Financial Consumer Agency of Canada Act (S.C. 2001, c. 9)
Full Document:
Assented to 2001-06-14
86. The Act is amended by adding the following after section 229:
Marginal note:Court enforcement
229.1 (1) If a bank or any director, officer, employee or agent of a bank is contravening or has failed to comply with any term or condition made in respect of the issuance of letters patent of amalgamation, the Minister may, in addition to any other action that may be taken under this Act, apply to a court for an order directing the bank or the director, officer, employee or agent to comply with the term or condition, cease the contravention or do any thing that is required to be done, and on the application the court may so order and make any other order it thinks fit.
Marginal note:Appeal
(2) An appeal from an order of a court under this section lies in the same manner as, and to the same court to which, an appeal may be taken from any other order of the court.
Marginal note:1999, c. 28, s. 14
87. Subsection 230(1) of the Act is amended by adding the word “and” at the end of paragraph (g) and by repealing paragraph (h).
88. (1) Section 239 of the Act is amended by adding the following after subsection (5):
Marginal note:Electronic access
(5.1) A bank may make the information contained in records referred to in subsection 238(1) available to persons by any system of mechanical or electronic data processing or any other information storage device that is capable of reproducing the records in intelligible written form within a reasonable time.
(2) Subsection 239(6) of the French version of the Act is replaced by the following:
Marginal note:Exemplaires
(6) Les actionnaires peuvent sur demande et sans frais, une fois par année civile, obtenir un exemplaire des règlements administratifs de la banque.
89. Subsection 245(1) of the Act is replaced by the following:
Marginal note:Location and processing of information
245. (1) Subject to subsection (3), a bank shall maintain and process in Canada any information or data relating to the preparation and maintenance of the records referred to in section 238 unless the Superintendent has, subject to any terms and conditions that the Superintendent considers appropriate, exempted the bank from the application of this section.
90. Subsection 248(3) of the Act is replaced by the following:
Marginal note:Application of certain provisions
(3) Subsections 239(5) and (5.1) and sections 240 and 242 to 245 apply, with any modifications that the circumstances require, in respect of a central securities register.
91. Section 307 of the Act is replaced by the following:
Marginal note:Financial year
307. (1) The financial year of a bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in each year.
Marginal note:First financial year
(2) If a bank, after the first day of July in any year, obtains an order approving the commencement and carrying on of business, the first financial year of the bank ends, at the election of the bank in its by-laws, on the expiration of the thirty-first day of October or the thirty-first day of December in the next calendar year.
Marginal note:Exception
(3) Despite subsection (1), the financial year of a bank named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force ends on the expiration of the thirty-first day of October in each year unless the bank elects in its by-laws to have its financial year end on the thirty-first day of December in each year.
92. (1) The portion of paragraph 308(3)(a) of the Act before subparagraph (i) is replaced by the following:
(a) a list of the subsidiaries of the bank, other than subsidiaries that are not required to be listed by the regulations and subsidiaries acquired pursuant to section 472 or pursuant to a realization of security in accordance with section 473 and which the bank would not otherwise be permitted to hold, showing, with respect to each subsidiary,
(2) Section 308 of the Act is amended by adding the following after subsection (4):
Marginal note:Regulations
(5) The Governor in Council may make regulations respecting subsidiaries that are not required to be listed for the purposes of paragraph (3)(a).
Marginal note:1997, c. 15, s. 35
93. Section 312 of the Act is replaced by the following:
Marginal note:Copy to Superintendent
312. (1) Subject to subsection (2), a bank shall send to the Superintendent a copy of the documents referred to in subsections 308(1) and (3) not later than twenty-one days before the date of each annual meeting of shareholders of the bank.
Marginal note:Later filing
(2) If a bank’s shareholders sign a resolution under paragraph 152(1)(b) in lieu of an annual meeting, the bank shall send a copy of the documents referred to in subsections 308(1) and (3) to the Superintendent not later than thirty days after the signing of the resolution.
94. (1) Subsection 315(3) of the Act is replaced by the following:
Marginal note:Notice of designation
(3) Within fifteen days after appointing a firm of accountants as auditor of a bank, the bank and the firm of accountants shall jointly designate a member of the firm who has the qualifications described in subsection (1) to conduct the audit of the bank on behalf of the firm and the bank shall forthwith notify the Superintendent in writing of the designation.
(2) Subsection 315(4) of the French version of the Act is replaced by the following:
Marginal note:Remplacement d’un membre désigné
(4) Si, pour une raison quelconque, le membre désigné cesse de remplir ses fonctions, la banque et le cabinet de comptables peuvent désigner conjointement un autre membre qui remplit les conditions du paragraphe (1); la banque en avise sans délai par écrit le surintendant.
95. Subsection 369(2) of the Act is replaced by the following:
Marginal note:Priority not affected
(2) Nothing in subsection (1) prejudices or affects the priority of any holder of any security interest in any property of a bank.
96. (1) The definitions “eligible Canadian financial institution” and “eligible foreign institution” in subsection 370(1) of the Act are replaced by the following:
“eligible Canadian financial institution”
« institution financière canadienne admissible »
“eligible Canadian financial institution” means a Canadian financial institution that is a body corporate and that is widely held;
“eligible foreign institution”
« institution étrangère admissible »
“eligible foreign institution” means
(a) a foreign bank that, in the opinion of the Minister, after consultation with the Superintendent, is regulated as or like a bank, according to the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business, or
(b) a foreign institution that, in the opinion of the Minister,
(i) is, with respect to its provision of financial services, regulated in the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business, and
(ii) is widely held;
Marginal note:1991, c. 48, par. 494(b)
(2) Subsections 370(2) to (4) of the Act are repealed.
97. Subsection 371(1) of the Act is replaced by the following:
Marginal note:Associates
371. (1) For the purpose of determining ownership of a bank, where two persons who each beneficially own shares of a bank are associated with each other, those persons are deemed to be a single person who beneficially owns the aggregate number of shares of the bank beneficially owned by them.
Marginal note:1991, c. 46, s. 578; 1991, c. 48, par. 494(c); 1994, c. 47, ss. 17 to 21; 1997, c. 15, ss. 36 to 41; 1999, c. 28, ss. 18 to 20
98. Sections 372 to 400 of the Act are replaced by the following:
Constraints on Ownership
Marginal note:Significant interest
372. Except as permitted by this Part, no person shall have a significant interest in any class of shares of a bank.
Marginal note:Acquisition of significant interest
373. (1) Subject to this Part, no person, or entity controlled by a person, shall, without the approval of the Minister, purchase or otherwise acquire any share of a bank or purchase or otherwise acquire control of any entity that holds any share of a bank if
(a) the acquisition would cause the person to have a significant interest in any class of shares of the bank; or
(b) where the person has a significant interest in a class of shares of the bank, the acquisition would increase the significant interest of the person in that class of shares.
Marginal note:Amalgamation, etc., constitutes acquisition
(2) If, as a result of an amalgamation, merger or reorganization, the entity that results would have a significant interest in a class of shares of a bank, that entity is deemed to be acquiring a significant interest in that class of shares of the bank through an acquisition for which the approval of the Minister is required.
Marginal note:Limitations on share holdings
374. (1) No person may be a major shareholder of a bank with equity of five billion dollars or more.
Marginal note:Exception — widely held bank
(2) Subsection (1) does not apply to a widely held bank that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of five billion dollars or more if it controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day.
Marginal note:Exception — widely held bank holding company
(3) Subsection (1) does not apply to a widely held bank holding company that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of five billion dollars or more if
(a) the bank holding company controlled, within the meaning of those paragraphs, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of those paragraphs, the bank since that day;
(b) the bank holding company acquired control, within the meaning of those paragraphs, of the bank under section 677 or 678 and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day the bank holding company acquired control; or
(c) the bank was a subsidiary of another bank that was continued under section 684 as the bank holding company and the bank holding company has continued to control, within the meaning of those paragraphs, the bank since the day it came into existence as a bank holding company.
Marginal note:Exception — insurance holding companies and certain institutions
(4) Subsection (1) does not apply to any of the following that controls, within the meaning of paragraph 3(1)(d), the bank with equity of five billion dollars or more if it controlled, within the meaning of that paragraph, the bank on the day the bank’s equity reached five billion dollars and it has controlled, within the meaning of that paragraph, the bank since that day:
(a) a widely held insurance holding company;
(b) an eligible Canadian financial institution, other than a bank; or
(c) an eligible foreign institution.
Marginal note:Exception — other entities
(5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the bank with equity of five billion dollars or more if the entity is controlled, within the meaning of those paragraphs, by a widely held bank to which subsection (2) applies, or a widely held bank holding company to which subsection (3) applies, that controls the bank.
Marginal note:Exception — other entities
(6) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the bank with equity of five billion dollars or more if the entity is controlled, within the meaning of that paragraph, by
(a) a widely held insurance holding company to which subsection (4) applies that controls the bank;
(b) an eligible Canadian financial institution to which subsection (4) applies, other than a bank, that controls the bank; or
(c) an eligible foreign institution to which subsection (4) applies that controls the bank.
Marginal note:Exception
374.1 (1) Despite section 374, if a bank with equity of five billion dollars or more was formed as the result of an amalgamation, a person who is a major shareholder of the bank on the effective date of the letters patent of amalgamation shall do all things necessary to ensure that the person is no longer a major shareholder of the bank on the day that is one year after that day or on the day that is after any shorter period specified by the Minister.
Marginal note:Exception — widely held banks and bank holding companies
(2) Subsection (1) does not apply to a widely held bank or a widely held bank holding company that controlled, within the meaning of paragraphs 3(1)(a) and (d), one of the applicants for the letters patent of amalgamation and that has controlled, within the meaning of those paragraphs, the amalgamated bank since the effective date of those letters patent.
Marginal note:Exception — insurance holding companies and certain institutions
(3) Subsection (1) does not apply to any of the following that controlled, within the meaning of paragraph 3(1)(d), one of the applicants for the letters patent of amalgamation if it has controlled, within the meaning of that paragraph, the amalgamated bank since the effective date of those letters patent:
(a) a widely held insurance holding company;
(b) an eligible Canadian financial institution, other than a bank; or
(c) an eligible foreign institution.
Marginal note:Exception — other entities
(4) Subsection (1) does not apply to an entity that controls, within the meaning of paragraphs 3(1)(a) and (d), the amalgamated bank if the entity is controlled, within the meaning of those paragraphs, by a widely held bank or widely held bank holding company to which subsection (2) applies that controls the amalgamated bank.
Marginal note:Exception — other entities
(5) Subsection (1) does not apply to an entity that controls, within the meaning of paragraph 3(1)(d), the amalgamated bank if the entity is controlled, within the meaning of that paragraph, by any of the following:
(a) a widely held insurance holding company to which subsection (3) applies that controls the amalgamated bank;
(b) an eligible Canadian financial institution to which subsection (3) applies, other than a bank, that controls the amalgamated bank; or
(c) an eligible foreign institution to which subsection (3) applies that controls the amalgamated bank.
Marginal note:Extension
(6) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.
Marginal note:Limitation on share holdings
375. (1) If a person is a major shareholder of a bank with equity of less than five billion dollars and the bank’s equity reaches five billion dollars or more, the person shall do all things necessary to ensure that the person is not a major shareholder of the bank on the day that is three years after the day the bank’s equity reached five billion dollars.
Marginal note:Exception
(2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.
Marginal note:Extension
(3) If general market conditions so warrant and the Minister is satisfied that the person has used the person’s best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which the person must comply with that subsection.
Marginal note:Obligation of widely held bank
376. (1) If a widely held bank with equity of five billion dollars or more controls another bank and a person becomes a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is one year after the person became a major shareholder of the other bank or entity that controls the other bank,
(a) the widely held bank no longer controls the other bank; or
(b) the other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.
Marginal note:Exception
(2) Subsection (1) does not apply in respect of a bank with equity of less than two hundred and fifty million dollars or any other amount that is prescribed.
Marginal note:Extension
(3) If general market conditions so warrant and the Minister is satisfied that the widely held bank has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.
Marginal note:Obligation of widely held bank
376.01 (1) Despite subsection 376(1), if a widely held bank with equity of five billion dollars or more controls a bank (in this subsection referred to as the “other bank”) in respect of which that subsection does not apply by reason of subsection 376(2) and the equity of the other bank reaches two hundred and fifty million dollars or more or any other amount that is prescribed and on the day the equity of the other bank reaches two hundred and fifty million dollars or more, or the prescribed amount, as the case may be, a person is a major shareholder of the other bank or of any entity that also controls the other bank, the widely held bank must do all things necessary to ensure that, on the day that is three years after that day,
(a) the widely held bank no longer controls the other bank; or
(b) the other bank or the entity that controls the other bank does not have any major shareholder other than the widely held bank or any entity that the widely held bank controls.
Marginal note:Extension
(2) If general market conditions so warrant and the Minister is satisfied that the widely held bank has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.
Marginal note:Prohibition against significant interest
376.1 No person who has a significant interest in any class of shares of a widely held bank with equity of five billion dollars or more may have a significant interest in any class of shares of a subsidiary of the widely held bank that is a bank or a bank holding company.
Marginal note:Prohibition against significant interest
376.2 No person who has a significant interest in any class of shares of a bank may have a significant interest in any class of shares of any widely held bank with equity of five billion dollars or more, or of any widely held bank holding company with equity of five billion dollars or more, that controls the bank.
Marginal note:Prohibition against control
377. (1) No person shall control, within the meaning of paragraph 3(1)(d), a bank with equity of five billion dollars or more.
Marginal note:Exception
(2) Subsection (1) does not apply if any of subsections 374(2) to (6) applies to the person in respect of the bank.
Marginal note:Restriction on control
377.1 No person shall, without the prior approval of the Minister, acquire control, within the meaning of paragraph 3(1)(d), of a bank with equity of less than five billion dollars.
Marginal note:Former Schedule I banks with equity of less than five billion dollars
378. (1) A bank that was named in Schedule I as that Schedule read immediately before the day section 184 of the Financial Consumer Agency of Canada Act comes into force and that had equity of less than five billion dollars on that day is deemed, for the purposes of sections 138, 156.09, 374, 376, 376.01, 376.1, 376.2, 377, 380 and 382, subsection 383(2), section 385 and subsection 396(2), to be a bank with equity of five billion dollars or more.
Marginal note:Non-application of subsection (1)
(2) Subsection (1) ceases to apply to a bank that continues to have equity of less than five billion dollars if the Minister specifies that it no longer applies to the bank.
Marginal note:Prohibition
378.1 No person may control or be a major shareholder of a bank if the person or an entity affiliated with the person
(a) has control of or has a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or
(b) engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.
Marginal note:Prohibition
378.2 No person who controls a bank or who is a major shareholder of a bank, and no entity affiliated with that person, may
(a) control or have a substantial investment in an entity that engages in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in; or
(b) engage in Canada in any personal property leasing activity that a financial leasing entity as defined in subsection 464(1) is prohibited from engaging in.
Marginal note:Constraint on registration
379. No bank shall, unless the acquisition of the share has been approved by the Minister, record in its securities register a transfer or issue of any share of the bank to any person or to any entity controlled by a person if
(a) the transfer or issue of the share would cause the person to have a significant interest in any class of shares of the bank; or
(b) where the person has a significant interest in a class of shares of the bank, the transfer or issue of the share would increase the significant interest of the person in that class of shares.
Marginal note:Exemption
380. On application by a bank, other than a bank with equity of five billion dollars or more, the Superintendent may exempt any class of non-voting shares of the bank the aggregate book value of which is not more than 30 per cent of the aggregate book value of all the outstanding shares of the bank from the application of sections 373 and 379.
Marginal note:Exception for small holdings
381. Despite section 379, if, as a result of a transfer or issue of shares of a class of shares of a bank to a person, the total number of shares of that class registered in the securities register of the bank in the name of that person would not exceed five thousand and would not exceed 0.1 per cent of the outstanding shares of that class, the bank is entitled to assume that no person is acquiring or increasing a significant interest in that class of shares of the bank as a result of that issue or transfer of shares.
Marginal note:When approval not required
382. (1) Despite sections 373 and 379, the approval of the Minister is not required in respect of a bank with equity of less than five billion dollars if a person with a significant interest in a class of shares of the bank, or an entity controlled by a person with a significant interest in a class of shares of the bank, purchases or otherwise acquires shares of that class, or acquires control of any entity that holds any share of that class, and the number of shares of that class purchased or otherwise acquired, or the acquisition of control of the entity, as the case may be, would not increase the significant interest of the person in that class of shares of the bank to a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever is applicable.
Marginal note:Percentage
(2) Subject to subsection (3) and for the purpose of subsection (1), the percentage is 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.
Marginal note:Percentage
(3) If a person has a significant interest in a class of shares of a bank and the person’s percentage of that class has decreased after the date of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, the percentage for the purposes of subsection (1) is the percentage that is the lesser of
(a) 5 percentage points in excess of the significant interest of the person in that class of shares of the bank on the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister, and
(b) 10 percentage points in excess of the lowest significant interest of the person in that class of shares of the bank at any time after the later of June 1, 1992 and the day of the most recent purchase or other acquisition by the person or any entity controlled by the person, other than the entity referred to in subsection (1), of shares of that class of shares of the bank, or of control of an entity that held shares of that class of shares of the bank, for which approval was given by the Minister.
Marginal note:Exception
(4) Subsection (1) does not apply if the purchase or other acquisition of shares or the acquisition of control referred to in that subsection would
(a) result in the acquisition of control of the bank by the person referred to in that subsection;
(b) if the person controls the bank but the voting rights attached to the aggregate of any voting shares of the bank beneficially owned by the person and by entities controlled by the person do not exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank, cause the voting rights attached to that aggregate to exceed 50 per cent of the voting rights attached to all of the outstanding voting shares of the bank;
(c) result in the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person and the acquisition of that investment is not exempted by the regulations; or
(d) result in an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies, and the increase is not exempted by the regulations.
Marginal note:Regulations
(5) The Governor in Council may make regulations
(a) exempting from the application of paragraph (4)(c) the acquisition of a significant interest in a class of shares of the bank by an entity controlled by the person; and
(b) exempting from the application of paragraph (4)(d) an increase in a significant interest in a class of shares of the bank by an entity controlled by the person by a percentage that is greater than the percentage referred to in subsection (2) or (3), whichever applies.
Marginal note:When approval not required
383. (1) Despite sections 373 and 379, the approval of the Minister is not required if
(a) the Superintendent has, by order, directed the bank to increase its capital and shares of the bank are issued and acquired in accordance with the terms and conditions, if any, that may be specified in the order; or
(b) a person who controls, within the meaning of paragraph 3(1)(a), the bank acquires additional shares of the bank.
Marginal note:Exception
(2) Paragraph (1)(a) does not apply in respect of a bank with equity of five billion dollars or more.
Marginal note:Pre-approval
384. For the purposes of sections 373 and 379, the Minister may approve
(a) the purchase or other acquisition of any number or percentage of shares of a bank that may be required in a particular transaction or series of transactions; or
(b) the purchase or other acquisition of up to a specified number or percentage of shares of a bank within a specified period.
Marginal note:Public holding requirement
385. (1) Every bank with equity of one billion dollars or more but less than five billion dollars shall, from and after the day determined under this section in respect of that bank, have, and continue to have, voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that are
(a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and
(b) shares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.
Marginal note:Determination of day
(2) The day referred to in subsection (1) is
(a) if the bank had equity of one billion dollars or more but less than five billion dollars on the day the bank came into existence, the day that is three years after that day; and
(b) in any other case, the day that is three years after the day of the first annual meeting of the shareholders of the bank held after the equity of the bank first reaches one billion dollars.
Marginal note:Extension
(3) If general market conditions so warrant and the Minister is satisfied that a bank has used its best efforts to be in compliance with this section on the day determined under subsection (2), the Minister may specify a later day as the day from and after which the bank must comply with subsection (1).
Marginal note:Public holding requirement
385.1 If a bank to which section 385 applies becomes a bank with equity of five billion dollars or more, that section continues to apply to the bank until no person is a major shareholder of the bank, other than a person to whom subsections 374(2) to (6) apply.
Marginal note:Limit on assets
386. (1) Unless an exemption order with respect to the bank is granted under section 388, if a bank fails to comply with section 385 in any month, the Minister may, by order, require the bank not to have, until it complies with that section, average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the month specified in the order.
Marginal note:Average total assets
(2) For the purposes of subsection (1), the average total assets of a bank in a three month period is to be computed by adding the total assets of the bank as calculated for the month end of each of the three months in the period and by dividing the sum by three.
Definition of “total assets”
(3) For the purposes of subsections (1) and (2), “total assets”, in respect of a bank, has the meaning given that expression by the regulations.
Marginal note:Increase of capital
387. If the Superintendent has, by order, directed a bank with equity of one billion dollars or more but less than five billion dollars to increase its capital and shares of the bank are issued and acquired in accordance with any terms and conditions that may be specified in the order, section 385 does not apply in respect of the bank until the time that the Superintendent may, by order, specify.
Marginal note:Exemption by order of the Minister
388. (1) On application by a bank, the Minister may, if the Minister considers it appropriate to do so, by order exempt the bank from the requirements of section 385, subject to any terms and conditions that the Minister considers appropriate.
Marginal note:Compliance with section 385
(2) If an exemption order granted under this section in respect of a bank expires, the bank shall comply with section 385 as of the day the exemption order expires.
Marginal note:Limit on assets
(3) If a bank fails to comply with section 385 on the day referred to in subsection (2), the bank shall not, until it complies with that section, have average total assets in any three month period ending on the last day of a subsequent month exceeding the bank’s average total assets in the three month period ending on the last day of the month immediately before the day referred to in subsection (2) or any later day that the Minister may, by order, specify.
Marginal note:Application of ss. 386(2) and (3)
(4) Subsections 386(2) and (3) apply for the purposes of subsection (3).
Marginal note:Exception
389. (1) If a bank fails to comply with section 385 as the result of any of the following, section 386 does not apply in respect of the bank until the expiration of six months after the day it failed to comply with section 385:
(a) a distribution to the public of voting shares of the bank;
(b) a redemption or purchase of voting shares of the bank;
(c) the exercise of any option to acquire voting shares of the bank; or
(d) the conversion of any convertible securities into voting shares of the bank.
Marginal note:Shares acquiring voting rights
(2) If, as the result of an event that has occurred and is continuing, shares of a bank acquire voting rights in such number as to cause the bank to no longer be in compliance with section 385, section 386 does not apply in respect of that bank until the expiration of six months after the day the bank ceased to be in compliance with section 385 or any later day that the Minister may, by order, specify.
Marginal note:Acquisition of control permitted
390. (1) Subject to subsection (2) and sections 379 and 391, section 385 does not apply in respect of a bank if a person acquires control of the bank through the purchase or other acquisition of all or any number of the shares of the bank by the person or by any entity controlled by the person.
Marginal note:Undertaking required
(2) Subsection (1) applies only if the person referred to in that subsection provides the Minister with an undertaking satisfactory to the Minister to do all things necessary so that, within three years after the acquisition, or any other period that the Minister may specify, the bank has voting shares that carry at least 35 per cent of the voting rights attached to all of the outstanding voting shares of the bank and that are
(a) shares of one or more classes of shares that are listed and posted for trading on a recognized stock exchange in Canada; and
(b) shares none of which is beneficially owned by a person who is a major shareholder of the bank in respect of the voting shares of the bank or by any entity that is controlled by a person who is a major shareholder of the bank in respect of such shares.
Marginal note:Application of section 385
391. At the expiration of the period for compliance with an undertaking referred to in subsection 390(2), section 385 shall apply in respect of the bank to which the undertaking relates.
Marginal note:Restriction on voting rights
392. (1) If, with respect to any bank, a particular person contravenes section 372, subsection 373(1), 374(1) or 375(1), section 376.1 or 376.2, subsection 377(1) or section 377.1 or fails to comply with an undertaking referred to in subsection 390(2) or with any term or condition imposed under section 397, no person, and no entity controlled by the particular person, shall, in person or by proxy, exercise any voting rights
(a) that are attached to shares of the bank beneficially owned by the particular person or any entity controlled by the particular person; or
(b) that are subject to an agreement entered into by the particular person, or any entity controlled by the particular person, pertaining to the exercise of the voting rights.
Marginal note:Subsection (1) ceases to apply
(2) Subsection (1) ceases to apply in respect of a person when, as the case may be,
(a) the shares to which the contravention relates have been disposed of;
(b) the person ceases to control the bank within the meaning of paragraph 3(1)(d);
(c) if the person failed to comply with an undertaking referred to in subsection 390(2), the bank complies with section 385; or
(d) if the person failed to comply with a term or condition imposed under section 397, the person complies with the term or condition.
Marginal note:Saving
(3) Despite subsection (1), if a person contravenes subsection 374(1) by reason only that, as a result of an event that has occurred and is continuing and is not within the control of the person, shares of the bank beneficially owned by the person or by any entity controlled by the person acquire voting rights in such number so as to cause the person to be a major shareholder of the bank, the Minister may, after consideration of the circumstances, permit the person and any entity controlled by the person to exercise voting rights, in person or by proxy, in respect of any class of voting shares of the bank beneficially owned by them that do not in aggregate exceed 20 per cent of the voting rights attached to that class of voting shares.
Marginal note:Loss of control — banks and bank holding companies
393. (1) Despite sections 374 and 377, a widely held bank or a widely held bank holding company may be a major shareholder of a bank with equity of five billion dollars or more and cease to control, within the meaning of paragraphs 3(1)(a) and (d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.
Marginal note:Extension
(2) If general market conditions so warrant and the Minister is satisfied that the bank or the bank holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.
Marginal note:Loss of control — other entities
393.1 (1) Despite sections 374 and 377, an eligible foreign institution, an eligible Canadian financial institution, other than a bank, or a widely held insurance holding company may be a major shareholder of a bank with equity of five billion dollars or more and cease to control, within the meaning of paragraph 3(1)(d), the bank if it has entered into an agreement with the Minister to do all things necessary to ensure that it is not a major shareholder of the bank on the expiration of the day specified in the agreement.
Marginal note:Extension
(2) If general market conditions so warrant and the Minister is satisfied that the institution or insurance holding company has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.
Marginal note:Change in status
394. (1) If a body corporate that is an eligible financial institution other than a bank controls, within the meaning of paragraph 3(1)(d), a bank with equity of five billion dollars or more and the body corporate subsequently ceases to be an eligible financial institution, the body corporate must do all things necessary to ensure that, on the day that is one year after the day it ceased to be an eligible financial institution,
(a) it does not control, within the meaning of paragraph 3(1)(d), the bank; and
(b) it is not a major shareholder of the bank.
Marginal note:Extension
(2) If general market conditions so warrant and the Minister is satisfied that the body corporate has used its best efforts to be in compliance with subsection (1) on the required day, the Minister may specify a later day as the day from and after which it must comply with that subsection.
Approval Process
Marginal note:Application for approval
395. (1) An application for an approval of the Minister required under this Part must be filed with the Superintendent and contain the information, material and evidence that the Superintendent may require.
Marginal note:Applicant
(2) If, with respect to any particular transaction, this Part applies to more than one person, any one of those persons may make the application to the Minister for approval on behalf of all of those persons.
Marginal note:Matters for consideration
396. (1) Subject to subsection (2), if an application for an approval under section 373 is made, the Minister, in determining whether or not to approve the transaction, shall take into account all matters that the Minister considers relevant to the application, including
(a) the nature and sufficiency of the financial resources of the applicant or applicants as a source of continuing financial support for the bank;
(b) the soundness and feasibility of the plans of the applicant or applicants for the future conduct and development of the business of the bank;
(c) the business record and experience of the applicant or applicants;
(d) the character and integrity of the applicant or applicants or, if the applicant or any of the applicants is a body corporate, its reputation for being operated in a manner that is consistent with the standards of good character and integrity;
(e) whether the bank will be operated responsibly by persons with the competence and experience suitable for involvement in the operation of a financial institution;
(f) the impact of any integration of the businesses and operations of the applicant or applicants with those of the bank on the conduct of those businesses and operations;
(g) the opinion of the Superintendent regarding the extent to which the proposed corporate structure of the applicant or applicants and their affiliates may affect the supervision and regulation of the bank, having regard to
(i) the nature and extent of the proposed financial services activities to be carried out by the bank and its affiliates, and
(ii) the nature and degree of supervision and regulation applying to the proposed financial services activities to be carried out by the affiliates of the bank; and
(h) the best interests of the financial system in Canada.
Marginal note:Exception
(2) Subject to subsection 377(1), the Minister shall take into account only paragraph (1)(d) if the application is in respect of a transaction that would result in the applicant or applicants holding
(a) more than 10 per cent but no more than 20 per cent of any class of the outstanding voting shares of a widely held bank with equity of five billion dollars or more; or
(b) more than 10 per cent but no more than 30 per cent of any class of the outstanding non-voting shares of such a bank.
Marginal note:Favourable treatment
(3) The Minister shall not approve a transaction that would cause a bank to become a subsidiary of a foreign bank within the meaning of any of paragraphs (a) to (f) of the definition “foreign bank” in section 2 that is a non-WTO Member foreign bank unless the Minister is satisfied that treatment as favourable for banks to which this Act applies exists or will be provided in the jurisdiction in which the foreign bank principally carries on business, either directly or through a subsidiary.
Marginal note:Terms and conditions
397. The Minister may impose any terms and conditions in respect of an approval given under this Part that the Minister considers necessary to ensure compliance with any provision of this Act.
Marginal note:Certifying receipt of application
398. (1) If, in the opinion of the Superintendent, an application filed under this Part contains all the required information, the Superintendent shall without delay refer the application to the Minister and send a receipt to the applicant certifying the date on which the completed application was received by the Superintendent.
Marginal note:Incomplete application
(2) If, in the opinion of the Superintendent, an application filed under this Part is incomplete, the Superintendent shall send a notice to the applicant specifying the information required by the Superintendent to complete the application.
Marginal note:Notice of decision
399. (1) Subject to subsections (2) and (3) and 400(1), the Minister shall, within a period of thirty days after the certified date referred to in subsection 398(1), send to the applicant
(a) a notice approving the transaction to which the application relates; or
(b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.
Marginal note:Notice of decision
(2) Subject to subsections (4) and 400(2), if an application involves the acquisition of control of a bank, the Minister shall, within a period of forty-five days after the certified date referred to in subsection 398(1), send to the applicant
(a) a notice approving the transaction to which the application relates; or
(b) if the Minister is not satisfied that the transaction to which the application relates should be approved, a notice to that effect, advising the applicant of the right to make representations to the Minister in respect of the matter.
Marginal note:Extension of period for notice
(3) If the Minister is unable to complete the consideration of an application within the period referred to in subsection (1), the Minister shall
(a) within that period, send a notice to that effect to the applicant; and
(b) within a further period of thirty days after the date of the sending of the notice referred to in paragraph (a) or within any other further period that may be agreed on by the applicant and the Minister, send a notice referred to in paragraph (1)(a) or (b) to the applicant.
Marginal note:Further extensions
(4) If the Minister considers it appropriate to do so, the Minister may extend the period referred to in subsection (2) for one or more periods of forty-five days.
Marginal note:Reasonable opportunity to make representations
400. (1) If, after receipt of the notice referred to in paragraph 399(1)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of thirty days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.
Marginal note:Reasonable opportunity to make representations
(2) If, after receipt of the notice referred to in paragraph 399(2)(b), the applicant advises the Minister that the applicant wishes to make representations, the Minister must provide the applicant with a reasonable opportunity within a period of forty-five days after the date of the notice, or within any further period that may be agreed on by the applicant and the Minister, to make representations in respect of the matter.
Marginal note:Notice of decision
401. (1) Within a period of thirty days after the expiration of the period for making representations referred to in subsection 400(1), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.
Marginal note:Notice of decision
(2) Within a period of forty-five days after the expiration of the period for making representations referred to in subsection 400(2), the Minister shall, in the light of any such representations and having regard to the matters to be taken into account, send a notice to the applicant indicating whether or not the Minister approves the transaction to which the application relates.
Marginal note:Deemed approval
401.1 If the Minister does not send a notice under subsection 399(1) or (3) or 401(1) within the period provided for in those subsections, the Minister is deemed to have approved the transaction to which the application relates.
Marginal note:Constraining registration: Crown and foreign governments
401.2 (1) No bank shall record in its securities register a transfer or issue of any share of the bank to
(a) Her Majesty in right of Canada or of a province or any agent or agency of Her Majesty in either of those rights; or
(b) the government of a foreign country or any political subdivision of a foreign country, or any agent or agency of a foreign government.
Marginal note:Exception
(2) Despite subsection (1), a bank may record in its securities register a transfer or issue of any share of the bank to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country or any agent or agency of a foreign country if the bank is a subsidiary of the foreign bank or foreign institution.
Marginal note:Suspension of voting rights held by governments
401.3 (1) Despite section 148, no person shall, in person or by proxy, exercise any voting rights attached to any share of a bank that is beneficially owned by
(a) Her Majesty in right of Canada or of a province or any agency of Her Majesty in either of those rights; or
(b) the government of a foreign country or any political subdivision thereof, or any agency thereof.
Marginal note:Exception
(2) Subsection (1) does not apply to a foreign bank, or to a foreign institution, that is controlled by the government of a foreign country or any political subdivision of a foreign country or any agent or agency of a foreign country and that has a significant interest in a class of shares of a bank that is a subsidiary of the foreign bank or foreign institution.
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