Canada Deposit Insurance Corporation Application for Deposit Insurance By-law (SOR/2006-236)

Interpretation

• 1 (1) The following definitions apply in this By-law.

  Act

  Act means the Canada Deposit Insurance Corporation Act. (Loi)

  applicant

  applicant means a provincial institution that makes an application to the Corporation for deposit insurance. (demandeur)

  associate

  associate, when used to indicate a relationship with a person, means

  • (a) a corporation of which that person beneficially owns, directly or indirectly, voting securities that carry more than 10 per cent of the voting rights attached to all of the outstanding voting securities of the corporation;

  • (b) a partner of that person; or

  • (c) a trust or an estate or succession in which that person has a substantial beneficial interest or in respect of which that person serves as a trustee or in a similar capacity. (associé)

  beneficial ownership

  beneficial ownership includes ownership through one or more trustees, legal representatives, agents or mandataries or other intermediaries. (véritable propriétaire)

  common-law partnership

  common-law partnership means the relationship between two individuals who are cohabiting in a conjugal relationship, having so cohabited for a period of at least one year. (union de fait)

  corporation

  corporation means an incorporated body wherever or however incorporated. (personne morale)

  direction

  direction, in respect of the voting securities of an entity, means the power, alone or in combination with one or more persons, directly or indirectly, to exercise or direct the exercise of the voting rights attached to those securities. (haute main)

  entity

  entity means a corporation, a trust, a partnership, a fund, an unincorporated association or organization, Her Majesty in right of Canada or of a province, an agency of Her Majesty in either of those rights, the government of a foreign country or any political subdivision of that government or any agency of that government or of that political subdivision. (entité)

  financial statements

  financial statements includes a balance sheet, a statement of retained earnings, an income statement and a statement of changes in financial position. (états financiers)

  forecast

  forecast means information in respect of prospective results of the operations and financial position or changes in the financial position of an entity, based on assumptions made in respect of future economic conditions and planned courses of action for a specified period, given management’s judgment as to the most probable set of economic conditions. (prévisions)

  influence

  influence, in respect of an entity, means the power to exercise an influence, directly or indirectly and alone or in combination with one or more persons, over the management and policies of the entity, whether through the beneficial ownership of voting securities or otherwise. (influence)

  material

  material, in respect of any matter, means a matter that has or may reasonably be expected to have a bearing on the decision of the Corporation as to whether to approve an applicant for deposit insurance. (important)

  misrepresentation

  misrepresentation means an untrue statement made in respect of a material fact or a statement that is misleading in the context in which it is made due to the omission of a material fact. (fausse déclaration)

  officer

  officer means

  • (a) in respect of a corporation, a chief executive officer, president, vice-president, secretary, controller, treasurer and any other individual designated as an officer of the corporation by by-law or by a resolution of its directors; and

  • (b) in respect of any other entity, any individual designated as an officer of the entity. (dirigeant)

  person

  person means an individual or an entity and includes a legal representative. (personne)

  promoter

  promoter means a person who

  • (a) acting alone or in conjunction with one or more other persons, participates directly or indirectly in the founding, organizing or substantial reorganizing of the business of an applicant; or

  • (b) in connection with the founding, organizing or substantial reorganizing of the business of an applicant, directly or indirectly receives, in consideration of services or property or both services and property, five per cent or more of any class of securities of the applicant or five per cent or more of the proceeds from the sale of any class of securities of a particular issue, other than a person who receives such securities or proceeds either solely as underwriting commissions or solely in consideration of property but does not otherwise take part in the founding, organizing or substantial reorganizing of the business of the applicant. (promoteur)

  regulatory authority

  regulatory authority means a supervisory or regulatory authority of financial institutions, capital markets, securities transactions or commodity futures that has jurisdiction over an applicant. (organisme de réglementation)

  relative

  relative, in respect of a person who is an individual, means an individual related to that person by birth, adoption, marriage or common-law partnership. (parent)

  subsidiary

  subsidiary, when used to indicate a relationship between one corporation and another, means a corporation that is controlled by that other corporation. (filiale)

• (2) For the purposes of this By-law,

  • (a) a person controls a corporation if securities of the corporation, to which are attached more than 50 per cent of the votes that may be cast to elect directors of the corporation, are beneficially owned by the person and the votes attached to those securities are sufficient, if exercised, to elect a majority of the directors of the corporation;

  • (b) a person controls an unincorporated entity, other than a limited partnership, if more than 50 per cent of the ownership interest in the entity, however designated, is beneficially owned by the person and the person is able to direct the business and affairs of the entity;

  • (c) the general partner of a limited partnership controls the limited partnership; and

  • (d) a person controls an entity if the person has any direct or indirect influence that, if exercised, would result in control in fact of the entity.

• (3) For the purposes of this By-law, a person who controls an entity is considered to control any other entity that is controlled, or is considered to be controlled, by the entity.

• (4) For the purposes of this By-law, a person is considered to control an entity where the aggregate of any securities of the entity that are beneficially owned by the person and any securities of the entity that are beneficially owned by any entity controlled by that person is such that, if that person and all of the entities that beneficially own securities of the entity were one person, that person would control the entity.

Application for Deposit Insurance

• 2 (1) An application for deposit insurance must contain

  • (a) the information and documentation referred to in sections 3 to 17, in one of Canada’s official languages; and

  • (b) an affidavit as set out in Form 1 of the schedule and, if applicable, an affidavit as set out in Form 2 of the schedule, duly executed.

• (2) The information and documentation included in an application must be current as of not more than 12 months before the day on which the final information or documentation relating to the application is submitted to the Corporation by the applicant in order to complete the application.

Applicant’s General Information

3 The application must include the following information in respect of the applicant:

• (a) its legal name, including the form of that name in the other official language of Canada, if any;

• (b) the address, telephone number, e-mail address and facsimile number of

  • (i) its head office,

  • (ii) its principal place of business, if that place of business is located somewhere other than at the head office, and

  • (iii) each of its current branches, if any, and each of its proposed branches, if any;

• (c) the date of its incorporation, the jurisdiction of its incorporation and the date on which it began to carry on business or proposes to do so;

• (d) the name, title or office, and address of each of its current and proposed directors and officers and a copy of their curriculum vitae or resumé;

• (e) whether any director or officer referred to in paragraph (d) is an associate or a relative of any other director or officer referred to in that paragraph or of

  • (i) a director or officer referred to in paragraph 13(e), or

  • (ii) an individual referred to in section 14;

• (f) detailed information, for each of the directors and officers referred to in paragraph (d), in respect of

  • (i) any conviction, under the laws of any jurisdiction within or outside Canada, for a material criminal offence,

  • (ii) any conviction, under the laws of such a jurisdiction, for a statutory or regulatory violation in relation to any of their businesses or the applicant’s business, and

  • (iii) any proceedings that have been commenced against them in such a jurisdiction in respect of such an offence or violation;

• (g) detailed information, for each of the directors and officers referred to in paragraph (d), in respect of

  • (i) the suspension or revocation, under the laws of any jurisdiction within or outside Canada, of any licence held by them in relation to the business or affairs of the applicant,

  • (ii) the suspension or cancellation, under the laws of such a jurisdiction, of any registration in their name in relation to the business or affairs of the applicant, and

  • (iii) any investigation that has been or is being conducted in such a jurisdiction in relation to such a licence or registration;

• (h) the legal name, address, telephone number, e-mail address and facsimile number of its current or proposed external auditor, as applicable;

• (i) the name, address, telephone number, e-mail address and facsimile number of any person who is, or who, within the 24-month period preceding the day referred to in subsection 2(2) has been, a promoter of the applicant; and

• (j) the name, title or office, address, telephone number, e-mail address and facsimile number of the individual who is authorized to represent the applicant with respect to the application.

Applicant’s Financial Information

• 4 (1) The application must include the following documents in respect of the financial affairs of the applicant:

  • (a) if the applicant has been incorporated for less than one financial year, an audited opening balance sheet and unaudited interim financial statements, if any, for the financial period beginning on the day on which it began to carry on its business; and

  • (b) if the applicant has been incorporated for one or more financial years

    • (i) unaudited interim financial statements, if any, for the financial period following the period covered by the annual audited financial statements for the most recently completed financial year,

    • (ii) audited financial statements for

      • (A) each completed financial year from the date of incorporation, if it has been incorporated for one or more, but less than three, financial years, or

      • (B) each of the last three financial years, if it has been incorporated for three or more financial years, and

    • (iii) its latest annual report, if any.

• (2) Subject to subsection (3), all financial statements included in the application must be

  • (a) prepared in accordance with the accounting principles and auditing standards accepted under or required by the laws of the jurisdiction of incorporation of the applicant or prescribed by the regulatory authority primarily responsible for regulating the applicant; or

  • (b) prepared in accordance with the accounting standards and guidelines established by the Canadian Institute of Chartered Accountants (“CICA”) — also referred to as “Canadian Generally Accepted Accounting Principles” (“Canadian GAAP”) — and audited in accordance with the auditing standards and guidelines established by the CICA.

• (3) If financial statements that are included in an application are provided by a foreign entity that controls the applicant, they must be

  • (a) prepared in accordance with the generally accepted or applicable accounting principles and auditing procedures in the jurisdiction where the foreign entity was incorporated or established and accompanied by a comparison between the accounting standards used to complete the applicant’s financial statements and Canadian GAAP; or

  • (b) prepared in accordance with Canadian GAAP and audited in accordance with the auditing standards and guidelines established by the CICA.

• 5 (1) The application must include a business plan that covers the three-year period beginning on the day on which the applicant proposes to begin carrying on its deposit-taking business and that contains the following information:

  • (a) the reasons why it wants to establish a deposit-taking business;

  • (b) an analysis of target markets together with its business objectives for those markets, the short- and long-term strategy it will employ to achieve those objectives and the reasons why it believes that it will be successful in achieving those objectives;

  • (c) an overview of each line of business to be conducted and a description of the products and services it will offer in each target market, together with the expected levels of business for those products and services;

  • (d) an analysis of the competitive threats it will face in each target market, together with a description of how it plans to respond to those threats and the reasons why it believes that the response will be successful;

  • (e) a detailed forecast that includes pro forma financial statements covering that three-year period and identifying the assumptions made in the preparation of the forecast;

  • (f) a list of the assumptions that it made for the purposes of paragraphs (b) to (e) and the reasons why it considers those assumptions to be reasonable;

  • (g) a description of the off-balance sheet activities that it proposes to carry on;

  • (h) a description of its proposed outsourcing arrangements and its contingency plans respecting those arrangements;

  • (i) a sensitivity analysis of its projected financial results under various assumptions or scenarios;

  • (j) its projected staff complement during that three-year period; and

  • (k) an explanation of the correlation between the business background and expertise of each director and officer and the applicant’s business objectives.

• (2) The application must also include any other business plan that was prepared by, or for, the applicant within the 24-month period preceding the date of the business plan referred to in subsection (1) and an explanation of any significant differences between those business plans.

6 The application must include the following information in respect of the applicant’s capital:

• (a) its authorized capital level;

• (b) the sources of its initial and future capital;

• (c) the amount of its issued and outstanding capital;

• (d) the amount of its paid-in or stated capital; and

• (e) a description of any other forms of its capital that are accepted as, or considered to be, capital in the jurisdiction in which the applicant was incorporated.