Budget Implementation Act, 2016, No. 1 (S.C. 2016, c. 7)
Full Document:
Assented to 2016-06-22
Marginal note:1996, c. 6, s. 41; 2009, c. 2, s. 245(2)
134 (1) Paragraphs 39.15(1)(d) to (f) of the Act are replaced by the following:
(d) except in the normal course of clearing and settlement processes, including the consolidation of accounts in respect of those processes or the services referred to in paragraph (5)(c), no creditor has any right of set-off or compensation against the federal member institution;
(e) no person may terminate or amend any agreement with the federal member institution or claim an accelerated payment, or forfeiture of the term, under such an agreement by reason only of
(i) the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,
(ii) a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the agreement,
(iii) a monetary default, before the order was made, under the agreement by the federal member institution or any of its affiliates that is remedied within 60 days after the day on which the order is made,
(iv) the making of the order or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,
(v) the assignment or assumption of the agreement to or by a bridge institution or a third party,
(vi) the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates,
(vii) a conversion under subsection 39.2(2.3) in respect of the federal member institution, or
(viii) a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities; and
(f) no person may terminate the federal member institution’s membership in an organization by reason only of
(i) the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,
(ii) a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the rules of the organization,
(iii) a monetary default, before the order was made, under the rules of the organization by the federal member institution or any of its affiliates that is remedied within 60 days after the day on which the order is made,
(iv) the making of the order or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,
(v) the transfer of the federal member institution’s membership to a bridge institution or a third party,
(vi) the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates,
(vii) a conversion under subsection 39.2(2.3) in respect of the federal member institution, or
(viii) a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities.
Marginal note:2009, c. 2, s. 245(3)
(2) Subparagraphs 39.15(2)(b)(i) to (iv) of the Act are replaced by the following:
(i) the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,
(ii) a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the agreement,
(iii) a monetary default, before the order was made, under the agreement by the federal member institution or any of its affiliates that is remedied within 60 days after the day on which the order is made,
(iv) the making of the order or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,
(v) the assignment or assumption of the agreement to or by a bridge institution or a third party,
(vi) the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates,
(vii) a conversion under subsection 39.2(2.3) in respect of the federal member institution, or
(viii) a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities.
Marginal note:2009, c. 2, s. 245(4)
(3) Subparagraphs 39.15(2.1)(b)(i) to (iv) of the Act are replaced by the following:
(i) the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,
(ii) a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the rules of the organization,
(iii) a monetary default, before the order was made, under the rules of the organization by the federal member institution or any of its affiliates that is remedied by the institution within 60 days after the day on which the order is made,
(iv) the making of the order or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,
(v) the transfer of the federal member institution’s membership to a bridge institution or a third party,
(vi) the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates,
(vii) a conversion under subsection 39.2(2.3) in respect of the federal member institution, or
(viii) a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities.
Marginal note:2001, c. 9, s. 212(1); 2009, c. 2, s. 245(5)
(4) Subsections 39.15(3) and (3.1) of the Act are replaced by the following:
Marginal note:Clearing arrangements
(3) Subsections (1) to (2.1) do not apply so as to prevent a member of the Canadian Payments Association from acting or ceasing to act as a clearing agent for a federal member institution in accordance with the Canadian Payments Act and the by-laws and rules of that Association.
Marginal note:Exception
(3.1) Despite subsection (3), if a clearing agent that is a member of the Canadian Payments Association acts in that capacity for a federal member institution at the time an order is made under subsection 39.13(1) in respect of the institution, the clearing agent shall continue to act in that capacity for the institution after the order is made, if the Corporation has given an undertaking to provide the financial assistance that the institution needs in order to discharge its obligations to the clearing agent as they become due.
Marginal note:Clearing house
(3.2) Subsections (1) to (2.1) do not apply so as to prevent a clearing house
(a) from acting or ceasing to act in that capacity for a federal member institution; or
(b) from exercising its rights under its settlement rules, as defined in subsection 8(5) of the Payment Clearing and Settlement Act.
Marginal note:Exception
(3.3) Despite subsection (3.2), a clearing house that acts in that capacity for a federal member institution at the time an order is made under subsection 39.13(1) in respect of the institution shall continue to act in that capacity for the institution and subsections (1) to (2.1) apply in respect of the clearing house, if the Corporation has given an undertaking to provide the financial assistance that the institution needs in order to discharge its obligations to the clearing house as they become due.
Marginal note:2009, c. 2, s. 245(6)
(5) Paragraph 39.15(6)(b) of the Act is replaced by the following:
(b) the Superintendent, on the application of the federal member institution, exempted the security agreement from the application of those paragraphs and that subsection before the making of an order under subsection 39.13(1) and the Corporation does not undertake
(i) to ensure that the obligations secured by the security interest will be assumed by a bridge institution or a third party, or
(ii) to provide the federal member institution with the financial assistance that it needs to discharge the obligations secured by the security interest as they become due.
Marginal note:2007, c. 29, s. 103(1)
(6) Subsection 39.15(7) of the Act is replaced by the following:
Marginal note:Eligible financial contracts
(7) Nothing in subsection (1), (2) or (2.1) prevents the following actions from being taken in accordance with the provisions of an eligible financial contract:
(a) the termination or amendment of the contract;
(b) the accelerated payment or forfeiture of the term under the contract;
(c) the exercise of remedies for a failure to pay an amount payable under or in connection with the contract;
(d) the netting or setting off or compensation of an amount payable under or in connection with the contract; or
(e) except in respect of the actions referred to in paragraphs (c) and (d), any dealing with financial collateral, including
Marginal note:2012, c. 31, s. 166(1)
(7) The portion of subsection 39.15(7.01) of the Act before paragraph (b) is replaced by the following:
Marginal note:Stay — bridge institutions
(7.01) If an order directing the incorporation of a bridge institution is made, the actions referred to in paragraphs (7)(a), (b) and (e) are not to be taken during the period beginning on the coming into force of the order and ending on the following business day at 5:00 p.m. at the location of the Corporation’s head office, by reason only of
(a) the insolvency or deteriorated financial condition of the federal member institution, any of its affiliates or any of its providers of credit support or guarantors in respect of the institution’s obligations under the eligible financial contract;
Marginal note:2012, c. 31, s. 166(1)
(8) Subsections 39.15(7.02) to (7.1) of the Act are replaced by the following:
Marginal note:Stay — eligible financial contracts
(7.1) If an order made under subsection 39.13(1) does not direct the incorporation of a bridge institution, or if it directs the incorporation of a bridge institution and the Corporation undertakes, before the time referred to in subsection (7.01), to assign the eligible financial contract to the bridge institution, the actions referred to in paragraphs (7)(a), (b) and (e) are not to be taken by reason only of
(a) the insolvency or deteriorated financial condition of the federal member institution, any of its affiliates or any of its providers of credit support or guarantors in respect of the institution’s obligations under the eligible financial contract;
(b) the assignment or assumption of the eligible financial contract to or by a bridge institution or a third party;
(c) the making of the order or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order;
(d) a conversion under subsection 39.2(2.3) in respect of the federal member institution; or
(e) a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities.
Marginal note:Stay terminated by order
(7.101) If the Governor in Council considers that all or substantially all of the federal member institution’s assets will be transferred to a third party, the Governor in Council may, by order, declare that subsection (7.1) ceases to apply in respect of the institution’s eligible financial contracts, or any class of those contracts, at the later of
Marginal note:Exception
(7.102) Despite any order made under subsection (7.101), subsection (7.1) does not cease to apply in respect of an eligible financial contract if the Corporation undertakes, before the time provided for in subsection (7.101), to assign it to a third party.
Marginal note:2012, c. 31, s. 166(1)
(9) Paragraph 39.15(7.11)(b) of the Act is replaced by the following:
(b) provides, in substance, that, by reason of the occurrence of any circumstance described in any of paragraphs (7.01)(a) to (c) and (7.1)(a) to (e), the federal member institution ceases to have the rights — or, in the case of a bridge institution, does not have the rights — to use or deal with assets that the federal member institution or bridge institution would otherwise have.
(10) Section 39.15 of the Act is amended by adding the following after subsection (7.11):
Marginal note:Exception
(7.12) Subsections (7.01) and (7.1) do not apply in respect of an eligible financial contract between the federal member institution and a clearing house unless the Corporation has given the undertaking referred to in subsection (3.3) in respect of the institution.
Marginal note:2010, c. 12, s. 1889
(11) The portion of subsection 39.15(7.2) of the Act before paragraph (a) is replaced by the following:
Marginal note:Assignment of eligible financial contracts
(7.2) Subject to subsection (7.21), the Corporation may assign to a bridge institution or a third party eligible financial contracts — including any claim under such contracts — that are between a federal member institution and an entity or any of the following entities if the Corporation assigns all of those eligible financial contracts to the bridge institution or the third party:
Marginal note:2010, c. 12, s. 1889
(12) Subsection 39.15(7.3) of the Act is replaced by the following:
Marginal note:Eligible third parties
(7.21) The Corporation may assign eligible financial contracts to a third party under subsection (7.2) if the third party has met any condition that may be prescribed in the by-laws and has certified in writing that
(a) it maintains all material licences and registrations that are required for the continued operation of its business and, if applicable, that it is in good standing in respect of those licences and registrations;
(b) it has, on its balance sheet, assets that exceed its liabilities;
(c) it is able to discharge its obligations in respect of the assigned eligible financial contracts as they become due; and
(d) its creditworthiness is at least as good as the federal member institution’s creditworthiness was immediately before the order was made under subsection 39.13(1).
Marginal note:Effects of assignment of eligible financial contracts
(7.3) If any of the eligible financial contracts are assigned to or assumed by a bridge institution or a third party,
(a) the Corporation shall assign all of the federal member institution’s obligations arising from the eligible financial contracts, and the bridge institution or the third party shall assume those obligations; and
(b) the federal member institution’s interest or right in property that secures its obligations under the eligible financial contracts is transferred to the bridge institution or the third party.
(13) Subsection 39.15(9) of the Act is amended by adding the following in alphabetical order:
- business day
business day means a day, other than a Saturday or a Sunday, on which the head office of the federal member institution is open for business. (jour ouvrable)
- clearing agent
clearing agent has the same meaning as in section 1 of the Canadian Payments Association By-law No. 3 — Payment Items and Automated Clearing Settlement System. (agent de compensation)
- clearing house
clearing house means
(a) a clearing house, as defined in section 2 of the Payment Clearing and Settlement Act, that provides clearing and settlement services for a clearing and settlement system designated under section 4 of that Act; or
(b) a securities and derivatives clearing house, as defined in subsection 13.1(3) of the Payment Clearing and Settlement Act. (chambre de compensation)
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