) if the company acquires control of, or acquires or increases a substantial investment in, an entity solely as the result of an event not within the control of the company.
Marginal note:Regulations
494. The Governor in Council may make regulations
(a) respecting the determination of the amount or value of loans, investments and interests for the purposes of this Part;
(b) respecting the loans and investments, and the maximum aggregate amount of all loans and investments, that may be made or acquired by a company and its prescribed subsidiaries to or in a person and any persons connected with that person;
(c) specifying the classes of persons who are connected with any person for the purposes of paragraph (b); and
(d) concerning specialized financing for the purposes of subsection 493(4).
Subsidiaries and Equity Investments
Marginal note:Permitted investments
495. (1) Subject to subsections (6) to (8) and Part XI, a company may acquire control of, or acquire or increase a substantial investment in
(a) a company or a society;
(b) an insurance holding company;
(c) a bank;
(d) a bank holding company;
(e) a body corporate to which the Trust and Loan Companies Act applies;
(f) an association to which the Cooperative Credit Associations Act applies;
(g) a trust, loan or insurance corporation incorporated or formed by or under an Act of the legislature of a province;
(h) a cooperative credit society incorporated or formed, and regulated, by or under an Act of the legislature of a province;
(i) an entity that is incorporated or formed by or under an Act of Parliament or of the legislature of a province and that is primarily engaged in dealing in securities; or
(j) an entity that is incorporated or formed, and regulated, otherwise than by or under an Act of Parliament or of the legislature of a province and that is primarily engaged outside Canada in a business that, if carried on in Canada, would be the business of banking, the business of a cooperative credit society, the business of insurance, the business of providing fiduciary services or the business of dealing in securities.
Marginal note:Permitted investments — life companies
(2) Subject to subsections (3) and (6) to (8) and Part XI, a life company may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:
(a) engaging in any financial service activity or in any other activity that a life company is permitted to engage in under subsection 440(2) or section 441 or 442, other than paragraph 441(1)(h);
(b) acquiring or holding shares of, or ownership interests in, entities in which a company is permitted under this Part to hold or acquire;
(c) engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the company or any member of the company’s group:
(i) the company,
(ii) any member of the company’s group,
(iii) any entity that is primarily engaged in the business of providing financial services,
(iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or
(v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;
(d) engaging in any activity that a life company is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to
(i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by the life company or any member of the life company’s group, or
(ii) if a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;
(e) engaging in the activities referred to in the definition “mutual fund entity” or “mutual fund distribution entity” in subsection 490(1); and
(f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.
Marginal note:Restriction — life company
(3) A life company may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (2)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include
(a) activities that a company is not permitted to engage in under any of sections 466, 469 and 475;
(b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a company under paragraph 440(2)(b);
(c) activities that a company is not permitted to engage in under any regulation made under section 489 if the entity engages in the activities of a finance entity or of any other entity as may be prescribed;
(d) acquiring control of or acquiring or holding a substantial investment in another entity unless
(i) in the case of an entity that is controlled by the company, the company itself would be permitted under this Part to acquire a substantial investment in the other entity, or
(ii) in the case of an entity that is not controlled by the company, the company itself would be permitted to acquire a substantial investment in the other entity under subsection (1) or (2) or 493(2), paragraph 493(3)(b) or (c) or subsection 493(4); or
(e) any prescribed activity.
Marginal note:Permitted investments — property and casualty companies
(4) Subject to subsections (5) to (8) and Part XI, a property and casualty company may acquire control of, or acquire or increase a substantial investment in, an entity, other than an entity referred to in any of paragraphs (1)(a) to (j), whose business is limited to one or more of the following:
(a) engaging in any financial service activity or in any other activity that a property and casualty company is permitted to engage in under subsection 440(2) or section 441 or 442, other than paragraph 441(1)(h);
(b) acquiring or holding shares of, or ownership interests in, entities in which a property and casualty company is permitted under this Part to hold or acquire;
(c) engaging in the provision of any services exclusively to any or all of the following, so long as the entity is providing those services to the company or any member of the company’s group:
(i) the company,
(ii) any member of the company’s group,
(iii) any entity that is primarily engaged in the business of providing financial services,
(iv) any permitted entity in which an entity referred to in subparagraph (iii) has a substantial investment, or
(v) any prescribed person, if it is doing so under prescribed terms and conditions, if any are prescribed;
(d) engaging in any activity that a property and casualty company is permitted to engage in, other than an activity referred to in paragraph (a) or (e), that relates to
(i) the promotion, sale, delivery or distribution of a financial product or financial service that is provided by the property and casualty company or any member of the property and casualty company’s group, or
(ii) if a significant portion of the business of the entity involves an activity referred to in subparagraph (i), the promotion, sale, delivery or distribution of a financial product or financial service that is provided by any other entity that is primarily engaged in the business of providing financial services;
(e) engaging in the activities referred to in the definition “mutual fund entity” or “mutual fund distribution entity” in subsection 490(1); and
(f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.
Marginal note:Restriction — property and casualty company
(5) A property and casualty company may not acquire control of, or acquire or increase a substantial investment in, an entity whose business includes any activity referred to in any of paragraphs (4)(a) to (e) if the entity engages in the business of accepting deposit liabilities or if the activities of the entity include
(a) activities that a company is not permitted to engage in under any of sections 466, 469 and 478;
(b) dealing in securities, except as may be permitted under paragraph (2)(e) or as may be permitted to a company under paragraph 440(2)(b);
(c) any financial intermediary activity that exposes the entity to material market or credit risk, including the activities of a finance entity, a factoring entity and a financial leasing entity;
(c.1) the activities of a specialized financing entity;
(d) acquiring control of or acquiring or holding a substantial investment in another entity unless
(i) in the case of an entity that is controlled by the company, the company itself would be permitted under this Part to acquire a substantial investment in the other entity, or
(ii) in the case of an entity that is not controlled by the company, the company itself would be permitted to acquire a substantial investment in the other entity under subsection (1) or (4) or 493(2) or paragraph 493(3)(b) or (c); or
(e) any prescribed activity.
Marginal note:Control
(6) Subject to subsection (10) and the regulations, a company may not acquire control of, or acquire or increase a substantial investment in,
(a) an entity referred to in any of paragraphs (1)(a) to (j), unless
(i) the company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or
(ii) the company is permitted by regulations made under paragraph 501(a) to acquire or increase the substantial investment;
(b) an entity whose business includes one or more of the activities referred to in paragraph (2)(a) and that engages, as part of its business, in any financial intermediary activity that exposes the entity to material market or credit risk, including a finance entity, a factoring entity and a financial leasing entity, unless
(i) the company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity, or
(ii) the company is permitted by regulations made under paragraph 501(a) to acquire or increase the substantial investment; or
(c) an entity whose business includes an activity referred to in paragraph (2)(b) or (4)(b), including a specialized financing entity, unless
(i) the company controls, within the meaning of paragraph 3(1)(d), the entity, or would thereby acquire control, within the meaning of that paragraph, of the entity,
(ii) the company is permitted by regulations made under paragraph 501(a) to acquire or increase the substantial investment, or
(iii) subject to prescribed terms and conditions, if any are prescribed, the activities of the entity do not include the acquisition or holding of control of, or the acquisition or holding of shares or other ownership interests in, an entity referred to in paragraph (a) or (b) or an entity that is not a permitted entity.
Marginal note:Minister’s approval
(7) Subject to the regulations, a company may not, without the prior written approval of the Minister,
(a) acquire control of an entity referred to in paragraphs (1)(g) to (i) from a person who is not a member of the company’s group;
(b) acquire control of an entity referred to in paragraph (1)(j) or (6)(b), other than an entity whose activities are limited to the activities of one or more of the following entities, if the control is acquired from an entity referred to in any of paragraphs (1)(a) to (f) that is not a member of the company’s group:
(i) a factoring entity, or
(ii) a financial leasing entity;
(c) acquire control of, or acquire or increase a substantial investment in, an entity whose business includes one or more of the activities referred to in paragraph (2)(d) or (4)(d);
(d) acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 441(1)(d) or (d.1); or
(e) acquire control of, or acquire or increase a substantial investment in, an entity engaging in an activity prescribed for the purposes of paragraph (2)(f) or (4)(f).
Marginal note:Superintendent’s approval
(8) Subject to subsection (9) and the regulations, a company may not acquire control of, or acquire or increase a substantial investment in, an entity referred to in any of paragraphs (1)(g) to (j) and (6)(b) and (c) unless the company obtains the approval of the Superintendent.
Marginal note:Exception
(9) Subsection (8) does not apply in respect of a particular transaction if
(a) the company is acquiring control of an entity whose business includes an activity referred to in paragraph (2)(b) or (4)(b), other than a specialized financing entity;
(b) the company is acquiring control of an entity whose activities are limited to the activities of a factoring entity or a financial leasing entity; or
(c) the Minister has approved the transaction under subsection (7) or is deemed to have approved it under subsection 496(1).
Marginal note:Control not required
(10) A company need not control an entity referred to in paragraph (1)(j), or an entity that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province, if the laws or customary business practices of the country under the laws of which the entity was incorporated or formed do not permit the company to control the entity.
Marginal note:Prohibition on giving up control in fact
(11) A company that, under subsection (6), controls an entity may not, without the prior written approval of the Minister, give up control, within the meaning of paragraph 3(1)(d), of the entity while it continues to control the entity.
Marginal note:Giving up control
(12) A company that, under subsection (6), controls an entity may, with the prior written approval of the Superintendent, give up control of the entity while keeping a substantial investment in the entity if
(a) the company is permitted to do so by regulations made under paragraph 501(c); or
(b) the entity meets the conditions referred to in subparagraph (6)(c)(iii).
Marginal note:Subsections do not apply
(13) If a company controls, within the meaning of paragraph 3(1)(a), (b) or (c), an entity, subsections (7) and (8) do not apply in respect of any subsequent increases by the company of its substantial investment in the entity so long as the company continues to control the entity.
Marginal note:Approval for indirect investments
496. (1) If a company obtains the approval of the Minister under subsection 495(7) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 495(7) or the Superintendent under subsection 495(8) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the company is deemed to have obtained the approval of the Minister or the Superintendent for that indirect acquisition or increase.
Marginal note:Approval for indirect investments
(2) If a company obtains the approval of the Superintendent under subsection 495(8) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase the company indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Superintendent under that subsection and that indirect acquisition or increase is disclosed to the Superintendent in writing before the approval is obtained, the company is deemed to have obtained the approval of the Superintendent for that indirect acquisition or increase.
Marginal note:Undertakings
497. (1) If a company controls a permitted entity, other than an entity referred to in any of paragraphs 495(1)(a) to (f), the company shall provide the Superintendent with any undertakings that the Superintendent may require regarding
(a) the activities of the entity; and
(b) access to information about the entity.
Marginal note:Undertakings
(2) If a company acquires control of an entity referred to in any of paragraphs 495(1)(g) to (j), the company shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.
Marginal note:Agreements with other jurisdictions
(3) The Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of any entity referred to in any of paragraphs 495(1)(g) to (j) in each province or in any other jurisdiction concerning any matters referred to in paragraphs (1)(a) and (b) or any other matter the Superintendent considers appropriate.
Marginal note:Access to records
(4) Despite any other provision of this Part, a company shall not control a permitted entity, other than an entity referred to in any of paragraphs 495(1)(a) to (f), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the company obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.
Exceptions and Exclusions
Marginal note:Temporary investments in entity
498. (1) Subject to subsection (4), a company may, by way of a temporary investment, acquire control of, or acquire or increase a substantial investment in, an entity but, within two years, or any other period that may be specified or approved by the Superintendent, after acquiring control or after acquiring or increasing the substantial investment, as the case may be, it shall do all things necessary to ensure that it no longer controls the entity or has a substantial investment in the entity.
Marginal note:Transitional
(2) Despite subsection (1), if a company that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the company subsequently increases that substantial investment by way of a temporary investment, the company shall, within two years, or any other period that is specified or approved by the Superintendent, after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.
Marginal note:Extension
(3) The Superintendent may, in the case of any particular company that makes an application under this subsection, extend the period of two years, or the other period specified or approved by the Superintendent, that is referred to in subsection (1) or (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.
Marginal note:Temporary investment
(4) If a company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Minister under subsection 495(7) is required, the company must, within 90 days after acquiring control or after acquiring or increasing the substantial investment,
(a) apply to the Minister for approval to retain control of the entity or to continue to hold the substantial investment in the entity for a period specified by the Minister or for an indeterminate period on any terms and conditions that the Minister considers appropriate; or
(b) do all things necessary to ensure that, on the expiry of the 90 days, it no longer controls the entity or does not have a substantial investment in the entity.
Marginal note:Indeterminate extension
(5) If a company, by way of temporary investment, acquires control of, or acquires or increases a substantial investment in, an entity for which the approval of the Superintendent under subsection 495(8) is required, the Superintendent may, in the case of any particular company that makes an application under this subsection, permit the company to retain control of the entity or to continue to hold the substantial investment in the entity for an indeterminate period, on any terms and conditions that the Superintendent considers necessary.
Marginal note:Loan workouts
499. (1) Despite anything in this Part, if a company or any of its subsidiaries has made a loan to an entity and, under the terms of the agreement between the company, or any of its subsidiaries, and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the company may acquire
(a) if the entity is a body corporate, all or any of the shares of the body corporate;
(b) if the entity is an unincorporated entity, all or any of the ownership interests in the entity;
(c) all or any of the shares or all or any of the ownership interests in any entity that is an affiliate of the entity; or
(d) all or any of the shares of a body corporate that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity or any of its affiliates.
Marginal note:Obligation of company
(2) If a company acquires shares or ownership interests in an entity under subsection (1), the company shall, within five years after acquiring them, do all things necessary to ensure that the company does not control the entity or have a substantial investment in the entity.
Marginal note:Transitional
(3) Despite subsection (1), if a company that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the company later increases that substantial investment by way of an investment made under subsection (1), the company shall, within five years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.
Marginal note:Extension
(4) The Superintendent may, in the case of any particular company that makes an application under this subsection, extend the period of five years referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.
Marginal note:Exception — entities controlled by foreign governments
(5) Despite anything in this Part, if a company has made a loan to, or holds a debt obligation of, the government of a foreign country or an entity controlled by the government of a foreign country and, under the terms of the agreement between the company and that government or the entity, as the case may be, and any other documents governing the terms of the loan or debt obligation, a default has occurred, the company may acquire all or any of the shares of, or ownership interests in, that entity or in any other entity designated by that government, if the acquisition is part of a debt restructuring program of that government.
Marginal note:Time for holding shares
(6) If a company acquires any shares or ownership interests under subsection (5), the company may, on any terms and conditions that the Superintendent considers appropriate, hold those shares or ownership interests for an indeterminate period or for any other period that the Superintendent may specify.
Marginal note:Exception
(7) If, under subsection (1), a company acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 495, the company may retain control of the entity or continue to hold the substantial investment for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2) or (3), including any extension of it granted under subsection (4).
Marginal note:Realizations
500. (1) Despite anything in this Act, a company may acquire
(a) an investment in a body corporate,
(b) an interest in an unincorporated entity, or
(c) an interest in real property,
if the investment or interest is acquired through the realization of a security interest held by the company or any of its subsidiaries.
Marginal note:Disposition
(2) Subject to subsection 77(2), if a company acquires control of, or acquires a substantial investment in, an entity by way of the realization of a security interest held by the company or any of its subsidiaries, the company shall, within five years after the day on which control or the substantial investment is acquired, do all things necessary, or cause its subsidiary to do all things necessary, as the case may be, to ensure that the company no longer controls the entity or has a substantial investment in the entity.
Marginal note:Transitional
(3) Despite subsection (2), if a company that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the company later increases that substantial investment by way of a realization of a security interest under subsection (1), the company shall, within five years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.
Marginal note:Extension
(4) The Superintendent may, in the case of any particular company that makes an application under this subsection, extend the period of five years referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.
Marginal note:Exception
(5) If, under subsection (1), a company acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 495, the company may retain control of the entity or continue to hold the substantial investment for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2) or (3), including any extension of it granted under subsection (4).
Marginal note:Regulations restricting ownership
501. The Governor in Council may make regulations
(a) for the purposes of subsection 495(6), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which that subsection does not apply or the companies or other entities in respect of which that subsection does not apply, including prescribing companies or other entities on the basis of the activities they engage in;
(b) for the purposes of subsection 495(7) or (8), permitting the acquisition of control or the acquisition or increase of substantial investments, or prescribing the circumstances under which either of those subsections does not apply or the companies or other entities in respect of which either of those subsections does not apply, including prescribing companies or other entities on the basis of the activities they engage in;
(c) for the purposes of subsection 495(12), permitting a company to give up control of an entity; and
(d) restricting the ownership by a company of shares of a body corporate or of ownership interests in an unincorporated entity under sections 495 to 500 and imposing terms and conditions applicable to companies that own such shares or interests.
Portfolio Limits
Marginal note:Exclusion from portfolio limits
502. (1) Subject to subsection (3), the value of all loans, investments and interests acquired by a company and any of its prescribed subsidiaries under section 499 or as a result of a realization of a security interest is not to be included in calculating the value of loans, investments and interests of the company and its prescribed subsidiaries under sections 503 to 508
(a) for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; and
(b) for a period of five years after the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.
Marginal note:Extension
(2) The Superintendent may, in the case of any particular company, extend any period referred to in subsection (1) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.
Marginal note:Exception
(3) Subsection (1) does not apply to an investment or interest described in that subsection if the investment or interest is defined by a regulation made under section 509 to be an interest in real property and
(a) the company or the subsidiary acquired the investment or interest as a result of the realization of a security interest securing a loan that was defined by a regulation made under section 509 to be an interest in real property; or
(b) the company or the subsidiary acquired the investment or interest under section 499 as a result of a default referred to in that section in respect of a loan that was defined by a regulation made under section 509 to be an interest in real property.
Commercial Lending by Life Companies
Marginal note:Lending limit: companies with regulatory capital of $25 million or less
503. Subject to section 504, a life company that has twenty-five million dollars or less of regulatory capital shall not, and shall not permit its prescribed subsidiaries to, make or acquire a commercial loan or acquire control of a permitted entity that holds commercial loans if the aggregate value of all commercial loans held by the company and its prescribed subsidiaries exceeds, or the making or acquisition of the commercial loan or acquisition of control of the entity would cause the aggregate value of all commercial loans held by the company and its prescribed subsidiaries to exceed, 5 per cent of the total assets of the company.
Marginal note:Lending limit: regulatory capital over $25 million
504. A life company that has twenty-five million dollars or less of regulatory capital that is controlled by a financial institution that has the equivalent of more than twenty-five million dollars of regulatory capital or a life company that has more than twenty-five million dollars of regulatory capital may make or acquire commercial loans or acquire control of a permitted entity that holds commercial loans if the aggregate value of all commercial loans held by the company and its prescribed subsidiaries would thereby exceed the limit set out in section 503 only with the prior approval in writing of the Superintendent and in accordance with any terms and conditions that the Superintendent may specify.
Consumer and Commercial Lending by Property and Casualty Companies
Marginal note:Lending limit — property and casualty companies
505. A property and casualty company shall not, and shall not permit its prescribed subsidiaries to,
(a) make or acquire a commercial loan or a loan to a natural person, or
(b) acquire control of a permitted entity that holds commercial loans or loans to natural persons
if the aggregate value of all such loans held by the company and its prescribed subsidiaries exceeds, or the making or acquisition of the loan or the acquisition of control of the permitted entity would cause the aggregate value of all such loans held by the company and its prescribed subsidiaries to exceed, the prescribed percentage of the total assets of the company.
Real Property
Marginal note:Limit on total property interest
506. A company shall not, and shall not permit its prescribed subsidiaries to, purchase or otherwise acquire an interest in real property or make an improvement to any real property in which the company or any of its prescribed subsidiaries has an interest if the aggregate value of all interests of the company in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, an amount determined in accordance with the regulations.
Equities
Marginal note:Limits on equity acquisitions
507. A company shall not, and shall not permit its prescribed subsidiaries to,
(a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of a permitted entity in which the company has, or by virtue of the acquisition would have, a substantial investment, or
(b) acquire control of an entity that holds shares or ownership interests referred to in paragraph (a),
if the aggregate value of
(c) all participating shares, excluding participating shares of permitted entities in which the company has a substantial investment, and
(d) all ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the company has a substantial investment,
beneficially owned by the company and its prescribed subsidiaries exceeds, or the purchase or acquisition would cause that aggregate value to exceed, an amount determined in accordance with the regulations.
Aggregate Limit
Marginal note:Aggregate limit
508. A company shall not, and shall not permit its prescribed subsidiaries to,
(a) purchase or otherwise acquire
(i) participating shares of a body corporate, other than those of a permitted entity in which the company has, or by virtue of the acquisition would have, a substantial investment,
(ii) ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the company has, or by virtue of the acquisition would have, a substantial investment, or
(iii) interests in real property, or
(b) make an improvement to real property in which the company or any of its prescribed subsidiaries has an interest
if the aggregate value of
(c) all participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the company and its prescribed subsidiaries, and
(d) all interests of the company in real property referred to in subparagraph (a)(iii)
exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, an amount determined in accordance with the regulations.
Miscellaneous
Marginal note:Regulations
509. For the purposes of this Part, the Governor in Council may make regulations
(a) defining the interests of a company in real property;
(b) determining the method of valuing those interests;
(c) exempting classes of companies from the application of sections 502 to 508; or
(d) respecting the determination of an amount for the purpose of each of sections 506, 507 and 508.
Marginal note:Divestment order
510. (1) The Superintendent may, by order, direct a company to dispose of, within any period that the Superintendent considers reasonable, any loan, investment or interest made or acquired in contravention of this Part.
Marginal note:Divestment order
(2) If, in the opinion of the Superintendent,
(a) an investment by a company or any entity it controls in shares of a body corporate or in ownership interests in an unincorporated entity enables the company to control the body corporate or the unincorporated entity, or
(b) the company or any entity it controls has entered into an arrangement whereby it or its nominee may veto any proposal put before
(i) the board of directors of a body corporate, or
(ii) a similar group or committee of an unincorporated entity,
or whereby no proposal may be approved except with the consent of the company, the entity it controls or the nominee,
the Superintendent may, by order, require the company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the company no longer controls the body corporate or unincorporated entity or has the ability to veto or otherwise defeat any proposal referred to in paragraph (b).
Marginal note:Divestment order
(3) If
(a) a company
(i) fails to provide or obtain within a reasonable time the undertakings referred to in subsection 497(1), (2) or (4), or
(ii) is in default of an undertaking referred to in subsection 497(1) or (2) and the default is not remedied within ninety days after the day of receipt by the company of a notice from the Superintendent of the default, or
(b) a permitted entity referred to in subsection 497(4) is in default of an undertaking referred to in subsection 497(4) and the default is not remedied within ninety days after the day of receipt by the company of a notice from the Superintendent of the default,
the Superintendent may, by order, require the company, within any period that the Superintendent considers reasonable, to do all things necessary to ensure that the company no longer has a substantial investment in the entity to which the undertaking relates.
Marginal note:Exception
(4) Subsection (2) does not apply in respect of an entity in which a company has a substantial investment permitted by this Part.
Marginal note:Deemed temporary investment
511. If a company controls or has a substantial investment in an entity as permitted by this Part and the company becomes aware of a change in the business or affairs of the entity that, if the change had taken place before the acquisition of control or of the substantial investment, would have caused the entity not to be a permitted entity or would have been such that approval for the acquisition would have been required under subsection 495(7) or (8), the company is deemed to have acquired, on the day the company becomes aware of the change, a temporary investment in respect of which section 498 applies.
Marginal note:Asset transactions
512. (1) A company shall not, and shall not permit its subsidiaries to, without the approval of the Superintendent, acquire assets from a person or transfer assets to a person if
A + B > C
where
- A
- is the value of the assets;
- B
- is the total value of all assets that the company and its subsidiaries acquired from or transferred to that person in the twelve months ending immediately before the acquisition or transfer; and
- C
- is ten per cent of the total value of the assets of the company, as shown in the last annual statement of the company prepared before the acquisition or transfer.
Marginal note:Exception
(2) The prohibition in subsection (1) does not apply in respect of
(a) an asset that is a debt obligation referred to in subparagraphs (b)(i) to (v) of the definition “commercial loan” in subsection 490(1); or
(b) a transaction or series of transactions by a company with another financial institution as a result of the company’s participation in one or more syndicated loans with that financial institution.
Marginal note:Exception
(3) The approval of the Superintendent is not required if
(a) the company sells assets under a sale agreement that is approved by the Minister under subsection 254(2);
(b) the company or its subsidiary acquires shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 495(7) is required or the approval of the Superintendent under subsection 495(8) is required; or
(c) the transaction has been approved by the Minister under subsection 715(1) of this Act or subsection 678(1) of the Bank Act.
Marginal note:Value of assets
(4) For the purposes of “A” in subsection (1), the value of the assets is
(a) in the case of assets that are acquired, the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which will be included in the annual statement of the company after the acquisition, the fair market value of the assets; and
(b) in the case of assets that are transferred, the book value of the assets as stated in the last annual statement of the company prepared before the transfer, or if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the company before the transfer, the value of the assets as stated in the annual statement.
Marginal note:Total value of all assets
(5) For the purposes of subsection (1), the total value of all assets that the company or any of its subsidiaries has acquired during the period of twelve months referred to in subsection (1) is the purchase price of the assets or, if the assets are shares of, or ownership interests in, an entity the assets of which immediately after the acquisition were included in the annual statement of the company, the fair market value of the assets of the entity at the date of the acquisition.
Marginal note:Total value of all assets
(6) For the purposes of subsection (1), the total value of all assets that the company or any of its subsidiaries has transferred during the period of twelve months referred to in subsection (1) is the book value of the assets as stated in the last annual statement of the company prepared before the transfer or, if the assets are shares of, or ownership interests in, an entity the assets of which were included in the last annual statement of the company before the transfer, the value of the assets of the entity as stated in the annual statement.
Marginal note:Transitional
513. Nothing in this Part requires
(a) the termination of a loan made before February 7, 2001;
(b) the termination of a loan made after that date as a result of a commitment made before that date;
(c) the disposal of an investment made before that date; or
(d) the disposal of an investment made after that date as a result of a commitment made before that date.
But if the loan or investment would be precluded or limited by this Part, the amount of the loan or investment may not, except as provided in subsections 498(2), 499(3) and 500(3), be increased after that date.
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