An Act to amend the law governing financial institutions and to provide for related and consequential matters (S.C. 2007, c. 6)
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Assented to 2007-03-29
PART 11991, c. 46AMENDMENTS TO THE BANK ACT
Marginal note:2001, c. 9, s. 125
37. Subparagraph 459.4(a)(iv) of the Act is replaced by the following:
(iv) any other matter that may affect their dealings, or their employees’ or representatives’ dealings, with customers or the public;
38. Subsection 464(1) of the Act is amended by adding the following in alphabetical order:
“closed-end fund”
« fonds d’investissement à capital fixe »
“closed-end fund” means an entity whose activities are limited to investing the funds of the entity so as to provide investment diversification and professional investment management to the holders of its securities, and whose securities are
(a) fixed in number and distributed to the public in an offering under a preliminary prospectus, prospectus, short-form prospectus or similar document in accordance with the laws of a province or a foreign jurisdiction;
(b) traded on an exchange or an over-the-counter market; and
(c) liquidated on a fixed future termination date, the proceeds of which are allocated to the holders of the securities on a proportional basis.
39. Section 466 of the Act is amended by adding the following after subsection (5):
Marginal note:Application of other provision
(6) Despite having acquired control of, or a substantial investment in, an entity under a particular provision of this Part, a bank may continue to control the entity or hold the substantial investment in the entity as though it had made the acquisition under another provision of this Part so long as the conditions set out in that other provision are met.
Marginal note:Timing of deemed acquisition
(7) If a bank decides to exercise its right under subsection (6), the bank is deemed to be acquiring the control or the substantial investment under the other provision.
Marginal note:2001, c. 9, s. 127
40. (1) Paragraph 468(1)(j) of the French version of the Act is replaced by the following:
j) une entité qui est constituée en personne morale ou formée et réglementée autrement que sous le régime d’une loi fédérale ou provinciale et qui exerce principalement, à l’étranger, des activités commerciales qui, au Canada, seraient des opérations bancaires, l’activité d’une société coopérative de crédit, des opérations d’assurance, la prestation de services fiduciaires ou le commerce de valeurs mobilières.
Marginal note:2001, c. 9, s. 127
(2) Paragraph 468(2)(e) of the Act is replaced by the following:
(e) engaging in the activities referred to in the definition “closed-end fund”, “mutual fund distribution entity”, “mutual fund entity” or “real property brokerage entity” in subsection 464(1); and
(3) Section 468 of the Act is amended by adding the following after subsection (3):
Marginal note:Exception
(3.1) Despite paragraph (3)(a), a bank may acquire control of, or acquire or increase a substantial investment in, any entity that acts as a trustee of a trust if the entity has been authorized under the laws of a province to act as a trustee of a trust and the entity is
(a) a closed-end fund;
(b) a mutual fund entity; or
(c) an entity whose business is limited to engaging in one or more of the following:
(i) the activities of a mutual fund distribution entity,
(ii) any activity that a bank is permitted to engage in under paragraph 410(1)(c.2), and
(iii) the provision of investment counselling services and portfolio management services.
Marginal note:2001, c. 9, s. 127
(4) Paragraph 468(5)(d) of the Act is replaced by the following:
(d) acquire control of, or acquire or increase a substantial investment in, an entity that engages in Canada in an activity described in paragraph 410(1)(c);
(d.1) acquire control of, or acquire or increase a substantial investment in, an entity that engages in an activity described in paragraph 410(1)(c.1); or
Marginal note:2001, c. 9, s. 127
(5) Paragraph 468(7)(a) of the Act is replaced by the following:
(a) the bank is acquiring control of an entity, other than a specialized financing entity, and the only reason for which the bank would, but for this subsection, require approval for the acquisition is that the entity carries on activities referred to in paragraph (2)(b);
Marginal note:2001, c. 9, s. 127
41. Subsections 471(4) and (5) of the Act are replaced by the following:
Marginal note:Temporary investment
(4) If a bank, 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 would have been required under subsection 468(5) if the bank had acquired the control, or acquired or increased the substantial investment, under section 468, the bank 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 bank, 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 would have been required under subsection 468(6) if the bank had acquired the control, or acquired or increased the substantial investment, under section 468, the Superintendent may, on application, permit the bank 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 appropriate.
42. Subsection 472(1) of the Act is amended by striking out the word “or” at the end of paragraph (c), by adding the word “or” at the end of paragraph (d) and by adding the following after paragraph (d):
(e) all or any of the ownership interests in any entity that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity or any of its affiliates.
43. (1) Section 482 of the Act is amended by adding the following after subsection (1):
Marginal note:Approval of series of transactions
(1.1) The Superintendent may, for the purposes of subsection (1), approve a transaction or series of transactions relating to the acquisition or transfer of assets that may be entered into with a person, or with persons of any class of persons, regardless of whether those persons are known at the time of the granting of the approval or not.
Marginal note:2001, c. 9, s. 127
(2) The portion of subsection 482(2) of the Act before paragraph (a) is replaced by the following:
Marginal note:Exception
(2) Subsection (1) does not apply in respect of
Marginal note:2001, c. 9, s. 127
(3) Subsection 482(2) of the Act is amended by striking out the word “or” at the end of paragraph (e) and by replacing paragraph (f) with the following:
(f) assets acquired or transferred under a transaction or series of transactions by the bank with another financial institution as a result of the bank’s participation in one or more syndicated loans with that financial institution;
(g) assets purchased or sold under a sale agreement that is approved by the Minister under section 236;
(h) shares of, or ownership interests in, an entity for which the approval of the Minister under Part VII or subsection 468(5) is required or the approval of the Superintendent under subsection 468(6) is required;
(i) assets that are acquired or transferred under a transaction that has been approved by the Minister under subsection 678(1) of this Act or subsection 715(1) of the Insurance Companies Act;
(j) assets, other than real property, acquired or disposed of under an arrangement that has been approved by the Superintendent under subsection 494(3); or
(k) assets acquired or disposed of with the approval of the Superintendent under subsection 494(4).
Marginal note:2001, c. 9, s. 127
(4) Subsection 482(3) of the Act is repealed.
Marginal note:2001, c. 9, s. 127
(5) Paragraph 482(4)(b) of the Act is replaced by the following:
(b) in the case of assets that are transferred, the value of the assets as reported in the last annual statement of the bank prepared before the transfer or, if the value of the assets is not reported in that annual statement, the value of the assets as it would be reported in the annual statement of the bank if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 308(4), immediately before the transfer.
Marginal note:2001, c. 9, s. 127
(6) Subsection 482(6) of the Act is replaced by the following:
Marginal note:Total value of all assets
(6) For the purposes of subsection (1), the total value of all assets that the bank or any of its subsidiaries has transferred during the 12-month period referred to in subsection (1) is the total of the value of each of those assets as reported in the last annual statement of the bank prepared before the transfer of the asset or, if the value of any of those assets is not reported in that annual statement, as it would be reported in the annual statement of the bank if the annual statement had been prepared, in accordance with the accounting principles referred to in subsection 308(4), immediately before the transfer of the asset.
44. Section 488 of the Act is amended by adding the following after subsection (3):
Marginal note:Security of a related party
(4) For the purposes of this Part, “security” of a related party includes an option, transferable by delivery, to demand delivery of a specified number or amount of shares of the related party at a fixed price within a specified time.
45. Section 494 of the Act is amended by adding the following after subsection (5):
Marginal note:Approval under section 236
(6) A bank may acquire any assets from, or dispose of any assets to, a related party of the bank under a sale agreement that is approved by the Minister under section 236.
Marginal note:1997, c. 15, c. 70
46. Subsection 495(3) of the Act is replaced by the following:
Marginal note:Exception
(3) Despite subsection 489(2), a bank is deemed not to have indirectly entered into a transaction in respect of which this Part applies if the transaction is entered into by an entity that is controlled by the bank and the business of which is limited to the activity referred to in paragraph 468(2)(c) and the transaction is on terms and conditions at least as favourable to the bank as market terms and conditions, as defined in subsection 501(2).
Marginal note:2001, c. 9, s. 129
47. (1) The description of B in subsection 495.3(1) of the Act is replaced by the following:
- B
- is the total value of all assets that the bank directly or indirectly acquired from, or directly or indirectly transferred to, that related party in the 12 months ending immediately before the acquisition or transfer, other than assets acquired by or transferred to the bank under transactions permitted by section 490; and
Marginal note:2001, c. 9, s. 129
(2) Paragraph 495.3(3)(a) of the Act is replaced by the following:
(a) the bank purchases or sells assets under a sale agreement that is approved by the Minister under section 236; or
Marginal note:2001, c. 9, s. 132
48. (1) The definitions “designated foreign bank”, “designation order” and “exemption order” in subsection 507(1) of the Act are repealed.
Marginal note:2001, c. 9, s. 132
(2) The definition “limited commercial entity” in subsection 507(1) of the Act is replaced by the following:
“limited commercial entity”
« entité à activités commerciales restreintes »
“limited commercial entity” means a Canadian entity that a foreign bank or an entity associated with a foreign bank may control in accordance with subsection 522.09(1) or (2), or in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment in accordance with that subsection.
Marginal note:2001, c. 9, s. 132
(3) Paragraph (e) of the definition “financial services entity” in subsection 507(1) of the Act is replaced by the following:
(e) engaging in the activities referred to in the definition “closed-end fund”, “mutual fund distribution entity” or “mutual fund entity” in subsection 464(1);
Marginal note:2001, c. 9, s. 132
(4) Paragraph 507(15)(c) of the Act is replaced by the following:
(c) has received the approval of the Minister under paragraph 522.22(1)(f); or
Marginal note:2001, c. 9, s. 132
(5) Paragraph 507(16)(c) of the Act is replaced by the following:
(c) has received the approval of the Minister under paragraph 522.22(1)(f); or
Marginal note:2001, c. 9, s. 132
49. Sections 508 to 509.1 of the Act are replaced by the following:
Marginal note:Application
508. (1) This Part applies to
(a) a foreign bank that
(i) is a bank according to the laws of the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business,
(ii) engages in the business of providing financial services and employs, to identify or describe its business, a name that includes the word “bank”, “banque”, “banking” or “bancaire”, either alone or in combination with other words, or any word or words in any language other than English or French corresponding generally to any of those words, or
(iii) is regulated as a bank or as a deposit-taking institution according to the jurisdiction under whose laws it was incorporated or in any jurisdiction in which it carries on business; and
(b) an entity that is associated with a foreign bank and that is
(i) a member of a material banking group,
(ii) controlled by a foreign bank described in any of subparagraphs (a)(i) to (iii), or
(iii) associated with a foreign bank described in any of subparagraphs (a)(i) to (iii) and that foreign bank or any entity controlled by that foreign bank is
(A) engaging in or carrying on business in Canada, other than holding, managing or otherwise dealing with real property,
(B) maintaining a branch in Canada, other than an office referred to in section 522,
(C) establishing, maintaining or acquiring for use in Canada an automated banking machine, a remote service unit or a similar automated service, or, in Canada, accepting data from such a machine, unit or service other than in circumstances described in section 511 or 512,
(D) acquiring or holding control of, or a substantial investment in, a Canadian entity, or
(E) acquiring or holding any share or ownership interest in a Canadian entity and
(I) an entity associated with the foreign bank holds control of, or a substantial investment in, the Canadian entity, or
(II) the foreign bank, an entity associated with the foreign bank and one or more other entities associated with the foreign bank would, if they were one person, hold control of, or a substantial investment in, the Canadian entity.
Marginal note:Member of a material banking group
(2) For the purposes of this section, an entity is a member of a material banking group if either of the following ratios, expressed as a percentage, is equal to or greater than the percentage prescribed for the purpose of this subsection:
A/B or C/D
where
- A
- is the sum of the total assets of all foreign banks described in any of subparagraphs (1)(a)(i) to (iii) with which the entity is associated, other than the total assets of foreign banks described in any of those subparagraphs whose assets are consolidated into the total assets of any foreign bank described in any of those subparagraphs with which the entity is associated;
- B
- is
(a) if the entity is not controlled by any person, the total assets of the entity, or
(b) in any other case, the sum of the total assets of the entity and of all its affiliates, other than entities whose total assets are consolidated into the total assets of an affiliate of the entity;
- C
- is the sum of the total revenue of all foreign banks described in any of subparagraphs (1)(a)(i) to (iii) with which the entity is associated, other than the total revenue of foreign banks described in any of those subparagraphs whose revenue is consolidated into the total revenue of any foreign bank described in any of those subparagraphs with which the entity is associated; and
- D
- is
(a) if the entity is not controlled by any person, the total revenue of the entity, or
(b) in any other case, the sum of the total revenue of the entity and of all its affiliates, other than entities whose total revenue is consolidated into the total revenue of an affiliate of the entity.
Marginal note:Exemption from material banking group status
(3) Despite subsection (2), the Minister may, subject to any terms and conditions that he or she considers appropriate, exempt an entity from being a member of a material banking group if neither of the ratios determined in accordance with that subsection in relation to that entity exceeds the percentage prescribed for the purposes of this subsection.
Marginal note:Subsections 507(4) to (7) do not apply
(4) Subsections 507(4) to (7) do not apply with respect to the making of any determination relating to control or a substantial investment for the purposes of subparagraph (1)(b)(iii).
Marginal note:Definitions
(5) The following definitions apply in this section.
“total assets”
« actif total »
“total assets”, in respect of an entity, means the total value of its assets
(a) as reported on a consolidated basis in its most recently completed financial statements that were prepared in accordance with generally accepted accounting principles in
(i) the jurisdiction in which the entity was formed or incorporated,
(ii) a jurisdiction in which it carries on business, or
(iii) a country or territory that is a WTO Member as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act; or
(b) if its most recently completed financial statements were not prepared in the manner described in paragraph (a), as would have been reported on a consolidated basis in its most recently completed financial statements had they been prepared in accordance with generally accepted accounting principles in Canada.
“total revenue”
« recettes d’exploitation totales »
“total revenue”, in respect of an entity, means its total revenue
(a) as reported on a consolidated basis in its most recently completed financial statements that were prepared in accordance with generally accepted accounting principles in
(i) the jurisdiction in which the entity was formed or incorporated,
(ii) a jurisdiction in which it carries on business, or
(iii) a country or territory that is a WTO Member as defined in subsection 2(1) of the World Trade Organization Agreement Implementation Act; or
(b) if its most recently completed financial statements were not prepared in the manner described in paragraph (a), as would have been reported on a consolidated basis in its most recently completed financial statements had they been prepared in accordance with generally accepted accounting principles in Canada.
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