Insurance Companies Act (S.C. 1991, c. 47)

Marginal note:Approval for indirect investments

555 If a society obtains the approval of the Minister under subsection 554(5) to acquire control of, or to acquire or increase a substantial investment in, an entity and, through that acquisition or increase, the society indirectly acquires control of, or acquires or increases a substantial investment in, another entity that would require the approval of the Minister under subsection 554(5) and that indirect acquisition or increase is disclosed to the Minister in writing before the approval is obtained, the society is deemed to have obtained the approval of the Minister for that indirect acquisition or increase.

Marginal note:Undertakings

• 556 (1) If a society controls a permitted entity, other than an entity referred to in any of paragraphs 554(1)(a) to (c), the society shall provide the Superintendent with any undertakings that the Superintendent may require regarding

  • (a) the activities of the entity; and

  • (b) access to information about the entity.

• Marginal note:Undertakings

  (2) If a society acquires control of an entity referred to in paragraph 554(1)(b) or (c), the society shall provide the Superintendent with any undertakings concerning the entity that the Superintendent may require.

• Marginal note:Agreements with other jurisdictions

  (3) The Superintendent may enter into an agreement with the appropriate official or public body responsible for the supervision of any entity referred to in paragraph 554(1)(b) or (c) in each province or in any other jurisdiction concerning any matters referred to in paragraphs (1)(a) and (b) or any other matter the Superintendent considers appropriate.

• Marginal note:Access to records

  (4) Despite any other provision of this Part, a society shall not control a permitted entity, other than an entity referred to in paragraph 554(1)(a), unless, in the course of the acquisition of control or within a reasonable time after the control is acquired, the society obtains from the permitted entity an undertaking to provide the Superintendent with reasonable access to the records of the permitted entity.

Exceptions and Exclusions

Marginal note:Temporary investments in entity

• 557 (1) Subject to subsection (4), a society may, by way of a temporary investment, acquire control of, or acquire or increase a substantial investment in, an entity but, within two years, or any other period that may be specified or approved by the Superintendent, after acquiring control or after acquiring or increasing the substantial investment, as the case may be, it shall do all things necessary to ensure that it no longer controls the entity or has a substantial investment in the entity.

• Marginal note:Transitional

  (2) Despite subsection (1), if a society that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the society subsequently increases that substantial investment by way of a temporary investment, the society shall, within two years, or any other period that is specified or approved by the Superintendent, after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

• Marginal note:Extension

  (3) The Superintendent may, in the case of any particular society that makes an application under this subsection, extend the period of two years, or the other period specified or approved by the Superintendent, that is referred to in subsection (1) or (2) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Temporary investment

  (4) If a society, 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 554(5) if the society had acquired the control, or acquired or increased the substantial investment, under section 554, the society 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:Loan workouts

• 558 (1) Despite anything in this Part, if a society or any of its subsidiaries has made a loan to an entity and, under the terms of the agreement between the society, or any of its subsidiaries, and the entity with respect to the loan and any other documents governing the terms of the loan, a default has occurred, the society may acquire

  • (a) if the entity is a body corporate, all or any of the shares of the body corporate;

  • (b) if the entity is an unincorporated entity, all or any of the ownership interests in the entity;

  • (c) all or any of the shares or all or any of the ownership interests in any entity that is an affiliate of the entity; or

  • (d) all or any of the shares of a body corporate that is primarily engaged in holding shares of, ownership interests in or assets acquired from the entity or any of its affiliates.

• Marginal note:Obligation

  (2) If a society acquires shares or ownership interests in an entity under subsection (1), the society shall, within five years after acquiring them, do all things necessary to ensure that the society does not control the entity or have a substantial investment in the entity.

• Marginal note:Transitional

  (3) Despite subsection (1), if a society that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the society later increases that substantial investment by way of an investment made under subsection (1), the society shall, within five years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

• Marginal note:Extension

  (4) The Superintendent may, in the case of any particular society that makes an application under this subsection, extend the period of five years referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception — entities controlled by foreign governments

  (5) Despite anything in this Part, if a society has made a loan to, or holds a debt obligation of, the government of a foreign country or an entity controlled by the government of a foreign country and, under the terms of the agreement between the society and that government or the entity, as the case may be, and any other documents governing the terms of the loan or debt obligation, a default has occurred, the society may acquire all or any of the shares of, or ownership interests in, that entity or in any other entity designated by that government, if the acquisition is part of a debt restructuring program of that government.

• Marginal note:Time for holding shares

  (6) If a society acquires any shares or ownership interests under subsection (5), the society may, on any terms and conditions that the Superintendent considers appropriate, hold those shares or ownership interests for an indeterminate period or for any other period that the Superintendent may specify.

• Marginal note:Exception

  (7) If, under subsection (1), a society acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 554, the society may retain control of the entity or continue to hold the substantial investment for an indeterminate period, if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2) or (3), including any extension of it granted under subsection (4).

Marginal note:Realizations

• 559 (1) Despite anything in this Act, a society may acquire

  • (a) an investment in a body corporate,

  • (b) an interest in an unincorporated entity, or

  • (c) an interest in real property,

  if the investment or interest is acquired through the realization of a security interest held by the society or any of its subsidiaries.

• Marginal note:Disposition

  (2) If a society acquires control of, or acquires a substantial investment in, an entity by way of the realization of a security interest held by the society or any of its subsidiaries, the society shall, within five years after the day on which control or the substantial investment is acquired, do all things necessary, or cause its subsidiary to do all things necessary, as the case may be, to ensure that the society no longer controls the entity or has a substantial investment in the entity.

• Marginal note:Transitional

  (3) Despite subsection (2), if a society that was in existence immediately before June 1, 1992 had an investment in an entity on September 27, 1990 that is a substantial investment within the meaning of section 10 and the society later increases that substantial investment by way of a realization of a security interest under subsection (1), the society shall, within five years after increasing the substantial investment, do all things necessary to ensure that its substantial investment in the entity is no greater than it was on September 27, 1990.

• Marginal note:Extension

  (4) The Superintendent may, in the case of any particular society that makes an application under this subsection, extend the period of five years referred to in subsection (2) or (3) for any further period or periods, and on any terms and conditions, that the Superintendent considers necessary.

• Marginal note:Exception

  (5) If, under subsection (1), a society acquires control of, or acquires or increases a substantial investment in, an entity that it would otherwise be permitted to acquire or increase under section 554, the society may retain control of the entity or continue to hold the substantial investment for an indeterminate period if the approval in writing of the Minister is obtained before the end of the period referred to in subsection (2) or (3), including any extension of it granted under subsection (4).

Marginal note:Regulations restricting ownership

560 The Governor in Council may make regulations restricting the ownership under sections 554 to 559 by a society of shares of a body corporate or of ownership interest in an unincorporated entity and imposing terms and conditions applicable to societies that own such shares or interests.

Portfolio Limits

Marginal note:Exclusion from portfolio limits

• 561 (1) The value of all loans, investments and interests acquired by a society and any of its prescribed subsidiaries as a result of a realization of a security interest or pursuant to section 558 shall not be included in calculating the value of loans, investments and interests of the society and its prescribed subsidiaries under sections 562 to 566

  • (a) for a period of twelve years following the day on which the interest was acquired, in the case of an interest in real property; and

  • (b) for a period of five years after the day on which the loan, investment or interest was acquired, in the case of a loan, investment or interest, other than an interest in real property.

• Marginal note:Extension

  (2) The Superintendent may, in the case of any particular society, extend any period referred to in subsection (1) for such further period or periods, and on such terms and conditions, as the Superintendent considers necessary.

Consumer and Commercial Lending by Societies

Marginal note:Lending limit

562 A society shall not, and shall not permit its prescribed subsidiaries to,

• (a) make or acquire a commercial loan or a loan to a natural person, or

• (b) acquire control of a permitted entity that holds commercial loans or loans to natural persons

where the aggregate value of all such loans held by the society and its prescribed subsidiaries exceeds, or the acquisition or making of the loan or the acquisition of control of the body corporate would cause the aggregate value of all such loans held by the society and its prescribed subsidiaries to exceed, the prescribed percentage of the total assets of the society.

Real Property

Marginal note:Limit on total property interest

563 A society shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire an interest in real property, or

• (b) make an improvement to any real property in which the society or any of its prescribed subsidiaries has an interest

if the aggregate value of all interests of the society in real property exceeds, or the acquisition of the interest or the making of the improvement would cause that aggregate value to exceed, an amount determined in accordance with the regulations.

Marginal note:Regulations

564 For the purposes of this Part, the Governor in Council may make regulations

• (a) defining the interests of a society in real property;

• (b) determining the method of valuing those interests; and

• (c) respecting the determination of an amount for the purpose of each of sections 563, 565 and 566.

Equities

Marginal note:Limits on equity acquisitions

565 A society shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire any participating shares of any body corporate or any ownership interests in any unincorporated entity, other than those of a permitted entity in which the society has, or by virtue of the acquisition would have, a substantial investment, or

• (b) acquire control of an entity that holds shares or ownership interests referred to in paragraph (a),

if the aggregate value of

• (c) all participating shares, excluding participating shares of permitted entities in which the society has a substantial investment, and

• (d) all ownership interests in unincorporated entities, other than ownership interests in permitted entities in which the society has a substantial investment,

beneficially owned by the society and its prescribed subsidiaries exceeds, or the purchase or acquisition would cause that aggregate value to exceed, an amount determined in accordance with the regulations.

Aggregate Limit

Marginal note:Aggregate limit

566 A society shall not, and shall not permit its prescribed subsidiaries to,

• (a) purchase or otherwise acquire

  • (i) participating shares of a body corporate, other than those of a permitted entity in which the society has, or by virtue of the acquisition would have, a substantial investment,

  • (ii) ownership interests in an unincorporated entity, other than ownership interests in a permitted entity in which the society has, or by virtue of the acquisition would have, a substantial investment, or

  • (iii) interests in real property, or

• (b) make an improvement to real property in which the society or any of its prescribed subsidiaries has an interest

if the aggregate value of

• (c) all participating shares and ownership interests referred to in subparagraphs (a)(i) and (ii) that are beneficially owned by the society and its prescribed subsidiaries, and

• (d) all interests of the society in real property referred to in subparagraph (a)(iii)

exceeds, or the acquisition or the making of the improvement would cause that aggregate value to exceed, an amount determined in accordance with the regulations.