Financial Consumer Agency of Canada Act (S.C. 2001, c. 9)

Marginal note:Adequacy of capital and liquidity — companies and societies

• 515. (1) A company and society shall, in relation to its operations, maintain adequate capital and adequate and appropriate forms of liquidity and shall comply with any regulations in relation to adequate capital and adequate and appropriate forms of liquidity.

• Marginal note:Regulations and guidelines

  (2) The Governor in Council may make regulations and the Superintendent may make guidelines respecting the maintenance by companies and societies of adequate capital and adequate and appropriate forms of liquidity.

• Marginal note:Directives

  (3) Notwithstanding that a company or society is complying with regulations or guidelines made under subsection (2), the Superintendent may, by order, direct the company or society to increase its capital or to provide additional liquidity in any forms and amounts that the Superintendent may require.

• Marginal note:Compliance

  (4) A company and society shall comply with an order made under subsection (3) within the time that the Superintendent specifies in the order.

Marginal note:Transactions with holding companies

• 528.1 (1) Subject to subsection (2) and sections 528.2 and 528.3, if a widely held insurance holding company or a widely held bank holding company has a significant interest in any class of shares of a company, the company may enter into any transaction with the holding company or with any other related party of the company that is an entity in which the holding company has a substantial investment.

• Marginal note:Policies and procedures

  (2) The company shall adhere to policies and procedures established under subsection 204(3) when entering into the transaction.

Marginal note:Restriction

• 528.2 (1) If a company enters into a transaction with a related party of the company with whom the company may enter into transactions under subsection 528.1(1) and that is not a federal financial institution, the company shall not directly or indirectly make, take an assignment of or otherwise acquire a loan to the related party, make an acceptance, endorsement or other guarantee on behalf of the related party or make an investment in the securities of the related party if, immediately following the transaction, the aggregate financial exposure, as that expression is defined by the regulations, of the company would exceed

  • (a) in respect of all transactions of the company with the related party, the prescribed percentage of the company’s regulatory capital or, if no percentage is prescribed, five per cent of the company’s regulatory capital; or

  • (b) in respect of all transactions of the company with such related parties of the company, the prescribed percentage of the company’s regulatory capital or, if no percentage is prescribed, ten per cent of the company’s regulatory capital.

• Marginal note:Order

  (2) If the Superintendent is of the opinion that it is necessary for the protection of the interests of the policyholders and creditors of a company, the Superintendent may, by order,

  • (a) reduce the limit in paragraph (1)(a) or (b) that would otherwise apply to the company; and

  • (b) impose limits on transactions by the company with related parties with whom the company may enter into transactions under subsection 528.1(1) that are federal financial institutions.

• Marginal note:Order

  (3) The Superintendent may, by order, increase the limit in paragraph (1)(a) or (b) that would otherwise apply to a company on transactions by the company with related parties that are financial institutions that are regulated in a manner acceptable to the Superintendent.

Marginal note:Assets transactions

• 528.3 (1) Despite subsection 527(3), a company shall not, without the approval of the Superintendent and its conduct review committee, directly or indirectly acquire assets from a related party of the company with whom the company may enter into transactions under subsection 528.1(1) that is not a federal financial institution, or directly or indirectly transfer assets to such a related party if

  A + B > C

  where

  A 

  is the value of the assets;

  B 

  is the total value of all assets that the company directly or indirectly acquired from, or directly or indirectly transferred to, that related party in the twelve months ending immediately before the acquisition or transfer; and

  C 

  is five per cent, or the percentage that may be prescribed, 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 assets purchased or otherwise acquired under subsection 527(1), assets sold under subsection 527(2) or any other assets that may be prescribed.

• 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); or

  • (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.

• 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.

• (b) in respect of any other transaction,

  • (i) terms and conditions, including those relating to price, rent or interest rate, that might reasonably be expected to apply in a similar transaction in an open market under conditions requisite to a fair transaction between parties who are at arm’s length and who are acting prudently, knowledgeably and willingly, or

  • (ii) if the transaction is one that would not reasonably be expected to occur in an open market between parties who are at arm’s length, terms and conditions, including those relating to price, rent or interest rate, that would reasonably be expected to provide the company with fair value, having regard to all the circumstances of the transaction, and that would be consistent with the parties to the transaction acting prudently, knowledgeably and willingly.

Marginal note:Order to void contract or to grant other remedy

• 539. (1) If a company enters into a transaction that it is prohibited from entering into by this Part, the company or the Superintendent may apply to a court for an order setting aside the transaction or for any other appropriate remedy, including an order directing that the related party of the company involved in the transaction account to the company for any profit or gain realized or that any director or senior officer of the company who authorized the transaction compensate the company for any loss or damage incurred by the company.

• Marginal note:Time limit

  (2) An application under subsection (1) in respect of a particular transaction may only be made within the period of three months following the day the notice referred to in section 538 in respect of the transaction is given to the Superintendent or, if no such notice is given, the day the Superintendent becomes aware of the transaction.

• Marginal note:Certificate

  (3) For the purposes of subsection (2), a document purporting to have been issued by the Superintendent, certifying the day on which the Superintendent became aware of the transaction, shall, in the absence of evidence to the contrary, be received in evidence as conclusive proof of that fact without proof of the signature or of the official character of the person appearing to have signed the document and without further proof.