Business Development Bank of Canada Act (S.C. 1995, c. 28)

Capital of the Bank

Marginal note:Authorized capital

• 23 (1) The authorized capital of the Bank consists of an unlimited number of common shares with a par value of $100 each and an unlimited number of preferred shares without par value, but the paid-in capital of the Bank, together with any contributed surplus relating to it and any proceeds referred to in paragraph 30(2)(d) that have been prescribed as equity, must not at any time exceed

  • (a) for the period beginning on the day on which this subsection comes into force and ending on September 30, 2020, the amount that the Minister of Finance determines during that period, or, if that Minister redetermines the amount during that period, the most recently determined amount; and

  • (b) on and after October 1, 2020, an amount equal to the amount determined by the Minister of Finance under paragraph (a), or, if that Minister redetermined the amount under that paragraph, an amount equal to the last amount so determined.

• Marginal note:Publication in Canada Gazette

  (1.1) As soon as feasible after determining or redetermining an amount under paragraph (1)(a), the Minister of Finance shall publish a notice of that amount in the Canada Gazette.

• Marginal note:Issuance of shares

  (2) The shares of the Bank may be issued only to the Designated Minister to be held in trust for the Crown.

• Marginal note:Subscription by Designated Minister

  (3) Where the Board recommends that the Designated Minister subscribe for unissued shares of the Bank, the Designated Minister may, if the Minister of Finance concurs, subscribe for the amount that the Designated Minister considers desirable.

• Marginal note:Payment out of Consolidated Revenue Fund

  (4) The amount of the subscription is to be paid to the Bank out of the Consolidated Revenue Fund at any time and in any amount that the Board may require.

Marginal note:Rights of common shares

• 24 (1) The rights conferred by common shares include

  • (a) the right to vote at any meeting of shareholders;

  • (b) the right to receive dividends declared on common shares; and

  • (c) the right to receive the remaining property of the Bank on dissolution.

• Marginal note:Rights of preferred shares

  (2) The rights conferred by preferred shares of any class or series are limited as follows:

  • (a) the holders of preferred shares are not entitled to vote at meetings of shareholders;

  • (b) dividends, once declared, are limited to the rate, whether fixed or variable, cumulative or non-cumulative, that may be provided for in the by-laws; and

  • (c) participation in the remaining property of the Bank on dissolution is limited to the consideration paid for the shares plus any dividend accumulated or declared and unpaid, but no more.

Marginal note:Declaration and payment of dividends

• 25 (1) In any financial year of the Bank, it may declare and pay to the shareholders of the Bank any dividends out of the retained earnings or surplus account of the Bank.

• Marginal note:Limitation

  (2) The Bank may not declare or pay a dividend if there are reasonable grounds for believing that

  • (a) the Bank is, or would after the payment be, unable to pay its liabilities as they become due; or

  • (b) the realizable value of the Bank’s assets would, after the payment, be less than the aggregate of its liabilities and paid-up capital of all classes.

• Marginal note:Participation in dividends

  (3) If any cumulative dividends or amounts payable on return of capital in respect of a series of shares are not paid in full, the shares of all series of the same class participate rateably in respect of accumulated dividends and the return of capital.

Marginal note:Cancellation or restoration of shares

26 Shares, or fractions of them, of any class or series of shares issued by the Bank and purchased, redeemed or otherwise acquired by it must be cancelled or, if the number of them is limited and the by-laws so authorize, they may be restored to the status of authorized but unissued shares of that class or series.

Marginal note:By-laws relating to shares

27 Subject to the approval of the Governor in Council on the recommendation of the Minister of Finance, the Board may make by-laws

• (a) setting out the rights, privileges, restrictions and conditions attaching to preferred shares, creating one or more additional classes of preferred shares and generally determining the rights and obligations of the holders of preferred shares, including

  • (i) limiting the right of the shareholders to specific dividends or repayments, whether fixed or variable,

  • (ii) authorizing the purchase or redemption of the shares by the Bank, either at the Bank’s option or at the shareholder’s request, and

  • (iii) limiting or extending the rights of the shareholders in any other way;

• (b) authorizing the issue of any class of shares in one or more series and authorizing the Board to fix, by resolution, the maximum number of shares in each series and to determine the designation, rights, privileges, restrictions and conditions attaching to the shares of each series, subject to any limitations set out in the by-law;

• (c) determining a maximum number of shares with respect to any class or series of preferred shares;

• (d) changing authorized shares without par value, whether issued or not, into shares with a par value and changing authorized shares with a par value, whether issued or not, into shares without par value;

• (e) consolidating or subdividing shares;

• (f) converting shares of any class into shares of another class; and

• (g) increasing or reducing the issued share capital or any part of it, with or without distribution of paid-in capital or reduction of liability on any of the shares.

Marginal note:Hybrid capital instruments

• 28 (1) With the approval of the Governor in Council on the recommendation of the Minister of Finance, the Bank may issue to persons other than the Crown hybrid capital instruments prescribed, in whole or in part, as equity of the Bank under paragraph 30(2)(d).

• Marginal note:Crown not liable

  (2) The Crown is not in any way liable for payment of amounts owing under an instrument issued under subsection (1).

• Marginal note:Instruments not shares

  (3) For greater certainty, an instrument issued under subsection (1) is not a share within the meaning of Part X of the Financial Administration Act.

Marginal note:Appropriations

29 Moneys may be appropriated by Parliament and paid out to the Bank for use in any of its activities.

Debt-to-equity Ratio

Marginal note:Limit on borrowings and guarantees

• 30 (1) The aggregate of

  • (a) the borrowings of the Bank under subsection 18(1) and section 19, and

  • (b) the contingent liabilities of the Bank in the form of guarantees given by it

  must not at any time exceed twelve times the equity of the Bank.

• Marginal note:Definition of equity

  (2) For the purpose of subsection (1), the equity of the Bank consists of

  • (a) the amounts paid for its shares, including any contributed surplus;

  • (b) the retained earnings of the Bank, which may be positive or negative;

  • (c) amounts paid to the Bank as capital by Parliamentary appropriation; and

  • (d) such proceeds of debt instruments, hybrid capital instruments or other arrangements as may be prescribed as equity by the Governor in Council.

Conflict of Interest

Marginal note:Definitions

31 In section 33,

applicant

applicant means a person who applies to the Bank for assistance in the form of a loan, investment, guarantee, purchase or lease; (demandeur)

interested person

interested person means

• (a) the spouse, common-law partner within the meaning of section 2 of the Bank Act, child, brother, sister or parent of a director,

• (b) the spouse, or the common-law partner within the meaning of section 2 of the Bank Act, of a child, brother, sister or parent of a director, or

• (c) the parent, sister or brother of the spouse, or of the common-law partner within the meaning of section 2 of the Bank Act, of a director. (personne intéressée)

Marginal note:Restriction

32 The Bank shall not grant a loan, investment or guarantee to a director or officer of the Bank.

Marginal note:Disclosure

• 33 (1) An applicant must disclose in writing to the Bank whether the applicant is an interested person or, if the applicant is a firm or corporation, whether a partner of the firm or a shareholder, director or officer of the corporation is an interested person or a director or officer of the Bank.

• Marginal note:Submission of application to Board for approval

  (2) If the applicant discloses that the applicant is an interested person, or that a partner, shareholder, director or officer is an interested person or a director or an officer of the Bank, the application must be submitted to the Board for approval before the Bank enters into an agreement to provide the assistance.

• Marginal note:Director must not be at meeting or vote

  (3) A director must not be present at a meeting of the Board when the Board is considering an application, or vote on a resolution relating to it, if the applicant is

  • (a) a person related to the director as described in paragraph (a), (b) or (c) of the definition interested person in section 31; or

  • (b) a firm or corporation of which the director, or a person referred to in paragraph (a), is a partner, shareholder, director or officer.

• Marginal note:Annual report

  (4) The amount of each agreement referred to in this section and the name of the person, firm or corporation with whom the agreement is entered into must be included in the annual report that the Bank is required to submit under subsection 150(1) of the Financial Administration Act.

Miscellaneous Provisions

Marginal note:Financial year

34 Notwithstanding section 121 of the Financial Administration Act, the financial year of the Bank is the period of twelve months beginning on April 1 and ending on the next March 31, unless the Governor in Council directs otherwise.

Marginal note:Exemption from taxes

35 The Bank is exempt from taxes imposed by the Income Tax Act.

Marginal note:Ten-year review

• 36 (1) Five years after this Act comes into force, and every ten years afterward, the Designated Minister must have a review of the provisions and operation of this Act undertaken in consultation with the Minister of Finance.

• Marginal note:Report to Parliament

  (2) Within one year after the review is undertaken, the Designated Minister must submit to Parliament a report on the review.

• Marginal note:Review of report

  (3) The report must be reviewed by any committee of the Senate or of the House of Commons, or any joint committee, that may be designated or established for the purpose of reviewing the report.