Budget Implementation Act, 2016, No. 1 (S.C. 2016, c. 7)
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Assented to 2016-06-22
PART 4Various Measures (continued)
DIVISION 5Bank Recapitalization Regime (Bail-in) (continued)
R.S., c. C-3Canada Deposit Insurance Corporation Act (continued)
Marginal note:2012, c. 5, s. 199
135 Section 39.152 of the Act is replaced by the following:
Marginal note:Assignments — bridge institution or third party
39.152 (1) Subject to subsection (2), if an agreement with a federal member institution is assigned to or assumed by a bridge institution or a third party,
(a) a person is prohibited from terminating or amending the agreement, or claiming an accelerated payment or forfeiture of the term under the agreement, by reason only of
(i) the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,
(ii) the making of an order under subsection 39.13(1) or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,
(iii) a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the agreement,
(iv) a monetary default, before the order was made, under the agreement by the federal member institution or any of its affiliates that is remedied within 60 days after the day on which the agreement is assigned or assumed,
(v) the assignment or assumption of the agreement to or by a bridge institution or a third party,
(vi) the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates,
(vii) a conversion under subsection 39.2(2.3) in respect of the federal member institution, or
(viii) a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities; and
(b) any stipulation in the agreement that has the effect of providing for or permitting anything that, in substance, is contrary to any of subparagraphs (a)(i) to (viii) or provides, in substance, that the bridge institution or the third party does not have the rights to use or deal with assets that the bridge institution or the third party would otherwise have by reason of the occurrence of any circumstance described in those subparagraphs, is of no force or effect.
Marginal note:Exception
(2) Subparagraphs (1)(a)(iii) and (iv) do not apply to an eligible financial contract, as defined in subsection 39.15(9).
Marginal note:Membership in organization
(3) If a bridge institution or a third party becomes a member of an organization in place of a federal member institution, it is prohibited for the organization to terminate the membership of the bridge institution or of the third party by reason only of
(a) the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors;
(b) the making of an order under subsection 39.13(1) or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order;
(c) a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under the rules of the organization;
(d) a monetary default, before the order was made, under the rules of the organization by the federal member institution or any of its affiliates that is remedied within 60 days after the day on which the order is made;
(e) the transfer of the federal member institution’s membership to a bridge institution or a third party;
(f) the transfer to a third party of all or part of the assets or liabilities of the federal member institution or any of its affiliates;
(g) a conversion under subsection 39.2(2.3) in respect of the federal member institution; or
(h) a conversion of any of the federal member institution’s shares or liabilities in accordance with the contractual terms of those shares or liabilities.
Marginal note:1996, c. 6, s. 41; 2012, c. 31, s. 167
136 (1) Subsection 39.18(1) of the French version of the Act is replaced by the following:
Marginal note:Durée d’application
39.18 (1) Les articles 39.14 et 39.15 cessent de s’appliquer à l’institution fédérale membre :
a) soit à la date précisée à son égard dans l’avis prévu au paragraphe 39.2(3);
b) soit à la date du prononcé à son égard d’une ordonnance de liquidation.
Marginal note:2012, c. 31, s. 167
(2) Subsection 39.18(2) of the Act is replaced by the following:
Marginal note:Exceptions
(2) Despite paragraph (1)(a),
(a) paragraph 39.15(1)(e) or (f) or subsection 39.15(2) or (2.1) continues to apply to the extent that it produced its effects by reason of
(i) the insolvency or deteriorated financial condition of the federal member institution or any of its affiliates, providers of credit support or guarantors,
(ii) the making of the order under subsection 39.13(1) or any change of control or ownership of the federal member institution or any of its affiliates that is related to the making of the order,
(iii) a non-monetary default, before the order was made, by the federal member institution or any of its affiliates in the performance of obligations under an agreement or the rules of an organization,
(iv) a monetary default, before the order was made, under an agreement or the rules of an organization by the federal member institution or any of its affiliates that was remedied within 60 days after the day on which the order was made,
(v) a conversion under subsection 39.2(2.3) in respect of the federal member institution, or
(vi) a conversion of any of the federal member institution’s shares or liabilities in accordance with contractual terms of those shares or liabilities; and
(b) subject to subsections 39.15(7.101) and (7.102), subsections 39.15(7.01), (7.1) and (7.11) to (7.2) continue to apply and — only for the purpose of interpreting those subsections 39.15(7.01), (7.1) and (7.11) to (7.2) — subsections 39.15(7) and (9) continue to apply.
Marginal note:Stay terminated by order
(3) The Governor in Council may, by order, declare that paragraph (2)(a) ceases to apply in respect of the federal member institution if the Governor in Council considers that all or substantially all of the institution’s assets have been transferred to a bridge institution or a third party.
137 The Act is amended by adding the following after section 39.18:
Non-application of Certain Legislative Provisions
Marginal note:Not agent or Crown corporation
39.181 (1) A federal member institution that is a subsidiary of the Corporation as a result of an order made under paragraph 39.13(1)(a) or (b), a bridge institution or a subsidiary of either of those institutions is not an agent of the Corporation or Her Majesty in right of Canada and, despite Part X of the Financial Administration Act, is not a parent Crown corporation, or a wholly-owned subsidiary, within the meaning of section 83 of that Act. Their respective directors, officers and employees are not part of the federal public administration.
Marginal note:Exception
(2) Despite subsection (1), Division V of Part X of the Financial Administration Act and the regulations made under that Division apply to the federal member institution, the bridge institution or a subsidiary of either of those institutions as if it were a Crown corporation within the meaning of section 83 of that Act.
138 The Act is amended by adding the following after section 39.191:
Marginal note:Regulation to exempt or adapt
39.192 (1) The Governor in Council may, by regulation,
(a) exempt federal member institutions in respect of which an order is made under subsection 39.13(1), bridge institutions or affiliates of either of those institutions, or any class of those institutions or class of their affiliates, or any other person from the application of any provision of this Act or the regulations or of the following Acts or the regulations made under them:
(i) the Bank Act,
(ii) the Canadian Payments Act,
(iii) the Cooperative Credit Associations Act,
(iv) the Financial Consumer Agency of Canada Act,
(v) the Insurance Companies Act,
(vi) the Office of the Superintendent of Financial Institutions Act,
(vii) the Trust and Loan Companies Act, and
(viii) the Winding-up and Restructuring Act; or
(b) provide that any provision of this Act or the regulations or of the Acts referred to in paragraph (a) or the regulations made under them applies to federal member institutions in respect of which an order is made under subsection 39.13(1), bridge institutions or affiliates of either of those institutions, or any class of those institutions or class of their affiliates, or any other person but only in the manner and to the extent provided for in the regulation made under this subsection, and adapt that provision for the purpose of that application.
Marginal note:Order directed at a given federal member institution
(2) The Governor in Council or the Minister may, by order, do anything that may be done by regulation under subsection (1) in respect of a federal member institution in respect of which an order is made under subsection 39.13(1), a bridge institution, an affiliate of either of those institutions or any other person.
Marginal note:Scope or conditions
(3) An exemption made under paragraph (1)(a) or subsection (2) may be limited in scope or duration or subject to conditions.
Marginal note:Coming into force
(4) An order made by the Minister does not take effect before the later of the date specified in a notice described in subsection 39.2(3) in respect of the federal member institution and the day on which an order made by the Governor in Council under subsection (2) expires.
Marginal note:Expiry
(5) An order made by the Minister expires one year after the day on which the order comes into force or any shorter period specified in the order.
Marginal note:Extension
(6) The Minister may, by order, grant one or more extensions of the applicable period set out in subsection (5) — of up to one year each — but the last extension must expire not later than five years after the date specified in the notice described in subsection 39.2(3).
Marginal note:Statutory Instruments Act
(7) The Statutory Instruments Act does not apply to an order made under subsection (2).
Marginal note:Publication
(8) The Minister shall cause an order made under subsection (2) to be published in the Canada Gazette as soon as he or she considers it appropriate to do so.
Marginal note:Office of Superintendent of Financial Institutions
39.193 (1) Despite subsection 4(2) of the Office of the Superintendent of Financial Institutions Act, if an order is made under subsection 39.13(1) in respect of a federal member institution, the objects of the Office of the Superintendent of Financial Institutions, in respect of the institution or, in the case of an order made under paragraph 39.13(1)(c), a bridge institution, are
(a) to monitor the institution in order to assess its financial condition and determine whether it is complying with its governing statute law and supervisory requirements under that law; and
(b) to report the Office’s findings to the Minister and the Corporation.
Marginal note:Application
(2) Subsection (1) applies during the period that begins on the day on which the order is made and ends
(a) on the date specified in a notice described in subsection 39.2(3) in respect of the federal member institution; or
(b) on the day on which the bridge institution ceases to be designated as such.
Marginal note:1996, c. 6, s. 41
139 (1) The portion of subsection 39.2(1) of the Act before paragraph (a) is replaced by the following:
Marginal note:Restructuring transactions
39.2 (1) If an order is made under paragraph 39.13(1)(a), the Corporation may, in addition to any other of its rights and powers, carry out, or cause the federal member institution to carry out,
Marginal note:1996, c. 6, s. 41
(2) Paragraphs 39.2(1)(c) and (d) of the Act are replaced by the following:
(c) a transaction or series of transactions that involves the sale or other disposition by the federal member institution of all or part of its assets or the assumption by another person of all or part of its liabilities, or both; and
(d) any other transaction or series of transactions the purpose of which is to restructure the business of the federal member institution.
Marginal note:1996, c. 6, s. 41; 2009, c. 2, s. 247
(3) Subsections 39.2(2) to (5) of the Act are replaced by the following:
Marginal note:Transactions for disposition of assets or restructuring
(2) If an order is made under paragraph 39.13(1)(b), the Corporation, as receiver, may, in addition to any other of its rights and powers, carry out
(a) a transaction or series of transactions that involves the sale or other disposition of all or part of the assets of the federal member institution or the assumption by another person of all or part of its liabilities, or both; and
(b) any other transaction or series of transactions the purpose of which is to restructure the business of the federal member institution.
Marginal note:No approval required — transaction with bridge institution
(2.1) If a transaction referred to in subsection (1) or (2) between the Corporation, as receiver for a federal member institution, and a bridge institution requires the approval of the Minister or the Superintendent under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act, that approval is not required despite those Acts.
Marginal note:Approval by Minister
(2.2) If a transaction referred to in subsection (1) or (2), other than one described in subsection (2.1), requires the approval of the Superintendent under the Bank Act, the Cooperative Credit Associations Act, the Insurance Companies Act or the Trust and Loan Companies Act, that approval is not required despite those Acts but the transaction has no force or effect until the Minister approves it after consultation with the Superintendent.
Marginal note:Conversion
(2.3) An order made under paragraph 39.13(1)(d) gives the Corporation the power to convert, or cause the federal member institution to convert, in whole or in part — by means of a transaction or series of transactions and in one or more steps — the institution’s shares and liabilities that are prescribed by the regulations made under subsection (10) into common shares of that institution or of any of its affiliates.
Marginal note:Terms and conditions
(2.4) Subject to any regulations made under subsection (10) and any by-laws made under subsection (12), the Corporation shall set the terms and conditions of the conversion, including its timing.
Marginal note:Publication
(2.5) As soon as feasible after the conversion, the Corporation shall cause a notice of it to be published in the Canada Gazette and on the federal member institution’s website.
Marginal note:Completion of transaction
(3) If the Corporation considers that a transaction or series of transactions referred to in this section has been substantially completed and that no other such transactions are expected in respect of the federal member institution, it shall cause a notice to that effect to be published in the Canada Gazetteand on the institution’s website. The notice must specify the date on which the notice is to take effect.
Marginal note:Negative pledges inapplicable
(4) No restriction on the rights of the federal member institution, including the right to amalgamate, to sell or otherwise dispose of any of its assets or to provide for the assumption of any of its liabilities, other than a restriction provided for in an Act of Parliament, applies so as to prevent the Corporation, the federal member institution or any other person from carrying out a transaction referred to in this section.
(4) Section 39.2 of the Act is amended by adding the following after subsection (8):
Marginal note:Effects of conversion
(9) The conversion of shares or liabilities under subsection (2.3)
(a) subject to paragraph (b), extinguishes any claim, interest or right in respect of the shares or liabilities, or part of them, that were converted; and
(b) does not extinguish any claim to the extent that the claim is a personal claim against a person other than the Corporation, the federal member institution or a person claiming under the Corporation or the federal member institution.
Marginal note:Regulations
(10) The Governor in Council may make regulations respecting conversion for the purposes of this section.
Marginal note:Regulations — application
(11) Regulations made under subsection (10) may, if they so provide, apply in respect of shares and liabilities
(a) that were issued or that originated before the day on which the first regulation made under that subsection comes into force if, on or after that day, they are amended or, in the case of liabilities, their term is extended; or
(b) that are issued or that originate on or after that day.
Marginal note:By-laws
(12) The Corporation may make by-laws respecting conversion for the purposes of this section, including by-laws that prescribe, for the purposes of subsection (2.3), the interim instruments into which shares and liabilities may be converted before they are converted into common shares.
Marginal note:Inconsistency
(13) In the event of any inconsistency between the regulations made under subsection (10) and the by-laws made under subsection (12), the regulations prevail to the extent of the inconsistency.
(5) Paragraph 39.2(9)(a) of the Act is replaced by the following:
(a) subject to paragraphs (b) and (c), extinguishes any claim, interest or right in respect of the shares or liabilities, or part of them, that were converted;
(6) Subsection 39.2(9) of the Act is amended by adding “and” at the end of paragraph (b) and by adding the following after that paragraph:
(c) does not prevent a secured creditor or an assignee or successor in interest of the person who was the holder of the shares or liabilities immediately before the conversion from being entitled to receive compensation under section 39.23.
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