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Indian Economic Development Guarantee Order (SOR/78-21)

Regulations are current to 2019-08-28

Indian Economic Development Guarantee Order

SOR/78-21

APPROPRIATION ACTS

APPROPRIATION ACT NO. 1, 1970

Registration 1977-12-29

Terms and Conditions Respecting the Guaranteeing of Loans for the Purpose of the Economic Development of Indians

P.C. 1977-3608 1977-12-22

His Excellency the Governor General in Council, on the recommendation of the Minister of Finance, the Minister of Indian Affairs and Northern Development and the Treasury Board, pursuant to Vote L53b of Appropriation Act No. 1, 1970, is pleased hereby to approve the revocation of the Indian Economic Development Regulations made by Order in Council P.C. 1972-1498 of 4th July, 1972Footnote 1, as amendedFootnote 2, and to approve the annexed terms and conditions respecting the guaranteeing of loans for the purpose of the economic development of Indians.

Short Title

 These Terms and Conditions may be cited as the Indian Economic Development Guarantee Order.

Interpretation

 In this Order,

applicant

applicant means an individual, a group of Indians, an Indian band, a partnership or a corporation in respect of whom an application is made by a bank pursuant to section 3; (requérant)

bank

bank means

  • (a) a bank to which the Bank Act applies,

  • (b) a credit union, caisse populaire or other cooperative credit society that has been designated as a bank for the purposes of the Farm Improvement Loans Act, the Small Businesses Loans Act or the Fisheries Improvement Loans Act or is designated by the Minister on the application of that society as a bank for purposes of this Order,

  • (c) a corporation that

    • (i) carries on the business of a trust company within the meaning of the Trust Companies Act, the business of a loan company within the meaning of the Loan Companies Act or the business of insurance within the meaning of the Canadian and British Insurance Companies Act,

    • (ii) has been designated as a bank for the purposes of the Farm Improvement Loans Act, the Small Businesses Loans Act or the Fisheries Improvement Loans Act, or

    • (iii) is designated by the Minister on the application of that corporation as a bank for the purposes of this Order, or

  • (d) the Province of Alberta Treasury Branch established pursuant to the Treasury Branches Act as enacted by the Province of Alberta; (banque)

borrower

borrower means an applicant who has received a guaranteed loan pursuant to this Order; (emprunteur)

business enterprise

business enterprise means, regardless of a change in ownership or control,

  • (a) any business carried on in Canada for gain or profit,

  • (b) a cooperative association incorported under a law of the Parliament of Canada or the legislature of a province, or

  • (c) the business of a profession recognized as such under a law of the Parliament of Canada or the legislature of a province,

but does not include

  • (d) a business having as its object the furtherance of a charitable or religious purpose, or

  • (e) a business carried on for the purpose of money lending, insurance or finance; (entreprise commerciale)

guaranteed loan

guaranteed loan means a loan, including a loan pursuant to a line of credit, made by a bank and guaranteed by the Minister pursuant to section 4; (prêt garanti)

Indian

Indian means an Indian as defined in the Indian Act; (Indien)

Minister

Minister means the Minister of Indian Affairs and Northern Development; (ministre)

responsible officer of the bank

responsible officer of the bank means

  • (a) the manager or assistant manager of a bank or a branch thereof,

  • (b) the person for the time acting as manager of a bank or a branch thereof,

  • (c) the credit committee of a bank or a branch thereof, or

  • (d) any person duly authorized by a bank to supervise the granting of loans. (préposé compétent de la banque)

  • SI/84-4, s. 1

Applications by Banks

 A bank may apply to the Minister, in a form satisfactory to him, for the guarantee by the Minister of a loan to be made by the bank to an applicant whose activities contribute or may contribute to the economic development of Indians.

Guarantee by the Minister

  •  (1) Subject to subsections (2) to (4), the Minister may guarantee, in whole or in part, a loan in respect of which an application is made pursuant to section 3 where

    • (a) he is satisfied that the loan is required to finance a business enterprise that will or may contribute to the economic development of Indians;

    • (b) the application for the loan was scrutinized and checked by a responsible officer of the bank, with the care required in the conduct of its ordinary business, prior to the making of the loan;

    • (c) the terms and conditions of the loan were fixed by the bank in consultation with the borrower; and

    • (d) the loan is to be repaid within a period that does not exceed 15 years and repayments are to be made not less frequently than annually.

  • (2) The Minister shall not, without the approval of the Minister of Finance, guarantee to a bank a loan in excess of $100,000.

  • (3) The Minister shall not guarantee to a bank any loan where the aggregate of

    • (a) the principal amount of the guaranteed loan,

    • (b) the amount outstanding and the undisbursed amount in respect of all other guaranteed loans, made pursuant to Vote L53b of Appropriation Act No. 1, 1970,

    • (c) the amount outstanding and the undisbursed amount of all direct loans made pursuant to Vote L53b of Appropriation Act No. 1, 1970,

    • (d) grants, contributions or other payments made or authorized by the Minister for the purposes of Indian economic development,

    • (e) the amount outstanding and the undisbursed amount in respect of all loans, grants, contributions and development incentives made under statutory authority vested in the Minister of Regional Economic Expansion, and

    • (f) loans made or guaranteed under statutory authority by any federal Department, Crown Corporation or Agency

    to or on behalf of the applicant or in respect of the business enterprise for the purpose of which the guaranteed loan is required exceeds $500,000 or may, in the opinion of the Minister be reasonably expected to exceed $500,000, unless he has obtained, in addition to any approval required under subsection (2), the approval of the Treasury Board.

  • (4) The Minister shall, on giving any guarantee without the approval of the Treasury Board, certify to the Treasury Board that the aggregate referred to in subsection (3) does not exceed $500,000.

  • (5) Where a guaranteed loan is made by a bank other than to an Indian, an Indian band or a corporation controlled by one or more Indians, the Minister shall not guarantee more than 90 per cent of any loss sustained by the bank as a result of the guaranteed loan.

Security by Bank

  •  (1) The Minister shall require that a bank take security for a guaranteed loan in one or more of the following forms:

    • (a) a promissory note;

    • (b) any security instrument pursuant to section 88 of the Bank Act;

    • (c) an assignment of book debts;

    • (d) a chattel mortgage or commercial pledge;

    • (e) a mortgage or hypothecation on real property;

    • (f) an assignment of rights and interest of the borrower under an agreement for sale; or

    • (g) any security in place of or in addition to that referred to in paragraphs (a) to (f) that the Minister deems appropriate.

  • (2) Every bank shall, throughout the term of a guaranteed loan, keep and maintain in accordance with normal banking practice, the security taken for the guaranteed loan under subsection (1).

  • (3) No bank shall release the security taken for a guaranteed loan under subsection (1)

    • (a) without the prior approval of the Minister; or

    • (b) where the Minister of Finance originally approved the loan, without the prior approval of the Minister and the Minister of Finance.

 
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