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
50. Section 510 of the Act is amended by adding the following after subsection (3):
Marginal note:Non-application re federal institutions associated with a foreign bank
(4) Subsection (1) does not apply to
(a) an entity referred to in any of paragraphs 468(1)(a) to (f) that is an entity associated with a foreign bank; or
(b) a Canadian entity that an entity referred to in paragraph (a) controls, or in which such an entity has a substantial investment.
Marginal note:Non-application re Canadian entity associated with a foreign bank
(5) Paragraphs (1)(a) and (b) do not apply to a Canadian entity that is an entity associated with a foreign bank and that is held or acquired in accordance with this Part.
Marginal note:2001, c. 9, s. 132
51. Section 511 of the Act is replaced by the following:
Marginal note:Exception re real property holding and management
510.1 Except as may be prescribed, paragraphs 510(1)(a) and (b) do not apply in respect of the holding or managing of, or otherwise dealing with, real property in Canada by a foreign bank or an entity associated with a foreign bank.
Marginal note:Exception re accessing accounts
511. Nothing in paragraphs 510(1)(a) to (c) is to be construed as prohibiting a foreign bank or an entity associated with a foreign bank from providing its customers who are natural persons not ordinarily resident in Canada with access in Canada to their accounts located outside Canada through the use of automated banking machines located in Canada.
Marginal note:2001, c. 9, s. 132
52. Subsection 513(1) of the Act is replaced by the following:
Marginal note:Exception re automated services
513. (1) A foreign bank, or an entity associated with a foreign bank, that has received the approval of the Minister under paragraph 522.22(1)(f) may
(a) if it is a foreign securities dealer that has also received the approval of the Minister under paragraph 522.22(1)(i), engage in the activities referred to in paragraph 510(1)(c) so long as they relate to its business referred to in paragraph 522.18(1)(b); and
(b) if it is a foreign cooperative credit society, engage in the activities referred to in paragraph 510(1)(c) so long as they relate to its business as a cooperative credit society engaged in or carried on by it in accordance with provincial laws relating to cooperative credit societies.
Marginal note:2001, c. 9, s. 132
53. Sections 514 to 517 of the Act are replaced by the following:
Marginal note:Change of status
516. (1) If an entity becomes a foreign bank, or an entity associated with a foreign bank, to which this Part applies and immediately before it became such a foreign bank or such an entity it maintained a branch or engaged in or carried on business in Canada that is not permitted by or under this Part, it may continue to maintain that branch or engage in or carry on that business for a period of six months after the day on which it became such a foreign bank or such an entity, or for any other shorter period that may be specified or approved by the Minister.
Marginal note:Transitional
(2) If a foreign bank or an entity associated with a foreign bank was permitted by section 516 or 517, as that section read immediately before the day on which this subsection came into force, to maintain a branch or engage in or carry on business in Canada that is not permitted by or under this Part, it may continue to maintain that branch or engage in or carry on that business for the period during which it could have done so under that section.
Marginal note:Change of status
517. (1) If an entity becomes a foreign bank, or an entity associated with a foreign bank, to which this Part applies and immediately before it became such a foreign bank or such an entity it held control of, or a substantial investment in, a Canadian entity and that control or substantial investment is not permitted by or under this Part, it may continue to hold control of, or a substantial investment in, the Canadian entity for a period of six months after the day on which it became such a foreign bank or such an entity, or for any other shorter period that may be specified or approved by the Minister.
Marginal note:Transitional
(2) If a foreign bank or an entity associated with a foreign bank was permitted by section 516 or 517, as that section read immediately before the day on which this subsection came into force, to hold control of, or a substantial investment in, a Canadian entity and that holding is not permitted by or under this Part, it may continue to hold control of, or the substantial investment in, the Canadian entity for the period during which it could have done so under that section.
Marginal note:2001, c. 9, s. 132
54. Section 517.1 of the English version of the Act is replaced by the following:
Marginal note:Restriction
517.1 If an order has been made under subsection 973.1(1) in respect of a foreign bank or an entity associated with a foreign bank and section 516 or 517 applies to the foreign bank or entity, as the case may be, the period under section 516 or 517 may not extend beyond the expiry of the period referred to in the order made under subsection 973.1(1).
Marginal note:2001, c. 9, s. 132
55. Subsection 518(4) of the Act is replaced by the following:
Marginal note:Exception
(4) Despite subsection (1), a foreign bank, or an entity associated with a foreign bank, that has received the approval of the Minister under paragraph 522.22(1)(f) may guarantee any securities or accept any bills of exchange or depository bills in relation to its business permitted under paragraph 522.18(1)(a) or (b).
Marginal note:2001, c. 9, s. 132
56. Sections 519 and 520 of the Act are replaced by the following:
Marginal note:Prohibited activities — non-bank affiliates
519. (1) Despite subsections 510(4) and (5), a non-bank affiliate of a foreign bank shall not, in Canada,
(a) engage in the business of accepting deposit liabilities;
(b) engage in the business of acting as an agent for the acceptance of deposit liabilities for a foreign bank or an entity associated with a foreign bank, other than for
(i) an authorized foreign bank,
(ii) a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society, or
(iii) an entity referred to in any of paragraphs 468(1)(a), (c), (d) and (h) or a trust or loan corporation referred to in paragraph 468(1)(g); or
(c) represent to the public that any instrument issued by it is a deposit or that any liability incurred by it is a deposit.
Marginal note:Exception
(2) Subsection (1) does not apply to a non-bank affiliate that is
(a) a trust or loan corporation incorporated by or under an Act of Parliament or of the legislature of a province;
(b) a Canadian entity referred to in paragraph 468(1)(d) or (h); or
(c) a prescribed entity.
Marginal note:Borrowing from the public — non-bank affiliates
519.1 (1) A non-bank affiliate of a foreign bank that carries on as part of its business the provision of financial services may borrow money in Canada from the public only if it discloses that
(a) it is not a member institution of the Canada Deposit Insurance Corporation;
(b) the liability incurred by it through the borrowing is not a deposit; and
(c) it is not regulated as a financial institution in Canada.
Marginal note:Manner of disclosure
(2) The disclosure must be
(a) in a prospectus, information circular or other offering document or a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or
(b) in any other manner that may be prescribed.
Marginal note:Exception for certain borrowing
(3) Subsection (1) does not apply
(a) to a borrowing of a prescribed class or type or to a borrowing in prescribed circumstances or in a prescribed manner; or
(b) except as may be provided in any regulations, to a borrowing
(i) from a person in an amount of $150,000 or more, or
(ii) through the issue of instruments in denominations of $150,000 or more.
Marginal note:Exception
(4) Subsection (1) does not apply to a non-bank affiliate that is
(a) a Canadian entity referred to in any of paragraphs 468(1)(b), (c) or (e) to (g);
(b) an entity controlled by a bank holding company or an insurance holding company or in which a bank holding company or an insurance holding company has a substantial investment;
(c) a financial institution referred to in paragraph (g) of the definition “financial institution” in section 2; or
(d) a prescribed entity.
Marginal note:Prohibition re deposits
520. (1) A foreign bank — or an entity that is associated with a foreign bank and that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province — shall not, as part of its business in Canada,
(a) engage in the business of accepting deposit liabilities;
(b) engage in the business of acting as an agent for the acceptance of deposit liabilities for a foreign bank or an entity associated with a foreign bank; or
(c) represent to the public that any instrument issued by it is a deposit or that any liability incurred by it is a deposit.
Marginal note:Exception
(2) Subsection (1) does not apply to
(a) a foreign bank that is an authorized foreign bank; or
(b) a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society.
Marginal note:Exception
(3) Paragraph (1)(b) does not apply to a foreign securities dealer that has received the approval of the Minister under paragraph 522.22(1)(f) or to a foreign insurance company — or to a prescribed entity — that engages in the business of acting as an agent for the acceptance of deposit liabilities for
(a) an authorized foreign bank;
(b) a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society; or
(c) an entity referred to in paragraph 468(1)(a), (c), (d) or (h) or a trust or loan corporation referred to in paragraph 468(1)(g).
Marginal note:Borrowing from the public
520.1 (1) A foreign bank — or an entity that is associated with a foreign bank and that is incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province — may, as part of its business in Canada, borrow money in Canada from the public only if
(a) it maintains a branch in Canada as permitted by section 522.05 or 522.19 or it engages in or carries on business in Canada as permitted by that section; and
(b) it discloses that
(i) it is not a member institution of the Canada Deposit Insurance Corporation,
(ii) the liability incurred through the borrowing is not a deposit, and
(iii) it is not regulated as a financial institution in Canada.
Marginal note:Manner of disclosure
(2) The disclosure must be
(a) in a prospectus, information circular or other offering document or a similar document related to the borrowing or, if there is no such document, in a statement delivered to the lender; or
(b) in any other manner that may be prescribed.
Marginal note:Exception for certain borrowing
(3) The disclosure is not required in respect of
(a) a borrowing of a prescribed class or type or a borrowing in prescribed circumstances or in a prescribed manner; or
(b) except as may be provided in any regulations, a borrowing
(i) from a person in an amount of $150,000 or more, or
(ii) through the issue of instruments in denominations of $150,000 or more.
Marginal note:Exception
(4) Subsection (1) does not apply to
(a) an authorized foreign bank;
(b) a foreign cooperative credit society that has received the approval of the Minister under paragraph 522.22(1)(f) to engage in or carry on the business of a cooperative credit society;
(c) a foreign insurance company;
(d) a foreign securities dealer that has received the approval of the Minister under paragraph 522.22(1)(f); or
(e) a prescribed entity.
Marginal note:2001, c. 9, s. 132
57. Section 522.02 of the Act is replaced by the following:
Marginal note:Name of representative office
522.011 If the name under which a representative office of a foreign bank is or will be identifying itself in Canada is one referred to in any of paragraphs 530(1)(a) to (e), the Superintendent may, as the case may be,
(a) refuse to grant the approval referred to in paragraph 522(a);
(b) impose restrictions on the use of the name in Canada; or
(c) direct the foreign bank to change the name.
Marginal note:Cancellation of registration
522.02 The Superintendent may cancel the registration of a representative office of a foreign bank if
(a) the foreign bank requests the Superintendent to cancel the registration;
(b) the Superintendent is of the opinion that the representative office is not being operated, or the personnel of that office are not conducting themselves, in accordance with the rules prescribed for the purposes of paragraph 522(a); or
(c) the Superintendent is of the opinion that the foreign bank has failed to comply with a restriction imposed under paragraph 522.011(b) or a direction made under paragraph 522.011(c).
Marginal note:2001, c. 9, s. 132
58. Section 522.07 of the Act is replaced by the following:
Marginal note:Investment in a financial institution
522.07 Subject to the requirements relating to approval set out in Division 5, a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity referred to in any of paragraphs 468(1)(a) to (i).
Marginal note:2001, c. 9, s. 132
59. (1) Subsection 522.08(1) of the Act is replaced by the following:
Marginal note:Permitted investments
522.08 (1) Subject to subsection (2) and the requirements relating to approval set out in Division 5, a foreign bank or an entity associated with a foreign bank may acquire or hold control of, or a substantial investment in, a Canadian entity, other than an entity referred to in any of paragraphs 468(1)(a) to (i), whose business is limited to one or more of the following:
(a) engaging in
(i) any financial service activity that a bank is permitted to engage in under any of paragraphs 409(2)(a) to (d), or
(ii) any other activity that a bank is permitted to engage in under section 410 or 411;
(b) acquiring or holding shares of, or ownership interests in, entities that a foreign bank or an entity associated with a foreign bank is permitted to acquire or hold under this Division or Division 8 — other than limited commercial entities, except in prescribed circumstances;
(b.1) acquiring or holding shares of, or ownership interests in, entities incorporated or formed otherwise than by or under an Act of Parliament or of the legislature of a province;
(c) engaging in the provision of any services exclusively to any or all of the following, so long as the Canadian entity is also providing those services to the foreign bank or to any member of the foreign bank’s group, namely,
(i) the foreign bank,
(ii) any member of the foreign bank’s group,
(iii) any entity that is primarily engaged in the business of providing financial services,
(iv) any entity in which an entity referred to in subparagraph (iii) has a substantial investment and that is
(A) an entity in which a bank is permitted to acquire a substantial investment under section 468,
(B) an entity in which a foreign bank or an entity associated with a foreign bank is permitted to acquire a substantial investment under this section and section 522.07, or
(C) a prescribed entity, 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 bank is permitted to engage in — or in any other prescribed activity —, 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 foreign bank or by any member of the foreign bank’s group, or
(ii) if a significant portion of the business of the Canadian 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 “closed-end fund”, “mutual fund distribution entity”, “mutual fund entity” or “real property brokerage entity” in subsection 464(1); and
(f) engaging in prescribed activities, under prescribed terms and conditions, if any are prescribed.
Marginal note:2001, c. 9, s. 132
(2) Paragraph 522.08(2)(d) of the Act is replaced by the following:
(d) acquiring or holding control of, or a substantial investment in, another Canadian entity unless
(i) in the case of a Canadian entity that is controlled by the foreign bank or the entity associated with a foreign bank, the foreign bank or the entity associated with a foreign bank itself would be permitted to acquire or hold control of, or a substantial investment in, the other Canadian entity under this section or section 522.07 or 522.1 or Division 8, or
(ii) in the case of a Canadian entity that is not controlled by the foreign bank or the entity associated with a foreign bank, the foreign bank or the entity associated with a foreign bank itself would be permitted to acquire or hold control of, or a substantial investment in, the other Canadian entity under this section, section 522.07, any of paragraphs 522.1(a) or (c) to (e) or Division 8; or
(3) Section 522.08 of the Act is amended by adding the following after subsection (2):
Marginal note:Exception
(2.1) Despite paragraph (2)(a), a foreign bank or an entity associated with a foreign bank may acquire or hold 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.
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