Enterprise Development Regulations (C.R.C., c. 969)

PART IIIInsurance

General

• 25 (1) Subject to sections 33 and 34, the Minister may provide insurance on a loan made by a private lender to a manufacturer, individual, firm or corporation in Canada, as the case may be, if, in the opinion of the Minister,

  • (a) in the case of a manufacturer, the manufacturer requires a loan

    • (i) to restructure his operations in order to improve his position in international trade competition,

    • (ii) to adjust to changes affecting his access to foreign markets, which changes are attributable to the imposition by a country other than Canada of an import surtax or to the taking by such country of other actions having the same effect, or

    • (iii) to engage in the manufacture or production of products that will be subject to international trade competition;

  • (b) in the case of an individual, firm or corporation about to engage in a manufacturing or processing activity in Canada, the individual, firm or corporation requires a loan to engage in the manufacture or production of products that will be subject to international trade competition; or

  • (c) the individual, firm or corporation requires a loan to acquire a corporation or group of corporations engaged in a manufacturing or processing activity and the acquisition will result in a significant increase in the manufacturing or processing activity in Canada.

• (2) Subject to sections 33 and 34 and subsection (3), the Minister, with the approval of the Treasury Board, may provide insurance on any loan made by a private lender to an individual, firm or corporation engaged or about to engage in the business of general contracting or special trades contracting in Canada, if, in the opinion of the Minister, the individual, firm or corporation requires a loan to restructure his or its operations in order to improve his or its position in international trade competition and the restructuring will improve his or its capability to undertake foreign turnkey and other capital projects that would result in significant benefits to Canada.

• (3) The aggregate amount of insurance that may be provided by the Minister pursuant to subsection (2) shall not exceed $12 million at any time.

• (4) Notwithstanding any other provision of these Regulations, the Minister shall not, without the approval of the Treasury Board, authorize the amendment of the terms and conditions of any loan insured pursuant to subsection (2) or exercise any of his powers under subsection 24(2) in respect of security taken for the loan except, only, where the Minister is satisfied that such amendment or the exercise of such powers will not substantially increase the risk of any loss to Her Majesty.

26 Subject to sections 33 and 34, the Minister may provide insurance on a loan made by a private lender to a manufacturer to assist that manufacturer in restructuring his manufacturing or processing activity if

• (a) the manufacturer was engaged in a manufacturing or processing activity prior to the first reduction of tariffs or first modification of non-tariff barriers by Canada resulting from the Tokyo Round agreements; and

• (b) in the opinion of the Minister

  • (i) the manufacturer requires a loan in order to restructure his manufacturing or processing activity for the purpose of improving his position in international competition, and

  • (ii) the manufacturer is seriously injured or threatened with serious injury by reason of increased imports as a direct result of the Tokyo Round agreements.

27 Subject to sections 33 and 34, the Minister may provide insurance on a loan made by a private lender to a manufacturer or to a trustee or receiver authorized by law to carry on the business of the manufacturer if

• (a) the manufacturer’s products are subject to international trade competition;

• (b) in the opinion of the Minister the manufacturer is in financial difficulty that threatens the cessation of a significant portion of his manufacturing or processing activity and the lay-off of a significant number of his employees; and

• (c) the manufacturer proposes the sale of all or a significant portion of his assets or the individual firm or corporation which holds effective ownership control of the manufacturer proposes the sale of such control and in the opinion of the Minister

  • (i) the manufacturer requires a loan to continue his operations until the assets are sold or effective ownership control of the manufacturer is sold, as the case may be,

  • (ii) the sale will be effected within a reasonable period of time, and

  • (iii) the sale will enhance the prospects for the continued employment of a significant number of his employees.

• 28 (1) Subject to subsection (3), the Minister may provide insurance on a loan made by a private lender to an individual in Canada or to a firm or corporation incorporated under the laws of Canada or a province if, in the opinion of the Minister, the individual, firm or corporation requires the loan to

  • (a) acquire effective ownership control of a corporation engaged in a manufacturing or processing activity in Canada;

  • (b) acquire from a manufacturer the whole or a significant portion of that manufacturer’s assets; or

  • (c) restructure the operations of that individual, firm or corporation, as the case may be, as a result of the acquisition by the individual, firm or corporation of the whole or a significant portion of a manufacturer’s assets.

• (2) Subject to subsection (3), the Minister may provide insurance on a loan made by a private lender to a corporation engaged in a manufacturing or processing activity in Canada and incorporated under the laws of Canada or a province for the purpose of restructuring its operations if in the opinion of the Minister the corporation requires the loan to restructure its operations as a result of the acquisition of its effective ownership control by an individual, firm or corporation.

• (3) The Minister may provide insurance pursuant to subsection (1) or (2) on the following conditions:

  • (a) the individual, firm or corporation, as the case may be, described in subsection (1) or (2), that requires a loan has agreed

    • (i) to provide or to arrange to be provided to the private lender a guarantee satisfactory to the Minister for 10 per cent of the amount of the loan to be provided, and

    • (ii) to provide the private lender with security satisfactory to the Minister on the assets acquired or on the assets of the corporation the effective ownership control of which has been acquired; and

  • (b) in the opinion of the Minister, the acquisition or restructuring in respect of which the loan is required

    • (i) is essential to prevent a serious disruption in the manufacturing or processing activity of the corporation acquired or the manufacturing or processing activity resulting from the use of the assets acquired,

    • (ii) will result in the growth, efficiency or international competitiveness of a manufacturing or processing activity in Canada,

    • (iii) would not proceed unless the loan required is insured by the Minister, and

    • (iv) would not proceed unless the private lender and the Minister agree to limit the liability of the individual, firm or corporation acquiring the assets, as the case may be, to the lender to 10 per cent of the amount of the loan to be provided.

29 Subject to sections 33 and 34, the Minister may provide insurance on a loan made by a private lender to a person engaged or about to engage in a business in Canada that

• (a) provides services, directly or indirectly, to a manufacturer in Canada who is engaged in international trade competition if, in the opinion of the Minister, that person requires a loan to establish, restructure or improve his operations in order to improve the manufacturer’s position in international trade competition; or

• (b) provides services to business or government administration through the application of intellectual skills, knowledge, expertise or aptitude embodied in specific programs, procedures or systems, if, in the opinion of the Minister that person requires a loan to develop or exploit such programs, procedures or systems to improve his position in international trade competition.

30 Subject to sections 33 and 34, where a manufacturer or other person, or a trustee or receiver authorized by law to carry on the business of such manufacturer or other person, has previously obtained assistance by way of a loan or insurance on a loan or other financial obligation administered by the Minister pursuant to subsection 4(1), the Minister may provide insurance on a loan to the manufacturer or other person or to the trustee or receiver for the purpose of protecting the Crown’s interest in respect of the loan previously made or the loan or other financial obligation previously insured.

Insurance to the Footwear or Tanning Industry

31 In this section and section 32,

footwear

footwear does not include footwear, the main component of which is canvas; (chaussure)

manufacturer

manufacturer means

• (a) an individual, firm or corporation or a division thereof in Canada that

  • (i) on January 1, 1974 was engaged in a manufacturing or processing activity in the footwear or tanning industry, or both, or

  • (ii) acquires from an individual, firm or corporation or division thereof referred to in subparagraph (i), the whole or a significant portion of its manufacturing or processing activity,

• (b) any corporation restructuring by means of the acquisition of one or more corporations or divisions thereof referred to in paragraph (a),

• (c) a corporation formed after January 1, 1974 by the amalgamation or merger of two or more corporations or divisions thereof referred to in paragraph (a), or

• (d) a corporation or partnership formed by two or more individuals, firms, corporations or divisions thereof referred to in paragraph (a), (b) or (c) for the purpose of undertaking and performing an activity directly related to their manufacturing or processing activities; (fabricant)

restructure

restructure means a change that, in the opinion of the Minister, is significant in the operations of a manufacturer with respect to his products, methods of production, markets or management procedures and includes, if directly related to such operations,

• (a) the acquisition, amalgamation or merger of one or more manufacturers described in the definition “manufacturer” or the formation of a corporation or partnership described in paragraph (d) thereof,

• (b) the acquisition of working capital, or

• (c) the acquisition, construction or conversion of machinery, equipment, buildings, land or other facilities. (restructuration)

• 32 (1) The Minister may provide insurance on a loan or loans, not exceeding $1,500,000 in the aggregate, made by a private lender to a manufacturer to assist that manufacturer in restructuring his manufacturing or processing activity if

  • (a) the manufacturer has submitted plans for restructuring based on a comprehensive analysis of his operations made by a consultant approved by the Minister in respect of the products, methods of production, markets or management procedures of the manufacturer; and

  • (b) in the opinion of the Minister, the manufacturer requires the loan to restructure his operations in order to improve his position in international trade competition.

• (2) Notwithstanding subsection (1), where the manufacturer is able to establish to the satisfaction of the Minister his capability of making the analysis described in subsection (1), the analysis may be made without the assistance of a consultant.

• (3) Notwithstanding subsection (1), the Minister may provide insurance on a loan or loans exceeding $1,500,000 in the aggregate, to a manufacturer for the purpose of assisting the manufacturer in restructuring by means of acquisition, amalgamation or merger or the formation of a corporation or partnership described in paragraph (d) of the definition “manufacturer” in section 31.

Condition of Insurance

33 The Minister shall grant insurance pursuant to sections 25 to 27, 29 and 30 only where the person requiring the loan is unable to obtain sufficient financing on reasonable terms unless the loan is insured by the Minister.

34 Where insurance is to be provided by the Minister pursuant to these Regulations in respect of a loan made by a private lender to a manufacturer and the loan enabled the manufacturer to make adjustments to his operations that will result in 20 or more of his employees being laid off for a period of two or more months, the provision of that insurance shall be on condition that the manufacturer agree to give at least three months notice of the lay-off to the Minister and to each employee who is to be laid off.